RENDERED: MAY 24, 2024; 10:00 A.M.

NOT TO BE PUBLISHED

Commonwealth of Kentucky

Court of Appeals

NO. 2022-CA-1253-MR

SOUTHERN FINANCIAL LIFE 

INSURANCE COMPANY APPELLANT 

v. 

APPEAL FROM PIKE CIRCUIT COURT

HONORABLE JOHNNY RAY HARRIS, SPECIAL JUDGE

ACTION NO. 07-CI-00114

RACHEL KENNEDY, AS PUBLIC 

ADMINISTRATOR OF THE ESTATE

OF VALERIE MULLINS APPELLEE 

OPINION

AFFIRMING IN PART, REVERSING IN PART,

AND REMANDING

**   **  **

BEFORE: GOODWINE, KAREM, AND MCNEILL, JUDGES.

MCNEILL, JUDGE: This is an insurance class action case. Appellant is Southern 

Financial Life Insurance Company (Southern Financial). Appellee is Rachel 
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Kennedy, as Public Administrator for the Estate of Valerie Mullins (Mullins).

1

 

The Pike Circuit Court granted summary judgment in Mullins’ favor. Southern 

Financial appeals to this Court as a matter of right. Oral argument was held on 

March 22, 2024. 

FACTUAL BACKGROUND 

The underlying facts have been summarized by our Supreme Court as 

follows:

Southern Financial is an insurer that sells disability and 

life insurance to help borrowers make loan payments in 

the event that the insured borrower becomes disabled or 

dies before [their] loan is paid off. I n issuing these 

policies, Southern Financial did not directly solicit the 

insureds. Instead, the lending institutions offered 

Southern Financial’s product with a lump-sum premium 

that was often included in the amount loaned to the 

borrower.

The underlying action . . . was filed by Roger Mullins as 

executor of his wife’s estate. The suit alleges that 

Southern Financial did not properly pay disability 

benefits that his late wife was entitled to under the terms 

of her Southern Financial disability policies. Alleging 

that this underpayment of benefits was the result of a 

pattern of practice applicable to each policy issued by 

Southern Financial, Mullins’s claims were certified as a 

class action.

1 Roger Mullins’ late wife, Valerie Mullins, originally filed this suit. After Valerie Mullins died, 

Roger Mullins was appointed the Administrator of her Estate. After Roger Mullins died, Rachel 

Kennedy was appointed to succeed him for purposes of the present case. 
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S. Fin. Life Ins. Co. v. Combs, 413 S.W.3d 921, 928 (Ky. 2013) (holding in part 

that “[t]he lenders here fall squarely within this agency relationship and are the 

agents of Southern Financial as a matter of law.”) (footnotes omitted).2 

As a class action, this case involves disability insurance issued in 

connection with approximately 26,000 loans made by hundreds of lenders from 

1997-2007. The class includes two types of insurance products and four separate 

insurance products divided into two subclasses: Subclass A (every class member 

who suffered a disability and received less than full disability benefits) and 

Subclass B (every class member whose loan termination date extended beyond the 

termination date of the credit disability insurance purchased). 

After much appellate wrangling, the present case returned to the Pike 

Circuit Court for a decision on the merits. The circuit court granted Mullins’

motions for summary judgment on its claims for breach of contract as to 

Subclasses A and B, and simultaneously denied Southern Financials’ cross motion 

for summary judgment on the claim for breach of contract as to Subclass B. At 

issue here are two summary judgments, one for each subclass. The arguments 

2 The class certification order at issue here was entered on June 25, 2010. Kentucky Rules of 

Civil Procedure (CR) 23.06, was amended to provide an interlocutory appeal of an order 

“granting or denying class action certification.” It became effective on January 1, 2011, six 

months after the class certification order was entered in the present case. 
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presented on appeal concern class certification and breach of contract. For the 

following reasons, we affirm in part, reverse in part, and remand.

STANDARD OF REVIEW

“Because summary judgment involves only legal questions and the 

existence of any disputed material issues of fact, an appellate court need not defer 

to the trial court’s decision and will review the issue de novo.” Lewis v. B&R 

Corp., 56 S.W.3d 432, 436 (Ky. App. 2001) (citation omitted). For insurance 

claims specifically, the Kentucky Supreme Court has directed:

Foremost in interpreting an insurance contract we are 

bound by the specific language of the contract before us. 

We apply certain rules of construction to insurance 

contracts, including a rule that when the terms of an 

insurance contract are unambiguous and not 

unreasonable, they will be enforced as written. 

Unambiguously defined terms are interpreted in the light 

of usage and understanding of the average person. 

Ambiguous terms and the language of exclusions are 

strictly construed against the Insurer so as not to defeat 

the policyholder’s reasonable expectation of coverage. 

But this rule of strict construction certainly does not 

mean that every doubt must be resolved against the 

Insurer and does not interfere with the rule that the policy 

must receive a reasonable interpretation consistent with 

the plain meaning in the contract.

Foreman v. Auto Club Prop.-Cas. Ins. Co., 617 S.W.3d 345, 349-50 (Ky. 2021) 

(internal quotation marks and citations omitted). And as to class certification, our 

standard of review has been summarized as follows:
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A trial court’s decision to certify a class is reviewed for 

an abuse of discretion. The test for abuse of discretion is 

whether the trial judge’s decision was arbitrary, 

unreasonable, unfair, or unsupported by sound legal 

principles. Under this standard, we review the record and 

the ruling while giving deference to the trial court’s 

factual findings and rulings because the trial court is in 

the best position to evaluate the evidence before it. 

Nebraska All. Realty Co. v. Brewer, 529 S.W.3d 307, 311 (Ky. App. 2017). 

(internal quotation marks and citations omitted). With these standards in mind, we 

return to the record and arguments at issue in the present case.

ANALYSIS

Southern Financial raises two primary arguments on appeal: 1) The 

circuit court erred in certifying any class as to the contract claims, so judgment in 

favor of any class is error; and 2) The circuit court erred in interpreting the 

contracts. Each will be discussed in turn.

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Class Certification

A party seeking class certification must prove the following four 

prerequisites:

3

Southern Financial’s Notice of Appeal states that it is appealing from the two summary 

judgments “entered on October 3, 2022, and were designated by the Court as final and 

appealable, and from all interlocutory orders made final by the entry of these Orders.” We 

must presume this blanket reservation includes the circuit court’s order granting class 

certification entered on June 25, 2010. However, our rules make no such presumption. See

Kentucky Rules of Appellate Procedure (RAP) 2(B)(1)(b). Nevertheless, we will address the 

merits of the class certification issue. See Johnson v. Smith, 885 S.W.2d 944, 950 (Ky. 1994).

(“Excepting for tardy appeals . . . we follow a rule of substantial compliance.”). 
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(a) the class is so numerous that joinder of all members is 

impracticable,

(b)there are questions of law or fact common to the class,

(c) the claims or defenses of the representative parties are 

typical of the claims or defenses of the class, and

(d)the representative parties will fairly and adequately 

protect the interests of the class.

CR 23.01. See also Brewer, 529 S.W.3d at 311-12 (“These prerequisites are often 

referred to as numerosity, commonality, typicality, and adequacy.”). In the present 

case, the circuit court made affirmative findings under this provision. In addition, 

the party seeking certification must satisfy at least one requirement of the three 

requirements in CR 23.02. The circuit court found that all three had been satisfied. 

However, Southern asserts that CR 23.02(a) and (b) were inapplicable

here, and that we should focus our analysis on (c).

4

 The circuit court found that:

CR 23.02(c) requires the common questions of fact and

law predominate over those not shared by the Class and

that the class action mechanism is the superior method

for the fair and efficient resolution of controversy. 

. . .

4

See Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 362, 131 S. Ct. 2541, 2558, 180 L. Ed. 2d 

374 (2011) (“[W]e think it clear that individualized monetary claims belong in Rule 23(b)(3).”). 

See also Hensley v. Haynes Trucking, LLC, 549 S.W.3d 430, 436 (Ky. 2018) (observing that 

“federal law should guide this Court’s analysis of the trial court’s class-certification decision 

because CR 23 mirrors its federal counterpart, Federal Rules of Civil Procedure Rule (FRCP) 

23.”). We also find Hensley’s discussion and application of “fail-safe” classes to be persuasive 

and adopt that reasoning herein. Id. at 449. 
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The predominance of the common questions of law and

fact has been addressed more fully above. This

requirement is satisfied here. So too is the requirement

that class treatment be the superior method . . . . There is

no foreseeable impediment to this Court’s management

of this litigation. 

While reasonable minds may differ as to class certification – a notoriously

complex process for all involved – we cannot conclude that the certification in this 

case was “arbitrary, unreasonable, unfair, or unsupported by sound legal 

principles.” Therefore, the circuit court did not abuse its discretion. The class 

certification order is affirmed. 

Breach of Contract

To prove a breach of contract, the complainant must establish three

things: (1) existence of a contract; (2) breach of that contract; and (3) damages

flowing from that breach. Barnett v. Mercy Health Partners-Lourdes, Inc., 233 

S.W.3d 723, 727 (Ky. App. 2007). In the present case, the orders appealed from 

finally resolve the breach of contract claim and were made final pursuant to CR 

54.02. In its order regarding breach of contract as to Subclass A, the circuit court 

concluded:

WHEREFORE, PLAINTIFF’S MOTION FOR 

PARTIAL SUMMARY JUDGMENT IS HEREBY 

GRANTED as indicated supra. With respect to Subclass 

A . . . [t]he Court concludes and declares that Southern 

Financial breached its contracts with the members of 

Subclass A and that said members are entitled to 

compensatory damages, the measure of which would 
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include the amount of benefits due but withheld by 

Southern Financial to Subclass A, out to the Term of 

Loan date, or the date the loan was paid off, plus interest 

from the date such benefits were due.

The circuit court also provided a formula for calculating damages and interest. 

Likewise, in its order regarding Subclass B, the circuit court concluded:

WHEREFORE, PLAINTIFF’S MOTION FOR 

PARTIAL SUMMARY JUDGMENT IS HEREBY 

GRANTED as indicated supra. DEFENDANT’S 

MOTION FOR SUMMARY JUDGMENT AS TO 

BREACH OF CONTRACT AS TO SUBCLASS B IS 

HEREBY DENIED. The Court concludes and declares 

that the contracts between Southern Financial and 

Subclass B members were breached, and the former 

subject to disgorgement for unjust enrichment as 

provided supra, plus interest from the date such 

premiums were paid.

The circuit court again provided a formula for calculating damages and interest. 

These orders also reference an earlier order entered on July 6, 2021, wherein the 

circuit court interpreted the contracts at issue. 

The matter before us is exclusively an issue of law. More precisely, 

we must interpret the coverage and payment provisions of the Mullins Insurance 

Certificates (Mullins Contracts). Both Mullins Contracts are four pages in length. 

Southern Financial argues that they limit coverage to sixty months (five years). 

For example, Mullins Contract One was signed by her on June 17, 1999. Mullins 

subsequently suffered a qualifying injury triggering coverage. Southern Financial 

ceased paying under Contract One on June 17, 2004 – exactly five years after 
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Mullins signed the contract. Mullins Contract Two was signed by her on February 

5, 2001. Southern Financial ceased paying under Contract One on February 5, 

2006 – exactly five years later. Mullins died on July 8, 2007. 

Contrary to the foregoing, Mullins argues that, pursuant to both 

contracts, so long as a qualifying disability occurs within the five-year period

premium payments are being made: “the Company will pay to the Creditor 

beginning with the DAY BENEFITS COMMENCE set forth above . . . for the 

period such Debtor shall continue to be totally disabled . . . .” The circuit court 

agreed and cited this contractual provision in its order interpreting the contracts. 

However, the court and both parties acknowledge that benefits would expire upon 

one of the following two conditions: a) the insureds’ total disability ceases; or b) 

the insureds’ underlying loan is paid off. Therefore, we need not address those 

conditions further.

Instead, we must resolve the following disputed positions: 1) 

Southern Financial – the coverage term of five years means benefit payments

cease five years after the contract is executed; and 2) Mullins – the contracts’ term

of coverage is five years – benefit payments are governed by other provisions and 

are not limited to five years. Both parties assert that their respective interpretations 

are unambiguous. We disagree. However, we agree that there is an unambiguous 

interpretation:
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So long as the insured sustains a qualifying injury during 

the five-year coverage period while paying premiums, 

the insurer shall pay monthly benefits for a period not to 

exceed five years from the day benefits commence. In 

addition to the expiration of the maximum five-year 

benefit payment term, benefit payments shall also cease 

if one of the following events occurs: 1) the underlying 

loan is paid off; OR 2) the insured ceases to be totally 

disabled. 

This interpretation comprises a plain, natural, and logical reading of all applicable 

terms and provisions. Any alternative interpretation would strain the bounds of 

contract law – and credulity.5 

Lastly, Southern Financial alleges that the “the court erred in granting 

summary judgment to Mullins and denying summary judgment to Southern 

Financial on the breach of contract claims as to Subclass B.” This argument, and 

its sub-arguments, are either underdeveloped, or are otherwise unpersuasive. In 

any event, reversal is certainly not warranted. 

CONCLUSION

For the foregoing reasons, we AFFIRM the circuit court’s order 

granting class certification entered on June 25, 2010. To the extent that the circuit 

5 Under Mullins’ interpretation, so long as the insured remained totally disabled, Southern 

Financial would be required to make monthly payments on the insured instrument or 

incumbrance at issue – for whatever sum owed, and for whatever loan term remained. This 

would lead to an absurd result. Southern Financial’s rigid interpretation would yield a similarly 

absurd result, albeit an opposite one. Both interpretations selectively and erroneously apply 

certain terms and provisions in isolation. 
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court’s summary judgment orders entered on October 3, 2022, are contrary to this 

decision, we REVERSE. We REMAND for the court to enter an order in 

accordance with this decision and for a determination of damages. 

ALL CONCUR.

BRIEFS FOR APPELLANT:

Jeffrey Charles Mando 

Covington, Kentucky 

Joseph L. Hamilton

Marjorie A. Farris

Chadwick A. McTighe

Bethany A. Breetz

Louisville, Kentucky

Russell H. Davis

Pikeville, Kentucky

BRIEF FOR APPELLEE:

Robert E. Salyer 

Lexington, Kentucky