RENDERED: APRIL 12, 2024; 10:00 A.M. NOT TO BE PUBLISHED
Commonwealth of Kentucky Court of Appeals
NO. 2023-CA-0485-MR
CECIL WAYNE BARNETT AND SALLY LOUISE BARNETT APPELLANTS
APPEAL FROM HOPKINS CIRCUIT COURT v. HONORABLE CHRISTOPHER B. OGLESBY, JUDGE ACTION NO. 21-CI-00293
KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY APPELLEES
OPINION AFFIRMING
** ** ** ** **
BEFORE: EASTON, KAREM, AND TAYLOR, JUDGES.
KAREM, JUDGE: Cecil Wayne Barnett and Sally Louise Barnett appeal from a
Hopkins Circuit Court order granting summary judgment to Kentucky Farm
Bureau Mutual Insurance Company (“KFB”). At issue is whether their bad faith
claim under the Kentucky Unfair Claims Settlement Practices Act (“UCSPA”), Kentucky Revised Statutes (KRS) 304.12-230, was untimely or without merit as a
matter of law. Upon careful review, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The Barnetts had insured their home in Madisonville with KFB since
2000. On July 30, 2018, they filed a claim alleging their house and property were
damaged by mine subsidence. It is undisputed that their homeowners’ policy with
KFB contained an endorsement covering this type of loss. KFB retained Bowser
Morner, Geotechnical Engineers, to investigate the Barnetts’ claim. Bowser
Morner’s resulting report was authored by a geologist and an engineer who opined
that the primary cause of the cracks observed in the Barnett residence was not
ground movement induced by a mine subsidence event.
KFB sent the Barnetts a letter dated October 18, 2018, denying their
claim on the basis of the Bowser Morner report. According to statements by
KFB’s attorney at the hearing, KFB would have had no monetary interest in
denying the Barnetts’ claim because the Kentucky Mine Subsidence Fund
reimburses insurance companies for mine subsidence damages. See KRS 304.44-
020 and KRS 304.44-050.
The Barnetts did not pursue the matter further until, approximately
two and one-half years later, on April 14, 2021, they filed a complaint in Hopkins
Circuit Court alleging that KFB had arbitrarily refused to compensate them for the
-2- damage to their residence. The complaint also alleged that KFB’s refusal to pay
the claim constituted bad faith and violated the UCSPA.
KFB moved for summary judgment on the grounds that the Barnetts’
complaint was untimely filed under a limitations clause found in their
homeowners’ policy, which states: “Suit Against Us. No action can be brought
unless the policy provisions have been complied with and the action is started
within one year after the date of loss.” KFB argued that the Barnetts’ contractual
claims had to be dismissed for failure to bring suit within one year of the alleged
mine subsidence reported on July 30, 2018. It further argued that the plaintiffs
could not satisfy the prerequisites of a bad faith claim under the UCSPA, the first
prong of which requires proof that the insurer was obligated to pay the claim under
the terms of the policy. KFB contended that it was not obligated to pay the
underlying claim both because it was not timely filed and because the experts had
opined the damages to the Barnetts’ home were not caused by mine subsidence.
The Barnetts responded that the appropriate limitations period for
UCSPA claims was five years and that the one-year limitations period was
contrary to public policy as an attempt to dilute and diminish the protections of the
UCSPA.
Following a hearing, the circuit court entered an order granting
summary judgment to KFB. This appeal by the Barnetts followed.
-3- STANDARD OF REVIEW
In reviewing a grant of summary judgment, our inquiry focuses on
“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); Kentucky Rules of
Civil Procedure (“CR”) 56.03. The trial court is required to view the record “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).
The circuit court’s order granting summary judgment does not state
the specific basis for its decision. We “will review the issue de novo because only
legal questions and no factual findings are involved.” Hallahan v. The Courier-
Journal, 138 S.W.3d 699, 705 (Ky. App. 2004).
ANALYSIS
On appeal, the Barnetts’ arguments address only the dismissal of their
claims of bad faith under the UCSPA. They proceed on the assumption that the
circuit court granted summary judgment by applying the one-year limitations
period found in their policy to bar these claims. They contend that UCSPA claims
are subject to the five-year limitations period found in KRS 413.120(2) and that the
circuit court’s decision was contrary to the public policy underlying the UCSPA.
-4- However, we need not delve into the legitimacy of this argument as the issue of
whether they are able, as a matter of law, to state a claim under the USPCA is
dispositive of this appeal.
A successful bad faith claim against an insurer, premised on common
law or the UCSPA, requires the plaintiff to prove the following three elements set
forth in Wittmer v. Jones, 864 S.W.2d 885 (Ky. 1993):
(1) the insurer must be obligated to pay the claim under the terms of the policy;
(2) the insurer must lack a reasonable basis in law or fact for denying the claim; and
(3) it must be shown that the insurer either knew there was no reasonable basis for denying the claim or acted with reckless disregard for whether such a basis existed.
Davidson v. American Freightways, Inc., 25 S.W.3d 94, 100 (Ky. 2000) (citing
Wittmer, 864 S.W.2d at 890).
KFB argues that it is impossible for the Barnetts to meet the first
prong of the UCSPA claim because KFB was not contractually obligated to pay
their claim under the terms of the policy once the one-year limitations period had
passed. In other words, the Barnetts cannot meet the first prong of the Wittmer test
because their underlying claim for breach of the insurance contract is not viable as
untimely filed.
-5- This argument has never been addressed by a Kentucky court,
although we note that it was rejected in an unpublished opinion of the federal
district court for the Eastern District of Kentucky to conclude that the plaintiffs’
bad faith claim was not necessarily barred even if their underlying breach of
contract claim was procedurally barred, because there was no finding that the
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RENDERED: APRIL 12, 2024; 10:00 A.M. NOT TO BE PUBLISHED
Commonwealth of Kentucky Court of Appeals
NO. 2023-CA-0485-MR
CECIL WAYNE BARNETT AND SALLY LOUISE BARNETT APPELLANTS
APPEAL FROM HOPKINS CIRCUIT COURT v. HONORABLE CHRISTOPHER B. OGLESBY, JUDGE ACTION NO. 21-CI-00293
KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY APPELLEES
OPINION AFFIRMING
** ** ** ** **
BEFORE: EASTON, KAREM, AND TAYLOR, JUDGES.
KAREM, JUDGE: Cecil Wayne Barnett and Sally Louise Barnett appeal from a
Hopkins Circuit Court order granting summary judgment to Kentucky Farm
Bureau Mutual Insurance Company (“KFB”). At issue is whether their bad faith
claim under the Kentucky Unfair Claims Settlement Practices Act (“UCSPA”), Kentucky Revised Statutes (KRS) 304.12-230, was untimely or without merit as a
matter of law. Upon careful review, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The Barnetts had insured their home in Madisonville with KFB since
2000. On July 30, 2018, they filed a claim alleging their house and property were
damaged by mine subsidence. It is undisputed that their homeowners’ policy with
KFB contained an endorsement covering this type of loss. KFB retained Bowser
Morner, Geotechnical Engineers, to investigate the Barnetts’ claim. Bowser
Morner’s resulting report was authored by a geologist and an engineer who opined
that the primary cause of the cracks observed in the Barnett residence was not
ground movement induced by a mine subsidence event.
KFB sent the Barnetts a letter dated October 18, 2018, denying their
claim on the basis of the Bowser Morner report. According to statements by
KFB’s attorney at the hearing, KFB would have had no monetary interest in
denying the Barnetts’ claim because the Kentucky Mine Subsidence Fund
reimburses insurance companies for mine subsidence damages. See KRS 304.44-
020 and KRS 304.44-050.
The Barnetts did not pursue the matter further until, approximately
two and one-half years later, on April 14, 2021, they filed a complaint in Hopkins
Circuit Court alleging that KFB had arbitrarily refused to compensate them for the
-2- damage to their residence. The complaint also alleged that KFB’s refusal to pay
the claim constituted bad faith and violated the UCSPA.
KFB moved for summary judgment on the grounds that the Barnetts’
complaint was untimely filed under a limitations clause found in their
homeowners’ policy, which states: “Suit Against Us. No action can be brought
unless the policy provisions have been complied with and the action is started
within one year after the date of loss.” KFB argued that the Barnetts’ contractual
claims had to be dismissed for failure to bring suit within one year of the alleged
mine subsidence reported on July 30, 2018. It further argued that the plaintiffs
could not satisfy the prerequisites of a bad faith claim under the UCSPA, the first
prong of which requires proof that the insurer was obligated to pay the claim under
the terms of the policy. KFB contended that it was not obligated to pay the
underlying claim both because it was not timely filed and because the experts had
opined the damages to the Barnetts’ home were not caused by mine subsidence.
The Barnetts responded that the appropriate limitations period for
UCSPA claims was five years and that the one-year limitations period was
contrary to public policy as an attempt to dilute and diminish the protections of the
UCSPA.
Following a hearing, the circuit court entered an order granting
summary judgment to KFB. This appeal by the Barnetts followed.
-3- STANDARD OF REVIEW
In reviewing a grant of summary judgment, our inquiry focuses on
“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); Kentucky Rules of
Civil Procedure (“CR”) 56.03. The trial court is required to view the record “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).
The circuit court’s order granting summary judgment does not state
the specific basis for its decision. We “will review the issue de novo because only
legal questions and no factual findings are involved.” Hallahan v. The Courier-
Journal, 138 S.W.3d 699, 705 (Ky. App. 2004).
ANALYSIS
On appeal, the Barnetts’ arguments address only the dismissal of their
claims of bad faith under the UCSPA. They proceed on the assumption that the
circuit court granted summary judgment by applying the one-year limitations
period found in their policy to bar these claims. They contend that UCSPA claims
are subject to the five-year limitations period found in KRS 413.120(2) and that the
circuit court’s decision was contrary to the public policy underlying the UCSPA.
-4- However, we need not delve into the legitimacy of this argument as the issue of
whether they are able, as a matter of law, to state a claim under the USPCA is
dispositive of this appeal.
A successful bad faith claim against an insurer, premised on common
law or the UCSPA, requires the plaintiff to prove the following three elements set
forth in Wittmer v. Jones, 864 S.W.2d 885 (Ky. 1993):
(1) the insurer must be obligated to pay the claim under the terms of the policy;
(2) the insurer must lack a reasonable basis in law or fact for denying the claim; and
(3) it must be shown that the insurer either knew there was no reasonable basis for denying the claim or acted with reckless disregard for whether such a basis existed.
Davidson v. American Freightways, Inc., 25 S.W.3d 94, 100 (Ky. 2000) (citing
Wittmer, 864 S.W.2d at 890).
KFB argues that it is impossible for the Barnetts to meet the first
prong of the UCSPA claim because KFB was not contractually obligated to pay
their claim under the terms of the policy once the one-year limitations period had
passed. In other words, the Barnetts cannot meet the first prong of the Wittmer test
because their underlying claim for breach of the insurance contract is not viable as
untimely filed.
-5- This argument has never been addressed by a Kentucky court,
although we note that it was rejected in an unpublished opinion of the federal
district court for the Eastern District of Kentucky to conclude that the plaintiffs’
bad faith claim was not necessarily barred even if their underlying breach of
contract claim was procedurally barred, because there was no finding that the
insurer was not obligated to pay the plaintiffs’ claim under the express provisions
of the policy. “A finding that the claim is now time barred does not preclude the
[plaintiffs] from arguing that [the insurer] indeed 1) had an obligation to pay the
claims under the terms of the policy; 2) denied the claim without a reasonable
basis; and 3) either knew there was no reasonable basis for denying the claim or
acted with reckless disregard for whether such a basis existed.” Barjuca v. State
Farm Fire and Cas. Co., No. 5:11-CV-380-JMH-REW, 2013 WL 6631999, at *9
(E.D. Ky. Dec. 17, 2013) (quoting Tennant v. Allstate Ins. Co., No. Civ.A. 04-54,
2006 WL 319046, at *8 (E.D. Ky. Feb. 10, 2006)).
We need not resolve this thorny question because even if the Barnetts’
UCSPA claims were not time-barred, summary judgment was warranted because
they failed to meet the minimal evidentiary standard for stating a claim of bad
faith.
The evidentiary threshold to state a claim for bad faith has been
described as “high indeed.” United Services Auto. Ass’n v. Bult, 183 S.W.3d 181,
-6- 186 (Ky. App. 2003), as modified (Jun. 27, 2003). There is no such thing as
“technical violation” of the UCSPA. Id. (citation omitted). “Before the cause of
action [for bad faith] exists in the first place, there must be evidence sufficient to
warrant punitive damages[.]” Id. “This means there must be sufficient evidence of
intentional misconduct or reckless disregard of the rights of an insured or a
claimant to warrant submitting the right to award punitive damages to the jury.”
Id. (emphasis in original).
Evidence must demonstrate that an insurer has engaged in outrageous conduct toward its insured. Furthermore, the conduct must be driven by evil motives or by an indifference to its insureds’ rights. . . . . Evidence of mere negligence or failure to pay a claim in timely fashion will not suffice to support a claim for bad faith. Inadvertence, sloppiness, or tardiness will not suffice; instead, the element of malice or flagrant malfeasance must be shown.
Id. The Barnetts have made no specific allegations of bad faith or how it
manifested itself in KFB’s behavior towards them. Their complaint tracks the
language of KRS 304.12-230, but they have not suggested how KFB’s reliance on
the Bowser Morner report to reject their claim was evidence of bad faith.
“[A] party opposing a properly supported summary judgment motion
cannot defeat it without presenting at least some affirmative evidence showing that
there is a genuine issue of material fact for trial.” Steelvest, 807 S.W.2d at 482.
The Barnetts have failed to present any affirmative evidence of the type of conduct
-7- of KFB’s part that would meet this standard. The Bowser Morner report provided a reasonable b
that the company would have had no monetary interest in denying the claim. The
Barnetts have offered no evidence whatsoever that KFB acted with an evil motive
or with reckless indifference to their rights nor have they suggested where such
evidence may be found or what the nature of such evidence might be. They simply
have not met the evidentiary threshold to state a claim for bad faith under the
Because, at the outset, we find that the Barnetts failed to state a claim
for which relief can be granted, we need not analyze the application of any statute
of limitations. The circuit court was correct in granting KFB’s motion for
summary judgment.
CONCLUSION
For the foregoing reasons, the order granting summary judgment to
KFB is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT: BRIEF FOR APPELLEE:
William M. Cox, Jr. Mike Moore Madisonville, Kentucky Paducah, Kentucky
-8-