Court Opinion

ID: 6342595
Source: CourtListenerOpinion
Date Created: 2022-05-20 14:05:48.684617+00
Date Added: 2024-06-11T09:19:03.704726
License: Public Domain

RENDERED: MAY 13, 2022; 10:00 A.M.
                           TO BE PUBLISHED

                Commonwealth of Kentucky
                           Court of Appeals

                             NO. 2021-CA-0573-MR

BOBBY G. FISH, JR.                                                   APPELLANT

                APPEAL FROM BOONE CIRCUIT COURT
v.          HONORABLE RICHARD A. BRUEGGEMANN, JUDGE
                      ACTION NO. 06-CI-02149

STATE FARM AUTOMOBILE
INSURANCE COMPANY                                                      APPELLEE

                             OPINION
     AFFIRMING IN PART AND REVERSING AND REMANDING IN PART

                                  ** ** ** ** **

BEFORE: CLAYTON, CHIEF JUDGE; COMBS AND JONES, JUDGES.

CLAYTON, CHIEF JUDGE: Bobby G. Fish, Jr. (“Fish”) appeals the Boone

Circuit Court’s grant of summary judgment to State Farm Automobile Insurance

Company (“State Farm”) on Fish’s claim brought under the Kentucky Unfair

Claims Settlement Practices Act. On appeal, Fish argues that there are genuine

issues of fact as to whether State Farm handled his claim in bad faith. Fish further
contends that the trial court committed reversible error when it denied him leave to

amend his complaint to include allegations of fraud and fraud upon the court.

             For the reasons set forth below, we reverse the trial court’s judgment

insofar as it granted summary judgment in favor of State Farm and remand for

further proceedings. On the other hand, we affirm the trial court’s judgment

insofar as it denied Fish leave to amend his complaint.

              FACTUAL AND PROCEDURAL BACKGROUND

             The instant bad faith action between Fish and State Farm arises from a

motor vehicle accident on October 31, 2004. On the day of the accident, Rachel

M. Harmon (“Harmon”), a minor, was operating her 2004 Pontiac Sunfire on

Salem Creek Road in Walton, Boone County, Kentucky. Salem Creek Road was a

two-lane road that permitted vehicular travel in both directions. However, the road

was narrow and had no painted center lines or other markings. Fish was operating

his vehicle in the opposite direction as Harmon. According to the police report,

Fish and Harmon collided at a curve in the road.

             Specifically, the police report stated that Harmon told the

investigating officer that when she observed Fish’s vehicle, “she attempted to hit

her brakes, but could not negotiate the curve and went into the opposing lane of

traffic, striking [Fish’s vehicle].” The police report further stated that Fish told the

investigating officer that Fish had observed Harmon’s vehicle going left of center.

                                          -2-
To avoid Harmon’s vehicle, Fish attempted to go off the road to his right but was

struck by Harmon’s vehicle.

             Both vehicles sustained damage, with Fish’s vehicle ultimately

rendered a total loss valued at over $13,000.00. The vehicle operated by Harmon

was owned and insured by her mother, Debra Harmon, under a personal auto

policy underwritten by State Farm. The applicable bodily injury limit on the

policy was $100,000.00. As Debra Harmon’s daughter and a resident relative and

permissive user of the vehicle, Harmon was an “insured” as described in the

policy.

             Fish refused medical treatment on the day of the collision but began

experiencing back pain later that day while participating in a martial arts event.

The next day, Fish went to his family physician, Dr. Gary Shearer, who diagnosed

Fish with “cervical, dorsal and lumbar strain sacroiliitis.” Although Fish continued

to work regularly as a plumber, he continued to have back pain. Approximately

one month later, Dr. Shearer ordered an MRI, which indicated that Fish had

degenerative disc disease (“DDD”). Specifically, the radiologist stated: “There is

no definite neural compression noted.”

             Based on these findings, Dr. Shearer instructed Fish to undergo

physical therapy. Fish attended approximately nine physical therapy sessions, and

his physical therapist discharged him on January 26, 2005. At the time of

                                         -3-
discharge, his physical therapist’s notes indicated that Fish had no complaint of

pain and that Fish had met all of the goals set in the physical therapy sessions.

             a. Negotiations and Conduct Before the Commencement of
             Litigation

             Meanwhile, throughout the end of 2004 and into the beginning of

2005, State Farm initiated an investigation into the collision. For example, a State

Farm claims log note from November 30, 2004, indicated that a State Farm

representative spoke with Harmon and documented the following:

             [Harmon] advised that was coming around a turn and she
             was in the middle of the [road]. There [was] no center
             line. She saw a truck so she hit the brakes and tried to
             turn right but it was too late to fix anything. [Fish]
             turned to try to avoid [Harmon] but [Harmon] still struck
             [Fish]. [Reviewed police report] which has [Harmon’s
             vehicle] going too fast and also [Harmon] told officer she
             went more into oncoming lane as she hit the brakes
             trying to avoid. [Harmon] stated [Fish] was in the middle
             of the [road] too but I [explained] with her going too fast
             and not under proper control/skidding into [Fish’s] lane
             and no witnesses, we can’t prove any liability on [Fish]
             but [liability] can be proven on her. She understood we
             will accept [liability] on her.

At the beginning of 2005, State Farm also paid Fish’s property damage claim.

             By March 10, 2005, State Farm’s claims log notes from that period

consistently indicated that it considered Harmon to be at fault in causing the

collision. At that point, Fish’s insurance company, Liberty Mutual, had paid

approximately $2,360.00 in medical expenses for Fish. Other notes from the State

                                         -4-
Farm claims log indicate that Fish had undergone an MRI that had indicated a

“degenerative condition” wherein the “accident aggravated an underlying

condition”; that Fish had a physical job as a plumber and that his job could be a

“contributing factor to his back pain”; that the “[m]echanism of injury” was

consistent with Fish’s lower back pain complaints; and that the impact on Fish’s

car had been “severe” and the impact on Harmon’s car had been “moderate.”

             Based on the foregoing, the State Farm representative determined at

that time that State Farm should value the current value of the claim at between

$1,500.00 and $3,000.00. However, the representative noted that State Farm

would need more records and bills to consider the future value of Fish’s claim.

The representative indicated in the claims log notes that an argument in favor of a

lower evaluation was that the injury was soft tissue, but that an argument in favor

of a higher value was that State Farm considered Harmon to be “100% at fault” for

causing the collision.

             Thus, on March 10, 2005, State Farm contacted Fish and attempted to

settle his claim for $1,500.00. Fish stated that he wanted to discuss the settlement

offer with his brother, an attorney, and call State Farm back. State Farm spoke

with Fish again on April 8, 2005, at which time Fish rejected State Farm’s

settlement offer of $1,500.00. State Farm increased its offer to $2,000.00, which

Fish also rejected. Fish explained that he was still receiving medical treatment for

                                         -5-
his injury, but would accept $10,000.00 to settle the claim. The State Farm

representative stated that State Farm “was not anywhere near” that number. Both

parties agreed to speak again after more medical records and other information

were forthcoming.

             State Farm subsequently received copies of Fish’s medical bills

throughout May 2005. In addition, a claims log note from May 3, 2005, indicated

that State Farm received the medical bills from Fish’s physical therapist, which

contained the following diagnosis information:

             L-strain and L-disc disease. [Fish] makes note on some
             paperwork for the [doctor] that he has a protruding disc,
             but [doctor] states that there is not. [Kentucky]
             Diagnostic[] Center states that there is a “small focal
             protrusion” at L3-4. At L5-S1, there is a small protrusion
             to mod[erate] sized protrusion, but it does not indent or
             touch the thecal sac.

             Thereafter, on June 13, 2005, a State Farm representative spoke to a

nurse who had reviewed the results of Fish’s MRI. The claims log notes reveal

that the nurse indicated that “MRI report states that there is not pressure causing

problems. Protrusions on the discs are degenerative in nature. One compresses the

nerve root a little, but is not putting pressure on the spinal cord.” The nurse

recommended looking at Dr. Shearer’s interpretation of the MRI. The log

indicated that Dr. Shearer specified in his report that “[Fish] stated there is a

                                          -6-
protrusion, but it is unseen.” Additionally, the log entry from that same day seems

to downgrade the level of impact, stating that it was “moderate to severe.”

             State Farm spoke with Fish again on June 14, 2005, at which time

they increased their offer to $2,500.00. The State Farm representative indicated in

the claims log note from that day that the representative had reviewed the notes

and medical records with Fish that State Farm had obtained thus far. Fish stated

that his doctor was treating him, but he would call back after seeing his doctor

again.

             On July 8, 2005, the claim log indicates that a State Farm

representative spoke with Fish. Fish declined State Farm’s offer of $2,500.00,

with Fish stating that his doctor had indicated that he may have problems for the

rest of his life and reiterating that he would not accept anything less than

$10,000.00. State Farm told Fish that, without further documentation, it could not

increase its offer but that it would be happy to review any new information. Fish

stated that he understood.

             On August 12, 2005, State Farm received notice of a subrogation

claim from Liberty Mutual for its medical expense payments up to that date of

$2,425.15. Additionally, a September 10, 2005, claim log note stated that a State

Farm representative should contact Fish about its offer in forty-five days. Further,

                                          -7-
it noted that State Farm might receive more medical records or bills from Fish in

the meantime.

             On October 13, 2005, State Farm documented receiving a letter of

representation from an attorney for Fish, which State Farm also forwarded to

Harmon. The claims log further indicates that State Farm attempted to contact

Fish’s lawyer on October 24, 2005, December 27, 2005, February 27, 2006, April

27, 2006, and June 26, 2006, August 16, 2006, August 31, 2006, and September

26, 2009, all with no response. Additionally, a claims log note from July 12, 2006,

indicates that State Farm sent a letter to Fish’s counsel reiterating its $2,500.00

offer and received no response.

             On September 29, 2006, State Farm documented receiving a time-

limit demand package from Fish dated September 22, 2006, demanding the

payment of its policy limits of $100,000.00 and expiring on October 25, 2006.

             On October 16, 2006, State Farm began its evaluation of the materials

in the demand package. It stated the defense’s strengths as being that the injury

was soft tissue and evidence of degenerative disc disease. In addition, it noted the

“factors that affect value” as being Harmon’s “clear” liability in causing the

collision, “moderate impact,” and the fact that Fish’s medical records do not reflect

that he had any back problems before the accident. State Farm also noted that Fish

had sought treatment the day after the accident, that he had an MRI, that he had

                                          -8-
undergone a course of physical therapy, and that he had been discharged from

physical therapy as Fish had met all of his goals. It further noted a medical lien of

almost $3,000.00. Thus, the State Farm representative valued the claim between

$4,000.00 and $6,000.00 and submitted it for approval.

             On October 17, 2006, State Farm’s management granted up to

$6,000.00 for general damages and another $1,891.00 for the personal injury

protection (“PIP”) subrogation claim. A State Farm representative spoke to Fish’s

counsel and extended an offer of $4,000.00. Fish’s counsel rejected the offer,

explaining that the amount offered was nowhere near the claim’s value. Fish’s

counsel further indicated that Fish would be filing a lawsuit. State Farm’s log

again noted that “[b]ased on MRI findings one protrusion abuts right L4 nerve root

and may compress it but no central compression.” State Farm also sent a letter to

Fish making the $4,000.00 offer on that same day and advised Debra Harmon of

the possibility of a lawsuit. A State Farm representative also spoke to Fish’s

attorney on October 19, 2006, reinforcing that the evaluation “was based on

medical reports, medical bills and diagnostic reports that were provided.”

             b. Post-Litigation Commencement Negotiations and Conduct

             On October 24, 2006, Fish filed a lawsuit against State Farm, alleging

bad faith and unfair claims settlement practice violations under Kentucky Revised

Statutes (“KRS”) 304.12-230 and KRS 304.12-235.

                                         -9-
             On November 1, 2006, the State Farm claims log noted receipt of the

lawsuit paperwork and that the claim was moving to the litigation department. The

log notes state that Fish had “degenerative issues,” that “under $3K [had been]

paid by PIP carrier.” However, seemingly for the first time and without

explanation, the log notes state that the “impact to [Fish’s vehicle was] not

significant.” On November 15, 2006, State Farm moved to bifurcate Fish’s

common law and statutory bad faith claims from the underlying liability claims

until resolution of the liability claims.

             Thereafter, in a November 21, 2006, assignment letter to defense

counsel, State Farm advised counsel, “[i]t appears Rachel Harmon was responsible

for this accident occurring.” Nevertheless, in a November 28, 2006, case analysis

by State Farm’s defense attorney, his “Liability Analysis” stated that: “It appears

Ms. Harmon’s actions were the cause of the automobile accident. However, Salem

Creek Road is a very narrow road and I want to take all parties’ depositions before

I concede liability.” Both parties engaged in discovery throughout the beginning

of 2007, with State Farm’s defense attorney promulgating and receiving discovery

from Fish and engaging in the process of scheduling some depositions.

             Fish ultimately underwent surgery on his lumbar spine on May 31,

2007. Thereafter, on October 25, 2007, Fish’s counsel sent a second demand

package to State Farm containing updated medical records and bills from Fish’s

                                            -10-
surgery. Specifically, the package indicated that Fish had undergone a “[l]eft L5-

S1 facetectomy, left L5-S1 transforaminal diskectomy, left transforaminal

arthrodesis, L5-S1. Pedicle screw fixation L5-S1 with Stryker screws and rod.”

             The second demand package also contained a note from Dr. Paul

Lewis dated June 29, 2007. Dr. Lewis was the neurosurgeon who had performed

Fish’s surgery. In the note, Dr. Lewis stated that, as a result of the accident, Fish

suffered a back injury and that, although he would recover from surgery, he

“would never be the same again.” The second demand package also included Dr.

Lewis’s post-operative report, which stated Dr. Lewis’s pre-operative diagnosis of

Fish as a “[h]erniated and degenerated disk L5-S1.”

             The second demand package also contained new medical bills of over

$51,000.00. Fish’s counsel noted that the PIP carrier, Liberty Mutual, had refused

to pay certain bills associated with the surgery, arguing that such bills were

unrelated to the accident. Fish included such communications in the package,

including a May 18, 2007, peer review report from Dr. Robert Sexton obtained by

Liberty Mutual, in which Dr. Sexton opined that the surgery was unrelated to the

accident. The demand package also included a report from Fish’s medical expert

opining that Fish had sustained a twenty percent (20%) permanent impairment to

the whole person and would be unable to return to the normal activities of a master

plumber. The demand package letter from Fish’s counsel further stated that Fish

                                         -11-
had been off work since May 24, 2007, and had been receiving short-term

disability. Finally, Fish’s counsel stated that he would be submitting all medical

documentation and disability ratings to a vocational expert for an opinion

regarding lost wages and impairments to earning. Thus, Fish requested the policy

limits of the State Farm policy.

              Although there appear to be no specific notes in State Farm’s log

concerning receipt of the second demand package on October 27, 2007, a

November 8, 2007, claims log note stated that a State Farm representative had

spoken with defense counsel and that defense counsel had just received Fish’s

interrogatories. The note further stated that they were waiting on medical bills and

reports. Thereafter, defense counsel indicated that he would schedule Fish’s

deposition.

              There appeared to be a lull in activity between this claims log note

and the beginning of 2008. Fish filed a set of answers to interrogatories and

requests for production of documents on March 21, 2008, and State Farm noted

receipt of those on March 31, 2008. In addition, on April 2, 2008, for the first

time, State Farm documented in the claims log that Fish had undergone surgery in

May 2007. However, it did not re-evaluate his claim based on this new

information and did not change its reserves but noted that the defense attorney was

still compiling medical records and expenses and had scheduled depositions.

                                         -12-
             State Farm deposed Fish on June 2, 2008. In defense counsel’s

deposition summary letter to State Farm, he explained that Fish missed

approximately five months of work after his spinal surgery. He further reported

that causation was in question as there was a “peer review letter regarding the

surgery, which indicate[d] that in fact the surgery [was] related to the pre-existing

degenerative conditions as opposed to this accident.” Regarding liability, he

reported, “[i]t does appear that . . . our insured crossed left of center causing the

impact. Liability seems fairly clear.”

             On June 13, 2008, a State Farm representative reviewed Fish’s

deposition testimony and evaluated the claim’s range of value as still being

between $4,000.00 and $6,000.00 for general damages. On October 21, 2008, a

State Farm representative documented a discussion with defense counsel, who

indicated that State Farm needed to obtain an independent medical examination of

Fish’s injuries.

             On January 7, 2009, a State Farm representative again spoke with

defense counsel, who informed her that he had obtained a records review report

from Dr. Robert Sexton, the same doctor previously hired by Liberty Mutual. Dr.

Sexton reviewed Fish’s medical records and concluded that Fish’s surgery was

“related to his pre-existing condition as opposed to injuries sustained” in the

                                          -13-
collision. The claims representative also requested that defense counsel set up

mediation.

             On January 16, 2009, a State Farm representative read the records

review report but did not comment on the report in her claim file notes. On

February 12, 2009, a different State Farm representative noted in the claim file

they need to have all records “to prepare an update evaluation and assess what

percentage of the surgery may be related to this loss.” Additionally, on February

18, 2009, a State Farm representative changed the reserve for the first time from

$8,800.00 to $15,000.00.

             Thereafter, State Farm spoke with defense counsel on March 30,

2009, who indicated that he had made numerous attempts to contact Fish’s counsel

and set a mediation date, but Fish’s counsel had been unresponsive. Additionally,

defense counsel stated that the court had set a trial date for September 29, 2009.

Defense counsel further indicated that he did not feel that State Farm’s offer

amount of $4,000.00 needed to be changed, based on Dr. Sexton’s report relating

Fish’s need for surgery to his pre-existing condition.

             The State Farm representative requested that defense counsel review

and give his opinion regarding the settlement offer and continue attempts to obtain

a mediation date from Fish’s counsel. Later that day, a claims team manager

reviewed the claim file and agreed that it would be a good idea to review the claim

                                        -14-
with defense counsel “to see if [an] updated evaluation is needed.” At that point,

the current documented evaluation range of between $4,000.00 and $6,000.00 had

not substantially changed since its last evaluation in 2006, before Fish’s surgery.

             A State Farm representative reviewed the case with defense counsel

again on April 23, 2009, when defense counsel stated that Fish’s counsel was still

unresponsive and did not appear interested in setting a date for mediation.

             Thereafter, a July 23, 2009, claims log note stated that a State Farm

representative had reviewed defense counsel’s pre-trial report. Specifically, the

report noted that defense counsel felt that there was a possibility that a jury could

find that Fish was fifty percent (50%) liable for the collision due to the condition of

the road being unmarked and narrow. As to liability for Fish’s injury, defense

counsel’s report noted that Fish did not report any injuries at the accident scene

and subsequently attended a martial arts seminar where he participated in hand-to-

hand combat exercises. The report further noted that the MRI showed only

degenerative changes in Fish’s lumbar spine and Fish had concluded physical

therapy in January of 2005. At that time, he only had a little pain and stiffness.

             State Farm took Fish’s deposition again on July 28, 2009. The State

Farm representative who attended the deposition noted in the claims log that, “I

discussed with defense counsel that we will need to get a good evaluation on this

[claim] prior to going to mediation as there are some things which could

                                         -15-
potentially go well in our favor, but there are some things which could go well for

plaintiff . . . our evaluation of $4-$8k need to be updated.” She further

documented the outstanding tasks as “Pends for updated evaluation, set up

mediation.” That same day, another manager reviewed the claim and noted in the

claims log that it was “very questionable as to whether the surgery would be

causally related to this” collision due to Fish’s activities following the accident.

             On August 7, 2009, the claims log noted that Fish’s surgeon, Dr.

Lewis, had passed away. The trial date was changed to April 26, 2010, and, on

September 28, 2009, a State Farm representative again documented in the claim

activity log, “[o]ur prior evaluation of 4-8k needs to be updated.”

             On November 2, 2009, a State Farm representative spoke with defense

counsel and noted in the claims log, “[w]ith liability being an issue and damages

we feel our current evaluation is adequate.” The State Farm representative

primarily based this on the fact that Dr. Sexton’s report did not relate the injury to

the collision.

             On March 30, 2010, defense counsel discussed with a State Farm

representative the deposition of Dr. Schwetschenau, a partner of Dr. Lewis. While

defense counsel reported to State Farm that the deposition “went very well for

us[,]” Dr. Schwetschenau testified that Fish’s “low back complaints were triggered

                                         -16-
by this accident.” Further, he opined that “the surgery was reasonable and

necessary, and related to this accident.”

             Subsequently, a claims section manager instructed a claims handler to

“[g]et EAP out when discovery is complete. Continue attempts to negotiate a

settlement. Proceed to trial if necessary.” As later explained by a State Farm

representative in a deposition, excess assurance protection (“EAP”) is coverage

extended to an insured by State Farm in the case of a judgment over the insured’s

policy limits. However, it is unclear whether this letter or other offer of coverage

was ever extended to Harmon as instructed by the manager.

             Fish tried his claims against Harmon before a jury on April 26, 2010.

The jury found Harmon to be one hundred percent (100%) liable for the collision.

Additionally, the jury awarded Fish $191,191.00 in past and future medical

expenses, $18,000.00 for loss of wages and income, and $106,872.30 for pain and

suffering. Ultimately, the trial court reduced the verdict to a judgment of

$206,000.00.

             Fish subsequently requested to amend his complaint on August 25,

2016, based on his allegation that State Farm had failed to disclose that it would

cover any amounts of a judgment made against it at trial above the policy limits.

However, the court entered an order on November 2, 2016, denying Fish’s request

to amend the complaint.

                                            -17-
             Fish also pursued the bad faith claims alleged in his complaint. As a

result, State Farm moved for summary judgment on October 19, 2020. The trial

court ultimately found that the record demonstrated no genuine dispute as to

liability for the accident and whether the collision caused the injuries that

necessitated Fish’s surgery. As a result, the trial court granted summary judgment

in State Farm’s favor and dismissed Fish’s bad claims on May 12, 2021.

             Further facts will be discussed as they become relevant.

                                       ISSUES

                                     ANALYSIS

             a. Standard of Review

             A court may grant a summary judgment motion when “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.” Kentucky Rule of Civil Procedure (CR) 56.03. The Kentucky Supreme

Court has stated that, “the movant should not succeed unless his right to judgment

is shown with such clarity that there is no room left for controversy.” Steelvest,

Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 482 (Ky. 1991) (citation

omitted). Further, “[o]nly when it appears impossible for the nonmoving party to

produce evidence at trial warranting a judgment in his favor should the motion for

                                         -18-
summary judgment be granted.” Id. (citations omitted). Indeed, “[e]ven though a

trial court may believe the party opposing the motion may not succeed at trial, it

should not render a summary judgment if there is any issue of material fact.” Id. at

480 (citation omitted). Moreover, when examining a summary judgment motion,

“[t]he record must be viewed in a light most favorable to the party opposing the

motion for summary judgment and all doubts are to be resolved in his favor.” Id.

(citations omitted).

             “Appellate review of a summary judgment involves only legal

questions and a determination of whether a disputed material issue of fact exists.

So we operate under a de novo standard of review with no need to defer to the trial

court’s decision.” Shelton v. Kentucky Easter Seals Soc., Inc., 413 S.W.3d 901,

905 (Ky. 2013) (citations and footnotes omitted).

             b. Kentucky’s Unfair Claims Settlement Practices Act

             Kentucky’s Unfair Claims Settlement Practices Act (the “Act”) “is

intended to protect the public from unfair trade practices and fraud.” State Farm

Mut. Auto. Ins. Co. v. Reeder, 763 S.W.2d 116, 118 (Ky. 1988). The Kentucky

Supreme Court has stated that the Act “should be liberally construed so as to

effectuate its purpose.” Id. (citations omitted).

             Among other things, the Act “imposes what is generally known as the

duty of good faith and fair dealing owed by an insurer to an insured . . . .” Knotts

                                         -19-
v. Zurich Ins. Co., 197 S.W.3d 512, 515 (Ky. 2006). Perhaps most relevant to this

case, the Act prohibits insurers from failing to “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). An insurance company’s violation of the

Act can create a private cause of action for a third-party claimant. Reeder, 763

S.W.2d at 118. Moreover, the duties imposed by the Act on an insurer to a third

party apply both before and after the commencement of litigation by the third party

against the insured. Knotts, 197 S.W.3d at 517.

             To state a cause of action against an insurer for bad faith under the

Act, a plaintiff must show that: “(1) the insurer [was] obligated to pay the claim

under the terms of the policy; (2) the insurer . . . lack[ed] a reasonable basis in law

or fact for denying the claim; and (3) . . . the insurer either knew there was no

reasonable basis for denying the claim or acted with reckless disregard for whether

such a basis existed.” Hollaway v. Direct General Insurance Company of

Mississippi, Inc., 497 S.W.3d 733, 737-38 (Ky. 2016) (emphasis in original) (citing

Wittmer v. Jones, 864 S.W.2d 885, 890 (Ky. 1993)). Moreover, as stated by the

Kentucky Supreme Court, “[p]roof of this third element requires evidence that the

insurer’s conduct was outrageous, or because of [the company’s] reckless

indifference to the rights of others.” Id. at 738 (citation omitted).

                                         -20-
             Further, the Kentucky Supreme Court has noted that “all elements of

the [standard] must be established to prevail on a third-party claim for bad faith

under [the Act].” Id. Thus, a plaintiff “must go beyond simply showing [an

insurer’s] liability . . . [but] must also proffer evidence that the insurer’s motive

was recklessly indifferent to [the plaintiff’s] right to recover.” Id. Moreover,

“[b]ecause [a plaintiff] bears the burden of establishing all three elements, to defeat

summary judgment [the plaintiff] must offer proof for all three.” Id.

             “The appropriate inquiry is whether there is sufficient evidence from

which reasonable jurors could conclude that in the investigation, evaluation, and

processing of the claim, the insurer acted unreasonably and either knew or was

conscious of the fact that its conduct was unreasonable.” Farmland Mut. Ins. Co.

v. Johnson, 36 S.W.3d 368, 376 (Ky. 2000), as modified on denial of reh’g (Feb.

22, 2001) (quoting Zilisch v. State Farm Mutual Auto. Ins. Co., 196 Ariz. 234, 238,

995 P.2d 276, 280 (2000)). Indeed, “although elements of a claim may be ‘fairly

debatable,’ an insurer must debate the matter fairly” and “still is obligated under

the [Act] to investigate, negotiate, and attempt to settle the claim in a fair and

reasonable manner.” Id. at 375. Moreover, “whether a claim or the amount of a

claim is fairly debatable is a question of fact for the jury[.]” Id. at 376.

                                          -21-
             c. The Trial Court Erred in Granting Summary Judgment on
             Fish’s Bad Faith Claim

             In this case, we conclude that summary judgment was improper, as

Fish offered sufficient proof for each of the three Hollaway elements discussed

above. Beginning with liability under the policy, the Court in Hollaway discussed

the “two distinct questions of law” in assessing an insurer’s duty to compensate a

claimant based on their insured’s liability. 497 S.W.3d at 738. These two issues

involved both “liability for the accident itself” and liability based upon “the extent

and severity of [the] alleged injuries from the accident[.]” Id. at 738-39.

             As to the second issue, the Court in Hollaway found that the insurer

had disputed from the very beginning whether the accident had caused the alleged

injuries sustained by the plaintiff. Id. The record in Hollaway included the

plaintiff’s “well-documented . . . history of physical complaints not dissimilar to

the physical complaints she attributes to the accident.” Id. at 739. Moreover, the

insurer in Hollaway consistently characterized the accident and its impact on the

claimant as “low impact[.]” Id.

             In this case, we find that Fish offered sufficient proof that State

Farm’s insured – Harmon – was liable for both types of liability discussed by the

Hollaway Court. First, Fish provided evidence that Harmon was liable for causing

the accident itself. Not only did the jury find Harmon to be one hundred percent

responsible for the accident, but Fish provided the State Farm claim diary, in which

                                         -22-
State Farm noted multiple times that it had determined that Harmon was fully

liable for causing the accident.

             Fish also provided evidence of the second form of liability described

in Hollaway. Specifically, Fish provided a note from his treating neurosurgeon

stating that the accident had been the reason for his surgery. Additionally, Fish

provided the depositions of both Dr. Schwetschenau and Dr. Shearer, in which they

opined that the accident had caused the injuries for which he ultimately underwent

surgery. Moreover, unlike in the Hollaway case, Fish provided evidence that State

Farm consistently described the damage to his vehicle as “severe,” and that he had

never sought treatment for any of his injuries before the accident. Thus, we

conclude that Fish provided evidence that State Farm was obligated to pay the

claim under the terms of the policy sufficient to overcome summary judgment.

             We also find that Fish provided evidence sufficient to overcome

summary judgment regarding the second and third Hollaway elements. 497

S.W.3d at 738. Those elements concern whether State Farm “lack[ed] a reasonable

basis in law or fact for denying the claim” and whether State Farm “either knew

there was no reasonable basis for denying the claim or acted with reckless

disregard for whether such a basis existed.” Id. (citation omitted). As previously

discussed, the Act requires plaintiffs to prove that an insurer’s actions during the

                                         -23-
resolution of the claim were “outrageous, or because of [the insurer’s] reckless

indifference to the rights of others.” Id. (citation omitted).

             In this case, Fish provided evidence that, at some point between

October 25, 2007, and March 31, 2008, Fish put State Farm on notice that Fish had

undergone lumbar surgery; Fish’s treating doctors had related the surgery to the

accident; Harmon was liable for causing the accident; the impact to Fish’s vehicle

was “severe” and had totaled Fish’s vehicle; Fish had no prior treatment before the

accident and had no previous injury claims; and Fish had incurred over $51,000.00

in medical expenses.

             Further, Fish has provided proof that, as of the date of trial, State

Farm never changed its evaluation or offer of $4,000.00 versus Fish’s policy limit

demand of $100,000.00. Although State Farm had raised its reserve days earlier to

$20,000.00, it never increased its offer. Fish contends that State Farm failed to

properly consider new information since the claim was evaluated years earlier and

considered only the evidence supporting their desired outcome. Indeed, the

ultimate judgment was approximately fifty times greater than State Farm’s highest

settlement offer.

             Additionally, Fish provided a report and affidavit from an expert

witness, Stuart J. Setcavage, concerning State Farm’s allegedly unreasonable

claims-handling practices. As detailed in his report, Setcavage had more than

                                          -24-
twenty-four years of experience working in the insurance industry and handling,

supervising, negotiating, and settling automobile claims. He also participated in

various training programs related to his profession.

             In his affidavit, Setcavage opined that State Farm lacked a reasonable

basis in law or fact for delaying payment of the claim for so long and either knew

there was no reasonable basis for delaying payment of the claim or acted with

reckless disregard for whether such a basis existed. He further opined that State

Farm’s conduct was outrageous and showed a reckless indifference to Fish’s

rights. Setcavage further testified to a series of facts that, when viewed in the light

most favorable to Fish, constituted evidence that State Farm both lacked a

reasonable basis in law or fact for refusing the prompt, full, and fair payment of

Fish’s claim and that State Farm either knew or should have known of the

foregoing. These facts included that: (1) “State Farm arbitrarily and capriciously

attempted to apply comparative negligence without any new information”; (2)

“State Farm adopted an obdurate position that was based upon speculation that the

plaintiff’s injury was not a result of this car wreck but rather a result of an

underlying condition” and “[w]hen it adopted this position, the only evidence it

had suggested otherwise”; (3) “State Farm made a low-ball offer that it never

changed despite significant new developments that directly changed the value of

the claim”; and (4) “State Farm’s position was based upon speculation and is

                                          -25-
indicia of a biased evaluation of the evidence a jury would have to consider when

considering the value of [Fish’s] claim against its insured.”

             Finally, as already discussed, even if the claim was “fairly debatable,”

the insurer must debate the matter “fairly.” Farmland, 36 S.W.3d at 375. The

examination by Setcavage of the claim file and his opinions as to State Farm’s

adherence to standards for adjusting a claim in good faith are sufficient to present

to the jury whether State Farm debated the matter “fairly,” thus requiring denial of

summary judgment on this basis as well.

             In conclusion, Fish has provided sufficient proof as to each Hollaway

element, and his expert has opined the same from his review of the facts of the

case. Moreover, Fish’s expert has couched his opinion in the exact terms used in

each element of the test, rather than just generally opining about violations of the

Act. As such, genuine issues of material fact existed upon which reasonable minds

could disagree.

             All of this is not to say that a jury will ultimately find that State Farm

violated the Act by processing Fish’s claim in bad faith. But the evidence

presented by Fish is sufficient to raise a genuine dispute as to this issue. In other

words, it does not “appear[] that it would be impossible for [Fish] to produce

evidence at the trial warranting a judgment in his favor and against [State Farm].”

Steelvest, 807 S.W.2d at 483 (citation omitted).

                                         -26-
             d. The Trial Court Properly Denied Fish’s Request to Amend His
             Complaint

             Ten years after filing his complaint, Fish requested leave from the

court to amend his complaint to allege fraud because of State Farm’s alleged

failure to advise Fish and the trial court that State Farm had extended EAP.

             CR 15.01 states that, after the initial answering period, “a party may

amend his pleading only by leave of court or by written consent of the adverse

party; and leave shall be freely given when justice so requires.” Ultimately,

whether a party may amend his complaint is discretionary with the circuit court,

and we will not disturb its ruling unless it has abused its discretion. Lambert v.

Franklin Real Estate Co., 37 S.W.3d 770, 779 (Ky. App. 2000).

             In this case, Fish’s brief does not address the trial court’s reasoning in

denying his motion for leave to amend. Nor does he address the legal differences

between a policy covering an insured’s liability for the insured’s actions versus the

extension of assurance protection to protect against potential liability for an

insurer’s conduct. As the standard for review of a trial court’s denial of leave to

amend is an abuse of discretion, Fish has provided us with no concrete reasons as

to why the trial court’s decision was “arbitrary, unreasonable, unfair, or

unsupported by sound legal principles.” Commonwealth v. English, 993 S.W.2d

941, 945 (Ky. 1999). We affirm as to this issue.

                                         -27-
                                  CONCLUSION

             Based on the foregoing, we reverse the trial court’s grant of summary

judgment in favor of State Farm, affirm the trial court’s denial of Fish’s motion to

amend his complaint, and remand this matter for further proceedings.

             ALL CONCUR.

BRIEFS FOR APPELLANT:                          BRIEF FOR APPELLEE:

John H. Metz                                   Richard W. Edwards
Cincinnati, Ohio                               Louisville, Kentucky

Bill Meader
Hyden, Kentucky                                ORAL ARGUMENT FOR
                                               APPELLEE:
ORAL ARGUMENT FOR
APPELLANT:                                     Richard W. Edwards
                                               Louisville, Kentucky
John H. Metz
Cincinnati, Ohio

Bill Meader
Hyden, Kentucky

                                        -28-