Heather Parsley, as guardian/conservator for Coleton Parsley, a Minor v. Cincinnati Insurance Company

RENDERED: AUGUST 20, 2021; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2020-CA-0858-MR
HEATHER PARSLEY, AS GUARDIAN/
CONSERVATOR FOR COLETON PARSLEY,
A MINOR; AND HEATHER PARSLEY AND
BRIAN PARSLEY, INDIVIDUALLY APPELLANTS
APPEAL FROM WARREN CIRCUIT COURT
v. HONORABLE STEVE A. WILSON, JUDGE
ACTION NO. 19-CI-00047
CINCINNATI INSURANCE COMPANY;
SAYLORS GOLF CARTS, INC.;
EDGEHILL FARM, INC.; AND
JOHN F. BALLANCE APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: GOODWINE, KRAMER, AND MAZE, JUDGES.
MAZE, JUDGE: Appellants (collectively referred to as “Parsley”) appeal the
entry of separate summary judgments dismissing appellees Saylors Golf Carts,
Inc., and Cincinnati Insurance Company from litigation stemming from serious
injuries sustained by Coleton Parsley while riding on an innertube pulled by a 4-
wheeler all-terrain vehicle (ATV) driven by appellee John Ballance. Parsley
argues that genuine issues of material fact preclude summary disposition
concerning the liability of Saylors for Ballance’s actions and as to coverage for
Ballance under a Cincinnati Insurance Company policy insuring Saylors. We
affirm.
After a snowfall on January 13, 2018, John Ballance and his wife
Katie hosted an impromptu sledding party for their family and friends at their farm
in Oakland, Kentucky. Although the Parsleys allege that the Ballances had invited
guests to the property, John Ballance stated in deposition testimony that people
other than family had not been invited but simply started showing up. One of
those who showed up was appellant Coleton Parsley, a friend of the Ballances’
son. At some point in the evening, Mr. Ballance was using a four-wheeler to tow
his son and Coleton on an innertube. While Coleton was being towed, the
innertube on which he was riding struck a utility pole causing catastrophic injuries
from which Coleton is unlikely to fully recover.
Edgehill Farm, where the accident occurred, is located approximately
five miles from Saylors Golf Carts, Inc., a golf cart sales, rental, and service
business owned by the Ballances. The Ballances reside on and individually own a
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portion of Edgehill Farm. Edgehill Farm also owns the property on which Saylors
Golf Carts is located in Smiths Grove, Kentucky, although the businesses are
separate business entities.
The ATV Mr. Ballance was operating at the time of the accident is the
primary focus of this appeal. Approximately four years prior to the accident, a
Saylors’ customer, Jim Stirgill, traded the subject ATV and another ATV for a golf
cart. In deposition testimony, Mr. Ballance stated that within days of that
transaction, he took the ATVs to the Edgehill Farm property where he and his
family used them for recreation and as their personal farm implements. He also
stated that the ATVs Stirgill traded in were kept in a barn where he sometimes
stored excess golf cart inventory from shortly after the trade-in in December 2013
until the accident in 2018.
Mr. Ballance acknowledged that because Saylors so rarely takes
ATVs in trade for golf carts, he was unaware that, unlike golf cars, ATVs are
accompanied by certificates of title. Accordingly, Saylors did not require Mr.
Stirgill to produce an endorsed certificate of title to complete the trade-in
transaction. Nor did Saylors submit an application for a new title and registration
to the county clerk. Thus, the ATV in question remained in Stirgill’s name until
after the accident when the Ballances discovered that title had never been
transferred. They thereafter contacted Mr. Stirgill who signed the ATV over to
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Mr. Ballance individually. On March 21, 2018, approximately two months after
the accident, a new title was issued to Mr. Ballance individually.
In January 2019, Parsley filed a complaint in Warren Circuit Court
naming John Ballance, Edgehill Farm, and Saylors as defendants. The complaint
also named Cincinnati Insurance Company as a defendant, seeking recovery on a
commercial general liability policy it had issued to Saylors. Following exchange
of written discovery and Mr. Ballance’s deposition, Saylors and Cincinnati
Insurance separately moved for summary judgment. The circuit court granted each
motion holding that there were no genuine issues of material fact, concluding that
both Saylors and Cincinnati Insurance were entitled to judgment as a matter of law,
and dismissing Parley’s claims against each entity.
With respect to Saylors, the circuit court specifically held that Mr.
Ballance was not furthering any business or other interest of Saylors by pulling his
son and Coleton on the innertube in the snow. The court also concluded that
ownership of the ATV was irrelevant because there was no evidence that Saylors
negligently allowed Mr. Ballance to operate the ATV. In granting Cincinnati
Insurance’s motion, the circuit court determined that Mr. Ballance was not acting
as an officer or employee of Saylors at the time of the accident and that his act of
pulling his son and Coleton on an innertube was in no way connected to Saylors’
business. Although Edgehill Farm is also an insured under Saylors’ commercial
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policy, the trial court determined that coverage was limited to damages arising out
of the ownership, maintenance, or use of property designated by the policy.
Because the location designated by the policy is not the location where the accident
occurred, the circuit court concluded coverage did not extend to Edgehill. After
the circuit court subsequently certified each judgment as final and appealable, this
appeal followed.
In appeals from the grant of summary judgment, this Court must
conduct a de novo review to determine “whether the trial court correctly found that
there were no genuine issues as to any material fact and that the moving party was
entitled to judgment as a matter of law.” Scifres v. Kraft, 916 S.W.2d 779, 781
(Ky. App. 1996). Further, “[t]he record must be viewed in a light most favorable
to the party opposing the motion for summary judgment and all doubts are to be
resolved in his favor.” Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d
476, 480 (Ky. 1991). Finally, as our Supreme Court emphasized in Isaacs v.
Smith, 5 S.W.3d 500, 503 (Ky. 1999), “[a]n issue of nonmaterial fact will not
preclude the granting of a summary judgment. A motion for summary judgment
should be granted if the court is fully satisfied that there is an absence of genuine
and material factual issues. Steelvest does not hold to the contrary, but expressly
reaffirms that longstanding position.” With these principles in mind, we turn to the
arguments for reversal.
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1. Dismissal of Parsley’s Claims against Saylors
Parsley first argues that genuine issues of material fact as to the
ownership of the ATV and as to Saylors’ vicarious liability for Mr. Ballance’s use
of the ATV at the time of the accident preclude summary disposition. As
previously noted, in dismissing the claims against Saylors, the circuit court
specifically determined that ownership of the ATV was irrelevant. Rather, the
circuit court held that the dispositive issues centered upon whether Mr. Ballance’s
use of the ATV fell within the course and scope of his employment with Saylors
and whether Saylors negligently entrusted the ATV to Mr. Ballance on the night in
question. We reiterate the well-established rule set out in Steelvest that “[t]he trial
judge must examine the evidence, not to decide any issue of fact, but to discover if
a real issue exists.” 807 S.W.2d at 480. And, in so doing, “[t]he record must be
viewed in a light most favorable to the party opposing the motion for summary
judgment and all doubts are to be resolved in his favor.” Id.
Thus, viewing this record in the light most favorable to Parsley, we
will presume that the ATV in question was listed as an inventory asset of Saylors
at the time the accident occurred. Nevertheless, we are in complete agreement
with the decision of the circuit court that Saylors’ liability turns upon whether it is
vicariously liable for Mr. Ballance’s use of the ATV and whether it negligently
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entrusted the ATV to him on the night in question, not whether Saylors in fact
owned the ATV.
As set out in the order granting summary judgment, the record is
devoid of any evidence suggesting that Mr. Ballance was using the ATV to further
Saylors’ business interests when the accident occurred. In Papa John’s
International, Inc. v. McCoy, our Supreme Court reexamined and reiterated the
rule set out in the American Law Institute’s RESTATEMENT (THIRD) OF AGENCY §
7.07 (2006), entitled “Employee Acting Within Scope of Employment:”
This general rule is consistent with the standard advanced
by Prosser and Keeton—as noted in the Patterson [v.
Blair, 172 S.W.3d 361, 364 (Ky. 2005)] opinion—in
their treatise on tort law: “[I]n general, . . . the master is
held liable for any intentional tort committed by the
servant where its purpose, however misguided, is wholly
or in part to further the master’s business.” Thus, if the
servant “acts from purely personal motives . . . which
[are] in no way connected with the employer’s interests,
he is considered in the ordinary case to have departed
from his employment, and the master is not liable.” This
approach “conforms to the economic theory of vicarious
liability . . . because when the employee acts for solely
personal reasons, the employer’s ability to prevent the
tort is limited.”
244 S.W.3d 44, 52 (Ky. 2008) (footnotes omitted). Because review of the record
confirms the circuit court’s finding that there is absolutely no evidence in the
record that Mr. Ballance was acting in the course and scope of his employment,
summary judgment in favor of Saylors is appropriate. The accident occurred at the
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Ballance’s residence during an impromptu event occasioned by a larger snowfall
than is normal for the area. Parsley failed to offer any evidence to rebut Mr.
Ballance’s deposition testimony that the impromptu sledding party was a purely
personal recreational activity at which the golf cart business “didn’t even come to
mind.”
In addition, we are convinced that this case falls squarely within the
rationale set out in Mid-States Plastics, Inc. v. Estate of Bryant ex rel. Bryant
concerning the requirement that for vicarious liability to attach, there must be
evidence that the activity in question can be construed as furthering the work of the
employer. 245 S.W.3d 728 (Ky. 2008). In Bryant, Daniel Edwards, the president
of Mid-States Plastics, had a planned business trip to Indianapolis and invited his
pastor to ride along in a leased plane to allow the minister to visit his family while
Edwards worked. The trip was free for the minister and involved no business
purpose on his part for Mid-States. On the return trip, the plane struck a cell phone
tower and crashed, killing both Edwards and Reverend Bryant. In affirming the
entry of summary judgment in favor of Mid-States, the Kentucky Supreme Court
reasoned:
In our case, it is clear that Reverend Bryant was a
guest of Edwards and his presence “could not be
construed as being for the purpose of accomplishing the
work of the corporation,” as required by Wigginton
[Studio v. Reuter’s Adm’r, 254 Ky. 128, 71 S.W.2d 14(1934)] before liability attaches to the master. 71 S.W.2d
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at 16. Also, the fact that Edwards was an officer of Mid-
States (President, as well as the General Manager and
Chief Executive) and not just an employee does not
change the outcome. Wigginton made clear that “in
order for a company to be held responsible for the
tort of one of its officers he must be acting within the
scope of his employment and in the furtherance of the
corporation’s business.” Id.Id. at 730 (emphasis added). The connection between Saylors and the impromptu
sledding party at the Ballances’ residence is even more attenuated than the relation
between Mid-States and Edward’s invitation to Reverend Bryant to accompany
him on a scheduled Mid-States’ business trip. In sum, an impromptu sledding
party at an employee’s residence cannot be construed as serving the interests of
Saylors without the production of some evidence to the contrary.
Furthermore, Parsley did not plead nor attempt to offer proof as to
negligent entrustment. Although Parsley now argues that the Saylors took the
position below that the ATV is a motor vehicle, that is a distortion of Saylors’
position as it simply noted that the titling requirements of ATVs differ from those
regarding golf carts. In any event, our Supreme Court in Manies v. Croan settled
the question of whether an ATV can be considered to be a motor vehicle for
purposes of the limitations provision of the Kentucky Motor Vehicle Reparations
Act:
ATVs, like the golf carts considered in Kenton
County Public Parks Corporation v. Modlin, Ky.App.,
901 S.W.2d 876 (1995), are not to be used on the public
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roadways. With respect to ATVs, our General Assembly
expressly prohibited such use in KRS 189.515(1):
No person shall operate an all-terrain vehicle
upon any public highway or roadway or
upon the right-of-way of any public highway
or roadway.
It seems clear that a vehicle which by law is
prohibited from operation on public highways could not
also satisfy the language of KRS 304.39–020(7), i.e.,
“any vehicle which transports persons or property upon
the public highways of the Commonwealth.” Moreover,
there is no credible basis for concluding that the
registration and insurance requirements of the MVRA
were intended to apply to ATVs. The exclusion of ATVs
from the MVRA’s reparations system similarly excludes
causes of action arising from their use from the MVRA’s
more generous limitations period. The trial court
correctly applied the one-year limitations period in KRS
413.140.
977 S.W.2d 22, 23-24 (Ky. App. 1998). Nothing in Parsley’s argument persuades
us that ATVs should be treated as motor vehicles for negligent entrustment
analysis.
Thus, in our view, ATVs are to be construed to be chattel and fall
within the purview of Section 390 of the RESTATEMENT OF TORTS 2D. The
application of that section was explained by this Court in Hercules Powder
Company v. Hicks:
It is important to recall that the rule [Section 390 of
RESTATEMENT OF TORTS 2D] imposes liability upon the
supplier of a chattel for use by an incompetent person if,
and only if, the supplier knows or has reason to know of
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the probable misuse by reason of the incompetence of the
person to whom the chattel is furnished. The record fails
to reflect any basis upon which a finding could be made
that Hercules knew or had reason to know of any
incompetence of Herbert or Wabassco or any of its
employees. Section 12 of Restatement of Torts 2d points
out that the words ‘reason to know’ as used in the
Restatement of Torts denote the fact that the actor has
information from which a person of reasonable
intelligence would infer that the fact in question exists, or
that such person would govern his conduct upon the
assumption that such fact exists. Significantly, Section
12 provides that the words ‘should know’ denote the fact
that a person of reasonable prudence and intelligence
would ascertain the fact in question in the performance of
his duty to another, or would govern his conduct upon the
assumption that such fact exists.
453 S.W.2d 583, 587 (Ky. 1970). Nothing in the facts alleged in Parsley’s
complaint would support a claim of negligent entrustment and the circuit court did
not err in so holding.
Accordingly, we hold that the Warren Circuit Court did not err in
granting summary judgment dismissing Parsley’s claim against Saylors.
2. Dismissal of Parsley’s claim against Cincinnati Insurance
The single issue concerning the dismissal of Parsley’s claims against
Cincinnati Insurance Company is whether the circuit court properly concluded that
the policy covering Saylors provides no coverage for Mr. Ballance for the claims
asserted against him in the complaint. Initially, Parsley asserts that coverage is
available to Mr. Ballance simply because he was driving an ATV belonging to
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Saylors at the time of the accident and, because Saylors disputes ownership of the
ATV, genuine issues of material fact preclude the entry of summary judgment.
Again, because the record is to be construed most favorably to the party opposing
summary judgment, for purposes of the arguments concerning Cincinnati
Insurance, we will presume ownership on the part of Saylors. Nevertheless,
ownership of the ATV is, in and of itself, insufficient to impose liability under the
policy issued to Saylors.
The policy in question contains a “golfmobile” endorsement which
provides:
WHO IS AN INSURED (Section II) is amended to
include as an insured any person(s) using or legally
responsible for the use of golfmobiles loaned or rented to
others by you or any of your concessionaires but only for
their liability arising out of the use of the golfmobiles.
The circuit court specifically rejected Parsley’s contention that “golfmobiles” can
be reasonably interpreted to mean either golf carts or Saylors’ inventory generally,
holding that the term “golfmobile”:
can only be reasonably interpreted to mean golf carts or
other types of mobiles used on a golf course because
“golf” is an integral part of the term. Regardless of
whether the ATV was owned by Saylors at the time of
the incident, users of ATVs were not covered under the
additional endorsement covering golfmobiles.
We agree.
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To suggest that the term “golfmobiles” encompasses Saylors’
inventory in general fails to accord any significance to the use of that particular
term in the endorsement. As Cincinnati Insurance correctly posits, to equate the
term “golfmobile” to general inventory leads to absurd results as general inventory
might include golf cart parts and office furniture as well. In Stone v. Kentucky
Farm Bureau Insurance Company, this Court reiterated that, as a general rule,
interpretation of an insurance contract is a matter of law for the court. 34 S.W.3d
809, 810-11 (Ky. App. 2000) (citing Morganfield National Bank v. Damien Elder
& Sons, 836 S.W.2d 893 (Ky. 1992)). The Stone Court also noted that while
ambiguous terms are to be construed against the drafter and in favor of the insured,
the policy must be accorded a reasonable interpretation, “and there is no
requirement that every doubt be resolved against the insurer.” Id. at 811 (citing
Motorists Mutual Ins. Co. v. RSJ, Inc., 926 S.W.2d 679 (Ky. App. 1996)). And
finally, Stone holds that policy terms “should be interpreted in light of the usage
and understanding of the average person.” Id. (citing Fryman v. Pilot Life
Insurance Company, 704 S.W.2d 205 (Ky. 1986)). We thus concur in the circuit
court’s assessment that the term “golfmobile” cannot be reasonably construed as
encompassing inventory in general – to hold otherwise would undermine the very
purpose for using a specialized term like “golfmobile” in the policy endorsement.
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Parsley also argues that coverage for Mr. Ballance is provided by an
additional insured endorsement for owners, lessees, or contractors. The circuit
court concluded that coverage under that endorsement extends only to damages
caused in whole or in part by:
1. Your [Saylors’] acts or omissions;
2. The acts or omissions of those acting on your
[Saylors’] behalf;
in the performance of your [Saylors’] ongoing operations
for the additional insured(s) at the location(s) designated
above.
In other words, the circuit court interpreted the word “your” as referring to Saylors.
This construction comports with the policy’s declaration that if the named insured
is an organization other than a partnership, joint venture or limited liability
company, the named insured’s “executive officers” and directors are insureds “but
only with respect to their duties as your officers or directors.” Similarly, the
commercial general liability policy provides that employees of the named insured
are insureds only with regard to acts within the scope of their employment or while
performing duties related to Saylors Golf Carts’ business interests.
Parsley attempts to conflate Mr. Ballance’s status as an “additional
insured” with Saylors’ status as the only named insured on the policy. As
Cincinnati correctly argues, there is a fundamental difference between a named
insured and someone who qualifies as an additional insured for the provision of
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coverage under the specific circumstances set out in the endorsement. Because
Mr. Ballance was not acting as an executive officer or employee of Saylors at the
time of the accident, nor was any business interest of Saylors being furthered by
the impromptu sledding party at the Ballances’ residence, the circuit court
correctly determined that Saylors’ commercial policy does not provide coverage
for his act of using the ATV for a purely personal and recreational activity. Simply
stated, Mr. Ballance’s actions fall outside the scope of that policy’s explicitly
defined coverage.
Accordingly, we affirm the judgment of the Warren Circuit Court
dismissing Parsley’s claims against Saylor’s Golf Carts and Cincinnati Insurance
Company.
ALL CONCUR.
BRIEFS FOR APPELLANTS: BRIEF FOR APPELLEE SAYLORS
GOLF CARTS, INC.:
Matt McGill
Bowling Green, Kentucky Thomas N. Kerrick
Colton W. Givens
Kyle R. Salyer Bowling Green, Kentucky
Paintsville, Kentucky
BRIEF FOR APPELLEE
CINCINNATI INSURANCE
COMPANY:
Michael D. Risley
Louisville, Kentucky
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