Guaranty National Insurance Co. v. George
953 S.W.2d 946
Ky.
1997
Check Treatment

*1 believing respects, In all give the instruction vacated. other refused to instruc- the Jefferson Court is affirmed. concept such was included Circuit separate tions and that instruction

unnecessary. given The instruction was ver- STEPHENS, COOPER, C.J., and 9.56. batim from RCr GRAVES, JOHNSTONE and WINTERSHEIMER, JJ., concur.

This issue has decided Car been Commonwealth, v. 656 S.W.2d wile STUMBO, J., dissents. “[u]nder states 9.56], [RCr the Rule of Criminal Procedure longer required to instruct

courts are

upon degree reasonable doubt language does

of the offense.” While this may instruct suggest that a court never degree as reasonable doubt to the

offense, viewed as such an instruction is now con

unnecessary, particularly when the same cepts with in other instructions. are dealt NATIONAL INSURANCE GUARANTY

Contrary may appear, to what our deci COMPANY, Appellant/Cross- Commonwealth, Ky., v. sions Grooms Appellee, (1988), v. S.W.2d 131 and Funk Common (1992), wealth, Ky., do not 842 S.W.2d 476 given on rea require that instruction be GEORGE, Pearl Karen offense, degree sonable doubt as Miller, Jackson, and Steven require

but do that when such an instruction Appellees/Cross-Appellants. given correctly. rec given that it be We ognize 96-SC-000501-DG, that our decisions Grooms 96-SC-000512-DG. Nos. point possibly on this ambiguous Funk are Kentucky. Supreme herein that v. Common and state Carwile (1983), wealth, repre Ky., 656 2,Oct. proper interpretation the 1978 sents the Accordingly, the of RCr 9.56. amendment 14, 1997. As Nov. Amended any such instruction should giving of further be avoided.

Finally, appellant’s error concern- claim of separate for PFO

ing the indictment fully in Price degree has been answered

first Commonwealth, Ky., repeating and we will refrain ap- recognize that here. We

that discussion attempted distinguish the

pellant has of RCr 5.02. case a claimed violation

Price argument, we

Despite ingenuity of his Price, nevertheless, the re- controls

believe separate Despite the indictment

sult. degree, no doubt in the first there is

PFO the status offense was based This is not a

pending charges. substantive serving

case in which one convicted a PFO. separately as

sentence is indicted reasons, appellant’s con- foregoing

For the Degree Fourth for Assault

viction *2 stated,

age. For the reasons to be we re- Appeals. verse the decision of the Court of essentially The facts of this case are dispute. May Georges (specifi- the Miller) cally Riley, Karen contacted J.C. Agency, pro- Bradshaw Insurance d/b/a coverage cure commercial insurance for 1988Volvo truck used in a mail service in the Surprisingly, Hazel-Paducah area. the George family owned two 1988Volvo trucks. by The second truck was owned Albert and son, George’s Billy George, oper- Pearl who Hodgensville ated mail service area. Billy George is not a to this action. Riley policy Guaranty secured Na- correctly tional which indicated that Georges’ truck was to be used to deliver mail area, in the Hazel-Paducah and the risk and rate evaluation was on determined that basis. However, due to an admitted mistake Riley, “wrong” truck was listed on the face of the insurance The details of why complex, this occurred are rather but Cole, Baker, John D. Matthew J. Dov truck, simply, the Volvo identified its vehi- Moore, Cole, Hughes, Stefan R. Moore & (VIN), cle identification number listed Baker, Green, Bowling Nation- policy by Billy was that owned George. al Company. Insurance truck, In August George’s which Saladino, Oakes, Charles A. David Vance was not listed on the but used on the Paducah, George, for Albert George, Pearl route, Hazel-Paducah in an involved ac- Karen Miller and Steven Jackson. cident with another vehicle Marshall Coun- Mehr, M. Austin Kentucky Academy of ty, tragically took the life of Harold Attorneys, Trial Lexington, Michael A. Creason. Breen, Green, Bowling Anderson, Eugene R. 28, 1992, MacDonald, January John A. On the Creason estate City, Amy New York Bach, wrongful filed a death Policyholders, Francisco, action United San CA, Georges. Guaranty by letter, for amicus curiae. Georges provide formed the it would counsel EASLEY, right for them but reserved the Special SID Justice. deny coverage should the facts indicate the Company did cover the vehicle National”) (“Guaranty appeals from a deci- Facing payment involved. of a substantial sion Appeals holding of the Court of coverage, claim without filed an Miller, George, Pearl Karen alleging part faith on the of Guar- (collectively and Steve Jackson “the Geor- anty National. National counter- ges”) pursue are entitled to claims for bad claimed, requesting a declaration of on dealing and violations of the Unfair coverage question. Act, Claims Settlement Practices KRS 304.12-230, against Guaranty National. The On October Circuit well, Georges, appeal as granted partial from the Court of summary judgment affirming the trial court’s favor of issue. denying order attorney’s them access to an It found that a mutual mistake existed and requested by Guaranty letter Nation- equita- that the insurance contract should be regarding bly opined insurance cover- The court reformed. fact, activity, an insurer to the attor- parties, in to insure the is entitled intended privilege the accident. extent ney-client Volvo truck to the same as appealed Id. litigants.” parties Both later, Only days specifically fewa granted discretionary and this Court review. 4,1992, Guaranty November death claim filed the Crea- *3 Guaranty Georges believe that Nation- of Crea- son estate and obtained a release to under a reservation of al’s decision defend against Guaranty Georges. son’s claim the outrageous to conduct in rights amounted however, National, appealed the trial court’s undisputed facts indicated a mere that the coverage. opinion, to ruling In a 1994 on policy. error on the face of the Like- clerical review, discretionary this Court denied wise, impres- this was not a case of “first Appeals of the trial court. the Court affirmed sion”, and the well-settled law of reformation resolved, Georges applied matter the as it to the facts of that of contracts was With pursued crystal Georges the instant faith action. The bad case was clear. The Guaranty granted dispute Circuit Court genuine that there conclude was facts, summary judgment motion for and anguish National’s or mental on the law and the claim, finding the bad faith dismissed they knowing they whether suffered questions agen- of and legal the reformation coverage in a lawsuit significant had filed Guaranty filing in the cy was, fact, raised National outrageous against them conduct rights “fairly of de- declaration action were part Guaranty of National. Empire Marine batable.” Fire & hand, Guaranty on the other ar- Wrecker, Simpsonville Ky.App., 880 S.W.2d gues that once the trial court determined it (1994). The further concluded court it coverage policy, the immedi- owed under that, jury a to “It should be left to Specifically, ately settled the claim. principles in- legal whether determine 28, January on wrongful death suit was filed ‘fairly volved are debatable’.” by Guaranty the claim and was appeal, Appeals reversed On Guaranty National November to that the were entitled and held ques- a argues also that there was National pursue faith The Court rea the bad action. agent acts of concerning tion whether initially that since the trial court had soned company. Guaranty Riley could bind the judg to held that the were entitled states, of ment as a matter law on complete providing of a and the fortiori, a the trial question, then “Given of under a of indemnification a claim summary language partial court’s own motive or is not of evil indicative to judgment, we are unable it a clear indi- reckless indifference ... as a ‘fairly claim was debatable’ faith, caution, prudence. good and cation of al. v. matter of law.” et filing a of basis If reservation Company, 95-CA-1577- faith, litiga- gates for then flood bad 8, 1996). Opinion (Slip MR March open an insurer even tion are wide when further held that The Court coverage question, let to raise the dares properly Georges dis- court denied the trial it. litigate alone covery letter Nation- of a issued to whether Guar- first to the issue of We turn by attorney Terrell Burke tantamount to anty was National’s conduct the Geor- National’s under Claims violation of Unfair bad the letter policy. The court concluded ges’ Act, KRS 304.12-230. Practices Settlement attor- privileged the traditional Jones, Ky., 864 S.W.2d 885 In Wittmer any privilege in ney-client the absence for a test ascer- this Court enunciated contemplation of a indicating evidence private cause of for taining whether Guaranty National. act on behalf of tortious a claim of bad justifying misconduct tortious develop exception in bad faith cases “To faith can exist. free flow impede insurers would three elements prove insured evaluation must “[A]n information honest prevail against an insurance fraud or criminal order claims. the absence of ambiguity suspected material company alleged for faith to there is an refusal (1) pay that would the insured’s claim: the insurer error on the face of obligated must the claim under it is bad coverage, be we do not believe exclude (2) policy; the terms of the the insurer either to ask a court to faith for in law or fact must lack a reasonable basis reform or decline to reform the claim; denying for it must be Wittmer, recognized We there shown that the insurer either knew threshold, is a and the find bad faith there denying was no basis for to establish that a must be sufficient evidence disregard claim or acted with such reckless Id. at 890. We are tort has occurred. whether such basis existed.... [A]n Guaranty National’s conduct challenge ... entitled to a claim insurer is meet that threshold and this case does not *4 litigate fairly it if the claim is debata- required to sustain an rise the level ble on the law the facts.” provided faith. a bad (quoting Kemper Id. at 890. Federal Ins. pro- for the and the claim Hornback, Ky, 711 Co. delay. Simultaneously ceeded without with (1986) (Leibson, J, dissenting), cited with lawsuit, Guaranty National chose to approval Curry in v. Fireman’s Fund Ins. independent maintain an action to determine Co., (1989)); Ky, 784 S.W.2d 176 see also liability. its Under this state Marine, Empire supra. Fire & facts, deprive an insur- we are not inclined to However, before the cause of action exists explore legal remedy. its er of its election place, in the first there must be evidence Marine, Empire Fire at 888. & punitive damages. sufficient to warrant questions The essence of the as to whether insurer, may argue by that the Some dispute merely is contractual or wheth- defending that it is un notifying its insured justifying er there are tortious elements an rights filing a de der a reservation of punitive depends damages award of first action, automatically claratory judgment proof on whether there is of bad faith and not absolved of bad faith. We do so hold. proof next whether the is sufficient for the Clearly, one can envision factual situations jury to conclude that there was ‘conduct legal pre where an insurer could abuse its outrageous, that is because of the defen- rogative requesting in a court to determine dant’s evil motive or his reckless indiffer- may coverage issues. Those well be ad (citations rights ence to the of others.’ through a motion under Civil Rule dressed omitted) or, circumstances, in certain an action for Wittmer, supra at 890. bad faith. Wittmer, dealing we were with a appealed have also from the ease where the insurer refused to be Appeals denying them ac- cause it could not with its insured as to letter authored attor- cess to Here, by the dollar amount of the loss. ney purportedly Burke Terrell contrast, paid, challenged the insurer but the Guaranty liability. Since this National’s coverage by filing legitimacy a declaration has have determined equita action. Once the trial court produced support a not evidence sufficient contract, bly Guaranty National reformed the against Guaranty bad faith action very period settled the claim within a short necessarily becomes moot and does this issue of time. require further discussion. The trial court in this ease was faced with of the Court of The decision reformation, policy required its that on face Calloway the order of the Cir- reversed and that it insured a truck that was not granting summary judgment cuit Court Further, volved in the accident. there were Guaranty National Insurance Com- favor of questions legal agency and whether pany is reinstated. agent’s negligence was a factor in the lack of coverage. Though retrospect issues these undebatable, All

may appear clear and when concur. COOPER, entry J., opinion vember two weeks after of the by separate concurs JOHNSTONE, J., less than ten joins declaratory judgment and in which as it relates filed, Guaranty Nation- months after suit was to CR 11. the tort claim of the deceased GRAVES, J., sitting. estate. driver’s Justice, COOPER, concurring. categories of “bad faith” claims Four companies have been rec- against insurance I reached ma- concur the result jurisdiction. ognized in this case, i.e., jority in this reversal deci- Appeals and reinstate- sion of the Court of “third-party faith” A common law judgment summary ment of the entered when a insurer’s failure claim occurs However, I Circuit Court. its to settle a tort claim insured allegations factual would do so because the the in results in a excess of action under this case do not state cause of Eskridge limits. v. Educator sured’s statutory theory. The any common law or Insurers, Inc., Ky., 677 and Executive operative facts are these: (1984); Manchester Insurance & S.W.2d 887 Grundy, Ky., Indemnity Company Co. Guaranty National denied, 429 U.S. cert. covering had issued a *5 (1976). 70, 50 L.Ed.2d 82 The settle S.Ct. Appellees truck owned 1988 Volvo by Guaranty of the tort claim ment George George, Pearl and Karen Miller. On prior ipso against Appellees to August a 1988 Volvo truck owned fac- any cause of action based on to eliminated operated Miller and Jackson, “third-party law bad faith.” common employee, Appellee their Steven in a two-car collision in which was involved (2) “first-party bad faith” A common law operator of the other vehicle was killed. pay to claim arises when an insurer refuses subse- The estate of the deceased driver its insured under a first- the claim of own wrongful against action quently filed a death Curry provision of its party coverage Appellees, the case to Guar- who referred Co., Ky., Fund Insurance 784 v. Fireman’s payment under anty National for defense and (1989). Appellees were not 176 Since S.W.2d liability coverage policy, if neces- first-party payment claim for making a sary. family owned two 1988 George The theory application policy, also has Unfortunately, the local inde- trucks. Volvo to this case. application pendent agent who submitted the (3) In v. Motorists Mutual Insur Stevens Appellees to National on behalf (1988), Co., we Ky., 759 S.W.2d 819 ance wrong vehicle identifica- entered the Volvo’s against an insur recognized a cause of action (VIN) application. tion number on the When act” as defined er for an “unlawful of the vehi- it realized VIN number 367.170. Protection Act. KRS Consumer involved in the accident was different cle However, question here was a policy, number from that liability policy and the Consumer commercial Appellees to notified of its intent only goods or ser applies to Protection Act rights and a reservation of defend under personal, fami purchased primarily for vices declaratory judgment as to whether sought a 367.220(1); ly purposes. KRS or household coverage for the policy provided its Volvo Inc., Farms, Ridge 712 Cohen v. North cf. respond- Appellees in the accident. (E.D.Ky.1989). F.Supp. 1265 faith” on the alleging with this action “bad ed (4) statutory Lastly, recognized a we have violation of part of National and an insurance com- against Act “bad faith” Claims Settlement Practices Unfair State pany for violation of the UCSPA. (UCSPA), Subsequently, 304.12-230. KRS Co. v. Automobile Insurance improper Farm Mutual judge ruled that the VIN the trial (1988). Reeder, 116 mistake 763 S.W.2d the result of a mutual number was speci- contains fourteen subsections to re- UCSPA and reformed the insurance contract claims settle- acts as unfair fying particular That correct number. flect the VIN to statute is intended Meanwhile, practices. The on No- ment appeal. was affirmed on prose appear actions to be damage by requiring though insur- most such benefit claimants against attorneys, see also Raine v. companies reasonably negotiat- act cuted ance to Drasin, (1981), Ky, 621 Hill v. ing settlements of their claims. The four (1978), Willmott, Ky.App., 561 S.W.2d 331 upon 304.12-230 relied subsections KRS Davis, Ky. and Rose v. by Appellees clearly apply damage to claim- main cause of action is also ants, liability insureds: the client. Section 674 tainable potential de the Restatement refers (4) con- Refusing to claims without action as “One who takes of such an fendant ducting investigation a reasonable based initiation, continuation part an active information; upon all available proceedings against procurement or another_” of civil (5) Failing deny coverage affirm or Con Williams Central Cf. proof claims within a time after Inc., Ky.App., 599 S.W.2d crete completed; of loss statements have been However, prevail an action attempting in faith to good Not effectu- proceedings, plaintiff would use of civil prompt, equitable ate fair and settlements probable prove have to both an absence of of claims has become Restatement, cause, § and that clear; reasonably proceedings were initiated or continued (7) Compelling litiga- to institute insureds purpose than that of primarily for a tion to recover amounts due under an proper adjudication of the claim securing the policy by offering substantially surance Id., 676; § they on which are based. cf. ultimately less than the amounts recovered Drasin, supra, Although Raine v. at brought by in actions such insureds. (a probable lack of cause Appellees claim added.) (Emphasis judge since the trial had dubious assertion the contract in order to rule then- reform Nothing provisions in these could be inter- favor), they make no claim that declara- preted seeking to inhibit an insurer from *6 any tory judgment action was commenced declaratory judgment to determine whether purpose adjudicate than to whether provided particular for a vehicle a defense and liabil- National owed an accident. ity coverage arising for the out of this claims majority I Nor do with the that this accident. might proper subject case be the of a CR appears Finally, although complaint provide motion. That rule does not substan- contract, allege a breach of the contract litigants, procedural tive but is a only required insurance in this case designed rule to curb abusive conduct in the provide Appellees with a defense National to litigation process. Equipment v. Clark Co. any judgment tort action and to (1988). Bowman, Ky.App., 762 S.W.2d provid- A was up to its limits. damages permitted by The rule are in claim was settled before ed and the tort expenses including nature reasonable precludes judgment. Nothing the contract attorney reasonable fees. or Good seeking judicial construc- either Rent-A-Space is not the issue. Louisville v. tion of its terms. (1988). Akai, Ky.App., 746 reasons, unnecessary I pleading For these deem it offending issue is whether the Appellees’ “bad to address the merits motion the circum- simply Bowman, faith” claim and would reverse Equipment stances. Clark Co. Appellees’ because claims supra, at 420. against Guaranty National do not state filing declaratory judg Neither the of the cause of action. taking appeal nor the ment action could be characterized as a use of JOHNSTONE, J, concurs so much of proceedings. Compare Prewitt v. civil Sex as it relates to CR ton, (1989); Mapother 777 S.W.2d 891 & Mapother, Douglas, Ky., P.S.C. denied, cert. 488 U.S. 142, 102 L.Ed.2d 114 Restate

S.Ct. (Second) Torts, §§ Al-

ment 674-681B.