Court Opinion

ID: 5140541
Source: CourtListenerOpinion
Date Created: 2021-12-24 15:05:49.076856+00
Date Added: 2024-06-11T08:24:24.092767
License: Public Domain

RENDERED: DECEMBER 17, 2021; 10:00 A.M.
                      NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals

                             NO. 2021-CA-0361-MR

TRAVIS DYKES                                                          APPELLANT

               APPEAL FROM FAYETTE CIRCUIT COURT
v.            HONORABLE KIMBERLY N. BUNNELL, JUDGE
                      ACTION NO. 20-CI-01547

OWNERS INSURANCE COMPANY                                               APPELLEE

                                  OPINION
                               VACATING AND
                                REMANDING

                                 ** ** ** ** **

BEFORE: COMBS, DIXON, AND MAZE, JUDGES.

COMBS, JUDGE: Travis Dykes (Appellant) appeals a judgment of the Fayette

Circuit Court holding that the commercial automobile insurance policy issued by

Owners Insurance Company (Appellee) did not provide underinsured motorist

coverage to Dykes for a motor vehicle accident that occurred while he was driving

his personal pick-up truck. After our review, we vacate and remand.
             On April 1, 2019, Dykes was involved in a two-car accident with

Logan Hauswirth on Man O’ War Boulevard in Lexington. Dykes was driving a

2016 Ford F-250 pick-up truck insured by State Farm Insurance under a personal

automobile liability policy. Hauswirth’s vehicle was insured by Progressive.

             Hauswirth’s policy limits were insufficient to cover Dyke’s alleged

damages; Progressive tendered the limits of its policy. On January 7, 2020, Dykes

filed a claim for underinsured motorist coverage under the commercial auto policy

issued by Owners Insurance. This policy designates the named insured as follows:

                          TRAVIS DYKES
                          T & C BOBCAT SERVICE

The entity insured is characterized on the policy declarations page as an

“individual.” Pursuant to a policy endorsement, Dykes paid an additional premium

for uninsured/underinsured motorist coverage.

             Through correspondence dated May 19, 2020, Owners Insurance

denied the claim. Describing its insured as “Travis Dykes dba T&C Excavating

LLC,” Owners Insurance contended that underinsured motorist coverage was

available only for an accident in a vehicle which had been scheduled in the policy

declarations. It stated that coverage did not extend to the 2016 Ford F-250 pick-up

truck that Dykes was driving at the time of the accident.

             On May 22, 2020, Dykes filed a personal injury action against

Hauswirth in Fayette Circuit Court. Dykes alleged that Hauswirth was an

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underinsured motorist pursuant to the provisions of KRS1 304.39-320, and that

Owners Insurance was obligated to pay damages in excess of the coverage

afforded by Hauswirth’s policy with Progressive. Dykes contended that Owners

Insurance breached its contract with him by failing to provide underinsured

motorist benefits; that it acted in bad faith by denying his claim; and that it violated

Kentucky’s Unfair Claims Settlement Practices Act (UCSPA) in numerous ways.

KRS 304.12-010, et seq.

                Owners Insurance answered and denied the allegations. It requested a

declaratory judgment with respect to its obligation to provide underinsured

motorist coverage.

                On January 29, 2021, Dykes filed a motion for judgment. He argued

that the policy provides coverage or, in the alternative, that the policy provisions

are ambiguous. Owners Insurance responded and filed a cross-motion for

judgment. It argued that the commercial auto policy was issued to Dykes’s

business for the purpose of covering his work vehicles and that its provisions

clearly extended underinsured motorist coverage only to those scheduled vehicles

for which a premium was paid.

1
    Kentucky Revised Statutes.

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             The circuit court entered judgment on March 1, 2021, and concluded

that Dykes was not entitled to underinsured motorist coverage pursuant to the

terms of his policy. This appeal followed.

             On appeal, Dykes argues that the trial court misinterpreted the

policy’s provisions. Because the construction of an insurance contract is a matter

of law, we review the issue de novo and without deference to the trial court’s

conclusions. Isaacs v. Sentinal Ins. Co. Ltd., 607 S.W.3d 678 (Ky. 2020). We

begin our analysis by examining the pertinent language of the insurance policy and

the relevant endorsement.

             Again, Item One of the policy identifies the named insured as follows:

                           TRAVIS DYKES
                           T & C BOBCAT SERVICE

It specifically identifies the insured entity as an “Individual.” By insertion of a

symbol beside “Uninsured/Underinsured Motorist Coverage,” Item Two of the

policy indicates that coverage is provided only for “scheduled autos.” Item Three

includes a “schedule of covered autos,” identifying a 1996 International 8100

heavy-duty truck and a 1978 Flatbed Trailer. A separate chart sets forth the

applicable coverage (specifically including uninsured and underinsured motorist

coverage for the heavy-duty truck), coverage limits, and premiums for each

scheduled vehicle. Critically, Item Three also provides for “Additional Coverages

and Endorsements.” It contains a separate chart -- which precedes the charts

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pertaining to the scheduled autos -- that separate chart describes the limits and

premiums for uninsured and underinsured motorist coverage without reference to

either of the scheduled autos.

             Owners Insurance contends that Dykes did not enter into a contract

for underinsured motorist coverage for his 2016 Ford F-250 pick-up truck. It states

that the Ford F-250 pick-up “was not scheduled, listed, referenced, nor insured

under the Owners Commercial Auto Policy at issue in this matter.” It notes that

“no premium was paid to [Owners Insurance] for that vehicle.” While these

assertions are facially correct, the argument overlooks the pertinent fact that Dykes

also purchased and paid a separate premium for the several endorsements

referenced in Item Three.

             One of these endorsements provides for additional underinsured

motorist coverage. It expressly provides that “THIS ENDORSEMENT

CHANGES THE POLICY.”

             The Underinsured Motorist Coverage endorsement specifically

provides that Owners Insurance will “pay all sums the insured is legally entitled to

recover as compensatory damages from the owner or driver of an underinsured

motor vehicle.” With respect to who qualifies as an insured, the endorsement

provides as follows:

             If the Named Insured is designated in the Declarations as:

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         1. An individual, then the following are insureds:
            a. The Named insured and any family members.
            b. Anyone else occupying:
               (1) A covered auto; or
               (2) A temporary substitute for a covered auto. . . .

         2. A partnership, limited liability company corporation or
            any other form of organization, then anyone occupying:
            a. A covered auto is an insured; or
            b. A temporary substitute for a covered auto is an
               insured.

(Emphases added.) In its policy declarations, Owners Insurance unambiguously

designated the named insured, “TRAVIS DYKES T & C BOBCAT SERVICE,” an

individual and a sole proprietorship, as an “individual.” Therefore, by the plain

terms of its endorsement, Dykes is an “insured” even where he is not occupying a

“covered auto.” As a consequence, and by the unambiguous language of the

contract terms, Owners Insurance is obligated to pay all sums that he is legally

entitled to recover as compensatory damages from the driver of an underinsured

motor vehicle.

              Owners Insurance rejects this interpretation. It argues that the

underinsured motorist coverage endorsement does not modify the commercial auto

policy to provide coverage for the Ford F-250 pick-up because the Ford F-250 was

not a “scheduled auto.” It relies on the endorsement’s preamble, which indicates

as follows:

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             For a covered auto licensed or principally garaged in
             Kentucky, this endorsement modifies insurance provided
             under the following: COMMERCIAL AUTO POLICY.

             From this language, Owners Insurance concludes that a vehicle that is

not a “scheduled auto” is not a “covered auto” under the policy and that the

endorsement -- by its very terms -- does not apply. We disagree.

             Section V of the policy provides that:

             For any covered auto that is scheduled in the
             Declarations, this policy provides a primary insurance.
             For any covered auto which is not scheduled in the
             Declarations, the insurance provided by this policy is
             excess over any other collectible insurance.

(Italics added.) The policy itself accounts for a vehicle that is not a “scheduled

auto” yet is classified as a “covered auto.” Therefore, we cannot accept the

premise asserted by Owners Insurance that is clearly refuted by this language.

             Furthermore, the policy endorsement amending the provisions of

“SECTION V-CONDITIONS” of the policy specifically envisages uninsured

motorist coverage -- even where a vehicle owned by the name insured is not a

“covered auto.” It provides as follows:

          1. The Other Insurance provision in the policy is changed
             by addition of the following:

             a. The reference to “other collectible insurance” applies
                only to other collectible underinsured motorist
                insurance.
             b. Any insurance we provide with respect to a vehicle
                owned by the Named Insured . . . that is not a covered

                                          -7-
                auto for Underinsured Motorist Coverage under this
                policy, will be excess over any other collectible
                underinsured motorist insurance providing coverage
                on a primary basis.

(Italics added.) Thus, Owners Insurance contemplated coverage to a named

insured’s vehicle even where it is not an auto covered under the policy.

             As Owners Insurance correctly observes, the parties are largely at

liberty to contract for the terms of a policy that best suit them. True v. Raines, 99

S.W.3d 439 (Ky. 2003). Moreover, “Kentucky public policy does not bar

reasonable [underinsured motorists coverage] exclusion provisions.” Philadelphia

Indem. Ins. Co. v. Tryon, 502 S.W.3d 585, 592 (Ky. 2016). However, we are not

persuaded that the policy includes a clear and unambiguous statement indicating

that it does not pay uninsured motorist coverage benefits for vehicles it does not

insure. See Philadelphia Indem. Ins. Co., supra. On the contrary, we are

persuaded that the Owners Insurance policy explicitly defines Dykes as an insured

for underinsured motorist coverage regardless of which vehicle he occupied.

Where the terms of an insurance policy are unambiguous, the policy will be

enforced as written. Kemper Nat’l Ins. Companies v. Heaven Hill Distilleries, Inc.,

82 S.W.3d 869 (Ky. 2002).

             Having concluded that Owners Insurance is obligated to provide

underinsured motorist coverage to Dykes, we are compelled to vacate the judgment

of the Fayette Circuit Court. We remand the matter for additional proceedings,

                                          -8-
including its consideration of any allegations raised with respect to bad faith and

UCSPA.

             ALL CONCUR.

BRIEFS FOR APPELLANT:                      BRIEF FOR APPELLEE:

Kellie M. Collins                          David K. Barnes
Taylor M. Shepherd                         Matthew R. Londergan
Lexington, Kentucky                        Louisville, Kentucky

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