The Kentucky Court of Appeals has found that Virginia law applied in an uninsured motorist (UIM) coverage dispute arising out of a Kentucky tractor-trailer crash. In an unpublished opinion, a Virginia truck driver sued the insurance carrier for another motorist who struck his big rig head-on. The tractor-trailer wreck occurred on Interstate 65 in Jefferson County, Kentucky, in 2009. At the time of the collision, the other motorist was allegedly intoxicated and traveling in the wrong direction on the freeway. Following the accident, the truck driver settled with the at-fault driver’s liability insurer for the full policy limits of $25,000.
After that, the semi-truck driver’s motor vehicle insurer waived its subrogation rights against the other driver. The trucker then sought $25,000 in UIM benefits from his own auto insurer. The truck driver’s UIM insurer denied his claim because the at-fault driver was not an underinsured motorist according to the definition included in his insurance policy. In addition, the company claimed that Virginia law allowed it to offset the $25,000 payment the truck driver received from the other driver’s insurer against his potential UIM benefits. Because of this, the trucker’s insurer claimed that he was not entitled to receive additional payment as a result of his UIM coverage.
The truck driver filed a lawsuit seeking damages from his UIM insurer in Jefferson County Circuit Court. Both parties filed a motion for summary judgment and the Kentucky court ruled in favor of the insurance company. According to the court, Virginia law applied despite the fact that the collision occurred in Kentucky. The trucker’s UIM policy was issued in his home state of Virginia, and Virginia enjoyed the “most significant relationship” with the parties’ contract dispute. Applying Virginia law, the Jefferson County Circuit Court determined that the auto insurer was not obligated to pay the trucker’s UIM claim.
The truck driver then appealed his case to the Kentucky Court of Appeals. After analyzing the truck driver’s conflicts-of-law argument, the appellate court stated that applying the Virginia law at issue would violate Kentucky public policy. As a result, the Court of Appeals held that the lower court committed error when it determined Virginia law controlled the contract dispute. Not long after, the Kentucky Supreme Court decided State Farm Mutual Auto Insurance Company v. Hodgkiss-Warrick, vacated the appellate court’s opinion in the current case, and remanded the trucker’s dispute.
In Hodgkiss-Warrick, the Kentucky high court considered a similar choice-of-law dispute over UIM accident benefits. In that case, the Supreme Court overturned the Kentucky Court of Appeals’ holding that the Commonwealth’s public policy exception required Kentucky law to be applied in lieu of a particular Pennsylvania law. In its decision, the Supreme Court stated that the appellate court’s rationale for applying the public policy exception was insufficient and cautioned against applying it simply because a contract would not be enforceable in Kentucky or because the outcome would be different in another state.
The high court also provided a two-part test for determining when it was appropriate to apply Kentucky’s public policy exception. According to the Kentucky Supreme Court, a court must first determine whether any legislation expressly forbids the enforcement of another state’s law. If no such prohibition exists, a court may look to the legislative intent or other factors that clearly indicate that enforcement of the law goes against Kentucky public policy.
When reconsidering the truck driver’s case, the Court of Appeals found that Kentucky law did not prohibit the enforcement of a UIM set-off provision. The court then examined whether other factors barred its administration. According to the court, Kentucky case law prohibits any UIM endorsement that requires a set-off. Despite this, the appellate court determined the policy was not so strong as to require a court to apply Kentucky law to a case that no longer involved a Kentucky resident. Since enforcing the UIM set-off provision would not affect a Kentucky resident, the Kentucky Court of Appeals held that the lower court correctly refused to apply the public policy exception to the truck driver’s dispute.
The court dismissed the trucker’s claim that the policy language required that Kentucky law be applied simply because the traffic collision occurred in Kentucky. The court also disagreed with the truck driver’s assertion that his motor vehicle insurer judicially admitted that Kentucky law applied to the case. Finally, the Court of Appeals of Kentucky affirmed the lower court’s decision here.
If you were hurt or someone you love was killed in a Kentucky a tractor-trailer wreck that was caused by a negligent driver, you should discuss your situation with a Bowling Green personal injury lawyer. To schedule a free confidential consultation with a knowledgeable lawyer, call English, Lucas, Priest & Owsley, LLP at (270) 781-6500 today or contact us online.
Ward v. Nationwide Assurance Co., Ky: Court of Appeals 2014
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