State Farm Mutual Automobile Insurance v. Beard

636 S.W.2d 26, 1982 Ky. App. LEXIS 225
CourtCourt of Appeals of Kentucky
DecidedJuly 16, 1982
StatusPublished

This text of 636 S.W.2d 26 (State Farm Mutual Automobile Insurance v. Beard) 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
State Farm Mutual Automobile Insurance v. Beard, 636 S.W.2d 26, 1982 Ky. App. LEXIS 225 (Ky. Ct. App. 1982).

Opinions

COOPER, Judge.

This is an appeal from a portion of a judgment allowing the appellee-Klapheke an attorney’s fee under KRS 304.39-070(5). At issue is whether the trial court erred, as a matter of law, in so acting given the language of the statute. On review, we reverse and remand.

The facts relative to this action are as follows: In April of 1980, the appellee, Donna Jo Beard, filed an action against the appellant, Timothy Puckett, and Danny Cherry for personal injuries she sustained as a result of a motor vehicle accident on May 27,1979. KRS 304.39-060. Beard was represented by the co-appellee, William Thomas Klapheke, II. Puckett and Cherry answered, denying liability. The appellant, State Farm Mutual Automobile Insurance Company, (hereinafter State Farm) as the reparation obligor and insurer of Puckett and Cherry, reserved its rights as to the question of coverage. The action against Cherry was subsequently dismissed.

Pursuant to CR 24 and KRS 304.39-070, State Farm, as the reparation obligor and insurer of Beard, filed an intervening complaint, asserting its statutory subrogation claim against Puckett and/or its insurer, State Farm, for basic reparation benefits paid to Beard. By coincidence, State Farm was the insurer of Beard and Puckett. The amount of such benefits was $3,135.23, $2,629.48 for medical expenses and $505.75 for loss of wages. Puckett and State Farm filed a motion to dismiss the intervening complaint with prejudice. Prior to the trial, Puckett filed a motion to strike any claim for medical expenses and loss of wages from Beard’s complaint. KRS 304.-39-060(2)(a). In the alternative, he requested a credit or set-off for $3,135.23 against any possible subsequent judgment. A jury subsequently awarded Beard $10,-944.96, of which $2,938.48 represented medical expenses, and $506.48 represented loss of wages. On joint motion of State Farm, both as intervening plaintiff and intervening defendant, an agreed order was entered dismissing the intervening complaint.

Prior to the entry of judgment, as counsel for Beard, Klapheke requested the trial court for an attorney’s fee of $1,045.08, or one-third of the amount recovered by State Farm. KRS 304.39-070(5). The latter objected, arguing that since its intervening complaint had been dismissed, there had been no reimbursement or recovery of basic reparation benefits under the language of the statute. Nevertheless, the trial court awarded Klapheke an attorney’s fee of $1,048.08. Furthermore, it allowed Puckett a credit or set-off in the amount of $3,135.23, or the amount of the basic reparation benefits paid to Beard by State Farm. It is from such judgment that the appellants now appeal.

Essentially, the appellants argue that the trial court erred, as a matter of law, in awarding Klapheke an attorney’s fee given the language of KRS 304.39-070(5). Specifically, they argue that in light of the dismissal of the intervening complaint, there was no reimbursement or recovery by State Farm of basic reparation benefits [28]*28paid to Beard. As such, they argue that under the specific language of the statute, Elapheke was not entitled to an attorney’s fee.

The relevant portion of KRS 304.39-070(5) states as follows:

An 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...

Here, the situation is somewhat anomalous in that State Farm is the insurer of both the secured person and the tortfeasor. Given this fact, it is evident why State Farm failed to pursue its subrogation claim for basic reparation benefits paid to its insured. To pursue such a claim would be to pursue a claim against itself or, in the language of the Court in Hargett v. Dodson, Ky.App., 597 S.W.2d 151 p. 152 (1979), it would be, “. .. likened to a cat chasing its own tail; if it succeeded, it would only bite itself...” Strictly construing the language of the statute, there was no reimbursement of basic reparation benefits paid to a secured party by that party’s reparation obligor by any insurance carrier on behalf of a tort-feasor. As such, the attorney representing the secured person, here the appellee-Kla-pheke, was not “entitled to a reasonable attorneys’ fee.” Consequently, the judgment of the trial court in this respect was in error.

Although it is arguable that a court may construe portions of KRS 304.39-070(5) with principles of equity in mind — see Meridian Mut. Ins. Co. v. Walker, Ky.App., 602 S.W.2d 181 (1980); Grange Mutual Cas. Co. v. Woodall, Ky.App., 28 Ky.L.Summ. 16 (Nov. 25, 1981), (Disc.Rev. Granted March 2, 1982)—this Court is bound to construe the language in question strictly.

In Progressive Cas. Ins. Co. v. Kidd, Ky., 602 S.W.2d 416 (1980), the Court held that the procedures outlined in subsections (2) and (3) of the statute were mandatory. Such sections allow a reparation obligor to recover basic reparation benefits paid to its insured only if it intervenes as a party in the separate tort action, or submits its claim to arbitration. In ruling that the insurer in Progressive, supra, had forfeited its claim to recover basic reparation benefits because it failed to follow the statutory procedure, the Court underscored the language of KRS 304.39-060(2)(a) which provides that:

Tort liability with respect to accidents occurring in this Commonwealth and arising from the ownership, maintenance, or use of a motor vehicle is ‘abolished’ for damages because of bodily injury, sickness or disease to the extent the basic reparation benefits provided in this subtitle are payable thereof...

The Progressive Court held that this language, and the language in KRS 304.39-070, prevents an injured party from asserting a claim for benefits that it has already received from its insurer in the form of basic reparation benefits.

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Related

Progressive Casualty Insurance Co. v. Kidd
602 S.W.2d 416 (Kentucky Supreme Court, 1980)
Hargett v. Dodson
597 S.W.2d 151 (Court of Appeals of Kentucky, 1979)
Meridian Mutual Insurance Co. v. Walker
602 S.W.2d 181 (Court of Appeals of Kentucky, 1980)

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Bluebook (online)
636 S.W.2d 26, 1982 Ky. App. LEXIS 225, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-farm-mutual-automobile-insurance-v-beard-kyctapp-1982.