SAFE AUTO INSURANCE COMPANY ON DISCRETIONARY REVIEW v. KEY AUTO AND FINANCE, INC.
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RENDERED:
October 12, 2001; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
2000-CA-002940-DG
SAFE AUTO INSURANCE COMPANY
v.
APPELLANT
ON DISCRETIONARY REVIEW FROM FAYETTE CIRCUIT COURT
HONORABLE THOMAS L. CLARK, JUDGE
ACTION NO. 00-XX-00035
KEY AUTO AND FINANCE, INC.
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
GUIDUGLI, MILLER, AND SCHRODER, JUDGES.
MILLER, JUDGE: Safe Auto Insurance Company (Safe Auto) brings
this appeal from a November 27, 2000, order of the Fayette
Circuit Court.
We affirm.
On February 12, 2000, Robert Coleman (Coleman)
purchased a 1993 Chevrolet Cavalier from Appellee, Key Auto and
Finance, Incorporated (Key Finance).
Coleman made a down payment
on the car and financed the balance by installment contract and
security agreement.
Key Finance retained a security interest in
the vehicle and required Coleman to purchase collision insurance.
On February 15, 2000, Coleman took out an insurance policy with
Safe Auto, which included collision coverage.
Coleman made the
initial payment on the insurance policy by check.
The same day,
Safe Auto faxed as proof of insurance coverage a declarations
page to Key Finance.
On February 19, 2000, Coleman was involved in an
automobile accident resulting in the vehicle being totaled.
After the accident, Coleman's check for the auto insurance was
returned for insufficient funds.
As a result, Safe Auto denied
coverage.
On March 29, 2000, Key Finance brought an action
against Coleman and Safe Auto in the Fayette District Court1.
On
August 21, 2000, the district court granted summary judgment in
favor of Key Finance.
Court.
Safe Auto appealed to the Fayette Circuit
On November 27, 2000, the circuit court affirmed the
district court.
On February 15, 2001, Safe Auto was granted
discretionary review by this court.
The sole issue before us is whether the district court
erred in granting summary judgment in favor of Key Finance.
Summary judgment may be granted where there exists no material
issue of fact and movant is entitled to judgment as a matter of
law.
Steelvest, Inc. v. Scansteel Service Center, Inc., Ky.,
807 S.W.2d 476 (1991).
In sustaining the district court's grant
of summary judgment to Key Finance, the circuit court wrote:
The determination of whether the grant
of summary judgment in this case was
appropriate revolves almost exclusively
around the proper interpretation of the
1
Key Finance was granted a default judgment against Coleman.
He is not a party to this appeal.
-2-
opinion of the Kentucky Court of Appeals in
National Insurance Association v. Peach, Ky.
App., 926 S.W.2d 859 (1996). In Peach the
case involved the serious injury and death of
a pedestrian by the negligent driving of one
of National Insurance's insured. After the
accident National Insurance denied coverage
arguing the policy in issue was void from
inception due to the surfacing of material
misrepresentations which were made at the
time of the policy's acquisition. The Court
of Appeals reviewed the facts and the
specific requirements of Kentucky's Motor
Vehicle Reparations Act (hereinafter ”the
MVRA”), and held that
the compulsory automobile
insurance statutes, when read
together, abrogate the right of an
insurer to rescind automobile
liability insurance so as to deny
recovery to an innocent thirdparty claimant. Rescission of the
insurance contract in this limited
instance is precluded-even though
a fraud may have been perpetrated
in securing the coverage.
Id. at 863. What this case then means is
that Appellant cannot deny the Appellee
recovery under the insurance policy in
dispute.
. . . The Peach Court held that the objective
of the MVRA is “to insure continuous
liability insurance coverage in order to
protect the victims of motor vehicle
accidents and to insure that one who suffers
a loss as a result of an automobile accident
would have a source and means of recovery.”
Id. at 861. The Appellee is a victim of a
motor vehicle accident under the facts of
this case, albeit not a tort victim, . . . .
We disagree with the district court's application of National
Insurance Association v. Peach, Ky. App., 926 S.W.2d 854 (1996).
There are crucial differences between Peach and the case sub
judice.
Most notably, Peach involved construction of the
Kentucky Motor Vehicle Reparations Act (MVRA), Kentucky Revised
-3-
Statutes (KRS) Chapter 304, Subtitle 39.
The MVRA mandates
minimum amounts of automobile liability insurance coverage.
The
coverage under which Key Finance seeks to collect is collision.
Collision coverage extends to physical damage to the insured
vehicle only,
and it is not mandated under the MVRA.
Thus, we
are of the opinion Peach is inapposite to the case at hand.
The Court of Appeals, however, may affirm the circuit
court for different reasons than the circuit court gave in its
judgment.
See Revenue Cabinet v. Joy Technologies, Inc., Ky.
App., 838 S.W.2d 406 (1992).
We believe there are ample grounds
for affirming the circuit court under the doctrine of estoppel.
See Smith v. Ash, Ky., 448 S.W.2d 51 (1969).
One who knows or should know of a situation or material
fact is estopped from denying it where by conduct he induces
another's detrimental reliance.
Hunts Branch Coal Company v.
Canada, Ky., 599 S.W.2d 154 (1980).
Estoppel is established
where another party relies in good faith on representations made
by the estopped party.
Grayson Rural Electric Corporation v.
City of Vanceburg, Ky., 4 S.W.3d 526 (1999).
When Coleman applied for an automobile insurance policy
from Safe Auto, Safe Auto generated a declarations page.
The
declarations page listed a policy number, effective date,
coverages, including collision coverage, was countersigned by the
agent, and named Key Finance as lienholder on the vehicle.
The
declarations page did not indicate any coverage contingencies
based on method of payment.
Safe Auto then faxed this document
to Key Finance; Key Finance released the vehicle to Coleman in
-4-
reliance upon Safe Auto's declarations page.
Quite obviously,
Key Finance relied upon the declarations page faxed to it by Safe
Auto was reasonable.
Thereafter, the car was totaled and Safe
Auto denied coverage to the detriment of Key Finance.
We think
Key Finance reasonably relied upon Safe Auto's declarations page
and changed its position to its detriment.
As such, we are of
the opinion Safe Auto is estopped from denying collision coverage
on Coleman's vehicle.
upon different grounds.
We thus affirm the circuit court albeit
See Joy Technologies, Inc. 838 S.W.2d
406.
For the foregoing reasons, the judgment of the Fayette
Circuit Court is affirmed.
SCHRODER, JUDGE, CONCURS.
GUIDUGLI, JUDGE, CONCURS IN RESULT ONLY.
BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
Diane L. Rose
Lexington, Kentucky
Wayne P. Cook
Lexington, Kentucky
-5-
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