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Coots v. Allstate Insurance Co.3/18/1993
Opinion OF THE COURT BY JUSTICE LEIBSON
These two cases, briefed separately, were argued on the same day and are decided in a single opinion because they involve common questions of law regarding further viability of an underinsured motorist policy covering the victim of a motor vehicle collision after settlement with the tortfeasor's liability insurance carrier for the policy limits.
Both cases were decided at the trial level by summary judgment in favor of the underinsured motorist insurance carrier based on the opinion handed down by the Kentucky Court of Appeals in Kentucky Cent. Ins. Co. v. Kempf, Ky.App., 813 S.W.2d 829 (1991), holding that when a tort victim covered by underinsured motorist protection settles his tort claim before obtaining a judgment against the tortfeasor, the victim has abrogated his right to underinsured motorist benefits, even though he has settled for the tortfeasor's policy limit. The principal issue in reviewing the present cases is whether Kentucky Cent. Ins. Co. v. Kempf represents an appropriate resolution of this issue.
In an effort to shorten the repeated references thereto, we will refer to underinsured motorist coverage as "UIM" coverage, and to the term "uninsured motorist coverage," where used, as "UM" coverage.
The Kitchen case is a wrongful death action filed on behalf of the estate of Koren M. Kitchen ("Karrie") who was killed when the car in which she was a passenger left the roadway and struck a tree. Both Karrie and the driver, Michael Jaeger, were seventeen years old. Along with the estate's claim for wrongful death damages, the parents sued, individually, seeking damages for loss of love and affection during the remainder of Karrie's minority. The defendants were Michael Jaeger and his father, John L. Jaeger, Jr., who allegedly owned and supplied the car. The Jaegers' liability insurance carrier, Allstate Insurance Company, agreed to pay the Kitchens the Jaegers' policy limits, $100,000, shortly before the trial. The settlement agreement provided for the Kitchens to release the Jaegers, but reserved their rights against State Automobile Mutual Insurance Company, their own automobile insurer whose policy included the UIM coverage now at issue. It also provided that Allstate would continue to defend the Jaegers.
In the Kitchens' lawsuit against the Jaegers their UIM insurer, State Automobile Mutual Insurance Company, was named as an additional defendant. In their automobile policy the Kitchens had paid separate premiums for UIM coverage on two different vehicles, and they claimed that the aggregate UIM coverage on these two automobiles at the time their daughter was killed was $120,000.
Shortly before trial the Kitchens settled with the tortfeasor's insurer, Allstate, for $100,000. The Kitchens intended to proceed to trial against their own insurer, State Auto, for the balance of their loss up to the UIM coverages limits, but were precluded from doing so by the trial court's summary judgment. The Kitchens intended for the jury to decide the total damages sustained by the Kitchens, who would then look to State Auto to pay the damages that exceeded the $100,000 up to the limits of State Auto's UIM coverage. This would be up to $120,000 if the coverage could be stacked.
Before reaching the coverage question, the trial court ruled that only one coverage in the amount of $60,000 was available, citing LaFrange v. United Serv. Auto. Ass'n., Ky., 700 S.W.2d 411 (1985). Our opinion in LaFrange was not authority to so hold because LaFrange expressly stated that the "question of stacking because a separate . . . premium for
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