Opinion ID: 2284494
Heading Depth: 1
Heading Rank: 2

Heading: analysis

Text: 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 standard insurance policies, and in some cases are offered as a combined coverage. In both, proof that the offending motorist was at fault and proof of the amount of damages caused by the offending motorist are not preconditions to coverage, but only essential facts that must be proved before the insured can recover judgment in a lawsuit against the insurer on the contract of insurance. Contract language, like statutory language, may be clear on its face and yet contain a latent ambiguity. Thornhill Baptist Church v. Smither, 273 S.W.2d 560, 562 (Ky.1954); see also Carroll v. Cave Hill Cemetery Co., 172 Ky. 204, 189 S.W. 186, 190 (1916) (A latent ambiguity is one which does not appear upon the face of the words used, and it is not known to exist until the words are brought in contact with the collateral facts.) As explained further below, under facts peculiar to each case, the contract language in Preston (legally entitled to recover) and Hatfield (a legal right to recover) exposed a latent ambiguity when confronted with applicable laws of foreign jurisdictions that reflected public policies of those jurisdictions sharply at odds with Kentucky law. However, when the interplay between the policy language now before us and the exclusive remedy provisions of the Workers' Compensation Act is examined, we find no ambiguity in the policy language, and we can find no construction of such language that would support a conclusion that the Estate was legally entitled to collect any amounts from either the owner of the vehicle, James Long Trucking, or its driver, Napier, over and above the workers' compensation benefits already awarded under the Act. The exclusive remedy provision of the Kentucky Workers' Compensation Act, which is contained in KRS 342.690, provides as follows: If an employer secures payment of compensation as required by this chapter, the liability of such employer under this chapter shall be exclusive and in place of all other liability of such employer to the employee, his legal representative, husband or wife, parents, dependents, next of kin, and anyone otherwise entitled to recover damages from such employer at law or in admiralty on account of such injury or death.... The exemption from liability given an employer by this section shall also extend to such employer's carrier and to all employees, officers or directors of such employer or carrier.... Essentially, the exclusive remedy provision grants immunity for liability arising from common law and statutory claims, meaning such claims cannot be pursued in the courts of this Commonwealth. Kentucky Employers Mut. Ins. v. Coleman, 236 S.W.3d 9, 13 (Ky.2007). The effect of this statute is that KRS 342.690(1) and its predecessor statute shield a covered employer and its insurer from any other liability to a covered employee for damages arising out of a work-related injury. Id. (quoting Travelers Indemnity Co. v. Reker, 100 S.W.3d 756, 760 (Ky.2003)). [T]he exemption from liability granted to an employer by KRS 342.690(1) is also extended to all employees of the employer. Fireman's Fund Ins. Co. v. Sherman & Fletcher, 705 S.W.2d 459, 464 (Ky.1986). As the above authorities demonstrate, except for the workers' compensation benefits that have already been awarded pursuant to KRS Chapter 342, the Estate is not now, nor will it ever be, legally entitled to collect any further amounts from either James Long Trucking or Napier. Since the contractual language of the State Farm policy affords payment of UM or UIM benefits only for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured [underinsured] motor vehicle, under the facts of this case, the Estate may not collect under its UM or UIM coverage. While the Court of Appeals determined that the policy language was ambiguous, its declaration to that effect was conclusory, and it identified no alternative interpretation of the language. The two decisions upon which it principally relied to find ambiguity in the State Farm policy language are Preston, 26 S.W.3d 145 and Hatfield, 122 S.W.3d 36. However, in each of those cases the legal bar to recovery against the third-party tortfeasor was the application of foreign law to a Kentucky resident claiming coverage under a Kentucky-issued policy of UM or UIM insurance. In Hatfield, Missouri's sovereign immunity law prevented further recovery from the tortfeasor, a Missouri municipal fire department employee. In Preston, Georgia's comparative negligence law prevented recovery by the sixty-percent at fault plaintiff from the forty-percent at fault tortfeasor. Thus, in those cases, the laws of foreign jurisdictions which barred recovery where Kentucky law would allow recovery exposed the latent ambiguity of the insurance policy language. In Preston, did legally entitled to recover mean legally under Georgia law or legally under Kentucky law? In Hatfield, did a legal right to recover mean legal under Missouri law or legal under Kentucky law? In both Preston and Hatfield we interpreted a Kentucky insurance policy issued to a Kentucky resident as being consistent with Kentucky law, and we refused to subordinate Kentucky public policy to the conflicting public policy of another state. Central to the Preston decision was our recognition that [l]aws unique to other jurisdictions, e.g., regarding statutes of limitations, interspousal immunity, workers' compensation, and comparative or contributory negligence, should not bind and define the public policy of Kentucky. Preston, 26 S.W.3d at 147-148 (emphasis added). In the present matter, Kentucky public policy is expressed in KRS 342.690(1), and we are not confronted with the law of a foreign jurisdiction that conflicts with that Kentucky policy. Our decision in this case is not inconsistent with our holdings in Hatfield and Preston. [11] The conclusion we reach is also consistent with the conclusion reached by the majority of other jurisdictions that have considered the issue. See John P. Ludington, Annotation, Automobile Uninsured Motorist Coverage: Legally Entitled to Recover Clause as Barring Claim Compensable Under Workers' Compensation Statute, 82 A.L.R. 4th 1096 § 6(a) (1990) ([A]n employee is not entitled to uninsured motorist benefits under his or her own automobile insurance policy for injuries resulting from a coemployee's [sic] negligent operation of a motor vehicle, because an uninsured motorist carrier is liable only for the damages which an insured is legally entitled to recover' from owners or operators of uninsured motor vehicles, and the workers' compensation law grants immunity from suit to a co-employee for injuries compensable by workers' compensation benefits.) [12] In summary, for the reasons explained, we are constrained to conclude that both the trial court and Court of Appeals erred in their holdings that the Estate was entitled to collect benefits under either the UM or UIM provisions of the State Farm policy.