Court Opinion

ID: 4696401
Source: CourtListenerOpinion
Date Created: 2021-06-17 15:07:39.011235+00
Date Added: 2024-06-11T09:02:16.678908
License: Public Domain

RENDERED: JUNE 17, 2021
                                                          TO BE PUBLISHED

               Supreme Court of Kentucky
                               2019-SC-0475-DG

UNITED STATES LIABILITY                                              APPELLANT
INSURANCE COMPANY

                 ON REVIEW FROM COURT OF APPEALS
V.                       NO. 2018-CA-0475
               MCCRACKEN CIRCUIT COURT NO. 09-CI-01400

JACI WATSON, AS ADMINISTRATOR                                         APPELLEE
OF THE ESTATE OF WILLIAM
GERALD WATSON, DECEASED

               OPINION OF THE COURT BY JUSTICE HUGHES

                        REVERSING AND REMANDING

      After being seriously injured in a motor vehicle accident in late 2008,

William G. Watson settled his dram shop liability claim against Pure Country,

LLC, an establishment insured by United States Liability Insurance Company

(USLI). Pure Country was alleged to have served alcohol to the driver of the car

in which Watson was a passenger. Several years after settling with Pure

Country, Watson brought a bad faith claim against USLI pursuant to

Kentucky’s Unfair Claims Settlement Practices Act (UCSPA) only to have it

dismissed as barred by the statute of limitations. This appeal requires us to

consider the triggering of the limitations period for a UCSPA claim where the

parties settle the underlying claim and, in the course of addressing that issue,

to reiterate the legal elements of a binding settlement agreement. For the
reasons discussed fully below, we conclude that the Court of Appeals erred in

reversing the trial court because a binding settlement agreement between

Watson and Pure Country was in fact reached more than five years prior to

Watson’s filing of his UCSPA action.

                FACTUAL AND PROCEDURAL BACKGROUND

       William Watson and his friend, Joe Taylor, patronized establishments

that serve or sell alcohol in the Paducah, Kentucky area the evening of

December 26, 2008. Pure Country, LLC, d/b/a Pure Country, insured by

USLI, was one of these establishments. Later that evening, Taylor’s vehicle left

the road and flipped several times, ejecting Watson from the passenger side

and causing disabling injuries to his spine and neck. Taylor failed a field

sobriety test and his blood alcohol concentration was found to be above the

legal limit.

       In December 2009,1 Watson filed suit against Taylor, Pure Country, and

Ohio Valley Bistros, Inc., d/b/a TGI Friday’s. Watson asserted a negligence

claim against Taylor and sued the other defendants under Kentucky’s dram

shop law, claiming each establishment served Taylor alcoholic beverages when

he was visibly intoxicated. Watson initiated a second lawsuit in June 2011

against Roof Brothers Wine and Spirits, Inc., the liquor store Watson and

Taylor visited that evening. The trial court consolidated the two lawsuits and

the parties conducted discovery regarding the issues of liability, comparative

     1 Watson died in December 2019 and the administrator of his estate, Jaci

Watson, is now the Appellee in this Court.

                                         2
fault, and Watson’s claimed damages. Throughout the case, a dispute existed

as to whether Pure Country even served alcoholic beverages to Taylor that

night.

         Pertinently, in early February 2012, Watson moved for leave to file a

second amended complaint to assert bad faith claims against USLI and the

other insurance companies (collectively, the “Carriers”) involved in the case

under common law and the UCSPA, Kentucky Revised Statute (KRS) 304.12-

230. Watson’s proposed second amended complaint, inter alia, alleged that the

Carriers “violated KRS 304.12-235 by failing to make a good faith attempt to

settle the claim within the time prescribed in KRS 304.12-235(1)” and this

conduct further constitutes “bad faith and a breach of fiduciary duty to act in

good faith and to deal fairly with Plaintiff.” USLI2 objected to Watson’s motion

on the ground that Watson could not state viable statutory bad faith claims

against it. The circuit court agreed with USLI and denied Watson’s motion in

an April 17, 2012 order, the basis of its decision being Wittmer v. Jones, 864

S.W.2d 855 (Ky. 1993), and Motorists Mutual Insurance Co. v. Glass, 996

S.W.2d 437, 452-53 (Ky. 1997). Without evidence sufficient to warrant

punitive damages, and without Watson having shown all three bad faith

elements outlined in Wittmer, the circuit court declined to allow filing of

Watson’s amended complaint which would add the Carriers as party

         2   The Carriers, by special appearance, filed a joint response.

                                                3
defendants and, as a practical matter, result in a continuance of the

approaching trial.3

      According to the record, the first brief settlement negotiations between

Watson and Pure Country occurred mid-2011. One year later, upon rejecting

an earlier offer from USLI, Watson made a written settlement offer to Pure

Country on June 11, 2012, stating the offer would remain open through the

close of business on June 19, 2012. Watson agreed to accept USLI’s policy

limits and further agreed that Watson would be responsible for resolving

anticipated medical liens.

      The policy covering Pure Country contained a provision under which the

policy limits eroded as fees and costs were incurred in defense of the claim.

Pure Country’s counsel promptly accepted Watson’s offer4 and subsequently

transmitted the release and settlement agreement to Watson’s counsel on July

20, 2012, noting that he would send a final version of the agreement once the

final settlement amount was known, i.e., the funds remaining after deduction

of defense fees and costs. On July 30, 2012, Pure Country’s counsel forwarded

the final settlement release, detailing the amount remaining on the policy, to

Watson’s counsel. The parties ceased all further litigation of Watson’s claims

against Pure Country after June 2012; at that time a trial was scheduled for

      3   The trial was scheduled to begin August 13, 2012.
      4A June 13, 2012 email from Watson’s counsel referenced a conversation that
morning between counsel and reflected that Watson would begin determining the
amount owed on various medical liens, for which Watson would be responsible.

                                           4
early August 2012.5 Meanwhile, as promised in the June 13, 2012 email,

Watson’s counsel worked to resolve the medical liens that would be covered by

the funds Watson was to receive from the negotiated settlement. In December

2012, with those details resolved, Watson executed the release and USLI paid

the agreed amount.

      As of August 2017, only the claims against Taylor remained in suit. On

August 9, 2017, Watson moved for leave to file a tendered third amended

complaint to assert a bad faith claim against USLI. The trial court granted the

motion, and the complaint was filed of record August 11, 2017.6 USLI moved

on September 13, 2017 to dismiss Watson’s third amended complaint for its

failure to state a claim against USLI upon which relief could be granted. USLI

argued that the third amended complaint did not contain allegations different

than the proposed second amended complaint which former Circuit Judge

Clymer had not allowed Watson to file in April 2012 and that no developments

had occurred to alter the viability of Watson’s claims against USLI more than

five years later; USLI noted the only change in circumstances was the parties’

December 2012 settlement.7 Hence, USLI maintained that the Wittmer bad

      5  The trial did not proceed as scheduled and the case was never tried, the
parties receiving summary judgment or eventually settling. The final settlement was
with Defendant Joe Taylor and was noticed to the trial court by the parties on
December 18, 2019.
      6 At times, the parties reference August 11 in their filings. For consistency with
the circuit court, we use August 9 when referencing the filing date of the third
amended complaint.
      7As Watson emphasizes, USLI did initially refer to a December 2012 settlement,
the month that the release was signed, and the funds were disbursed. However, as
                                           5
faith cause of action elements were not met. USLI further argued that

Watson’s bad faith claim was barred by the five-year limitation period in KRS

413.120(2)8 and that Watson’s claims were time-barred to the extent they

accrued before August 9, 2012. USLI noted that Watson obviously believed his

claim accrued before then since he first attempted to state a bad faith claim

against USLI in March 2012.9

      Watson in response argued, first, that his third amended complaint set

forth a plausible claim for relief. He maintained the UCSPA applies and the

reasonableness of USLI’s conduct in this case is a question for the jury to

decide. As for the April 17, 2012 court order, Watson insisted that was not

determinative. He asserted that the trial court’s concerns at that point – trial

delay due to impact on the underlying claims – were no longer present. And as

to the extent the trial court made determinations about a lack of evidence, or

the weight of it, Watson argued that those determinations were in error. As to

timeliness, he contended the third amended complaint was not barred by KRS

413.120(2) because, as USLI concedes, it did not make an actual settlement

payment until December 2012, rendering Watson’s August 9, 2017 complaint

timely. Finally, Watson insisted that the claims asserted against USLI relate

back to the filing of the original complaint, an assertion which USLI strongly

explained fully below, a binding settlement agreement was reached no later than July
30, 2012.
       8 The parties agree the five-year limitation period expressed in KRS 413.120(2)

applies to this case.
       9 Watson filed the motion in February, briefing occurred in March and the trial

court denied the motion in April 2012.

                                           6
disputed, noting that it was not even a named defendant in the original

December 2009 complaint – a complaint containing no allegations of bad faith.

      On November 14, 2017, the circuit court granted USLI’s motion to

dismiss in part, finding that the statute of limitations had run on those bad

faith claims which existed prior to August 9, 2012. The court also concluded

that the third amended complaint did not relate back to the original complaint

because the bad faith claim did not arise out of the conduct, transaction, or

occurrence set forth in the original complaint and it did not change a party

against whom the original complaint was filed. As to the court’s April 2012

order, it explained that impending trial reasons for denying the second

amended complaint no longer existed and reconsidered its earlier position10

that under no circumstances could Watson prevail on his bad faith claim.

      USLI then moved for summary judgment on Watson’s bad faith claims,

arguing they were all time-barred. Given the circuit court’s conclusion that

only conduct that occurred after August 9, 2012 could support a timely bad

faith claim, USLI supported its motion with evidence that Watson and USLI

agreed to settle Watson’s claims against USLI’s insured for policy limits in June

2012. USLI argued with that being so, as a matter of law, nothing could have

occurred after August 9, 2012 as Watson alleged under KRS 304.12-230

subsections (2), (3), (4), (6), (7) and (14), and KRS 304.12-235, that would

constitute bad faith. Watson countered, arguing that the motion was

       10 By this point, Judge Clymer had retired and Judge William A. Kitchen, III was

the presiding judge.

                                          7
premature; that USLI was on notice of Watson’s claims against it in early 2012

with his original motion for leave to amend the complaint and would not be

prejudiced in having to defend the case on its merits; that he would be

prejudiced by a determination that his claims accruing before August 9, 2012

are time-barred; and that he had an actionable claim under UCSPA until the

underlying claim was paid. In support of his argument, he provided proof that

USLI did not send the settlement checks dated December 28, 2012 until

January 2, 2013. Watson noted further that the claims against Pure Country

were not dismissed in the trial court until February 21, 2013.

      Watson also filed a competing motion, asking the circuit court to

reconsider, clarify, and/or revise its April 17, 2012 and November 14, 2017

orders, thereby rendering USLI’s motion for summary judgment moot. Citing

Hill v. State Farm Insurance Co., 390 S.W.3d 156 (Ky. App. 2012), he argued in

part that since the circuit court had reconsidered its position that he could

under no circumstances prevail on his UCSPA claim and that because his

initial motion for leave to file an amended complaint was timely in February

2012, the court should reconsider its ruling that “any claim for damages

accruing prior to August 9, 2012 is time-barred.” USLI’s response maintained

that Watson’s third amended complaint could not possibly relate back to his

unsuccessful 2012 motion for leave to file an amended complaint. The circuit

court denied Watson’s motion to reconsider.

      The circuit court granted USLI’s motion for summary judgment. Finding

the parties did not dispute that Watson agreed in principle in June 2012 to the

                                        8
settlement of the underlying claim against Pure Country for the policy limits of

the insurance coverage, the circuit court considered the parties’ dispute as to

whether the insurance claim ceased to be pendent prior to August 2012.11 The

circuit court concluded that the insurance claim was in fact settled before

August 9, 2012, and as Watson could not identify any bad faith actions

subsequent to the settlement agreement, a genuine issue of material fact did

not exist, entitling USLI to judgment as a matter of law. In accordance with its

written order, the circuit court made an oral ruling, finding that the claim

settled before August 2012.

      Watson appealed to the Court of Appeals from three of the McCracken

Circuit Court orders: 1) the April 17, 2012 order denying Watson’s motion for

leave to file an amended complaint; 2) the November 14, 2017 order granting in

part USLI’s motion to dismiss; and 3) the February 26, 2018 order granting

USLI summary judgment. The Court of Appeals concluded the circuit court did

not abuse its discretion in April 2012 by denying Watson’s motion for leave to

file an amended complaint, agreeing that Watson’s bad faith claim against USLI

was not ripe. However, based on its understanding of contract formation

principles, the Court of Appeals concluded the circuit court’s 2017 order

granting partial dismissal of Watson’s bad faith claim was in error. The Court

of Appeals concluded that Watson’s bad faith claim did not accrue until

      11 The circuit court’s order noted that the November 14, 2017 order was based
on information that Watson’s claim was settled in December 2012.

                                         9
December 2012, when Watson “accepted” USLI’s June 2012 offer and executed

the settlement agreement, resulting in USLI paying Watson. Based on the

perceived December 2012 settlement date, the Court of Appeals concluded that

Watson’s August 2017 bad faith claim against USLI was timely and remanded

the case for further proceedings.

      The Court of Appeals did not address Watson’s argument that his bad

faith claim in his 2017 complaint was timely because USLI was on notice of the

claim from Watson’s early 2012 motion for leave to file an amended complaint.

Viewing the circuit court’s 2018 summary judgment in favor of USLI as not

being a final order adjudicating the entire bad faith claim, the Court of Appeals

declined to review the circuit court’s summary judgment. The Court of Appeals

later denied USLI’s petition for rehearing. USLI then petitioned for, and this

Court granted, discretionary review to consider when a third-party insurance

bad faith claim accrues under the UCSPA.

                                    ANALYSIS

      I. The Trial Court Correctly Concluded That Watson’s Bad Faith
         Claim Against USLI Was Barred by the Statute of Limitations
         After July 30, 2017

      This case centers on the statute of limitations applicable to a third-party

insurance bad faith claim pursuant to Kentucky’s UCSPA and, more

specifically, when that limitations period is triggered where the insurer and the

UCSPA plaintiff have reached a settlement as to the insurer’s liability on the

underlying claim. To answer this question, we first briefly review the

fundamentals of a UCSPA claim.

                                       10
      “The gravamen of the UCSPA is that an insurance company is required to

deal in good faith with a claimant, whether an insured or a third-party, with

respect to a claim which the insurance company is contractually obligated to

pay.” Davidson v. American Freightways, Inc., 25 S.W.3d 94, 100 (Ky. 2000).

KRS 304.12-230 is the UCSPA provision that identifies certain prohibited “acts

or omissions” on the part of an insurer, including “not attempting in good faith

to effectuate prompt, fair and equitable settlements of claims in which liability

has become reasonably clear,” KRS 304.12-230(6). Since State Farm Mutual

Automobile Insurance Co. v. Reeder, 763 S.W.2d 116 (Ky. 1988), this Court has

recognized that a third-party can bring a statutory claim against the

tortfeasor’s insurance carrier even though UCSPA does not include a private

right of action provision. KRS 446.070 allows a person injured by violation of

any Kentucky statute to recover damages from the offending party and thus

when read with the UCSPA provision on prohibited conduct provides a

statutory bad faith cause of action against an insurer. See Indiana Ins. Co. v.

Demetre, 527 S.W.3d 12, 26-27 (Ky. 2017). The statute of limitations period

applicable to that claim is five years pursuant to KRS 413.120(2) (statute

applicable for “action upon a liability created by statute, when no other time is

fixed by the statute creating a liability”).

      Beginning with Wittmer, 864 S.W.2d at 890, this Court has identified the

required elements of a bad faith claim as (1) an obligation to pay under the

policy; (2) no reasonable basis in law or fact for denying the claim; and (3)

knowledge on the part of the insurer that no reasonable basis existed for

                                          11
denying the claim or the insurer’s reckless disregard as to whether such basis

existed. The first element—obligation to pay—may be the result of a final

judgment from a court, Simpson v. Travelers Ins. Co., 812 S.W.2d 510, 512 (Ky.

App. 1991), but it may also be the result of settlement of the underlying claim.

This case presents us with the first opportunity to address a settlement of an

underlying UCSPA claim and the triggering of the five-year statute of

limitations.

      Here, USLI believed that the role of its insured, Pure Country, in the

relevant events on the night of December 26, 2008 was unclear. As noted,

Taylor and Watson visited several establishments that night where alcohol was

available and significant questions existed as to whether Pure Country actually

served alcohol to Taylor, a necessary element of Watson’s dram shop liability

claim. In the summer of 2012, after Watson’s case had been pending for

approximately two and one-half years and with a trial scheduled to begin in a

few weeks, Watson and Pure Country began serious settlement negotiations.

Those negotiations were successful: the parties agreed to settle and at that

point—a binding settlement agreement—USLI’s obligation to pay under the

policy arose. Later, when the timeliness of Watson’s UCSPA claim was at

issue, the trial court examined the parties’ conduct and concluded that a

binding settlement occurred no later than July 30, 2012. The Court of Appeals

reversed because it dated USLI’s binding obligation to pay several months later,

in December 2012. Based on the undisputed facts and Kentucky precedent,

we find that the trial court was clearly correct, and thus it appropriately

                                        12
dismissed Watson’s UCSPA claim filed on August 9, 2017 as barred by the five-

year statute of limitations.

      Before looking closer at this specific dispute, we pause to emphasize that

this case is ultimately about more than the triggering of the statute of

limitations for a UCSPA cause of action following settlement of the underlying

claim. The trigger in those circumstances is a binding settlement agreement

and, to state the obvious, because settlement agreements occur regularly

across the breadth of civil litigation their binding nature, their enforceability, is

of considerable significance beyond just bad faith insurance cases.

Consequently, in a larger sense this case is about what constitutes a binding

settlement agreement between adverse litigants, an issue of immense concern

to our civil justice system.

      As we noted in Frear v. P.T.A. Industries, Inc., 103 S.W.3d 99, 105 (Ky.

2003), “‘settlement agreements are a type of contract and therefore are

governed by contract law.’” (Citing 15 Am. Jur. 2d, Compromise and Settlement

§ 9 (2000)). A formal written document is not required because “it has long

been the law of this Commonwealth that the fact that a compromise agreement

is verbal and not yet reduced to writing does not make it any less binding.”

Motorists Ins. Co., 996 S.W.2d at 445. Frequently parties settle a case pretrial

through verbal exchanges, in person or by phone, through the exchange of

letters or emails, or by a combination of the foregoing. Lawyers and judges

alike are familiar with settlements “on the courthouse steps,” literally

settlements reached just before trial starts, or even settlements reached during

                                         13
a trial recess. Often these settlements are not reflected in a formal written

document signed by all affected parties but are established by the facts, e.g.,

the parties’ phone calls and emails. To determine if the parties actually

reached a settlement agreement courts look to the parties’ negotiations. See,

e.g., General Motors Corp. v. Herald, 833 S.W.2d 804 (Ky. 1992).

      The trial court found that Watson’s claim against Pure Country “was

settled before August 9, 2012,” the date five years before the filing of the bad

faith claim. The record reflects that Watson made an initial settlement demand

for a sum in excess of the USLI policy limits in June 2011 but negotiations did

not begin in earnest until a year later, June 2012. In a June 11, 2012 faxed

letter Watson’s counsel made Pure Country’s counsel an “offer to settle the

case” in which Watson agreed to release his claims in exchange for the

remaining USLI liability policy limits. The offer was to remain open until June

19, 2012. USLI accepted Watson’s offer, confirmed in a June 13, 2012 email

from Watson’s counsel discussing settlement language and medical liens. On

July 30, 2012, Pure Country’s counsel sent a written release and confirmation

of the settlement amount to Watson’s counsel. At that point, an agreement

existed and, as USLI accurately notes, “the parties stopped litigating.”

      The foregoing facts support the trial court’s finding regarding a binding

settlement because the essential elements of an enforceable contract were

present no later than July 30, 2012. “The fundamental elements of a valid

contract are ‘offer and acceptance, full and complete terms, and

consideration.’” Energy Home, Div. of S. Energy Homes, Inc. v. Peay, 406

                                        14
S.W.3d 828, 834 (Ky. 2013) (citations omitted). The Court of Appeals declined

to acknowledge the binding nature of the agreement in July 2012 because it

perceived an absence of consideration, i.e., it found that mutual consideration

was not present until December 2012 when Watson executed the release and

USLI disbursed the settlement funds. This analysis ignores longstanding

Kentucky law which holds that mutual promises can, and often do, constitute

the necessary consideration;12 the subsequent exchange of money and signing

of a written release is simply the implementation of the agreement previously

reached.

      Almost 100 years ago, in Barr v. Gilmour, 265 S.W. 6 (Ky. 1924), the

Commonwealth’s then-highest court, the Court of Appeals, addressed the

settlement of a malpractice claim arising from dental surgery in which the

patient contracted tetanus. After negotiations the patient’s husband, her

authorized representative, reached an agreement with the dental surgeon to

settle the matter for $900 but a dispute ensued when Dr. Barr refused to sign a

later-drafted written version of their agreement. The Court reviewed the

parties’ negotiations in detail and then acknowledged the general principle that

mutual promises can support an enforceable settlement even though the

parties’ agreement is not reduced to writing.

      12  See, e.g., Robbins v. Robbins, 55 S.W.2d 31, 35 (Ky. 1932) (“It is a universal
principle in the law of contracts that mutual promises form a valid consideration for
an agreement; but, in order for that to be so, there must be a benefit to the promisor,
or a detriment to the promisee.”); Wilson v. Davis, 8 Ky. 219, 220 (1818) (“Where a
contract is subscribed by both parties, and contains mutual covenants, the covenant
on one side is the consideration for the covenant on the other.”).
                                           15
             The writing was not the compromise but only evidence of it.
       The compromise was effected when the minds of the parties met,
       one proposing and the other accepting. The writing was intended
       only to evidence their agreement and to save further controversy by
       enabling Dr. Barr to produce a writing showing the compromise
       had been effected, but the writing was not the compromise, merely
       evidence of it.

Id. at 9.

       More recently, in Energy Home, 406 S.W.3d at 835, this Court reiterated

the concept in the context of an arbitration agreement signed after the

purchase of a mobile home.

       The Arbitration Agreement was supported by adequate
       consideration. Mutual promises constitute adequate consideration
       if a benefit is conferred to the promisor or a detriment is incurred
       by the promisee. The manufacturer’s promise to cure certain flaws
       and defects that appear within a given time was fair consideration
       for the buyers’ mutual promise to submit disputes to arbitration.
       Furthermore, “an arbitration clause requiring both parties to
       submit equally to arbitration constitutes adequate consideration.”

(Citations omitted.)

       Here, Pure Country and Watson reached an agreement no later than July

30, 2012 wherein Watson agreed to release his claims and cease further

litigation in exchange for Pure Country tendering its USLI’s policy limits minus

the defense fees and costs. As the record reflects, the several months delay in

the actual issuance of the settlement payment was caused by Watson and his

counsel who needed to determine the various medical liens before the

settlement checks were written. Nevertheless, the parties’ correspondence and

conduct clearly evidence that a binding settlement existed no later than July

30, 2012. The Court of Appeals erred in holding otherwise.

                                       16
      II. Watson’s UCSPA Claim Is Not Saved by Relation Back
          to an Earlier Filed or Proposed Pleading

      In an effort to establish that his UCSPA claim was filed even before the

summer 2012 settlement agreement was reached, Watson pointed the trial

court to the relation-back language in Kentucky Rule of Civil Procedure (CR)

15.03. Specifically, he argued his August 9, 2017 amended complaint could

relate back to the original complaint in December 2009. The relevant

subsections of CR 15.03 state:

      (1) Whenever the claim or defense asserted in the amended
      pleading arose out of the conduct, transaction, or occurrence set
      forth or attempted to be set forth in the original pleading, the
      amendment relates back to the date of the original pleading.

      (2) An amendment changing the party against whom a claim is
      asserted relates back if the condition of paragraph (1) is satisfied
      and, within the period provided by law for commencing the action
      against him, the party to be brought in by amendment (a) has
      received such notice of the institution of the action that he will not
      be prejudiced in maintaining his defense on the merits, and (b)
      knew or should have known that, but for a mistake concerning the
      identity of the proper party, the action would have been brought
      against him.

As the trial court properly held, Watson’s bad faith claims did not arise out of

the same “conduct, transaction or occurrence” at issue in the original

complaint, namely the motor vehicle accident and Watson’s negligence and

dram shop claims against Pure Country and others involved that night. USLI

was not even a party as to those original claims, nor was the later untimely

UCSPA complaint simply an attempt to change the party against whom the

original claims were asserted. CR 15.03 has absolutely no bearing on Watson’s

                                       17
UCSPA claim against USLI and the trial court appropriately rejected that

argument.

      Alternatively, Watson insists that his UCSPA complaint should date back

to March/April 2012 when he initially attempted to file it, but Judge Clymer

denied his motion. He posits that his complaint should not be deemed

untimely when USLI had notice of his claims in early 2012, citing Hill, 390

S.W.3d 153.

      First, Hill is a readily distinguishable case. Hill filed a timely motion for

leave to amend her complaint to add her underinsured motorist carrier, State

Farm, but the trial court did not grant her motion until after the statute of

limitations had expired. Id. at 155. The Court of Appeals deemed the amended

complaint timely because Hill had done all that was required of her before the

limitations period ended, any delay being solely attributable to the trial court’s

schedule, over which she had no control. Id. at 155-56. Hill was not premised

on a defendant being on notice of a claim but rather on a plaintiff timely filing

her amended complaint even though it was not formally approved by the court

until after expiration of the limitations period. Here Watson did not timely file

his UCSPA complaint against USLI because the August 9, 2017 filing date was

at least five years and ten days past the settlement of the underlying claim

Watson had against Pure Country.

      Focusing on his early 2012 attempt to amend his complaint, Watson

characterizes the trial court’s later acceptance of the August 9, 2017 amended

complaint as a reconsideration of the earlier April 17, 2012 order denying his

                                        18
motion to file an amended complaint to add bad faith claims against the

Carriers, including USLI. However, the April 17, 2012 order reflected not only

the court’s concern about the effect on an upcoming trial date but also a legal

conclusion—a correct one—that the first Wittmer element of a bad faith claim,

the insurance carrier’s obligation to pay the claim, was missing. Well over five

years later, when the August 9, 2017 amended complaint was tendered, that

element was present because USLI became obligated to pay Watson when the

parties’ settlement agreement was reached no later than July 30, 2012.

Unfortunately for Watson his long delay in seeking the court’s permission to file

the UCSPA complaint rendered the claim untimely. The trial court did not err

in rejecting all of Watson’s later attempts to reframe the date on which that

complaint should be deemed filed.

                                 CONCLUSION

      Five years is a relatively generous limitation period, considerably longer

than the limitation periods applicable to most claims. Watson’s August 9,

2017 attempt to file an amended complaint asserting bad faith claims against

USLI was untimely despite this generous limitation period because the

settlement agreement which triggered the five-year period was reached no later

than July 30, 2012. Accordingly, we reverse the Court of Appeals and remand

to the trial court for reinstatement of the summary judgment in favor of USLI.

      All sitting. Minton, C.J.; Conley, Keller, Nickell, and VanMeter, JJ.,

concur. Lambert, J., dissents by separate opinion.

                                       19
      LAMBERT, J., DISSENTING: I would affirm the Court of Appeals and

hold that the determinative date for calculation of the statute of limitations was

the date of the completion of the contract, i.e., the payment of the

consideration. This clear guidepost would also work to prevent litigation as to

the moment in time when there is a binding contract arising prior to

consideration being paid. With today’s crossing emails and phone messages

and misdelivered or nondelivered texts, trying to pick an amorphous date from

the settlement negotiation season is a bad idea. While it did not happen here,

a larger than expected medical lien can, and often does, foul what was thought

to be an agreement to settle. As the old adage warns, “There is many a slip

'twixt the cup and the lip.” Thus, I would affirm the Court of Appeals.

COUNSEL FOR APPELLANT:

David Domene
Emily Christine Lamb
Blackburn Domene Burchett PLLC

COUNSEL FOR APPELLEE:
Philip Gray Fairbanks
Mendel Austin Mehr
Mehr Fairbanks & Peterson Trial Lawyers, PLLC

David Vance Oakes
Oakes Law Firm

                                       20