SEAN E. TAYLOR v. AMERICAN INDEPENDENT INSURANCE CENTERS, INC.; MUTUAL SERVICE CASUALTY INSURANCE COMPANY; AND DIRECT GENERAL INSURANCE AGENCY OF KENTUCKY, INC.
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RENDERED: November 22, 2000; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1999-CA-002861-MR
SEAN E. TAYLOR
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE JAMES M. SHAKE, JUDGE
ACTION NO. 98-CI-002439
v.
AMERICAN INDEPENDENT INSURANCE CENTERS, INC.;
MUTUAL SERVICE CASUALTY INSURANCE COMPANY;
AND DIRECT GENERAL INSURANCE AGENCY OF
KENTUCKY, INC.
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
GUDGEL, CHIEF JUDGE, BARBER, AND SCHRODER, JUDGES.
SCHRODER, JUDGE:
Sean E. Taylor appeals from an order of the
Jefferson Circuit Court granting summary judgment to appellees,
American Independent Insurance Centers, Inc., Mutual Service
Casualty Insurance Company, and Direct General Insurance Agency
of Kentucky, Inc.
Having determined that no genuine issue of
material fact exists and that appellees are entitled to judgment
as a matter of law, we affirm the judgment of the Jefferson
Circuit Court.
In the morning of December 23, 1997, Taylor went to
American Independent Insurance Centers, Inc. (American), located
in Louisville, Kentucky, for the purpose of obtaining insurance
on his 1994 Toyota Corolla.
American is an independent agency
which obtains policies from different insurance companies.
Taylor had called American earlier, was given a quote over the
phone, and told he would need to bring a down payment of $389.12
with him for the insurance.
When Taylor went to American on
December 23, 1997, he was assisted by customer service
representative Carla Washington.
Washington informed Taylor that
his insurance would be through Direct.
(Appellee's brief
indicates that Direct General Insurance Agency of Kentucky, Inc.
is the managing general agent for Mutual Service Casualty
Insurance Company.)
Washington filled out an application for
insurance for Taylor, which showed that the policy was effective
as of December 23, 1997.
Washington also filled out a finance
agreement, entitled "20/27 Day Payment Plan" which reflected a
total price of $3110.37, less a down payment of $389.12 "DUE
NOW", leaving $2721.25 as the amount financed.
The finance
agreement was signed by Taylor, and showed a policy effective
date of December 23, 1997.
payment with Taylor.
Washington did not discuss the down
It appears from the record that Taylor was
in a hurry, and Washington forgot to ask for the down payment,
and that Taylor forgot or did not offer to pay it.
Washington then gave Taylor "Commonwealth of Kentucky
Proof of Insurance" cards, showing that Taylor was insured
through Mutual Service Casualty Insurance Company effective
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December 23, 1997, along with a copy of the finance agreement,
after which Taylor left.
In her deposition testimony, Washington
stated that, shortly after Taylor left, she realized that she had
not taken Taylor's down payment.
Washington's co-worker,
customer service agent Deborah Freemont, then called Taylor's
mother, which was the number he had listed, and told her that
Taylor did not have coverage because he had not made his down
payment.
Washington testified that Taylor's mother said that she
would let Taylor know.
In the late afternoon of December 23, 1997, Taylor
began driving the 1994 Toyota Corolla from Louisville to Dayton,
Ohio to attend a Christmas party.
According to Taylor's
deposition testimony, after perhaps an hour into the drive he
received a phone call on his cell phone from his mother, who told
him that an American agent had called her and said something to
the effect that she (the agent) had forgotten to get the down
payment from him or that he didn't give her the money.
Taylor
told his mother that he was already out of Louisville, and that
he would have to give them the money when he got back.
Taylor
stated that his mother did not relay any messages concerning
coverage.
Shortly after receiving the phone call, while traveling
north on I-71 towards Cincinnati, Taylor fell asleep at the wheel
and collided with another vehicle.
Taylor was taken to a
Carrollton hospital, and Taylor's vehicle and the vehicle which
he hit both sustained damage.
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On December 29, 1997, Taylor returned to American's
office, and paid the $389.12 down payment by money order, and a
new finance agreement, entitled 20/27 Day Payment Plan, was
executed.
The new finance agreement, signed by Taylor, showed an
effective policy date of December 29, 1997, and the date on
Taylor's December 23, 1997 application was altered to reflect an
effective date of December 29, 1997.
No new insurance cards were
issued.
It is unclear when and to whom Taylor first reported
the December 23, 1997 accident.
Taylor could not recall if he
informed American of the accident when he was there on
December 29.
Robin Yates, a claims adjuster with Direct,
testified that she first became aware of the claim on January 26,
1998.
Yates subsequently informed Taylor that Direct was not
responsible for any damages or injuries resulting from the
December 23, 1997 incident, as his policy/coverage did not go
into effect until December 29, 1997 when he paid the down
payment.
On May 5, 1998, Taylor filed a complaint in Jefferson
Circuit Court, naming as defendants, American, Mutual, and
Direct.
Taylor's complaint alleged that appellees failed to
provide the benefits to which he was entitled under the insurance
policy and acted in violation of Kentucky's unfair claims
settlement practices statute, KRS 304.12-230.
On May 13, 1999,
American filed a motion for summary judgment.
On October 5,
1999, the court entered an order granting American's motion.
October 7, 1999, Mutual and Direct moved the court to dismiss
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On
Taylor's complaint against them by reason of the summary judgment
order entered by the court on October 5, 1999.
The motion was
granted on October 12, 1999, and this appeal followed.
On appeal, Taylor argues that the trial court erred in
granting summary judgment to appellees, as there was a question
of material fact as to whether he was covered at the time of the
accident on December 23, 1997.
Taylor contends that the
obligation he incurred by signing the finance agreement was
sufficient consideration to form an insurance contract, and
having issued written proof of coverage, or at least proof of a
binder, American was obligated to follow certain statutory
procedures to cancel the policy, which they did not.
Additionally, Taylor presents arguments based on principles of
waiver and estoppel.
In granting summary judgment to appellees, the trial
court found that the down payment was a condition precedent to
the insurance coverage, based on the doctrine of reasonable
expectations.
Although we agree with the trial court that
summary judgment was proper, we reach this conclusion on
different grounds.
The reasonable expectations doctrine is
applicable only where the policy at issue is ambiguous.
Continental Ins. Co., Ky., 724 S.W.2d 210 (1986).
Simon v.
Unlike the
trial court, we see no ambiguity in the finance agreement or the
application regarding the down payment.
Rather, we believe the
documents show plainly on their face that the down payment is a
condition precedent to insurance coverage.
The finance agreement
states in two places that the down payment is "DUE NOW".
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The
application states, "DOWN PAYMENT FROM INSURED MUST BE SUBMITTED
WITH APPLICATION" and contains a section entitled "APPLICANT'S
STATEMENT - READ BEFORE SIGNING", which states "I further agree
that if my down payment or full payment check is returned by the
bank because of non-sufficient funds, coverage will be null and
void from inception."
Further, Taylor stated in his deposition
testimony that he had been told on the phone by American that he
would need to bring the $389.12 down payment with him to get the
insurance.
Hence, it is clear that the parties agreed that the
down payment was a condition precedent to the creation of the
insurance contract, and as such condition did not occur, no
insurance contract was formed on December 23, 1997.
We believe
that the condition failed to occur due to a mutual mistake of the
parties - Washington forgot to ask for the down payment, and,
accepting Taylor's version of the facts as true, he was in a
hurry and forgot to pay it.
The parties subsequently recognized
the mistake, as demonstrated by the parties’ execution of the new
finance agreement and modified the application by mutual
agreement on December 29, 1997.
See, Transport Insurance Co. v.
Ford, Ky. App., 886 S.W.2d 901 (1994).
It is the December 29,
1997 documents, on which date Taylor tendered the down payment
and an insurance contract was thereby created showing a policy
effective date of December 29, 1997, which control the
expectations and obligations of the parties.
Id.; see also, MFA
Mutual Insurance Co. v. Black, Ky., 441 S.W.2d 134 (1969).
Having determined that no contract was formed on December 23,
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1997, it follows that no coverage existed for the December 23,
1997 accident.
Further, as no contract was formed on December 23
1997, appellees were not required to follow statutory
requirements regarding cancellation of insurance policies, nor
did appellees' actions constitute a prohibited retroactive
annulment.
KRS 304.20-030; KRS 304.20-040.
Taylor cites Republic Life and Accident Ins. Co. v.
Hatcher, 244 Ky. 574, 51 S.W.2d 922 (1932) for the proposition
that American's acceptance of the payment plan as consideration
for insurance is binding on the parties even though the
application called for a cash down payment.
Republic involved a
life insurance policy which called for payment of the premium on
or before the delivery of the policy.
When the policy was
delivered on July 1, the insured gave the agent a check postdated July 10, which was accepted by the agent who had the
authority to do so.
The insured died July 9.
In finding that
the policy was in force, the court held that the acceptance of
the check by an authorized agent was binding on the parties, even
though the contract called for a cash payment.
Hence, we believe
Republic can be readily distinguished from the instant case, as
there was no such offer and acceptance of an alternate form of
consideration.
Taylor further argues that by accepting the finance
agreement without discussing the down payment, and by issuing
proof of insurance cards, appellees waived any claim to lack of
consideration.
We disagree.
Waiver involves the "voluntary and
intentional relinquishment of a known, existing right or power
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under the terms of an insurance contract."
Edmondson v.
Pennsylvania National Mutual Casualty Insurance Co., Ky., 781
S.W.2d 753, 755 (1989), quoting Long, The Law of Liability
Insurance, § 17.14.
See also, Howard v. Motorists Mutual
Insurance Co., Ky., 955 S.W.2d 525 (1997).
Having determined
that no contract existed on December 23, 1997, the doctrine of
waiver does not apply.
Further, it is clear that appellees did
not knowingly and intentionally relinquish the right to receive
the down payment as a condition precedent to insurance coverage,
particularly in light of the fact that American immediately tried
to contact Taylor as soon as it was discovered that the down
payment had not been made.
Taylor finally argues that the appellees should be
estopped from denying the existence of insurance coverage, as he
reasonably relied on appellees' representations that he was
covered.
A party seeking estoppel must prove the following
elements:
(1) Conduct, including acts, language and
silence, amounting to a representation or
concealment of material facts; (2) the
estopped party is aware of these facts; (3)
these facts are unknown to the other party;
(4) the estopped party must act with the
intention or expectation his conduct will be
acted upon; and (5) the other party in fact
relied on this conduct to his detriment.
Gray v. Jackson Purchase Production Credit Association, Ky. App.,
691 S.W.2d 904, 906 (1985).
Accepting Taylor's version of the facts as true,
although questions of material fact could arguably exist
regarding some of the above factors, with regard to the third
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factor in particular, there was no evidence presented to indicate
that Taylor did not know that he was required to make the down
payment.
To the contrary, Taylor's own testimony showed that he
knew that a down payment was required:
Q. Now did she explain to you the payment
plan?
A.
I can't remember.
Q. Did she tell you anything about making a
payment?
A. Not then or I would have gave her the
money. I got on the phone and called up
there earlier and asked them how much the
down payment was, and I brought it with me.
Q.
They gave you a quote over the phone?
A.
Yes.
Q. She did not ask you for the payment or
did not mention anything at all about the
payment when you were there?
A.
No.
Q.
Did you offer the payment?
A.
No.
. . . .
Q. Now when you went out there on the 23rd,
you had phoned around prior to that and
gotten some quotes?
A.
Yes.
Q. And you knew when you went out there on
the 23rd that you needed three hundred and
eighty-nine dollars and twelve cents as a
down payment for this insurance coverage?
A.
Yes.
Q. You understand that insurance coverage is
not free.
A.
Yes.
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Q.
And you had that in your pocket?
A.
Yes.
Q.
Cash money?
A.
Cash.
As Taylor cannot establish that he was unaware that the
down payment was required to effect coverage, he cannot establish
the elements of estoppel.
We further note that Taylor had no
prior dealings with appellees, and hence could not justify any
expectation that appellees would accept a late down payment and
issue retroactive coverage.
See, Howard, 955 S.W.2d 525.
The standard of review of a trial court’s granting of
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, Ky. App., 916 S.W.2d 779, 781 (1996).
We are
to view the record in the light most favorable to the party
opposing the motion and resolve all doubts in its favor.
Steelvest, Inc. v. Scansteel Service Center, Inc., Ky., 807
S.W.2d 476, 480 (1991).
Having viewed the record in the light
most favorable to Taylor, and having determined that no genuine
issue of material fact exists, appellees were properly entitled
to summary judgment as a matter of law.
The judgment of the Jefferson Circuit Court is
affirmed.
ALL CONCUR.
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BRIEF FOR APPELLANT:
BRIEF FOR APPELLEES, MUTUAL
SERVICE CASUALTY INSURANCE
COMPANY AND DIRECT GENERAL
AGENCY OF KENTUCKY, INC.:
Robert M. Klein
Louisville, Kentucky
Michael J. Darnell
Louisville, Kentucky
BRIEF FOR APPELLEE, AMERICAN
INDEPENDENT INSURANCE CENTERS,
INC.:
Ridley M. Sandidge, Jr.
Lynn K. Fieldhouse
Louisville, Kentucky
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