SANFORD WILLIAMS, ADMINISTRATOR OF THE ESTATE OF PAUL WILLIAMS V. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
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AS CORRECTED : JUNE 24, 2008
RENDERED : JUNE 19, 2008
TO BE PUBLISHED
2006-SC-000856-DG
SANFORD WILLIAMS,
ADMINISTRATOR OF THE ESTATE OF PAUL WILLIAMS
APPELLANT
ON REVIEW FROM COURT OF APPEALS
CASE NUMBER 2005-CA-001646
MENIFEE CIRCUIT COURT NO. 04-CI-90087
V.
STATE FARM MUTUAL
AUTOMOBILE INSURANCE COMPANY
APPELLEE
OPINION OF THE COURT BY JUSTICE SCHRODER
REVERSING AND REMANDING
This case involves a single-vehicle crash and the death of both occupants,
brothers . The issue on appeal involves whether or not the parents' underinsured motor
vehicle insurance (UIM) policy provided coverage to the passenger, or whether
coverage was excluded because the vehicle was "furnished" to and operated by a
family member who. resided in the house, for his regular use. We opine that under the
terms of this policy, there was coverage to the passenger because the vehicle was
"owned" by the driver (brother) and not "furnished" to the driver by the parents (policy
holders) .
Sanford Williams was the father of Paul and Aaron Williams . Sanford and his
wife owned
a 1986 Dodge Caravan, insured through State Farm Mutual Automobile
Insurance Company (State Farm), and other vehicles not in question . In 2002, Sanford
Williams' son, Aaron, purchased a 1987 Toyota pickup truck with his own money.
Aaron was a minor at the time and the dealer listed Sanford "or" Aaron as the owner of
the vehicle . State Farm does not contest Aaron's ownership of the pickup. Aaron
purchased a State Farm automobile policy in his own name and he was the only named
insured. Except for an occasional use by Sanford, Aaron was the only driver of the
pickup . Aaron's brother, Paul, was a full-time student at the University of Kentucky and
lived on campus. He did not have a vehicle on campus and when home, he had access
to other family vehicles, primarily a 1989 Nissan Sentra, which was also insured through
State Farm .
On Christmas Eve 2004, Aaron was driving his pickup with his brother, Paul, as a
passenger. A tragic accident occurred, which killed both brothers . Paul's estate filed a
claim with State Farm on Aaron's policy . State Farm paid the policy limits and that case
is not before
us.
Paul's estate also filed a claim against State Farm on his parents'
policy on the Dodge Caravan, which policy included Paul as a driver and carried
underinsurance coverage .
State Farm denied this claim based on an exclusion in the Dodge Caravan policy
which provided that underinsured coverage does not apply to a vehicle where the injury
occurred in a vehicle (the pickup), "[f]urnished for the regular use of you, your spouse or
any relative ." "Relative" is defined in the policy as being a person related to the policy
holder(s) who primarily resides with them, including unemancipated children . Aaron
was an unemancipated child who lived with his parents, the policy holders. Aaron was
unquestionably a "relative" of the policy holders (the parents) .
The issue with State Farm was whether the pickup was "furnished" to Aaron for
his regular use. State Farm contended the pickup was excluded because it was owned
by a relative (Aaron) that lived in the same house as the policy holders of the Caravan
(the parents) . The circuit court agreed and pointed to the exclusion in the Caravan
policy of underinsured vehicles furnished for the regular use of a relative, and concluded
that a vehicle owned by Aaron was furnished for his use .
The Court of Appeals affirmed the result in a 2-1 opinion . The majority
considered the estate's argument that the pickup was not "furnished" by the parents to
their son, because the son actually owned the pickup. The majority rejected this
argument, concluding that an ambiguity was not created in the policy by the omission of
the phrase "owned by" from the Caravan policy's definition of excluded vehicles for
purposes of underinsurance coverage. The majority opined :
The policy states that the vehicle is not an underinsured
vehicle if `furnished for the regular use of you or any family
member.' The common and ordinary understanding is that a
vehicle owned is one furnished for the owner's use. Whether
Aaron owned the pickup exclusively or jointly with his father,
it was for Aaron's use, therefore excluded under the
underinsured provision in the State Farm policy.
The dissent agreed with the estate that, because the pickup was "owned" by the driver
(Aaron), it was not "furnished" to the driver by the policy holders (the parents) .
We granted discretionary review to decide whether, under the Caravan policy's
definition of excluded vehicles for purposes of underinsurance coverage, a vehicle
"furnished" to a relative includes a vehicle "owned" by the relative not the policy holder .
In our opinion, a vehicle owned by a relative (Aaron) is not "furnished" to the relative
(Aaron) by the Caravan policy holders (the parents) . This case is similar to, but
distinguishable from, Murphy v. Kentucky Farm Bureau Mut Ins Co ., 116 S.W.3d 500
(Ky. App. 2003), cited by the appellee herein as controlling precedent. In Murphy, two
brothers were riding in a car owned by the mother when it was involved in a single-car
accident killing the passenger . The mother insured the vehicle with Kentucky Farm
Bureau Mutual Insurance Company (Farm Bureau) . The estate of the passenger filed a
claim against Farm Bureau for the driver's negligence . Farm Bureau paid the policy
limits and there was no issue as to liability on the mother's policy.
Murphy also involved another policy on another vehicle, which included
underinsurance motor vehicle (UIM) coverage. The brothers' step-father, with whom
they lived, together with their mother, owned a separate vehicle and also had a
separate insurance policy with Farm Bureau . As mentioned earlier, this separate policy
contained UIM coverage and the estate of the passenger filed a claim with Farm
Bureau . The Farm Bureau policy was similar to the State Farm policy in the present
case with one exception, it excluded coverage to relatives or "family members" (by
blood, marriage or adoption) living in the same household (which they did), if the
"underinsured motor vehicle" was "owned ,by or furnished or available for the regular
use of you or any `family member."' Id . at 501 . The issue in Murphy was whether this
regular-use exclusion was against public policy. The court held it was not.
In the case sub judice, we are again dealing with a regular-use exclusion
coverage issue, but with different language defining vehicles subject to the "relatives" or
"family members" regular use . The Farm Bureau policy in Murphy excluded vehicles
"[o]wned by or furnished or available" for the regular use of family members . The State
Farm policy excludes only vehicles "furnished" to a relative for the regular use of a
relative.
State Farm does not see a difference in the language of the Murphy policy and
the language of it's policy herein, relying on the Court of Appeal's language that, "[t]he
common and ordinary understanding is that a vehicle owned is one furnished for the
owner's use ." In Kentucky Assn of Counties All Lines Fund Trust v. McClendon , 157
S.W.3d 626,630 (Ky. 2005), this Court recognized that terms in insurance contracts
have no technical meaning in law and must be given their plain meaning, according to
the usage of the average man . This Court has not previously analyzed the difference in
the meaning of "owned" and "furnished" in the two policies. However, the Louisiana
Court of Appeals, Second Circuit, has considered the meanings in two similar policies in
Hortman v. State Farm Mut. Ins . Co., 823 So. 2d 1048,1052 (La. Ct. App. 2002) and
concluded :
[T]hat a vehicle owned by a person cannot fairly be said to
be "furnished" for that person's use. In some insurance
policies, this exception is written to exclude vehicles "owned
by or furnished for the regular use of" a person, but the State
Farm policy at issue in this case does not exclude vehicles
"owned by" a person. The term "furnished" means that some
other person or entity is the owner of the vehicle and is
permitting another to use the vehicle, and that is not the
case here .
We agree with this rationale . A vehicle (the pickup) "owned" by the relative
(Aaron/driver) in State Farm's Caravan policy is not a vehicle "furnished" by the policy
holders (the parents) to the relative. Therefore, the Estate of Paul Williams is entitled to
UIM coverage under the Caravan policy.
For the foregoing reasons, the opinion of the Court of Appeals is reversed and
the matter remanded to the Menifee Circuit Court for further proceedings consistent with
this opinion .
All sitting . All concur.
COUNSEL FOR APPELLANT:
William D. Nefzger
Bahe, Cook, Cantley & Jones, PLC.
239 South Fifth Street,
Suite 700.
Louisville, KY 40202
COUNSEL FOR APPELLEE:
E . Douglas Stephan
Sturgill, Turner, Barker & Moloney, PLLC .
333 East Vine Street
Suite 400,
Lexington, KY 40507
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2006-SC-000856-DG
SANFORD WILLIAMS,
ADMINISTRATOR OF THE ESTATE OF PAUL WILLIAMS
V.
APPELLANT
ON REVIEW FROM COURT OF APPEALS
CASE NUMBER 2005-CA-001646
MENIFEE CIRCUIT COURT NO. 04-CI-90087
STATE FARM MUTUAL
AUTOMOBILE INSURANCE COMPANY
APPELLEE
ORDER
On the Court's own motion, the Opinion of the Court rendered June 19, 2008,
shall be corrected on page 4, correcting a reference to the Kentucky Court of Appeals.
Pages 1 and 4 shall be substituted, as attached hereto, in lieu of pages 1 and 4 of the
Opinion as originally rendered . Said correction does not affect the holding .
ENTERED : JUNE
2 4 , 2008.
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