Christopher Wallace v. Grange Insurance Company

RENDERED: MARCH 25, 2022; 10:00 A.M.
NOT TO BE PUBLISHED

Commonwealth of Kentucky
Court of Appeals

NO. 2021-CA-0715-MR

CHRISTOPHER WALLACE APPELLANT

APPEAL FROM WARREN CIRCUIT COURT
v. HONORABLE JOHN R. GRISE, JUDGE
ACTION NO. 19-CI-01766

GRANGE INSURANCE COMPANY APPELLEE

OPINION
AFFIRMING

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

MAZE, JUDGE: The single issue in this appeal is whether the Warren Circuit

Court erred in concluding that an insurance policy issued by appellee Grange

Insurance Company did not afford uninsured motorist coverage in excess of the

statutory minimum nor permit stacking of uninsured motorists coverage. Finding

no error in the conclusion of the trial court, we affirm.
 The facts are undisputed. Appellant Christopher Wallace was

involved in an automobile collision with an uninsured driver. At the time of the

collision, Wallace was driving his employer’s vehicle which was covered under a

policy of insurance with Grange Mutual. After collecting no-fault benefits

pursuant to KRS1 304.39-010, the Kentucky Motor Vehicle Reparations Act, he

sought uninsured motorist benefits under his employer’s policy with Grange.

The policy in question is a commercial auto policy issued to Bluegrass

Audio, with a policy liability limit of $1,000,000 per accident. The policy does not

include uninsured nor underinsured motorist coverage and no premiums were

charged for those coverages. Upon receipt of Wallace’s claim, Grange was unable

to locate a written rejection of uninsured motorist coverage. Due to the lack of

proof of rejection required by the clear dictates of KRS 304.20-020, Grange

determined it was obligated to provide uninsured motorist benefits up to the

statutory minimum set out in KRS 304.39-110, $25,000 per person/$50,000 per

accident. However, Wallace insisted that in the absence of proof of a signed

rejection of uninsured motorist benefits, Grange was required to provide uninsured

motorist benefits up to the $1,000,000 liability coverage limit. Wallace also

contended that because the policy insured two vehicles, the uninsured motorist

coverage should stack resulting in $2,000,000 uninsured motorist coverage.

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Kentucky Revised Statute.

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 Wallace thereafter instituted this action against Grange seeking

uninsured motorist coverage for damages up to the liability limits of the policy

covering the vehicle he was driving at the time of the collision and again

maintained that because the policy covered two vehicles, the coverage must stack,

doubling the amount of that coverage. This appeal stems from the entry of a

partial summary judgment concluding that Grange’s liability was limited to the

$25,000/$50,000 statutory minimum set out in KRS 304.39-110.

Because there are no disputed issues of fact in this appeal, the

question before us is whether “the moving party was entitled to judgment as a

matter of law.” Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky. App. 1996). In the

absence of factual disputes, we need not defer to the trial court’s decisions as to

questions of law and therefore review them de novo. Philadelphia Indemnity

Insurance Company, Inc. v. Tryon, 502 S.W.3d 585, 588 (Ky. 2016).

As he did before the trial court, Wallace relies upon the decision of

the Kentucky Supreme Court in Simon v. Continental Insurance Company, 724

S.W.2d 210, 212 (Ky. 1986), as requiring Grange to provide uninsured motorist

benefits to the extent of its $1,000,000 policy limits. In rejecting Wallace’s

interpretation of Simon, the trial court distinguished the statutory requirements

underpinning the underinsured motorists benefits at issue in Simon from the

uninsured motorist benefits at issue in this case:

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 Even if UIM [underinsured motorist] coverage is
coextensive with liability coverage, it does not
necessarily follow that UM [uninsured motorist]
coverage is coextensive with liability coverage. Insurers
are required to offer UIM coverage, but they are not
required to provide it. KRS 304.39-320. On the other
hand, insurers are required to provide UM coverage.
Since UM coverage is mandatory and the statute provides
a minimum amount of coverage, UM coverage should
not be coextensive unless the policy states otherwise.

This view of the distinction between uninsured motorist coverage and underinsured

motorist coverage finds support in the opinion of Sixth Circuit Court of Appeals in

Roy v. State Farm Mutual Automobile Insurance Company:

Every Kentucky policyholder obtains the relatively
modest uninsured/underinsured coverage described in
Ky. Rev. Stat. 304.20-020 unless he opts out of such
coverage by rejecting it in writing. To obtain the
potentially more extensive underinsured motorist
coverage described in Ky. Rev. Stat. 304.39-320, by
contrast, the policyholder must opt in to the coverage.
Under 304.39-320, the insurer is required only to “make
[such coverage] available upon request.” (Emphasis
supplied.)

954 F.2d 392, 397 (6th Cir. 1992).

Returning to the Simon analysis, the Supreme Court emphasized that

the insured had requested and paid for underinsured coverage but the amount of

coverage requested and paid for could not be determined from the declarations

page of the policy:

KRS 304.39-320, which is part of the Motor Vehicle
Reparations Act, requires that “Every insurer shall make

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 available upon request to its insureds underinsured
motorist coverage . . . .” It is conceded that the insured
requested for and paid for such coverage, but the
evidence does not show the amount of underinsured
motorist coverage that was asked for and paid for, and we
cannot determine this by looking at the Declaration pages
in the policy.

724 S.W.2d at 211 (emphasis added). The Supreme Court then discussed the

policy’s failure to designate the amount of underinsurance payable in light of the

doctrine of reasonable expectations:

When considered from the standpoint of:

(a) a face sheet that provides limits for uninsured
motorist coverage but omits limits for underinsured
motorist coverage;

(b) a section in the policy on uninsured motorist
insurance which mentions “underinsured” but only in
limited and confusing terminology; and

(c) the reasonable expectations of an insured which
would accompany the purchase of underinsured motorist
coverage absent “an unequivocally conspicuous, plain
and clear manifestation of the company’s intent to
exclude coverage” (Long, supra) [sic]; this policy must
be viewed as ambiguous and the coverage unlimited
except to the extent that the insured knows he has
purchased automobile liability insurance limited to
$100,000. The insured had the right to expect that he
had underinsured motorist coverage to the extent of
$100,000, less the offset from the tortfeasor’s liability
coverage.

Id. at 213 (emphases added). Stated differently, “the proper area of inquiry is what

the [insureds] could reasonably expect in light of what they actually paid for . . . .”

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Estate of Swartz v. Metropolitan Property & Casualty Co., 949 S.W.2d 72, 76 (Ky.

App. 1997) (emphasis added).

` In contrast to the situation in Simon, there was no purchase of

uninsured coverage in this case and thus no reasonable expectation that the

coverage provided under the Grange policy would exceed the statutory minimums.

Unlike Simon, we perceive no patent ambiguity in the policy, merely the absence

of the written rejection required by KRS 304.20-020. Accordingly, having paid no

premium for uninsured motorist insurance, we are convinced that the insured had

no reasonable expectation of receiving coverage in excess of the statutory

minimum.

Next, appellant argues to that he is entitled to stack the uninsured

motorist coverage on the two vehicles covered by the policy. We do not agree for

two reasons.

First, the Supreme Court of Kentucky clarified in Ohio Casualty

Insurance Company v. Stanfield, 581 S.W.2d 555 (Ky. 1979), that an employee is

precluded from stacking the coverages in his employer’s policy. Stanfield

involved a single policy covering a fleet of vehicles owned by the City of Newport.

Stanfield, an injured employee of the named insured City of Newport sought to

“stack” or pyramid the uninsured motorist coverages on all 63 vehicles on which

his employer had procured insurance. In concluding that stacking was not

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permissible, the Supreme Court differentiated between two classes of insureds

under a policy: 1) insureds of the first class, who are named insureds who had

bought and paid for the extra protection by not rejecting uninsured motorist

coverage for each vehicle on the policy; and 2) permissive users, like Stanfield,

who were entitled to more limited protection:

We therefore hold that Stanfield is confined to the
limits of the Ohio Casualty policy applicable to the
vehicle he was using. He is as to his employer’s policy
an insured of the second class. He is precluded from
stacking the coverages in his employer’s policy.

Id. at 559. In reaching this result, the Stanfield Court cited approvingly the

rationale expressed by the Supreme Court of Alabama in Lambert v. Liberty

Mutual Insurance Co., 331 So.2d 260, 265 (Ala. 1976):

Can it be seriously contended that Seaboard [the
employer] expected that the $4.00 premium it paid for
uninsured motorist coverage on each of its 1,699 vehicles
would purchase coverage for all permissive occupants of
its vehicles to the tune of $16,900,000? Clearly, such an
expectation would not have been a reasonable one under
the terms of the commercial fleet policy here in question.
The status of Lambert (for purposes of uninsured
motorist coverage) as an insured solely by virtue of his
occupancy of the vehicle, is clearly distinguishable from
the status of a named insured who is entitled to stack
coverages by virtue of his personal payment of an
additional premium for each vehicle insured under a
multi-vehicle policy.

The second reason stacking is not available in this case stems from

precedent set out in the decision of this Court in Adkins v. Kentucky National

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Insurance Company, 220 S.W.3d 296 (Ky. App. 2007), holding that uninsured

motorist coverage may not be stacked where a single uninsured motorist premium

is charged for multiple vehicles and where the single premium charged is actuarial,

not based on the number of vehicles covered. In this case, uninsured motorist

coverage is available only by operation of statute due to Grange’s inability to

provide proof of rejection of that coverage. Thus, the named insured did not pay

any premium, let alone separate premiums, for the two covered vehicles. Wallace

therefore had no reasonable expectation that uninsured motorist coverage on his

employer’s two vehicles would stack.

Accordingly, finding no error in the decision of the Warren Circuit

Court on either issue presented, we affirm its entry of partial summary judgment

both as to the extent of uninsured coverage available and the right to stack that

coverage.

ALL CONCUR.

BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE:

Dion Moorman Melissa Thompson Richardson
Owensboro, Kentucky Elizabeth M. Bass
Lexington, Kentucky

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