G & J Pepsi-Cola Bottlers, Inc. v. Fletcher

229 S.W.3d 915, 2007 Ky. App. LEXIS 220, 2007 WL 2011573
CourtCourt of Appeals of Kentucky
DecidedJuly 13, 2007
Docket2003-CA-000129-MR
StatusPublished
Cited by7 cases

This text of 229 S.W.3d 915 (G & J Pepsi-Cola Bottlers, Inc. v. Fletcher) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
G & J Pepsi-Cola Bottlers, Inc. v. Fletcher, 229 S.W.3d 915, 2007 Ky. App. LEXIS 220, 2007 WL 2011573 (Ky. Ct. App. 2007).

Opinion

OPINION AND ORDER

KNOPF, Senior Judge.

The single question in this appeal is whether the Bourbon Circuit Court erred in summarily dismissing the subrogation *916 claim of appellant, G & J Pepsi-Cola Bottlers, Inc., for workers’ compensation benefits paid to appellee, Nicholas Fletcher. This appeal was held in abeyance pending resolution by the Supreme Court of Kentucky of the issues advanced in Cincinnati Insurance Company v. Samples, 192 S.W.3d 311 (Ky.2006). After that opinion became final, this panel directed the parties to file supplemental briefs addressing the applicability of the Samples decision to the subrogation claim at issue in this appeal. Having fully considered those supplemental briefs, the original briefs filed in this appeal, and the record, we. are convinced that the decision of the Bourbon Circuit Court must be affirmed.

The facts of this case are neither complex nor in dispute. On March 26, 1999, Nicholas Fletcher, while driving a vehicle owned by his employer, G & J Pepsi-Cola Bottlers (“G & J”), was involved in an automobile collision with a vehicle driven by David Urmson. Fletcher sustained serious physical injuries and filed the underlying litigation against Urmson. Because it appeared that Urmson was under-insured, Fletcher also sued Ohio Casualty Group, his personal automobile insurance carrier, for underinsured motorist’s (“UIM”) benefits. Fletcher subsequently amended his complaint to add a UIM claim against United States Fire Insurance Company (“US Fire”), the insurer of G & J’s fleet of vehicles. Finally, G & J intervened in this action in June 2001, to assert a $370,000.00 subrogation claim for workers’ compensation benefits paid to Fletcher as a result of the same automobile accident.

Due to the extent of Fletcher’s injuries and the fact that Urmson’s automobile insurance policy provided only the minimum limits, the focus of the circuit court litigation was the UIM coverage. The primary issue became whether G & J could assert a subrogation claim against the benefits Fletcher was seeking from U.S. Fire and Ohio Casualty. The issue was resolved on Fletcher’s motion for partial summary judgment. Relying upon the language of KRS 342.700(1) and the rationale set out in State Farm Mutual Insurance Company v. Fireman’s Fund American Insurance Company, 550 S.W.2d 554 (Ky.1977), the circuit court concluded that the employer’s statutory subrogation rights extend only to recovery of benefits paid “from the other person in whom legal liability for damages exists[;]” in other words, the tortfeasor. Applying the holding in State Farm, the trial court noted that the payment of benefits by a UIM carrier is the performance of a contractual obligation, not the payment of damages by the person in whom legal liability rests. Thus, the trial court granted the motion for summary judgment because it found no case or statute which would permit G & J to assert its subrogation claim against the amounts paid under the two separately purchased UIM policies.

As previously noted, this appeal was held in abeyance pending a decision by the Supreme Court in Samples. In its supplemental brief, G & J argues that Samples requires reinstatement of its subrogation claim in order to effectuate the statutory prohibition against double recovery. G & J asserts that allowing Fletcher to proceed on his UIM claim without allowing its sub-rogation claim is contrary to Samples’ holding that a plaintiff cannot recover UIM damages which duplicate his workers’ compensation benefits.

Ohio Casualty and U.S. Fire disagree. Ohio Casualty maintains that Samples simply holds that an employee may not recover UIM benefits which duplicate his workers’ compensation award, but it does not address or change well-settled caselaw that a workers’ compensation carrier may *917 not look to a UIM carrier for its statutory subrogation rights. Similarly, U.S. Fire argues that the holding in Samples is intended to prevent double recovery and does not answer the question posed in this appeal — whether an employer is entitled to subrogate against its employee’s related UIM recovery the amount of workers’ compensation benefits paid. We do not read Samples as supporting G & J’s subro-gation claim.

We preface our discussion of the merits of G & J’s appeal with a reiteration of the analysis set out in State Farm concerning the nature of UIM benefits and the genesis of an employer’s subrogation rights:

As we construe KRS 342.055 [now KRS 342.700(1) ], the subrogation statute, “the other person in whom legal liability for damages exists” quite clearly refers to the third-party tortfeasor who is liable at common law. A payment made in performance of a contractual obligation is not a payment of “damages.” Hence the liability of an insurance company under its uninsured motorist coverage cannot be the “legal liability for damages” mentioned in KRS 342.055. Moreover, the satisfaction of an injured party’s claim by his own insurance company under its uninsured motorist coverage does not inure to the benefit of the uninsured motorist. His liability is not extinguished, and it may be enforced by both the carrier which has paid workmen’s compensation benefits and the carrier which has paid under the uninsured motorist coverage. As between these two subrogees, however, the compensation carrier has priority, because otherwise the automobile policy would indeed interfere with the rights given to the compensation carrier under KRS 342.055. Cf. Horne v. Superior Life Ins. Co., 203 Va. 282, 123 S.E.2d 401, 405 (1962).
To hold that the contractual rights of an insured party under the uninsured motorist clause of an automobile liability insurance policy must inure to the benefit of a workmen’s compensation carrier to the extent of compensation paid or payable to him would confer upon the compensation carrier an additional right which it does not have under the subrogation statute. The injured party, or the person under whose insurance policy he is defined as an “insured,” has no obligation to his employer’s compensation carrier to carry any automobile liability insurance whatever.

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Bluebook (online)
229 S.W.3d 915, 2007 Ky. App. LEXIS 220, 2007 WL 2011573, Counsel Stack Legal Research, https://law.counselstack.com/opinion/g-j-pepsi-cola-bottlers-inc-v-fletcher-kyctapp-2007.