Kentucky Farm Bureau Mutual Insurance Company v. Charles R. Streich

RENDERED: APRIL 7, 2023; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2022-CA-0676-MR
KENTUCKY FARM BUREAU
MUTUAL INSURANCE COMPANY APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
v. HONORABLE BRIAN C. EDWARDS, JUDGE
ACTION NO. 20-CI-006298
CHARLES R. STREICH APPELLEE
OPINION
VACATING AND REMANDING
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BEFORE: THOMPSON, CHIEF JUDGE; COMBS AND JONES, JUDGES.
JONES, JUDGE: Kentucky Farm Bureau (“KFB”) appeals from an order of the
Jefferson Circuit Court granting judgment on the pleadings to attorney Charles R.
Streich, awarding attorney’s fees and other relief pursuant to KRS1 304.39-070(5).
For the reasons explained below, we vacate and remand.
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Kentucky Revised Statute.
I. FACTUAL AND PROCEDURAL BACKGROUND
On February 14, 2015, Randy Bullitt was involved in a motor vehicle
accident (“MVA”). Bullitt was insured by KFB and the other driver, Robert
Creech, was insured by Auto-Owners Insurance Company (“AOIC”). Bullitt
sustained injuries and received medical treatment. He filed an application for
personal injury protection benefits (“PIP”) and KFB paid the benefits. Sometime
after the MVA, the police report that was initially issued was changed and a second
report issued. Although not contained in the record before us, Streich alleges the
first report was corrected to place liability for the MVA with Creech; however,
both Creech and AOIC have continuously denied liability. Bullitt retained Streich
to represent him and, in 2017, with Streich’s assistance filed a bodily injury claim
against Creech in Jefferson Circuit Court.
The bodily injury claim remained on the circuit court’s docket for
several years. Eventually, Bullitt, Creech, and AOIC engaged in settlement
negotiations. At no time did KFB intervene in the case for a subrogation claim and
in fact sent a letter to Streich in August 2020, stating it would pursue subrogation
on its own and that Streich in no way represented KFB. At some point, KFB
applied for arbitration for its subrogation claim against AOIC. Bullitt ultimately
settled his bodily injury claim with Creech. However, although AOIC signed the
settlement agreement in June 2020, Streich refused to sign on behalf of Bullitt.
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Emails contained in the record before us show Streich insisted on attorney’s fees
pursuant to KRS 304.39-070(5) before signing the settlement agreement. In
response, AOIC repeatedly reminded Streich that settlement of the bodily injury
claim was exclusive of PIP, and that any statutory claim for attorney’s fees by
Streich must be addressed with KFB. Although Streich eventually signed the
settlement with AOIC, he claimed a lien for attorney’s fees.
In October 2020, AOIC filed the underlying complaint for
interpleader and declaratory judgment in the Jefferson Circuit Court. The
complaint stated AOIC was in possession of nine thousand dollars ($9,000) for PIP
reimbursement and asked the circuit court to clarify disbursement of the funds
because Streich claimed attorney’s fees and KFB was owed for its subrogation
claim. Streich filed an answer, counter- and cross-claim stating he is entitled to
three thousand six hundred dollars ($3,600) in attorney’s fees. On June 1, 2021,
Streich filed a motion for attorney’s fees along with an affidavit that was not
notarized. Both AOIC and KFB filed responses. KFB asserted that whether
Streich is entitled to attorney’s fees is a question of fact. AOIC argued PIP was not
part of the settlement agreement and Streich is not entitled to attorney’s fees.2
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AOIC also cited Streich’s failure to move the bodily injury case forward, stating he “never
tendered an interrogatory, tendered a request for production of documents or took a deposition.”
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Eventually, the circuit court ordered AOIC to pay $9,000 to KFB, and KFB was to
hold onto the funds pending further orders. AOIC was dismissed from the action.
On November 7, 2021, Streich filed a motion for judgment on the
pleadings. The next day, KFB filed a notice that interrogatories and requests for
production had been propounded on Streich.3 Streich then filed a motion to hold
discovery in abeyance. On December 16, 2021, the circuit court denied the motion
to hold discovery in abeyance but granted Streich’s motion for judgment on the
pleadings. He was awarded $3,600 in attorney’s fees plus interest from the date
KFB received the funds from AOIC, as well as account statements from KFB
showing how the funds were handled after receipt. At that point, KFB filed a
motion to set aside the judgment and for additional time to respond to Streich’s
motion for judgment on the pleadings. The circuit court granted KFB’s motion.
However, on May 10, 2022, after numerous other filings by the parties, the circuit
court entered a perfunctory order reinstating its original order granting Streich’s
motion for judgment on the pleadings and attorney’s fees, interest, and KFB’s
financial statements to Streich. The circuit court also adopted “the findings
articulated by Defendant Streich in his motion for judgment on the pleadings.”
This appeal followed. Further facts will be developed as necessary.
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KFB later stated it did not receive a copy of Streich’s motion when it was filed.
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II. STANDARD OF REVIEW
We first note that Streich incorrectly styled his motion as relief
pursuant to CR4 12.03 (judgment on the pleadings), and the circuit court treated it
as such. However, matters outside of the record were presented by the parties that
were not excluded by the circuit court. See CR 12.03;5 Craft v. Simmons, 777
S.W.2d 618, 620 (Ky. App. 1989). Our standard of review is well-established:
Kentucky’s “[CR] 12.03 provides that any party to
a lawsuit may move for a judgment on the pleadings.”
City of Pioneer Vill. v. Bullitt Cty., 104 S.W.3d 757, 759
(Ky. 2003). A judgment on the pleadings “should be
granted if it appears beyond doubt that the nonmoving
party cannot prove any set of facts that would entitle
him/her to relief.” Id. “[T]he circuit court is not required
to make any factual determination; rather, the question is
purely a matter of law.” James v. Wilson, 95 S.W.3d
875, 883-84 (Ky. App. 2002). Further, CR 12.03 may be
treated as a motion for summary judgment. Schultz v.
Gen. Elec. Healthcare Fin. Servs., Inc., 360 S.W.3d 171,
177 (Ky. 2012). We review a judgment on the pleadings
de novo. Id.Scott v. Forcht Bank, NA, 521 S.W.3d 591, 594 (Ky. App. 2017).
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Kentucky Rule of Civil Procedure.
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CR 12.03 states, “[a]fter the pleadings are closed but within such time as not to delay the trial,
any party may move for judgment on the pleadings. If, on such motion, matters outside the
pleading are presented to and not excluded by the court, the motion shall be treated as one for
summary judgment and disposed of as provided for in Rule 56, and all parties shall be given
reasonable opportunity to present all materials made pertinent to such a motion by Rule 56.”
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III. ANALYSIS
On appeal, KFB argues the circuit court erred, in part, because
whether Streich was entitled to attorney’s fees is a question of fact and the circuit
court erroneously entered an order granting a judgment on the pleadings in favor of
Streich before discovery was complete. We agree.
KRS 304.39-070(5) reads
[a]n attorney representing a secured person in any action
filed under KRS 304.39-060 shall be entitled to a
reasonable attorneys’ fee in the event that reparation
benefits paid to said secured person by that secured
person’s reparation’s obligor are reimbursed by any
insurance carrier on behalf of a tortfeasor who is the
defendant in any such action filed by the said secured
person or in the event such potential “action” is settled by
said potential tortfeasor’s insurance carrier on his behalf
prior to the filing of any such suit.
Streich’s position is that he is entitled to attorney’s fees under the
statute because he (1) filed a lawsuit in tort against the tortfeasor (Creech); and (2)
successfully negotiated a settlement with the tortfeasor.
The Kentucky Supreme Court has interpreted KRS 304.39-070(5) to
mean that the attorney is entitled to fees only “if the facts show that the attorney’s
representation of the insured conferred a benefit on the reparation obligor[.]”
Baker v. Motorists Ins. Companies, 695 S.W.2d 415, 417 (Ky. 1985). This
includes establishing liability. Id. Additionally, this Court recently reiterated “that
where no benefit is conferred upon the reparation obligor by the attorney
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representing the secured person, either directly or indirectly, a ‘reasonable
attorney’s fee’ may be zero.” Byrnes v. Nationwide Mutual Insurance Company,
647 S.W.3d 558, 560 (Ky. App. 2022) (citation omitted). In other words, any
benefit conferred upon Bullitt through Streich’s representation in the bodily injury
action does not necessarily mean a benefit was conferred on KFB vis-à-vis the
subrogation claim.
Streich maintains his efforts to get the police report revised to place
liability on Creech is what eventually established liability and entitled KFB for PIP
reimbursement from AOIC. However, the record before us is rife with questions
of fact. For example, in one of his emails to AOIC in August 2020, Streich
claimed it took “the better part of a year” to get the police report corrected.
However, a letter from Streich to KFB dated June 15, 2015, references the police
report had been corrected by the date of the letter, or within 4 months of the date of
the MVA. Streich did not submit an accounting of his time to the circuit court with
his motion for attorney’s fees; however, KFB attempted to obtain this information
in the interrogatories and request for production of documents propounded upon
Streich that remain unanswered. KFB does point out that Streich’s responses to its
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requests for admissions contradict his affidavit regarding his efforts to change the
police report.6
Additionally, Streich claims he notified KFB of his lien for attorney’s
fees in June 2020, but the letter contained in the record before us was addressed
only to AOIC. KFB asserts it was not notified of Streich’s lien until after it had
filed for arbitration. Regardless, by simply adopting the allegations contained in
Streich’s motion for judgment on the pleadings, the circuit court denied KFB the
opportunity to present counter evidence because discovery was truncated, and a
hearing was never held.
We also note that even if Streich was responsible for getting a
corrected police report, this does not automatically establish liability. Police
reports are generally considered hearsay. “Pursuant to the Kentucky Rules of
Evidence (‘KRE’) 803(8), a police report is not exempt from hearsay, unless it is
offered for an admissible purpose.” Allen v. Gueltzow, 535 S.W.3d 333, 335 (Ky.
App. 2017). Therefore, the police report, which was never submitted to the circuit
court and does not appear in the record before us, cannot be used to establish fault
for the MVA. Bradley, 642 S.W.3d at 739.
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Additionally, we cannot say that the police report, as a matter of law, established liability,
especially where it would not have been admissible at any trial. Bradley v. Commonwealth, 642
S.W.3d 731, 739 (Ky. App. 2021) (“[A] police report could not be lawfully considered as
evidence of fault for the accident.”).
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It is unclear from the record before us if AOIC’s willingness to
reimburse KFB for PIP, even though AOIC and Creech have continuously denied
liability, was brought about by the changed police report, KFB’s filing for
arbitration, or some other reason that may or may not have been the result of a
benefit conferred on KFB by Streich. This Court has ruled that
in instances such as this where a reparations obligor has
elected to pursue its KRS 304.39-070 subrogation rights
by applying for arbitration rather than by intervening as a
party in its insured’s pending tort action, and has not
employed the attorneys for the insured to represent its
interests, those attorneys are not entitled to the award of
an attorneys’ fee under KRS 304.39-070(5) merely
because the insurer’s subrogation claim is subsequently
paid.
MFA Ins. Co. v. Carroll, 687 S.W.2d 553, 555 (Ky. App. 1985).
As previously stated, KFB did not intervene in the underlying tort
action and subsequently filed for arbitration. However, AOIC preempted
arbitration by filing the underlying interpleader action in circuit court. Reading
Carroll in conjunction with Baker, Streich still needs to demonstrate he conferred a
benefit upon KFB in order to collect attorney’s fees under KRS 304.39-070(5), and
this is a question of fact.
IV. CONCLUSION
Accordingly, we vacate the circuit court’s order granting a judgment
on the pleadings to Streich and remand for proceedings consistent with this
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opinion, including completion of discovery already initiated by KFB.7 Because we
are remanding with instructions, we decline to address KFB’s remaining
arguments.
ALL CONCUR.
BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE:
Valerie W. Herbert Charles R. Streich
Louisville, Kentucky Louisville, Kentucky
7
Streich cites Woodall v. Grange Mutual Casualty Company, 648 S.W.2d 871 (Ky. 1983), in
support of his argument that he is entitled to attorney’s fees. However, in the cases cited by both
parties, and in Byrnes, whether attorney’s fees were permitted pursuant to KRS 304.39-070(5)
was decided only after a hearing was held by the circuit court. In an unpublished opinion,
Byrnes v. GEICO General Insurance Company, No. 2021-CA-0113-MR, 2022 WL 982325 (Ky.
App. Apr. 1, 2022), this Court affirmed the circuit court’s order granting summary judgment to
GEICO because Byrnes failed to put forth any evidence to prove that his representation
conferred a benefit on GEICO. This was in spite of the fact the record contained an affidavit
from Byrnes detailing his work in the bodily injury case. In the instant action, Streich’s affidavit
focuses on the changed police report, but does not detail his efforts or time involved in obtaining
said report.
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