Court Opinion

ID: 9636253
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:21:36.299962+00
Date Added: 2024-06-11T18:09:43.401145
License: Public Domain

LAMBERT, Justice,
dissenting.
I dissent from the majority opinion. There are substantial aspects of that opinion with which I disagree and others which exceed the analysis required for resolution of the issues. Portions of the majority opinion are laden with obiter dictum which may modify Kentucky law in future cases in ways wholly beyond our present contemplation.
The majority opinion in the Court of Appeals by Judge Miller, with Judge Combs concurring and Judge Wilhoit dissenting, appropriately addresses and resolves the issues presented and gives due regard to trial court discretion regarding the admission and exclusion of evidence and proper regard for the jury verdict. Accordingly, I file herewith the majority opinion in the Court of Appeals as my dissenting opinion in this ease.
On May 13,1988, appellee/eross-appel-lant, Jeffrey A. Glass, received injuries and ultimate loss of his right arm, the result of a one-ear accident. He was a passenger in his 1980 Ford pickup truck which, at the time of the accident, was being operated by one Stephen Shel-burne.
Jeffrey’s truck was insured by appellant/cross-appellee, Motorists Mutual Insurance Company (Motorists or Motorists Mutual). His policy contained a bodily injury liability limit of $50,000.00 and $50,000.00 “underinsured motorist” (UIM) coverage. Jeffrey, a teenager, lived with his parents, cross-appellants/Garnett Doyle Glass and Brenda Glass (the Glasses).' At the time the Glasses had two other vehicles insured with Motorists, each with a $50,000.00 UIM clause.1 Shelburne, the driver, was insured by appellant/cross-appellee, Kentucky Farm Bureau Mutual Insurance Company (Farm Bureau) with a bodily injury liability limit of $100,-000.00.
After the accident a Motorists Mutual claims representative contacted Jeffrey and commenced settlement negotiations within the $50,000.00 limit provided on the pickup. It was then realized there might be excess insurance available from Farm Bureau, Shelburne’s insurer. Thereafter Motorists and Farm Bureau commenced negotiations with the Glass family to settle all claims within the $50,000.00 limit on the pickup and the $100,000.00 limit on Shelburne.
With the aid of an expert employed by Motorists Mutual, a structured settlement was explored. The settlement was intended to be funded by annuities purchased by Motorists ($485,000.00) and Farm .Bureau ($434,000.00) over Jeffrey’s life. At some point after discussion of the structured settlement to be funded by the annuities, negotiations came to an impasse and Jeffrey sought advice of counsel. On May 3, 1990, the Glasses filed suit against Motorists Mutual and Farm Bureau alleging, inter alia, bad faith settlement practices.2
*457In 199B an extensive jury trial resulted in the following awards:
Against Motorists
1. $485,000.00 punitive damages
2. 200,000.00 liability on UIM coverage
3. 9,208.11 reasonable costs
4. 231,402.70 attorney fees
$925,610.81 TOTAL
Against Farm Bureau
1. $ 9,208.12 reasonable costs
2. 434,000.00 mental anguish, etc.
$443,208.12 TOTAL
Judgment was entered upon the foregoing awards, thus precipitating these appeals.

Motorists Mutual’s Appeal

We first address the issue of Jeffrey’s UIM coverage. The circuit court concluded that Jeffrey was entitled to $200,-000.00 of UIM coverage. Conversely, Motorists contends that no such coverage was available to Jeffrey and that a directed verdict was mandated upon this issue. Ky. R. Civ. P. (CR) 50.01. Motorists contends that UIM coverage is unavailable to Jeffrey because KRS 304.39-320 contemplates such coverage only in multi-vehicle accidents. However, we are reminded of the following:
KRS 304.39-320, “Underinsured motorist coverage,” is part of the Motor Vehicle Reparations Act (MVRA), and, as such, is remedial legislation which should be generally construed to accomplish its stated purposes. Cf. Bishop v. Allstate Ins. Co., Ky., 623 S.W.2d 865 (1981).
LaFrange v. United Serv. Auto. Ass’n, Ky., 700 S.W.2d 411, 413 (1985).
The stated purposes of the MVRA are enunciated in KRS 304.39-010. One such purpose found in subsection (3) reads as follows:
To encourage prompt medical treatment and rehabilitation of motor vehicle accident victim by providing for prompt payment of needed medical care and rehabilitation.
If KRS 304.39-320 is construed to effect the above-stated purpose, we be-
lieve it cannot be so narrowly interpreted as to encompass only multi-vehicle accidents. We think such construction repugnant to KRS 304.39-320 and to the very pith of the MVRA.
Motorists Mutual also avers that Jeffrey is not entitled to UIM coverage because such coverage is specifically excluded from an “insured vehicle.” In support of same, Motorists relies upon the following policy language:
When the term uninsured motor vehicle is used in Part C, it shall also include underinsured motor vehicle
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PART C — UNINSURED MOTORISTS COVERAGE
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C. “Uninsured motor vehicle” means a land motor vehicle or trailer of any type:
1. To which no bodily injury liability bond or policy applies at the time of the accident.
2. To which a bodily injury liability bond or policy applies at the time of the accident. In this case its limit for bodily injury liability must be less than the minimum limit for bodily injury liability specified by the financial responsibility law of the state in which your covered auto is principally garaged.
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However, uninsured motor vehicle does not include any vehicle or equipment:
1. Owned by or furnished or available for the regular use of you or any family member.
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Upon close scrutiny the terms “uninsured motor vehicle” and “underinsured motor vehicle” may be used interchangeably throughout Part C — Uninsured Motor Coverage, except in relation to Part C, subsection c. Subsection c attempts to define the term “uninsured motor vehi*458cle;” thus, we think it perspicuous that “underinsured motor vehicle” cannot therein be used interchangeably. Because the “owned” vehicle exclusion is set forth in subsection c, we are of the opinion that the exclusion can be applied only to an uninsured motor vehicle. Thus we believe no “owned” vehicle exclusion exists regarding UIM coverage. Finally, upon the following perlustration of the Glasses’ policies, we believe Jeffrey was protected by $150,000.00 of UIM coverage.
The policy language states in relevant part as follows:
“Underinsured motor vehicle” means a land motor vehicle or trailer of any type to which a bodily injury liability bond or policy applies at the time of the accident but its limit for bodily injury liability is less than the limit of liability for this coverage. (Emphasis added.)
We view this definition — “underin-sured motor vehicle” — as ambiguous. The phrase “motor vehicle ... to which a bodily injury liability ... policy applies at the time of the accident ...” may be susceptible to inconsistent interpretations. One interpretation is that only the bodily injury policy covering the motor vehicle at the time of the accident is applicable; the other interpretation is that the bodily injury policy covering the vehicle and, likewise, any such policy covering the driver are applicable. We recognize that such interpretations are inconsistent only when the owner of the vehicle and the driver of the vehicle are not the same, as in the case at hand. Because the definition of an “underin-sured motor vehicle” is subject to inconsistent interpretations, we are bound to resolve the ambiguity in favor of the insured, Jeffrey. See Transport Ins. Co. v. Ford, Ky.App., 886 S.W.2d 901 (1994), and Davis v. American States Ins. Co., Ky.App., 562 S.W.2d 653 (1977).
There is little doubt that the most favorable interpretation to the insured/Jeffrey is that only the motor vehicle’s bodily injury policy needs consideration and not any additional policy on the tortfeasor/driver. As a result, only Policy D’s bodily injury liability on Jeffrey’s truck at the time of the accident must be weighed when determining whether the vehicle was, in fact, under-insured.
The Glasses’ policies clearly and unambiguously state that a vehicle is un-derinsured when “its limit for bodily injury liability is less than the limit of liability for this coverage.” The bodily injury liability limit on Jeffrey’s vehicle was $50,000.00, and we believe that the limit of liability for “this coverage” (un-derinsured) should be $150,000.00. We arrive at this figure by stacking the UIM coverage applicable to each of the Glasses’ three insured vehicles at the time of the accident. Each vehicle had $50,000.00 UIM coverage. We do not believe the fourth ear — added to Policy D after the accident — should be considered. We think it appropriate to stack UIM coverage when initially determining whether Jeffrey was underinsured.3 Hence, we believe Jeffrey’s vehicle was, indeed, an “underinsured motor vehicle,” as defined by the Glasses’ policies.
More succinctly, we view the applicable sum of bodily injury liability as $50,-000.00 under Policy D and the applicable sum of UIM coverage of Policies A and D as $150,000.00. Because the limit for bodily injury liability ($50,000.00) is less than the limit of liability for UIM coverage ($150,000.00), we believe that Jeffrey’s vehicle was underinsured, as defined by Glasses’ policies. Having so concluded, we now examine the Glasses’ policies to determine the exact amount of UIM coverage to which Jeffrey is entitled.
*459The Glasses’ policies state in relevant part as follows:
We will pay under this coverage only after the limits of liability under any applicable bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements. We believe this sentence susceptible
to inconsistent interpretations and therefore ambiguous. One possible interpretation is that Motorists would pay UIM benefits (1) only after exhaustion of applicable bodily injury policy/policies and (2) only in the amount remaining uncompensated after such policies have been exhausted. Consequently, the UIM payment would be reduced by applicable bodily injury payments. Another possible interpretation is that Motorists would pay UIM benefits (1) only after exhaustion of applicable bodily injury policy/policies, but (2) in the full amount of damages incurred irrespective of any applicable bodily injury payments. Consequently, the UIM payment would not be reduced by any applicable bodily injury payments.
We are compelled to adopt the latter interpretation, it being more favorable to the insured/Jeffrey. See Transport Ins. Co., supra, and Davis, supra. Because the UIM payment ($150,000.00) should not be reduced by “any applicable bodily injury” payments, wé are of the opinion Jeffrey is entitled to the full $150,000.00 of UIM coverage.
A controversy exists over the effect of KRS 304.89-320 (UIM coverage) as it applies to this case. On July 15, 1988, the statute was amended to remove certain “offset” language.4 Prior to that time the UIM benefits were diminished by the amount paid by the liability insurer for the tortfeasor. See Coots v. Allstate Ins. Co., Ky., 853 S.W.2d 895 (1993). Because the accident giving rise to this litigation occurred on May 13, 1988, before the amendment, Motorists Mutual argues that any UIM benefit recovery should be subject to offset. While we do not necessarily agree that the date of the accident is the triggering event, we are not bound to decide the question. We are of the opinion that the amendment of the statute is a non-issue. As we read Motorists’ policies, they do not state with specificity that an offset should be effected, as was the situation in LaFrange, supra. To read into the policies the right of an offset requires a ratiocination that we are not inclined to afford. Without a “setoff’ provision, as authorized by statute before amendment, we interpret the Glasses’ policies as providing more coverage than required by the pre-amended version, of KRS 304.39-320. At a minimum an insurance contract must include rights and obligations as required by statute; however, it is axiomatic that an insurance contract may “provide broader coverage than that required by statute.” LaFrange at 413. We interpret the Glasses’ policies as providing more UIM coverage, and thus the rights and liabilities so afforded are controlling.
In concluding this issue, there being only three insured vehicles in the Glass household at the time of the accident, Jeffrey was entitled to $150,000.00 UIM benefits, not the $200,000.00 awarded. Upon remand the court shall adjust the judgment accordingly.
We next turn to issues faced by Motorists regarding the application of various provisions of the Kentucky Unfair Claims Settlement Practices Act (UCS-PA). KRS 304.12-230. Motorists claims entitlement to a directed verdict because of insufficient evidence regarding the claims of bad faith, violation of the UCS-PA, and punitive damages.
Before addressing these issues we consider the question of whether a third party may pursue a bad faith claim under the UCSPA. Motorists contends *460that the UCSPA does not apply to third party claimants such as Jeffrey. We believe State Farm Mut. Auto. Ins. Co. v. Reeder, Ky., 763 S.W.2d 116 (1988), negates Motorists’ argument and is controlling. We would be remiss, however, if we did not observe that the statute is not specifically designed to accommodate third party claims. This, of course, makes trial nearly impossible and appellate review most difficult.
As to sufficiency of evidence, a directed verdict is precluded “unless there is a complete absence of proof on a material issue in the action or if no disputed issue of fact exists upon which reasonable minds could differ.” Taylor v. Kennedy, Ky.App., 700 S.W.2d 415, 416 (1985). Motorists Mutual denies any bad faith in its adjustment of Jeffrey’s claim. Based upon the requirements for a bad faith claim under the UCSPA (see Wittmer v. Jones, Ky., 864 S.W.2d 885 (1993)), we conclude there was sufficient evidence supporting the issue’s submissibility. Approximately a month and a half after the accident, Motorists’ adjuster was authorized to pay the $50,000.00 policy liability limit; yet, Motorists did not tender same until years later and initially failed to advise Jeffrey of his potential UIM coverage. During the interim, astronomical medical bills emanating from the insured tort were mounting. Because reasonable minds could differ on the issue of Motorists’ bad faith and because there was sufficient evidence to support the claim, we believe the circuit court properly submitted the matter to the jury.
Motorists also contends there was insufficient evidence supporting the jury’s findings of a UCSPA violation and of Jeffrey’s right to punitive damages.5 For reasons' similar to those given on the issue of bad faith, we conclude that the court did not err in submitting these issues to the jury.
Concerning the issue of attorney fees, Motorists argues four specific points. First, it submits that KRS 304.12-235 does not apply to third party claimants. We disagree. Having already held that the UCSPA (KRS 304.12-230) applies to third party claimants, we perceive no logical basis for granting to such insured claimants the right to pursue a bad faith cause of action under KRS 304.12-230, but not under KRS 304.12-235. KRS 304.12-230 sets forth prohibited settlement practices of an insurer. KRS 304.12-235 stipulates the time allotted for payment of claims and the effect of failure to promulgate a settlement. Both statutes were enacted to protect the rights of an insured against unfair settlement practices. KRS 304.12-010. As such, they must be applied consistently to effectuate the purposes of both statutes. To do otherwise seems contrary to legislative intent.
Dispute also arises as to which version of KRS 304.12-235 is applicable. The controverted portion of the statute was amended July 13, 1990, and reads as follows:
All claims arising under the terms of any contract of insurance shall be paid to the named insured person or health care provider not more than thirty (30) days from the date upon which notice and proof of claim, in the substance and form required by the terms of the policy, are furnished the insurer.
Although this version was applied by the circuit court, Motorists observes that at the time of the accident, the pre-amend-ed statute-fallowing for sixty days of payment on the claim — was in effect. In both versions the time period applies to subsections (2) and (3) regarding the time for settlement before interest or attorney fees can be awarded for failure to settle.
*461We believe that Motorists’ protracted delay in payment renders the dispute inconsequential as to the stipulation of thirty or sixty days. Thus, if any error existed in application of the statute, we perceive no resulting prejudice. CR 61.01
Motorists also objects to the jury instruction given to create liability under KRS 304.12-285(3). Specifically, Motorists contends the instruction excluded an element of the subsection and should have incorporated language that a delay in payment must be “without reasonable foundation.” KRS 304.12-235(3). Motorists also maintains error on the basis that no evidence was presented on the reasonableness of the claimed fee. The circuit court rendered the following interrogatory to the jury:
Do you believe from the evidence that the Defendant, Motorist Mutual Insurance Company, failed to make a good faith attempt to settle the Plaintiffs, Jeffrey A. Glass, claim within 30 days from the date on which notice or proof of loss in the substance and form required by the terms of the policy was furnished the Defendant, Motorist Mutual Insurance Company?6
The jury responded in the affirmative to this question, and Glass made a post-trial motion for one-third of attorney fees against Motorists and Farm Bureau. The motion was granted only against Motorists. The court then fixed the amount of attorney fees in an amount equal to one-third of the total recovery against Motorists. We believe both the instruction and the amount fixed by the court to be appropriate.
Finally, Motorists argues that the court erred in calculating interest on the award from the date of verdict rather than from date of judgment. We believe this indeed erroneous. KRS 360.040 provides for interest upon a judgment. We know of no authority for commencing interest from the date of verdict. There may be special circumstances that would justify same, but they are not here present.
Motorists argues that the cumulative effect of various other errors deprived it of a fair trial. We have examined these alleged errors and find no merit.
In conclusion, we reverse and remand the judgment against Motorists as to the amount of UIM coverage and the award of interest prior to judgment; in all other respects, the judgment is affirmed.

Farm Bureau’s Appeal

Farm Bureau proffers an assortment of reasons why it should not be held liable as a violator of the UCSPA. Additionally, Farm Bureau contends that during the course of settlement negotiations, an oral agreement as to settlement was, in fact, reached and that this settlement should have been enforced. We shall discuss what we deem significant claims by Farm Bureau.
Farm Bureau first contends that the UCSPA is not a strict liability enactment and, therefore, for a claimant to prevail under the statute, he must prove intentional or outrageous conduct. While we are inclined to agree with this interpretation (see Wittmer, supra), we think there was sufficient evidence in the case sub judice to submit the matter to the jury. Farm Bureau maintains that it was in a peculiar position in that it was a third party insurer and had an obligation to its insured. Perforce, Farm Bureau argues in a roundabout manner that its actions could not be elevated to the level of violating the UCSPA. Here again we are unable to agree with Farm Bureau’s contention and think the matter was one for jury determination.
Farm Bureau makes a strong argument that it should be shielded from liability because it had a right to rely upon the belief that an oral settlement of the claim asserted by Jeffrey had been *462effected. The circuit court entered summary judgment denying the claim of settlement. Nevertheless, Farm Bureau contends that its reliance upon the settlement was reasonable and therefore precluded its violation of the UCSPA. We do not agree with this contention. We believe the circuit court was correct in summarily concluding that a binding settlement of this matter had not been effected. As to Farm Bureau’s reliance upon same, we think it only a scrap of evidence to have been considered in its overall conduct in handling this claim. We cannot assign merit to Farm Bureau’s contention that it should be excused from liability in its handling of the claim based upon the assumption of settlement. Moreover, we cannot ascribe credence to Farm Bureau’s argument that the Glasses made no demand for settlement of the action and, thus, there is no condition for violation of the act.
Farm Bureau contends that the testimony of Clinton Miller, a claims settlement expert offered by the Glasses, was not competent to support a bad faith settlement practice. During the course of the trial, Farm Bureau sought to impeach Miller by offering into evidence derogatory information concerning his past. The court excluded the evidence which was proffered by avowal. The avowal evidence demonstrated that Miller was a three-time failure of the California bar and had been a plaintiff in several questionable lawsuits against insurance companies. Miller, however, was subjected to rigorous and skillful cross-examination revealing him to be a paid professional witness who frequently testified against the insurance industry. While we think the court might not have so severely limited cross-examination of Miller, we are unable to ascribe reversible error. CR 61.01. The jury was sufficiently advised of Miller’s nature and purpose in his appearance as a paid professional witness, and we think it was able to appropriately weigh and evaluate his testimony. Upon the record as whole we conclude there was sufficient basis to support the jury’s determination that Farm Bureau violated provisions of the UCSPA.
Farm Bureau argues that damages in the form of emotional injuries were not justified in this case. We think this contention without merit. In view of the mounting medical expenses, failure to promptly settle this claim created a sub-missible issue as to whether there was outrageous conduct on the part of Farm Bureau .within the context of Wittmer, supra. Farm Bureau contends that it was prejudiced by the court’s allowing the evidence of Jeffrey’s injuries, as if this were a tort claim against Jeffrey. This action, Farm Bureau contends, is in the nature of those allowed under KRS 446.070 for violation of a statute, namely, KRS 304.12-230. Additionally, Farm Bureau argues that the cumulative effect of evidentiary errors entitles it to a new trial. We ascribe no merit to these contentions.
Finally, Farm Bureau maintains that the court erred in including interest on the award from the date of verdict rather than from date of judgment. For the reasons herein stated in Motorists’ appeal, we agree that the court indeed erred.
In conclusion we affirm all aspects of Farm Bureau’s appeal, except the award of interest prior to judgment. The circuit court is reversed on this issue and, on remand, shall impose interest from the date of judgment.

The Glasses’ Cross-Appeal

We now address those issues raised in the Glasses’ cross-appeal. Jeffrey contends that the jury should have been given an instruction on punitive damages against Farm Bureau. In Wittmer, supra, at 890, the Supreme Court set forth the following precept:
Before [a bad faith violation of the UCSPA] cause of action exists in the first place, there must be evidence *463sufficient to warrant punitive damages.
The circuit court, in the case at hand, correctly concluded that sufficient evidence of bad faith was presented for the issue to be submissible, but failed to submit on punitive damages.
Interpreting the standard for punitive damages, the Wittmer Court states:
This means there must be sufficient evidence of intentional misconduct or reckless disregard of the rights of an insured or a claimant to warrant submitting the right to award punitive damages to the jury. If there is such evidence, the jury should award consequential damages and may award punitive damages.
Id. at 890.
In light of Wittmer it may seem contrary for the circuit court to give an instruction on compensatory damages, yet preclude the jury from considering punitive damages. Nevertheless, we do not interpret Wittmer as mandating that a punitive damage instruction be given in all cases. Because Farm Bureau was an excess carrier and in view of the compensatory award against it, as well as the punitive damage award against Motorists, we are disinclined to reverse on this issue. We are of the opinion that the instructions rendered were sufficient to permit the jury to properly characterize the conduct of the respective carriers. Upon this line of reasoning, we also reject the Glasses’ argument that an award of attorney fees should have been placed against Farm Bureau.
Finally, we reject the contention of Garnett Doyle and Brenda Glass as to their claim for a damage award. CR 8.01.

Summary

We affirm the judgment of the Shelby Circuit Court as it pertains to Motorists Mutual in every respect except as to the award of UIM benefits and the award of interest prior to judgment, which, upon remand, shall be adjusted in accordance with this opinion.
The judgment against Farm Bureau is affirmed in all respects with the exception of the interest award prior to judgment, which shall likewise be adjusted upon remand.
The cross-appeal is affirmed in all respects.
For the foregoing reasons, Appeal No. 98-CA-2137-MR and No. 93-CA-2235-MR are affirmed in part, reversed in part, and remanded for proceedings consistent with this opinion. The cross-appeal, No. 93-CA-2198-MR, is affirmed.
For the reasons set forth hereinabove, I respectfully dissent.
STUMBO and WINTERSHEIMER, JJ., join this dissenting opinion.

. The record reveals that the Glasses had two insurance policies with Motorists Mutual. Policy Number 5342-06-224865-00A will be referred to in the course of this opinion as "Policy A.” This policy covered two motor vehicles and insured Garnett Doyle Glass and Brenda Glass. Policy Number 5342-04-224866-1 ID will be referred to as “Policy D." At the time of the accident, this policy covered Jeffrey's truck and, after the accident, also covered another motor vehicle. Policy D insured Garnett, Brenda, and Jeffrey. Collectively, we will sometimes refer to Policy A and Policy D as "the Glasses’ policies.” Policies A and D substantively contained identical language.

. The suit named Stephen Shelburne as a tortfeasor/defendant. Shelburne was dismissed from the proceedings on May 6, 1993, when Motorists Mutual and Farm Bureau paid their respective bodily injury policy limits.

. We are persuaded by the reasoning in Wickline v. United States Fidelity & Guaranty Co., 530 So.2d 708, 712-713 (Miss.1988), wherein the Mississippi Supreme Court held that the stacking of an injured’s uninsured motorist coverage is acceptable for "the purpose of meeting the 'uninsured motor vehicle' definition.”

. Ky.Rev.Stat. (KRS) 304.39-320 was originally enacted in 1974, with an effective date of July 1, 1975. Thereafter, it was amended, effective July 15, 1988, and again, effective December 1, 1990.

. As to any controversy existing over which standard should be applied in the determination of punitive damages under KRS 411.184 (applied by the circuit court) or Wittmer v. Jones, Ky., 864 S.W.2d 885 (1993), we are of the opinion that any difference is illusory.

. No similar instruction was given regarding Farm Bureau.