Morris v. Crete Carrier Corp.

• Citation: 105 F.3d 279
• Decision Date: 23 January 1997
• Docket Number: No. 95-6457,95-6457
• Parties: Lois R. MORRIS, Individually and as Administratrix of the Estate of Carlos R. Morris, Deceased, Plaintiff-Appellee, Westfield Companies, Intervenor Third-Party Plaintiff-Appellant, v. CRETE CARRIER CORPORATION and Joey R. Hall, Defendants, Crete Carrier Corporation, Intervenor Third-Party Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 279

105 F.3d 279

Lois R. MORRIS, Individually and as Administratrix of the

Estate of Carlos R. Morris, Deceased, Plaintiff-Appellee,

Westfield Companies, Intervenor Third-Party Plaintiff-Appellant, v. CRETE CARRIER CORPORATION and Joey R. Hall, Defendants, Crete Carrier Corporation, Intervenor Third-Party Defendant-Appellee.

No. 95-6457.

United States Court of Appeals, Sixth Circuit.

Jan. 23, 1997.

Guy E. Millward, Jr., Durenda L. Lawson, Millward & Jewell, Barbourville, KY, for plaintiff-appellee.

Gregory A. Keyser, Timothy D. Martin, Bowles, Rice, McDavid, Graff, Love & Getty, Lexington, KY, for intervenor-appellant.

Ronald L. Green, Michael J. Cox, Boehl, Stopher & Graves, Lexington, KY, for intervenor-appellee.

Before: MERRITT, NELSON, and DAUGHTREY, Circuit Judges.

MERRITT, Circuit Judge.

Plaintiff Lois Morris filed this action against defendant Crete Carrier Corporation, alleging that her husband died in a car accident caused by Crete's driver. Mrs. Morris' insurance company, Westfield Companies, intervened to recover from Crete the benefits Westfield had paid to Mrs. Morris as a result of her husband's death. After Mrs. Morris settled her claims against Crete, Westfield sought to recover from Mrs. Morris any double recovery she had received. The district court granted summary judgment in favor of Crete and denied as moot Westfield's request to add a claim against Mrs. Morris. We reverse both decisions.

I

Plaintiff Lois Morris filed this action as Administratrix of the Estate of her husband, Carlos R. Morris. The complaint alleged that defendant Joey R. Hall was negligently operating a tractor trailer rig for defendant Crete Carrier Corporation when the rig collided with Mr. Morris' car. Mr. Morris was killed in the accident.

Mr. and Mrs. Morris were insured by Westfield Companies for $100,000. Under the policy, Westfield paid Mrs. Morris $1,000 in funeral expenses and $26,800 for the loss of Mr. Morris' income. Westfield also continued to pay Mrs. Morris $1,600 per month.

Mrs. Morris filed this action against Crete, seeking damages for Mr. Morris' lost wages, his pain and suffering, medical and funeral expenses, and loss of consortium. Mrs. Morris also asserted a loss of consortium claim on behalf of her daughter. Crete was self-insured for liability up to $1,000,000 and had excess liability insurance of $29,000,000. Westfield intervened to recover from Crete the lost earnings and funeral expenses Westfield had paid to Mrs. Morris. After Mrs. Morris settled her action against Crete, Westfield sought to add a claim against Mrs. Morris to recover any double recovery she had received.

Crete moved to dismiss Westfield's complaint. The district court granted Crete's motion, treating it as a motion for summary judgment. The district court held that Westfield could not recover its benefits payments because Crete had expended its primary insurance through settlement, and Westfield could not recover from Crete's excess liability insurers. The district court also denied as moot Westfield's motion to add a claim against Mrs. Morris.

II

This Court reviews grants of summary judgment de novo. City Management Corp. v. U.S. Chem. Co., 43 F.3d 244, 250 (6th Cir.1994). Federal Rule of Civil Procedure 56(c) provides that summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). We must view all the facts and inferences drawn therefrom in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962)).

A. Subrogation Claims

Under the Kentucky Motor Vehicle Reparations Act, every Kentucky automobile owner is required to provide security for basic reparation benefits of $10,000. K.R.S. §§ 304.39-080(5), 020(2). These basic benefits must be paid promptly and without regard to fault by the insurer covering the car in which the victim was riding. K.R.S. §§ 304.39-040(1), 050(1), 210(1). An automobile owner may also carry added reparation benefits coverage. K.R.S. § 304.39-140(1).

The parties agree that Westfield provided Mr. and Mrs. Morris with a policy of $10,000 in basic benefits and $90,000 in added benefits. The Reparations Act provides the basic benefits insurer and the added benefits insurer with rights of subrogation to the rights of its insured. Subrogation is defined as:

[t]he substitution of one person in the place of another with reference to a lawful claim, demand or right, so that he who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies, or securities.

Black's Law Dictionary 1427 (6th ed. 1990). Under the subrogation rights provided in the Reparations Act, Westfield seeks to recover the basic and added benefits it paid to Mrs. Morris.

1. Basic Benefits

The victim's basic benefits insurer has the following subrogation rights under the Reparations Act:

A reparation obligor which has paid or may become obligated to pay basic reparation benefits shall be subrogated to the extent of its obligations to all of the rights of the person suffering the injury against any person or organization other than a secured person.

K.R.S. § 304.39-070(2). A "secured person" is defined as the "owner, operator or occupant of a secured motor vehicle and any other person or organization legally responsible for the acts or omissions of such owner, operator or occupant." K.R.S. § 304.39-070(1). In addition, the Reparations Act includes a separate provision for recovery against the secured person's insurer:

A reparation obligor shall have the right to recover basic reparation benefits paid to or for the benefit of a person suffering the injury from the reparation obligor of a secured person as provided in this subsection, except as provided in KRS 304.39-140(3).

K.R.S. § 304.39-070(3). Under § 304.39-140(3), the victim is entitled to priority over its insurer's claim for basic benefits. Section 304.39-070(4) limits the recovery for basic or added benefits to the amount of "the automobile bodily injury liability coverage available to the secured party after priority of entitlement ... has been satisfied."

The parties agree that Westfield paid basic benefits to Mrs. Morris. Although the district court held that Crete is a secured person, the district court and the parties agreed that Westfield could proceed against Crete because Crete is its own insurance carrier. The district court held that Westfield could not recover the basic benefits it paid to Mrs. Morris because Crete exhausted its $1,000,000 self-insurance policy. In addition, the district court held that Westfield could not recover from Crete's excess liability insurers.

Westfield argues that it could recover from Crete's excess liability insurers under section 304.39-070(2), which permits subrogation against "any person or organization other than a secured person." Crete argues that the holding in State Auto. Mut. Ins. Co. v. Empire Fire & Marine Ins. Co., 808 S.W.2d 805, 807-08 (Ky.1991), bars Westfield from recovering from Crete's excess liability insurers. In Empire Fire, the Kentucky Supreme Court held that a victim's basic benefits insurer could not recover from the tort-feasor's excess liability insurer under section 304.39-070(2) because the Reparations Act had abolished the victim's tort claims for basic benefits. Because the insurer's subrogation rights are derivative from the victim's rights, the victim's basic benefits insurer had no claim. Id. However, a basic benefits insurer could recover under section 304.39-070(2) if the victim could recover the basic benefits. Therefore, Westfield could recover its basic benefits if Mrs. Morris could recover those benefits from Crete's excess liability insurance.

Crete argues that Mrs. Morris could not recover basic benefits because section 304.39-060(2)(a) abolishes tort liability for "bodily injury, sickness or disease to the extent [of] the basic reparation benefits provided." This section does not abolish tort liability for death, which is the basis of Mrs. Morris' claim. However, Crete argues that the court should hold that this section was meant to include death because an earlier section of the code defined "injury" to mean "bodily harm, sickness, disease, or death." K.R.S. § 304.39-020(4). We are not persuaded by Crete's argument. Crete asks the court to hold that section 304.39-060(2)(a) abolishes tort liability for: "bodily injury [which Crete argues means bodily harm, sickness, disease, or death], sickness, or disease." Under Crete's suggested reading, the terms bodily, sickness, and disease would be repeated twice. If Crete's argument were...