AUTOMOBILE INSURANCE FOLLOWS CAR….
RENDERED: JANUARY 11, 2013; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
INSURANCE COMPANY APPELLANT
APPEAL FROM MADISON CIRCUIT COURT
v. HONORABLE WILLIAM G. CLOUSE, JR., JUDGE
ACTION NO. 10-CI-01834
BILLIE JO MASTERS; LORI HAYS AS
ADMINISTRATRIX OF THE ESTATE OF
GREGORY HAYS; LORI HAYS AS
GUARDIAN OF KAYLEE AND BAYLEE
HAYS; LORI HAYS; DEBORAH GRIFFITH AS
PERSONAL REPRESENTATIVE OF THE ESTATE
OF ERIC SHANE COX; DEBORAH GRIFFITH;
ROGER MILLION, JR.; ELBY COX; ELBY COX, JR.
AS ADMINISTRATOR OF THE ESTATE OF WILMA
COX; AND ROGER MILLION, JR. APPELLEES
REVERSING AND REMANDING
** ** ** ** **
BEFORE: CLAYTON, LAMBERT AND STUMBO, JUDGES.
STUMBO, JUDGE: Universal Underwriters Insurance Company appeals from an
order of the Madison Circuit Court granting summary judgment in favor of the
Appellees and awarding them $1,300,000. Universal argues that the Appellees are
only entitled to $300,000. We agree with Universal and reverse and remand.
Primarily, this is an auto accident case, but on appeal, the only issue is
how much insurance coverage the Appellees are entitled to receive. The following
facts are not in dispute. On June 3, 2010, a vehicle operated by Wilma Cox was
involved in an auto accident with a vehicle operated by Roger Million, Jr. The
accident resulted in multiple injuries and multiple deaths. Cox was the cause of the
accident. Prior to the accident, Cox had bought the vehicle she was driving from
Delmus Gross, d/b/a Bunt Gross Auto Sales. The paperwork from this sale had not
been completed, nor had the title to the vehicle been transferred; therefore, Gross
and his auto sales company were the owners of the vehicle Cox was driving.1
Gross is insured by Universal. Gross has two types of insurance at
issue here, Auto Hazard Coverage and Commercial Umbrella Coverage. The
parties agree that Universal owes Cox’s estate the policy limit of the Auto Hazard
Coverage in the amount of $300,000. The issue on appeal is whether Universal
owes Cox’s estate $1,000,000 in Commercial Umbrella Coverage. Universal
argues that Cox was not an insured under the Umbrella Coverage, only Mr. Gross,
Emily Gross, and Bunt Gross Auto Sales are. The Appellees argue that Cox
“stands in the shoes” of Gross and his company and is therefore entitled to
1 Mr. Gross and his dealership were not named as defendants in this case.
coverage. The circuit court found that Cox did stand in the shoes of Gross and was
entitled to coverage based on the cases of Kentucky Farm Bureau Mut. Ins. Co. v.
Shelter Mut. Ins. Co., 326 S.W.3d 803 (Ky. 2010), Gainsco Companies v. Gentry,
191 S.W.3d 633 (Ky. 2006), and McGrew v. Stone, 998, S.W.2d 5 (Ky. 1999). It
also relied on Kentucky Revised Statute (KRS) 186A.220(5). This appeal
Gross’ Commercial Umbrella Coverage is limited in who it covers.
Generally, it only covers Mr. Gross, Emily Gross, and Bunt Gross Auto Sales.
However, according to the terms of the policy, the only person it covers with
respect to claims involving automobiles is Mr. Gross. Relying on the cases and
statute cited previously, the trial court found that Gross was vicariously liable for
Cox; therefore, Cox “stepped into the shoes of Delmus Gross.” In short, Cox
became Mr. Gross for the purposes of his Commercial Umbrella Coverage. We
find this reasoning was in error.
“Interpretation and construction of an insurance contract is a matter of
law for the court.” Kemper Nat. Ins. Companies v. Heaven Hill Distilleries, Inc.,
82 S.W.3d 869, 871 (Ky. 2002). This Court reviews issues of law de novo.
Camenisch v. City of Stanford, 140 S.W.3d 1, 3 (Ky. App. 2003). “Where the
terms of an insurance policy are clear and unambiguous, the policy will be
enforced as written.” Kemper, supra. The issue in this case is who did the
insurance policies cover? We find that the cases and statute relied upon by the trial
court are distinguishable in this instance and the terms of the Commercial
Umbrella Coverage should have been enforced as written.
KRS 186A.220(5) lists the requirements a car dealer must comply
with in order to transfer title and ownership to a buyer. Gainsco stands for the
position that when a dealer fails to strictly comply with the requirements of KRS
186A.220(5), the dealer remains the owner of the vehicle. Gainsco also holds that
because the dealer is still the owner of the automobile, its automobile liability
coverage is the primary insurance should the vehicle become involved in an auto
accident. Kentucky Farm Bureau holds that in the case of an auto accident, the
vehicle’s insurer is the primary insurer and the permissive driver’s insurance is the
excess insurer. Finally, McGrew stands for the position that the owner of an
uninsured automobile is liable for damages when the car is driven by a permissive
user and is involved in an auto accident. In essence, the owner of the vehicle
becomes a de facto self-insurer of the vehicle.
These cases are all distinguishable from the case at hand. They all
hold that the auto insurance flows with the automobile. If the vehicle is insured,
then the owner’s insurance is the primary insurance. If the vehicle is uninsured,
then the owner pays for damages him or herself. They do not hold that the
permissive driver of the vehicle legally becomes the same person as the owner of
the vehicle. In the case sub judice, the car being driven by Cox was insured by
Universal. Gross’ Auto Hazard Coverage specifically insured permissive drivers,
which Cox was. In addition, permissive drivers are insured by law. See Mitchell
v. Allstate Ins. Co., 244 S.W.3d 59 (Ky. 2008).
On the other hand is the Commercial Umbrella Coverage. This type
of insurance is voluntary and is to provide extra coverage to Mr. Gross and his
business. When it comes to automobiles, the only person the Commercial
Umbrella Coverage insures is Mr. Gross. It does not cover permissive drivers.
Here, the Commercial Umbrella Coverage insurance policy clearly
states that Mr. Gross is the only person covered for damages relating to an
automobile. The Auto Hazard Coverage specifically covers permissive drivers.
These provide two separate and distinct types of coverage. The case law cited
previously and utilized by the Appellees and the trial court does not rewrite the
terms of the policy. Nor does the case law stand for the proposition that Cox
becomes Mr. Gross for the purposes of Universal’s insurance policy. Each
insurance policy only covers whom it says it covers. The Commercial Umbrella
Coverage insurance policy should have been enforced as written.
Universal makes other arguments on appeal. These arguments are
moot because we find that the trial court erred in holding that Cox was insured
under Gross’ Commercial Umbrella Coverage.
Based on the foregoing, we reverse the judgment of the trial court and
hold that Universal is entitled to summary judgment in its favor regarding the
Commercial Umbrella Coverage issue.
BRIEFS FOR APPELLANT:
Robert E. Stopher
Robert D. Bobrow
BRIEF FOR APPELLEE DEBORAH
GRIFFITH, INDIVIDUALLY AND
AS PERSONAL REPRESENTATIVE
OF THE ESTATE OF ERIC SHANE
Bowling Green, Kentucky
BRIEF FOR APPELLEE ROGER
Michael F. Eubanks
BRIEF FOR APPELLEE BILLIE JO
Rodney G. Davis
BRIEF FOR APPELLEE LORI
HAYS, INDIVIDUALLY AND AS
ADMINISTRATRIX OF THE
ESTATE OF GREGORY HAYS
AND AS GUARDIAN FOR
KAYLEE HAYS AND BAYLEE
James T. Gilbert