Eberle v. Nationwide Mut. Ins. Co.
| Decision Date | 06 May 2016 |
| Docket Number | NO. 2013-CA-000898-MR,2013-CA-000898-MR |
| Parties | JACOB EBERLE, BY AND THROUGH HIS PARENTS, JOHN EBERLE AND JENNIFER EBERLE APPELLANTS v. NATIONWIDE MUTUAL INSURANCE CO. AND MICHAEL RAY BISHOP APPELLEES |
| Court | Kentucky Court of Appeals |
TO BE PUBLISHED
APPEAL FROM JEFFERSON CIRCUIT COURT
The events leading up to this appeal occurred on Monday, June 13, 2011, in Jefferson County, Kentucky. On that date, Jacob Eberle, who was twelve years old at the time, was playing in Bishop's neighborhood with a group of friends. Bishop, who was in his fifties, was at his home. The boys had been playing a game where they would ring the doorbells on houses and then run away before the occupants answered their doors.1
Eberle was struck with shotgun pellets in his back, neck and right arm while he was on the sidewalk in front of Bishop's home. It is undisputed that the shotgun pellets were fired by Bishop while he was standing on his porch. It is unclear, however, whether Bishop actually intended to fire his gun at Eberle.
Bishop was indicted on charges of assault in the first degree, wanton endangerment, and tampering with physical evidence. On July 26, 2012, Bishop pleaded guilty to class D felonies pursuant to North Carolina v. Alford, 400 U.S. 25, 91 S. Ct. 160, 27 L. Ed. 2d 162 (U.S. 1970). Bishop's plea agreement states:
The facts offered on the plea agreement stated as follows:
On or about June 13, 2011, in Jefferson County, the Defendant, while acting under extreme emotional disturbance, wantonly discharged a shotgun striking Jacob Eberle causing serious physical injury. Jack Riley was also present and placed at risk by the firing. The shell casing discharged from the shotgun was never found. Jacob Eberle and Jack Riley would testify that they never rang the defendant's doorbell nor set foot on his front porch.
The circuit court ultimately accepted Bishop's plea and sentenced him to ten years' imprisonment on the Alford plea.2
At the time of the June 2011 incident, Bishop held a homeowner's insurance policy through Nationwide. Bishop subsequently sought coverage for the June 2011 incident, under that homeowner's insurance. Consequently, a declaratory rights action was filed by Nationwide to determine the existence, if any, of insurance coverage under Bishop's homeowner's insurance policy, through Nationwide, for the June 2011 incident.
Of relevance, Bishop's homeowner's insurance policy with Nationwide provided in "Section II Liability Coverage," Nationwide agrees to "pay damages an insured is legally obligated to pay due to an 'occurrence'resulting from negligent personal acts or negligence arising out of ownership, maintenance, or use of real or personal property." An "occurrence" is defined in the policy as "bodily injury."
The policy also provided for certain exclusions for "bodily injury." Specifically, coverage for "bodily injury" is excluded when:
On November 14, 2012, Nationwide filed a motion for summary judgment arguing that Bishop's Alford plea constituted a criminal conviction/crime, meaning it owed Bishop no defense or indemnity. By Opinion and Order rendered April 23, 2014, the circuit court concluded no coverage existed under Bishop's homeowner's insurance policy for the June 13, 2011, incident and granted summary judgment in favor of Nationwide. The circuit court reasoned that Bishop "was charged with and convicted of a felony criminal offense in connection with the very actions for which he seeks coverage." The circuit court concluded that no issue of genuine material fact existed and deemed summary judgment appropriate.
This appeal followed.
The standard of review on appeal when a trial court grants a motion for summary judgment is "whether the circuit judge correctly found that there were no issues as to any material fact and that the moving party was entitled to a judgment as a matter of law." Pearson ex rel. Trent v. Nat'l Feeding Sys., Inc., 90 S.W.3d 46, 49 (Ky. 2002). "[T]he trial court must view the evidence in the light most favorable to the nonmoving party, and summary judgment should be granted only if it appears impossible that the nonmoving party will be able to produce evidence at trial warranting a judgment in his favor." Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480-82 (Ky. 1991).3
Here, the question before us is a purely legal one regarding coverage under an insurance policy. Our standard of review, therefore, is de novo. Dowell v. Safe Auto Ins. Co., 208 S.W.3d 872, 875 (Ky. 2006). Under de novo review, we owe no deference to the trial court's application of the law to the established facts. Grange Mutual Ins. Co. v. Trude, 151 S.W.3d 803, 810 (Ky. 2004).
An insurance policy is a contract. See State Farm Mut. Ins. Co. v. Fireman's Fund Am. Ins. Co., 550 S.W.2d 554, 557 (Ky. 1977). Generally speaking, two parties of equal bargaining power are free to contract to any terms and conditions they negotiate with one another; with few exceptions, our courts will not endeavor to rewrite such contracts for the benefit of one party or the other. See Frear v. P.T.A. Ind., Inc., 103 S.W.3d 99, 106 (Ky. 2003). Where the contract at issue involves insurance, however, our courts must carefully weigh the right to freely contract against the commercial realities and public policy concerns at issue. "Standard form insurance policies . . . are recognized as contracts of adhesion because they are not negotiated; they are offered to the insurance consumer on essentially a 'take it or leave it' basis without affording the consumer a realistic opportunity to bargain." Jones v. Bituminous Cas. Corp., 821 S.W.2d 798, 801-02 (Ky. 1991).
When interpreting contracts of insurance, we must consider the commercial reality that most such contracts between consumers and insurance companies do not contain negotiated terms. See Wehr Constr., Inc. v. Assurance Co. of Am., 384 S.W.3d 680, 687 (Ky. 2012). Given the disparity in bargaining power between consumer insureds and insurance companies, Kentucky has adopted "four basic principles of insurance policy construction." Brown v. Indiana Ins. Co., 184 S.W.3d 528, 541 (Ky. 2005).
The doctrine of reasonable expectations plays a critical role in how courts apply these rules. Ascertaining the objective and reasonable expectations of the insured guides the court in determining ambiguity from the outset. Estate of Swartz v. Metro. Prop. & Cas. Co., 949 S.W.2d 72, 76 (Ky. App. 1997). "Despite the apparent clarity of the [terms of the insurance] agreement, courts are nevertheless bound to look at an insured's reasonable expectations in deciding whether the insurance contract is ambiguous and what the contract means." Kentucky Employers' Mut. Ins. v. Ellington, 459 S.W.3d 876, 883 (Ky. 2015) (emphasis added). The gist of the reasonable expectations doctrine is that "the insured is entitled to all the coverage he may reasonably expect to be provided under the policy." Simon v. Cont'l Ins. Co., 724 S.W.2d 210, 212 (Ky. 1986) (quoting The Law of Liability Insurance, § 5.10B). Stated in more practical terms, "an insurance company should not be allowed to collect premiums by stimulating a reasonable expectation of risk protection in the mind of the consumer, and then hide behind a technical definition to snatch away the protection which induced the premium payment." Aetna Cas. & Sur. Co. v. Com., 179 S.W.3d 830, 837 (Ky.2005), as modified on reh'g (Jan. 19, 2006)(quoting Moore v. Commonwealth Life Ins. Co., 759 S.W.2d 598, 599 (Ky. App. 1988)).
Kentucky requires exclusions in insurance policies should be narrowly construed as to effectuate insurance coverage. Id. This does not mean, however, that "every doubt must be resolved against an insurance company nor does it change the mandate that the policy must receive a reasonable interpretation consistent with the parties' expression in the language of the contract." Pryor v. Colony Ins., 414 S.W.3d 424, 430 (Ky. App. 2013). The reasonable expectations doctrine "requires more than finding the existence of an ambiguity and, without considering the surrounding facts, ruling against the...
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