RENDERED: JANUARY 19, 2024; 10:00 A.M. NOT TO BE PUBLISHED 

# Commonwealth of Kentucky Court of Appeals

NO. 2022

- CA

- 0840

- MR
BETTY BALDWIN APPELLANT

v. APPEAL FROM CALLOWAY CIRCUIT COURT

HONORABLE JAMES T. JAMESON, JUDGE

ACTION NO. 20

- CI

- 00092

KENTUCKY NATIONAL INSURANCE COMPANY ; AND HOLTON, MELUGIN AND HAVERSTOCK INSURANCE AGENCY, INC. , D/B/A HAVERSTOCK INSURANCE AGENCY, INC. APPELLEES

OPINION AFFIRMING IN PART, REVERSING IN PART ,

AND REMANDING
**   **  **
BEFORE: CALDWELL, JONES, AND TAYLOR, JUDGES. TAYLOR, JUDGE: Betty Baldwin brings this appeal from a June 21, 2022, summary judgment of the Calloway Circuit Court in favor of Kentucky National Insurance Agency (KNIC) and Holton, Melugin, and Haverstock Insurance- 2

-

Agency, Inc. , d/b/a Haverstock Insurance Agency, Inc. (Haverstock)

. We affirm in part, reverse in part, and remand.

This appeal involves the denial of insurance coverage to Baldwin relating to the total loss of her home by fire in October of 2019

. The circuit court summarized the facts as follows:

1

. It is undisputed that Betty Baldwin, hereinafter “Baldw in ,” i ncurred a fire loss in 1994

. Baldw in received approximately $90,000 in insurance proceeds as a result of that fire

. Baldw in rebuilt the existing structure damaged by fire

. The new structure was a two

- story home. Baldwin lived in this home u ntil October 13, 2019

. 2

. On or about 2012, according to Baldwin ’ s Complaint in C alloway 20

- CI

- 00120, Baldwin purchased homeowner insurance for the above

described home from American Commerce through Holton, Melugin and Haverstock Insurance Agency, Inc ., d/b/a Haverstock Insurance Agency Inc ., hereinafter “Haverstock

. ” Specifically, Baldwin interacted with Van Haverstock

. 3

. Van Haverstock is an agent for multiple insurance companies, including American Commerce and Kentucky National Insu rance Company

. 4

. Prior to procuring insurance through American Commerce, Baldwin called [Van] Haverstock due to her relationship with Haverstock ’ s brother, Gary Haverstock. Shortly after the initial call, [Van] Haverstock went to Baldwin ’ s home and pe rformed an in spec t ion of the premises

. Baldwin ’ s brother, Jerry Davidson, was the only individual present at the home du ri ng the inspection

. Neither Baldwin nor her husband were present

.- 3

-

5

. Defendant had homeowner insurance from American Commerce unti l approximately November of 2017

. 6

. On or about 2017, Baldwin called [Van] Haverstock

. Baldwin asked Haverstock to look into cheaper options for homeowner insurance

. [Van] Haverstock did not perform any inspections or present questions to Baldwin reg arding a new application for homeowner insurance

. 7

. On or about November 21, 2017, Baldwin received a phone call from “Betsy” at Haverstock

. Betsy ad v ised Baldwin that she needed to come to the office and s ign her application

. On November 21, 2017, Baldwin appeared at Haverstock ’ s office to s ign the application

. The secretary presented the application for homeow n er ’ s insurance to Baldwin in the recept ion area of the office

. The secretary instructed Baldwin on where her signature was needed

. Without reading, Baldwin signed the application

. The application was dated November 21, 2017

. Baldwin was not denied an opportunity to review the application be fore signing

. 8

. According to Baldwin in her deposition on September 14, 2021, two of the answers provided on the application were incorrect at the time of sign in g . Baldwin indicated in Question 28 that she did not specifically have a German Shepperd [ sic]

. Further, Baldwin in Question 32 indicated that she had never had a prior fire loss

. See Attached Kentucky Homeowners Application

. 9

. Sometime after signing the Kentucky Homeowner Application, Baldwin purchased a homeowner insurance policy throug h Kentucky National Insurance Company

.- 4

- 10

. On October 13, 2019, a fire occurred and resulted in a total loss of the above

- described home

. 11

. On March 5, 2020, after denying Baldwin ’ s coverage, Kentucky National Insurance Company (hereinafter “KNI”) filed a Complaint for Declaration of Rights and Monetary Damages arising from the house fire on October 13, 2019

. 12

. On March 26, 2020, Baldwin answered KNI ’ s complaint and filed her own counterclaims

. 13

. On March 26, 2020, Baldwin filed a separate action ( C alloway Circuit 20

- CI

- 00120) against Haverstock. Baldwin claimed that Haverstock was liable for the damages incurred by Baldwin which were caused by the representations of [Van] Haverstock

. 14

. On June 18, 2020, this case was consolid ated w ith 20

- CI

- 00120

. Third

- Party Defendant, Holton, Melugin and Haverstock Insurance Agency, Inc

. , d/b/a Haverstock Insurance Agency, Inc

. , was jo in ed because of the similarity in ba s ic facts and circumstances

. Order on Summary Judgment at 1

- 3.

On Mar ch 10, 2022, KNI C filed a motion for summary judgment.
KNI C alleged that Baldwin signed the application for insurance with KNI C and that the application contained two misrepresentations. According to KNI C , Baldwin answered in the negative as to whether s he had any fire losses in the past
and as to whether she owned a German Shepherd dog; however, KNI C pointed ou t that Baldwin had a prior fire loss to her home in 1994 and owned a German- 5

-

Shepherd dog. 1 Because of these m isrepresentation s in the applicatio n, KNIC maintained that it was permitted to rescind the homeowner ’ s insurance policy pursuant to Kentucky Revised Statutes (KRS) 304.14

- 110 and Hornback v.
Ba n kers Life Insurance Company , 176 S.W.3d 699 (Ky. App. 2005). Haverstock joined in KNIC ’ s motion for summary judgment and sought summary judgment in its favor. Baldwin filed a response and argued that she did not make the misrepresentations in the application. Rather, Baldwin asserted that Van Haverstock or an employee under his direction com pleted the application, and she merely signed same without reading it. Baldwin also alleged that Van Haverstock knew that her prior home was destroyed by fire and that she owned a German Shepherd dog but negligently completed the application. As Van Have rstock was an agent of KNIC, Baldwin maintains that KNIC was estopped from rescinding coverage and/or that Haverstock was liable for Van Haverstock ’ s negligence.

On June 21, 2022, the circuit court rendered summary judgment in favor of KNIC and Haverstoc k. In so doing, the circuit court reasoned:

Plaintiff, in their renewed and second motion for summary judgment, argues that Horn back v. Bankers

1 The record reflects that due to the 1994 fire loss, Betty Baldwin’s insurance company paid $90,000 on the claim

. Additionally, the parties acknowledged at oral argument that the dog was not involved in causing the fire. Thus, the representation regarding the dog was not material to Baldwin’s fire loss claim in 2019.- 6

- Life Insurance Compa ny , 1 76 S

. W

. 3d 699 (Ky

. Ct. App

. 2005) is controlling in the matter s ub judice based on t he facts and circumstances presented supra . This Court agrees . . . . The application process in Hornback is similar to the application process in the matter sub judice , though not identical

. However, the outcome remains the same

. In Hornback , Garrett, an employee of AMI and an agent of the insurer, renewed the application with the Hornback s . The employee read the questions and completed the applica tion based on the answers they supplied

. After completing the application , the employe e asked the Hornback s to s ign it. The Hornback s testified that they were hurried and did not read the application before singing it

. The Hornback s further acknowledged that no one prevented them from either reading the form or filling out t he answers themselves

. In the matter sub judice , some conversations w ere had between Baldw in and [Van] Haverstock

. These conversations were held telephonically

. [Van ] Haverstock, on one occas ion , visited and inspected the premises

. [Van] Haverstock, after the inspection, completed an applica ti on for homeowner ’ s insurance through A m erican Commerce in approximately 2012

. Baldw in eventually purchased a policy through American Commerce. A few years later, in 2017, Baldwin sought a new, cheaper policy

. The record reflects that Haverstock used information from Baldw in ’ s prior application for American Commerce to complete the new ap plication for Pla inti ff, Kentucky National Insurance Company

. At no point, as the record reflects, did Haverstock direct new questions to Baldw in regarding her new policy

. Once instructed to appear at Haverstock ’ s office to sign the application, Baldw in complied

. Baldwin was not precluded from re vi ew in g the application or altering answers contained therein

. Most importantly, Baldwin did not correct the answers provided in Questions 28 and- 7

- 32

– i

. e . , German Shepherd ownership and prior fire losses

.

. . . . Da ti ng back to at least 1945, Kentucky Courts have long held that the statements written in applications for insurance coverage by a local agent, signed [ b y] the applicant w ithout reading the contents therein, were actually or constructively known to the applicant and that “she may not thereafter repudiate the answers in the application and recover on the policy

. ” Commo nwealth Life Ins. Co. v. Bruner , 299 Ky

. 335 , 185 S

. W

. 2d 408 (1945)

. See al s o Reserve Life Ins. Co . v. Thoma s , 310 S

. W

. 2d 267, 269

- 70 (Ky

. 1958)

. Here, it is undisputed that Baldw in did not read the application before signing it. Immediately above Baldwin ’ s Signature is the following language : “I have read the entire application and I warrant that to the best of my knowledge an d belief all of the statements made herein are true

. I understand that this application is part of my policy contract

. I understand if any check or credit card offered in payment is not honored by my bank or credit card company, the Company shall be deem ed not to have accepted the check or credit card, and the policy shall be deemed void from i nception and I will be charged a processing fee

. ” Thus, Baldwin by affi xi ng her s ignature to the document, represented to Kentucky Na ti onal Insurance Company that all statements were true. Baldw in represented to Kentucky National Insurance Company that she did not own a German Shepherd, a prohibited dog breed

. F urther, Baldw in represented that she had no prior fire losses

. In fact, it is undisputed that Baldwin received approximately $90,000

. 00 in insurance proceeds follow in g a fire in 1994

. Therefore, it is impossible for this Court to conclude anything other than that Bald w in made misrepresentations that were material to the insurer ’ s acceptance of the risk and that there is no- 8

- genuine issue of material fact in this regard

. Thus, it would be i m possible for Baldwin to produce evidence at trial that would result in a judgment in her favor

. This Court concludes that Kentucky National Insurance Company is entitled to judgment, as a matter of law

. Baldwin filed an original action against Haverstock for damages, in excess of the minimum jurisdictional limits of this Court, sus tained by reason of the failure of Haverstock to properly and correctly answer the questions in the application for insurance w ith Kentucky National Insurance Company

. The Court concludes that Hornback , again, is controlling

. . . . There is no dispute in both matters that an agent or an employee of the agent for the in surer filled out the application in its en ti rety

. In both i nstances, the insureds never read the application

. Further, the insureds in both matters were not prevented from reading the appl ication and m ak ing alterations

. The Court in Ho rnback concluded, “as a matter of law, that the Hornback s adopted and were responsible for the answers when they signed the application

. Thus, regardless of what disclosures were made to Garrett, the responsibility for the answers rests solely with the Hornback s . Under these circumstances, Garrett and AMI were, as a matter of law, entitled to a judgment in their favor

. ” Id

. at 704

. Thus, this Court can only conclude that, when renewing the record in a light most favorable to Baldw in , there is no genuine i ssue of mate ri al fact, and, as a matter of law, Haverstock is entitled to a judgment in his favor because it would be impossible for Baldwin to produce ev i dence at trial that would produce a judgment in her favor

. Order on Summary Judgment at 4

- 7. The circuit court also awarded KNIC “costs, fees, expenses and attorney ’ s fees.” Order on Summary Judgment at 8. This appeal follows.- 9

- To begin , summary judgment is proper where there exists no material issue of fact and movant is entitled to judgment as a matter of law. Steelvest, Inc. v. Scansteel Service Center, Inc. , 807 S.W.2d 476 (Ky. 1991) . All facts and inferences therefrom are to be viewed in a light most favorable to the nonmoving party. Seiller Waterman, LLC v. Bardstown Cap. Corp. , 643 S.W.3d 68, 74 (Ky. 2022). Additionally, this Court ’ s review of a summary judgment is always de

novo . Id. at 74; Cunningham v. Kroger Ltd

. P ’ ship I , 651 S.W.3d 199, 202 (Ky. App. 20 2 2). Baldwin asserts t hat the circuit court erred by rendering summary judgment in favor of KNIC. In particular, Baldwin argues that KNIC was estopped from denying coverage and rescinding her homeowner ’ s insurance policy. According to Baldwin, Van Haverstock or an employee un der his direction filled out the application in its entirety , and she merely signed the application after being contacted to do so . Baldwin asserts that Van Haverstock or his employee incorrectly answered the questions in the application despite knowing t hat she owned a German Shepherd dog and that she had previously sustained a major fire to her home. Baldwin claims that Van Haverstock was KNIC ’ s agent , and KNIC should be estopped from rescinding her homeowner ’ s insurance policy.

In a strikingly similar case in 2005 , th is Court recognized that an applicant who signs an insurance application is on constructive notice of its- 10

-

contents and is singularly responsible for the information contained therein. Hornb a ck , 176 S.W.3d at 704. Therein, the Court held :

The court faced a similar situation in Commonwealth Life Ins. Co. v. Bruner , 299 Ky. 335, 185 S.W.2d 408 (1945)

. Therein , the applicant on a life insurance policy made false statements material to the risk in the application. Upon her son ’ s death, the applicant sought to recover under the policy. While it was clear that the answers given by the applicant in the applicatio n were false, the applicant claimed that she did not read it before signing it. Nevertheless, the court held that the statements written in the application by the local agent were actually or constructively known to the applicant and that “she may not the reafter repudiate the answers in the application and recover on the policy.” Id. at 410. See also Reserve Life Ins. Co. v. Thomas , 310 S.W. 2d 267, 269

- 70 (Ky. 1958)

. In short, whether they read the application or not, the Hornbacks are held to have actual or constructive knowledge of its contents. Further, by signing the application, the Hornbacks adopted the answers as their own. Hornb a ck , 176 S.W.3d at 704

.

Bald win believes that Hornback , 176 S.W.3d 699 is distinguishable from the case at hand ; however, we do not read Hornback so narrowly. Hornback is clear that an applicant is, as a matter of law, responsible for the answers, correct or incorrect, in an insuran ce application when he or she signs their n ame. Id. It matters not whether the applicant or the insurance agent filled out the application. We, thus, reject Baldwin ’ s contention that KNIC should be estopped from denying coverage and rescinding the polic y.- 11

- Baldwin next contends that the incorrect answers in the homeowner ’ s insurance application were not material per KRS 304.14

- 110 (2) , and as such, KNIC could not rescind the homeowner ’ s insurance policy. Baldwin asserts that her prior fire loss occurred some 23 years before she signed the application for homeowner ’ s insurance with KNIC. Baldwin points out “that C.L.U.E. (Comprehensive Loss Underwriting Exchange), the Nationwide databa se used by insurance companies to determine previous losses, only goes back” approximately seven years. Baldwin ’ s Brief at 6. Additionally, Baldwin maintains that American Commerce Insurance, her previous homeowner ’ s insurance company, only inquired abou t any loss over the last five years. To be material under KRS 304.14

- 110 (2) , Baldwin claims that KNIC had to demonstrate that acting reasonably and in accordance with the usual industr y practice , it would have not issued insurance coverage. In this insta nce, Baldwin asserts that the incorrect answers in the application were not material per KRS 304.14

- 110(2).

KRS 304.14

- 110 controls where a misrepresentation is made in an insurance application. KRS 304.14

- 110 provides:

All statements and descriptions in any application for an insurance policy or annuity contract, by or on behalf of the insured or annuitant, shall be deemed to be representations and not warranties. Misrepresentations, omissions, and incorrect statements shall not prevent a recovery under the policy or contract unless either: (1) Fraudulent; or- 12

- (2) Material either to the acceptance of the risk, or to the hazard assumed by the insurer; or (3) The insurer in good faith would either not have issued the poli cy or contract, or would not have issued it at the same premium rate, or would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss, if the true facts had been made known to the insurer as required either by the application for the policy or contract or otherwise. This subsection shall not apply to applications taken for workers ’ compensation insurance coverage. Relevant to this appeal, under KRS 304.14

- 110(2), the insurer may rescind a policy where the misrepresentation was “ [ m ] aterial either to the acceptance of the risk, or to the hazard assumed by the insurer [

. ] ” An incorrect answer in the application is considered material” if the insurer, “acting reasonably a nd naturally in accordance with the usual practice of . . . insurance companies under similar circumstances, would not have accepted the application . . . .” John Hancock Mut. Life Ins. Co. v. Conway , 240 S.W.2d 644, 646 (Ky. 1951). And, under KRS 304.14

- 110(3), the insurer may rescind an insurance policy where the insurer, acting in good faith, would not have issued the policy, would not have issued it at the same premium, or would not have covered the hazard causing the loss i f the true facts were known t o the insurer. It must be pointed out that the insurance company is permitted to rescind an insurance policy under subsection (1), (2), or (3) of KRS 304.14

- 110.- 13

- In th is case, it is undisputed that Baldwin suffered a major fire loss to her previous home in 1994 and was paid $90,000 by her homeowner ’ s insurance company. It is also uncontroverted that in the insurance application with KNIC, Baldwin was asked if she “ever h ad a fire loss,” and the answer was no.

The record contains KNIC ’ s underwriting guidelines filed with the Kentucky Department of Insurance. The guidelines provide that KNIC would not have bound a homeowner ’ s insurance policy if the applicant had previous ly incurred a total or major loss. A total or major loss was identified as “[r]isks with a prior total fire loss or a major loss including any fire or theft loss in excess of $5 , 000 or any other loss that is not weather or catastrophe related in excess of $10,000

. . . . ” In his depositional testimony, Gary Rogers, KNIC ’ s Vice

- President of underwriting, stated if an applicant for homeowner ’ s insurance had previously incurred a major fire loss in excess of $10,000, KNIC would not issue a policy of
insuranc e. According to Rogers, it is KNIC ’ s customary and usual practice to not issue homeowner ’ s insurance if the applicant previously suffered a major fire loss.

Baldwin , however, failed to present any evidence disputing that it was KNIC ’ s usual and customa ry practice not to issue a homeowner ’ s insurance polic y if there has been a prior major fire loss

. See Blackstone Mining Co. v. Travelers
Ins. Co. , 351 S.W.3d 193, 198 (Ky. 2010) ( cit ing Lewis v. B&R Corp. , 56 S.W.3d 432, 436 (Ky. App. 2001) ) ( holding tha t t h e moving party carries the initial burden- 14

-

of demonstrat ing that no genuine issue of material fact exists ; thereafter , the burden shifts to the nonmoving party to present some evidence showing there is a genuine issue of material fact for trial)

. Based upon the above uncontroverted facts , it is clear that KNIC, acting in good faith , would not have issued the homeowner ’ s policy absent the misrepresentations in the application. Therefore, we conclude that KNIC was permitted to rescind the homeowner ’ s policy of insurance pursuant to KRS 304.14

- 110( 3 ). 2

Baldwin also maintains that the circuit court erroneously rendered summary judgment dismissing her negligence claim against Haverstock. Baldwin
claims Van Haverstock knew that she had a previous majo r fire loss to her home and that she owned a German Shepherd dog. Despite such knowledge, Baldwin asserts that Van Haverstock or an employee acting under his direction incorrectly answered questions concerning same in the insurance application and was
neg ligent by doing so.

Again, we view Hornback , 176 S.W.3d 699 as dispositive. In Hornback , the Hornback s contended that an agent of an insurance company acted negligently and breached a fiduciary duty by incorrectly filling out the application

2 Baldwin also maintains that the circuit court rendered summary judgment under subsection (2) of Kentucky Revised Statutes 304

. 14

- 110, rather than subsection (3). Nonetheless, the law is clear that we may affirm the circuit court upon any basis in the record, and our review of summary judgment is de n ovo .- 15

-

of insurance by indicating that Hornback did not suffer from a disease of the heart. Id

. at 701

. The Hornbacks alleged that they disclosed Hornback ’ s heart condition to the agent. Id. In affirming the circuit court ’ s summary judgment in favor of the agent, the Court of Appeals pointed ou t that the Hornback s did not read the application before signing it even though they were free to do so. Id

. at 704. The Court held that “as a matter of law, the Hornbacks adopted and were responsible for the answers when they signed the application

. T hus, regardless of what disclosures were made [to the agent], the responsibility for the answers rests solely with the Hornbacks. ” Hornback , 173 S.W.3d at 704. T he C ourt then concluded that the insurance agent was entitled to su mmary judgment upon the negligence claim and breach of fiduciary duty claim as a matter of law. Id.

Likewise, in our case, Baldwin signed the insurance application without reading it. Per Hornback , 173 S.W.3d at 704, Baldwin is solely responsible for th e answers in the application, and Haverstock was entitled to summary judgment dismissing Baldwin ’ s claim of negligence. Absent any allegation or evidence of fraud by Haverstock, we are duty bound to follow Hornback and Bruner cited therein. Supreme Court Rule 1:030(8).

Baldwin lastly argues that the circuit court erroneously awarded attorney ’ s fees to KNIC . We agree.- 16

- In Kentucky , it is well

- established that attorney ’ s fees are not awarded to the prevailing party unless a statute or contractual provisio n specifically permits recovery thereof. Bell v. Commonwealth, Cabinet for Health and Fam

. Servs. , 423 S.W.3d 742, 748 (Ky. 2014); Any C onnect U.S. , LLC v. Williamsburg Place, LLC , 636 S.W.3d 556, 565 (Ky. App. 2021).

In its summary judgment awarding KNI C attorney ’ s fees, the circuit court d id not cite to a statutory or contractual provision authorizing an award of attorney ’ s fees to KNIC, and we are aware of none

. Moreover, KNIC fails to address its entitlement to attorney ’ s fees in its brief. Accordingly, we are of the opinion that KNIC was not entitled to an award of attorney ’ s fees, and the circuit court erred by awarding same in the summary judgment.

To summ arize, we are of the opinion that the circuit court properly rendered summary judgment dismissing Baldwin ’ s claims against KNIC and Haverstock but improperly awarded KNIC attorney ’ s fees.

For the foregoing reasons, the summary judgment of the Calloway Cir cuit Court is affirmed in part, reversed in part, and remanded for proceedings consistent with this Opinion

.

CALDWELL, JUDGE, CONCUR S

. JONES, JUDGE, CONCURS IN RESULT ONLY.- 17

-

BRIEF FOR APPELLANT: Robert L

. Prince Benton, Kentucky
ORAL ARGUMENT FOR APPELLANT: Bethany Willcutt Benton, Kentucky BRIEF AND ORAL ARGUMENT FOR APPELLEE KENTUCKY NATIONAL INSURANCE COMPANY : Ben E. Stewart Paducah, Kentucky BRIEF FOR APPELLEE HOLTON, MELUGIN AND HAVERSTOC K INSURANCE AGENCY, INC., D/B/A HAVERSTOCK INSURANCE AGENCY, INC.:
Ben S . Fletcher, III Hopkinsville , Kentucky