State Farm Mut. Auto. Ins. Co. v. Slusher

• Decision Date: 18 November 2010
• Docket Number: No. 2009-SC-000513-DG.,2009-SC-000513-DG.
• Citation: 325 S.W.3d 318
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. Carlene SLUSHER, Administratrix of the Estate of Donald Slusher, Deceased, Appellee.
• Court: United States State Supreme Court — District of Kentucky

325 S.W.3d 318

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant,

v.Carlene SLUSHER, Administratrix of the Estate of Donald Slusher, Deceased, Appellee.

No. 2009-SC-000513-DG.

Supreme Court of Kentucky.

Nov. 18, 2010.

John Fredrick Vincent, Martin, Justice, Vincent & Lavender, Ashland, KY, Counsel for Appellant.

Samuel Girdner Davies, Barbourville, KY, Counsel for Appellee.

Opinion of the Court by Justice VENTERS.

This case involves the right of a worker to recover under his personal policy of uninsured motorist protection (UM) and underinsured motorist protection (UIM) for uncompensated injuries sustained in a work-related motor vehicle accident caused by the negligence of a co-worker. Appellant, State Farm Mutual Automobile Insurance Company, appeals from an opinion of the Court of Appeals which upheld a determination by the Knox Circuit Court that Appellee, Carlene Slusher, Administratrix of the Estate of Donald Slusher, was entitled to collect under either the UM or UIM provisions of a motor vehicle insurance policy issued by State Farm to Appellee's decedent, Donald Slusher. ¹ For reasons set forth below, we reverse the Court of Appeals, and remand to the Knox Circuit Court for dismissal of the Estate's claims against State Farm.

FACTUAL AND PROCEDURAL BACKGROUND

Donald Slusher and Arlie Napier were both working as truck drivers in the employ of James Long Trucking, which had a contract to haul refuse from a coal processing site in Bell County, Kentucky. After parking his truck, Donald was on duty, waiting for his next load in a concrete block structure located at the site. Meanwhile, Napier had parked his twenty-ton 1988 Mack haul truck uphill from, and facing, the concrete block building. According to investigators, Napier left his truck with the engine running and the transmission in neutral. He set the hand brake but failed to set the parking brake. ² He also failed to turn the wheels toward the adjacent berm to prevent the vehicle from rolling down the slope toward the concrete block structure. The Mack truck was owned by James Long Trucking and was covered by a liability insurance policy issued by Progressive Insurance Company. ³

Several minutes after Napier parked the coal truck, it rolled into the concrete block building, demolishing it and killing Donald and another person. An accident investigation by the Federal Mine Safety and Health Administration concluded that the cause of the accident was Napier's negligence in parking the truck. ⁴

Donald's wife, Carlene, was appointed Administratrix of his estate. The parties stipulate that Donald's death occurred during the course of his employment and that the accident was covered by the Kentucky Workers' Compensation Act, KRS Chapter 342. Carlene sought and received all workers' compensation benefits to which she was entitled from James Long Trucking's workers' compensation carrier. ⁵ Because of KRS 342.690(1), the exclusive remedy provision of the Workers' Compensation Act, the Estate could not directly assert a wrongful death claim against Napier.

At the time of his death, Donald had an automobile insurance policy issued by State Farm which covered his personal vehicle. The State Farm policy had both UM and UIM provisions, each with a $50,000.00 per person coverage limit. However, when the Estate sought payment under these provisions, State Farm denied the claim on the grounds that the policy language limited the UM and UIM liability to damages that the Estate was “legally entitled to collect” from the owner or operator of an uninsured or underinsured motor vehicle and KRS 342.690(1) eliminated the Estate's legal entitlement to collect any damages from either the employer or a co-worker in excess of the workers' compensation benefits paid on account of Donald's death.

After denial of its claim, the Estate filed suit against State Farm in Knox Circuit Court seeking payment of the UM policy limits (if the truck was determined to be uninsured) ⁶ or the UIM policy limits (if the truck was determined to be underinsured). The Estate eventually filed a motion for partial summary judgment on the issue of coverage under the policy. The circuit court entered an order granting the Estate partial summary judgment on two issues. First, the circuit court held that the insurance policy contained both UM and UIM coverage and that Donald was covered by the policy at the time of the accident. Second, citing Philadelphia Indemnity Ins. Co. v. Morris, 990 S.W.2d 621 (Ky.1999), the court held that the exclusive remedy provisions of the Workers' Compensation Act did not bar the Estate from asserting a claim against State Farm under the policy. State Farm appealed that decision; however, the Court of Appeals dismissed this initial appeal as interlocutory because the circuit court had made no finding concerning damages.

The parties then entered into an Agreed Stipulation of Facts which provided, among other things, that “[t]he policy maintained uninsured motorist's coverage with limits of $50,000.00 per person[,]” and “[s]hould coverage be applicable, the amount of damages sustained by the Plaintiff Estate meet [sic] the $50,000.00 limit for uninsured motorist's coverage under the State Farm policy.” ⁷

On January 7, 2008, the circuit court entered a $50,000.00 judgment against State Farm based upon its “review of the Stipulation of Facts entered by and between the parties hereto and the Court having previously entered an order addressing the coverage issue for uninsured motorist's coverage on January 17, 2007 and finding such coverage under the State Farm policy in existence....” Thus, the Stipulation of Facts and the circuit court's order of January 7, 2008, referenced only UM coverage; neither mentioned UIM coverage. Again, however, we construe the circuit court's orders as holding that the Estate is entitled to a $50,000.00 recovery under whichever of the two provisions may be applicable. ⁸

Following entry of the January 7, 2008 Judgment, State Farm again appealed to the Court of Appeals. The Court of Appeals affirmed the circuit court, although on different grounds. In concluding the exclusive remedy provisions of the Workers' Compensation Act did not apply, the Court of Appeals used the “essential facts” approach contained in U.S. Fidelity and Guar. Co. v. Preston, 26 S.W.3d 145 (Ky.2000) and Nationwide Mutual Insurance Co. v. Hatfield, 122 S.W.3d 36 (Ky.2003). Using this approach, the Court of Appeals concluded that to recover UM or UIM benefits an insured need only prove: (1) the fault of the uninsured or underinsured motorist; and (2) the extent of damages caused by the uninsured or underinsured motorist. ⁹ The court concluded that since the parties had stipulated to both Napier's negligence in causing the accident and damages sufficient to consume the $50,000.00 UM or UIM coverage limit, the Estate was entitled to summary judgment upon its claim for recovery under either the UM or UIM provisions of the policy. We accepted discretionary review to examine an insured's entitlement to UM or UIM coverage when he is injured by a co-worker in a work-related motor vehicle accident and, because of the exclusive remedy provisions of the Workers' Compensation Act, is not legally entitled to collect any further amounts from either his employer or co-worker.

ANALYSIS

State Farm argues that the plain language of the policy, the exclusive remedy provisions of the Workers' Compensation Act, and applicable case authorities compel the conclusion that it has no liability under either the UM and UIM provision.

For the reasons discussed below, we agree.

Donald's State Farm policy includes the following provision governing entitlement to UM and UIM coverage: “We will pay compensatory damages for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured [underinsured] motor vehicle.” ¹⁰ As a general rule, the construction and legal effect of an insurance contract is a matter of law for the court. Morganfield Nat'l Bank v. Damien Elder & Sons, 836 S.W.2d 893, 895 (Ky.1992). While “it [is] clear that ambiguous language must be liberally construed so as to resolve all doubts in favor of the insured ... where not ambiguous, the ordinary meaning of the words chosen by the insurer is to be followed.” Bituminous Cas. Corp. v. Kenway Contracting, Inc., 240 S.W.3d 633, 638 (Ky.2007). “Or stated another way, words which have no technical meaning in law, must be interpreted in light of the usage and understanding of the common man.” Id.

Stating that “in 1999 our Supreme Court addressed this very issue,” the trial court relied upon Morris, 990 S.W.2d 621, for the proposition that “KRS 342.690 has been found to not bar the way when an employee seeks underinsured/uninsured motorist benefits that exceed his or her workers' compensation award.” However, Morris is distinguishable from this matter because there the tortfeasor was a third party, not a co-worker protected from liability by our workers' compensation law. The exclusive remedy provisions of Chapter 342 were not involved there. Similarly, G & J Pepsi-Cola Bottlers, Inc. v. Fletcher, 229 S.W.3d 915 (Ky.App.2007), cited by the Court of Appeals for the rule that an injured employee who receives workers' compensation benefits has a right to seek additional coverage under both his own UIM policy and his employer's, is distinguishable for the same reason-the tortfeasor in that case also was not a fellow employee.

The Court of Appeals found the phrase “legally entitled to collect” to be ambiguous when considered in the context of the statutory immunity from liability as provided under KRS 342.690(1). See Preston, 26 S.W.3d 145; and Hatfield, 122 S.W.3d 36. To resolve the perceived ambiguity, it resorted to the “essential facts” approach from Coots v. Allstate Ins. Co., 853 S.W.2d 895, 899 (Ky.1993) which holds:

UM coverage and UIM coverage are treated coextensively in many...