Court Opinion

ID: 4692878
Source: CourtListenerOpinion
Date Created: 2021-06-04 14:06:50.681953+00
Date Added: 2024-06-11T08:05:18.928983
License: Public Domain

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                         NOT TO BE PUBLISHED

                 Commonwealth of Kentucky
                           Court of Appeals

                              NO. 2020-CA-0518-MR

YUSUF MURAD                                                           APPELLANT

                APPEAL FROM JEFFERSON CIRCUIT COURT
v.              HONORABLE A.C. MCKAY CHAUVIN, JUDGE
                        ACTION NO. 10-CI-005924

GEICO INDEMNITY INSURANCE CO.                                           APPELLEE

                                     OPINION
                                    AFFIRMING

                                   ** ** ** ** **

BEFORE: JONES, MAZE, AND L. THOMPSON, JUDGES.

THOMPSON, L., JUDGE: Yusuf Murad (“Murad” or “Appellant”) appeals from

an order of the Jefferson Circuit Court granting summary judgment in favor of

GEICO Indemnity Insurance Company (“GEICO” or “Appellee”). Appellant

argues that the circuit court erred in failing to conclude that Appellee had a duty to

defend Appellant in a third-party subrogation claim, that the duty to defend was
not dependent on Appellant’s ownership of the vehicle involved in a collision, and

that the court must construe the policy language in favor of Appellant. As a prior

panel of this Court determined that the insurance policy between Appellant and

Appellee was void ab initio as a matter of law, we find no error in the Jefferson

Circuit Court’s conclusion that Appellee had no duty to defend Appellant.

                   FACTS AND PROCEDURAL HISTORY

             In the interest of judicial economy, we adopt the factual and

procedural recitation set out in the prior opinion of this Court in GEICO Indemnity

Co. v. Murad, No. 2016-CA-1907-MR, 2018 WL 3602950 (Ky. App. Jul. 27,

2018). We stated therein as follows:

                On September 14, 2008, Abdalla Suleiman was
             operating a Mitsubishi Eclipse when it collided with a
             motor vehicle operated by Abdullahi Said. At the time of
             the alleged collision, the Mitsubishi Eclipse was listed as
             a covered vehicle upon a motor vehicle insurance policy
             issued to Yusuf Murad by GEICO Indemnity Company
             in April of 2008. Murad is Suleiman’s father. The motor
             vehicle driven by Said was insured by Liberty Mutual
             Fire Insurance Company. The police were not
             summoned to the accident; rather, a civilian traffic
             collision report was completed by Said.

                Liberty Mutual paid a total of $39,776.94 to its
             insured as a result of the accident. It ultimately sought
             subrogation from GEICO. GEICO informed Liberty
             Mutual that the claim was “denied” due to issues of fraud
             and uncooperativeness of Murad and Suleiman.

                Thereafter, on August 23, 2010, Liberty Mutual filed
             a complaint (Action No. 10-CI-005924) in the Jefferson

                                         -2-
Circuit Court against Suleiman and Murad. Therein, it
was alleged that Suleiman negligently caused a collision
between his vehicle and its insured’s vehicle. Liberty
Mutual maintained that it paid a total of $39,776.94 to its
insured because of the accident. Liberty Mutual sought
to recover said sum from Suleiman and Murad.

   Neither Suleiman nor Murad filed an answer;
consequently, Liberty Mutual filed a motion for default
judgment. By order entered April 13, 2011, the circuit
court granted Liberty Mutual’s motion for default
judgment and determined that Suleiman and Murad were
jointly and severally liable for the sum of $39,776.94.

    Suleiman and Murad then retained private counsel and
filed, on October 7, 2011, a complaint in the Jefferson
Circuit Court against GEICO (Action No. 11-CI-
006538). Therein, it was asserted:

      10. On August 23, 2010, Liberty Mutual
      instituted a civil lawsuit against Mr. Murad
      and Mr. Suleiman in the Jefferson County,
      Kentucky Circuit Court, Civil Action No.
      10-CI-005924 (the “Underlying Action”), on
      its subrogation claim, asserting negligence
      on the part of Mr. Suleiman in causing the
      Accident and in addition, Liberty Mutual
      asserted a claim against Mr. Murad on a
      theory of vicarious liability, claiming Mr.
      Murad did not have motor vehicle insurance
      covering the Mitsubishi Eclipse.

      11. After [Suleiman and Murad] were each
      served with a summons and a copy of the
      complaint in the Underlying Action, they
      notified GEICO of the Underlying Action.

      12. Thereafter, GEICO continued to deny
      coverage on the claim and refused to

                            -3-
      provide [Suleiman and Murad] with any
      defense in the Underlying Action.

      13. In or around November of 2010, Liberty
      Mutual moved for default judgment against
      [Suleiman and Murad]. [Suleiman and
      Murad] notified GEICO of the motion for
      default, however GEICO took no action to
      protect the interests of [Suleiman and
      Murad]. Although [Suleiman and Murad]
      attempted to represent themselves in the
      Underlying Action, a default judgment was
      entered against them, jointly and severally,
      on April 13, 2011, in the amount of
      $39,776.94, plus interest thereon at the rate
      of 12% per annum (the “Judgment”).

      14. On September 2, 2011, [Suleiman and
      Murad], by counsel, tendered a copy of the
      Judgment to GEICO, demanding payment
      thereof, which to date, GEICO has failed
      and/or refused to pay and in fact, GEICO
      has failed to even respond.

      15. [Suleiman and Murad] have been
      damaged by GEICO’s breach of contract,
      bad faith, and its violations of Kentucky’s
      Insurance Code, including but not limited to
      its failure to provide a defense to [Suleiman
      and Murad] and its failure to indemnify and
      pay the Judgment against [Suleiman and
      Murad], entitling [Suleiman and Murad] to
      relief therefrom.

Complaint at 3-4. GEICO filed an answer to complaint
and denied that the motor vehicle insurance policy issued
to Murad covered the Mitsubishi Eclipse for various
reasons.

                           -4-
   On October 27, 2011, Suleiman and Murad filed a
motion to set aside the default judgment in Action No.
10-CI-005924. By order entered December 21, 2011, the
circuit court granted the motion to set aside the April 13,
2011, default judgment.

   GEICO then retained attorney Todd Page to represent
Suleiman and Murad in the action filed by Liberty
Mutual (Action No. 10-CI-005924). On January 27,
2012, Page entered an appearance as co-counsel for
Suleiman and Murad. Suleiman and Murad also
continued to retain privately hired counsel.

   Suleiman and Murad eventually filed a motion for
summary judgment against Liberty Mutual (Action No.
10-CI-005924). Subsequently, by agreed order, the two
actions (Action Nos. 10-CI-005924 and 11-CI-006538)
were consolidated on February 15, 2012.

  The circuit court then granted, in part, Suleiman and
Murad’s motion for summary judgment against Liberty
Mutual and dismissed all claims asserted by Liberty
Mutual except one claim asserted against Suleiman.
Thereafter, an agreed order was entered on October 15,
2013, dismissing the remaining claim against Suleiman.

   On October 27, 2014, GEICO filed a motion for
declaratory judgment in this action. GEICO asserted that
the motor vehicle policy issued to Murad did not provide
coverage for the motor vehicle accident that occurred on
September 14, 2008. Specifically, GEICO asserted that
Murad made material misrepresentations on the
application for insurance coverage and that Suleiman
made false statements concerning the accident and
concealed facts from GEICO. Then, on February 2,
2015, the circuit court rendered an Agreed Order
dismissing Suleiman as a party and all claims asserted
against him. On October 27, 2015, GEICO’s motion for
declaratory judgment was denied.

                            -5-
                The circuit court ultimately bifurcated for jury trial the
             coverage and bad faith claims. A jury trial was
             conducted on August 29, 2016, on the coverage issue,
             and the jury ultimately returned a verdict in favor of
             Murad, upon which judgment was entered September 9,
             2016.

             GEICO then appealed the adverse judgment on the coverage portion

of the bifurcated claim. A panel of this Court in GEICO Indemnity Co. v. Murad,

supra, reversed the circuit court’s judgment as to the coverage portion of the

bifurcated claim. In support of the opinion reversing, the panel determined that

Murad did not own the Mitsubishi Eclipse at the time of the accident. The panel

determined that the policy of insurance could be valid and enforceable only if

Murad had an insurable interest in the vehicle at the time of the accident. Having

found no insurable interest by virtue of the fact that Murad did not own the vehicle

at the time of the accident, the panel concluded that the policy purporting to insure

the vehicle was void ab initio.

             The remaining portion of the bifurcated claim continued in Jefferson

Circuit Court, wherein Murad alleged that GEICO acted in bad faith by improperly

failing to defend Murad in Liberty Mutual’s subrogation claim in a timely manner.

GEICO moved for summary judgment. As a basis for the summary judgment

motion, GEICO argued that as there was no valid insurance policy by virtue of the

holding in GEICO Indemnity Co. v. Murad, supra, GEICO had no duty to defend.

The Jefferson Circuit Court found this argument persuasive, and rendered an

                                         -6-
opinion and order on March 13, 2020, sustaining GEICO’s motion. This appeal

followed.

                           ARGUMENTS AND ANALYSIS

              Murad now argues that the Jefferson Circuit Court erred in sustaining

GEICO’s motion for summary judgment. He contends that the “duty to defend”

clause in the insurance policy entitled him to a defense in Liberty Mutual’s

subrogation claim. Murad also argues that GEICO’s duty to defend was not

dependent on his ownership of the vehicle, and that the policy language must be

construed in his favor. Murad also asserts that he had a reasonable expectation of

coverage, that GEICO engaged in bad faith, and that it should be estopped from

denying its obligation to defend. He seeks an order reversing the summary

judgment and remanding the matter for a jury trial on the breach of contract and

bad faith claims.1

              We must first address GEICO’s contention that Murad failed to

comply with Kentucky Rules of Civil Procedure (“CR”) 76.12(4)(c)(v) requiring a

statement at the beginning of the argument showing whether the issue was

1
 On approximately October 27, 2011, GEICO retained attorney Todd Page to defend Murad and
Suleiman. GEICO’s defense was successful and Liberty Mutual’s complaint against Murad was
dismissed. Nevertheless, Murad argues that he suffered a default judgment and the suspension of
his driving privileges “among other harms.”

                                             -7-
preserved and, if so, in what manner. Murad complied with this provision by

citing his memorandum in opposition to GEICO’s motion for summary judgment.

“[A]n appellate court cannot consider items that were not first presented to the trial

court. By citing us to the specific location of the item in the record, we can

confirm the document was presented to the trial court and is properly before us.”

Oakley v. Oakley, 391 S.W.3d 377, 380 (Ky. App. 2012). Murad’s argument in

opposition to summary judgment was raised below, and is properly before us.

GEICO also asserts that Murad waived certain arguments by not presenting them

to the circuit court. For the reasons addressed below, we hold this argument as

moot.

             The Jefferson Circuit Court sustained GEICO’s motion for summary

judgment based on its recognition that a panel of this Court previously found no

enforceable policy of insurance to exist as between Murad and GEICO. When the

Kentucky Supreme Court denied discretionary review, it became the law of the

case.

             A final decision of [an appellate court], whether right or
             wrong, is the law of the case and is conclusive of the
             questions therein resolved. It is binding upon the parties,
             the trial court, and the Court of Appeals. It may not be
             reconsidered by prosecuting an appeal from a judgment
             entered in conformity therewith.

Martin v. Frasure, 352 S.W.2d 817, 818 (Ky. 1961) (citations omitted). The law

of the case doctrine is an “iron rule, universally recognized,” and holds appellate

                                         -8-
decisions as binding on subsequent trials and appeals “however erroneous the

opinion or decision may have been.” Ragland v. Estate of Digiuro, 352 S.W.3d

908, 914 (Ky. App. 2010) (emphasis in original).

             It is uncontroverted that in the companion case of GEICO Indemnity

Co. v. Murad, supra, a panel of this Court determined that no enforceable policy of

insurance existed as between Murad and GEICO as to coverage of the Mitsubishi

Eclipse. Murad’s motion for discretionary review was denied on June 5, 2019, and

the underlying action became the law of the case. The Jefferson Circuit Court

properly so found. Having determined that no contractual relationship existed

between Murad and GEICO as to the Mitsubishi Eclipse, it follows that the void

policy cannot be relied upon as a basis for establishing duties between the parties.

A void policy of insurance is unenforceable. See State Farm Mut. Auto. Ins. Co. v.

Marley, 151 S.W.3d 33 (Ky. 2004).

             Murad forwards several arguments in support of his claim that GEICO

engaged in bad faith by failing to defend him in the subrogation claim. He argues

that the “duty to defend” clause in the insurance policy entitled him to a defense;

that GEICO’s duty to defend was not dependent on his ownership of the Mitsubishi

Eclipse; that the policy language must be construed in favor of the insured; that he

had a reasonable expectation of coverage; and that GEICO is estopped from

denying the obligation to defend. These arguments are premised in large part on

                                         -9-
his claim that he had an insurable interest in a second automobile under the GEICO

policy. However, and as best we can discern, Murad did not tender proof of a

second, insured vehicle, and it is clear that said vehicle, if any, was not involved in

the subject accident. Ultimately, we are constrained by the holding in GEICO

Indemnity Co. v. Murad, supra.

                                  CONCLUSION

             Summary judgment “shall be rendered forthwith if 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.” CR 56.03. “The 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.” Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky.

1991). Summary judgment should be granted only if it appears impossible that the

nonmoving party will be able to produce evidence at trial warranting a judgment in

his favor. Id. “Even 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. Finally, “[t]he standard of review on appeal of a

summary judgment is whether the trial court correctly found that there were no

genuine issues as to any material fact and that the moving party was entitled to

                                         -10-
judgment as a matter of law.” Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky. App.

1996).

             When viewing the record in a light most favorable to Murad and

resolving all doubts in his favor, we conclude that GEICO was entitled to summary

judgment. The purported insurance coverage of the Mitsubishi Eclipse was

determined to be void. This ruling is the law of the case. Murad was not driving

or occupying either the Mitsubishi Eclipse nor Said’s Honda Odyssey at the time

of the collision, was not otherwise a party to the accident, and had no insurable

interest in either vehicle. Kentucky Revised Statutes (KRS) 304.14-060 and

Kentucky case law require an insurable interest in property to support a valid

insurance contract. As no valid policy of insurance existed at the time of the

accident, it follows that GEICO had no duty to defend Liberty Mutual’s

subrogation claim. The Jefferson Circuit Court properly so found. Even so,

GEICO did retain attorney Todd Page to defend Murad in Liberty Mutual’s

subrogation claim, and the defense was successful. For these reasons, we affirm

the opinion and order of the Jefferson Circuit Court.

             ALL CONCUR.

                                        -11-
BRIEFS FOR APPELLANT:     BRIEF FOR APPELLEE:

Zachary L. Taylor         Charles H. Stopher
Louisville, Kentucky      Todd P. Greer
                          Louisville, Kentucky

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