Court Opinion

ID: 4637828
Source: CourtListenerOpinion
Date Created: 2020-11-27 15:06:01.350829+00
Date Added: 2024-06-11T07:58:43.684512
License: Public Domain

RENDERED: NOVEMBER 20, 2020; 10:00 A.M.
                     TO BE PUBLISHED

           Commonwealth of Kentucky
                    Court of Appeals

                     NO. 2018-CA-1494-MR

BOWLIN GROUP, LLC                                    APPELLANT

           APPEAL FROM BOONE CIRCUIT COURT
v.    HONORABLE GREGORY M. BARTLETT, SPECIAL JUDGE
                 ACTION NO. 16-CI-00203

CHRISTINA REBENNACK, INDIVIDUALLY,
AS PERSONAL REPRESENTATIVE OF THE
ESTATE OF JOEL REBENNACK, AND AS
MOTHER AND NEXT FRIEND OF ELIJAH
REBENNACK; MELANIE REBENNACK; AND
ARIANNA REBENNACK                                    APPELLEES

                             AND
                     NO. 2019-CA-0078-MR

CHRISTINA REBENNACK, INDIVIDUALLY,
AS ADMINISTRATRIX OF THE ESTATE OF
JOEL REBENNACK, AND AS MOTHER AND
NEXT FRIEND OF ELIJAH REBENNACK; MELANIE
REBENNACK; AND ARIANNA REBENNACK                     APPELLANTS
              APPEAL FROM BOONE CIRCUIT COURT
v.       HONORABLE GREGORY M. BARTLETT, SPECIAL JUDGE
                    ACTION NO. 16-CI-00203

WESTCHESTER FIRE
INSURANCE COMPANY                                                      APPELLEE

                            OPINION
      AFFIRMING IN PART, VACATING IN PART, AND REMANDING

                                    ** ** ** ** **

BEFORE: GOODWINE, TAYLOR, AND K. THOMPSON, JUDGES.

THOMPSON, K., JUDGE: In February 2015, Joel Rebennack died after being

struck by a vehicle driven by an intoxicated Brenda Amerson. Because Joel was

working when he was struck, Bowlin Group, LLC paid workers’ compensation to

his estate and, pursuant to a settlement, is obligated to pay substantial future

benefits. Joel Rebennack’s widow, Christina Rebennack (on behalf of herself,

Joel’s estate, and their three minor children—collectively “Christina”), sued

Amerson, an Elks Lodge where Amerson drank alcohol prior to the tragic accident,

and some individuals associated with the lodge (collectively the “Elks

defendants”). Bowlin Group intervened to assert its subrogation rights.

             Christina eventually settled with the Elks defendants. The trial court

denied Bowlin Group’s request to use that settlement to receive a credit against its

                                          -2-
future obligations, instead granting summary judgment to Christina. Bowlin

Group then filed appeal 2018-CA-1494-MR.

             Meanwhile, Christina also filed bad-faith claims against Westchester

Fire Insurance Company, the Elks defendants’ excess insurance provider.

However, without affording Christina an opportunity to engage in discovery on her

bad-faith claims, the trial court granted summary judgment to Westchester.

Christina then filed appeal 2019-CA-0078-MR. Since the appeals spring from the

same facts and circuit court case, we will resolve both in this combined Opinion.

Having considered the parties’ arguments and applicable law, we affirm the

decision to grant summary judgment to Christina in Bowlin Group’s appeal and

vacate the decision to grant summary judgment to Westchester without affording

Christina a chance to engage in discovery.

             I. Sealing the Briefs

             Before we analyze the issues, we must address a procedural matter left

open by a previous procedural order of this Court. Specifically, the parties seek to

seal the briefs in both appeals, essentially because they contain discussion of

matters ordered sealed by the trial court—principally, the settlement(s) and offers

of settlement. The previous order provisionally granted the motion but noted the

decision would be revisited by the merits panel. “This Court retains authority to

review decisions on motion panel that do not finally dispose of the case when the

                                         -3-
case is considered by a full-judge panel to which it is assigned.” Commonwealth

Bank & Tr. Co. v. Young, 361 S.W.3d 344, 350 (Ky.App. 2012).

             Kentucky Rule of Civil Procedure (CR) 7.03(4) provides in relevant

part that “[f]or good cause, the court may by order in a case . . . limit or prohibit a

nonparty’s access to a document filed with the court.” The question before us is

not whether the trial court erred by permitting documents to be filed under seal.

No one has challenged that decision, so we will not address it. Maclean v.

Middleton, 419 S.W.3d 755, 761 (Ky.App. 2014) (“We certainly agree that court

records should not be sealed as a matter of routine practice simply at the request of

the parties. But in the absence of any challenge to the order, the issue is not before

this Court and we have no authority to disturb the trial court’s decision to seal the

record.”). Instead, the question is whether the appellate briefs should be sealed.

             Generally, there is a presumption in favor of public disclosure of court

records. Id. Here, however, the briefs contain discussion of settlement amounts

and offers, which is unsurprising given Christina’s bad-faith claims and Bowlin

Group’s request for a credit against its future obligations. There is authority

holding that public disclosure of the offers and counteroffers endemic to any

settlement effort is generally inappropriate. See, e.g., Goodyear Tire & Rubber

Co. v. Chiles Power Supply, Inc., 332 F.3d 976, 980 (6th Cir. 2003) (citation

omitted) (“There exists a strong public interest in favor of secrecy of matters

                                          -4-
discussed by parties during settlement negotiations. . . . Moreover, confidential

settlement communications are a tradition in this country.”). To help preserve the

sanctity of the settlement process, we will not disturb the decision to seal the

briefs.

             II. Bowlin Group’s Appeal (2018-CA-1494-MR)

             Bowlin Group’s appeal requires us to determine whether Kentucky

Revised Statute (KRS) 342.700(1) entitles it to an offset for future benefits owed

Christina. We review the “substance of a trial court’s summary judgment ruling de

novo, i.e., to determine whether the record reflects a genuine issue of material fact

. . . .” Blankenship v. Collier, 302 S.W.3d 665, 668 (Ky. 2010).

             In relevant part, the applicable version of KRS 342.700(1) provided:

             Whenever an injury for which compensation is payable
             under this chapter has been sustained under
             circumstances creating in some other person than the
             employer a legal liability to pay damages, the injured
             employee may either claim compensation or proceed at
             law by civil action against the other person to recover
             damages, or proceed both against the employer for
             compensation and the other person to recover damages,
             but he shall not collect from both. . . . If compensation is
             awarded under this chapter, the employer, . . . having
             paid the compensation or having become liable therefor,
             may recover in his or its own name or that of the injured
             employee from the other person in whom legal liability
             for damages exists, not to exceed the indemnity paid and

                                          -5-
               payable to the injured employee, less the employee’s
               legal fees and expense.[1]

KRS 342.700(1) “permits injured workers to seek full recovery for their injuries by

allowing such workers to receive compensation from both the employer and a

third-party tortfeasor so long as the injured worker does not receive double

recovery for the injuries.” AIK Selective Self-Insurance Fund v. Minton, 192
S.W.3d 415, 419 n.2 (Ky. 2006) (citation omitted). But determining what is a

double recovery is not always simple.

               It is uncontested that the settlement Christina reached with the Elks

defendants is for an amount which dwarfs the maximum possible benefits the

Bowlin Group may owe.2 It is also uncontested that Christina’s attorney fees

exceed the maximum possible benefits the Bowlin Group may owe. Bowlin Group

stresses that not allowing it to receive a credit against its future obligations due to

Christina’s substantial tort recovery would allow her to receive an impermissible

double recovery.3 On the other hand, Christina stresses language in KRS

1
 KRS 342.700 was amended in 2018, but all parties agree the prior version of the statute applies
here, and 2018 Kentucky Acts Ch. 40 (HB 2) § 20 explicitly provides that the amendments to
KRS 342.700 apply to claims based upon injuries “occurring on or after the effective date of this
Act.” Thus, our analysis will be based upon the prior version of KRS 342.700.
2
 The precise amount of Bowlin Group’s obligations to Christina is unknowable since it is
contingent upon future events which may or may not occur, such as remarriage.
3
 Bowlin Group is only entitled to subrogation/credit for any settlement funds stemming from
Joel’s lost wages, not his pain and suffering. See, e.g., Hillman v. American Mut. Liability Ins.
Co., 631 S.W.2d 848, 850 (Ky. 1982) (“Although compensation benefits are calculated on the

                                                -6-
342.700(1) which states that an employer’s subrogation recovery must be reduced

by an injured employee’s legal fees. Since her legal fees exceed Bowlin Group’s

maximum liability, she argues Bowlin Group’s ability to receive subrogation

credits has been eliminated. Though the parties argue to the contrary, we have

found no precedent with similar facts which directly resolves this issue.

               Bowlin Group chiefly relies upon AIK Selective Self Insurance Fund

v. Bush, 74 S.W.3d 251 (Ky. 2002), to support its contention that it is entitled to an

offset of its future obligations. In Bush, an injured worker settled with his

employer’s workers’ compensation carrier and then sued the alleged tortfeasor; the

compensation carrier filed a complaint against the tortfeasor “to recoup the

workers’ compensation benefits it had paid and would pay to Bush because of his

injury.” Id. at 252. A jury apportioned 25% of the fault to the tortfeasor and 75%

to the worker’s employer. The question on appeal was whether the employer’s

basis of lost earnings, the percentage of disability reflects the loss of future earnings and earning
power as well. To the extent, therefore, that the claimant recovers these items of damage against
a third-party tortfeasor, the compensation carrier is subrogated and, we believe, is entitled to be
reimbursed before the claimant collects. To the extent, however, that the recovery against the
tortfeasor represents items of damage (e.g., pain and suffering) not covered by workers’
compensation, the carrier has no right against that recovery at all.”). Christina’s settlement with
the Elks defendants did not allocate a specific amount for Joel’s lost income. However,
Christina claimed a significant amount for Joel’s lost income in a pre-settlement itemization of
damages. “The burden of proving the affirmative defense of entitlement to a credit is on the
employer. Where prima facie evidence of a credit is introduced, the burden of going forward
with evidence that a portion of the tort recovery is not available for subrogation credit should be
properly placed on the employee.” Whittaker v. Hardin, 32 S.W.3d 497, 499 (Ky. 2000). The
fact that Christina claimed lost income and settled for an amount well over twice that claimed
lost income amount is prima facie evidence that at least some portion of the settlement was for
Joel’s lost income, and Christina has not met her burden to show to the contrary.

                                                 -7-
insurer was entitled to recoup past and future amounts owed to the worker. Our

Supreme Court held that the employer was entitled to recover 25% of its past and

future workers’ compensation payments (since the employer was found 75% at

fault) to avoid the worker receiving an impermissible double recovery. Id. at 255

(citation omitted) (“AIK can recover no more than 25% of its total subrogation

claim and . . . its recovery can be applied only against those elements of damages

awarded in the judgment that correspond to the workers’ compensation benefits

that it paid, i.e., past and future lost wages and medical expenses.”).

              We agree with the Bowlin Group that the Court in Bush held that the

employer was entitled to a credit for future medical expenses, which are roughly

akin to the future compensation payments owed to Christina here.4 But even if we

were to conclude that Bush means that an employer is generally entitled to a credit

for its future obligations, Bush does not address a situation where an injured

employee’s legal fees exceed the employer’s liability. Indeed, in Bush the Court

remanded the matter to the trial court because the record did not reflect the amount

of the claimant’s legal fees. Id. at 258.5

4
 Obviously, Joel’s death precludes his having post-settlement medical expenses, so the facts in
Bush are analogous, not directly on point.
5
  We have also considered the other cases relied upon by Bowlin Group and Christina, but we
will not belabor this already lengthy Opinion by discussing each cited case as we conclude none
is directly on point sufficient to resolve this appeal.

                                              -8-
              We also cannot find the answer in the main case upon which Christina

relies, Minton, 192 S.W.3d 415. In Minton, an employee collected workers’

compensation benefits, filed a tort claim against the third party who allegedly

caused the injury, and the employer intervened to raise its subrogation claim. After

the employee settled with the third party, the trial court denied the employer any

right to subrogation because the employee’s legal fees exceeded the benefits paid

by the employer. The employer appealed, arguing it was unfair to deduct the

employee’s entire legal fees since some of the fees were incurred for pursuing tort

damages. However, stressing the plain language of KRS 342.700(1), our Supreme

Court disagreed and held it was not unfair to use an employee’s entire legal

expenses to reduce, or even eliminate, an employer’s subrogation amount.6

              We agree with Christina that Minton reached the unremarkable

conclusion that courts construe KRS 342.700(1) according to its plain meaning.

We also agree with Christina that Minton shows that an employee’s legal fees can

“wipe[] out” an employer’s subrogation recoupment. Id. at 417. However, Minton

does not directly answer the credits-against-future-obligations issue since it

involved an employer seeking credit for past payments and mainly focused on

6
  We note that the current version of KRS 342.700(1) now provides that only a “pro rata share of
the employee’s legal fees and expense” shall be used to reduce an employer’s subrogation
amount. But, as previously explained, we must apply the older version of that statute.

                                              -9-
whether the entirety of an employee’s legal fees should impact an employer’s

subrogation efforts—an issue not present here.

             Because precedent does not directly answer the issue, we must

analyze closely the language of KRS 342.700(1). When analyzing a statute, a

court must look to the plain meaning of the words therein; if the language is clear,

the court must afford the statutory language its plain meaning and the “inquiry

ends.” Travelers Indemnity Company v. Armstrong, 565 S.W.3d 550, 558 (Ky.

2018) (citation omitted).

             We must also attempt to “carry out the intent of the legislature” by

“consider[ing] the intended purpose of the statute-and the mischief intended to be

remedied.” Monumental Life Ins. Co. v. Department of Revenue, 294 S.W.3d 10,

19 (Ky.App. 2008) (quotation marks and citation omitted). Indeed, the General

Assembly has enacted a statute mandating that “[a]ll statutes of this state shall be

liberally construed with a view to promote their objects and carry out the intent of

the legislature . . . .” KRS 446.080(1). And “[t]he primary purpose of the

Workers’ Compensation Act is to aid injured or deceased workers” so we must

“interpret the workers’ compensation statutes in a manner that is consistent with

their beneficent purpose.” Kentucky Uninsured Employers’ Fund v. Hoskins, 449
S.W.3d 753, 762 (Ky. 2014) (citations omitted).

                                         -10-
             In relevant part, KRS 342.700(1) provides that if an employee is

awarded workers’ compensation, the employer “may recover . . . from the other

person in whom legal liability for damages exists” an amount “not to exceed the

indemnity paid and payable to the injured employee, less the employee’s legal fees

. . . .” The statute plainly permits Bowlin Group (employer) to recover from a third

party who caused its employee damages (Amerson and the Elks), which it did,

pursuant to a settlement, albeit for significantly less than its future obligations to

Christina. But, in real world terms, accepting Bowlin Group’s arguments would

allow it to recover from Christina since affording it a credit against its future

obligations would result in a dollar-for-dollar reduction in the funds she receives.

Reducing the funds paid to an injured worker’s estate does not serve the

beneficent, worker-focused aim of our workers’ compensation system. As our

Supreme Court held in Minton, workers’ compensation is a contract between the

employer and employee, and “for the injured worker to receive the full benefit of

his bargain, his right to receive a maximum recovery under the statute must take

priority over the right of the employer/insurer to receive reimbursement for the

benefits which it was already obligated to pay by contract.” Minton, 192 S.W.3d at

419 (citation omitted). We can only accept Bowlin Group’s argument, therefore, if

compelled to do so by the plain language of KRS 342.700(1)—which we are not.

                                          -11-
             The plain language of KRS 342.700(1) weighs in Christina’s favor.

There is no language in the statute which would logically lead to a conclusion that

the entirety of Christina’s substantial legal fees should not apply to Bowlin

Group’s subrogation rights. Instead, the General Assembly used blanket language

to state broadly that the amount the employer has paid, and will pay, to its injured

employee (amounts “paid and payable”) must be reduced by “the employee’s legal

fees . . . .” We cannot judicially graft a distinction onto a statute which does not

contain one. And sometimes an employee’s legal fees are so large that they

eliminate an employer’s subrogation rights. Indeed, our Supreme Court

recognized in Minton that the employer’s subrogation fees in that case were

“wiped out” by the employee’s large legal fees. Minton, 192 S.W.3d at 417.

             Finally, we reject Bowlin Group’s argument that the trial court

allowed Christina to have an impermissible “double recovery.” Although it did not

involve the precise question before us, our Supreme Court in Minton explained at

length how reducing/eliminating an employer’s subrogation rights by the full

amount of an employee’s legal fees did not mean the employee had obtained a

double recovery:

             Tort claims involve a significant risk and require
             substantial energy in pursuing recovery. It is only fair to
             require employers/insurers benefiting from the fruits of
             such an endeavor to share in its costs . . . . Moreover, it
             is not arbitrary that the entire cost of pursuing the tort
             award (including those portions which do not duplicate

                                         -12-
the benefits paid as workers’ compensation) should be
deducted from an employer/insurer’s subrogation credit.

       Under the common law, subrogees had no right to
subrogation until the injured party was “made whole.”
Wine v. Globe American Casualty Co., 917 S.W.2d 558,
561-62 (Ky. 1996). In other words, the injured party
must be fully compensated for all of his or her injuries
before the subrogee is entitled to reimbursement. Id.
This doctrine recognized the basic premise that the right
of the injured party to receive full recovery for his or her
injuries is superior to the right of the subrogee to receive
a credit for benefits previously paid on behalf of the
injured party.

       While the “made whole” doctrine may not be
employed to trump or undermine the statutory
subrogation scheme set forth in workers’ compensation
cases, see Bush, supra, at 255-56, its underlying
principles remain relevant when explicating the statute’s
primary functions. Paying workers’ compensation
benefits is an obligation derived by contract. In
exchange for agreeing to pay benefits, employer-
subrogees receive revenues and profits from the labor of
its employees, as does the insurer-subrogee consequently
receive its revenue and profits from the premiums paid
by the employer. Thus, in order for the injured worker to
receive the full benefit of his bargain, his right to receive
a maximum recovery under the statute must take priority
over the right of the employer/insurer to receive
reimbursement for the benefits which it was already
obligated to pay by contract. See Wine, supra. The
conditional right to subrogation authorized under KRS
342.700(1) merely recognizes and codifies this
underlying principle of the “made whole” doctrine.

       In this case, Appellees are not receiving double
recovery for Mr. Minton’s injuries because a portion of
the tort award must be utilized to pay legal fees and
expenses. This diversion of funds has resulted in

                            -13-
              Appellees receiving less than full compensation for those
              injuries. Under such circumstances, it is reasonable for
              the legislature to deny employer/insurers an additional
              subrogation credit from the tort award unless the
              employer/insurer’s subrogation claim is greater than the
              costs incurred to pursue the tort award.

Minton, 192 S.W.3d at 418-19 (emphasis added) (citation and footnote omitted).7

              In sum, we agree with Bowlin Group that, generally, an employer is

entitled to a subrogation-type credit against its future obligations when an

employee recovers from a third-party tortfeasor. However, we disagree with

Bowlin Group that it is entitled to that credit because the statute is plain: an

employee’s entire legal fees offset an employer’s subrogation/future credit rights.

Here, Christina’s legal fees vastly exceed Bowlin Group’s obligations. Thus,

Bowlin Group’s general entitlement to credits against its future obligations is

“wiped out . . . .” Id. at 417. Because that is the same bottom line conclusion

reached by the trial court, we affirm.

              III. Christina’s Appeal (2019-CA-0078-MR)

              Christina’s appeal focuses on Westchester’s handling of her claims

against the Elks defendants, for whom Westchester was the excess insurance

7
  As Justice Cooper noted in his concurring opinion in Minton, there is tension between the
Kentucky Supreme Court’s rejection of the “made whole” doctrine in Bush, 74 S.W.3d at 255-
57, and its statement in Minton that KRS 342.700(1) was a legislative codification of that
doctrine. 192 S.W.3d at 418-19. Although the differences between Bush and Minton could lead
to confusion, it does not impact the result here.

                                           -14-
provider. Because the trial court granted summary judgment to Westchester, the

following facts are related in the light most favorable to Christina.

                 According to Christina, it was obvious that the Elks violated

Kentucky’s Dram Shop Act, KRS 413.241,8 by serving alcohol to an already

intoxicated Amerson shortly before she drove her vehicle into Joel. Indeed, it is

uncontested that she drank alcohol at the Elks Lodge for an extended period shortly

before the fatal accident and, after her arrest, her blood alcohol level was over

twice the legal limit. Thus, in Christina’s view, its insured(s)’ conduct made

Westchester’s liability clear all along, so its handling of her claims against the Elks

defendants violated Kentucky’s Unfair Claims Settlement Practices Act

(KUCSPA). See, e.g., KRS 304.12-230(6) (providing that it is an unfair claims

settlement practice when a person does “[n]ot attempt[] in good faith to effectuate

prompt, fair and equitable settlements of claims in which liability has become

reasonably clear”). Indeed, Christina asserts that, even though it was the excess

insurer, Westchester was “controlling the terms of its Insured’s pre-trial strategy

8
    KRS 413.241(2) provides in relevant part:

         [N]o person . . . who sells or serves intoxicating beverages to a person . . . shall be
         liable to that person or to any other person . . . for any injury suffered off the
         premises including but not limited to wrongful death and property damage,
         because of the intoxication of the person to whom the intoxicating beverages were
         sold or served, unless a reasonable person under the same or similar
         circumstances should know that the person served is already intoxicated . . . .

                                                  -15-
and dictating the timing and amount of their eventual settlement offers—which

also included and incorporated the underlying, self-insured amount.” Appellants’

brief at 4.

               Specifically, Christina asserts she offered to settle with the Elks

defendants in June 2016 for an amount above Westchester’s policy limits but

below the total funds available to those defendants via additional policies from

other insurance companies;9 Westchester said it needed to conduct discovery

before responding. After taking some depositions, Christina increased her

settlement demand; Westchester again said it needed to conduct discovery before

responding. Extensive discovery continued. At a December 2016 mediation,

Westchester made its first offer, but its then-maximum offer was only for about

18% of its potential liability, including the Elks’ self-insured amount—far less than

Christina’s expert had valued Joel’s loss of earning capacity and household

services alone. Soon thereafter, Christina filed these bad-faith claims against

Westchester. The trial court stayed discovery on those claims while Christina’s

underlying claims progressed.

               Shortly after filing the bad-faith claims, Christina offered to settle

with Westchester for its policy limits, but Westchester only nominally increased its

9
 The other insurance companies are not parties to this appeal, nor were they named as parties in
Christina’s bad-faith action. Thus, we express no opinion on the applicability of those policies,
nor is our decision based upon them.

                                              -16-
counteroffer. Later, Westchester offered 40% of its policy limits, conditioned on

Christina dismissing her bad-faith claims. In September 2017, only five days

before the trial, Christina and Westchester settled her underlying claims for 65% of

Westchester’s policy limits, including the underlying coverage.

             In February 2018, the trial court lifted the discovery stay on the bad-

faith claims, and Christina propounded interrogatories and requests for production

of documents to Westchester. But before Westchester answered, it persuaded the

trial court to reinstate the discovery stay and moved for summary judgment. In

December 2018, without Christina having conducted any discovery, the trial court

granted Westchester’s motion for summary judgment, concluding there was no

evidence Westchester had acted sufficiently outrageously to support a bad-faith

claim. Christina then filed this appeal.

             Normally, we would examine whether the record supports the trial

court’s decision to grant summary judgment to Westchester. Indeed, many of the

cases cited by the parties contain that type of analysis particularized to bad-faith

claims. But here, among other things, Christina argues the trial court acted

prematurely by granting summary judgment without letting her conduct discovery.

We agree. Thus, because a premature summary judgment inevitably leads the

record to be fatally incomplete, we do not address whether the embryonic record

supports granting summary judgment to Westchester. Suter v. Mazyck, 226

                                           -17-
S.W.3d 837, 842 (Ky.App. 2007) (holding that “for summary judgment to be

properly granted, the party opposing the motion must have been given adequate

opportunity to discover the relevant facts. Only if that opportunity was given do

we reach the issue of whether there were any material issues of fact precluding

summary judgment.”). Instead, we shall only discuss whether the record, such as

it is, could possibly be sufficient for Christina to make out viable bad-faith claims.

             Although CR 56.02 permits a party to move for summary judgment

“at any time,” our Supreme Court has “cautioned trial courts not to take up these

motions prematurely and to consider summary judgment motions only after the

opposing party has been given ample opportunity to complete discovery.”

Blankenship, 302 S.W.3d at 668 (quotation marks and citation omitted). We

“consider whether the trial court gave the party opposing the motion an ample

opportunity to respond and complete discovery before the court entered its

ruling[,]” a decision which we review for abuse of discretion. Id. The question is

not whether the nonmoving party “has actually completed discovery”—rather, the

question is whether the nonmoving party “has had an opportunity to do so.”

Hartford Ins. Group v. Citizens Fidelity Bank & Tr. Co., 579 S.W.2d 628, 630

(Ky.App. 1979).

             Christina had less than a month to perform discovery on her bad-faith

claims. In that extremely short period, she sent Westchester discovery requests,

                                         -18-
which it did not answer. In practical effect, Christina had no opportunity to

conduct discovery on her bad-faith claims. We must determine whether that utter

lack of discovery matters since Westchester contends any discovery Christina

could have conducted would not have helped her make a colorable bad-faith claim.

             To succeed on a bad-faith claim, the claimant must show an insurer:

(1) was “obligated to pay the claim under the terms of the policy;” (2) “lack[ed] a

reasonable basis in law or fact for denying the claim;” and (3) “either knew there

was no reasonable basis for denying the claim or acted with reckless disregard for

whether such a basis existed.” Indiana Ins. Co. v. Demetre, 527 S.W.3d 12, 26

(Ky. 2017) (quoting Davidson v. American Freightways, Inc., 25 S.W.3d 94, 100

(Ky. 2000)). The third element “requires evidence that the insurer’s conduct was

outrageous, or because of his reckless indifference to the rights of others” because

a bad faith claim is “a punitive action.” Hollaway v. Direct General Ins. Co. of

Mississippi, Inc., 497 S.W.3d 733, 738 & 739 (Ky. 2016) (footnote omitted).

             Westchester argues the first element is not met because it was not

obligated to pay until the underlying insurance was exhausted, which did not occur

until soon before Christina settled with the Elks defendants. See Motorists Mut.

Ins. Co. v. Glass, 996 S.W.2d 437, 453 (Ky. 1997) (citation omitted) (“Farm

Bureau did not receive notice of this accident until August 17, 1988. As the

‘excess’ insurer, it did not owe any coverage until Motorists Mutual’s primary

                                        -19-
coverage was exhausted.”). However, the circumstances here—viewed in the light

most favorable to Christina—are that Westchester was controlling the whole

defense during the litigation, including when the underlying policy would be

exhausted.10 And we have held in an analogous situation, albeit in an unpublished

Opinion (so we cite it only as an illustration, not as binding precedent), that when

an insurer is responsible for both the underlying and excess coverage it may not

refuse to negotiate a claim under the excess policy until the claimant exhausts the

underlying policy. Globe American Cas. Co. v. Bowman, Nos. 2001-CA-001420-

MR and 2001-CA-001508-MR, 2003 WL 21246382, at *5 (Ky.App. May 30,

2003) (quotation marks and citation omitted) (“[T]he Bowmans argue that a UIM

[underinsured motorist] carrier cannot refuse to negotiate a one million dollar

claim until the UIM insured can process a claim against the tortfeasor covered by a

$25,000 limit liability policy to judgment. The Bowmans assert that this is

particularly true where Globe was the insurer under both policies. We agree.”).

              Of course, we agree with Westchester that “mere delay in payment

does not amount to outrageous conduct absent some affirmative act of harassment

10
  As will be discussed later, we cannot know with certainty when, or if, Westchester took
control of the whole defense because the trial court granted summary judgment without allowing
Christina to conduct discovery. However, in the light most favorable to Christina, Westchester
should reasonably have known the underlying policy would be exhausted by no later than the
December 2016 mediation since it offered to settle then for more than the underlying policy
limits, but the case dragged on for many more months.

                                            -20-
or deception.” Glass, 996 S.W.2d at 452 (citation omitted). Instead, Christina

must present “proof or evidence supporting a reasonable inference that the purpose

of the delay was to extort a more favorable settlement . . . .” Id. at 452-53. But

Christina has had no opportunity to adduce evidence in her bad-faith claims,

especially since she has not been able to access Westchester’s claims file. In the

light most favorable to Christina, the local Elks facility served Amerson enough

alcohol to make her highly inebriated when she collided with Joel, making the Elks

defendants’ liability clear, but Westchester continued to contest liability and did

not even make a settlement offer until the case was roughly ten months old.

             We also agree with Westchester that an insurer is not required to settle

an action for an amount above the policy limits, American Physicians Assur. Corp.

v. Schmidt, 187 S.W.3d 313, 318 (Ky. 2006), and Christina’s initial offers were for

more than the limits of Westchester’s policy. However, the litigation continued

well after Christina offered to settle for Westchester’s policy limits.

             Of course, the final settlement was for an amount below

Westchester’s policy limits, which the trial court seemed to believe precluded a

bad-faith claim. Westchester points out the undisputed fact that the settlement was

for less than its policy limits but does not assert that this inherently dooms

Christina’s claims, nor have we independently located authority so holding.

Tellingly, the trial court did not cite any authority to support its apparent belief that

                                          -21-
a bad-faith claim may only be filed if an underlying claim has been resolved for the

policy limits. The KUCSPA requires an insurer to make reasonable attempts to

settle all claims. But, under the trial court’s logic, an insurer would be able to

intentionally, outrageously delay resolution of a claim for less than its policy limits

with impunity. Obviously, that would be antithetical to the goals of the KUCSPA.

             In the light most favorable to Christina, she offered to settle with

Westchester for its policy limits months before the final, lower settlement was

achieved. Given the facts and circumstances of this case, and drawing all

reasonable inferences in favor of Christina, we cannot say that it would be

impossible for her to show—after being afforded reasonable discovery—that

Westchester unreasonably delayed trying to resolve Christina’s claims.

             As to the second element, Westchester relies upon various items of

evidence which would help show that its insureds’ liability was not clear.

Christina, on the other hand, points to other evidence showing the copious amount

of alcohol the Elks defendants served Amerson prior to the fatal accident. Also,

Christina notes that some Elks-associated entity even prepared a PowerPoint

presentation about the case as a teaching point about irresponsibly serving alcohol

at its facilities, including a statement that “[w]e [the Elks] overserved her

                                         -22-
[Amerson] and we knew she was an alcoholic . . . .” 11 Appellants’ brief, Exh. 5 at

22. Christina also stresses that she needs Westchester’s claims file to ascertain

when it concluded its insured(s) liability had been reasonably established.

               It is impossible for a reviewing court to say whether a file not found in

the record would help a party establish a claim. Taking the facts in the light most

favorable to Christina, however, the file almost certainly shows when Westchester

first believed its liability became clear. And discerning that date would let a

reviewing court know how long afterwards it took Westchester to make reasonable

settlement attempts. In fact, Kentucky’s then-highest court held over fifty years

ago in a bad faith case that “it is within the proper scope of discovery to inquire

into and demand the production of all documents and material pertaining to any

negotiations or offers of settlement.” Terrell v. Western Cas. & Sur. Co., 427
S.W.2d 825, 828 (Ky. 1968). See also, e.g., Riggs v. Schroering, 822 S.W.2d 414,

415 (Ky. 1991) (holding that “Terrell recognizes that in the ‘bad-faith-failure-to-

settle’ action which followed after the litigation against the insured was concluded,

matters pertaining to the negotiation were a legitimate subject of discovery”).

11
  It is unclear exactly which entity prepared the PowerPoint presentation. We need not resolve
that question, nor any admissibility issues, as we cite it only to show that some people associated
with the national Elks organization found fault with the Elks defendants well before the case was
resolved.

                                               -23-
Generally, therefore, Christina would have been entitled to receive at least some of

the file in discovery.

               Although she cannot know with certainty what is in the file, Christina

did submit evidence which showed how obtaining it was necessary to her claims.

Specifically, Christina presented the affidavit of a purported insurance industry

expert12 opining that Westchester “failed to make prompt or reasonable attempts to

settle the underlying case when no reasonable claim person would fail to recognize

liability as reasonably clear and damages as catastrophic.” Appellants’ brief, Exh.

2. However, the affiant stated that he needed to review Westchester’s claims file

to reach any definitive conclusions.13

12
   We express no opinion as to whether the affiant was qualified to be an expert as the parties do
not raise that issue. We also express no opinion as to whether any part(s) of the file are exempt
from discovery due to, for example, falling within the attorney-client privilege.
13
   Westchester argues the affidavit was untimely because Christina submitted it a few weeks after
submitting her memorandum in opposition to Westchester’s motion for summary judgment.
However, the affidavit was submitted weeks before Westchester’s reply brief was due and nearly
six months before the trial court granted summary judgment to Westchester. And Westchester
has not cited, nor did we independently locate, where it asked the trial court to strike the affidavit
or otherwise argued it could not be considered. In short, Westchester basically ignored the
affidavit until Christina filed this appeal.

        CR 56.03 permits a party opposing summary judgment to present affidavits “prior to the
day of hearing . . . .” There was no hearing on Westchester’s motion. Kentucky precedent
generally holds that a hearing is not completed “until the question is ready for a decision,” and
courts “should be extremely liberal in allowing the parties to present additional material up until
the time the matter is ripe for decision.” Conley v. Hall, 395 S.W.2d 575, 580 (Ky. 1965). The
affidavit was submitted well before the matter was ready for the trial court’s decision.
Moreover, the trial court did not strike or exclude the affidavit, nor was it asked to so act. In
short, we disagree that the affidavit could not be considered.

                                                -24-
             Unfortunately, the trial court did not mention the affidavit in its

summary judgment decision. But the conclusion in the affidavit that the evidence

shows that Westchester acted unreasonably, along with other evidence (the lack of

offers by Westchester for about ten months, the extended discovery necessitated by

Westchester’s persistent refusal to admit its insured(s)’ liability, and Westchester’s

relatively low offers until nearly the eve of trial), was sufficient to necessitate

further discovery. Therefore, we disagree with Westchester that no amount of

discovery by Christina could have helped her make a colorable bad-faith claim.

             As can be seen here, each side can—and did, at length—cite to

evidence which supports its view of Christina’s bad-faith claims. But the ultimate

merit of Christina’s bad-faith claims is not the issue before us, and so we decline to

wade further into the thicket of the parties’ back and forth arguments about

whether Westchester’s actions or inactions constituted actionable bad faith.

Instead, we merely hold that, in the light most favorable to her, Christina’s bad-

faith claims are not facially unmeritorious. Consequently, she should have been

given the opportunity to conduct discovery. After reasonable discovery, it is

possible that Westchester will properly be able to show that it is entitled to

summary judgment. Or not. We cannot know how discovery will impact

Christina’s claims. Instead, we conclude only that she must be given a reasonable

                                          -25-
chance to conduct discovery, after which—and only after which—the viability of

her claims may appropriately be determined.

            IV. Conclusion

            For the foregoing reasons, the trial court’s decision in the Bowlin

Group’s appeal, 2018-CA-1494-MR, is affirmed and the trial court’s decision to

grant summary judgment to Westchester in appeal 2019-CA-0078-MR is vacated

and remanded for further proceedings consistent with this Opinion.

            ALL CONCUR.

                                       -26-
BRIEFS FOR APPELLANT            BRIEF FOR APPELLEES
BOWLIN GROUP, LLC:              CHRISTINA REBENNACK,
                                INDIVIDUALLY, AS PERSONAL
David D. Black                  REPRESENTATIVE OF THE
Jeremy S. Rogers                ESTATE OF JOEL REBENNACK,
Louisville, Kentucky            AND AS MOTHER AND NEXT
                                FRIEND OF ELIJAH REBENNACK;
                                MELANIE REBENNACK; AND
                                ARIANNA REBENNACK:

                                Charles L. Hinegardner
                                Sarah M. Houseman
                                Cincinnati, Ohio

BRIEFS FOR APPELLANTS          BRIEF FOR APPELLEE
CHRISTINA REBENNACK,           WESTCHESTER FIRE INSURANCE
INDIVIDUALLY, AS               COMPANY:
ADMINISTRATRIX OF THE
ESTATE OF JOEL REBENNACK,      Steven T. Usdin
AND AS MOTHER AND NEXT         New Orleans, Louisiana
FRIEND OF ELIJAH REBENNACK;
MELANIE REBENNACK; AND         Griffin Terry Sumner
ARIANNA REBENNACK:             Allison W. Weyand
                               Louisville, Kentucky
Charles L. Hinegardner
Sarah M. Houseman
Cincinnati, Ohio

                              -27-