Opinion
2023-CA-0973-MR
09-06-2024
JESUS BAPTIST U.S.A. CONFERENCE, INC. APPELLANT v. KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY APPELLEE
BRIEFS FOR APPELLANT Mark T. Hayden Cincinnati, Ohio BRIEF FOR APPELLEE Farrah W. Ingram Mt. Sterling, Kentucky
NOT TO BE PUBLISHED
APPEAL FROM FLEMING CIRCUIT COURT HONORABLE JEFFERY L. SCHUMACHER, JUDGE ACTION NO. 22-CI-00167
BRIEFS FOR APPELLANT Mark T. Hayden Cincinnati, Ohio
BRIEF FOR APPELLEE Farrah W. Ingram Mt. Sterling, Kentucky
BEFORE: CALDWELL, CETRULO, AND ECKERLE, JUDGES.
OPINION
CALDWELL, JUDGE
On its own motion, the Fleming Circuit Court issued a summary judgment in favor of Kentucky Farm Bureau Mutual Insurance Company ("Farm Bureau"). In accordance with Kentucky precedent which has consistently condemned sua sponte final judgments, we vacate and remand.
Jesus Baptist U.S.A. Conference, Inc. ("Jesus Baptist") uses land in Fleming County for religious retreats. Four attendees returning home from one retreat were involved in a one-vehicle crash in Illinois when the driver fell asleep. Tragically, one passenger was killed and the other two were seriously injured. The two survivors and the estate of the deceased passenger each sued the driver and Jesus Baptist in Illinois. The gist of the allegations against Jesus Baptist was that it conducted the retreat so as to cause, or allow, the driver to be sleep deprived.
Jesus Baptist asked Farm Bureau to provide a defense to the Illinois actions pursuant to a policy it bought from Farm Bureau. That policy covers the retreat, but it is denominated as a farm policy. Farm Bureau believed the farm policy did not provide coverage for the vehicular accident in Illinois; Jesus Baptist disagreed. Eventually, Farm Bureau filed this declaratory judgment action in the Fleming Circuit Court to resolve the coverage dispute.
Jesus Baptist subpoenaed for deposition the insurance agent who sold it the farm policy. Farm Bureau filed a motion to quash that subpoena because, in its view, the language of the policy speaks for itself so the agent could not provide relevant testimony. Around the same time, Jesus Baptist filed a motion for leave to amend its answer to allege the insurance agent had failed to provide proper and requested coverage.
The court held a brief hearing on those two non-dispositive motions on a routine motion day in June 2023. At the hearing, the trial court stated that the only question in the case was whether there was insurance coverage and then asked: "if there's not coverage, why are we still here?" Jesus Baptist's counsel argued in response that the insurance agent should not have sold it a farm policy and Farm Bureau could be bound by that allegedly improper act of the insurance agent. Farm Bureau's counsel responded that being sold the wrong policy is a potential separate cause of action which Jesus Baptist could bring, but it was not a valid defense to Farm Bureau's complaint.
A couple minutes later, the court asked "the policy as written doesn't apply, right? Does anybody dispute that?" Jesus Baptist's counsel responded that he was "not in a position" to provide a definitive answer; the court then said "the farm policy as written specifically excludes what you are asking it to cover. So that policy that's actually issued doesn't apply." Jesus Baptist's counsel very softly responded "right" but a couple seconds later stated that was why Jesus Baptist wanted to depose the agent who sold it the policy. Jesus Baptist's counsel reiterated his argument that the agent's negligence in issuing an incorrect policy was a valid defense to the declaratory judgment complaint.
But what did not occur at the roughly six-minute hearing is even more telling than what did occur. No witnesses testified. Neither Farm Bureau nor Jesus Baptist asked for dispositive relief. Farm Bureau did not argue that Jesus Baptist's counsel had made a concession or judicial admission that Farm Bureau was entitled to a judgment on the merits. Jesus Baptist's counsel did not unequivocally state that Farm Bureau was entitled to prevail on the merits. And the trial court did not give the parties any notice whatsoever that it intended to grant a final judgment to Farm Bureau. In short, nothing occurred during the hearing to alert the parties or counsel that the trial court intended to issue a dispositive ruling in favor of Farm Bureau. Nothing.
Nonetheless, a few weeks later the trial court issued an order which, in addition to denying Jesus Baptist's motion for leave to file an amended answer and granting Farm Bureau's motion to quash the subpoena, provided:
6. The Plaintiff's [Farm Bureau's] initial cause of action simply sought a declaration of rights as to the subject "farm" policy. It has been established that the said issued policy did not provide coverage for the car accident for which the Defendant [Jesus Baptist] is seeking coverage in Illinois.
7. The Court determines/declares that there is no coverage for the Defendant available under the policy issued by the Plaintiff as to the vehicle accident in Illinois and that this case is now concluded.
Jesus Baptist filed an unopposed motion to make that decision final and appealable. Farm Bureau also filed a motion seeking to amend the ruling to add language specifying that Farm Bureau had no duty to defend Jesus Baptist in the Illinois actions. The court granted the motion to make its holding final and appealable and amended its holding to state that it took no position on the Illinois actions but the "farm policy does not provide the coverage claimed by the Defendants ...." Jesus Baptist then filed this appeal.
"We have considered the parties' extensive arguments and citations to authority but will discuss only the arguments and cited authorities we deem most pertinent, the remainder being without merit, irrelevant, or redundant." Schell v. Young, 640 S.W.3d 24, 29 n.1 (Ky. App. 2021). Also, because this case may be adequately resolved by application of published precedent, we decline to address the unpublished precedent cited by the parties. See Kentucky Rules of Appellate Procedure ("RAP") 41(A) ('"Not To Be Published' opinions of the Supreme Court and the Court of Appeals are not binding precedent and citation of these opinions is disfavored.").
The trial court did not characterize its judgment. However, since it resolved the action, was issued prior to trial, and was issued without Jesus Baptist's consent, it is most logically characterized as a sua sponte summary judgment.
The result of this appeal would be the same, regardless of the precise procedural characterization of the sua sponte judgment.
CR 56.01 provides in relevant part that "[a] party seeking to . . . obtain a declaratory judgment may, at any time after the expiration of 20 days from the commencement of the action or after service of a motion for summary judgment by the adverse party, move with or without supporting affidavits for a summary judgment in his favor upon all or any part thereof." Here, of course, Farm Bureau did not move for a summary judgment - nor did Jesus Baptist. The plain requirements of CR 56.01, therefore, were not satisfied.
Kentucky Rules of Civil Procedure.
CR 56.03 provides in relevant part that summary judgment is appropriate "if 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." Our Supreme Court has interpreted CR 56.03 to require a trial court to "view the evidence in a light most favorable to the nonmoving party, resolving all doubts in its favor." Hammons v. Hammons, 327 S.W.3d 444, 448 (Ky. 2010). On appeal, we review a grant of summary judgment de novo because it does not involve findings of fact. Id.
Jesus Baptist asserts that this sua sponte judgment is improper. We agree.
It is beyond reasonable dispute that the judgment at hand was issued sua sponte. A court acts sua sponte when the act occurs "[w]ithout prompting or suggestion; on its own motion ...." Sua sponte, BLACK'S LAW DICTIONARY (11th ed. 2019). Here, Farm Bureau had not asked for a final judgment. Of course, neither had Jesus Baptist. Therefore, it is beyond reasonable dispute that the summary judgment was a sua sponte bolt out of the blue.
Kentucky precedent has consistently condemned sua sponte final judgments for decades. For example, nearly forty years ago we held that it was "better that a trial court refrain from dismissing a complaint for failure to state a claim unless it is brought to its attention by way of pleading or motion to dismiss as set forth in CR 12.02." Gall v. Scroggy, 725 S.W.2d 867, 869 (Ky. App. 1987). Over thirty years ago, we made plain that sua sponte summary judgments are similarly highly disfavored. Storer Communications of Jefferson Cnty., Inc. v. Oldham Cnty. Bd. of Educ., 850 S.W.2d 340, 342 (Ky. App. 1993). We have subsequently held fast to that same fundamental principle. See, e.g., Doster v. Kentucky Parole Bd., 308 S.W.3d 231, 233 (Ky. App. 2010); Hoard v. Ocwen Loan Servicing, LLC, 357 S.W.3d 917, 920 (Ky. App. 2011).
Of course, like most legal rules there are exceptions to the prohibition against sua sponte final judgments. For example, we have held that a sua sponte judgment based on lack of subject matter jurisdiction may be proper. See Storer, supra, at 342. This case presents no jurisdictional issues. It may also be permissible to grant a judgment to a nonmoving party if denying the moving party's motion "necessarily" would require granting a judgment to the nonmoving party. Collins v. Duff, 283 S.W.2d 179, 183 (Ky. 1955). Those exceptions obviously do not apply here.
We agree with Jesus Baptist that this judgment is materially indistinguishable from the one we vacated in Storer Communications of Jefferson County, Inc. A plaintiff in each case filed a declaratory judgment action, to which the defendants responded. Storer, 850 S.W.2d at 340. The defendant in each case filed a non-dispositive pretrial motion (for leave to amend an answer in the case at hand; for leave to file a cross-claim in Storer). Id. at 341. And in each case, "without notice to any of the parties, without a motion for dismissal by any party, without briefs or arguments on the issues, the trial court entered an order granting its judgment for the appellees on the merits!" Id.
"Indistinguishable cases should not yield different results." Burton v. Commonwealth, 300 S.W.3d 126, 148 (Ky. 2009) (Minton, C.J., concurring in part and dissenting in part). See also W.H.J. v. J.N.W., 669 S.W.3d 52, 57 (Ky. App. 2023) ("But we cannot let indistinguishable cases yield distinguishable results in the interests of expediency."). Thus, the judgment at hand cannot stand.
We reiterate our explanation in Storer, about why these types of sua sponte judgments are, with very limited exceptions not found here, jurisprudentially intolerable:
Appellees cite us to no authority that allows a trial court to circumvent the civil rules and enter summary judgment sua sponte where the legal issues have not been submitted for determination. While a court might be justified in using its inherent powers to dismiss sua sponte for lack of subject matter jurisdiction, it is fundamental that a trial court has no authority to otherwise dismiss claims without a motion, proper notice and a meaningful opportunity to be heard. CR 56.01 and CR 56.02 clearly provide that a "party" may seek a summary judgment. The rules do not contemplate such a proceeding on the court's own motion. CR 56.03 provides that one will have a minimum of ten days to respond to such a motion. This requirement is mandatory unless waived. Even if it is appropriate for the trial court to enter a summary judgment on its own motion, the trial court's failure to afford the appellant the most basic procedural protections, notice of its intention and an opportunity to respond, is unjustifiable, constitutionally defective, and requires reversal.850 S.W.2d at 342 (citations omitted).
Because the judgment at hand is "unjustifiable" and "constitutionally defective," we shall not address the merits of the complaint or the defenses thereto. Id. at 342-43 ("In any event, we make no comment on the merits of the constitutionality of the statutes at issue and will not until the trial court has, after hearing evidence and arguments, rendered a new judgment upon remand."); Doster, 308 S.W.3d at 234 ("Irrespective of the merits of Doster's due process claim relating to his resident record card, as to which we express no opinion, we find that the court improperly sua sponte dismissed his complaint ...."). We also decline Farm Bureau's invitation to deem this unjustifiable, constitutionally defective judgment to be a mere harmless error. Farm Bureau cites no binding authority so holding in similar circumstances. Doster, 308 S.W.3d at 234, n.3 ("Arguably, this issue might be subject to harmless error analysis under CR 61.01. However, no case has been cited in which the harmless error doctrine has been applied to circumstances such as those presently before us.").
We close by acknowledging our acute awareness that the hardworking, dedicated trial judges across the Commonwealth have busy dockets and scarce resources. We thus understand the great temptation for a trial court to shrink a burgeoning docket by resolving a case on its own motion when, in the court's view, the ultimate outcome is a foregone conclusion. However, courts must resist that temptation in order to act in accordance with fundamental fairness and due process, as well as to avoid "the loss, or the appearance thereof, of the court's detachment and its assumption of an adversarial role." Storer, supra, at 341.
For the foregoing reasons, the Fleming Circuit Court's sua sponte grant of summary judgment to Kentucky Farm Bureau Mutual Insurance Company is vacated, and the matter is remanded to the circuit court for further proceedings consistent with this opinion.
ECKERLE, JUDGE, CONCURS.
CETRULO, JUDGE, CONCURS, AND FILES SEPARATE OPINION.
I concur in result, but write separately to express my understanding of the trial court's effort to expedite stalled litigation.
The two underlying civil actions in Illinois arose out of a car accident that occurred in 2019. Serious injuries and a death resulted from the Illinois car accident. However, there were no allegations of negligence occurring on the property in Fleming County.
Farm Bureau filed this declaratory judgment action to have the trial court determine whether coverage existed for these particular facts under a specific policy - a farm policy insuring the land in Fleming County. The policy itself was attached to the declaratory judgment petition filed in October 2022. The policy included specific exclusions from coverage for motor vehicle accidents and bodily injuries arising out of business pursuits (which would include any alleged joint venture), and it excluded liability arising under any contract or agreement. In short, the policy, labeled as a Farm Owners Insurance Agreement, covered farming on the land in Fleming County, and not much else. Yet, consistent with its duty to its insured, Farm Bureau had been defending Jesus Baptist in those automobile negligence lawsuits under reservation of rights. The record reflects the lawsuits had been pending for at least two years when Farm Bureau commenced this litigation to resolve the coverage dispute.
Initially, Farm Bureau moved for default judgment as a timely answer was not filed. Then, in December 2022, Jesus Baptist answered with general denials, although admitting "that the policy speaks for itself." Farm Bureau agreed to withdraw the motion for default, and the parties commenced written discovery. Thereafter, Jesus Baptist subpoenaed the insurance agent who had sold the farm policy. As the agent was not a party to this action, Farm Bureau filed a motion to quash the subpoena and a motion for protective order to preclude the deposition of a non-party in a coverage action. As the majority Opinion notes, Jesus Baptist responded with a motion to amend its answer but was attempting to assert as a defense a claim against the insurance agent for not providing proper coverage.
These were the only motions pending at the motion docket in June 2023. However, the trial court was clearly familiar with the pleadings, the facts, and the policy in issue. Noting that the policy as written specifically excludes coverage, and that there were other lawsuits awaiting a decision on coverage, the trial court inquired whether counsel for Jesus Baptist agreed that the policy did not apply. Counsel for Jesus Baptist conceded this, stating, "Right, and I think, Your Honor, that's something we're seeking to declare through the deposition of this young man is why they were sold a farm policy for a retreat center that should have been sold a general liability policy and whether or not there was negligence on behalf of the insurance company in selling this policy."
Although litigants can bring claims for negligent failure to provide coverage consistent with the insured's request or failure to advise consistent with their professional duties, this was not such an action by Jesus Baptist against Farm Bureau or its agent. See McAlpin v. American General Life Insurance Company, 601 S.W.3d 188, 189 (Ky. App. 2020) (Where this Court reviewed a lower court's grant of summary judgment motion against a plaintiff that claimed his insurance agent "breached a professional obligation owed to him[.]").
At this point, the trial court should have ruled on those pending motions and directed Farm Bureau to file a motion to dismiss or summary judgment on coverage, affording Jesus Baptist an opportunity to respond. Instead, the court entered the order on appeal, denying the two pending motions and declaring that there was no coverage for this accident under the policy at issue.
As the trial court observed, the sole issue in this action was whether this farm policy afforded any coverage for these automobile negligence suits in Illinois. "Interpretation and construction of an insurance contract is a matter of law for the court." Kemper Nat'l Ins. Companies v. Heaven Hill Distilleries, Inc., 82 S.W.3d 869, 871 (Ky. 2002).
We have also held before that, "in the limited and rare situation where . . . the court has all of the pertinent issues before it[,] and there is no prejudice to the party against whom summary judgment is granted[,]" the circuit court is authorized to grant a summary judgment in favor of a party that did not request it. Smith v. Norton Hosps., Inc., 488 S.W.3d 23, 35 (Ky. App. 2016). Particularly in light of the discussion at the docket with counsel, I believe this is a close case. However, as Storer holds, CR 56.01 and CR 56.02 provide that a "party" may seek a summary judgment. Unfortunately, the parties had not yet moved for a CR 12 dismissal or a CR 56 summary judgment. The rules do not generally contemplate such a proceeding on the court's own motion, no matter how expedient. I agree that Storer compels us to remand this matter. However, I believe that, if Farm Bureau had filed a motion, the trial court could have acted within its authority and declared the lack of coverage based only upon the pleadings. The trial judge clearly hoped to avoid further delaying multiple lawsuits, but we must remand.