RENDERED: SEPTEMB R 24, 2020
2018-SC-0070-DG
DIANA METZGER AND GARY METZGER
ON REVIEW FROM COURT OF APPEALS
V. CASE NO. 2016-CA-1625-MR
JEFFERSON CIRCUIT COURT NO. 15-CI-000020
AUTO-OWNERS INSURANCE COMPANY APPELLEES
AND
OWNERS INSURANCE COMPANY
OPINION OF THE COURT BY JUSTICE WRIGHT
AFFIRMING
I. BACKGROUND
Appellants, Diana Metzger and her husband Gary, are members of a pet
and feed supply store limited liability company (Metzger’s Country Store, LLC)
along with Gary’s brother and sister. The LLC bought a commercial automobile
insurance policy from Appellee, Auto-Owners Insurance Company, which
included underinsured motorist (UIM) coverage for the LLC’s vehicles.1 This
appeal involves the interpretation of that policy.
1 The LLC also bought a separate tailored protection policy (TPP) which provided
commercial general liability coverage and commercial property and inland marine
coverage for the LLC. The Metzgers argue that some terms present in the TPP policy
make the auto policy ambiguous. However, these policies are separate and distinct
from one another and we will not read any terms from the TPP policy into the
automobile policy.
Diana Metzger drove her personally-insured vehicle to a feed supply store to
purchase inventory for resale at the LLC. It is undisputed the sole purpose of
her trip was to conduct business on behalf of the LLC. After Metzger
purchased the items intended for resale, she was struck by an automobile in
the parking lot while walking to her personal vehicle. Courtney Gebben, the
driver of the vehicle which struck Metzger, carried only $25,000 in liability
insurance. Metzger sustained severe injuries to her left ankle requiring six
surgeries and resulting in the accrual of more than $200,000 in medical
expenses. Due to the disparity in the amount of Gebben’s liability coverage
and Metzger’s injuries, Gebben was an underinsured motorist pursuant to KRS
304.39-320.
After Gebben’s insurer paid Metzger its $25,000 limits, Metzger settled
with her personal insurance UIM policy for an undisclosed amount (though the
maximum coverage she had under her personal policy was $100,000). The
payments from Gebben’s liability insurance and Metzger’s personal UIM policy
did not fully compensate Metzger for her injuries or Gary for his loss of
consortium. Metzger then submitted a UIM claim to the LLC’s automobile
insurance carrier, Auto-Owners.
Auto-Owners had issued a commercial automobile policy with UIM
coverage to Metzger’s Country Store, LLC. The LLC was the only named
insured on the Auto-Owners policy. The policy had combined liability limits of
$1,000,000 and UIM coverage limits of $1,000,000 per person. Four vehicles
were covered under the Auto-Owners commercial automobile policy and the
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personal vehicle Metzger drove on the day of the accident was not among the
scheduled vehicles. The declarations in the policy contained a list of scheduled
drivers which included Metzger, the other three LLC members, and several LLC
employees. None of these scheduled drivers, however, was a named insured.
The policy’s liability form included several definitions and defined “You or
Your” as the “first named insured shown in the Declarations, and if an
individual, your spouse who resides in the same household.” (Emphasis
added.) The policy’s relevant language concerning UIM coverage provides:
2. Coverage
a. We will pay compensatory damages, including but not limited to
loss of consortium, any person is legally entitled to recover from
the owner or operator of an underinsured automobile because
of bodily injury sustained by an injured person while
occupying an automobile that is covered by SECTION II—
LIABILITY COVERAGE of the policy.
b. If the first named insured in the Declarations is an individual,
this coverage is extended as follows:
(1) We will pay compensatory damages, including but
not limited to loss of consortium, you are legally
entitled to recover from the owner or operator of
any underinsured automobile because of bodily
injury you sustain:
(a) when you are not occupying
an automobile that is covered by
SECTION II—LIABILITY COVERAGE
of the policv; or
(b) when occupying an automobile
you do not own which is not covered by
SECTION II—LIABILITY COVERAGE
of the policy.
Based on the language of the commercial automobile policy, Auto-
Owners denied Metzger’s claim. She then filed a declaratory action in Jefferson
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Circuit Court, asking the trial court declare that Auto-Owners was obligated to
provide UIM benefits under the terms of the commercial policy. Gary filed a
derivative claim for loss of spousal consortium. Auto-Owners filed a motion for
summary judgment arguing that Metzger was not entitled to UIM coverage
because she was not occupying a scheduled vehicle at the time of the accident,
as required by the policy. The trial court granted Auto-Owners summary
judgment motion and the Court of Appeals unanimously affirmed the trial
court’s ruling. The Metzgers then filed a motion for discretionary review to this
Court, which we granted. We now affirm the Court of Appeals.
II. ANALYSIS
It has long been the law in this Commonwealth that summary judgment
“should only be used To terminate litigation when, as a matter of law, it
appears that it would be impossible for the respondent to produce evidence at
the trial warranting a judgment in his favor and against the movant.’”
Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807 S.W.2d 476, 483 (Ky. 1991)
(3quoting Paintsville Hosp. Co. v. Rose, 683 S.W.2d 255, 256 (Ky. 1985)).
Furthermore, Kentucky Rules of Civil Procedure (CR) 56.03 states that
summary judgment should be granted if the evidence shows 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. “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, 807 S.W.2d at 480.
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“Because summary judgments involve no fact finding, this Court will
review the circuit court’s decision de novo.” 3D Enters. Contracting Corp. v.
Louisville & Jefferson Cnty. Metro. Sewer Dist., 174 S.W.3d 440, 445 (Ky. 2005).
On appeal, “[t]he standard of review ... of a summary judgment is whether
the circuit judge correctly found that there were no issues as to any material
fact and that the moving party was entitled to a judgment as a matter of law.
Summary judgment is appropriate where the movant shows that the adverse
party could not prevail under any circumstances.” Pearson ex rel. Trent v. Nat'l
Feeding Sys., Inc., 90 S.W.3d 46, 49 (Ky. 2002).
• The trial court granted Auto-Owners’ motion for summary judgment.
Because “[interpretation and construction of an insurance contract is a matter
of law,” Kemper Nat’l Ins. Cos. v. Heaven Hill Distilleries, Inc., 82 S.W.3d 869,
871 (Ky. 2002), we review the raised issues de novo, giving no deference to the
trial court.
The Metzgers first argue the Court of Appeals erred in holding the
commercial automobile policy was unambiguous. In support of this argument,
they assert the policy is rife with ambiguity, as it uses familial and individual
terms and terms that are confusing and undefined. We disagree.
Recently we held “Kentucky public policy does not bar reasonable UIM
exclusion provisions.” Philadelphia Indem. Ins. Co. v. Tryon, 502 S.W.3d 585,
592 (Ky. 2016). In reaching that holding, we stated, “there is nothing either in
the MVRA or our public policy prohibiting enforcement of exclusion of UIM
coverage in certain scenarios. The reasonable expectations of coverage are
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satisfied so long as the plain meanings of the terms of the underlying policies
are clear and unambiguous.” Id. Here, no ambiguity existed.
The Metzgers would have this Court hold the policy was ambiguous due
to use of the terms “you,” “your,” “relative,” and “person.” However, the policy
defines “You or Your” as the “first named insured shown in the Declarations,
and if an individual, your spouse who resides in the same household.”
(Emphasis added.) The phrase “if an individual” clearly contemplates a
scenario in which the named insured is not an individual (as is the case here,
where the only named insured is an LLC). Clearly an LLC has neither a spouse
nor other relatives. While an LLC is, likewise, not referred to as “you” in
common parlance, the policy specifically defines the word “you” to include any
named insured—be it an individual or an entity. These terms create no
ambiguity in the policy.
The Metzgers also argue an ambiguity is created by the fact the policy
contains language inapplicable to the LLC (all the language “extending” the
coverage if the named insured is an “individual”). While we agree with the
Metzgers that insurance policies can be complex, confusing documents filled
with ambiguities, the applicable portions of the policy in the case at bar are
not. The policy language makes it clear that if the first named insured is an
“individual,” the coverage is extended past the occupancy of a scheduled
vehicle. However, if the first named insured is not an “individual,” then an
individual is only covered by the UIM policy when occupying a scheduled
automobile. There is no ambiguity here. The LLC is the only named insured
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on the policy—and the LLC is not an “individual.” Therefore, the UIM policy
only covered losses sustained by Metzger while occupying a scheduled
automobile.
The fact Metzger was undisputedly carrying out business on behalf of the
LLC is of no consequence, as the policy neither requires an individual to be
conducting the business of the LLC at the time of his or her injury nor
guarantees coverage if he or she is conducting the business of the LLC. It is
simply immaterial to our analysis, as it is immaterial to the terms of the policy.
The Metzgers further argue the policy’s use of the undefined term
“individual” creates ambiguity. They assert the term could mean either a
person or an entity. We need look no further than the definitions included in
the policy to resolve this claim. Again, we note the policy defines “You or Your”
as the “first named insured shown in the Declarations, and if an individual,
your spouse who resides in the same household.” (Emphasis added.) It would
be nonsensical to substitute the word “entity” for “individual” here. It is
obvious the policy contemplates an “individual” as a natural person.
The Metzgers next argue the Court of Appeals erred in holding they had
no reasonable expectation of coverage. However, the doctrine of reasonable
expectations, “applies only to policies with ambiguous terms.” True v. Raines,
99 S.W.3d 439, 443 (Ky. 2003). As we have already held the policy was
unambiguous, the doctrine does not apply.
Finally, the Metzgers argue the Court of Appeals erred in holding the UIM
coverage was not illusory or against public policy. The coverage herein is not
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illusory. Rather, it simply does not apply to Metzger under the facts of this
case. Had she been the named insured under the policy or had she been an
occupant of a covered auto at the time of the accident, Auto-Owners’s UIM
policy would have covered her. However, those are simply not the facts of this
case. Because the LLC was the named insured—and not Metzger herself—
Metzger (or any other individual) was only covered by the UIM policy when
occupying a scheduled vehicle.
As to the Metzgers’ argument the coverage was against public policy, we
have held “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. This is a reasonable UIM
exclusion provision, and we will not disturb the parties’ contractual rights in
the absence of an ambiguity. Here, Metzger was not the named insured. She
did not purchase the coverage, nor did her name appear on the policy’s
declarations page. The policy’s terms unambiguously distinguished between
policies in which the named insured was an individual and those in which the
named insured was not.
III. CONCLUSION
Viewing the record in a light most favorable to the Metzgers, we affirm
the Court of Appeals’ opinion affirming the trial court’s grant of summary
judgment. Here, the trial court correctly found there were no issues as to any
material fact and that Auto-Owners was entitled to a judgment as a matter of
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law. Because Metzger was not covered under the terms of the Auto-Owners
commercial UIM policy, Metzger could not prevail under any circumstances.
All sitting. All concur.
COUNSEL FOR APPELLANTS:
Kevin Crosby Burke
Burke Neal PLLC
Kevin B. Sciantarelli
Sciantarelli Law Firm
Jamie Kristin Neal
Burke Neal PLLC
COUNSEL FOR APPELLEES:
Catherine Marie Cundiff Sewell
Sewell & Neal, PLLC
Peter J. Sewell
Sewell & Neal, PLLC
Thomas Nathan Peters
Louisville, KY
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