Malone v. Kentucky Farm Bureau Mutual Insurance Co.

CUNNINGHAM, Justice,

dissenting:

Because I believe that Malone’s letter satisfied the requirements of Coots v. Allstate Ins. Co., 853 S.W.2d 895 (Ky.1993), I dissent.

KRS 304.39-320(3) requires that the injured party must give notice to the UIM carrier that a settlement has been proposed. If the UIM carrier fails to respond within thirty days, the injured party may “proceed to execute a full release.” In other words, the injured party may then finalize the settlement offer. We have emphasized that the “underinsurer is entitled to notice of the tentative settlement and an opportunity to protect those potential rights by paying underinsurance benefits before release.” 853 S.W.2d at 902, quoting Schmidt v. Clothier, 338 N.W.2d 256, 263 (Minn.1983) (emphasis added).

When reading KRS 304.39-320 and Coots together, it is clear that the injured party is required to give the UIM carrier notice of an intention to accept the tortfea-sor’s proposed settlement. The substance of the notice requirement is to relay to the UIM carrier that a settlement has been proposed and an intention to accept the settlement.

This Court has never identified a “magic phrase” that must be uttered in order to satisfy the requirements of Coots. However, we seem to have done so today. By focusing solely on Malone’s statement, “We are considering whether to accept this offer,” the majority has ignored the plain meaning of the overall correspondence. Any ambiguity created by this single sentence is fully and completely resolved when the letter is read in its entii*ety.

The letter is clear that an offer of settlement was made in the amount of $25,000. The letter specifically stated that it was being sent in satisfaction of the requirements of KRS 304.39-320 and Coots. It informed Farm Bureau that it “must” respond “within thirty days.” It further directed Farm Bureau to either consent to settle or forward a check “if you wish to preserve your subrogation position.” Finally, the letter contained a separate “form waiver” for Farm Bureau to execute. The letter directed Farm Bureau to sign and return the waiver if it intended to waive its subrogation rights. Again, Malone directed Farm Bureau to return this form waiver within thirty days.

Farm Bureau asserts that its return letter to Malone illustrates its understanding that formal notice had not been received for the purposes of Coots and KRS. 304.39-320; however, this argument rests on the erroneous assumption that the sufficiency of notice depends on the recipient’s understanding of the notice. “The essence of notice, when it is sufficient in form and content, is its objective effect on the person to whom it is given, not the subjective intent of the person who gives it.” 58 Am.Jur.2d Notice § 2 (2008) (emphasis added). Our consideration should be limited to an objective analysis of Malone’s notice letter, not the subjective interpretation by Farm Bureau. “Notice is but a medium of information, which if conveyed is sufficient notice. Notice ‘is not a question of diligence but of knowledge of essential facts.’ ” Jackson v. Int. Union of Operating Engineers, 307 Ky. 485, 489, 211 S.W.2d 138, 141 (1948) (internal citation omitted).

The majority has placed too much focus on Malone’s phrase, We are considering whether to accept this offer,’ while ignoring the overall context within which that statement was made. Malone’s July 29th letter to Farm Bureau is unambiguous in its direction to Farm Bureau regarding its *661subrogation rights, and satisfies the requirements of KRS 304.39-320 and Coots by relating the required information. When read in its entirety, the letter clearly conveyed that a settlement had been offered to Malone and that Farm Bureau should act within thirty days if it wished to preserve its subrogation rights.

SCHRODER and SCOTT, JJ, join.