TONYA J. SHEEHAN and KEVIN C. SHEEHAN V. STATE AUTOMOBILE MUTUAL INSURANCE COMPANIES
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RENDERED:
February 27, 1998; 10:00 a.m.
NOT TO BE PUBLISHED
NO. 96-CA-3314-MR
TONYA J. SHEEHAN and
KEVIN C. SHEEHAN
APPELLANTS
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE THOMAS J. KNOPF, JUDGE
ACTION NO. 95-CI-2950
V.
STATE AUTOMOBILE MUTUAL
INSURANCE COMPANIES
APPELLEE
OPINION AFFIRMING
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BEFORE:
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DYCHE, HUDDLESTON, and MILLER, Judges.
DYCHE, JUDGE.
We have examined the record of the trial court, and
the briefs of the parties herein.
We agree with appellee that the
learned trial judge correctly and completely set out the applicable
facts and law in his opinion, and we adopt it as our own.
BACKGROUND SUMMARY
Tonya J. Sheehan was seriously injured
in an automobile accident on October 8,
1994.
At that time, she had an
automobile liability policy issued by
State Auto, covering a 1989 Nissan and a
1982 Chevrolet vehicle.
The Nissan
vehicle was involved in the accident.
The tortfeasor's liability insurer paid
Mrs. Sheehan its bodily injury policy
limit of $25,000.
Mrs. Sheehan's policy with State Auto
contained both uninsured motorist ("UM")
and
underinsured
motorist
("UIM")
coverage of $100,000 per person/$300,000
per accident.
State Auto paid Mrs.
Sheehan $100,000 in UIM benefits, and
brought this action on May 26, 1995,
seeking a declaration as to whether or
not she is entitled under the policy to
stack the UIM coverage for an additional
$100,000 if required for uncompensated
injuries.
On June 7, 1995, Mrs. Sheehan and her
husband, Kevin C. Sheehan, filed a
counterclaim against State Auto, alleging
bad faith and violation of the Unfair
Claims Settlement Practices Act.
On June 21, 1996, State Auto filed a
motion for summary judgment on the legal
issue of whether the policy provides for
stacking of UIM coverage or limits UIM
coverage to $100,000. On July 1, 1996,
the Sheehans filed a response to State
Auto's summary judgment motion.
State
Auto filed a reply thereto on July 8,
1996, and the Sheehans filed a subsequent
reply on July 18, 1996. On July 23, 1996
State Auto filed its last reply.
OPINION
State Auto argues that Mrs. Sheehan is
limited to a single recovery of $100,000
in UIM benefits under the policy, which
it has already paid. The basis for State
Auto's argument is its "per policy"
instead of "per vehicle" charge for UIM
coverage.
The Sheehans argue that where there is
a
single
policy
insuring
multiple
vehicles, Kentucky law allows stacking of
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the UIM coverage limits notwithstanding
any anti-stacking policy provision.
The Court agrees with the Sheehans
that Kentucky courts have held antistacking provisions invalid in policies
regarding items of UM and UIM coverage
for which an insured has paid separate
premiums.
See Hamilton v. Allstate
Insurance Company, Ky., 789 S.W.2d 751
(1990) and Allstate Insurance Company v.
Dicke, Ky., 862 S.W.2d 327 (1993).
As stated in Dicke, 862 S.W.2d at 329,
a reasonable expectation of multiple
coverage arises when separate items of
"personal"
insurance
(such
as
UIM
coverage) are bought and paid for, and it
is contrary to public policy to deny the
insured such purchased coverage.
In this present action, State Auto
argues that the Sheehans paid just one
premium for UIM coverage and thus, there
could not have been any reasonable
expectation on their part for multiple
coverage. Effective June 6, 1994, State
Auto began charging a "per policy" rather
than a "per vehicle" rate for UM and UIM
coverage.
From the exhibits to the parties'
various memoranda, Mrs. Sheehan began to
insure her 1989 Nissan through State Auto
beginning in October of 1992.
She was
initially listed as the only driver on
the policy. Mr. Sheehan's name appears
on the policy beginning with the policy
period of January 2, 1993, but "N/A" is
provided where his driver's license
number should be.
Mrs. Sheehan paid a $6.00 of $7.00
premium for UIM coverage until July of
1994, when the premium was increased to
the per policy rate of $14.00 according
to the renewal declarations sheet for the
policy period from July 2, 1994 to
October 2, 1994.
Her premium for this
policy period was $190.91. The premium
was $185.55 for the prior policy period
of April 2, 1994 to July 2, 1994.
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The declarations sheet for the policy
period from July 2, 1994 to October 2,
1994 was amended effective August 9, 1994
to add a second vehicle, i.e., the 1982
Chevrolet, to the policy. According to
Mrs.
Sheehan's
January
18,
1996
deposition, her husband got his license
back in May of 1994 after a prior DUI
conviction and he brought a vehicle in
August of 1994 (pp.14-15).
The per policy rate of $14.00 for UIM
coverage of $100,000/$300,000 did not
increase when the second vehicle was
added
in
August
of
1994.
The
declarations sheets in the record also
show that the per policy rate of $14.00
for UIM coverage of $100,000/$300,000 did
not decrease when the Nissan vehicle was
dropped
from
the
policy,
effective
October 9, 1994, leaving only the
Chevrolet vehicle covered under the
policy.
In order to stack UIM coverage under a
single multi-vehicle policy, there must
be a reasonable expectation of multiple
coverage on the part of the insured.
With the "per policy" charge for UIM
coverage under their State Auto policy,
there
was not a payment of separate
premiums
by
the
Sheehans.
This
distinguishes the instant case from
Hamilton and Dicke, where the insured
paid additional premiums and thus had a
reasonable
expectation
of
increased
coverage.
The Sheehans argue that they had such
a
reasonable
expectation
due
to
handwritten figures on a declarations
sheet (premium notice) they received
through the mail from State Auto.
According to Mrs. Sheehan's deposition
testimony, she received said notice in
mid-September of 1994 (p. 22), and this
was the first premium notice that she
recalled receiving from State Auto that
had handwritten numbers on it (p. 22).
The document at issue is a
declarations sheet covering the policy
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period from October 2, 1994 to January 2,
1995.
It has the per policy rate of
$14.00 for UIM coverage of $100,000/
$300,000 printed on it.
It also has a
handwritten figure of 7 next to the
printed UIM per policy rate of $14.00 and
each printed total per auto is increased
by $7.00 to get a handwritten figure per
auto.
The Sheehans' State Auto policy was
procured through Old Colony Insurance
Services, Inc. ("Old Colony"). According
to the November 16, 1995 deposition
testimony
of
Charles
McHolan,
the
corporate claims manager for Old Colony,
the
handwritten
numbers
on
the
declaration sheets were something done by
an employee in Old Colony's office (p.
26) because of the accounting system on
its computer (p. 12).
Mr. McHolan testified that it was an
internal breakdown for the Old Colony
computer system (p. 13), it was only for
Old Colony's internal use (pp. 11, 13 and
16), and no one, except for an employee
at Old Colony, should have seen it (p.
13).
He further testified that it was
not anything that was sent out to any
client or customer (p. 16), and that
State Auto bills the customers directly
and not Old Colony (p. 27).
The declarations sheet in question
seems to be a copy of the "Agent Copy"
which was in Old Colony's file and is an
exhibit to Mr. McHolan's deposition.
Said
file
exhibit
shows
that
the
declarations sheets used as the "Agent
Copy" for Old Colony are in a different
format than the declarations sheets sent
to the Sheehans as their premium notice.
A copy of the declarations sheet (premium
notice) for the policy period of October
2, 1994 to January 2, 1995 is also an
exhibit to Mr. McHolan's deposition.
Even assuming that in September of
1994
the
Sheehans
were
sent
the
declarations sheet with the handwritten
notations for the policy period of
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October 2, 1994 to January 2, 1995, such
cannot be said to [be] a basis for a
reasonable expectation on their part of
multiple UIM coverage under the State
Auto policy. Mrs. Sheehan stated in her
deposition that the handwritten notations
thereon really did not mean anything to
her (pp. 27 and 31).
Furthermore, the initial declarations
sheet for the prior policy period from
July 2, 1994 to October 2, 1994, which
covered only the Nissan vehicle, showed a
per policy rate of $14.00 for $100,000/
$300/000 UIM coverage. This declarations
sheet was amended when the second vehicle
was added in August of 1994, and it
showed the same per policy rate of $14.00
for
the
same
UIM
coverage.
No
handwritten notations were on these
declarations sheets (premium notices).
Therefore the
following Order:
Court
enters
the
ORDER
IT IS HEREBY ORDERED AND ADJUDGED that
the motion for summary judgment brought
by Plaintiff, State Automobile Mutual
Insurance Companies, is GRANTED as the
underinsured motorist coverage under the
insurance policy issued to Defendants,
Tonya J. Sheehan and Kevin C. Sheehan,
was limited to the sum of $100,000 at the
time of the October 8, 1994 automobile
accident.
The judgment of the Jefferson Circuit Court is affirmed.
ALL CONCUR.
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BRIEF FOR APPELLANTS
BRIEF FOR APPELLEE
Thomas H. Hughes
Louisville, Kentucky
John G. Crutchfield
Louisville, Kentucky
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