KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY, Appellant v. Belinda K. RYAN, Kevin J. Kruer, and Mary Jo Lesak, Co-Executors of the Estates of Lawrence J. Kruer and Mildred L. Kruer, Appellees.
No. 2003-SC-0944-DG.
Supreme Court of Kentucky.
Nov. 23, 2005.
Clearly, relaxation of the rules regarding statutes of limitations and the appropriate time for the submission of filings directly lead to additional delays in the judicial system. They afford no benefit to the orderly process of justice in our system. To favor a pro se prisoner over a prisoner who is represented by counsel would be obviously unfair. The dilution of reasonable rules by judicial decision is unacceptable.
Justice Antonin Scalia, joined by Chief Justice Renquist and Justices Kennedy and O‘Connor, in dissent of Houston, sums up the arguments as follows:
Today‘s decision obliterates the line between textual construction and textual enactment. It would be within the realm of normal judicial creativity (though in my view wrong) to interpret the phrase “filed with the clerk” to mean “mailed to the clerk,” or even “mailed to the clerk or given to a person bearing an obligation to mail to the clerk.” But interpreting it to mean “delivered to the clerk or, if you are a prisoner, delivered to your warden” is no more acceptable than any of an infinite number of variants .... Like these other examples, the Court‘s rule makes a good deal of sense. I dissent only because it is not the rule we have promulgated ....
Recognizing the differences that exist between the state and federal statutes and rules, I must agree.
It is of interest to note that a rule change which would mirror the arguments of Robertson in this case was unanimously rejected by this Court in 2004. Here, Robertson was not diligent and thus should not be allowed to use the appellate process to circumvent clearly established rules. The decision could easily result in a flood of overdue and tardy motions.
Jeffrey L. Freeman, Tyler S. Thompson, Martin H. Kinney, Jr., Dolt, Thompson, Shepherd & Kinney, PSC, Louisville, Counsel for Appellees.
Robert L. Steinmetz, W. Douglas Kemper, Frost Brown Todd, LLC, Louisville, Counsel for Amicus Curiae, Kentucky Defense Counsel.
A. Campbell Ewen, William P. Carrell II, Ewen, Kinney & Rosing, Louisville, Counsel for Amicus Curiae, Property Casualty Insurers Association of America.
Opinion of the Court by Justice JOHNSTONE.
This case stems from an automobile accident that occurred on May 21, 1998, on Interstate 64 near Shelbyville, Kentucky. Charles Ashby, traveling in the westbound lane, was attempting to pass a truck when a motorcyclist veered in front of him. Ashby lost control of his vehicle and crossed the median, colliding with an eastbound vehicle driven by Lawrence Kruer. Kruer and his wife, Mildred, were killed instantly. The motorcyclist continued westbound on I-64 and was never identified.
Appellees, the estates of Lawrence and Mildred Kruer, settled with Ashby‘s insurer for liability policy limits and thereafter instituted the instant action against Appellant, Kentucky Farm Bureau Mutual Insurance Company (hereinafter “KFB“) for underinsured motorist (UIM) coverage provided under the Kruers’ policy. In its answer, KFB maintained that the accident was caused in whole, or in part, by the actions of the motorcyclist, and that KFB was entitled to apportion fault to the unknown individual. Subsequently, the trial court permitted KFB to file a third party complaint against this “unknown motorcyclist,” who was constructively served via warning order attorney. In response to KFB‘s third party complaint, Appellees amended their complaint to claim uninsured motorist (UM) coverage from KFB based on the alleged actions of the motorcyclist. KFB, in turn, argued that the motorcyclist was not an uninsured motor vehicle because the “hit and run” policy provision required physical contact between the motorcycle and the Kruers’ vehicle, which was never alleged.
The matter proceeded to a jury trial on November 26, 2001. At the close of the evidence, the trial court dismissed the UM claim against KFB, finding that there was no evidence of any physical contact between the Kruers’ vehicle and the motorcyclist. Further, over Appellees’ objection, the jury was instructed to apportion fault between Ashby and the motorcyclist. The jury returned a unanimous verdict apportioning fifty percent of the fault to Ashby and fifty percent to the motorcyclist, and awarding gross damages of $350,668 to Lawrence Kruer and $107,322 to Mildred Kruer. After reducing for apportionment and the amounts paid by Ashby‘s liability carrier, the trial court entered a judgment of $78,334 to Lawrence Kruers’ estate. Because the award to Mildred‘s estate was less than the payment by Ashby‘s carrier, the trial court entered a judgment dismissing Mildred‘s UIM claim against KFB.
Appellees appealed the issue of apportionment, as well as the validity of KFB‘s “physical contact” requirement for UM
The Court of Appeals essentially decided two issues in this case. First, it concluded that although KFB‘s liability for UIM coverage is contractual in nature, the measure of that contractual liability sounds in tort law, thus implicating Kentucky‘s apportionment statute,
We do not agree with the Court of Appeals’ restrictive interpretation of the procedural nature of
(1) In all tort actions, including products liability actions, involving fault of more than one party to the action, including third-party defendants and persons who have been released under subsection (4) of this section ....
(Emphasis added). By its plain language,
Despite the unambiguous language of
“[A] ‘suit to recover UIM coverage is a direct action’ against the UIM carrier and ‘the [UIM] carrier alone is the real party in interest ....” Philadelphia Indemnity Insurance Co. v. Morris, 990 S.W.2d 621, 625 (Ky. 1999) (quoting Coots v. Allstate Insurance Co., 853 S.W.2d 895, 903 (Ky. 1993)). While a UIM insurer‘s liability to its insured is fault-based to the extent the claimant has any comparative fault, there is no requirement that any other tortfeasor be named and/or served as a party in the action. In fact, Kentucky courts have refused to enforce insurance policy provisions requiring an insured to obtain a judgment or even sue the uninsured/underinsured motorist in order to determine liability under the contract. Puckett v. Liberty Mutual Insurance Co., 477 S.W.2d 811 (Ky. 1971). As this Court has stated with regard to UM coverage, it is first party contractual insurance that “must be honored even if the tort-feasor cannot be identified.” Gordon v. Kentucky Farm Bureau Insurance Co., 914 S.W.2d 331, 332 (Ky. 1995). This distinction is further illustrated by the fact that the fifteen-year statute of limitations governs the bringing of these contractual actions rather than the tort statute of limitations set out in the Motor Vehicle Reparations Act,
Appellees’ action against KFB was based in contract, seeking UIM coverage for damages that exceeded the payments by Ashby‘s liability carrier. This is not a tort case against Ashby because Appellees have previously released him in exchange for his insurer‘s payment of policy limits. To the extent that Appellees could prove damages caused by Ashby which exceeded the policy limits paid by his insurer, they would be entitled to recover such additional damages under the UIM contract with KFB. But any payment by KFB would necessarily be made in performance of its contractual obligation to the Kruers, and neither would nor could be characterized as payment of legal damages pursuant to tort liability. Morris, supra. See also State Farm Mutual Insurance Co. v. Fireman‘s Fund American Insurance Co., 550 S.W.2d 554, 557 (Ky. 1977). (“[P]ayment made in performance of a contractual obligation is not a payment of ‘damages.’ “)
In United States Fidelity and Guaranty Co. v. Preston, 26 S.W.3d 145 (Ky. 2000), a Kentucky resident was killed in an automobile accident in Georgia involving an uninsured motorist. The estate brought suit against the uninsured motorist and a Georgia jury found the Kentucky decedent to be sixty percent at fault. Under Georgia‘s modified comparative fault scheme, the estate was barred from recovery and the trial court entered a defense verdict. Nonetheless, the estate was subsequently permitted to bring an action in Kentucky against the decedent‘s insurer for UM coverage and to prove damages, ultimately recovering the forty percent of those damages attributable to the Georgia tortfeasor under the UM portion of the decedent‘s insurance contract. A majority of this Court distinguished the Georgia tort action from the Kentucky contract action, holding that the Georgia judgment in favor of the uninsured motorist would not be offended by the estate‘s recovery of benefits under
As a condition precedent to establishing any contractual liability on behalf of KFB, Appellees had the burden of proving damages caused by Ashby that exceeded payments they had already received from Ashby‘s liability carrier. Within that context, we agree with the Court of Appeals that the UIM claim sounded in tort. Notwithstanding, KFB‘s liability was purely contractual. And because the action was based in contract, it simply did not fall within the purview of
In focusing on
Comparative negligence is not “no-fault,” but the direct opposite. It calls for liability for any particular injury in direct proportion to fault. It eliminates a windfall for either claimant or defendant as presently exists in our all-or-nothing situation where sometimes claims are barred by contributory negligence and sometimes claims are paid in full regardless of contributory negligence ....
Id. (Citations omitted).
Shortly after Hilen, we addressed the issue of comparative fault among multiple tortfeasors in Prudential Life Insurance Co. v. Moody, 696 S.W.2d 503 (Ky. 1985), wherein Justice Vance noted in his concurring opinion:
[W]e held [in Hilen] that a plaintiff who is only partially at fault cannot fairly be required to bear the entire loss. It would seem to follow, therefore, that a defendant who is only partially at fault in causing an injury should not be required to bear the entire loss but should, likewise, be chargeable only to the extent of his fault.
Id. at 505. See also Dix & Associates Pipeline Contractors, Inc. v. Key, 799 S.W.2d 24, 27 (Ky. 1990). (“Whereas it is fundamentally unfair for a plaintiff who is only 5 percent at fault to be absolutely barred from recovery from a defendant who is 95 percent at fault, it is equally and fundamentally unfair to require one joint tort-feasor who is only 5 percent at fault to bear the entire loss when another tort-feasor has caused 95 percent of the loss.“)
In 1988, Kentucky codified certain procedural aspects of our comparative fault system with the passage of
At oral argument, Appellees’ counsel argued that had the jury placed one hundred percent of the fault with the unknown motorcyclist, then KFB would not have been obligated to pay any UIM coverage. However, since the jury found that Ashby was fifty percent at fault, then one hundred percent of the fault should be allocated to him, and KFB should be required to pay all damages in excess of that paid by Ashby‘s liability carrier. In response to a question from the bench, counsel stated that such a result should occur even if the jury had found Ashby only five percent at fault and the motorcyclist ninety-five percent at fault. Essentially, Appellees’ position is that if the known tortfeasor is found at all at fault, then the entire burden must be allocated to him. We find such a result illogical, unfair, and contrary to the purpose of comparative fault principles.
KFB‘s contractual liability to Appellees is defined and determined by the extent to which Ashby was found to be an underinsured motorist. Part of the equation in fixing that liability involves establishing Appellees’ damages, which necessarily requires a determination of Ashby‘s percentage of liability or fault. In other words, Appellees are only entitled to recover such damages from KFB that they would have been entitled to recover from Ashby but for the fact he had insufficient liability coverage. Thus, fundamental fairness requires that KFB be permitted to introduce evidence pertaining to the alleged fault of a third-party tortfeasor.2 By reversing the trial court‘s decision to permit apportionment against the unknown motorcyclist, the Court of Appeals essentially resurrected the concept of joint and several liability.
Kentucky CR 4.15 permits an action against an unknown defendant. Furthermore, upon compliance with the service of process procedures set forth in CR 4.05, 4.06, 4.07, the action may proceed accordingly. See Schwindel v. Meade County, 113 S.W.3d 159 (Ky. 2003). KFB complied with the procedural requirements to bring the unknown motorcyclist into the lawsuit as a third-party defendant. While not currently known, the motorcyclist can nonetheless be apportioned fault for the purposes of determining Ashby‘s percentage of fault and KFB‘s resulting contractual liability.
Finally, we find the Court of Appeals’ “empty chair” concerns to be without merit. In this case, there was more than sufficient evidence presented from several witnesses as to the motorcyclist‘s culpability in causing the accident. Despite Appellees’ protestations to the contrary, this is not a situation where an insurance company has created a “phantom” party for the purpose of shifting liability. Nor does apportionment of fault to a tortfeasor who is not an “active” party to the action impose any liability upon him or warrant a judgment against him; it merely determines the percentage of total damages for which
The thrust of the comparative negligence doctrine is to accomplish (1) the apportionment of fault between or among negligent parties whose negligence proximately causes any part of a loss or injury, and (2) the apportionment of the total damages resulting from such loss or injury in proportion to the fault of each party. To reach those purposes of the doctrine, we have great faith in the ability of our juries to determine whether an unknown tortfeasor was a legitimate cause of an injury or merely a fraudulent apparition to shift fault. Furthermore, apportionment of fault may not even be considered by the jury unless and until the trial court makes a threshold assessment that reasonable jurors could, in fact, determine that an individual was a fault. Owens Corning Fiberglas Corp. v. Parrish, 58 S.W.3d 467, 471 (Ky. 2001).
Here, KFB properly joined the motorcyclist as a party to the action and presented sufficient evidence to justify an apportionment instruction. We conclude that the trial court properly instructed the jury to consider the liability of the motorcyclist in apportioning fault, and the jury concluded that he was fifty percent responsible for the accident.3 As such, KFB‘s liability to Appellees under the UIM contract was limited to fifty percent of the excess damages over and above Ashby‘s policy limits.
For the foregoing reasons, the decision of the Court of Appeals is reversed and the judgment of the Shelby Circuit Court is reinstated.
COOPER, GRAVES, ROACH, and WINTERSHEIMER, JJ., concur.
SCOTT, J., dissents by separate opinion, with LAMBERT, C.J., joining that dissent.
Dissenting Opinion by Justice SCOTT.
Respectfully, I dissent.
The majority opinion concedes that apportionment would not be appropriate against a third-party immune from liability as a matter of law, citing Lexington-Fayette Urban County Government v. Smolcic, 142 S.W.3d 128 (Ky. 2004). Yet, they would allow apportionment to an unknown tortfeasor who is neither before the court, nor subject to personal liability, such as the unknown motorcyclist in this case.
In Smolcic and Jefferson County Commonwealth Attorney‘s Office v. Kaplan, 65 S.W.3d 916 (Ky. 2001), this Court held that fault could not be apportioned to persons or entities that enjoyed absolute or sovereign immunity because they failed to qualify as substantive “parties to the action” and therefore were not within the scope of
Of course, the majority doesn‘t even think
I believe
In this case, the Kruers’ estate sued KFB for UIM coverage provided under their policy. KFB then filed a third party complaint against the unknown motorcyclist, who was constructively served via warning order attorney. The Kruers countered with a claim against KFB on its UM coverage, but were denied their claim on grounds there was no contact by the motorcyclist with the Kruers’ vehicle. See Burton v. Farm Bureau Ins. Co., 116 S.W.3d 475, 478 (Ky. 2003)(“the purpose of the physical contact rule is to protect [] the insurer from fraudulent claims“). Yet, here, the majority refuses to apply its own Burton “no contact” logic in the apportionment of fault to an “unknown defendant“, who was only constructively served by a warning order attorney, and thus, was unavailable as a real party in the case.
Civil Rule 4.05 allows “individuals whose name or place of residence is unknown” to be constructively served via warning order. However, CR 4.05 should be read in conjunction with
Proceedings are divided into three classes, viz.: (1) in personam, (2) in rem, and (3) quasi in rem.
A judgment in a proceeding in rem is an adjudication upon the status of some particular thing by a tribunal having jurisdiction of the subject matter; it differs from a judgment in a proceeding in personam, in that the latter is an adjudication of the rights of the parties to the action, and does not directly affect the status of a thing or res. A personal judgment is a pronouncement binding only on the parties to the action and their privies; a judgment in rem, by a court of competent jurisdiction, is a pronouncement upon the status of the subject matter, and is binding upon the world. Judgments in rem and quasi in rem may be pronounced in an action in which the defendant has been notified by constructive process; whereas, a personal judgment may be pronounced only
As the Kruers’ action against KFB for UIM benefits is an in personam action, the unknown motorist cannot be constructively served and become a “party to the action.”
In effect, the majority opinion lowers the standard of service necessary for apportionment. Instead of requiring personal jurisdiction, the majority would now allow apportionment to any unknown, nominal party, constructively served. They argue “fundamental fairness” requires that KFB be permitted to introduce evidence pertaining to the alleged fault of a third-party tortfeasor (who never touched anybody), even though the deceased plaintiffs are not to be accorded the same “fundamental fairness” on their UM coverage from KFB per Burton.
Even so, we are not dealing with a true “third-party” in this case. A constructively served “unknown” defendant is not considered to be before the court in an in personam action such as this. c.f., Nolph v. Scott, 725 S.W.2d 860, 861-862 (Ky. 1987) (“Appointment of a warning order attorney is a procedural device permitting an action to proceed in certain circumstances, unknown to the defendant.“). Even Justice Liebson in his dissent in Nolph acknowledged: “This lawsuit is an action in personam and not in rem, and constructive service does not, per se, make Mr. Nolph a party defendant.” Nolph at 862 (emphasis added). Therefore, the unknown motorcyclist is not a “third-party” or any “party to the action.” Fundamental fairness requires that apportionment not be allowed to such a non-party on the basis of constructive service of process alone.
He does not defend himself—and in many cases in the future, he will only be a “ghost“—created by the intellect of the otherwise liable party—defending himself against subrogation from the UIM carrier, both having the same interest—reducing the damages awarded. In this case the parties were killed, and thus, they cannot dispute the tortfeasor‘s proof as to who did what. Yet, for some unfathomable reason—we now have a “no personal jurisdiction” apportionment and a “no contact” rule for KFB—but not for their policyholders who paid their premiums on the earnest expectation they were buying coverage.
For the above stated reasons, I believe the unknown motorcyclist cannot be deemed a “party to the action” for purposes of apportionment. And because fault should not be apportioned against the “unknown motorcyclist“, the issue of dismissal of the UM claim need not be addressed, other than to add, this Court has repeatedly upheld policy provisions requiring direct, physical contact with an uninsured vehicle as a prerequisite to UM coverage. That being said, the policyholders ought to have the benefit of the same rule. That would meet the need for consistency and avoid this absurd result.
LAMBERT, C.J., joins this dissent.