GARY WILSON; JOYCE WILSON v. AMERICAN NATIONAL PROPERTY AND CASUALTY COMPANY; NATIONAL GENERAL INSURANCE COMPANY, A GMAC INSURANCE COMPANY
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RENDERED: DECEMBER 14, 2007; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2006-CA-002632-MR
GARY WILSON; JOYCE WILSON
v.
APPELLANTS
APPEAL FROM FRANKLIN CIRCUIT COURT
HONORABLE SAM G. MCNAMARA, JUDGE
ACTION NO. 05-CI-00986
AMERICAN NATIONAL PROPERTY
AND CASUALTY COMPANY; NATIONAL
GENERAL INSURANCE COMPANY, A GMAC
INSURANCE COMPANY
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: DIXON AND LAMBERT, JUDGES; ROSENBLUM,1 SENIOR JUDGE.
ROSENBLUM, SENIOR JUDGE: Gary Wilson and Joyce Wilson appeal from orders of
the Franklin Circuit Court granting summary judgment to American National Property
and Casualty Company (American National) and National General Insurance Company, a
GMAC Insurance Company (National General) upon their claims seeking to collect
1
Senior Judge Paul W. Rosenblum sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.
payments under the underinsured motorist (UIM) provisions contained in vehicle
insurance policies issued by the companies to the Wilsons. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
On May 23, 2004, Gary and Joyce were both severely injured in a
motorcycle wreck in Fayette County, Kentucky. The wreck was caused by the negligence
of Stephanie Viens, whose liability insurance carrier was State Farm Insurance Company.
State Farm tendered the liability insurance limits contained in the Viens policy and the
Wilsons accepted the settlement
At the time of the wreck the Wilsons had in effect an automobile insurance
policy issued by American National which covered four other vehicles owned by the
Wilsons and an automobile insurance policy issued by National General which covered a
motor home they owned. As further discussed below, both of the policies contained UIM
provisions, but each of the policies also contained an exclusion exempting from UIM
coverage damages sustained while an insured (including either of the Wilsons) was
occupying a vehicle not covered under the policy. The Wilsons' motorcycle was insured
by Progressive Northern Insurance Company and was not listed as a vehicle covered
under either the American National or National General policies. Moreover, the
Progressive Northern policy did not afford UIM coverage.
After settling with State Farm, the Wilsons filed a Complaint in Franklin
Circuit Court2 seeking to collect payments under the UIM provisions contained in the
2
The Wilsons are residents of Franklin County.
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American National and National General policies. In due course the insurance companies
moved for summary judgment, arguing that because the motorcycle was not a vehicle
listed for coverage under the policies, the exclusion exempting from UIM coverage
damages sustained while an insured is occupying a vehicle not covered under the policy
barred the Wilsons' claim.
The trial court awarded summary judgment to American National and
National General on September 25, 2006, and December 11, 2006, respectively.3 This
appeal followed.
Before us the Wilsons argue that the trial court erred in awarding summary
judgment to the insurance companies because (1) the UIM exclusion language contained
in the policies is ambiguous and therefore should be construed against the companies and
in favor of coverage; and (2) the exclusions are void as against public policy.
STANDARD OF REVIEW
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.” CR4 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 Serv.
3
The Wilson's motion to alter, amend, or vacate the summary judgment award to American
National was also denied on December 11, 2006.
4
Kentucky Rules of Civil Procedure.
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Ctr., Inc., 807 S.W.2d 476, 480 (Ky. 1991). “The 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).
AMBIGUITY OF EXCLUSIONS
The Wilsons first contend that the UIM exclusions contained in the two
insurance policies are ambiguous and, therefore, the well settled principles that
ambiguous language is to be construed against the insurance company and in favor of
coverage should be applied. They argue that upon application of these principles the
UIM exclusions should not be applied so as to deprive them of coverage under the
policies.
The American National exclusion states as follows:5
This coverage [UIM coverage] does not apply to bodily
injury sustained by an insured person:
1. while occupying, or when struck by, a
motor vehicle owned by you or a relative for
which insurance is not afforded under this
endorsement[.]
The National General exclusion states as follows:
B. We do not provide . . . Underinsured Motorists Coverage
for bodily injury sustained:
1. By any insured while occupying, or when
struck by, any motor vehicle owned by that
5
The emphasis in both of the quoted provisions is in the original.
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insured which is not insured for this coverage
under this policy.
Interpretation of an insurance policy is a question of law which we review
de novo. Cinelli v. Ward, 997 S.W.2d 474 (Ky.App. 1998). The goal of any court in
interpreting a contract is to ascertain and to carry out the original intentions of the parties,
Wilcox v. Wilcox, 406 S.W.2d 152, 153 (Ky. 1966), and to interpret the terms employed in
light of the usage and understanding of the average person. Fryman v. Pilot Life
Insurance Co., 704 S.W.2d 205, 206 (Ky. 1986). Unless the terms contained in an
insurance policy have acquired a technical meaning in law, they “must be interpreted
according to the usage of the average man and as they would be read and understood by
him in the light of the prevailing rule that uncertainties and ambiguities must be resolved
in favor of the insured.” Id.; Stone v. Kentucky Farm Bureau Mut. Ins. Co., 34 S.W.3d
809, 811 (Ky.App. 2000). Furthermore, under the “doctrine of reasonable expectations,”
an insured is entitled to all the coverage he may reasonably expect to be provided
according to the terms of the policy. Hendrix v. Fireman's Fund Ins. Co., 823 S.W.2d
937, 938 (Ky.App. 1991); Woodson v. Manhattan Life Ins. Co., 743 S.W.2d 835, 839
(Ky. 1987).
Moreover, a policy of insurance is to be construed liberally in favor of the
insured and if, from the language, there is doubt or uncertainty as to its meaning, and is
susceptible to two interpretations, one favorable to the insured and the other favorable to
the insurer, the former will be adopted. St. Paul Fire & Marine Ins. Co. v. Powell-
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Walton-Milward, Inc., 870 S.W.2d 223, 227 (Ky. 1994). But, in the absence of
ambiguities or of a statute to the contrary, the terms of an insurance policy will be
enforced as drawn. Osborne v. Unigard Indemnity Co., 719 S.W.2d 737, 740 (Ky.App.
1986); Woodard v. Calvert Fire Ins. Co., 239 S.W.2d 267, 269 (Ky. 1951). Although
restrictive interpretation of a standardized “adhesion” contract is not favored, neither is it
the function of the courts to make a new contract for the parties to an insurance contract.
Moore v. Commonwealth Life Ins. Co., 759 S.W.2d 598, 599 (Ky.App.1988).
Giving the phraseology contained in the exclusions its most natural
meaning we do not believe there is any ambiguity. The phrasing straight-forwardly
excludes from underinsured motorist coverage bodily injuries sustained by an insured
while occupying another vehicle owned by an insured which is not covered under the
policy.
The declarations page of the American National policy lists the insured
property as being a 1996 Lincoln Town Car, a 2002 Ford Explorer, a 1993 Ford F 350,
and a 1990 Ford 350. The motorcycle is not listed as an insured vehicle. Similarly, the
National General policy insures only a 1994 Safari motor home. The declarations page
does not list the motorcycle as a covered vehicle.
While we agree that the exclusions could have been written more perfectly,
they are not so inartfully drafted as to become ambiguous. "Only actual ambiguities, not
fanciful ones," are required to be construed against the drafter. True v. Raines, 99
S.W.3d 439, 443 (Ky. 2003); Snow v. West American Ins. Co., 161 S.W.3d 338, 341
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(Ky.App. 2004). Because the UIM exclusions contained in the American National and
National General policies are not ambiguous, the rules of ambiguity favoring the insured
are not applicable in the case at bar. As such, the Wilsons may not rely upon those rules
to defeat summary judgment.
The Wilsons, however, cite us to Chaffin v. Kentucky Farm Bureau Ins.
Co., 789 S.W.2d 754 (Ky. 1990), in which a somewhat similar uninsured motorist
exclusion was described by the Supreme Court, in dicta, as “nearly incapable of rational
construction.” See also Hamilton Mut. Ins. Co. v. U.S. Fidelity & Guar. Co., 926 S.W.2d
466, 468, (Ky.App. 1996) (citing to the aforementioned dicta).
However, even if we were to agree with the Wilsons that the exclusionary
language was ambiguous, we do not believe their claim would be saved by Chaffin and
Hamilton. In Chaffin the insured had uninsured motorist (UM) coverage (as opposed to
UIM coverage in the present case) on the vehicle involved in the accident as well as two
other vehicles written by the same carrier. The issue was whether the insured could stack
the units of UIM coverage contained in the policies on the vehicles not involved in the
accident despite the policies' anti-stacking provisions. The Supreme Court held that the
anti-stacking provisions were void as against public policy. Hamilton extended Chaffin
to apply to UIM coverage written by multiple insurance companies. The case at bar,
however, is distinguishable because the motorcycle policy with Progressive Northern did
not have UIM coverage, and, hence, there is no underlying unit of UIM coverage upon
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which to stack the UIM coverage contained in the American National and National
General policies.
Snow v. West American Ins. Co., 161 S.W.3d 338, 341 (Ky.App. 2004)
addressed a similar issue in the context of an exclusion which exempted from liability
coverage vehicles owned but not listed on the policy as a covered vehicle. Following an
accident of an unlisted vehicle the insured sought coverage under the policy. Snow stated
that requiring coverage would be unreasonable because such
would allow an insured to obtain insurance and to pay
premiums for one vehicle while exposing the insurer to
liability for injuries arising from the use of multiple vehicles
owned by other family members for which coverage had not
been obtained. Extending coverage in this case would
provide benefits which were neither paid for nor reasonably
contemplated by the named insured or the members of his
family.
Id. at 341.
Similarly, the interpretation urged by the Wilsons in this case would
produce the unreasonable result in that they would be afforded a windfall by receiving
UIM coverage for the motorcycle when they made the deliberate decision not to purchase
same. Unfortunately, it seems apparent that the coverage the Wilsons purchased was
insufficient to cover the claimed amount of their damages. However, “[t]he insured has
the greatest degree of control over the amount of insurance he obtains.” Baxter v. Safeco
Ins. Co. of America, 46 S.W.3d 577, 579 (Ky.App. 2001). It would be manifestly unfair
for the companies to bear the burden of the Wilsons' failure to obtain adequate insurance
to cover their loss.
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PUBLIC POLICY
Again relying upon Chaffin and Hamilton, the Wilsons contend that the
UIM exclusions are void as against public policy. For the reasons previously discussed,
we do not believe that the holdings in Chaffin and Hamilton hold that exclusionary
provisions such as the one at bar are against public policy under the present
circumstances, but, rather, hold only that such provisions may not be used to prevent the
stacking of separately paid for UM and/or UIM coverage. As the motorcycle did not
have UIM coverage upon which to stack the units of UIM coverage contained in the
American National and National General policies, the cases are inapplicable. Stacking is
simply not an issue in this case.
Moreover, Kentucky courts have previously upheld insurance policy
provisions excluding from UIM coverage motor vehicles owned by or available for the
regular use of the policyholder or any family member. Motorists Mutual Ins. Co. v.
Glass, 996 S.W.2d 437 (Ky. 1997); Windham v. Cunningham, 902 S.W.2d 838 (Ky.App.
1995). The reasoning behind these decisions rests in the purpose of the statute -- "to give
the insured the right to purchase additional liability coverage for the vehicle of a
prospective underinsured tortfeasor." Motorists Mutual, 996 S.W.2d at 449. Motorists
Mutual upheld as not against public policy the exclusion from the definition of an
underinsured vehicle any vehicle "owned by or furnished or available for the regular use
of you or any family member." Id. at 449-450. See also Baxter v. Safeco Ins. Co. of
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America, 46 S.W.3d 577, 578 (Ky.App. 2001) (upholding UIM exclusion for bodily
injury sustained by any insured while occupying or operating an owned motorcycle).
In summary, under the circumstances of this case, we are not persuaded the
UIM exclusion provisions contained in the American National and National General
policies are void as against public policy.
CONCLUSION
For the foregoing reasons the judgment of the Franklin Circuit Court is
affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
G. Edward James
Carrolton, Kentucky
Edwin A. Logan
Frankfort, Kentucky
BRIEF FOR APPELLEE AMERICAN
NATIONAL PROPERTY AND
CASUALTY COMPANY:
E. Patrick Moores
Lexington, Kentucky
BRIEF FOR NATIONAL GENERAL
INSURANCE COMPANY:
Barry M. Miller
Heather M. McCollum
Lexington, Kentucky
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