Court Opinion

ID: 9963845
Source: CourtListenerOpinion
Date Created: 2024-04-26 14:05:26.995665+00
Date Added: 2024-06-11T08:25:02.286493
License: Public Domain

RENDERED: APRIL 19, 2024; 10:00 A.M.
                         TO BE PUBLISHED

                Commonwealth of Kentucky
                         Court of Appeals
                            NO. 2023-CA-0447-MR

KIMBERLY ROGERS                                                    APPELLANT

               APPEAL FROM FAYETTE CIRCUIT COURT
v.            HONORABLE KIMBERLY N. BUNNELL, JUDGE
                      ACTION NO. 22-CI-02508

ERIE INSURANCE EXCHANGE;
ALLSTATE INSURANCE
COMPANY; AND LYFT, INC.                                             APPELLEES

                                   OPINION
                                  AFFIRMING

                                 ** ** ** ** **

BEFORE: CETRULO, LAMBERT, AND TAYLOR, JUDGES.

TAYLOR, JUDGE: Kimberly Rogers brings this appeal from an April 3, 2023,

judgment of the Fayette Circuit Court granting Lyft, Inc.’s motion for summary

judgment, Allstate Insurance Company’s motion for summary judgment, and Erie

Insurance Exchange’s motion for judgment on the pleadings. We affirm.
             On February 1, 2022, Kimberly Rogers was a driver for Lyft, Inc.

(Lyft) and was involved in an automobile accident with another motor vehicle.

Rogers apparently suffered substantial physical injuries. The driver of the other

motor vehicle negligently caused the accident and was insured by State Farm

Automobile Insurance Company (State Farm). State Farm paid Rogers the

policy’s liability coverage limits. At the time of the accident, Rogers’ vehicle was

insured by Erie Insurance Exchange (Erie), and Lyft carried motor vehicle

insurance with Allstate Insurance Company (Allstate). Both Erie and Allstate

denied Rogers’ claims for underinsured motorist (UIM) benefits.

             As a result, Rogers filed a complaint in the Fayette Circuit Court

against Erie, Allstate, and Lyft. In the complaint, Rogers asserted:

                                      FACTS

                   14. Defendant Lyft is required by 601 KAR
             [Kentucky Administrative Regulations] 1:113 § 3(1) to
             maintain primary automobile insurance that provides
             coverage bother [sic] for a driver who is logged into the
             Lyft application AND for drivers engaged in a
             prearranged ride.

                    15. Defendant Lyft is also required by 601 KAR
             1:113 § 3(2) to maintain liability insurance, PIP [Personal
             Injury Protection] coverage, UM [Uninsured Motorist]
             coverage and UIM coverage for drivers who are logged
             into the Lyft application, who are not engaged in a
             prearranged ride.

                    16. Defendant Allstate insures Lyft under a policy
             of insurance that Defendant Allstate represents only

                                         -2-
provides the coverage required by KRS [Kentucky
Revised Statutes] § 281.655(12) as a prearranged ride
liability policy, which Allstate contends applies only
when Plaintiff was carrying persons for Defendant Lyft.

      17. Defendant Lyft either failed to maintain a
policy that provided coverage for Plaintiff as required by
KRS § 281.655(12) and 601 KAR 1:113 § 3, or Allstate
misrepresented the scope of coverage afforded by its
policy.

        18. Defendant Erie insures Plaintiff under a policy
which it contends excludes UIM coverage for all
transportation network company activities, whether as
part of a pre-trip liability policy or prearranged ride
liability policy.

      ....

                     COUNT I
                   KRS § 446.070
             VIOLATION OF KRS § 281.655
                   Defendant Lyft

      ....

      23. Defendant Lyft was required by KRS §
281.655 to maintain primary automobile insurance that
complies with the requirements of 601 KAR 1:113 § 3.

      24. Pursuant to the aforementioned statutes and
regulations Defendant Lyft was required to maintain
UIM insurance in the amount of $50,000 per person,
$100,000 per accident.

      25. Defendant Lyft has violated the
aforementioned laws and regulations by failing to
procure insurance of any kind that provided UIM
coverage during the time period in which she was logged

                            -3-
into Defendant Lyft’s application but was not engaged in
the active transportation of a passenger.

      ....

                    COUNT II
                NEGLIGENCE PER SE
                   Defendant Lyft

      ....

      28. Defendant Lyft had a statutory duty to
maintain UIM insurance to cover Plaintiff while she was
logged into the Lyft application, even when not engaged
in providing prearranged rides to Lyft customers.

       29. Defendant Lyft breached this statutory duty
when it failed to verify that primary insurance providing
the required minimum insurance coverage to the Plaintiff
was in place, either through Defendant Allstate or
Defendant Erie.

      ....

                     COUNT III
                         UIM
              Defendants Allstate and Erie

      ....

       34. To the extent that Defendant Allstate is
contractually obligated to provide UIM coverage to Lyft
drivers engaged in Lyft operations in the Commonwealth
of Kentucky, and to the extent that Plaintiff was engaged
in Lyft operations in the Commonwealth of Kentucky,
Defendant Allstate is required to provide UIM coverage
to the Plaintiff in an amount of at least $50,000.

      35. To the extent that it is determined that Plaintiff
was not engaged in Defendant Lyft’s operations at the

                            -4-
             time of the collision that is the subject hereof, Defendant
             Erie is required to provide UIM coverage to Plaintiff, not
             to exceed the limits of Plaintiff’s policy with Defendant
             Erie.

August 31, 2022, Complaint at 3-7.

             Lyft, Erie, and Allstate filed Answers. Eventually, Erie filed a motion

for judgment on the pleadings under Kentucky Rules of Civil Procedure (CR)

12.02 and CR 12.03. Erie pointed out that at the time of the accident, Rogers was

logged into Lyft’s mobile application. Under its insurance policy covering Rogers’

motor vehicle, Erie argued that UIM coverage was specifically excluded when a

motor vehicle was available for hire by the public. At the time of the accident,

Erie maintained that Rogers’ motor vehicle was available for hire by the public;

thus, UIM coverage was excluded under the clear policy provision. As UIM

coverage was excluded under its insurance policy, Erie sought dismissal of Rogers’

claim for UIM coverage. In her response, Rogers argued Erie was required to

provide UIM coverage as mandated per 601 KAR 1:113 Section 3.

             Thereafter, Allstate filed a motion for summary judgment. Allstate

admitted it had issued Lyft a business automobile insurance policy that was in

effect at the time of Rogers’ accident. However, Allstate maintained that Lyft

rejected UIM coverage, and as a result, the insurance policy did not provide UIM

coverage. Consequently, Allstate sought summary judgment dismissing the claim

for UIM coverage.

                                         -5-
              Lyft also filed a motion for summary judgment. Lyft stated that it

obtained automobile insurance coverage from Allstate in compliance with KRS

281.655 and 601 KAR 1:113. Lyft argued that neither KRS 281.655 nor 601 KAR

1:113 required it to obtain UIM coverage. Rather, Lyft maintained that UIM

coverage was optional per KRS 304.39-320(2).

              Rogers filed a combined response to Allstate’s motion for summary

judgment and Lyft’s motion for summary judgment. Rogers attached her affidavit

to the response. In the affidavit, Rogers stated that at the time of the accident, she

was logged onto the “Lyft Application, . . . had accepted a ride, and was on my

way to pick up a passenger for Lyft.” Rogers’ Affidavit at 1. According to

Rogers, 601 KAR 1:113 Section 3(1) mandated that Lyft maintain the primary

insurance for the automobile when the driver was either logged onto its mobile

application or engaged in a prearranged ride. At the time of the accident, Rogers

argued that she was engaged in a prearranged ride per KRS 281.010(42).1 When

engaged in a prearranged ride, Rogers believed that 601 KAR 1:113 Section 3(4)

mandated that Lyft provide UIM coverage. Rogers also argued that Lyft failed to

provide UIM coverage and, thus, committed the “tort of no insurance.” Rogers’

response to Allstate’s and Lyft’s motions for summary judgment at 7.

1
  Kentucky Revised Statutes (KRS) 281.010 was amended effective January 1, 2023, and the
provisions therein were renumbered. This Opinion references the statute in effect on the date of
the accident in February of 2022.

                                               -6-
               By judgment entered April 3, 2023, the Fayette Circuit Court granted

Erie’s motion for judgment on the pleadings, Allstate’s motion for summary

judgment, and Lyft’s motion for summary judgment. The judgment contained no

legal reasoning or analysis. This appeal follows.

               Summary judgment is proper where there exists no material issue of

fact and movant is entitled to judgment as a matter of law. Isaacs v. Sentinel Ins.

Co. Ltd., 607 S.W.3d 678, 680 (Ky. 2020). As no fact-finding is involved in a

summary judgment, our review is de novo. Id. at 681 (quoting 3D Enters. Cont.

Corp. v. Louisville & Jefferson Cnty. Metro. Sewer Dist., 174 S.W.3d 440, 445

(Ky. 2005)).

               Rogers initially contends that the circuit court erroneously granted

Lyft’s motion for summary judgment. Rogers argues that 601 KAR 1:113 Section

3(1) mandates that Lyft provide primary automobile insurance when a Lyft driver

is logged onto the Lyft application or engaged in a prearranged ride. Rogers

asserts that at the time of the accident she was engaged in a prearranged ride within

the meaning of KRS 281.010(42). As she was engaged in a prearranged ride at the

time of the accident, Rogers argues that 601 KAR 1:113 Section 4 requires Lyft to

obtain UIM coverage for her motor vehicle. Rogers maintains that the circuit court

misinterpreted 601 KAR 1:113 and committed an error of law by so doing.

                                           -7-
                The relevant statutory and regulatory provisions are as follows. 601

KAR 1:113 Section 3 provides, in part:

                (1) A TNC[2] shall maintain primary automobile
                    insurance that:

                   (a) Recognizes that a driver is a TNC driver or using a
                   vehicle to transport passengers for compensation; and

                   (b) Provides insurance coverage for a TNC driver who
                   is:

                       1. Logged on to the TNCs mobile application; or

                       2. Engaged in a prearranged ride.

                ....

                (4) The following automobile insurance requirements
                shall apply while a TNC driver is engaged in a
                prearranged ride:

                   (a) Primary automobile liability insurance in the
                   minimum amounts required by KRS 281.655(4);

                   (b) Basic reparation benefits in accordance with KRS
                   304.39-020;

                   (c) Uninsured vehicle coverage in accordance
                   with KRS 304.20-020; and

                   (d) Underinsured vehicle coverage in accordance
                   with KRS 304.39-320.

601 KAR 1:113 Section 3(1) and (4). KRS 281.010(60) defines a TNC as:

2
    TNC stands for “Transportation Network Company.” KRS 281.010(60).

                                            -8-
                 (60) “Transportation network company” or “TNC”
                 means a person or entity that connects passengers
                 through its digital network or mobile application to its
                 drivers for the provision of transportation network
                 company services[.][3]

And, KRS 281.010(42) defines a prearranged ride as:

                 (42) “Prearranged ride” means the period of time that
                 begins when a transportation network company driver
                 accepts a requested ride through a digital network or
                 mobile application, continues while the driver transports
                 the rider in a personal vehicle, and ends when the
                 transportation network company services end[.][4]

Lastly, KRS 304.39-320 reads, in part:

                 (1) As used in this section, “underinsured motorist”
                    means a party with motor vehicle liability insurance
                    coverage in an amount less than a judgment recovered
                    against that party for damages on account of injury
                    due to a motor vehicle accident.

                 (2) Every insurer shall make available upon request to its
                    insureds underinsured motorist coverage, whereby
                    subject to the terms and conditions of such coverage
                    not inconsistent with this section the insurance
                    company agrees to pay its own insured for such
                    uncompensated damages as he may recover on
                    account of injury due to a motor vehicle accident
                    because the judgment recovered against the owner of
                    the other vehicle exceeds the liability policy limits
                    thereon, to the extent of the underinsurance policy
                    limits on the vehicle of the party recovering.

3
    The definition of “Transportation Network Company” is currently found at KRS 281.010(67).
4
    This definition of “Prearranged Ride” is currently found at KRS 281.010(46).

                                                -9-
             We begin our analysis with the definitions set forth in KRS

281.010(60) and KRS 281.010(42). Under KRS 281.010(60), a transportation

network company (TNC) is an entity that uses a digital network or mobile

application to connect its drivers to passengers. It is undisputed that Lyft is a TNC

within the meaning of KRS 281.010(60). And, a prearranged ride is defined as

beginning when a TNC driver accepts a requested ride via a mobile application and

continues through transportation of the rider per KRS 281.010(42). In her

affidavit, Rogers averred that at the time of the accident she was logged onto the

Lyft application, had accepted a ride, and was en route to pick up the passenger.

So, viewing the facts most favorable to Rogers, Rogers was engaged in a

prearranged ride at the time of the accident per KRS 281.010(42).

             The terms of 601 KAR 1:113 are clear and unambiguous. It requires

the TNC to maintain primary automobile insurance that provides coverage when

the TNC driver is either logged onto the mobile application or engaged in a

prearranged ride. When a TNC driver is engaged in a prearranged ride, 601 KAR

1:113 Section 3(4)(d) requirements are triggered. It plainly requires

“[u]nderinsured vehicle coverage in accordance with KRS 304.39-320.” So, UIM

coverage must be maintained in compliance with KRS 304.39-320. Under the

clear terms of KRS 304.39-320, UIM coverage is not compulsory and is only

mandated upon the request of the insured. See Philadelphia Indem. Ins. Co., Inc. v.

                                        -10-
Tryon, 502 S.W.3d 585, 588 (Ky. 2016). Reading 601 KAR 1:113 Section 3(4)

and KRS 304.39-320 together, it is clear that UIM coverage must only be made

available upon request and is not otherwise compulsory insurance coverage during

a prearranged ride. In this case, Lyft did not request UIM coverage and was not

required to provide UIM coverage for Rogers at the time of the accident.5

              Rogers next asserts that the UIM exclusion contained in her own

motor vehicle insurance policy issued by Erie is unenforceable. Rogers points out

that she purchased motor vehicle insurance from Erie that included UIM coverage.

According to Rogers, Erie denied her claim for UIM coverage based upon an

exclusion in the policy. However, Rogers maintains that the exclusion is

ambiguous:

                      The first issue with the language of the policy is
              that it purports to exclude UIM coverage “while hired by
              or rented to others for a fee, or while available for hire by
              the public.” Ms. Rogers was not engaged in a rental of
              her vehicle for fee. There was no circumstance where a
              stranger to the policy would be authorized to drive the
              insured auto. As a driver for TNC she was providing her
              services as a driver only to users of the Lyft app. Ms.
              Rogers was not available for hire by the general public.
              It is not the case that any individual could hail Ms.

5
 Kimberly Rogers also cites to 601 Kentucky Administrative Regulations (KAR) 1:113 Section
3(5) to support her argument that Lyft, Inc., was required to provide underinsured motorist
coverage at the time of the accident. However, by its own terms, 601 KAR 1:113 Section 3(5)
only applies to “prearranged ride liability insurance coverage requirements,” not underinsured
motorist coverage. And, 601 KAR 1:113 Section 4(1)(c) clearly provides that insurers in
Kentucky may exclude underinsured motorist coverage under a TNC driver’s insurance policy
while a TNC driver is logged on to a TNC’s mobile application or while a TNC driver is
providing a prearranged ride.

                                             -11-
            Rogers’ services like a taxicab. The act of prearranging
            the ride via the Lyft app does not confer to Ms. Rogers
            the status of being for hire by the public. . . .

            [T]here is an exception to the exclusion that gives back
            coverage if an owned auto is used to drive for Lyft if the
            declarations page identifies the auto for business use.
            The declarations page of this policy lists the use as “To
            work 10-14” and does not specify that the coverage is
            limited to personal use or that it does not include
            business use. Neither term business use or personal use
            is used. Ms. Rogers’ reasonable expectation that “to
            work” includes to work for Lyft as a driver. Therefore,
            because the declarations page does not plainly and
            unambiguously define the use of the owned auto, the
            exception to the exclusion should be triggered. . . .

            [T]he use of TNC and the definition provided in the
            policy are not clear and unambiguous. Of course, TNC is
            a statutorily defined term that has significant technical
            and legal meaning. However, TNC is not the common
            term used by the public when discussing rideshare
            providers such as Uber and Lyft. There is no common
            usage of the term “transportation network company.”
            The term cannot be found in Merriam Webster’s. Lyft
            does not refer to itself as a TNC; it considers itself a
            rideshare company. Further, the policy’s definition does
            not make it any clearer that the exclusion applies to
            driving for Lyft or Uber. Nowhere in the definition is the
            common term “rideshare” used. The use of the term
            “digital platform” as opposed to mobile application
            creates an ambiguity that cannot be reconciled with the
            remainder of the definition. Therefore, the use of these
            terms does not make the exclusion clearly applicable to
            driving for Lyft.

Appellant’s Brief at 17-19 (footnote omitted). Arguing that the UIM exclusion

contained in her insurance policy is ambiguous, Rogers asserts that her reasonable

                                       -12-
expectation of UIM coverage prevails, and Erie is required to extend UIM

coverage.

             Erie filed a motion for judgment on the pleadings under CR 12.03,

and the circuit court granted the motion. However, pursuant to CR 12.03, the

circuit court “shall” consider the motion as a motion for summary judgment if

“matters outside the pleadings are presented.” In this case, the record reveals that

matters outside the pleadings were presented; consequently, we shall review the

judgment as a summary judgment.

             It is well-settled that UIM coverage is not statutorily mandated

coverage; rather, “[i]nsurers are required to make UIM coverage ‘available upon

request[.]’” Tryon, 502 S.W.3d at 588 (quoting KRS 304.39-320(2)). Moreover,

“UIM coverage exclusions are not impermissible under Kentucky public policy

and parties are at liberty to negotiate and customize policies to fit their own needs

and desired levels of coverage.” Id. at 592. Furthermore, the reasonable

expectation of coverage is “satisfied so long as the plain meanings of the terms of

the underlying [policy] are clear and unambiguous.” Id. at 592. Thus, an insured

is not entitled to UIM coverage if the exclusion is clear and unambiguous. Id. at

593. It is only when a UIM coverage exclusion is ambiguous and unclear that the

insured’s reasonable expectation of coverage defeats the UIM exclusion and

coverage is extended to the insured. Id. at 593-94.

                                         -13-
             In Rogers’ insurance policy, the UIM coverage exclusion provided, in

relevant part:

                    EXCLUSIONS – What We Do Not Cover

             This insurance does not apply to:

             1. bodily injury sustained by anyone while “occupying”
                or using any “auto we insure” while hired by or
                rented to others for a fee, or while available for hire
                by the public. “We” will protect “you” or a
                “relative” while “occupying,” but not driving, such a
                vehicle if it is a “nonowned auto.”

                 Fee does not include payment received in a car pool
                 or for trips for nonprofit social, educational or
                 charitable agencies.

                 If an “owned auto we insure” or a “temporary
                 substitute” for that “owned auto we insure” is:

                    a. identified for Business use as indicated on the
                       “Declarations;” and
                    b. used by “you” or a “relative” as a
                       transportation network company (TNC)
                       partner,

                    Exclusion 1. does not apply for that vehicle. For
                    purposes of this exception, coverage will be excess
                    over any other collectible insurance.

                    A transportation network company (TNC) is one
                    that provides transportation for passengers or
                    goods:

                    a. on a prearranged basis; and
                    b. only by means of a digital platform that enables
                       the passengers or customers to connect with
                       TNC partners using a TNC partner vehicle.

                                        -14-
                   A TNC partner is one who transports passengers
                   or goods, but only for passengers or for those
                   customers that the TNC matched with the partner
                   through the digital platform.

Erie Private Passenger Policy at 2.

             The UIM exclusion is plain and unambiguous. It clearly provides that

UIM coverage does not apply when an insured’s vehicle is hired, rented, or

available for hire by the public. The common definition of “hire” is to engage the

services of a person for a fee or to engage the temporary use of a thing for a fee.

THE AMERICAN HERITAGE DICTIONARY (2nd ed. 1976). According to Rogers, she

had accepted a request for a ride on the Lyft application and was en route to pick

up the passenger when the accident occurred. Therefore, Rogers’ vehicle was

hired by the passenger at the time of the accident, and the UIM exclusion was

clearly applicable. Thus, under the plain terms of the UIM exclusion, Rogers

could not have reasonably expected UIM coverage at the time of the accident.

             We also reject Rogers’ contention that an ambiguity exists as to the

exception to the UIM exclusion contained in the policy. Under its plain terms, the

exception is triggered only if the automobile was “identified for Business use as

indicated on the ‘Declarations.’” Rogers seizes upon the language on the

declaration page that identified the use of her vehicle as “To work 10-14.”

However, “To work” is commonly utilized to indicate that the insured drives the

motor vehicle to and from work. Additionally, at oral arguments before the circuit

                                         -15-
court, Rogers agreed that her vehicle was not rated for business use as required

under the exception to the UIM exclusion. Accordingly, we conclude that Rogers

was not entitled to UIM coverage under her policy of insurance.

             Rogers additionally asserts that public policy requires Lyft and/or Erie

to provide UIM coverage. We disagree.

             Generally, as previously noted, UIM exclusions in motor vehicle

insurance policies do not offend the public policy of this Commonwealth. Tryon,

502 S.W.3d at 592. UIM coverage is only required insurance coverage when the

insured requests such coverage. Additionally, the General Assembly could have

mandated that UIM coverage be compulsory as to TNC drivers but has declined to

do so. The lack of UIM coverage can be easily remedied by an insured, such as

Rogers. The insured simply may disclose the business use of her motor vehicle

and request UIM coverage rated for such use.

             We view any remaining contentions of error as moot or without merit.

             In sum, we conclude that the circuit court properly rendered summary

judgment in favor of Lyft, Allstate, and Erie. Accordingly, the judgment of the

Fayette Circuit Court is affirmed.

             ALL CONCUR.

                                        -16-
BRIEFS FOR APPELLANT:     BRIEF AND ORAL ARGUMENT
                          FOR APPELLEE ERIE INSURANCE
J. Dale Golden            EXCHANGE:
Cody P. McIlvoy
Lexington, Kentucky       Darrin W. Banks
                          Paintsville, Kentucky
ORAL ARGUMENT FOR
APPELLANT:                BRIEF FOR APPELLEE ALLSTATE
                          INSURANCE COMPANY:
J. Dale Golden
Lexington, Kentucky       Timothy P. Heather
                          Cincinnati, Ohio

                          ORAL ARGUMENT FOR
                          APPELLEE ALLSTATE
                          INSURANCE COMPANY:

                          Anthony Iaciofano
                          Cincinnati, Ohio

                          BRIEF AND ORAL ARGUMENT
                          FOR APPELLEE LYFT, INC.:

                          Patrick B. Healy
                          Cincinnati, Ohio

                        -17-