KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY VS. ELSWICK (SONYA L.)Annotate this Case
RENDERED: JUNE 27, 2008; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
KENTUCKY FARM BUREAU MUTUAL
APPEAL FROM PIKE CIRCUIT COURT
HONORABLE STEVEN D. COMBS, JUDGE
ACTION NO. 04-CI-00560
SONYA L. ELSWICK, A/K/A SONYA L.
CHAPMAN, A/K/A SONYA L. HONAKER
VACATING AND REMANDING
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BEFORE: KELLER, THOMPSON, AND WINE, JUDGES.
WINE, JUDGE: Kentucky Farm Bureau Mutual Insurance Company (KFB) filed
this action against Sonya L. Elswick (Elswick) in Pike Circuit Court, seeking
subrogation of basic reparation benefits (BRB) and uninsured motorist (UM)
benefits which it paid to its insured. The trial court granted Elswick’s motion to
dismiss the complaint, concluding that Elswick was a secured person under the
Motor Vehicle Reparations Act (MVRA), and therefore was not liable for
subrogation to KFB. KFB argues that there were disputed issues of material fact
which should have precluded a judgment in Elswick’s favor. We agree, and thus
vacate the order of dismissal and remand for additional proceedings.
This action arises from a motor vehicle accident that occurred in Pike
County, Kentucky, on May 2, 2002. Elswick’s vehicle collided with vehicles
driven by Kermit Smith and Darrell Brooks. The police report of the accident lists
a Pike County address for Elswick. In addition, the vehicle which Elswick was
driving was licensed and registered in Kentucky. At the time of the accident,
Elswick stated that she had motor vehicle insurance coverage with “Nationwide
Following the accident, Smith’s insurer, KFB, sent several
subrogation demand letters to Nationwide. According to KFB, Nationwide
repeatedly denied that coverage existed for Elswick on the date of the loss. When
contacted, Elswick again informed KFB that she had coverage through
Nationwide, but she did not provide KFB with any specific information about her
Finally, KFB filed this action against Elswick on April 23, 2004.
KFB alleged that it had paid its insured, Smith, a total of $9,681.47 in Personal
Injury Protection (PIP) benefits, and an additional $20,000.00 in UM benefits.
KFB asserted that it was entitled to subrogation of these amounts against Elswick
because she is an unsecured person under the MVRA.
After being served, Elswick responded with a motion to dismiss
KFB’s complaint. In support of her motion, Elswick introduced an automobile
insurance policy issued to her under the name of Sonya Chapman by a Nationwide
agent in Big Stone Gap, Virginia. (The Nationwide policy lists a Virginia address
for Elswick.) Elswick asserted that, since she was in fact a secured person at the
time of the accident, KFB was not entitled to seek subrogation against her pursuant
to Kentucky Revised Statutes (KRS) 304.39-070(2).
In response, KFB argued that there were factual issues about
Elswick’s coverage which precluded her motion to dismiss. In the alternative,
KFB filed a motion to amend its complaint to assert claims against Nationwide.
Upon submission of the motion, the trial court dismissed KFB’s subrogation
claims against Elswick. The trial court found that Elswick was a secured person
and that KFB’s subrogation claims against her were barred.
Thereafter, KFB filed a motion to alter, amend, or vacate the
judgment, Kentucky Rules of Civil Procedure (CR) 59.05, again arguing that there
were factual issues concerning Elswick’s coverage with Nationwide. KFB also
pointed out that the trial court had not ruled on its motion to file an amended
complaint against Nationwide. In an order entered on June 8, 2006, the trial court
granted KFB’s motion to file an amended complaint, but denied the motion to
reinstate KFB’s claims against Elswick. KFB’s claims against Nationwide are
apparently still pending before the trial court. However, KFB appeals from the
trial court’s order dismissing its claims against Elswick.
Although Elswick filed a motion to dismiss in lieu of an answer, she
relied on matters outside of the pleadings. Therefore, her motion must be treated
as one for summary judgment pursuant to CR 56. CR 12.02. See also Cabinet for
Human Resources v. Women’s Health Services, Inc., 878 S.W.2d 806, 807 (Ky.
App. 1994). In reviewing a motion for summary judgment, a trial court must
consider all evidence of record, including depositions, answers to interrogatories,
stipulations and admissions on file. CR 56.03. “[S]ummary judgment is only
proper where the movant shows that the adverse party [could] not prevail under
any circumstances.” Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d
476, 480 (Ky. 1991), citing Paintsville Hospital Co. v. Rose, 683 S.W.2d 255 (Ky.
1985). “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), citing CR 56.03. There is no
requirement that the appellate court defer to the trial court since factual findings
are not at issue. Goldsmith v. Allied Building Components, Inc., 833 S.W.2d 378,
381 (Ky. 1992).
As an initial matter, the trial court’s order prematurely resolved
disputed issues of fact. On a motion for summary judgment, “[t]he trial [court]
must examine the evidence, not to decide any issue of fact, but to discover if a real
issue exists.” Steelvest, 807 S.W.2d at 480. Most notably, the trial court found
that Elswick was a resident of Virginia on the date of the accident. This finding
conflicts with the evidence presented by KFB that Elswick gave a Kentucky
address to the police after the accident. Thus, the trial court clearly erred in
deciding a disputed issue of fact on a motion for summary judgment.
The more important question, however, is whether this disputed issue
of fact was material. This leads us to the central question in this case: Was
Elswick a “secured person” on the date of the accident? KRS 304.39-070(2)
provides that a reparation obligor (such as KFB) “which has paid or may become
obligated to pay basic reparation benefits shall be subrogated to the extent of its
obligations to all of the rights of the person suffering the injury against any person
or organization other than a secured person.” But if the injury was caused by a
secured person, the injured party’s reparation obligor may obtain BRB
reimbursement only from the secured person’s reparation obligor. City of
Louisville v. State Farm Mutual Automobile Insurance, Co., 194 S.W.3d 304, 306
(Ky. 2006), citing KRS 304.39-070(3).
The trial court found that Elswick “had in full force and effect a motor
vehicle insurance policy issued in the State of Virginia by Nationwide Mutual
Insurance Company.” Since the court also found that the policy complied with the
minimum coverage requirements of the Kentucky MVRA, the trial court found that
Elswick was a “secured person” within the meaning of KRS 304.39-070. But
given the circumstances of this case, we agree with KFB that such a determination
requires more than introducing a copy of a policy which purports to provide such
Rather, a “secured person” is defined at KRS 304.39-070(1) as “the
owner, operator or occupant of a secured motor vehicle, and any other person or
organization legally responsible for the acts or omissions of such owner, operator
or occupant.” Recently, in Schmidt v. Leppert, 214 S.W.3d 309 (Ky. 2007), the
Kentucky Supreme Court held that in order to be a secured person, the person must
be an owner, operator or occupant of a “secured motor vehicle.” Id. at 311, citing
KRS 304.39-070(1). The Court further held that, in order to have “security” on a
motor vehicle, an insured’s policy must include BRB. Id. at 311-12.
In Schmidt, a Kentucky insurer sought BRB subrogation from an
Indiana driver who caused an automobile accident in Kentucky. Although the
Indiana driver was insured, his insurance company did not do business in
Kentucky. Furthermore, his Indiana policy did not provide coverage for BRB.
Thus, the Kentucky Supreme Court concluded that, while the Indiana driver was
insured, he was not a “secured person” within the meaning of KRS 304.39-070(1),
because the Kentucky insurer could not obtain BRB reimbursement from the
Indiana carrier. Id.
Unlike in Schmidt, Elswick’s Virginia policy with Nationwide
provides for the minimum compulsory insurance coverage required by the law of
the state where the accident occurs. Assuming that Elswick had coverage under
that policy, we agree with the trial court that KFB could seek BRB reimbursement
directly from Nationwide, and was not entitled to bring a direct action against
Elswick. But while the facts of this case are distinguishable from those in Schmidt,
we conclude that there are still disputed issues of fact and law regarding Elswick’s
KFB presented evidence that Nationwide repeatedly denied that
Elswick was its insured prior to the filing of this action. In so doing, Nationwide
prevented KFB from filing a direct claim against it at an earlier time. And while it
appears that Nationwide is now providing Elswick’s defense in this action,
Nationwide has never formally admitted that it owes coverage for this accident.
Indeed, as recently as February 23, 2006, Nationwide issued a reservation-of-rights
letter to Elswick, stating that it had not yet made any determination of coverage.
KFB also notes the conflicting evidence about Elswick’s residency on
the date of the accident. In addition, there is no definitive evidence that
Nationwide’s Virginia policy is subject to arbitration in Kentucky under KRS
304.39-070(3). These questions all involve disputed issues of fact which were not
ripe for resolution on this motion. Moreover, a declaration of rights action, with
Nationwide as a party, would be the proper method to adjudicate these issues.
Furthermore, KFB also asserted a claim against Elswick to recover the
UM benefits which it paid to Smith. KFB’s right to recover these benefits is not
governed by KRS 304.39-070, but may be asserted as a subrogation claim under
KRS 304.20-020(4). The trial court addressed this claim, but concluded that the
claim was prohibited “since the [KFB’s] insured could have made a claim for
bodily injury damages from [Elswick] for which [Elswick] had liability insurance
with Nationwide Mutual Insurance Company at all relevant times.” As noted
above, however, Nationwide has repeatedly denied coverage in this case, and still
has not admitted that it owes coverage for this accident. Under the circumstances,
we conclude that summary judgment was premature on this matter as well.
Accordingly, the order of the Pike Circuit Court dismissing KFB’s
claims against Elswick is vacated, and this matter is remanded for additional
proceedings as set forth in this opinion.
BRIEF FOR APPELLANT:
A. C. Donahue
BRIEF AND ORAL ARGUMENT
Lee A. Smith
ORAL ARGUMENT FOR
A. C. Donahue