Court Opinion

ID: 4692892
Source: CourtListenerOpinion
Date Created: 2021-06-04 14:07:00.78293+00
Date Added: 2024-06-11T08:05:18.898627
License: Public Domain

RENDERED: MAY 28, 2021; 10:00 A.M.
                        NOT TO BE PUBLISHED

               Commonwealth of Kentucky
                         Court of Appeals

                            NO. 2020-CA-0958-MR

GREGORY WOOSLEY, AS                                             APPELLANTS
ADMINISTRATOR OF THE ESTATE
OF DAVID H. WOOSLEY AND
OLIVIA MARIE WOOSLEY

               APPEAL FROM JEFFERSON CIRCUIT COURT
v.              HONORABLE ANNIE O’CONNELL, JUDGE
                       ACTION NO. 12-CI-003910

STATE AUTO PROPERTY AND                                             APPELLEE
CASUALTY INSURANCE
COMPANY

                                  OPINION
                                 AFFIRMING

                                ** ** ** ** **

BEFORE: COMBS, LAMBERT, AND MCNEILL, JUDGES.

COMBS, JUDGE: Gregory Woosley, as administrator of the Estate of David

Woosley, and Olivia Marie Woosley, the surviving minor daughter of David

Woosley, appeal separate summary judgments of the Jefferson Circuit Court. One

judgment held that a homeowner’s policy issued by State Auto Property and
Casualty Company (“State Auto”) did not provide coverage to its insured, Lisa

Wright, the tortfeasor who was involved in the accident that claimed the life of

David Woosley. The second judgment held that the third-party claims of bad faith

asserted against State Auto by the Estate and Olivia Woosley (referred to

hereinafter as Olivia in order to avoid confusion) with respect to the homeowner’s

policy could not succeed as a matter of law. After our review, we affirm.

             On July 16, 2011, David Woosley was driving his motorcycle on the

Watterson Expressway in Jefferson County. He was riding with a number of

fellow bikers that included Douglas Carwile and Carwile’s passenger, Lisa Wright.

Lisa Wright was State Auto’s insured under both an auto policy and a

homeowner’s policy.

             In a congested construction zone, the group of motorcyclists

encountered Jazmen Sowell, who was attempting to merge onto the expressway.

Sowell’s automobile nearly collided with the group of motorcyclists. A police

investigator described what happened next as a “road rage” incident. Some of the

motorcyclists hurled angry words and gestures at Sowell. When Carwile’s

motorcycle drew up next to Sowell’s vehicle, a verbal altercation ensued. Wright

aimed an obscene gesture at Sowell. Sowell’s automobile swerved into the

adjoining lane of travel and struck Carwile’s motorcycle. As she struggled to

correct her steering, Sowell lost control of the vehicle. Her car struck a concrete

                                         -2-
barrier, careened over three lanes of traffic, and collided with the motorcycle being

operated by David Woosley. Woosley died of his injuries. No aggressive behavior

has been attributed to Woosley. Carwile, Wright, and Sowell were uninjured.

             Gregory Woosley, the decedent’s surviving son and an attorney, made

a claim against Sowell’s auto insurance policy. Sowell’s insurer offered to tender

the policy limits.

             In November 2011, Gregory Woosley informed Carwile and Wright

that his father’s Estate and Olivia would make claims against their separate

insurance policies. Later, Carwile and Wright would indicate that Woosley

explained to them that he did not believe that they were at fault but that he needed

them to respond carefully so that their insurance companies would pay the claims

he intended to assert. Woosley was appointed administrator of his father’s Estate

on February 20, 2012.

             On June 6, 2012, the Estate provided information to State Auto

indicating that the wreck was caused, in part, by Wright’s actions. It also

submitted, according to the Estate, “a very rough estimate of potential damages to

David Woosley’s estate that included the loss of a pension, substantial pain and

suffering, medical expenses, and a loss of consortium claim by [Olivia].” The

Estate demanded the limits of the auto policy that covered Wright as a resident of

her parents’ household and the limits of her parents’ homeowner’s policy.

                                         -3-
             Shortly later, the Estate contacted State Auto again. According to the

Estate, State Auto indicated that it lacked sufficient information to evaluate the

claim and that it could not make an immediate offer of settlement.

             On July 16, 2012, the Estate and Olivia filed a wrongful death action

against Sowell, Carwile, and Wright. The Estate alleged that Wright had

encouraged Carwile to pursue and engage Sowell and/or had distracted Sowell by

yelling and gesturing, causing Sowell to lose control of her automobile and

ultimately to collide with Woosley’s motorcycle, killing him.

             On August 10, 2012, Teresa Dryden-Smith, on behalf of State Auto,

advised the insureds that the company would provide a defense to Wright in the

wrongful death action. It did so under an express reservation of rights concerning

the coverage afforded by the terms of the automobile policy issued to Wright’s

parents. In her correspondence, Dryden-Smith cited specific provisions of the

policy underlying State Auto’s concern about the coverage afforded.

             On August 15, 2012, Jim Garvey of State Auto wrote to Wright,

explaining that the provisions of her parents’ homeowner’s policy “may not cover

you for some or all aspects” of the claim. He advised that the letter was not meant

as a denial of the claim but rather as an expression of the uncertainty of coverage.

He cited specific policy provisions in support of State Auto’s position -- including

one that excluded coverage for “motor vehicle liability.” He advised Wright that

                                         -4-
State Auto would continue to be involved in the matter only under a reservation of

its right to deny coverage.

             In a claim note prepared just weeks later, State Auto memorialized its

impressions that an early settlement of the wrongful death action was unlikely.

State Auto was skeptical that liability could be apportioned to Wright as she was

merely a passenger on the motorcycle -- a vehicle that was not involved in the

collision that killed Woosley. While she was not in position to direct negotiations,

Wright was adamant that State Auto should deny the claim as she did not believe

that she bore any responsibility for the collision. Wright indicated to a State Auto

adjuster that Gregory Woosley promised her (Wright) that he would dismiss the

action against her if State Auto denied the claim. Wright’s counsel filed an answer

to the complaint and denied her liability for the collision that killed Woosley.

             In late September 2012, Gregory Woosley, on behalf of the Estate,

spoke to Wright’s counsel by telephone. He explained that Wright’s liability had

been conclusively established by the police investigation that followed the

collision and that damages were significant. On this basis, the Estate again

demanded the limits of the policies.

             On March 13, 2013, the Estate sent a demand to Wright’s counsel for

“the maximum policy limits of Ms. Wright’s auto and/or homeowner’s policies.”

Wright’s counsel responded in writing the following day. Counsel indicated that

                                         -5-
the issue of Wright’s liability remained disputed. Without sufficient evidence to

support the claim, counsel advised that it would be imprudent for State Auto “to

make anything beyond a nuisance or expense[-]based offer.” Based upon their

previous communications, counsel assumed that the Estate would not be interested

in a nuisance value offer but indicated that she would await a response.

             On March 15, 2013, the Estate indicated that it would evaluate “any

offer to determine whether it reasonably reflects Ms. Wright’s relative degree of

culpability in the wreck.” In response, counsel for Wright wrote, “I appreciate

your efforts to articulate the Estate’s position on liability. Once we have

completed written discovery perhaps we can explore settlement. . . .”

             In August 2013, Wright’s counsel advised State Auto by letter that the

Estate had again made a demand for the limits of both the homeowner’s and the

auto policies. Counsel observed that the Estate had only recently secured service

of process on Sowell, however. She indicated that discovery could now proceed,

and she outlined a plan for deposing several witnesses.

             In November 2013, Wright’s counsel advised State Auto by letter that

the Estate had made a demand of $100,000, “apparently demanding the limits of

the automobile liability policy.” She explained that despite several conversations

with Gregory Woosley, counsel for the Estate “did not seem to register that a

demand for settlement under one policy would require the estate to give a

                                         -6-
complete, full and final release to Lisa Wright barring any further attempt to

collect on her homeowners [policy] or otherwise.”

              After Wright’s counsel scheduled several depositions, Gregory

Woosley secured co-counsel for the Estate. In a claim note that followed, State

Auto documented its intention to evaluate the Estate’s demand after depositions

were completed. The depositions were rescheduled to allow for new counsel to

join the litigation.

              On June 13, 2014, prior to a scheduled mediation session, Wright’s

counsel prepared a report for State Auto. Counsel advised that the testimony of

both Sowell and Carwile contradicted the Estate’s theory as to Wright’s liability.

Sowell testified that she did not interact with Wright until after the collision and

that she had not seen Wright’s gesture toward her before the collision. Moreover,

Sowell testified that she swerved and struck Carwile’s motorcycle because she

believed that Carwile and another motorcycle were swerving into her lane.

Carwile denied that he had approached Sowell’s vehicle at Wright’s urging.

Counsel concluded that Sowell had not been reacting to Wright when she lost

control of her vehicle and collided with Woosley’s motorcycle. In light of

Carwile’s testimony and inconsistencies in Sowell’s recollection of events, defense

counsel advised that a jury would be reluctant to apportion much liability to Wright

-- if any. Counsel recommended a target settlement range of $50,000 to $70,000

                                          -7-
based on an estimate of the value of the claim at $500,000 to $700,000 -- with 10%

fault apportioned to Wright.

                During the mediation conducted on July 11, 2014, the Estate advised

that it would accept nothing less than the combined policy limits of $400,000

under both State Auto policies. State Auto countered with an offer to settle for

$50,000.00 under the auto policy alone. State Auto held to its position that the

homeowner’s policy likely offered no coverage for the claims. The Estate did not

accept State Auto’s counteroffer, and the mediation session was ended. Following

the mediation, the Estate reduced its demand by two pennies.

                On September 4, 2014, Wright’s counsel served the Estate with an

offer of judgment pursuant to the provisions of our rules of civil procedure.

Wright proposed to allow a judgment to be taken against her for $50,000 in full

settlement of the claims against her. On October 28, 2014, State Auto advised

Wright that it would deny coverage for liability under the provisions of the

homeowner’s policy issued to her parents.

                On January 22, 2015, the Estate and Olivia amended their complaint

to assert claims against State Auto under Kentucky’s Unfair Claims Settlement

Practices Act. KRS1 304.12-230. The Estate alleged that State Auto was obligated

to provide coverage under both the auto policy and the homeowner’s policy in the

1
    Kentucky Revised Statutes.

                                          -8-
wrongful death action and that it had acted in bad faith by failing timely to resolve

the claim. It alleged that State Auto wrongfully denied coverage, failed to pay the

full value of the claim, and had unreasonably delayed the payment of the policy

benefits. It claimed specifically that State Auto: (1) refused to pay the claims

without conducting a reasonable investigation; (2) made no good faith attempt to

settle the claim “until after the depositions of all parties and witnesses were

conducted”; (3) made a settlement offer of only $50,000; (4) failed to provide a

reasonable explanation for its $50,000 settlement offer; (5) failed to settle promptly

the Estate’s claims once Wright’s liability had become reasonably clear; and (6)

misrepresented pertinent facts or policy provisions relating to coverage. It also

challenged State Auto’s decision to take the deposition of Greg Woosley, “the

purpose of which was to harass.” State Auto answered the complaint and denied

the allegations.

             On May 8, 2015, Wright’s counsel provided State Auto with a pre-

trial report indicating that Wright’s defenses remained strong. Counsel reported

that the Estate continued to demand the combined limits of both State Auto

Policies.

             The underlying wrongful death action was tried to a jury over the

course of four days in mid-August, 2015. After hearing the evidence, a jury

returned a $1,149, 571.92 verdict for the plaintiffs. It apportioned 30% of fault to

                                          -9-
Wright. On September 10, 2015, judgment was entered against Wright for

$344,871.58, and she filed for bankruptcy protection. After the bankruptcy court’s

stay was lifted, State Auto tendered the limits of the auto policy ($100,000), plus

interest, in partial satisfaction of the judgment against Wright.

             The underlying tort claim against Wright having been adjudicated,

discovery proceeded on the third-party, bad-faith claim asserted against State Auto.

State Auto produced over 7000 pages of documents included in its claims file and

presented five State Auto witnesses for deposition.

             On August 23, 2018, State Auto filed a motion for summary

judgment. It argued that coverage was not available under the homeowner’s policy

as a matter of law because the motor vehicle exclusion applied to the facts alleged

by the Estate. Separately, it argued that it had not acted in bad faith in its handling

of the claim against the auto policy because the Estate had been unwilling to

negotiate within the policy limits and Wright’s liability for Woosley’s death had

been unclear until the jury resolved the issue.

             The Estate responded that the policy provision excluding coverage for

motor vehicle liability did not apply as a matter of law and that genuine issues of

material fact prevented entry of summary judgment with respect to its third-party

claim against State Auto.

                                         -10-
             On May 16, 2019, the circuit court granted State Auto’s motion for

summary judgment with respect to the coverage available under the terms of the

homeowner’s policy. The court concluded that the tort claims against Wright

“arose out of a fatal motor vehicle accident” and that the homeowner’s policy

expressly excluded coverage for injuries arising out of the operation of a motor

vehicle. Citing this court’s opinion in Hugenberg v. West American Ins. Co./Ohio

Cas. Group, 249 S.W.3d 174 (Ky. App. 2006), the circuit court held that the

homeowner’s policy did not afford coverage in the underlying wrongful death

action and that State Auto was entitled to judgment as a matter of law.

             On July 17, 2020, the circuit court granted State Auto’s motion for

summary judgment with respect to the claim that it had acted in bad faith “in

refusing to pay the remainder of the judgment.” The court determined that the

Estate and Olivia Woosley could not show that State Auto had an obligation to

cover Wright’s liability for the collision under the provisions of the homeowner’s

policy. Because the plaintiffs could not establish the elements of a third-party bad

faith claim as outlined by the Supreme Court of Kentucky in Wittmer v. Jones, 864

S.W.2d 885 (Ky. 1993), the court concluded that State Auto was entitled to

judgment as a matter of law. The Jefferson Circuit Court designated the judgment

as final and appealable, there being no just cause for delay. This appeal followed.

                                        -11-
                On appeal, the Estate and Woosley argue that the circuit court erred

by granting summary judgment with respect to State Auto’s bad faith claims and

handling practices; by concluding that the homeowner’s policy does not provide

coverage; and by failing to grant them a meaningful opportunity to conduct

discovery. We address each of these arguments, reordering them for our analysis.

                A motion for summary judgment should be granted only where “the

pleadings, depositions, answers to interrogatories, stipulations, and admissions on

file, together with the affidavits, if any, show that there is no genuine issue as to

any material fact and that the moving party is entitled to a judgment as a matter of

law.” CR2 56.03. Summary judgment is appropriate where the movant shows that

the adverse party could not prevail under any circumstance. Pearson ex rel. Trent

v. Nat’l Feeding Sys., Inc., 90 S.W.3d 46 (Ky. 2002).

                We review the trial court’s decision to grant summary judgment de

novo. Caniff v. CSX Transp., Inc., 438 S.W.3d 368 (Ky. 2014). We must consider

whether the circuit court erred by concluding that there were no genuine issues as

to any material fact and that State Auto was entitled to judgment as a matter of law

with respect to both the issue of coverage under the homeowner’s policy and the

bad faith claim as it applied to that policy.

2
    Kentucky Rules of Civil Procedure.

                                          -12-
             The Estate and Olivia argue first that the court erred by granting

summary judgment with respect to their third-party bad faith claims. They contend

that the claims are based on a “prolonged and repeated pattern of conduct

demonstrating State Auto never had any intention to settle the claims in good

faith.”

             To prevail on a third-party, bad-faith claim a plaintiff must show that

the insurer was obligated to pay the claim under the terms of the policy; lacked a

reasonable basis for denying the claim; and knew that there was no reasonable

basis to deny the claim or acted with reckless disregard. See Hollaway v. Direct

Gen. Ins. Co. of Mississippi, Inc., 497 S.W.3d 733 (Ky. 2016) (citing Wittmer v.

Jones, 864 S.W.2d 885 (Ky. 1993)). Because the obligation of State Auto to pay

the underlying claim is the threshold issue in resolution of the bad faith action, it is

reasonable to address the disputed coverage issue before considering whether the

circuit court erred by granting summary judgment on the claim of bad faith.

             With respect to the issue of coverage under the terms of the

homeowner’s policy, the Estate and Olivia concede that interpretation of an

insurance contract presents an issue of law for the court to resolve. See Stone v.

Kentucky Farm Bureau Mut. Ins. Co., 34 S.W.3d 809 (Ky. App. 2000). Where

there are no factual disputes, courts may determine the meaning of such contracts

on summary judgment. Liberty Mut. Ins. Co. v. Bobzien by and through Hart, 377

                                          -13-
F.Supp.3d 723 (W.D. Ky. 2019). Our courts seek to determine the intention of the

parties according to the language of the contract. Abney v. Nationwide Mut. Ins.

Co., 215 S.W.3d 699 (Ky. 2006), as modified on denial of reh’g (Mar. 22, 2007).

Absent some ambiguity, provisions of an insurance policy are to be construed

according to their plain and ordinary meaning. Nationwide Mut. Ins. Co., v. Nolan,

10 S.W.3d 129 (Ky. 1999).

             The homeowner’s policy issued to Lisa Wright’s parents excludes

from coverage various types of liability. For example, the policy specifically

excludes coverage for motor vehicle liability. The policy defines “motor vehicle

liability” as liability for injuries “arising out of” the maintenance, occupancy,

operation, or use of a vehicle “by any person.”

             In its analysis, the Jefferson Circuit Court relied upon our decision in

Hugenberg v. West American Ins. Co./Ohio Cas. Group, 249 S.W.3d 174 (Ky.

App. 2006), where we considered a much narrower motor vehicle exclusion

included in a homeowner’s policy. In Hugenberg, the plaintiff suffered brain

damage in an automobile accident in which he was a passenger. The plaintiff sued

the drunk driver and his parents, the Hugenbergs, claiming negligent supervision of

their minor child (the drunk driver). The Hugenberg’s homeowner’s insurance

company denied coverage, citing an exclusion for “ʻbodily injury’ . . . [a]rising out

of . . . [t]he ownership, maintenance, use, loading or unloading of motor

                                         -14-
vehicles . . . owned or operated by or rented or loaned to an ‘insured[.]’” Id. at

186. With regard to whether the claim for injury “arose out of” the use of the

motor vehicle, we determined that all that was necessary was “a causal connection

with the accident.” Id. Such a nexus was sufficient to conclude that the insured’s

use of an automobile met the “arising out of” language contained in the policy

exclusion. Id. at 186-87. The Estate and Olivia contend that Wright’s liability in

this case is not causally connected to the use of a motor vehicle. We disagree.

             The exclusion contained in the Wrights’ State Auto policy is all-

encompassing. Liability for bodily injury “arising out of” the maintenance,

occupancy, operation, or use of a vehicle “by any person” triggers its application.

It explicitly bars coverage for the insured’s liability for injury whenever a motor

vehicle is involved at the time and place of an accident. The exclusion is

understandably broad as it is contained in a homeowner’s policy, which would not

generally encompass the comparatively greater risk of the use of a motor vehicle.

             In their complaint, the Estate and Olivia alleged that the collision that

claimed David Woosley’s life involved the use of several motor vehicles. Sowell’s

vehicle was most clearly involved. The wrongful death claim asserted against Lisa

Wright is based upon her behavior with respect to Sowell immediately before

Sowell lost control of her vehicle. If not for Sowell’s loss of control of the motor

vehicle and collision with Woosley’s motorcycle, there would be no claim against

                                         -15-
Wright because there would have been no injury. The wrongful death claim is

based upon Woosley’s injuries, and his injuries were caused by Sowell’s use of a

motor vehicle.

             Similarly, the jury found that Carwile’s vehicle was involved. If not

for Carwile’s use of his motor vehicle (and Wright’s use thereof as a passenger),

Sowell would not have lost control of her car and collided with Woosley. Again,

there would have been no claim against Wright because there would have been no

injury.

             We specifically reject the argument presented by the Estate and Olivia

that the exclusion does not apply because Wright’s tortious actions did not arise

from the use of a motor vehicle. They maintain that the motor vehicle was simply

the “situs” of Wright’s negligence or one of the “conditions” of the injury and that

her presence on the motorcycle was merely incidental to her liability.

             This argument is premised upon a fundamental misunderstanding of

the nexus required by our holding in Hugenberg. In Hugenberg, we reasoned that

applicability of the exclusion turned on whether the bodily injury for which

liability was sought to be imposed on the insured arose out of the use of a motor

vehicle -- not whether the insured’s tortious actions arose from the use of a motor

vehicle. In other words, the theory of liability does not have to encompass the use

of a motor vehicle; only the injury does. Nevertheless, this critical distinction

                                         -16-
notwithstanding, it is clear that Wright’s tortious actions did, in fact, arise from the

use of a motor vehicle.

             The evidence presented at trial indicates that the altercation among the

various tortfeasors was based wholly upon their use of motor vehicles upon the

roadway. “Road rage” encompasses their inability: to share the road safely with

other drivers of motor vehicles; to tolerate the restraints of congested traffic and its

effect on the drivers of motor vehicles around them; or to engage in simple,

courteous goodwill toward the drivers of other motor vehicles using the

expressway -- all factors at the heart of this tragedy. Under the circumstances of

this case, where “road rage” alone fueled senselessly aggressive use of motor

vehicles, it is disingenuous to contend that Wright’s use of a motor vehicle was

merely a “condition” of the injury or the “situs” of negligence. The tortfeasors’

use of motor vehicles was the precise cause of the collision that claimed the life of

David Woosley. Wright’s liability unequivocally “arose out of” the maintenance,

occupancy, operation, or use of a motor vehicle.

             The plain meaning of the clear and unambiguous language of the

insurance contract excludes from coverage the liability imposed upon Lisa Wright

by the jury’s verdict. Consequently, the circuit court did not err by granting

summary judgment in favor of State Auto with respect to the coverage provided by

the Wrights’ homeowner’s policy.

                                          -17-
             Having concluded that the trial court did not err by deciding as a

matter of law that State Auto was not bound to provide coverage to Wright under

her parents’ homeowner’s policy, we proceed to analyze its resolution of the bad

faith claim. The Estate and Olivia argue that summary judgment was precluded

because genuine issues of material fact remain to be decided. We disagree.

             Kentucky’s Unfair Claims Settlement Practices Act provides that an

insurer engages in an unfair claim-settlement practice when it does “[n]ot attempt[]

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

liability has become reasonably clear.” KRS 304.12-230(6). Uncertainty as to the

application of insurance policy provisions is a reasonable and legitimate reason

for an insurance company to litigate a claim. Messer v. Universal Underwriters

Ins. Co., 598 S.W.3d 578 (Ky. App. 2019). If a genuine dispute exists with respect

to a coverage issue, the insured’s claim is fairly debatable. Where the claim is

fairly debatable, a bad faith action cannot succeed. Empire Fire & Marine Ins. Co.

v. Simpsonville Wrecker Serv., Inc., 880 S.W.2d 886 (Ky. App. 1994). Absent a

contractual obligation to pay the claim under the terms of the homeowner’s policy,

no bad faith cause of action, either at common law or by statute, lies against State

Auto. See Davidson Am. Freightways, Inc., 25 S.W.3d 94 (Ky. 2000).

             Because the Estate and Olivia could not establish the elements to

prove the bad faith claim against State Auto, the circuit court did not err by holding

                                        -18-
that State Auto was entitled to judgment as a matter of law with respect to the

claims against the homeowner’s policy. Where State Auto was plainly entitled to

judgment as a matter of law, further discovery related to this issue would have

been an exercise in futility. Summary judgment was not improvidently granted on

this basis.

              As we have not been directed to a judgment disposing of the bad faith

action stemming from State Auto’s handling of the Estate’s and Olivia’s claims

against the Wrights’ auto policy, we do not address the argument that the circuit

court erred with respect to that issue.

              We AFFIRM the separate summary judgments of the Jefferson Circuit

Court.

              ALL CONCUR.

 BRIEFS FOR APPELLANT:                      BRIEF FOR APPELLEE:

 Bernard Pafunda                            John R. Martin, Jr.
 J. Brent Austin                            Louisville, Kentucky
 Gregory A. Woosley
 Lexington, Kentucky                        David M. Alt
                                            I. Jordan Lowe
                                            Chicago, Illinois

                                          -19-