LITTLE (CARL D.) VS. KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY, ET AL.
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RENDERED: AUGUST 20, 2010; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2009-CA-001030-MR
CARL D. LITTLE
v.
APPELLANT
APPEAL FROM KNOTT CIRCUIT COURT
HONORABLE KIMBERLY CORNETT CHILDERS, JUDGE
ACTION NO. 05-CI-00309
KENTUCKY FARM BUREAU MUTUAL
INSURANCE COMPANY, BETH CLEMONS,
AND MICHAEL R. FANNIN INSURANCE, INC.
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: NICKELL AND STUMBO, JUDGES; WHITE,1 SENIOR JUDGE.
NICKELL, JUDGE: Carl D. Little appeals from summary judgments entered in
favor of Kentucky Farm Bureau Mutual Insurance Co., Beth Clemons, and
Michael R. Fannin Insurance, Inc. Little argues the trial court erred by concluding
1
Senior Judge Edwin White sitting as Special Judge by assignment of the Chief Justice pursuant
to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statutes (KRS) 21.580.
there is neither statutory duty nor a common law or fiduciary duty to provide a
specific amount of underinsured coverage. We affirm.
Little was involved in an automobile accident. Prior to the accident,
he had purchased an automobile insurance policy from Beth Clemons, who was
acting as an agent for Michael R. Fannin Insurance and Farm Bureau. The policy
provided liability limits of $100,000 per person and $300,000 per accident. The
policy contained underinsured limits of $25,000 per person and $50,000 per
accident. Little alleges he requested underinsured coverage up to the liability
limits.
Little brought suit against the tortfeasors and against Farm Bureau for
underinsured benefits. Little settled his claim against the tortfeasors for the policy
limits and then amended his complaint to assert negligence and vicarious liability
claims against Clemons and Fannin Insurance for failing to provide him the
underinsured coverage he requested. Little asserted that Farm Bureau, Fannin
Insurance, and Clemons breached statutory, common law, and fiduciary duties by
failing to sell him the underinsurance coverage he requested. Farm Bureau filed a
motion for summary judgment on December 30, 2008, asserting it had no statutory
duty to sell any particular amount of underinsurance coverage. The trial court
granted summary judgment in favor of Farm Bureau holding there is no statutory
duty to sell a specific amount of underinsured coverage. Subsequently, Fannin
Insurance and Clemons filed a motion for summary judgment on February 11,
2009. Following a hearing, the trial court granted summary judgment to Clemons
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and Fannin Insurance again holding there is no statutory duty to sell a specific
amount of underinsured coverage. The order reserved ruling on Little’s common
law and fiduciary duty claims. Finally, Farm Bureau filed a motion for summary
judgment asserting it had no common law or fiduciary duty to sell any particular
amount of underinsurance coverage. This motion was joined by Fannin Insurance
and Clemons. The trial court granted summary judgment in favor of Farm Bureau,
Clemons, and Fannin Insurance holding there is no common law or fiduciary duty
to sell a specific amount of underinsured coverage. Little filed a motion to alter,
amend, or vacate the summary judgments which the trial court denied. This appeal
followed.
Little first argues KRS 304.39-320(2) imposes a duty upon insurers to
provide a specific amount of requested underinsured coverage. We disagree.
KRS 304.39-320(2) provides:
Every insurer shall make available upon request to its
insureds underinsured motorist coverage, whereby
subject to the terms and conditions of such coverage not
inconsistent with this section the insurance company
agrees to pay its own insured for such uncompensated
damages as he may recover on account of injury due to a
motor vehicle accident because the judgment recovered
against the owner of the other vehicle exceeds the
liability policy limits thereon, to the extent of the
underinsurance policy limits on the vehicle of the party
recovering.
Questions involving statutory construction are reviewed de novo. Bob
Hook Chevrolet Isuzu, Inc. v. Commonwealth, Transp. Cabinet, 983 S.W.2d 488,
490-91 (Ky. 1998).
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Little maintains Farm Bureau2 should have sold him a policy of
underinsured coverage at the limits he requested because he was willing to pay a
reasonable premium for such coverage. This is not a case where he alleges he
actually purchased a policy and paid the premiums, but was denied benefits. Little
concedes there is nothing in KRS 304.39-320(2) requiring insurers to provide a
specific amount of underinsured coverage, but maintains caselaw interprets the
statute to contain such a duty.
Little correctly states KRS 304.39-320(2) requires insurers to make
underinsured coverage available if requested. Allstate Ins. Co. v. Dicke, 862
S.W.2d 327, 328-29 (Ky. 1993). However, nothing in Dicke states or even
suggests insurers are required to provide underinsured coverage under terms
unilaterally set by the request of the insured. The insurer is only required to
provide underinsured coverage, if requested, under “such terms and conditions not
. . . inconsistent with the section of the statute.” Id. at 329. Again, we discern
nothing in Dicke requiring insurers to provide a specific amount of underinsured
coverage.
Little next argues Farm Bureau violated a common law duty to
provide him with the specific amount of insurance he requested. Little premises
the duty upon Mullins v. Commonwealth Life Ins. Co., 839 S.W.2d 245, 248 (Ky.
1992), which states:
2
Because Little’s arguments on appeal each concern the appellees as a whole, we will
henceforth refer to appellees collectively as “Farm Bureau” for the sake of clarity.
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An insurance agent ordinarily only assumes those duties
found in an agency relationship. An agent owes his
principal the obligation to deal in good faith and to carry
out the principal's instructions. Other jurisdictions have
found that, generally, an insurer may assume a duty to
advise an insured when: (1) he expressly undertakes to
advise the insured; or (2) he impliedly undertakes to
advise the insured. The insured has the burden of
proving that the insurer assumed such a duty.
An implied assumption of duty may be present when: (1)
the insured pays the insurance agent consideration
beyond a mere payment of the premium; (2) there is a
course of dealing over an extended period of time which
would put an objectively reasonable insurance agent on
notice that his advice is being sought and relied on; or (3)
the insured clearly makes a request for advice.
(Internal citations omitted).
In the present case, Little admitted Farm Bureau told him he would
not be sold underinsured coverage at the limits he requested. Little also admitted
he knew the limits were not the limits he requested prior to the accident underlying
this case. Little’s reliance on Grigsby v. Mountain Valley Ins. Agency, Inc., 795
S.W.2d 372, 375 (Ky. 1990), is of no moment as Grigsby is distinguishable from
the current situation. In Grigsby, the Court held an insurer could be held liable
because it failed to provide fire insurance for a particular piece of property and
instead insured a different property. In Grigsby, the insured did not receive the
policy bargained for and instead received a different unnecessary policy. In this
case, Little knew he would be not be sold a policy at the limits he requested. In
Brewer v. National Indem. Co., 163 S.W.3d 885, 886 (Ky. 2005), the Court simply
held an insured may proceed against the insurer “pursuant to the bargained-for
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agreement entered into by the parties.” Here, it is undisputed there was no
agreement by the parties. Underinsured policies are contractual in nature.
Schwartz v. Hasty, 175 S.W.3d 621, 628 (Ky. App. 2005). Therefore, Little may
not unilaterally dictate the terms of coverage or Farm Bureau’s acceptance of his
terms.
Accordingly, the judgments of Knott Circuit Court are affirmed.
ALL CONCUR.
BRIEFS FOR APPELLANT:
Nicholas C. A. Vaughn
Somerset, Kentucky
BRIEF FOR APPELLEE,
KENTUCKY FARM BUREAU
MUTUAL INSURANCE
COMPANY:
Deborah R. Lewis
Hazard, Kentucky
BRIEF FOR APPELLEES,
MICHAEL R. FANNIN
INSURANCE, INC. AND
BETH CLEMONS:
Marcia L. Wireman
Jackson, Kentucky
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