Opinion
NO. 2012-CA-001531-MR
2013-10-11
CARL KITCHEN APPELLANT v. SAFECO INSURANCE COMPANY APPELLEE
BRIEF FOR APPELLANT: Teddy L. Flynt Salyersville, Kentucky BRIEF FOR APPELLEE: No brief filed.
NOT TO BE PUBLISHED
APPEAL FROM ELLIOTT CIRCUIT COURT
HONORABLE REBECCA K. PHILLIPS, JUDGE
ACTION NO. 08-CI-00077
OPINION
REVERSING AND REMANDING
BEFORE: NICKELL, THOMPSON AND VANMETER, JUDGES. THOMPSON, JUDGE: Carl Kitchen appeals from an order denying his motion to amend his complaint in an action filed against Safeco Insurance Company. The circuit court found Carl settled all claims against Safeco, including his claim for basic and added reparation benefits.
Safeco has not filed an appellee brief. Whether its failure to do so is the result of inadvertence or intended as a confession of error, our civil rules provide this Court with three options when considering this appeal. Kentucky Rules of Civil Procedure 76.12(8)(c) provides:
If the appellee's brief has not been filed within the time allowed, the court may: (i) accept the appellant's statement of the facts and issues as correct; (ii) reverse the judgment if appellant's brief reasonably appears to sustain such action; or (iii) regard the appellee's failure as a confession of error and reverse the judgment without considering the merits of the case.Although it is well within this Court's discretion to simply reverse without discussion, we choose to discuss the merits and determine if Carl's brief "reasonably appears" to sustain his allegation no settlement was reached with Safeco regarding its liability for basic or added reparation benefits. We conclude it does, and reverse and remand.
On March 4, 2008, Carl was injured in a motor vehicle crash while riding as a passenger in a vehicle driven by Robert Kitchen. Robert's vehicle was insured by Garrison Property and Casualty Insurance Company, a USAA company (USAA). This policy contained liability insurance coverage and basic and added reparation benefits. Carl was covered by his own motor vehicle insurance policy issued by Safeco on a separate vehicle. The Safeco policy contained benefits for underinsured motorist (UIM) coverage and basic and added reparation benefits.
We recite the facts as presented in Carl's brief. Carl timely filed a complaint alleging Robert negligently operated his motor vehicle causing injuries to Carl. Additionally, he alleged two contractual claims: One against USAA, as a reparation obligor, for failure to pay basic and added reparation benefits to Carl and a claim against Safeco for UIM benefits. No claim was asserted for reparation benefits against Safeco.
On May 25, 2010, the parties participated in mediation that resulted in a settlement agreement. The settlement agreement provides in relevant part:
That the Defendant, Robert Kitchen, by and through his insurer, USAA, agrees to pay and the Plaintiff, Carl Kitchen agrees to accept the sum of Eighty-Five Thousand Dollars ($85,000), exclusive of PIP, in full and final settlement of all claims against Robert Kitchen as a result of a motor vehicle accident which occurred on March 4, 2008.It further states:
That the parties entered into an Agreed Order of Dismissal, with prejudice, of all claims asserted or which could have been asserted against the Defendant, Robert Kitchen, and the Defendant, Safeco, for UIM benefits, but preserving the Plaintiff's claim against USAA for additional no-fault benefits in the above-referenced matter pending in the Elliot Circuit Court.In its final paragraph, the agreement states "a more detailed release and indemnity agreement is to be prepared by counsel for the Defendant in conformity with this agreement."
A general release was executed and signed by Carl, Robert and USAA on July 1, 2010, releasing any and all claims against Robert and USAA, but excluding the payment of PIP benefits.
On July 20, 2010, Carl filed a motion to amend his complaint to assert a claim against Safeco for failure to pay added reparation benefits. Safeco opposed the motion, asserting Carl had not specifically reserved his right to seek additional reparation benefits against Safeco.
On August 17, 2010, Carl's claim for basic and added reparation benefits asserted against USAA where dismissed with prejudice because the policy limits had been exhausted. On August 18, 2010, an agreed order of partial dismissal was entered releasing Robert from the action.
Carl's motion to amend his complaint remained pending and Safeco remained a party. However, on June 2, 2011, an agreed order of dismissal was entered releasing Safeco for UIM benefits, but specifically reserving Carl's right to pursue a claim for basic reparation benefits against Safeco, subject to the circuit court's "acquiescence."
The circuit court denied the motion to file an amended complaint on August 10, 2012. Carl appealed.
CR 15.01 allows a party to amend a pleading once as a matter of course any time before a responsive pleading is filed. Thereafter, a party may amend his pleading only by leave of court or written consent of the adverse party. "[L]eave shall be freely given when justice so requires." CR 15.01. However, the court may deny a motion to amend when the proposed amendment would be futile. First Nat. Bank of Cincinnati v. Hartman, 747 S.W.2d 614, 616 (Ky.App. 1988).
The general rules of contract interpretation are applicable to a court's interpretation of a settlement agreement and "[i]t is valid if it satisfies the requirements associated with contracts generally, i.e., offer and acceptance, full and complete terms, and consideration. . . . The primary object in construing a contract or compromise settlement agreement is to effectuate the intentions of the parties." Cantrell Supply, Inc. v. Liberty Mut. Ins. Co., 94 S.W.3d 381, 384 (Ky.App. 2002). "Any contract or agreement must be construed as a whole, giving effect to all parts and every word in it if possible." City of Louisa v. Newland, 705 S.W.2d 916, 919 (Ky. 1986). "Absent an ambiguity in the contract, the parties' intentions must be discerned from the four corners of the instrument without resort to extrinsic evidence." Cantrell, 94 S.W.3d at 385.
Although the rules recited are applicable to settlement agreements in general, an additional rule prevails when interpreting a settlement and release of a claim for reparation benefits by an injured motorists against an insurance carrier. In Ohio Cas. Ins. Co. v. Ruschell, 834 S.W.2d 166, 169 (Ky. 1992), the Court approved the rule followed in other jurisdictions that a release of the tortfeasor and the tortfeasor's carrier, "will not release a no-fault claim unless there is a specific designation of the no-fault claim in the tort release[.]" The Court approved the reasoning of the Court in Cingoranelli v. St. Paul Fire & Marine Ins., 658 P.2d 863, 869 (Colo. 1983):
Given the statutory scheme, it is simply unreasonable to assume that an automobile accident victim executing a general tort release intends thereby to release PIP claims that are unrelated to the fault principles of tort liability. Rather, the presumed intention in such a case would be to preserve PIP claims, since the losses underlying these claims are not compensable in a tort action and, therefore, would not constitute part of any judgment that might subsequently be satisfied in that action.... WeRuschell, 834 S.W.2d at 169.
therefore hold that an automobile accident victim's general release of a tortfeasor, in the absence of a specific provision which unequivocally includes PIP claims within the terms of the release, does not operate to release an automobile insurer from its obligation to pay PIP benefits to the injured victim.
Applying the same rule to this case and with no contrary argument by Safeco, we conclude the settlement agreement and general release did not include Carl's claim for basic and added reparation benefits against Safeco. The settlement agreement does not make any specific reference to any claim for reparation benefits against Safeco. The only reference to such benefits was that the $85,000 to be paid by USAA, was "exclusive of PIP," a phrase commonly used to clarify that no other claims, offsets, or subrogation rights will reduce an injured party's receipt of the total settlement amount. The general release executed after the settlement agreement released only claims against Robert and USAA with no mention of Safeco. Furthermore, the agreed order of partial dismissal, signed by counsel for Carl and Safeco, specifically reserved Carl's claim for basic reparation benefits upon the court's acquiescence. That order was signed by the circuit court judge and entered.
The lack of any specific designation of Carl's claim for reparation benefits against Safeco in the settlement agreement, Safeco's concession in the agreed order dismissing the UIM claim that Carl's claim for basic reparation benefits was reserved, and its failure to file an appellee's brief in this case require we reverse the order denying Carl's motion to amend his complaint. This case is reversed and remanded for further proceedings.
NICKELL, JUDGE, CONCURS IN RESULT ONLY AND FILES SEPARATE OPINION.
VANMETER, JUDGE, DISSENTS.
NICKELL, JUDGE, CONCURRING IN RESULT ONLY. Respectfully, I concur with the majority's opinion in result only. Because Safeco failed to file an appellate brief, I would have regarded such failure under the facts of this case "as a confession of error" and would have reversed "the judgment without considering the merits of the case." CR 76.12(8)(c)(iii). BRIEF FOR APPELLANT: Teddy L. Flynt
Salyersville, Kentucky
BRIEF FOR APPELLEE: No brief filed.