Court Opinion

ID: 4568606
Source: CourtListenerOpinion
Date Created: 2020-09-22 23:06:44.058566+00
Date Added: 2024-06-11T13:28:11.516203
License: Public Domain

RENDERED: AUGUST 28, 2020; 10:00 A.M.
                       NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals

                            NO. 2019-CA-000846-MR

JEFFREY G. STAGNARO,
ADMINISTRATOR OF THE
ESTATE OF DAVID BOUMA                                               APPELLANT

                APPEAL FROM CAMPBELL CIRCUIT COURT
v.                HONORABLE DANIEL J. ZALLA, JUDGE
                 ACTION NOS. 17-CI-00308 AND 17-CI-00422

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY                                                     APPELLEE

                                    OPINION
                                   AFFIRMING

                                  ** ** ** ** **

BEFORE: GOODWINE, K. THOMPSON, AND L. THOMPSON, JUDGES.

GOODWINE, JUDGE: The estate of insured, an Ohio resident who was killed in

a car accident in Kentucky, filed a claim for underinsured motorist (“UIM”)

benefits. The Campbell Circuit Court denied coverage, finding Ohio law did not

entitle insured to UIM coverage. After careful review, finding no error, we affirm.
             On March 15, 2016, decedent David Bouma (“Bouma”) was driving

on the I-275 bridge crossing the Ohio River from Campbell County into Ohio

when he was killed in an accident involving an R&L Carriers (“R&L”) tow truck

and Brittany Asch (“Asch”). R&L had a $4,000,000 liability insurance policy

limit, and Asch had a liability policy with a $100,000 limit. Bouma’s estate filed

suit against the above-named at-fault parties, and after extensive litigation, they

entered into a confidential settlement agreement.

             After Bouma’s estate settled with the tortfeasors, the only remaining

issue before the circuit court was whether the estate was entitled to UIM benefits

under Bouma’s State Farm Mutual Automobile Insurance Company’s (“State

Farm”) policy. State Farm and Bouma’s estate filed cross-motions for summary

judgment. The issues were whether Ohio or Kentucky law applied under the facts

of the case and then whether the estate was entitled to UIM benefits of up to

$250,000. State Farm argued Ohio law applied under the most significant

relationship test, and the estate was not entitled to any UIM benefits. Under Ohio

law, State Farm argued, the estate was not entitled to receive payment because the

total amount of recovery from both parties exceeded Bouma’s $250,000 UIM

coverage. Bouma’s estate argued Kentucky law applied and entitled him to the full

amount of his $250,000 UIM coverage. Alternatively, Bouma’s estate argued,

under Ohio law, it was entitled to recover $150,000 in UIM benefits because the

                                          -2-
at-fault parties were severally liable, and it only recovered $100,000 from Asch’s

liability policy.

              The circuit court held Ohio law applied under the most significant

relationship test. The court further found, under Ohio Law, the estate was not

entitled to receive UIM benefits. This appeal followed.

              On appeal, Bouma’s estate argues the circuit court erred in

determining: (1) Ohio law applied and (2) the estate was not entitled to $150,000

in UIM coverage for Asch’s tortious conduct. “The questions presented are all

purely legal ones concerning the scope of coverage provided by an insurance

contract. Our standard of review, therefore, is de novo.” State Farm Mut. Auto.

Ins. Co. v. Hodgkiss-Warrick, 413 S.W.3d 875, 878 (Ky. 2013) (citing Dowell v.

Safe Auto Ins. Co., 208 S.W.3d 872 (Ky. 2006)).

              First, Bouma’s estate argues Kentucky law applies under the most

significant relationship test. In resolving “choice of law issues that arise in

contract disputes[,]” we apply the following four factors to determine which state

has the most significant relationship to the transaction and the parties: “the place

or places of negotiating and contracting; the place of performance; the location of

the contract’s subject matter; and the domicile, residence, place of incorporation

and place of business of the parties.” Id. at 878-79 (citing RESTATEMENT (SECOND)

CONFLICT OF LAWS § 188(2) (1971)).

                                          -3-
             Here, Bouma was an Ohio resident who entered into the State Farm

insurance contract at issue in Ohio. The State Farm policy specifically provides

Ohio law would apply to any claims brought under the policy. Bouma’s vehicle

was garaged and licensed in Ohio. Although Bouma drove to Kentucky for work

at times, the accident occurred in Kentucky, and Bouma’s estate was opened in

Kentucky, these factors are far outweighed by the significant relationship Ohio has

with the parties and the insurance transaction. As such, the circuit court correctly

applied the most significant relationship test and found that Ohio law applied.

             The estate further argues that even if Ohio has the most significant

relationship to the transaction, Kentucky law still applies because Ohio’s law

violates Kentucky’s public policy. Our Supreme Court addressed this issue in the

context of Pennsylvania law in Hodgkiss-Warrick and held that application of

Pennsylvania law did not violate Kentucky’s public policy based on the following

reasoning:

             In Zeitz v. Foley, 264 S.W.2d 267, 268 (Ky. 1954), our
             predecessor Court, emphasizing that “contracts
             voluntarily made between competent persons are not to
             be set aside lightly,” and that “the right of private
             contract is no small part of the liberty of the citizen,”
             observed that public policy would not bar enforcement of
             a contract unless “it clearly appears that [the] contract has
             as its direct object and purpose a violation of the Federal
             or state constitution, Federal or state statutes, some
             ordinance of a city or town, or some rule of the common
             law.” More recently, in Kentucky Farm Bureau Mut. Ins.
             Co. v. Thompson, 1 S.W.3d 475, 476-77 (Ky. 1999), we

                                          -4-
             reiterated that public policy, invoked to bar the
             enforcement of a contract, is not simply something courts
             establish from general considerations of supposed public
             interest, but rather something that must be found clearly
             expressed in the applicable law.

Hodgkiss-Warrick, 413 S.W.3d at 880-81. In determining whether the law of the

state with the most significant relationship to the transaction violates Kentucky’s

public policy, the key question is “whether the public policy was so strong as to

require a Kentucky court to interject Kentucky law into a dispute having none but a

fortuitous connection with Kentucky.” Id. at 882.

             Here, Bouma agreed Ohio law would apply to any claims arising from

the policy when he entered into the insurance agreement with State Farm. The

only connections this transaction has with Kentucky are that the accident occurred

on the Kentucky side of a bridge crossing the river into Ohio and the estate was

opened in Kentucky. As in Hodgkiss-Warrick, Ohio and Kentucky merely have

competing public policies regarding UIM coverage, and no Kentucky resident is

affected. Id. at 882-83. There is no reason to interfere with the contract between

the parties or the balance of insurance coverage and insurance affordability Ohio

has chosen for its residents. Id. Thus, the circuit court correctly found Kentucky

public policy does not require application of Kentucky law in this instance.

             Second, the estate argues, if Ohio law applies, it was entitled to

receive $150,000 in UIM coverage from State Farm because Asch’s policy limit of

                                         -5-
$100,000 did not exceed Bouma’s UIM coverage of $250,000. R.C.1 3937.18(C)

establishes the conditions which must be present to receive payment of UIM

coverage:

                If underinsured motorist coverage is included in a policy
                of insurance, the underinsured motorist coverage shall
                provide protection for insureds thereunder for bodily
                injury, sickness, or disease, including death, suffered by
                any insured under the policy, where the limits of
                coverage available for payment to the insured under all
                bodily injury liability bonds and insurance policies
                covering persons liable to the insured are less than the
                limits for the underinsured motorist coverage.
                Underinsured motorist coverage in this state is not and
                shall not be excess coverage to other applicable liability
                coverages, and shall only provide the insured an amount
                of protection not greater than that which would be
                available under the insured’s uninsured motorist
                coverage if the person or persons liable to the insured
                were uninsured at the time of the accident. The policy
                limits of the underinsured motorist coverage shall be
                reduced by those amounts available for payment under
                all applicable bodily injury liability bonds and insurance
                policies covering persons liable to the insured.

                For purposes of underinsured motorist coverage, an
                “underinsured motorist” does not include the owner or
                operator of a motor vehicle that has applicable liability
                coverage in the policy under which the underinsured
                motorist coverage is provided.

                In Clark v. Scarpelli, 744 N.E.2d 719 (Ohio 2001), the Supreme Court

of Ohio addressed “the meaning of the ‘amounts available for payment’ language

set forth in the statute.” Id. at 272. The Court noted “that the statute was intended

1
    Ohio Revised Code.

                                            -6-
to ensure that a person injured by an underinsured motorist should never be

afforded greater protection than that which would have been available had the

tortfeasor been uninsured.” Id. at 276. The Court held “that for the purpose of

setoff, the ‘amounts available for payment’ language in R.C. 3937.18(A)(2) means

the amounts actually accessible to and recoverable by an underinsured motorist

claimant from all bodily injury liability bonds and insurance policies (including

from the tortfeasor’s liability carrier).” Id. at 279-80; Littrell v. Wigglesworth, 746
N.E.2d 1077, 1084 (Ohio 2001).

             Furthermore, in cases involving multiple tortfeasors, the Ohio Court

of Appeals has held “the plain language of the statute requires that all liability

bonds and insurance policies for all ‘persons liable’ to the insured be considered in

toto.” Vawter v. Select Transp., Inc., No. 99AP-191, 1999 WL 1080114, at *5

(Ohio Ct. App. Dec. 2, 1999); see also Masenheimer v. Disselkamp, No. CA2002-

08-200, 2003 WL 435785 (Ohio Ct. App. Feb. 24, 2003); Gray v. State Farm Mut.

Auto. Ins. Co., No. CA2001-07-174, 2002 WL 336943 (Ohio Ct. App. Mar. 4,

2002); Roberts v. Allstate Ins. Co., No. CA2001-06-133, 2001 WL 1598274 (Ohio

Ct. App. Dec. 17, 2001). Although these cases addressing multiple tortfeasors are

unpublished, the factual circumstances in each case are more comparable to the

facts at hand than any published case law, and their holdings are consistent with

the holding in Clark. As such, they are instructive in rendering our decision.

                                          -7-
             Based on our review of the statute and relevant case law, we hold the

limitation in R.C. 3937.18(C) applies to both tortfeasors jointly. The combined

limits of coverage available for payment to Bouma from “all persons liable” is

$4,100,000, which far exceeds the $250,000 limits of his UIM coverage.

Therefore, the circuit court correctly found the estate was not entitled to any UIM

benefits.

             For the foregoing reasons, we affirm the judgment of the Campbell

Circuit Court.

             ALL CONCUR.

BRIEFS FOR APPELLANT:                    BRIEF FOR APPELLEE:

Tad Thomas                               Susanne M. Cetrulo
Lindsy Lopez                             Edgewood, Kentucky
Louisville, Kentucky

                                        -8-