Independence Bank v. Welch
| Decision Date | 16 December 2021 |
| Docket Number | 2019-SC-0192-DG |
| Citation | 636 S.W.3d 528 |
| Parties | INDEPENDENCE BANK, c/o Paul Bradford and Michael Burns, Trust Officers, as the Limited Guardian and Limited Conservator of Anthony W. Noel, Appellant v. Trevor WELCH in His Official Capacity as an Employee, Servant, and/or Agent of Lexington-Fayette Urban County Government and/or Lexington-Fayette Urban County Government Division of Police; Lexington-Fayette Urban County Government Division of Fleet Service; Lexington-Fayette Urban County Government Division of Police; and Lexington-Fayette Urban County Government, Appellees |
| Court | United States State Supreme Court — District of Kentucky |
COUNSEL FOR APPELLANT: David Todd Varellas, Sandra Motte Varellas, Lexington, Varellas & Varellas.
COUNSEL FOR APPELLEES: Jason Scott Morgan, Lexington, Alexander William Wilcox, Ward, Hocker & Thornton, PLLC.
COUNSEL FOR AMICUS CURIAE, KENTUCKY JUSTICE ASSOCIATION: Kevin Crosby Burke, Louisville, Burke Neal PLLC.
Anthony W. Noel was seriously injured in a collision between his bicycle and a police cruiser driven by Trevor Welch, a Lexington police officer and employee of the Lexington-Fayette Urban County Government (LFUCG). He filed suit against Welch in his individual and official capacities and against LFUCG and two of its divisions. The LFUCG defendants moved for dismissal, asserting, among other things, sovereign immunity as protection from civil judgments and the costs and burdens of defending such actions. Noel countered that LFUCG's purchase of a retained-limit insurance policy, purchased for coverage beyond the limits of its self-insurance policy, waived sovereign immunity up to policy limits. The trial court disagreed, concluding that the LFUCG defendants are entitled to sovereign immunity and dismissing all claims against them. The Court of Appeals affirmed. On discretionary review, we consider these insurance policies in light of Kentucky Revised Statute (KRS) 67.180, which authorizes counties to purchase liability insurance, to determine whether a waiver of sovereign immunity exists and, if so, to what extent. Finding the statute and legislative intent clear, we affirm the Court of Appeals, although with a different legal analysis.
On November 23, 2016 Noel was riding a bicycle against traffic in Lexington, Kentucky. Officer Welch, employed as a police officer by LFUCG, turned his LFUCG-owned police car in front of Noel. As a result, Noel collided with the driver's side door of Officer Welch's cruiser, fell, and sustained serious physical injuries. On July 11, 2017 Noel filed a negligence action against Welch in both his individual and official capacities, LFUCG, LFUCG Division of Police and LFUCG Division of Fleet Service (collectively "LFUCG defendants"). Noel demanded no-fault personal injury protection benefits and compensatory and punitive damages.
In discovery LFUCG produced insurance policy documents that outlined its self-insurance policy and its retained-limit policy. The self-insurance policy provides coverage to LFUCG and its employees, officers and agents for comprehensive general and automobile liability. The policy specifically covers personal injury claims "arising out of the ownership, maintenance or use of any [LFUCG] automobile." LFUCG maintains a self-insurance fund for the costs of defense and for any legal obligation to pay on various claims. LFUCG also has a retained-limit policy issued by American Alternative Insurance Corporation (AAIC), which provides excess insurance. This coverage only comes into effect after the retained limit is exhausted in full by the self-insurance policy.
The LFUCG defendants moved for dismissal, arguing Noel had failed to state a claim and asserting sovereign immunity as protection from civil judgments and the costs and burdens of defending such actions. Specifically, the LFUCG defendants maintained that LFUCG's self-insurance and Noel's claim were outside the scope of KRS 67.180(2), which at most allows suit to be filed against a county to "measure the liability of the insurance carrier to the injured party." The LFUCG defendants also filed an answer to the complaint, seeking dismissal with prejudice. Noel opposed dismissal, claiming that LFUCG's purchase of its retained-limit policy as permitted by KRS 67.180 waived sovereign immunity up to the policy limits.
As noted, the trial court granted the motion to dismiss. The trial court determined that the LFUCG defendants are entitled to sovereign immunity and that the existence of the retained-limit policy in addition to the self-insurance policy does not constitute an express waiver of the sovereign immunity defense under KRS 67.180. Noel filed a Kentucky Rule of Civil Procedure (CR) 59.05 motion to vacate the dismissal, which the trial court denied.
The Court of Appeals affirmed the trial court. Citing the trial court's order, the Court of Appeals concluded that the existence of a retained-limit policy to supplement LFUCG's self-insurance policy does not constitute a waiver of the LFUCG defendants' sovereign immunity defense. The Court of Appeals emphasized that Noel can seek redress for his complaints in a suit against Officer Welch in his individual capacity, pursuing the benefit of measuring liability against the insurance Officer Welch depends on, which is the LFUCG self-insurance policy (and if that is exhausted, the AAIC policy), without violating the longstanding concepts of sovereign immunity.1 Having granted discretionary review, heard oral arguments and carefully considered the record, we affirm.
The primary issue before us is whether LFUCG's self-insurance policy coupled with a retained-limit policy results in a waiver of the immunity inherent to LFUCG as a governmental entity, an issue which requires interpretation of KRS 67.180. Statutory interpretation is a question of law, which we review de novo.
St. Joseph Hosp. v. Frye , 415 S.W.3d 631, 632 (Ky. 2013).
Sovereign immunity "is an inherent attribute of a sovereign state that precludes the maintaining of any suit against the state unless the state has given its consent or otherwise waived its immunity." Yanero v. Davis , 65 S.W.3d 510, 517-18 (Ky. 2001). As a basic subdivision of the Commonwealth, a Kentucky county is cloaked with sovereign immunity. Lexington-Fayette Urb. Cnty. Gov't v. Smolcic , 142 S.W.3d 128, 132 (Ky. 2004) (citing Monroe Cnty. v. Rouse , 274 S.W.2d 477, 478 (Ky. 1955) ). In Smolcic , the Court held that LFUCG is generally entitled to sovereign immunity. 142 S.W.3d at 132. Therefore, LFUCG is entitled to sovereign immunity from Noel's tort claims unless that immunity is waived.
The waiver of sovereign immunity is exclusively a legislative matter. Withers v. Univ. of Ky. , 939 S.W.2d 340, 344 (Ky. 1997). This Court has stated that "[w]e will find waiver only where stated ‘by the most express language or by such overwhelming implications from the text as [will] leave no room for any other reasonable construction.’ " Id. at 346 (quoting Murray v. Wilson Distilling Co. , 213 U.S. 151, 171, 29 S.Ct. 458, 53 L.Ed. 742 (1909) ). With those guiding principles, we turn to the pertinent statute.
Noel argues that LFUCG's purchase of the retained-limit policy through AAIC constitutes a waiver of its sovereign immunity, an argument he premises on KRS 67.180. That statute, which gives Kentucky counties the discretion to purchase insurance policies covering vehicles operated by the county,2 states:
(Emphasis added). Purchasing such insurance is purely discretionary.
While KRS 67.180 does not use the word "waiver," subsection (2) provides an express, but limited, waiver of sovereign immunity because it permits suits against the county but only to obtain a judgment to measure the liability of the insurance carrier to the injured party. It explicitly states that such a judgment cannot be enforced or collected against the county, fiscal court or members thereof. Our caselaw has consistently treated subsection (2) as a limited waiver of sovereign immunity. See Rouse , 274 S.W.2d at 479 (holding that subsection (2) represented a modification of the common law rule of immunity by authorizing a suit against a county for damages arising out of an automobile accident for the sole purpose of measuring the liability of the county's automobile liability insurer; Ginter v. Montgomery Cnty. , 327 S.W.2d 98, 100 (Ky. 1959) (). The legislative intent is clear that the waiver should apply narrowly in limited circumstances and should not result in liability on the part of the county but rather only the insurance carrier from which coverage was purchased.
KRS 65.2005(1) requires local government3 to "provide for the defense of any employee by an attorney chosen by the local government in...
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