Motorists Mutual Insurance Co. v. Glass, 95-SC-972-DG

• Decision Date: 30 October 1997
• Docket Number: 90-CI-136,93-CA-2198,93-CA-2235,95-SC-980-DG,96-SC-800-DG,93-CA-2137,95-SC-972-DG
• Citation: 966 S.W.2d 437
• Parties: <PartyHeader>MOTORISTS MUTUAL INSURANCE COMPANY, APPELLANT v. JEFFREY GLASS; GARNETT DOYLE GLASS; BRENDA GLASS; GREGG Y. NEAL, ATTORNEY; AND KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY, APPELLEES AND KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY, APPELLANT </PartyHeader>
• Court: United States State Supreme Court — District of Kentucky

[3]	996 S.W.2d 437
[4]	MOTORISTS MUTUAL INSURANCE COMPANY, APPELLANT; v.; JEFFREY GLASS; GARNETT DOYLE GLASS; BRENDA GLASS; GREGG Y. NEAL, ATTORNEY; AND KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY, APPELLEES AND KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY, APPELLANT v. JEFFREY GLASS; AND MOTORISTS MUTUAL INSURANCE COMPANY, APPELLEES AND JEFFREY GLASS; GARNETT DOYLE GLASS; BRENDA GLASS; AND GREGG Y. NEAL, CROSS-APPELLANTS v. MOTORISTS MUTUAL INSURANCE COMPANY; AND KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY, CROSS-APPELLEES
[5]	95-SC-972-DG, 95-SC-980-DG, 96-SC-800-DG
[6]	Kentucky Supreme Court
[7]	ON REVIEW FROM COURT OF APPEALS. 93-CA-2137, 93-CA-2198 & 93-CA-2235. SHELBY CIRCUIT COURT. HONORABLE WILLIAM F. STEWART, JUDGE. 90-CI-136.
[8]	October 30, 1997
[9]	Justice Cooper. Stephens, C.j.; Graves and Johnstone, JJ., concur. Lambert, J., Dissents by separate opinion, with Stumbo and Wintersheimer, JJ., joining that Dissent.
[10]	Attorney For Motorists Mutual Insurance Company: Perry Adanick, Louisville, Ky.
[11]	Attorney For Jeffrey Glass, Garnett Doyle Glass, Brenda Glass and Gregg Y. Neal: Gregg Neal, Neal & Davis, Shelbyville, Ky.
[12]	Attorneys For Kentucky Farm Bureau Mutual Insurance Company: Wayne J. Carroll, Edward H. Bartenstein, MacKenzie & Peden, PSC, Louisville, Ky.
[13]	The opinion of the court was delivered by: Cooper
[14]	OPINION OF THE COURT BY JUSTICE COOPER
[15]	REVERSING
[16]	On May 13, 1988, Jeffrey Glass was injured while riding as a passenger in a vehicle owned by him and driven with his permission by Stephen Shelburne. Jeffrey was insured by Motorists Mutual Insurance Company (Motorists Mutual) and Shelburne was insured by Kentucky Farm Bureau Mutual Insurance Company (Farm Bureau). Following a trial by jury on Jeffrey's claim of bad faith against both insurers and his claim against Motorists Mutual for underinsured motorists coverage payments, the jury returned verdicts against Motorists Mutual in the total sum of $694,208.11 and against Farm Bureau in the total sum of $443,208.12. The trial Judge subsequently awarded Jeffrey attorney fees against Motorists Mutual in the sum of $231,402.70 (one-third of $694,208.11).
[17]	On July 19, 1993, judgment was entered in favor of Jeffrey Glass against Motorists Mutual in the total sum of $925,610.81 and against Farm Bureau in the total sum of $443,208.12. The judgment also awarded interest from July 9, 1993, the date of the verdict. On appeal, the Court of Appeals reduced the underinsured motorists' portion of the judgment against Motorists Mutual from $200,000.00 to $150,000.00 and ordered the interest to run from the date of judgment instead of the date of verdict. In all other respects, the judgment was affirmed. We granted discretionary review and now reverse.
[18]	Jeffrey's claim that the insurers were guilty of bad faith in failing to effect a prompt and fair settlement of his claim necessitates a detailed recitation of what occurred in this case.
[19]	I. THE ACCIDENT AND INJURIES
[20]	On May 13, 1988, Jeffrey Glass was nineteen years of age and resided with his parents, Doyle and Brenda Glass, in Waddy, Kentucky. He was employed as a parts salesman at Pierce Motor Company. That evening, he drove his 1980 Ford pickup truck to Stephen Shelburne's home in Shelbyville. On the way, he stopped at a liquor store and purchased some beer, which he iced down in a cooler in the back of the truck. He picked up Shelburne and the two proceeded to Bagdad, where they met Jeffrey's girlfriend, Kim Embert (now Hardin) and her friend, Heather Wentworth. The four left Bagdad at about 6:30 p.m. and drove to Georgetown where more alcohol was purchased. Kim Hardin testified that Jeffrey and Shelburne purchased some wine coolers for the girls and two more cases of beer, which they iced down in the cooler. The four then proceeded to a fairgrounds in Scott County where they attended a truck pull contest for several hours. Jeffrey admitted that he drank beer while driving from Shelbyville to Bagdad and that both he and Shelburne drank beer while driving from Bagdad to Georgetown. Kim Hardin testified that all four occupants of the pickup truck consumed alcohol during the trip from Georgetown to the fairgrounds, and continued to do so until they left the fairgrounds at approximately 9:30 p.m. As he drove the pickup truck out of the fairgrounds, Jeffrey almost rear-ended another vehicle and the girls "didn't think that I should be driving." He agreed to permit Shelburne to drive the vehicle.
[21]	Shortly thereafter, Shelburne made a wrong turn onto a narrow road and proceeded down a hill with a curve at the bottom of the grade. The vehicle apparently was going too fast for conditions. When Shelburne applied the brakes, the vehicle slid into a guard rail and turned up on its right side. Jeffrey was seated next to the passenger side door. When the vehicle rolled over, the weight of the other three passengers pressed against him and his right arm broke through the window and was severed when it was caught between the truck and the guardrail. Captain Willie Scott of the Scott County Police Department investigated the accident and interviewed Shelburne. Although he noted on his accident report that alcohol involvement was a cause of the accident, Scott did not arrest Shelburne, because he did not believe Shelburne was intoxicated. Shelburne told Scott he had consumed "only two beers."
[22]	Jeffrey's arm was surgically reattached by Louisville Hand Surgery specialists at Jewish Hospital in Louisville. However, despite several surgeries, he has never regained full function of his right arm and has little or no use of his right hand. He was unable to return to his previous employment and testified that he could perform only light work on his grandmother's farm. As of the date of trial, Jeffrey had incurred $82,168.75 in medical expenses as a result of this accident, of which $36,564.40 had been incurred with Jewish Hospital and $30,647.50 had been incurred with Louisville Hand Surgery.
[23]	II. THE INSURANCE POLICIES
[24]	Jeffrey's 1980 Ford pickup truck was insured by Motorists Mutual policy number 5342-04-224866-11D. The trial Judge concluded that the same policy also covered a 1978 Ford pickup truck. However, the policy declaration pages introduced into evidence in this case reveal that a previous vehicle was deleted from the policy on January 15, 1988, and that the 1978 Ford pickup truck was added to the policy on June 7, 1988; thus, as found by the Court of Appeals, the policy only covered one vehicle at the time of this accident. The policy provided liability coverage of $50,000.00 per person and $100,000.00 per accident for bodily injury and $50,000.00 per accident for property damage; uninsured motorists (UM) coverage of $50,000.00/$100,000.00; and underinsured motorists (UIM) coverage of $50,000.00/$100,000.00. The policy also provided basic personal injury protection (PIP) coverage of $10,000.00. Doyle and Brenda Glass were also named insureds on this policy, and bodily injury liability coverage was extended to Shelburne as an additional insured under the policy's omnibus clause. *fn1 Property damage liability coverage was excluded for this accident, both because the damaged vehicle was owned by the named insured, *fn2 Jeffrey Glass, and because it was damaged while "used by" or "in the care of" an additional insured, *fn3 Shelburne. These exclusions reflect the logic that damage to a vehicle owned or operated by a named insured or an additional insured is more appropriately the subject of collision (first-party) coverage than of liability (third-party) coverage. Jeffrey had not opted to purchase collision coverage for his vehicle.
[25]	The policy extended UIM coverage to the named insured and any family member living in the household. *fn4 An "underinsured motor vehicle" was defined as a land motor vehicle covered by a policy of insurance with liability limits less than the liability limits of the Motorists Mutual policy. *fn5 However, the policy excluded from this definition any vehicle owned by or furnished or available for the regular use of the insured or any family member. *fn6 The policy further provided that any amounts payable under UIM coverage shall be reduced by all sums paid for bodily injury damages by or on behalf of any person legally responsible, including "all sums paid under Part A." *fn7 Part A is the liability coverage portion of the policy containing the omnibus clause under which Shelburne was an additional insured for purposes of this accident.
[26]	Doyle and Brenda Glass were also the named insureds on Motorists Mutual policy number 5342-06-224865-00A, which insured two vehicles, a 1983 Pontiac Grand Prix and a 1979 Ford pickup truck. This policy contained liability coverage with limits of $100,000.00/$300,000.00 for bodily injury and $50,000.00 for property damage; UM coverage of $50,000.00/$100,000.00; and UIM coverage of $50,000.00/$100,000.00. The policy also contained basic PIP coverage, which did not apply to Jeffrey's injuries, since he was not a named insured of the policy and was not occupying the insured vehicle at the time of the accident. This second policy contained identical insuring agreements, exclusions and exceptions as policy number 5342-04-224866-11D. As a family member living in the household of the named insureds, Jeffrey was an insured for purposes of the policy's UIM coverage.
[27]	Shelburne was the named insured of an insurance policy issued by Farm Bureau. Although a specimen of this policy is not found in the record, a copy of the declarations page was filed in response to a discovery request. Examination of this document reveals that the policy provided liability coverage with limits of $100,000.00/$300,000.00 for bodily injury and $100,000.00 for property damage. Thus, Shelburne had available $150,000.00 in bodily injury liability coverage for this accident, $100,000.00 as the named insured under his own Farm Bureau policy

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