Motorist Mutual Insurance Company v. Deborah A. Lanigan

RENDERED: MARCH 3, 2023; 10:00 A.M.
NOT TO BE PUBLISHED

Commonwealth of Kentucky
Court of Appeals
NO. 2019-CA-1662-MR

MOTORIST MUTUAL INSURANCE
COMPANY APPELLANT

APPEAL FROM KENTON CIRCUIT COURT
v. HONORABLE GREGORY M. BARTLETT, JUDGE
ACTION NO. 17-CI-00948

DEBORAH A. LANIGAN; RANDY
LANIGAN; TRI-CITY INSURANCE
SERVICE, INC.; AND WILLIAM R.
MCCARTY APPELLEES

AND

NO. 2019-CA-1678-MR

DEBORAH LANIGAN; RANDY
LANIGAN; AND RANDY LANIGAN
D/B/A LANIGAN AUTO SALES LLC CROSS-APPELLANTS

CROSS-APPEAL FROM KENTON CIRCUIT COURT
v. HONORABLE GREGORY M. BARTLETT, JUDGE
ACTION NO. 17-CI-00948
TRI-CITY INSURANCE SERVICE,
INC.; THE MOTORIST MUTUAL
INSURANCE COMPANY; AND
WILLIAM R. MCCARTY CROSS-APPELLEES

OPINION
REVERSING AND REMANDING

** ** ** ** **

BEFORE: CALDWELL, JONES, AND TAYLOR, JUDGES.

JONES, JUDGE: Appellant/Cross-Appellee Motorist Mutual Insurance Company

(“Motorist Mutual”) appeals from orders of the Kenton Circuit Court granting

summary judgment in favor of Appellees/Cross-Appellants Randy and Deborah

Lanigan on the matter of underinsured motorist (“UIM”) coverage. Motorist

Mutual argues that the terms of the business insurance contract at issue

unambiguously exclude family members from being first-class insureds when the

named insured is a legal entity. The Lanigans cross-appeal from the orders of the

Kenton Circuit Court granting William R. McCarty and his insurance agency, Tri-

City Insurance Service, Inc. (“Tri-City”), summary judgment on the Lanigans’

claims of breach of fiduciary duty, fraudulent omission, fraudulent

misrepresentation, breach of contract, bad faith, violation of the Kentucky

Consumer Protection Act and the Unfair Claims Settlement Practices Act, and

intentional infliction of emotional distress. Following a careful review of the

record and applicable case law, we reverse and remand for additional proceedings.

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 I. BACKGROUND

This action arises from an August 28, 2015, motor vehicle accident in

the parking lot of the Belterra Park Racino in Cincinnati, Ohio. Deborah’s

husband, Randy, dropped Deborah off in the parking lot before driving away to

park the couple’s car. After Deborah exited the car, she began making her way

toward the entrance but was struck by another vehicle before she made her way out

of the parking lot. The initial collision knocked Deborah to the ground after which

the vehicle ran over her left foot. As a result of the accident, Deborah suffered a

non-displaced bi-malleolar fracture to her left ankle, a severe foot sprain, a non-

displaced fracture to her left femur, and a torn meniscus, requiring surgery.

Approximately one month prior to Deborah’s accident, the Lanigans

had met with Tri-City, a full-service independent insurance agency owned by

William R. McCarty, to procure insurance. As a result of that meeting, the

Lanigans purchased a business insurance policy in the name of Lanigan Auto

Sales, LLC1 from Motorist Mutual effective from July 30, 2015, to July 30, 2016.

The business insurance policy, entitled “Business Insurance by

Motorist,” identifies “Lanigan Auto Sales LLC d/b/a Lanigan Auto Sales” as the

named insured. The policy includes underinsured motorist coverage/uninsured

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Lanigan Auto Sales is a limited liability corporation wholly owned by Randy. Although
Deborah is an employee of Lanigan Auto Sales and a listed driver on the business insurance
policy, she has no ownership of the business.

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motorist coverage of $1,000,000 per accident and contains a Kentucky

Underinsured Motorist Coverage Endorsement (“the UIM Endorsement”), which

includes the following statement: “[w]e will pay all sums the ‘insured’ is legally

entitled to recover as compensatory damages from the owner or driver of an

‘underinsured motor vehicle.’” (Record (“R.”) at 44.)

The UIM Endorsement additionally provides:

WHO IS AN INSURED

1. You.

2. If you are an individual, any “family member.”

3. Anyone else “occupying” a covered “auto” or a
temporary substitute for a covered “auto.”

4. Anyone for damages he or she is entitled to recover
because of “bodily injury” sustained by another
“insured.”

(R. at 227.) The Garage Coverage Form clarifies: “Throughout this policy, the

words ‘you’ and ‘your’ refer to the Named Insured.” (R. at 205.) The UIM

Endorsement further defines “occupying” as “in, upon, getting in, on or out of” a

covered auto. (R. at 227.)

Deborah sought UIM coverage from Motorist Mutual under the

policy’s UIM Endorsement, claiming that the vehicle that hit her on August 28,

2015, lacked adequate insurance to compensate her for her injuries. Motorist

Mutual denied Deborah’s claim on the basis that she was not an insured who was

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eligible for UIM coverage based on its interpretation of the word “You” in the

UIM section of Lanigan Auto Sales’ business insurance policy.

Thereafter, on June 1, 2017, the Lanigans filed suit against Motorist

Mutual, Tri-City, and McCarty in Kenton Circuit Court seeking a determination as

to whether UIM coverage existed for Deborah under the policy from Motorist

Mutual. The Lanigans brought eight additional claims against Motorist Mutual,

Tri-City, and McCarty premised on the alleged lack of UIM coverage for the

accident – breach of fiduciary duty, fraudulent omission, fraudulent

misrepresentation, breach of contract, bad faith, violation of the Kentucky

Consumer Protection Act (“KCPA”), violation of the Unfair Claims Settlement

Practices Act (“UCSPA”), and intentional infliction of emotional distress.

Motorist Mutual moved for declaratory judgment, which the circuit

court ultimately resolved in the Lanigans’ favor. On July 11, 2019, the circuit

court explained:

[S]ince the named insured in the policy is Lanigan Auto
Sales, LLC, d/b/a Lanigan Auto Sales, there is a dispute
as to who would be provided coverage as drivers under
the Motorist policy.

Motorist argues that Deborah Lanigan is not covered
under the policy since she is not “You” as set forth in the
contract. The [Lanigans] counter that Lanigan Auto
Sales, LLC cannot benefit under underinsured motorist’s
coverage since that corporation cannot sustain personal
injuries as a result of an underinsured motorist. The
[Lanigans] argue that denying coverage to Deborah

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 Lanigan renders the coverage for underinsured motorist’s
benefits illusory. This Court agrees that the
interpretation of “You” as an insured under the policy is
illusory if the “You” applies only to the corporation
entity, Lanigan Auto Sales, LLC.

Several cases in Kentucky have found policies to be
illusory because a legal entity, not an individual person,
was granted first class coverage and a legal entity cannot
be physically insured or occupy a covered automobile.
Hartford Acc. & Indem. Co. v. Huddleston, Ky. App.,
514 S.W.2d 676 (1974); Solheim Roofing, LLC v. Grange
Mut. Cas. Co., 2010 WL 323296; Lovell v. St. Paul Fire
& Marine Ins. Co., 2012 WL 4037361; Metzger v. Auto-
Owners Insurance Company, 2018 WL 480524. In this
case, the [Lanigans] purchased a policy containing
underinsured motorist coverage from Motorist Mutual
Insurance Company. The policy would be illusory unless
the “You” in the definition of insured was referring to
Randy Lanigan. In this case, Deborah Lanigan, as
spouse of Randy Lanigan, would be a family member
entitled to coverage.

(R. at 282-83.)

Once the circuit court determined coverage applied, McCarty and Tri-

City also moved for summary judgment. The Lanigans responded that this motion

was premature as there were numerous claims against McCarty and Tri-City that

had not yet undergone discovery. On October 8, 2019, the circuit court granted

summary judgment to McCarty and Tri-City, dismissing all of the Lanigans’

claims against them on the basis that Deborah was in fact covered, and issued a

final and appealable order as to all claims. This appeal followed.

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 II. STANDARD OF REVIEW

Summary judgment is appropriate where “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

Rules of Civil Procedure (“CR”) 56.03. The movant bears the initial burden of

demonstrating that there is no genuine issue of material fact in dispute.

The party opposing the motion then has the burden to present, “at

least some affirmative evidence showing that there is a genuine issue of material

fact for trial.” Steelvest, Inc. v. Scansteel Serv. Ctr, Inc., 807 S.W.2d 476, 482 (Ky.

1991); Watson v. Landmark Urology, P.S.C., 642 S.W.3d 660, 666 (Ky. 2022). “A

party responding to a properly supported summary judgment motion cannot merely

rest on the allegations in its pleadings.” Versailles Farm Home and Garden, LLC

v. Haynes, 647 S.W.3d 205, 209 (Ky. 2022) (citing Continental Cas. Co. v.

Belknap Hardware & Mfg. Co., 281 S.W.2d 914, 916 (Ky. 1955)). “[S]peculation

and supposition are insufficient to justify a submission of a case to the jury, and

that the question should be taken from the jury when the evidence is so

unsatisfactory as to require a resort to surmise and speculation.” O’Bryan v. Cave,

202 S.W.3d 585, 588 (Ky. 2006) (quoting Chesapeake & Ohio Ry. Co. v. Yates,

239 S.W.2d 953, 955 (Ky. 1951)).

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 “An appellate court’s role in reviewing a summary judgment is to

determine whether the trial court erred in finding no genuine issue of material fact

exist[ed] and the moving party was entitled to judgment as a matter of law.”

Feltner v. PJ Operations, LLC, 568 S.W.3d 1, 3 (Ky. App. 2018). The standard of

review for an appellate court is de novo because only legal issues are involved.

Isaacs v. Sentinel Insurance Company Limited, 607 S.W.3d 678, 681 (Ky. 2020).

III. ANALYSIS

A. Was Deborah an Insured Entitled to UIM Coverage?

As set forth above, the essential facts are undisputed. The Motorist

Mutual policy was issued to Lanigan Auto Sales, a limited liability company

owned by Randy, who is married to Deborah. The policy when issued provided

UIM coverage of $1,000,000. While Deborah is an employee of Lanigan Auto

Sales, she does not have an ownership interest in the company. At the time of the

accident, Deborah and Randy were on an outing to a local casino. Because the

tortfeasor’s policy limits did not cover the damages resulting from Deborah’s

injuries, the tortfeasor was an underinsured motorist pursuant to Kentucky Revised

Statute (“KRS”) 304.39-320.

The parties do not dispute that Deborah was not “occupying” a

covered vehicle or acting within the scope of her employment with Lanigan Auto

Sales at the time of the accident. Moreover, Deborah is not a member of Lanigan

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Auto Sales. Whether Deborah is entitled to UIM coverage depends on the

interpretation of “You” under the UIM provision of the policy issued to Lanigan

Auto Sales.

The Garage Coverage Form within the policy states: “[t]hroughout

this policy, the words ‘you’ and ‘your’ refer to the Named Insured shown in the

Declarations.” The circuit court reasoned that even though Randy was not listed in

the Declarations page as an individual insured, he had to be included within the

definition of “You” to prevent illusory coverage because a legal entity, not an

individual person, was granted first-class coverage and a legal entity cannot be

physically insured or occupy a covered automobile.

However, the policy at issue specifically included in its definition of

an insured as “anyone else ‘occupying’ a covered ‘auto.’” (Emphasis added.)

“Occupying” is defined in the policy as “in, upon, getting in, on, or out of a

vehicle.” Thus, if Deborah had been determined to have been “occupying” a

covered vehicle at the time of the accident then she would in fact have been

entitled to UIM coverage. As recently explained by our Supreme Court in a fairly

similar case, this prevents the coverage from being illusory:

The coverage herein is not illusory. Rather, it simply
does not apply to Isaacs under the facts of this case. Had
he been the named insured under the policy or had he
been an occupant of a covered auto at the time of the
accident, Sentinel’s UIM policy would have covered him.
However, those are simply not the facts of this case.

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Isaacs, 607 S.W.3d at 682.

The Isaacs court also explained that there was no occasion to rewrite

the policy, as the circuit court did in this case, to provide additional coverage than

that contained within the policy issued because the terms were clear and

unambiguous as to who was insured.

The Isaacses also argue they are entitled to UIM
benefits under the Sentinel commercial policy because
“UIM coverage is personal to the person who purchased
the coverage.” However, as previously discussed, Isaacs
was not the named insured. He did not purchase the
coverage, nor did his name appear on the policy’s
declarations page. The policy’s terms unambiguously
distinguished between policies written to individuals and
those written to corporations.

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 satisfied so long as the plain meanings of
the terms of the underlying policies are clear and
unambiguous.” Id. Here, no ambiguity existed. Isaacs &
Isaacs, P.S.C., is a type of corporation – and the policy
explicitly defines the class of covered persons when the
named insured is a corporation.

Id. at 682.

Based on Isaacs, we must conclude that the circuit court erred in

determining that the policy at issue provided UIM coverage to Deborah. The

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circuit court’s dismissal of the Lanigans’ remaining claims was predicated on its

determination that Deborah was entitled to UIM coverage under the Motorist

Mutual Policy. As noted by the Lanigans, no discovery on those claims had taken

place at the time of dismissal. In light of our decision to reverse the circuit court’s

finding of coverage, we must vacate its dismissal of the Lanigans’ remaining

claims and remand for further proceedings.

ALL CONCUR.

BRIEFS FOR APPELLANT / BRIEFS FOR APPELLEE/
CROSS-APPELLEE CROSS-APPELLANT
MOTORIST MUTUAL DEBORAH LANIGAN:
INSURANCE COMPANY:
Dennis Mahoney
Jennifer K. Nordstrom Amanda Patton
David W. Zahniser Cincinnati, Ohio
Fort Mitchell, Kentucky

BRIEF FOR APPELLEES/
CROSS-APPELLEES TRI-CITY
INSURANCE SERVICE, INC. AND
WILLIAM MCCARTY:

Ralph Burnham
Fort Mitchell, Kentucky

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