VERNAL ADKINS, INDIVIDUALLY AND AS ADMINISTRATOR OF THE ESTATE OF KATHLEEN ADKINS v. KENTUCKY NATIONAL INSURANCE COMPANY AND HON. STEVEN COMBS, JUDGE
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RENDERED: APRIL 6, 2007; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2005-CA-002213-MR
VERNAL ADKINS, INDIVIDUALLY
AND AS ADMINISTRATOR OF THE
ESTATE OF KATHLEEN ADKINS
v.
APPELLANT
APPEAL FROM PIKE CIRCUIT COURT
HONORABLE STEVEN COMBS, JUDGE
ACTION NO. 02-CI-00419
KENTUCKY NATIONAL INSURANCE
COMPANY AND HON. STEVEN COMBS,
JUDGE
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: LAMBERT AND STUMBO, JUDGES; BUCKINGHAM,1 SENIOR
JUDGE.
STUMBO, JUDGE: Vernal Adkins (hereinafter referred to as “Adkins”), individually
and as administrator of the estate of Kathleen Adkins, appeals from a summary judgment
of the Pike Circuit Court. Adkins maintains that his action to recover aggregate or
Senior Judge David C. Buckingham sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.
1
“stacked” Uninsured Motorist Coverage (“UM coverage”) payments from
Kentucky National Insurance Company raised genuine issues of material fact
sufficient to overcome Kentucky National’s motion for summary judgment.
Specifically, he argues that Kentucky National improperly sought to unilaterally
amend an insurance contract for the purpose of preventing Adkins from stacking
three units of UM coverage. For the reasons stated below, we affirm the summary
judgment.
On October 1, 2001, Kathleen Adkins received fatal injuries in a
tragic automobile accident. The vehicle she was driving was owned by her
daughter and was insured by a policy with State Farm Insurance Company.
Kathleen and her husband, Vernal Adkins, had insurance coverage via a policy
issued by Kentucky National. The at-fault driver, Norman Thacker, was not
insured at the time of the accident.
The Adkinses’ Kentucky National policy was issued on August 13,
1998. At the time of issuance, it provided insurance coverage for two vehicles.
Sometime thereafter, an additional vehicle was added to the coverage. After the
third vehicle was added, the Adkinses began paying three separate premiums for
UM coverage, representing one unit of coverage per vehicle. Each UM coverage
premium cost $32 for $50,000 of UM coverage, for a total of $96 in premiums
representing $150,000 of stacked coverage.
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Prior to the policy’s renewal date of August 13, 2001, Kentucky
National mailed to the Adkinses renewal materials which included a written notice
of changes to their coverage. Specifically, Kentucky National stated that it would
begin charging a single UM premium for the three units of coverage on the three
vehicles, rather than three distinct premiums as had previously been done. The
apparent purpose of this change – though not stated in the notice – was to prevent
the stacking of the three units of UM coverage. The Adkinses accepted the new
coverage and began paying premiums according to its terms.
After the death of Kathleen Adkins, and because the at-fault driver
was not insured, Kathleen’s estate sought payment from Kentucky National of
$150,000 representing 3 stacked units of $50,000 UM coverage. Relying on the
new policy provisions in effect at the time of Kathleen’s death, Kentucky National
offered to pay a non-aggregate or “non-stacked” coverage limit of $50,000.
Rejecting the offer, Vernal Adkins, individually and as administrator of Kathleen’s
estate, filed the instant action in Pike Circuit Court. After the litigation
commenced, Kentucky National paid to Adkins the sum of $50,000 to which the
parties agreed Adkins was at least minimally entitled, and discovery was
undertaken on the stacking issues.
Kentucky National subsequently filed a motion for summary
judgment, followed by a renewed motion for summary judgment. As a basis for
the motion, Kentucky National argued that it gave the Adkinses proper notice of
the policy change affecting the UM coverage, that they accepted the change when
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they renewed the policy, and that Adkins was entitled to one unit of UM coverage
or $50,000. In sum, it maintained that no genuine issue of fact remained for
adjudication and that it was entitled to a summary judgment as a matter of law. A
hearing on the motion was conducted on September 30, 2005, after which the
circuit court granted the motion and rendered a summary judgment. This appeal
followed.
Adkins now argues that the circuit court erred in granting Kentucky
National’s motion for summary judgment. He maintains that the Adkinses were
not notified that Kentucky National intended to begin charging a single premium
for three units of UM coverage, and that they did not consent to said change.
Adkins also argues that Hamilton v. Allstate, 789 S.W.2d 751 (Ky. 1990)
expressly bars any provision in an automobile insurance policy prohibiting
stacking. He directs our attention to case law which he claims holds that
underinsured motorist coverage may be stacked even where a single premium is
charged, and argues that this principle is equally applicable to UM coverage.
Lastly, Adkins maintains that the policy change is void as contrary to the case law
and public policy, and asserts that he had a reasonable expectation of aggregate
(i.e., “stackable”) coverage. He seeks an order reversing the summary judgment
and remanding the matter for further adjudication.
We have closely examined the written arguments, the record and the
law, and having heard the parties’ oral arguments, we find no basis to overturn the
summary judgment on appeal. Adkins’ argument centers on his claim that the
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Adkinses were not given notice of Kentucky National’s intention to change the
terms of coverage resulting in their payment of a single premium rather than three
distinct premiums for three units of UM coverage. Subsumed in this argument is
Adkins’ assertion that the Adkinses never consented to the policy change.
This argument is refuted by the record, which contains the
notification of change in coverage mailed to the Adkinses as well as the “new”
policy declaration which became effectual on August 13, 2001. Adkins admits as
much in his written argument, where he states that “ . . . Kentucky National sent a
copy of the ‘altered’ policy to the Adkinses [sic], which indicated that Kentucky
National had changed the way they calculated the premium to be paid for UM
coverage.”2 (Emphasis added).
Though Adkins maintains that the Adkinses were not notified of the
change in coverage, the corpus of his argument on this issue is that they were not
told of the ramifications of that change. This too, however, is refuted by the
record. Kentucky National’s notice to the Adkinses contained the following
notice:
The enclosed renewal contains important changes in
Uninsured Motorist (UM) and Underinsured Motorist (UIM)
coverages. In the past, premiums for these coverages have
been charged on a per-vehicle basis. You paid a separate
premium for each vehicle on the policy and coverage was
determined by adding the number of vehicles and
multiplying this amount by the limits of UM/UIM coverage.
The amount of coverage would vary by the number of
vehicles insured on the policy. On the renewal date specified
2
Adkins’ brief at page 6.
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on the declarations page of your renewal policy, we have
revised this coverage. Only one change is made for this
coverage per policy and coverage is limited to the coverage
limits shown on the declarations page. If you have any
questions or would like to discuss higher limits of coverage,
please contact your agent.3 (Emphasis added).
The declarations page referenced in the notice, and which is
contained in the record as Exhibit 2, shows the limit of UM coverage at $50,000
per person. This language is clear and unambiguous, and was openly referenced
by Kentucky National in Exhibit 3 styled “IMPORTANT NOTICE TO OUR
POLICY HOLDERS.” A comparison of the 2000 Declarations page and the 2001
Declarations page reveals that in 2000, the Adkinses were charged the sum of
$32.00 per vehicle for UM coverage listed on separate lines, while in 2001, there
was a single charge of $52.00 for a single unit of UM coverage listed below the
totals for premiums charged per auto. Furthermore, the endorsement page
provided the Adkinses, and which is contained in the record as Exhibit 4, stated
that “[t]he limit of liability shown in the Declarations for each person for
Uninsured Motorists Coverage is our maximum limit of liability for all damages . .
. sustained by any one person in any one accident. . . . This is the most we will
pay regardless of the number of . . . [v]ehicles shown in the Declarations. . . .”
The record supports the circuit court’s conclusion that the Adkinses received
notice of the change in UM coverage and that they consented to the change by
accepting the new policy and tendering the premiums.
3
Exhibit 3.
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More important than the notice issue, however, is the underlying
question of whether UM coverage may be stacked where a single UM premium is
charged for multiple vehicles, and where the premium is actuarial and not based
on the number of vehicles covered. This is an issue of first impression, and must
be answered in the negative.
In Meridian Mutual Insurance Co. v. Siddons, 451 S.W.2d 831 (Ky.
1970), the Kentucky Supreme Court first held that stacking of UM coverage by the
named insured is permitted where there are separate policies for each vehicle
insured and where the named insured has not rejected the coverage in writing. A
number of decisions followed which addressed the scope and application of KRS
304.20-020 (requiring, unless waived, UM coverage as a part of every automobile
liability policy) and the stacking of that coverage where the injured party was
availed of multiple UM coverage units. See generally, Hamilton v. Allstate Ins.
Co., 789 S.W.2d 751 (Ky. 1990) (insurer barred from including policy language
limiting stacking); Chaffin v. Kentucky Farm Bureau Ins. Co., 789 S.W.2d 754
(Ky. 1990) (anti-stacking provision disallowed); and, Ohio Casualty Ins. Co. v.
Stanfield, 581 S.W.2d 555 (Ky. 1979) (doctrine of reasonable expectations upheld,
and employee disallowed from stacking employer’s coverage).
At the same time these issues were being addressed, questions
relating to aggregate underinsured (“UIM”) coverage also were being resolved.
Most notably for our purposes, the Kentucky Supreme Court held that an insured
had no reasonable expectation of aggregate or stacked UIM coverage if a single
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premium is paid for two or more units of coverage, where the premium is not
based on the number of vehicles covered. Marcum v. Rice, 987 S.W.2d 789 (Ky.
1999). See also, Estate of Swartz v. Metropolitan Property & Casualty Company,
949 S.W.2d 72 (Ky. App. 1997). As the parties are well aware, the Kentucky
Supreme Court has also held that the difference between UM and UIM coverage is
more illusory than real. Allstate Insurance Company v. Dicke, 862 S.W.2d 327
(Ky. 1993).
Because there is no rational distinction between UM and UIM
coverage for purposes of aggregation or stacking, and because Marcum resolves
single premium UIM coverage in favor of the insurer, we therefore hold that an
insurer is not required to stack multiple units of UM coverage which have been
paid by a single premium, if that premium is not based on the number of vehicles
insured. As in Marcum, we base this conclusion on our recognition that an insured
has no reasonable expectation of stacking where he or she pays a single premium
which does not vary based on the number of vehicles insured.
Summary judgment "shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, stipulations, and admissions on file,
together with the affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter of
law." CR 56.03. "The record must be viewed in a light most favorable to the party
opposing the motion for summary judgment and all doubts are to be resolved in
his favor." Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480
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(Ky. 1991). "Even though a trial court may believe the party opposing the motion
may not succeed at trial, it should not render a summary judgment if there is any
issue of material fact." Id. Finally, "[t]he standard of review on appeal of a
summary judgment is whether the trial court correctly found that there were no
genuine issues as to any material fact and that the moving party was entitled to
judgment as a matter of law." Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky. App.
1996).
In the matter at bar, it is uncontroverted that the new policy which
became effectual on August 13, 2001, charged a single premium for three units of
UM coverage, and that the premium is actuarial and not based on the number of
vehicles insured. The Adkinses were given notice of the policy change both by
way of a written notice and by the changed terms on the Declarations page. The
notice stated that the amount of UM coverage shown on the Declaration page, i.e.,
$50,000, was the maximum amount of Kentucky National’s liability for injuries
sustained by any one person in any one accident regardless of the number of
vehicles shown in the Declarations. As such, the Adkinses had no reasonable
expectation of aggregate coverage. The trial court correctly found that there were
no genuine issues of material fact and that Kentucky National was entitled to a
judgment as a matter of law. Scifres, supra. Accordingly, we find no error.
For the foregoing reasons, we affirm the summary judgment of the
Pike Circuit Court.
ALL CONCUR.
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BRIEF AND ORAL ARGUMENT
FOR APPELLANT:
Kristie M. Goff
Pikeville, Kentucky
BRIEF FOR APPELLEE,
KENTUCKY NATIONAL
INSURANCE COMPANY:
Bayard V. Collier
Julie Ann Sharp
Pikeville, Kentucky
ORAL ARGUMENT FOR APPELLEE,
KENTUCKY NATIONAL
INSURANCE COMPANY:
Bayard V. Collier
Pikeville, Kentucky
NO BRIEF OR ORAL ARGUMENT
FOR APPELLEE,
HON. STEVEN COMBS, JUDGE
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