RENDERED: SEPTEMBER 17, 2021; 10:00 A.M.

NOT TO BE PUBLISHED

Commonwealth of Kentucky

Court of Appeals

NO. 2019-CA-0015-MR

GREENWICH INSURANCE COMPANY APPELLANT

APPEAL FROM MAGOFFIN CIRCUIT COURT

v. HONORABLE JAMES W. CRAFT, II, SPECIAL JUDGE

ACTION NO. 07-CI-00006

ESTATE OF LAHOMA SALYER BRAMBLE; 

JOAN ANGONESE; MICHAEL R. ANSLEM; 

MELYNDA HARTMAN COFFEE; AMELIA

CRAFT; CHARLES V. CRAFT; JUDY DOWNS 

CROCKETT; BETTY DOBSON; DOUG DOWNS;

CAROLYN DYKHUZIEN; GWENDONLYN R.

FORGE; MAXINE FRENCH; FREDERIC HARWELL, 

ADMINISTRATOR OF THE ESTATE OF RONALD 

HARWELL; GEMALEA SALYER HAVENS; 

PAM HOWARD; MAYOLA HUMES; GAIL KAHLEY; 

NEVA LOUISE LOVELY; SANDY DOWNS ZIMMERMAN

LYNCH; KAREN J. LYON; CHRISTINE MADISON

KELLEY, ADMINISTRATOR OF THE ESTATE OF

LILLY MAY MADISON; ONEDA MARCHETTI; 

DAVID MARTIN; KIMBERLY D. MCCORD;

LILLIAN MINIX; JAMES R. (JAMIE) PHARES;

JASON PHARES; CHERYL L. PIPER; MOLLIE W.

RICHARDSON; BILL SALYER; DAVID RON SALYER;

GARY SALYER; GLEN SALYER; JAMES SALYER;

LARRY KEITH SALYER; LARRY R. SALYER; MARK
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STEVEN SALYER; MARY E. SALYER; PATCHEL

SALYER; RAMEY SALYER, JR.; ROBERT E. SALYER;

ROY WARD SALYER; TIMMY ODELL SALYER;

WISEMOND SALYER; LAVINIA WHITAKER SMITH;

BARBARA STALBAUM; GINGER ASHWORTH, 

EXECUTRIX OF THE ESTATE OF ANNA M. STEPHENS; 

VANESSA EASON VANHYNING; LAVARVIA 

BEDDINGFIELD WEBIE; DANIEL E. WHITAKER; 

DARYL LAWRENCE WHITAKER; JACK WHITAKER; 

JAMIE WHITWORTH; DARRELL G. WILLIAMS; 

GARY WILLIAMS; GREG WILLIAMS; RANDALL 

WILLIAMS; KAREN WORTMAN; BERNICE BAILEY, 

DECEASED; HENRIETTA BERRY, DECEASED; 

RUTH BROCK, DECEASED; BEAUREDA

COLLEY, DECEASED; CONROY CRAFT, DECEASED;

MARY FIFIELD, DECEASED; PAULINE FRITTS,

DECEASED; JERRY B. GIBBS, DECEASED; PAUL B.

GIBBS, DECEASED; MYRTLE HOWARD, DECEASED;

LINDA KRONTZ, DECEASED; HAROLD LOVELY,

DECEASED; MARK MANNING, DECEASED; AUDREY

MINIX, DECEASED; EARNESTINE MINIX, DECEASED;

JAMES PHARES, DECEASED; INA SALYER PYLES,

DECEASED; WANDA GAYE ROKOSZ, DECEASED;

CHANDLER “HAPPY” SALYER, DECEASED; EMORY

CAIN SALYER, DECEASED; FORD SALYER, DECEASED;

KELLY SALYER, DECEASED; ROTHEL SALYER,

DECEASED; VENA SALYER, DECEASED; LILLIAN 

WHITAKER FLOYD, DECEASED; MARVIN WHITAKER,

DECEASED; DEN DELBERT WILLIAMS, DECEASED;

GERALDINE WILLIAMS, DECEASED; AND ESTATE 

OF EVALEE BLAYLOCK EDWARDS APPELLEES

AND

NO. 2019-CA-0207-MR

GREENWICH INSURANCE COMPANY APPELLANT
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APPEAL FROM MAGOFFIN CIRCUIT COURT

v. HONORABLE JAMES W. CRAFT, II, JUDGE

ACTION NO. 07-CI-00006

MELYNDA HARTMAN COFFEE; AMELIA

CRAFT; JUDY DOWNS CROCKETT; BETTY

DOBSON; DOUG DOWNS; CAROLYN

DYKHUZIEN; GWENDONLYN R. FORGE; 

MAXINE FRENCH; FREDERIC HARWELL, 

ADMINISTRATOR OF THE ESTATE OF RONALD 

HARWELL; GEMALEA SALYER HAVENS; 

PAM HOWARD; MAYOLA HUMES; GAIL KAHLEY; 

SANDY DOWNS ZIMMERMAN LYNCH; 

KAREN J. LYON; CHRISTINE MADISON KELLEY, 

ADMINISTRATOR OF THE ESTATE OF LILLY 

MAY MADISON; ONEDA MARCHETTI; DAVID MARTIN; 

LILLIAN MINIX; JAMES R. (JAMIE) PHARES; 

JASON PHARES; CHERYL L. PIPER; MOLLIE W. 

RICHARDSON; BILL SALYER; DAVID RON 

SALYER; GARY SALYER; GLEN SALYER; 

JAMES SALYER; LARRY KEITH SALYER; 

LARRY R. SALYER; MARK STEVEN SALYER; 

MARY E. SALYER; PATCHEL SALYER; 

RAMEY SALYER, JR.; ROBERT E. SALYER; 

ROY WARD SALYER; TIMMY ODELL

SALYER; WISEMOND SALYER; LAVINIA

WHITAKER SMITH; BARBARA STALBAUM;

GINGER ASHWORTH, EXECUTRIX OF THE 

ESTATE OF ANNA M. STEPHENS; VANESSA EASON

VANHYNING; LAVARVIA BEDDINGFIELD

WEBIE; DANIEL E. WHITAKER; DARYL

LAWRENCE WHITAKER; JACK WHITAKER;

JAMIE WHITWORTH; DARRELL G. WILLIAMS; 

GARY WILLIAMS; GREG WILLIAMS; RANDALL

WILLIAMS; AND KAREN WORTMAN APPELLEES
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OPINION

REVERSING AND REMANDING

**   **  **

BEFORE: LAMBERT, McNEILL, AND TAYLOR, JUDGES.

LAMBERT, JUDGE: These appeals arise from a third-party bad faith action 

relating to the denial of coverage by Greenwich Insurance Company of claims by 

mineral property owners for trespass to minerals on their respective properties. 

After a jury found that Greenwich had violated six parts of Kentucky’s Unfair 

Claims Settlement Practices Act (UCSPA), Kentucky Revised Statutes (KRS) 

304.12-230, and acted with gross negligence towards the owners, the Magoffin 

Circuit Court awarded the landowners $15.1 million in damages. This included 

$14.3 million in punitive damages and $834,000.00 in compensatory damages, and 

the court ordered Greenwich to pay an additional $1.52 million based upon its 

default of obligations under an earlier settlement agreement. We reverse and 

remand.

The underlying matter began with the filing of a complaint with the 

Magoffin Circuit Court on January 9, 2007. The plaintiffs1are individuals who 

owned mineral property in the county. They are the heirs of Ben and Lillian 

Salyer, who had owned, in whole or in part, tracts of mineral property on Stinson 

 

1 Many of the named plaintiffs were dismissed in 2018, either due to non-participation in the suit

or because they had passed away and their claims had not been revived.
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Creek at Patton Fork and the Wardie Patrick Farm. They died intestate in 1946 

and 1940, respectively, and the plaintiffs are their grandchildren or greatgrandchildren, as their eleven children who had inherited the properties had passed 

away. The plaintiffs named J.D. Carty Resources, LLC, and Anaconda Drilling of 

Kentucky, LLC, as the defendants. Anaconda Drilling is a third-party contractor 

that was hired by J.D. Carty Resources to drill the wells at issue. The plaintiffs 

alleged that, beginning in 1993, the defendants trespassed on their land without 

permission or color of title and used heavy equipment to build roads and to drill 

and produce natural gas wells. This caused damage to the plaintiffs’ land and 

deprived them of the mineral and royalties. This, they alleged, constituted willful 

trespass to their mineral and entitled them to damages for the full value of the 

natural gas produced from the wells. The plaintiffs sought a declaration of rights 

concerning their interest in the mineral property and the title and boundary line 

locations. They also sought injunctive relief to enjoin the defendants from 

continuing to drill and produce natural gas from their land. 

A first amended complaint was filed in July 2007, in which the 

plaintiffs named various companies, estates, or individuals who also might claim 

an interest in the mineral property. A second amended complaint was filed in 

November 2007, naming Equitable Production Company as a successor in interest 

to one of the parties added in the first amended complaint. Litigation proceeded as 
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to the boundaries of the properties at issue. The circuit court entered a partial 

summary judgment in March 2008, ruling that the plaintiffs were entitled to a 

judgment as to liability for trespass to minerals against J.D. Carty Resources, 

Anaconda Drilling, and Country Gas, LLC (the J.D. Carty companies). The court 

specifically stated:

The J.D. Carty Companies’ expert and Licensed 

Land Surveyor conducted a survey of the Salyers heirs’

mineral property that is the subject of this action, and 

prepared a survey plat which is filed in the record in this 

case (the “BoCook Survey”). The BoCook survey agrees 

with the Plaintiffs’ survey that the Claxton McCarty Well 

#2 was drilled on the Plaintiffs’ mineral tract and is 

essentially the same with regard to the area affected by 

the Claxton McCarty Well #2. In answers to Requests 

for Admissions, the J.D. Carty Companies admitted to 

the accuracy of the BoCook Survey. There being no 

genuine issue of material fact, Plaintiffs are entitled to 

judgment as a matter of law on the issue of liability 

against the J.D. Carty Companies.

A jury trial was to be assigned to decide the remaining matters, including the 

amount of damages the plaintiffs could recover and apportionment of fault. A 

third amended complaint was filed in July 2008, adding two additional defendants 

(John D. Carty and Fast Flow Group, LLC, which were included with the J.D. 

Carty companies) and a cause of action for fraud. 

In September 2008, the plaintiffs filed a motion for an evidentiary 

hearing and to enforce a settlement agreement between them and the J.D. Carty 

companies. In December 2008, the court entered an order and judgment setting 
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forth the terms of the agreement reached between the parties (the Bramble 

judgment). The court ordered J.D. Carty Resources and Country Gas to pay the 

plaintiffs $628,000.00 to settle all claims related to the Claxton McCarty Well #2, 

making those defendants jointly and severally liable to pay the judgment. The 

Plaintiffs agreed to postpone execution of the judgment against the J.D. Carty 

companies as long as those defendants complied with the order and paid each 

payment when due as set forth in the order. An initial payment of $90,000.00 was 

due on or before December 18, 2008, and the balance was to be paid in ten equal 

installments of $50,000.00 each and a final payment of $38,000.00, with the first 

$50,000.00 payment to be made on or before January 18, 2009, and on the 18th of 

each month after that. Once all the payments had been made, the judgment would 

be deemed satisfied, and the claims against the J.D. Carty companies would be 

dismissed. If the defendants defaulted on one or more of the payments, they would 

not be entitled to a credit or setoff of the amounts paid under the agreement against 

any final judgment that was to be entered.

In January 2009, the plaintiffs moved to enforce the settlement 

agreement or to assign a trial date, stating that the J.D. Carty companies had

defaulted on the agreement to pay. The same month, they filed a renewed motion 

for summary judgment, seeking the amount of $1,010,746.67 from the J.D. Carty 

companies along with interest based upon the default. Anaconda Drilling objected 
-8-

to the motion, stating that it had fully complied with its obligation by tendering 

$20,000.00 by check from its carrier to Carty’s personal counsel with a policy 

release document. The release document was to be executed in exchange for the 

check. In February, the plaintiffs moved to withdraw their motion to enforce the 

settlement agreement so that the matter could proceed to trial the following month, 

although that trial was later continued. On February 19, 2009, the circuit court 

entered an agreed order memorializing a settlement agreement between the parties 

related to held garnishment funds. 

As the matter proceeded, the circuit court permitted several parties to 

intervene in order to determine their respective rights, and it substituted others due 

to death. By order entered June 1, 2009, the court dissolved and set aside the 

temporary restraining order and injunction enjoining the plaintiffs from executing 

on the judgment. In the same order, the court denied a motion to intervene by four 

individuals, which was appealed. That order was affirmed in an opinion rendered 

in October 2010. Another defendant, Country Gas, appealed from an order entered 

in April 2010 related to the court’s order for a judgment of sale against its assets. 

Country Gas’s appeal was dismissed on November 9, 2010.

In April 2010, the plaintiffs moved for leave to file a fourth amended 

complaint. In this amended complaint, the plaintiffs sought to join Bituminous 
-9-

Casualty Corporation2(the insurer for Anaconda Drilling) and Greenwich 

Insurance Company (the insurer for J.D. Carty Resources) in order to assert claims 

for violations of Kentucky’s UCSPA or common law bad faith. Both Greenwich 

and Bituminous had been notified of the plaintiffs’ claims no later than January 

2007, when the litigation began. Neither insurance company made an offer of 

settlement until January 2009, when the companies offered to pay $20,000.00 to 

settle the claims against their respective insured entity. The plaintiffs alleged that 

the companies lacked a reasonable basis to refuse or delay payment of the 

insurance claims once they were notified and had received information to 

document the claims. They also alleged the companies acted and continued to act 

with reckless disregard as to whether there was a reasonable basis to deny paying 

the claims or to negotiate a good faith settlement. As a result, the plaintiffs 

suffered inconvenience from these delays and the failure of the insurance 

companies to pay under the policies or attempt to settle and pay their claims in 

good faith. The plaintiffs went on to allege that the companies had ulterior motives 

for refusing to pay in good faith based upon the existence of self-serving programs 

and/or rewards programs, which would reward adjusters for underpaying claims. 

They alleged that this conduct constituted gross negligence and a reckless 

 

2 Bituminous changed its name to BITCO General Insurance Corporation during the course of 

the proceedings. In the interest of clarity, we shall refer to this defendant as Bituminous 

throughout this opinion.
-10-

disregard to whether any reasonable basis existed for denying or delaying payment 

of their claims. Therefore, the plaintiffs sought punitive damages. The plaintiffs 

also sought to recover attorney’s fees, costs, and pre-claim and pre-judgment 

interest. The motion was granted, and the fourth amended complaint was filed. 

In May 2010, Bituminous filed a notice of removal with the United 

States District Court for the Eastern District of Kentucky, Southern Division at 

Pikeville, based upon diversity jurisdiction. However, the matter was remanded to 

state court shortly thereafter because it could not be determined at that time 

whether complete diversity existed. 

In June of that year, the plaintiffs moved to clarify the scheduled trial 

date and to bifurcate certain defendants. They also indicated that they were not 

waiving their right to a jury trial on their bad faith claims against Bituminous and 

Greenwich. In August, Greenwich also filed a motion to sever the claims made in 

the fourth amended complaint against it from the remaining issues in the case. It 

indicated that it had been defending the underlying case under a reservation of 

rights and that, before a bad faith claim may proceed, coverage and an obligation 

to pay must be established. Bituminous also filed a motion to sever. Both parties 

filed motions seeking a protective order and to stay discovery. In its motion, 

Greenwich stated that it had contributed $20,000.00 to the total amount of the 

agreed upon settlement between the plaintiffs and its insured, J.D. Carty 
-11-

Resources. For that contribution, J.D. Carty Resources signed a policy holder’s 

release in which it agreed that it was not entitled to any further coverage or defense 

under its policy with Greenwich. J.D. Carty Resources and the plaintiffs accepted 

the funds and acknowledged the release. The remainder of the settlement was to 

be paid by J.D. Carty Resources pursuant to a set schedule. When J.D. Carty 

Resources defaulted on its payments, the plaintiffs demanded payment from 

Greenwich. They filed a fourth amended complaint against Greenwich and 

Bituminous when reminded about the substance of the settlement agreement and 

release. The court denied the motions to sever and for a protective order.

In November 2010, the Salyer heirs plaintiffs3filed a motion for 

partial summary judgment against Greenwich and Bituminous, asking the court to 

declare that the insurance companies were obligated to pay their claims under the 

terms of the respective insurance policies. They argued that a review of the 

companies’ policies established that they provided coverage for the claims. 

Greenwich responded with a cross-motion for partial summary judgment on the 

issue of coverage, arguing that no coverage existed under the policy for various 

reasons. 

 

3 The attorneys representing the Salyer heirs withdrew their representation of other plaintiffs 

prior to the filing of this motion. We shall continue to refer to these parties as the plaintiffs. 
-12-

On January 11, 2011, the circuit court entered an order ruling on the 

pending motions. The court denied the motions filed by Greenwich and 

Bituminous, but it granted the plaintiffs’ motion for partial summary judgment. It 

found that the policies provided coverage for J.D. Carty Resources’ actions that 

formed the basis of the plaintiffs’ complaint and subsequent judgment. It therefore

found that the plaintiffs had established the first prong of the bad faith test as set 

forth in Wittmer v. Jones, 864 S.W.2d 885, 890 (Ky. 1993); namely, that the 

insurers were obligated to pay the claim under the terms of the respective policies. 

Both insurance companies moved the court to alter, amend, or vacate this order. 

Greenwich specifically argued that the court failed to specify which plaintiffs were 

entitled to summary judgment; that the order did not indicate a basis for the ruling 

through findings of fact or conclusions of law; that the bad faith standard was 

misstated as the standard cited in the order was for first-party, not third-party, bad 

faith claims; and that the parties had not been heard on the issues presented 

regarding its liability for violations of the UCSPA. Greenwich requested that the 

order be made final and appealable. In a separate filing, Greenwich renoticed its 

motion to bifurcate. And in February 2011, Greenwich moved the court to 

reconsider the denial of its motion for summary judgment. 

By order entered March 11, 2011, the court ruled on the various 

pending motions. The court granted the motions to bifurcate and stay discovery, 
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partially granted reconsideration on its summary judgment by indicating which 

plaintiffs were included in the order (the plaintiffs represented by attorneys Dean 

and Mehr), and denied reconsideration as to its judgment in favor of the plaintiffs 

on coverage. As to Greenwich, the circuit court stated:

[T]he insurance policy between Greenwich and its 

insured J.D. Carty Resources, LLC, provides coverage 

for the claims asserted by the Dean/Mehr Represented 

Salyer Heir Plaintiffs against J.D. Carty Resources. J.D. 

Carty Resources’ trespass to minerals constitutes 

property damage and an occurrence under the terms of 

the Greenwich/J.D. Carty Resources insurance contract. 

No exclusions in the policy apply, and additionally the 

Greenwich/J.D. Carty Resources insurance contract 

contains a “personal injury and advertising liability 

endorsement” that also provides coverage for the 

Dean/Mehr Represented Salyer Heir Plaintiffs’ claims 

against J.D. Carty Resources.

In addition, the circuit court made the January 11, 2011, order final and appealable. 

Both Greenwich and Bituminous appealed from these rulings (Appeal Nos. 2011-

CA-0542-MR and 2011-CA-0643-MR). This Court dismissed the appeals on 

February 21, 2014, as non-final and interlocutory, holding that it was beyond the 

circuit court’s discretion to make the rulings final. The Supreme Court of 

Kentucky denied the motions by Greenwich and Bituminous seeking discretionary 

review on February 23, 2015, and this Court’s opinion and order became final later 

that month. At that time, litigation as to the UCSPA and bad faith claims went 

forward.
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In August 2016, Greenwich and Bituminous filed a joint notice of 

removal to the United States District Court for the Eastern District of Kentucky 

based upon diversity jurisdiction pursuant to 28 United States Code (U.S.C.) §

1441. In response to the removal, the plaintiffs moved to remand the case to state 

court. Early in 2017, the federal court opted to remand the case based upon the 

failure of the insurance companies to properly remove the case within one year of 

its commencement. 

Upon remand, the plaintiffs moved the circuit court to enter a 

scheduling order and set the matter for a jury trial on their bad faith claims against 

Greenwich and Bituminous. By order entered in April 2017, the matter was set for 

a status conference two months later. 

Prior to the status conference, the plaintiffs filed a notice of their 

intention to file a motion to enter an agreed judgment and order of dismissal of 

their claims against Anaconda, J.D. Carty, and Fast Flow Group. They also moved 

to file a fifth amended complaint to assert supplemental claims against Greenwich 

and Bituminous, alleging that the insurers had fraudulently induced J.D. Carty 

Resources and Anaconda into signing a policyholder’s release in exchange for the 

$20,000.00 and defense under the policies. 

Following the status conference, the court set a jury trial for March 5, 

2018. The trial would first determine the issues of damages and apportionment. If 
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those matters were settled or resolved, the trial would determine the bad faith 

claims. Discovery went forward.

In November 2017, the plaintiffs filed a motion for partial summary 

judgment against Greenwich for the amount of the underlying judgment against

J.D. Carty Resources ($628,000.00), plus interest, for a total of $1,358,858.01. 

This was based upon discovery documents that showed that lawyers had advised 

the insurance company as early as June 26, 2007, that the policy of insurance did 

provide coverage for the trespass claims as well as upon the circuit court’s January 

2011 ruling that the policy provided coverage. The court denied this motion in an 

order entered February 8, 2018.

Also in November 2017, Greenwich moved to dismiss the plaintiffs’

fourth amended complaint, arguing that Kentucky law prohibits a third party from 

pursuing a claim under the UCSPA for the purpose of determining coverage. 

Because coverage had always been contested and had not been established, and the 

plaintiffs did not seek a declaratory judgment in that complaint, the plaintiffs did 

not have the right to pursue such a claim in the fourth amended complaint. In 

addition, Greenwich argued that a third-party bad faith claim is not permitted under 

Kentucky common law. Therefore, Greenwich asserted that the plaintiffs did not 

have standing to bring a common law bad faith claim against it. Greenwich also 

argued that the plaintiffs could not prove that its conduct was outrageous or 
-16-

demonstrated a reckless indifference to the rights of others. In response, the 

plaintiffs moved to amend the pleadings to conform to the evidence that it was 

making a claim for declaratory relief pursuant to KRS 418.404. 

The plaintiffs moved to file a second, fifth amended complaint in 

January 2018 to make it clear that they were seeking a declaration of rights as to 

whether the insurance companies’ policies covered their claims pursuant to KRS 

418.040. The court permitted the plaintiffs to do so by order entered April 16, 

2018. This order also scheduled a jury trial to begin on September 17, 2018. The 

court denied Greenwich’s motion to dismiss the same day.

In March 2018, Greenwich filed a response to the plaintiffs’ motion 

for partial summary judgment as well as a cross-motion for summary judgment. 

Greenwich continued to argue that there was no coverage for lost royalties and 

revenue under the policy, only tangible property damage, and that it was entitled to 

summary judgment as well as a dismissal of the claims against it. And in April 

2018, Greenwich filed a motion to dismiss the fifth amended complaint for failure 

to state a cause of action for which relief could be granted based on it being unduly 

vague. 

On May 22, 2018, the court entered an agreed order of partial 

dismissal. Pursuant to a joint motion, the plaintiffs’ claims against Anaconda and 

Bituminous were dismissed with prejudice as settled. 
-17-

On May 30, 2018, Greenwich filed an answer to the fifth amended 

complaint as well as a counterclaim against the plaintiffs and a cross-claim for 

declaratory judgment against J.D. Carty Resources. These were related to the bad 

faith claims against it. 

In July 2018, Greenwich moved to dismiss the fourth and fifth 

amended complaints because it had satisfied its part of the underlying agreement 

by paying $20,000.00 of the amount due and because of the policy holder’s 

release. It argued that the plaintiffs waived their right to object to the policy 

holder’s release by failing to object to that portion of the agreement being read into 

the record. It also argued that cashing the check constituted waiver and estoppel. 

In August 2018, Greenwich filed a motion for summary judgment on 

the second element of Kentucky’s bad faith test. It argued that the plaintiffs failed 

to prove that it lacked a reasonable basis in law or fact to deny the claim and that 

whether the belief that coverage did not exist was fairly debatable. The gist of 

Greenwich’s argument was that the plaintiffs’ claims for trespass to minerals (here, 

the capture, removal, and sale of natural gas) did not constitute a covered 

occurrence under an endorsement to the policy or was at least fairly debatable. To 

be an occurrence, the claimed loss must be an accident, which Greenwich asserted 

was not the case here as J.D. Carty Resources’ actions were not accidental. 
-18-

Therefore, the plaintiffs could not prove all of the elements, and their bad faith 

claim should be dismissed. The plaintiffs objected to the motion. 

Also in August, Greenwich moved the court to alter, amend, or vacate 

its interlocutory order entered March 11, 2011, based upon a new decision by the 

Supreme Court of Kentucky in American Mining Insurance Co. v. Peters Farms, 

LLC, 557 S.W.3d 293 (Ky. 2018). The plaintiffs disputed that the policy at issue 

in American Mining was the same as the one in the present case. 

And also that month, the plaintiffs filed a motion for summary 

judgment seeking a declaration of rights under the fifth amended complaint that 

Greenwich’s insurance policy provided coverage for their trespass claim. They 

argued that the plain language of the endorsement explicitly covered trespass and 

that Greenwich’s attorneys offered it the same advice. 

Prior to trial, both sides filed motions in limine. Greenwich 

specifically objected to the introduction of any testimony from the plaintiffs’

proposed expert, David Huff, regarding whether its managing general agent 

(MGA) agreement with DBG & Associates, including the compensation structure, 

was improper or violated the UCSPA. It also sought to exclude testimony about or 

reliance upon the 2011 interlocutory orders regarding coverage. In a separate 

motion, Greenwich sought to strike Mr. Huff’s opinion in whole or in part because 

he had never been a licensed insurance adjuster and therefore was not qualified to 
-19-

offer an opinion as to whether a carrier acted in bad faith. The plaintiffs argued 

that Mr. Huff was qualified to offer expert testimony in this case. 

In September 2018, Greenwich filed a response to the plaintiffs’

motion for summary judgment and filed a cross motion for summary judgment 

seeking a declaration that its policy did not provide coverage for mineral trespass 

and conversion. It again cited the newly released opinion of the Supreme Court for 

its argument that the March 2011 interlocutory order should be amended or 

vacated. 

The circuit court held a pretrial conference on September 7, 2018, and 

thereafter entered an order ruling on various motions that had been pending. The 

court bifurcated the claims against John Carty, individually, from those against 

Greenwich in the fourth amended complaint. It granted Greenwich’s motion to 

alter, amend, or vacate the March 11, 2011, order in part, having determined that 

the holding in American Mining was dispositive as to the question of whether 

Coverage B (Property Damage based upon an occurrence) provided J.D. Carty 

Resources with coverage for the allegation of mineral trespass. Based on that 

holding, the court vacated its ruling that the policy provided coverage for the 

mineral trespass claims. It noted that the plaintiffs had stipulated on the record that 

they agreed with the court’s interpretation of American Mining and were 

withdrawing any claim that J.D. Carty Resources’ mineral trespass constituted 
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property damage and an occurrence under the terms of the insurance contract with 

Greenwich. The court did not, however, grant the portion of Greenwich’s motion 

related to Group C of the personal injury and advertising injury endorsement. 

The court went on to grant the plaintiffs’ motion for summary 

judgment and denied Greenwich’s cross motion for summary judgment related to 

coverage for the mineral trespass claims, holding that the policy did provide such 

coverage. It denied Greenwich’s motion for summary judgment on the fourth and 

fifth amended complaints based upon waiver or equitable estoppel. It also denied 

Greenwich’s motion for partial summary judgment regarding the policy language 

in the personal injury and advertising injury endorsement in Group C, ruling that it 

did not find any ambiguity in the policy language or that the interpretation of the 

policy language was fairly debatable. It found that questions of fact remained as to 

whether Greenwich had acted reasonably in handling the plaintiffs’ claim. The 

court opted to pass the motion related to Mr. Huff’s testimony, noting that it would 

address specific objections during his testimony. 

A jury trial commenced on September 17, 2018, and concluded eleven 

days later. Greenwich filed a written motion seeking a directed verdict of 

dismissal due to lack of evidence of outrageous conduct. It argued that there was 

no evidence of reckless indifference to the plaintiffs’ collective rights in the way 

Greenwich had defended itself and that, once put on notice, it took reasonable 
-21-

measures to investigate and promptly respond to the claims. Greenwich also filed 

a written motion for a directed verdict due to lack of sufficient evidence of 

emotional distress. The court entered a directed verdict in favor of Greenwich as 

to several individuals or estates. 

Following the trial, Greenwich filed motions for a judgment 

notwithstanding the verdict (JNOV) pursuant to Kentucky Rules of Civil 

Procedure (CR) 50.02, citing lack of sufficient proof of mental anguish in the 

context of bad faith, of outrageous conduct, of violations of the UCSPA, and for

the punitive damages award. The plaintiffs argued that the jury’s verdict was 

consistent with the evidence that had been presented at the trial. 

On November 9, 2018, the court entered its trial judgment. It noted 

that it had verbally granted Greenwich’s motion for a directed verdict due to lack 

of proof of emotional distress damages or lack of proof to support the dismissed

plaintiffs’ claims. It also had granted a directed verdict related to another plaintiff 

who had passed away and whose claim had not been revived. As a result of these 

rulings, 52 plaintiffs remained. The court went on to state that it had denied the 

remaining motions by Greenwich for a directed verdict at the close of the 

plaintiffs’ case-in-chief and at the close of its case-in-chief. As to the jury’s 

verdict, it found in favor of the plaintiffs on all of the interrogatories under 

Instruction No. 2 and awarded each plaintiff compensatory damages for emotional 
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distress in amounts between $11,000.00 and $40,000.00 for a total of $834,000.00 

under Instruction No. 4. Under Instruction No. 5, the jury found that Greenwich 

had acted with gross negligence towards the plaintiffs and awarded $14.3 million 

in punitive damages. The court awarded the plaintiffs the individual sums set forth 

in Instruction No. 4 and jointly awarded them the punitive damages along with 

post-judgment interest.

Greenwich filed another motion for a JNOV following entry of the 

judgment on each of the grounds listed above. In the alternative, it moved the 

court to alter or vacate the punitive damages award. 

On November 30, 2018, the court entered an order and judgment 

granting the plaintiffs’ motion for partial summary judgment against Greenwich 

related to the payment of damages and interest from the order and judgment 

entered in December 2008 in the underlying case. The court determined that 

Greenwich was obligated to pay the amount due from J.D. Carty Resources. The 

amount of damages was $628,000.00, and, with accrued interest, the amount owed 

was $1,520,433.27. The court adjudged Greenwich to be jointly and severally 

liable to the plaintiffs under the terms of the December 17, 2008, order and 

judgment. This order was made final and appealable. Greenwich filed a notice of 

appeal from the September 17 and November 30, 2018, orders as well as from 

several orders entered in 2011 (Appeal No. 2019-CA-0015-MR). 
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On January 22, 2019, the court entered an order denying Greenwich’s 

motion for a JNOV or new trial, specifically addressing the punitive damages 

argument. It held that Greenwich failed to challenge the amount of punitive 

damages and that the amount awarded was not excessive. Greenwich filed a notice 

of appeal from the November 9, 2018, judgment, the January 22, 2019, order 

denying its motion for a JNOV, and several other orders entered during the course 

of the proceedings (Appeal No. 2019-CA-0207-MR). 

On appeal, Greenwich raises issues related to the circuit court’s bad 

faith judgment, including orders related to coverage and its conduct; the amount of 

mental anguish and punitive damages awarded; various trial errors, including jury 

selection and evidentiary rulings; and the order requiring Greenwich to pay the 

underlying default judgment to the plaintiffs (now appellees). 

For its first, multi-part argument, Greenwich contends that the trial 

court’s orders concerning coverage were erroneous. Because this argument 

addresses conclusions of law, the trial court’s rulings “are subject to independent 

de novo appellate determination.” Gosney v. Glenn, 163 S.W.3d 894, 898 (Ky. 

App. 2005). “In general, the proper interpretation of insurance contracts is a 

matter of law to be decided by a court; and, thus, an appellate court uses a de novo, 

not a deferential, standard of review.” Pryor v. Colony Ins., 414 S.W.3d 424, 427 
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(Ky. App. 2013) (citing Hugenberg v. West American Ins. Co./Ohio Cas. Group, 

249 S.W.3d 174, 185 (Ky. App. 2006)). 

First, Greenwich argues that the trial court improperly permitted the 

appellees to file a bad faith claim prematurely so that they could obtain a ruling on 

coverage. Rather than filing a declaratory judgment to obtain a ruling on coverage, 

which Greenwich argued could have been immediately appealable, the appellees 

instead filed a third-party bad faith action to obtain an interlocutory ruling on 

coverage. Greenwich points out that when the appellees were later confronted with 

the holding in Pryor, supra, they asserted that the holding was inapplicable to them 

as coverage had been established by that time

Greenwich cites to Pryor, supra, in support of this argument. In 

Pryor, the Court recognized that the general rule “is that a complainant must first 

establish liability before seeking indemnity from an insurer in an action based on 

the insured’s negligence. The prohibition of direct actions against insurers until 

liability has been established has remained the law in Kentucky.” 414 S.W.3d at 

432 (citing N.Y. Indem. Co. v. Ewen, 221 Ky. 114, 298 S.W. 182, 185 (1927)). 

The Pryor Court examined the issue as follows:

Next, we address whether Pryor was authorized to 

sue as a third-party claimant under UCSPA. In fact, an 

insurance company’s violation of the UCSPA creates a 

private cause of action both for the named insured and 

for those who have claims against the named insured, and 

the same standards govern both types of cases. Motorists 
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Mut. Ins. Co. v. Glass, 996 S.W.2d 437, 452 (Ky. 1997). 

But a third-party claimant may only sue the insurance 

company under USCPA when coverage is not contested 

or already established. Knotts v. Zurich Ins. Co., 197 

S.W.3d 512, 516 (Ky. 2006). And, as stated by Chief 

Justice Robert Stephens in his concurring opinion in 

Curry v. Fireman’s Fund Ins. Co., 784 S.W.2d 176, 178 

(Ky. 1989):

An insured does not avail himself of this 

cause of action by merely alleging bad faith 

due to an insurance company’s disputing or 

delaying payment on a claim. An insured 

must prove that the insurer is obligated to 

pay under the policy, that the insurer lacks a 

reasonable basis for denying the claim, and 

that the insurer either knew there was no 

reasonable basis to deny the claim or acted 

with reckless disregard for whether such a 

basis existed. An insurer’s refusal to pay on 

a claim, alone, should not be sufficient to 

trigger the firing of this new tort.

Therefore, a third party cannot make a claim under 

UCSPA for the purpose of establishing coverage. 

Therefore, Pryor cannot avail herself of a bad faith action 

in order to establish that insurance coverage was 

available.

Pryor, 414 S.W.3d at 433. 

The appellees, on the other hand, argue that Greenwich’s 

interpretation of Pryor is incorrect as it (Greenwich) had agreed multiple times that 

the trial court properly considered insurance coverage issues. They point to the 

motions for summary judgment filed in 2010, in which the parties asked the trial 

court to rule on coverage, and to Greenwich’s appeal of that ruling, which was 
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dismissed as interlocutory. Greenwich argued to this Court in a motion for 

reconsideration and to the Supreme Court in a motion for discretionary review that 

the parties had properly sought rulings on coverage in the way they did. The 

appellees also argue that they had adjudicated their claims against J.D. Carty 

Resources prior to bringing Greenwich into the action. Only after Greenwich 

received unfavorable rulings did it argue in the opposite manner. 

We are persuaded by Greenwich’s argument that the circuit court 

improperly permitted the appellees to pursue their bad faith claims against it in 

violation of Pryor because coverage had not been established when they filed their 

third-party bad faith complaint. That coverage had been ruled on by the time 

Pryor was rendered does not excuse the error. And neither does the appellees’

motion to amend the pleadings to seek a declaration of rights once the legal 

problem was raised. The method by which the appellees prosecuted their bad faith 

claim ultimately did not permit Greenwich to seek review of the trial court’s 

interlocutory ruling on the first prong of the Wittmer bad faith test prior to the trial. 

Therefore, the trial court should have dismissed the appellees’ fourth amended 

complaint in which they sought their third-party bad faith claim against 

Greenwich. We must vacate the November 8, 2018, judgment and direct the trial 

court to enter a judgment in favor of Greenwich on the appellees’ third-party bad 

faith claim. 
-27-

Based upon this ruling, we need not address Greenwich’s remaining 

arguments related to coverage, the amount of damages awarded, and various trial 

errors. 

As to the November 30, 2018, order in which Greenwich was directed 

to reimburse the appellees for J.D. Carty Resources’ payment default under the 

2008 trespass settlement in the amount of $1,520,433.27, we must also reverse that 

judgment. In making this award, the trial court cited to State Automobile Mutual

Insurance Company v. Empire Fire & Marine Insurance Company, 808 S.W.2d 

805, 808 (Ky. 1991) (“[A]n injured party must first obtain judgment against the 

opposing party defendant and then seek enforcement of the judgment rendered in 

an action against the defendant’s indemnitor.”), and its conclusion that Greenwich 

had wrongfully denied coverage in this action to reach this decision. We must 

agree with Greenwich that the appellees did not have standing to challenge the 

defense it provided to J.D. Carty Resources as to the settlement proceedings as the 

duty to defend in such situations is between the insured and the insurer, absent an 

assignment of rights from the insured. “As a general matter, Kentucky courts have 

long recognized that an insurer that breaches its duty to defend will be liable to its 

insured for judgments and settlements obtained after that breach.” The Point/Arc 

of Northern Kentucky, Inc. v. Philadelphia Indemnity Insurance Company, 154 F. 

Supp. 3d 503, 507 (E.D. Ky. 2015) (citing Interstate Cas. Co. v. Wallins Creek 
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Coal Co., 164 Ky. 778, 176 S.W. 217, 219 (1915)). Therefore, the trial court erred 

in ordering Greenwich to pay the underlying settlement judgment.

For the foregoing reasons, the judgments of the Magoffin Circuit 

Court are reversed, and this matter is remanded for dismissal of the appellees’

fourth amended complaint.

McNEILL, JUDGE, CONCURS IN RESULT ONLY.

TAYLOR, JUDGE, DISSENTS AND DOES NOT FILE SEPARATE 

OPINION.

BRIEFS FOR APPELLANT:

Mindy G. Barfield

Shaye P. Johnson

Lexington, Kentucky

Susan L. Maines

Lexington, Kentucky

BRIEF FOR APPELLEES:

M. Austin Mehr

Philip G. Fairbanks

Lexington, Kentucky