Gordon v. Kentucky Farm Bureau Insurance Co. ( 1995 )

FUQUA, Justice.

On December 18, 1992, appellant Robin Gordon filed suit against appellee Kentucky Farm Bureau Insurance Company to collect uninsured motorist benefits arising out of an accident which occurred in Bourbon County, Kentucky, on July 26, 1990, in which the appellant, who was age seventeen at that time, was bodily injured when a motorcycle on which he was a passenger, and which was being driven by one uninsured Michael Gil-vin, slid into another vehicle. Appellant was apparently living in the home of his father, Charles Gordon, and his father had in effect at that time a policy of insurance from the appellee which provided uninsured motorist coverage in the amount of $100,000 for all family resident members of his household. This policy also contained a one-year limitation on bringing an action on an uninsured claim as well as the usual requirement of prompt notice to the carrier.

This action was filed on December 18, 1992. The trial court granted appellee’s motion for summary judgment on two grounds. First, it ruled that the action was barred by the twd-year limitation period provided in the Motor Vehicle Reparations Act, KRS 304.39-230(6). As a second ground, the court concluded “that the nearly two-year delay in having notice of the accident is a sufficient demonstration that Farm Bureau has been prejudiced by the late notice.” The Court of Appeals affirmed by a two-to-one vote on the statute of limitations issue and found it unnecessary to address the notice issue.

The primary issue before this Court is what time limitation applies to a claim for uninsured motorist benefits in view of the decision of the Kentucky Court of Appeals in Elkins v. Kentucky Farm Bureau Mutual Insurance Company, Ky.App., 844 S.W.2d 423 (1992).

In the case at bar, the Court of Appeals held that any uninsured motorist claim must be brought within the two-year period provided by KRS 304.39-230(6). In Elkins, the question was the validity of a provision within the uninsured motorist policy purporting to establish a one-year period of limitations. The Court of Appeals voided the contract provision, reasoning that:

Although [KRS 304.39-230] does not specifically refer to suing one’s insurance carrier for uninsured or underinsured benefits, it mates no sense to allow two years (or more) to file a suit against an uninsured or underinsured tort-feasor and yet permit the insurer to escape liability if the suit involving it is not filed within one year. Such would not only be an unreasonably short time, but it would completely frustrate the no-fault insurance scheme.

We find no merit in [appellee’s] argument that uninsured motorist coverage does not fall within the two-year limit allowed by KRS 304.39-230(6).... KRS 304.20-020 simply requires an insurer to offer uninsured motorist coverage as part of the contract. Otherwise, the provisions in Subtitle 39 control.

Id. at 424.

From this language comes the proposition that Elkins holds that an action against one’s uninsured-motorist carrier must be brought within the two-year period provided by the MVRA. Judge Wilhoit, concurring in result in Elkins, foresaw the present issue:

I am unable to see how an action based on a contract can “fall within the two-year limit allowed by KRS 304.39-230(6),” which deals with tort actions.

Id. at 425 (Wilhoit, J., concurring).

In the present case, the Court of Appeals, referring to the dicta in Elkins, specifically held that the two-year statute in the MVRA does apply. This Court agrees with Judge Huddleston’s dissent, in which he notes that KRS 304.39-230(6) does not purport to limit actions on contracts, but by its very terms limits “an action for tort liability not abolished by KRS 304.39-060.” This Court finds it illogical to adopt a general rule which would require a plaintiff to sue his own insurer before discovering whether or not the tort-feasor is in fact an uninsured motorist.

Neither the result nor the rationale of Elkins requires application of the MVRA statute of limitations to an action on a first-party insurance contract, nor is it necessarily controlling that the alleged tort-feasor is not a party to the action.

From its inception, we have recognized [uninsured motorist] coverage is first party coverage, which means that it is a contractual obligation directly to the insured which must be honored even if the tort-feasor cannot be identified_ [T]he carrier may be sued without first obtaining a judgment against the uninsured motorist, or without the uninsured motorist being a party to the suit, albeit the potential liability of the damages he caused must be established in the suit against the insurer in order to measure the insurer’s obligation to the insured under the policy.... UM coverage exists without regard to whether the obligation of the tort-feasor can be reduced to judgment....

Coots v. Allstate Ins. Co., Ky., 853 S.W.2d 895, 898 (1993) (citations omitted; emphasis original).

In the absence of the contractual provision, invalid due to the ruling in Elkins, we must look to the statute of limitations provided for in general contract law. KRS 413.090(2) provides a fifteen-year statute of limitations for general actions on a written contract. This fifteen-year period therefore applies in the present ease. However, this should not be construed to inhibit the insurance companies from contracting with their insureds for a shorter period of time to file a contractual claim. Such period of time must be “reasonable” as required under Elkins, which required at least two years to file a contractual claim. This two-year period is not a result of the similar period provided for by the MVRA.¹

The second issue regards actual notice to the insurance company which, as previously mentioned, was summarily decided by the trial court in appellee’s favor and not ruled upon by the Court of Appeals. The record reveals little if any real proof upon this issue. Appellee filed a short and inconclusive affidavit made by its claims adjuster. Appellant filed an inconclusive affidavit of appellant’s father. These two affidavits were all the proof in the record concerning this notice issue. There was sufficient conflict between the two affidavits to present a question of fact sufficient under Steelvest v. Scansteel, Ky., 807 S.W.2d 476 (1991), to create a triable issue. This issue of actual notice is one which should be addressed by the trier of fact upon remand of this case.

For the reasons hereinabove stated, it is, therefore, the holding of the Court that the rulings of the trial court and the Court of Appeals are hereby reversed and remanded to the trial court for further proceedings consistent with this opinion.

LAMBERT, STUMBO, and WINTERSHEIMER, JJ., concur in this opinion by FUQUA, J. LEIBSON, J., concurs in results only by separate opinion. REYNOLDS, J., dissents by separate opinion in which STEPHENS, C.J., joins.

1 . Perhaps the General Assembly may consider legislation creating a statute of limitations for uninsured motorist contractual claims.