STATE AUTOMOBILE MUTUAL INSURANCE COMPANY VS. OCCIDENTAL FIRE & CASUALTY INSURANCE COMPANY, ET AL.
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RENDERED: OCTOBER 15, 2010; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2009-CA-001660-MR
STATE AUTOMOBILE MUTUAL
INSURANCE COMPANY
v.
APPEAL FROM BULLITT CIRCUIT COURT
HONORABLE RODNEY BURRESS, JUDGE
ACTION NOS. 07-CI-01592 & 08-CI-00445
OCCIDENTAL FIRE & CASUALTY
INSURANCE COMPANY; RALPH ROYER;
PARKER’S TRUCK CARE, INC.,
D/B/A PARKER TRUCK SALES AND
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY
AND
APPELLEES
NO. 2009-CA-001661
OCCIDENTAL FIRE & CASUALTY
INSURANCE COMPANY
v.
APPELLANT
CROSS-APPELLANT
CROSS-APPEAL FROM BULLITT CIRCUIT COURT
HONORABLE RODNEY BURRESS, JUDGE
ACTION NOS. 07-CI-01592 & 08-CI-00445
STATE AUTOMOBILE MUTUAL
INSURANCE COMPANY
CROSS-APPELLEE
OPINION
DISMISSING
** ** ** ** **
BEFORE: COMBS, KELLER AND LAMBERT, JUDGES
LAMBERT, JUDGE: This is a consolidated case arising from an automobile
accident/personal injury lawsuit and a declaratory judgment action stemming from
coverage issues between two insurers. Specifically, State Automobile Mutual
Insurance Company appeals the Bullitt Circuit Court’s order holding that
Occidental Fire and Casualty Insurance Company had no duty to indemnify or
defend William Boblitt in the underlying tort litigation. After careful review, we
dismiss for failure to name an indispensable party and otherwise affirm the trial
court’s order.
This matter arose from an automobile accident in Bullitt County, Kentucky
on July 14, 2007. The accident occurred when William Boblitt’s vehicle went out
of control, crossed the center line, and struck the vehicle driven by Ralph Royer.
Parker’s Truck Care, Inc. d/b/a Parker’s Truck Sales, owned by Donald Parker,
was the registered owner of the vehicle Boblitt was driving when the accident
occurred. Parker was a licensed motor vehicle dealer pursuant to Kentucky
Revised Statutes (KRS) 190.130.
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Prior to 2007, Boblitt had an informal arrangement with Parker Truck Care
and Parker whereby Boblitt was given permission to operate a vehicle from time to
time, or to buy or sell a motor vehicle on Parker’s behalf. On May 8, 2007, Parker
contacted Jackie Holcomb, an insurance agent, to obtain a new liability insurance
policy for Parker Truck Care. During that conversation, Ms. Holcomb completed
an initial application that listed Boblitt as a potential driver. Unfortunately,
coverage could not be bound through the initial broker, and a new application had
to be submitted.
Ultimately, an application was later submitted to an underwriter at
Occidental. During the application process, Occidental required Boblitt to obtain a
completed medical form, attesting to his continued ability to drive, due to his age.
Ms. Holcomb provided this form to Parker on June 14, 2007. Parker then provided
the form to Boblitt, although Parker could not specifically recall when he gave the
form to him. Parker testified that he told Boblitt that unless he returned the
completed medical form, he could not drive any vehicle owned by Parker.
On July 9, 2007, three weeks after binding coverage and accepting the
policy premiums, Occidental still had not received Boblitt’s medical form and
required Parker to sign a named driver exclusion, which was to be added to the
policy. This exclusion stated, “With no change in premium, the insurance afforded
by this policy shall not apply with respect to any claim arising from accidents
which occur while any auto is being operated by Bill Boblitt.”
-3-
Ms. Holcomb returned the named driver exclusion to Occidental on July 13,
2007, the day before the accident that is the basis of the underlying action. The
named driver exclusion was not at any time counter-signed by Occidental, as the
form itself requires.
Ultimately, Royer filed suit against Boblitt and Parker for injuries arising
from the accident. When Occidental refused to defend Boblitt in the underlying
action, State Auto agreed to defend him despite the fact that the vehicle involved in
the accident was not insured under its policy. The only vehicle insured by
Boblitt’s State Auto policy was a 2000 Chrysler Concorde. State Auto chose to
provide a defense to Boblitt, but commenced a declaratory judgment action
wherein it alleged that it had no contractual duties to defend or indemnify its
named insured, Boblitt.
State Auto argued that Occidental, as the liability carrier for Parker’s Truck
Care, had a duty to defend and indemnify Boblitt. State Auto also sought a
determination that Occidental’s policy provided primary coverage and State Auto’s
policy provided excess coverage only. Further, State Auto sought a declaration
that, because Occidental refused to defend Boblitt, State Auto is entitled to
reimbursement of its defense costs incurred in defending Boblitt throughout the
underlying litigation. Finally, State Auto sought a declaration that, because
Occidental’s refusal to defend Boblitt and acknowledge coverage is contrary to
well-established Kentucky law, State Auto is entitled to recovery of its fees and
expenses incurred in bringing the declaratory judgment action.
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Occidental has denied that it owed a duty to either defend or indemnify
Boblitt based upon the existence of a named driver exclusion excluding Boblitt
from coverage and the undisputed revocation of permission to drive the insured
vehicle by its named insured, Parker, to Boblitt prior to the accident. The trial
court held that Occidental’s named driver exclusion was not enforceable under the
facts of this case. However, because Boblitt did not have Parker’s permission to
operate the motor vehicle at the time of the accident, the trial court held that
Occidental had no duty to provide a defense or otherwise indemnify Boblitt for the
events that transpired in the accident. This appeal and cross-appeal now follow.
On appeal, State Auto asserts that the trial court correctly determined that
the named driver exclusion is unenforceable. However, State Auto argues that the
trial court erred as a matter of law in holding that Parker’s verbal instruction to
Boblitt that he should not operate the vehicle supersedes the statutorily mandated
coverage under KRS 190.033. In response, Occidental asserts that State Auto’s
appeal is defective because the notice of appeal failed to include Boblitt as a party,
and therefore the appeal must be dismissed. On its cross-appeal, Occidental argues
that the trial court erred in failing to enforce the named driver endorsement, which
was specifically intended to exclude liability coverage to Boblitt.
Upon consideration, we conclude that all indispensible parties are not within
the jurisdiction of this Court, and therefore we must dismiss State Auto’s appeal.
The jurisdictional rule set forth in City of Devondale v. Stallings, 795
S.W.2d 954 (Ky. 1990), mandates that all indispensable parties must be timely and
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specifically named as parties in the notice of appeal. Id. at 957. Strict compliance
with this mandate is necessary to avoid dismissal pursuant to the following
language set forth in CR 73.02(2): “The failure of a party to file timely a notice of
appeal, cross-appeal, or motion for discretionary review shall result in a dismissal
or denial.” Id. In Stallings, supra, dismissal of the appeal was ordered where two
indispensable parties were not specifically named as parties in the notice of appeal,
even though these parties were served with copies of the notice and subsequent
pleadings in the appeal. Id.
In the instant case, Boblitt was not named on the notice of appeal, and State
Auto subsequently filed a motion to file an amended notice of appeal naming
Boblitt, which was denied by this Court. Now State Auto contends that Boblitt is
not a necessary party to this appeal, arguing that Boblitt will not be affected by this
Court’s decision. According to State Auto, if this Court reverses the trial court,
Occidental will assume Boblitt’s defense in the underlying action and pay
whatever damages are assessed by the jury, up to its policy limit. If this Court
affirms the trial court, State Auto claims it will continue to defend Boblitt and pay
whatever damages are assessed by the jury up to its policy limits.
We find this argument to be somewhat attenuated, given that Boblitt’s State
Auto policy did not cover the vehicle Boblitt was driving in this accident and it
sought the declaratory judgment to determine that Occidental’s policy provided
coverage. State Auto further contends that Boblitt can never be personally held
liable for any damages assessed in excess of either policy limits, due to the fact
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that he filed bankruptcy and was discharged from any personal liability for injuries
or damages from this accident.
Upon consideration, it is apparent that Boblitt is an indispensable party to
this appeal. “An indispensable party is one whose absence prevents the Court from
granting complete relief among those already parties ... [or] one whose interest
would be divested by an adverse judgment.” Liquor Outlet, LLC v. Alcoholic
Beverage Control Bd., 141 S.W.3d 378, 387 (Ky. App. 2004) (internal citations
omitted).
Clearly, Boblitt’s interests in this litigation would be divested by an adverse
judgment. Even assuming Boblitt’s debts are discharged in bankruptcy, a
judgment in excess of any policy limits is still a judgment against him, and any
judgment is inherently adverse to Boblitt’s interests. As it now stands, Boblitt
would be unable to appeal any judgment of this Court designating that he has no
insurance coverage for this accident because he is not a party to the appeal.
Accordingly, we are obligated to dismiss State Auto’s appeal for failure to name an
indispensable party.
In its cross-appeal, Occidental argues that the named driver exclusion
contained in its policy is valid and effective in Kentucky, and therefore, the trial
court erred as a matter of law in finding the exclusion inapplicable. Given that the
trial court ruled for Occidental on other grounds, this argument is now moot and
shall not be addressed.
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For the foregoing reasons, we dismiss State Auto’s appeal for failure to
name an indispensable party.
ALL CONCUR.
BRIEF FOR APPELLANT/
CROSS-APPELLEE:
BRIEF FOR APPELLEE/
CROSS-APPELLANT:
Richard J. Rinear
Cincinnati, Ohio
R. Craig Reinhardt
Lexington, Kentucky
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