Opinion
NO. 2019-CA-000491-MR
03-13-2020
SARAH JONES APPELLANT v. STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY APPELLEE
BRIEF FOR APPELLANT: Mark B. Wallace Louisville, Kentucky BRIEF FOR APPELLEE: Bradley C. Hooks Erin C. S. Izzo Lexington, Kentucky
NOT TO BE PUBLISHED APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE OLU A. STEVENS, JUDGE
ACTION NO. 17-CI-002324 OPINION
AFFIRMING
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BEFORE: CLAYTON, CHIEF JUDGE; CALDWELL AND COMBS, JUDGES. COMBS, JUDGE: Sarah Jones appeals from the findings of fact, conclusions of law, and summary judgment of the Jefferson Circuit Court entered in favor of State Auto Property & Casualty Insurance Company on March 14, 2019. Following our review, we affirm.
On or about July 23, 2016, Jones, a Kentucky resident, drove a rented Toyota RAV 4 on a highway outside Leon, Nicaragua. In the opposite lane of travel, a trailer became unhitched from a pickup truck. The trailer crossed the roadway and collided with the RAV 4 driven by Jones. She was injured and incurred medical expenses. According to Jones, the pickup truck carried less than the minimum security required by Kentucky law. Jones contacted State Auto, her insurer, to report the accident and to inquire about coverage. State Auto responded that there was no coverage for the accident because it occurred outside the territorial restrictions defined by the provisions of Jones's insurance contract.
In May 2017, Jones filed a declaratory judgment action against State Auto, claiming that State Auto was responsible to pay her claims for "Personal Injury Protection and Uninsured Motorist" benefits. After a period of discovery, the parties filed cross-motions for summary judgment and extensive memoranda in support of their respective positions. The trial court granted the motion of State Auto. This appeal followed.
The insurance policy purchased by Jones and her husband contains the following provision expressly limiting the geographic area to which its coverage extends:
A. This policy applies only to accidents and losses which occur:
1. During the policy period as shown in the Declarations; and
2. Within the policy territory.
B. The policy territory is:
Jones contends that the trial court erred in granting summary judgment to State Auto because the territory restriction provision applies to the location of separate events: (1) where the "accident" occurred; and (2) where the "losses" occurred. She argues that the policy does not require proof that both the accident and the losses occured within the covered territory but that she need only establish that the accident or her losses occurred within the coverage area.1. The United States of America, its territories or possessions;
2. Puerto Rico; or
3. Canada.
Although the "accident" occurred in Nicaragua, she argues that her "losses" (economic and otherwise) occurred in Kentucky and that, therefore, she is entitled to coverage. Alternatively, Jones argues that the provision is ambiguous and should be interpreted in favor of her reasonable expectation of coverage and against State Auto as the drafter of the insurance contract. Finally, Jones contends that the attempt by State Auto to limit the geographical scope of her uninsured motorist coverage violates the purpose and policy underlying Chapter 304 of Kentucky's insurance code.
State Auto argues that the territorial restrictions of the policy are unambiguous and must be enforced as written. If an accident occurred within the borders of the United States, it would be covered by the policy. If an accident occurred within the borders of Puerto Rico, Canada, or any other United States territory or possession, it would be covered by the policy. If an accident occurred outside these regions, there would be no coverage. State Auto contends that an insured could not reasonably anticipate coverage for losses occurring outside the areas specifically covered by the policy -- even if it were considered ambiguous. Finally, it argues that provisions of Kentucky's Motor Vehicle Reparations Act apply only where the accident occurs in Kentucky or any other state of the United States, any United States territory or possession, and Canada -- regardless of where the losses accrue.
In ruling on a motion for summary judgment, a trial court must examine the record to determine if any real or genuine issue of material fact exists. CR 56. Where no genuine issue of material fact exists, summary judgment is appropriate if it appears as a matter of law that it would be impossible for the non-moving party to produce evidence at trial warranting a judgment in his favor. "[T]he interpretation of a contract . . . is a question of law for the courts and is subject to de novo review." Cantrell Supply, Inc. v. Liberty Mut. Ins. Co., 94 S.W.3d 381, 385 (Ky. App. 2002).
Kentucky Rules of Civil Procedure.
Jones acknowledges that her accident occurred outside the geographical territory defined by the policy. Nevertheless, she argues that her "losses" are covered by the policy because she suffered economic loss, including medical expenses and lost wages, in Kentucky. We disagree with this interpretation of the geographical limitation provision.
Where the language of an insurance policy is clear and unambiguous, courts must enforce the terms of the policy as written. Peabody Painting & Waterproofing, Inc. v. Kentucky Employers' Mut. Ins. Co., 329 S.W.3d 684, 688 (Ky. App. 2010) (citing Goodman v. Horace Mann Ins. Co., 100 S.W.3d 769, 772 (Ky. App. 2003)). The words of the policy must be given their plain and ordinary meaning. Pryor v. Colony Ins., 414 S.W.3d 424, 430 (Ky. App. 2013) (citing Nationwide Mut. Ins. Co. v. Nolan, 10 S.W.3d 129, 131 (Ky. 1999)).
We are not persuaded that the meaning of the geographical limitation provision of the insurance contract turns on the word losses. Instead, it depends upon the word and. The word and is a conjunction "connecting words, clauses, or sentences, that are to be taken jointly." The Concise Oxford Dictionary, 9th Edition (1995) (emphasis added).
Reading the phrase "accidents and losses" in light of the plain, ordinary meaning of the word and, we conclude that the geographical limitation provision means that the policy will not apply unless both Jones's accident and the losses associated with her accident occurred in the geographical territory defined by the policy. Jones's argument for coverage under the policy interprets the geographical limitation provision as if it were written disjunctively as "accidents or losses." However, this provision is clear and unambiguous when and is interpreted in the conjunctive. Jones's interpretation of the provision disregards the clear and explicit use of the conjunctive and rather than the disjunctive or. Because Jones's accident occurred outside the policy territory, she is not entitled to coverage under the policy.
We must next consider whether the policy's territorial limitation is invalid or unenforceable because it is contrary to the language or policy of the statute that requires insurers to provide uninsured motorist coverage. Jones explains that the provisions of KRS 304.20-020 mandate that every automobile insurance policy issued in the Commonwealth must include uninsured motorist protection at the limits set for mandatory liability coverage by Kentucky's Motor Vehicle Reparations Act unless it is specifically rejected in writing. She argues that in order to trigger coverage, she need only show that the uninsured motorist was at fault and that damages resulted. She urges the Court to reject State Auto's attempt to require her to show additionally that the accident occurred within the defined territory.
Kentucky Revised Statutes. --------
State Auto argues that the relevant statute does not require that uninsured motorist protection be provided worldwide. Instead, the provisions of KRS 304.39-110(1)(b) require only that the liability coverage "apply to accidents during the contract period in a territorial area not less than the United States of America, its territories and possessions, and Canada. . . ." Territorial restrictions on uninsured motorist coverage have generally been upheld by state and federal courts across the country. See P. White, Annotation, Validity of Territorial Restrictions on Uninsured/Underinsured Coverage in Automobile Insurance Policies, 55 A.L.R.5th 747 (1998). Moreover, as noted above, our statutes specifically provide for the geographical limitation set forth in the policy at issue. We agree that the coverage territory of the State Auto policy wholly complies with the requirements of state law.
State Auto argues that public policy does not compel a different conclusion. We agree.
Public policy recognizes that insurance carriers have the right to impose reasonable limitations on coverage. Sparks v. Trustguard Ins. Co., 389 S.W.3d 121, 129-30 (Ky. App. 2012) (citing Jones v. Bituminous Cas. Corp., 821 S.W.2d 798, 802 (Ky. 1991)). An insurer's decision to limit liability for losses caused by uninsured motorists in foreign countries has been held to be reasonable. In Curtis v. Allstate Ins. Co., 473 F.Supp. 315, 317 (E.D. La. 1979), the federal court observed as follows:
Insurers providing U.M. [uninsured motorist] coverage must base their rates on the risk that the insured will be
struck by an uninsured vehicle. It is certainly rational to exclude countries where the number of uninsured motorists is unknown or so high as to make coverage impractical.
Therefore, we AFFIRM the judgment of the Jefferson Circuit Court.
ALL CONCUR. BRIEF FOR APPELLANT: Mark B. Wallace
Louisville, Kentucky BRIEF FOR APPELLEE: Bradley C. Hooks
Erin C. S. Izzo
Lexington, Kentucky