Marcum v. Rice

• Decision Date: 25 March 1999
• Docket Number: No. 98-SC-503-CL,98-SC-503-CL
• Citation: 987 S.W.2d 789
• Parties: Liss MARCUM and Edgaretta, Marcum, Appellants, v. Kevin RICE, Millard Rice, Louanne Rice and Grange Mutual Casualty Company, Appellees.
• Court: United States State Supreme Court — District of Kentucky

Page 789

987 S.W.2d 789

Liss MARCUM and Edgaretta, Marcum, Appellants, v. Kevin RICE, Millard Rice, Louanne Rice and Grange Mutual Casualty Company, Appellees.

No. 98-SC-503-CL.

Supreme Court of Kentucky.

March 25, 1999.

Timothy C. Bailey, Guy R. Bucci, J. Kristofer Cormany, Charleston, West Virginia, Eldred E. Adams, Jr., Adams & Adams, Louisa, KY, for appellants.

Daniel R. Schuda, Ancil G. Ramey, Nora C. Price, Steptoe & Johnson, Charleston, West Virginia, for appellee.

N. Jeffrey Blankenship, Edward S. Monohan, IV, Monohan, Hertz & Blankenship, Florence, KY, for amicus curiae, Kentucky Academy of Trial Attorneys, Inc. LAMBERT, Chief Justice.

This Court granted the certification request of the Supreme Court of Appeals of West Virginia pursuant to CR 76.37(1) to resolve the question of whether the public policy of Kentucky is violated by an automobile insurance carrier when it charges separate premiums for liability coverage for multiple vehicles in a single insurance policy, but only a single premium for a single item of underinsured motorist coverage, thereby defeating the claimed right of a UIM insured to aggregate or "stack" underinsured motorist coverage for all vehicles insured under the policy. To resolve this issue of first impression, we must consider the public policy underlying stacking as it relates to the premium charged for the underinsured motorist ("UIM") coverage and whether the policyholder must make a knowing and intelligent waiver of the "right" to stack UIM coverages.

This case arose as a consequence of an automobile accident that occurred in West Virginia and involved a Kentucky resident. On July 13, 1995, Liss Marcum was a passenger in a vehicle owned and operated by Troy Powers. While the vehicle was stopped in traffic on U.S. Route 52 in Steptown, West Virginia, it was struck in the rear by a vehicle driven by Kevin Rice. As a result, Marcum suffered permanent physical injuries that left him unable to work. Marcum was a Kentucky resident with a Grange Mutual Casualty Company ("Grange") insurance policy written in Kentucky by a Kentucky agent. It insured four vehicles licensed and registered in Kentucky. Separate liability premiums were charged for each of the four vehicles, but only a single premium of $14 was charged for one item of UIM coverage in the amount of $100,000 per person per accident. With regard to the UIM coverage, the insurance policy stated:

The limit of liability shown in the Declarations for 'each person' for Underinsured Motorists Coverage is our maximum limit of liability for all damages, including damages for care, loss of services or death, arising out of bodily injury sustained by any one insured in any one motor vehicle accident.

Subject to this limit for 'each person', the limit of liability shown in the Declarations for 'each accident' for Underinsured Motorists Coverage is our maximum limit of liability for all damages for bodily injury sustained by two or more insureds resulting from any one motor vehicle accident.

This is the most we will pay regardless of the number of:

1. Insureds;

2. Claims made;

3. Vehicles or premiums shown in the Declarations; or

4. Vehicles involved in the accident.

This language is unambiguous in its declaration that the policyholder receives only a single recovery of UIM coverage per person regardless of the number of vehicles insured.

Appellants, Liss and Edgaretta Marcum, timely filed this action in the Circuit Court of Wayne County, West Virginia against Kevin Rice and his parents. Their insurer paid its liability policy limits. Thereafter, Appellants amended their complaint to name Grange as a defendant, contending that they were entitled to stack their UIM limit for each of their four vehicles as a matter of Kentucky law for a total of $400,000. Grange stipulated that Appellants were entitled to the full policy limits, yet it argued that since only a single premium had been charged for the UIM coverage provided in the policy which insured the four vehicles, and that the exclusion was unambiguous, there could be no stacking. The circuit court granted summary judgment to Grange. Appellants petitioned the West Virginia Supreme Court of Appeals to hear their appeal or, in the alternative, to certify the stacking question to this Court. As heretofore stated, a certification request was made, and we hereby certify the law of Kentucky to the Supreme Court of Appeals of West Virginia.

The "single premium" issue was recently considered by the Court of Appeals of Kentucky in Swartz v. Metropolitan Property and Casualty Company, Ky.App., 949 S.W.2d 72 (1997). In Swartz, the sole issue was whether an insured could stack UIM coverage under a policy which, while ostensibly charging a single premium for the protection in fact based the premium on the number of vehicles insured. Id. 72-73. In its holding, the court relied on the doctrine of reasonable expectations, noting that the deciding factor in such an analysis was what the insured actually paid for UIM coverage and the manner in which the insurance company calculated and billed the premium. Id. at 75. Noting that Metropolitan charged a $6.00 premium for UIM coverage for one vehicle, while charging a single $10.00 premium for coverage for two or more vehicles, the court held that the Swartzes had actually purchased two units of UIM coverage, which they were entitled to stack. Id. at 76-78.

We agree with the reasoning in Swartz. Under the doctrine of "reasonable...