RENDERED : APRIL 23, 2009 LI... I=iED
,;vuyrrmr (~vurf of "pfir 2007-SC-000221-DG
51~yl0 WILLIAM MATTINGLY, ET AL APPELLANTS
ON REVIEW FROM COURT OF APPEALS V. CASE NO . 2006-CA-000337 HARDIN CIRCUIT COURT NO . 02-CI-00432
WILLIAM E. STINSON, ET AL APPELLEES
AND
2007-SC-000222-DG
KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY APPELLANT
ON REVIEW FROM COURT OF APPEALS V. CASE NO . 2006-CA-000337 HARDIN CIRCUIT COURT NO . 02-CI-00432
WILLIAM E . STINSON, ET AL APPELLEES
OPINION OF THE COURT BY JUSTICE CUNNINGHAM
REVERSING
In this appeal, we consider whether the rule set forth in Earle v. Cobb ,
requiring the identification at trial of a defendant underinsured motorist
carrier, applies when there has been no Coots settlement between the carrier
and the alleged tortfeasor. William Stinson and William Mattingly were driving vehicles that collided
at an intersection in Hardin County . Though both drivers were injured,
Stinson suffered severe and permanent injuries, including brain damage .
Mattingly filed suit against Stinson, and Stinson counterclaimed . Stinson also
brought third-party complaints against Mattingly's employer and his own
insurer, Kentucky Farm Bureau Mutual Insurance Company (KFB), pursuant
to his underinsured motorist (UIM) coverage . Mattingly's suit against Stinson
was settled.
The parties went to trial on Stinson's counterclaim . Prior to trial,
Mattingly successfully moved the trial court to exclude any reference to UIM
coverage. KFB also moved to prohibit its identification as a party. KFB argued
that identification was not required because it was not participating at trial and
because there had been no settlement between it and Mattingly pursuant to
Coots v. Allstate Ins . Co ., 853 S .W.2d 895 (Ky. 1993) . The motion was granted.
The jury returned a verdict in favor of Mattingly, finding Stinson 100%
liable for the accident. A judgment was entered in accordance with the verdict,
dismissing Stinson's counterclaim and the third-party complaints . Stinson
appealed the judgment, arguing that the trial court erred in prohibiting
reference to UIM coverage . The Court of Appeals reversed and remanded for a
new trial, finding that the prohibition violated the rule set forth in Earle v.
Cobb, 156 S.W.3d 257 (Ky. 2004) . This Court granted discretionary review .
In Earle v. Cobb, we considered "whether an underinsured motorist
(UIM) carrier must be identified at trial when it chooses to preserve its
subrogation rights by means of the procedure set forth in Coots v . Allstate Ins. 2 Co." 156 S .W .3d at 258 . When an injured party intends to settle with a
tortfeasor and the tortfeasor's liability insurance carrier, the Coots procedure
allows the injured party's UIM carrier to preserve its subrogation rights against
the tortfeasor by paying the injured party the policy amount. We held that the
"UIM carrier should be so identified as a party [at trial] because it was named
as a party by virtue of its contract and because it chose to retain its
subrogation rights by substitution of its payment for that of the liability
insurance carrier." Id.
The Earle decision attacks the "legal fiction" that occurred when the
name of the tortfeasor was substituted for the UIM carrier for trial purposes .
See Coots , id . Our decision rested on the recognition that when an UIM carrier
substitutes its payment for that of the liability insurance carrier through the
Coots procedure, that UIM carrier "becomes the only real party with potential
liability to the plaintiff." 156 S.W.3d at 261 . To conceal the insurer's identity,
in light of the practical effect of a Coots settlement on the parties' interests, is
to engage in a legal "charade" whereby the trial is presented to the jury as a
claim against the alleged tortfeasor when, in reality, the plaintiffs only
remaining claim is against the UIM carrier. Id .
In this case, Stinson argues that Earle required identification of KFB at
trial, and that the trial court's prohibition re-created the "legal fiction"
denounced therein . We disagree because, in this case, there has been no Coots
settlement between KFB and Mattingly. Thus, we decline to extend the holding
in Earle to situations where the UIM carrier has not utilized the Coots settlement procedure and, therefore, has not substituted its liability for that of
the defendant.
The Earle Court recognized that, when a UIM carrier has reached a Coots
settlement, the tortfeasor is "released from any further liability to the injured
party[ .]" True v. Raines, 99 S .W.3d 439, 448 (Ky. 2003) (emphasis added) . In
such circumstances, to permit the UIM carrier "to either participate or sit idly
by and allow the tortfeasor to defend at trial, [is to hide] the identity of a bona
fide party." Earle , 156 S .W .3d at 261 . When the UIM carrier has not reached a
Coots settlement with the tortfeasor, the tortfeasor remains primarily liable to
the plaintiff. The UIM carrier is only potentially liable, contingent upon a
judgment in excess of the tortfeasor's own liability coverage . Because the
tortfeasor remains a real party in interest, no legal fiction is created for the
jury. The jury considers an actual case in tort between the injured party and
the tortfeasor and decides liability and damages. Any liability of the UIM
carrier to the tortfeasor or the injured party is ancillary to the jury's
determinations in this regard, and then any such liability exists in contract.
Here, KFB did not participate at trial. It did not enter into a Coots
settlement with Mattingly and, therefore, did not substitute its own liability for
Mattingly's . At trial, Mattingly remained the principal party in Stinson's suit,
primarily responsible for his injuries upon a finding of liability. The jury was
not presented with a legal fiction and was not asked to decide a controversy
between Mattingly and Stinson when the only real controversy existed between
Stinson and KFB. Rather, it considered the "live" issue of Mattingly's tort
liability to Stinson. In accordance with our courts' long-standing policy against 4 reference to liability insurance in tort actions, including UIM coverage, no
mention was made of KFB . See Turpin v . Scrivner, 297 Ky. 365, 178 S.W .2d
971 (1944) .
By its express language, Earle requires identification of an UIM carrier at
trial when it has used the Coots procedure "because it was named as a party
by virtue of its contract and because it chose to retain its subrogation rights by
substitution of its payment for that of the liability insurance carrier." 156
S.W .3d at 258 (emphasis added) . We decline to extend the holding in Earle to
those trials where the UIM carrier has not availed itself of the Coots procedure
to subrogate its rights .
Accordingly, the Hardin Circuit Court did not err in prohibiting mention
of KFB at trial, and Mattingly's motion in this regard was properly granted.
The opinion of the Court of Appeals is reversed and the judgment of the Hardin
Circuit Court is hereby reinstated .
Minton, C .J. ; Noble, Schroder, Venters, JJ., concur. Scott, J ., concurs in
result only. Abramson, J., not sitting. WILLIAM MATTINGLY ET AL V. WILLIAM E.
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RENDERED : APRIL 23, 2009 LI... I=iED
,;vuyrrmr (~vurf of "pfir 2007-SC-000221-DG
51~yl0 WILLIAM MATTINGLY, ET AL APPELLANTS
ON REVIEW FROM COURT OF APPEALS V. CASE NO . 2006-CA-000337 HARDIN CIRCUIT COURT NO . 02-CI-00432
WILLIAM E. STINSON, ET AL APPELLEES
AND
2007-SC-000222-DG
KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY APPELLANT
ON REVIEW FROM COURT OF APPEALS V. CASE NO . 2006-CA-000337 HARDIN CIRCUIT COURT NO . 02-CI-00432
WILLIAM E . STINSON, ET AL APPELLEES
OPINION OF THE COURT BY JUSTICE CUNNINGHAM
REVERSING
In this appeal, we consider whether the rule set forth in Earle v. Cobb ,
requiring the identification at trial of a defendant underinsured motorist
carrier, applies when there has been no Coots settlement between the carrier
and the alleged tortfeasor. William Stinson and William Mattingly were driving vehicles that collided
at an intersection in Hardin County . Though both drivers were injured,
Stinson suffered severe and permanent injuries, including brain damage .
Mattingly filed suit against Stinson, and Stinson counterclaimed . Stinson also
brought third-party complaints against Mattingly's employer and his own
insurer, Kentucky Farm Bureau Mutual Insurance Company (KFB), pursuant
to his underinsured motorist (UIM) coverage . Mattingly's suit against Stinson
was settled.
The parties went to trial on Stinson's counterclaim . Prior to trial,
Mattingly successfully moved the trial court to exclude any reference to UIM
coverage. KFB also moved to prohibit its identification as a party. KFB argued
that identification was not required because it was not participating at trial and
because there had been no settlement between it and Mattingly pursuant to
Coots v. Allstate Ins . Co ., 853 S .W.2d 895 (Ky. 1993) . The motion was granted.
The jury returned a verdict in favor of Mattingly, finding Stinson 100%
liable for the accident. A judgment was entered in accordance with the verdict,
dismissing Stinson's counterclaim and the third-party complaints . Stinson
appealed the judgment, arguing that the trial court erred in prohibiting
reference to UIM coverage . The Court of Appeals reversed and remanded for a
new trial, finding that the prohibition violated the rule set forth in Earle v.
Cobb, 156 S.W.3d 257 (Ky. 2004) . This Court granted discretionary review .
In Earle v. Cobb, we considered "whether an underinsured motorist
(UIM) carrier must be identified at trial when it chooses to preserve its
subrogation rights by means of the procedure set forth in Coots v . Allstate Ins. 2 Co." 156 S .W .3d at 258 . When an injured party intends to settle with a
tortfeasor and the tortfeasor's liability insurance carrier, the Coots procedure
allows the injured party's UIM carrier to preserve its subrogation rights against
the tortfeasor by paying the injured party the policy amount. We held that the
"UIM carrier should be so identified as a party [at trial] because it was named
as a party by virtue of its contract and because it chose to retain its
subrogation rights by substitution of its payment for that of the liability
insurance carrier." Id.
The Earle decision attacks the "legal fiction" that occurred when the
name of the tortfeasor was substituted for the UIM carrier for trial purposes .
See Coots , id . Our decision rested on the recognition that when an UIM carrier
substitutes its payment for that of the liability insurance carrier through the
Coots procedure, that UIM carrier "becomes the only real party with potential
liability to the plaintiff." 156 S.W.3d at 261 . To conceal the insurer's identity,
in light of the practical effect of a Coots settlement on the parties' interests, is
to engage in a legal "charade" whereby the trial is presented to the jury as a
claim against the alleged tortfeasor when, in reality, the plaintiffs only
remaining claim is against the UIM carrier. Id .
In this case, Stinson argues that Earle required identification of KFB at
trial, and that the trial court's prohibition re-created the "legal fiction"
denounced therein . We disagree because, in this case, there has been no Coots
settlement between KFB and Mattingly. Thus, we decline to extend the holding
in Earle to situations where the UIM carrier has not utilized the Coots settlement procedure and, therefore, has not substituted its liability for that of
the defendant.
The Earle Court recognized that, when a UIM carrier has reached a Coots
settlement, the tortfeasor is "released from any further liability to the injured
party[ .]" True v. Raines, 99 S .W.3d 439, 448 (Ky. 2003) (emphasis added) . In
such circumstances, to permit the UIM carrier "to either participate or sit idly
by and allow the tortfeasor to defend at trial, [is to hide] the identity of a bona
fide party." Earle , 156 S .W .3d at 261 . When the UIM carrier has not reached a
Coots settlement with the tortfeasor, the tortfeasor remains primarily liable to
the plaintiff. The UIM carrier is only potentially liable, contingent upon a
judgment in excess of the tortfeasor's own liability coverage . Because the
tortfeasor remains a real party in interest, no legal fiction is created for the
jury. The jury considers an actual case in tort between the injured party and
the tortfeasor and decides liability and damages. Any liability of the UIM
carrier to the tortfeasor or the injured party is ancillary to the jury's
determinations in this regard, and then any such liability exists in contract.
Here, KFB did not participate at trial. It did not enter into a Coots
settlement with Mattingly and, therefore, did not substitute its own liability for
Mattingly's . At trial, Mattingly remained the principal party in Stinson's suit,
primarily responsible for his injuries upon a finding of liability. The jury was
not presented with a legal fiction and was not asked to decide a controversy
between Mattingly and Stinson when the only real controversy existed between
Stinson and KFB. Rather, it considered the "live" issue of Mattingly's tort
liability to Stinson. In accordance with our courts' long-standing policy against 4 reference to liability insurance in tort actions, including UIM coverage, no
mention was made of KFB . See Turpin v . Scrivner, 297 Ky. 365, 178 S.W .2d
971 (1944) .
By its express language, Earle requires identification of an UIM carrier at
trial when it has used the Coots procedure "because it was named as a party
by virtue of its contract and because it chose to retain its subrogation rights by
substitution of its payment for that of the liability insurance carrier." 156
S.W .3d at 258 (emphasis added) . We decline to extend the holding in Earle to
those trials where the UIM carrier has not availed itself of the Coots procedure
to subrogate its rights .
Accordingly, the Hardin Circuit Court did not err in prohibiting mention
of KFB at trial, and Mattingly's motion in this regard was properly granted.
The opinion of the Court of Appeals is reversed and the judgment of the Hardin
Circuit Court is hereby reinstated .
Minton, C .J. ; Noble, Schroder, Venters, JJ., concur. Scott, J ., concurs in
result only. Abramson, J., not sitting. WILLIAM MATTINGLY ET AL V. WILLIAM E. STINSON ET AL; KENTUCKY FARM BUREAU MUTUAL INSURANCE CO . V. WILLIAM E. STINSON ET AL, 2007-SC-000221-DG; 2007-SC-000222-DG:
SCOTT, J., CONCURS IN RESULT ONLY: I concur with the majority's opinion
in result only as Earle v. Cobb, 156 S .W.3d 257 (Ky. 2005) specifically cites two
separate triggers for UM/UIM identification, (1) a "Coots" settlement, i .e .,
"when [the Insurance Co .,] invoked the `Coots' procedure it should have been
identified ." Id. at 262, and (2) participation at trial, i.e., the jury should know
"who are the parties to the litigation where the [UIM] carrier elects to
participate actively in the trial." Id . at 260. As Kentucky Farm Bureau did not
enter into a "Coots settlements," or participate at trial, it was appropriate that
it not be identified . Had it done either one, however, Cobb commands that it
be properly identified as one of the parties .
As the majority opinion seems to suggest that both are required for
identification, my concurrence is in result only as Kentucky Farm Bureau did
neither. COUNSEL FOR APPELLANTS/ APPELEES, WILLIAM MATTINGLY, TRADITIONAL MASONRY, INC. AND TRADITIONAL MASONRY, LLC :
Wayne J . Carroll Deborah Lynne Harrod MacKenzie 8s Peden, P.S .C. 7508 New Lagrange Road, No. 3 Louisville, KY 40222
COUNSEL FOR APPELLANT/ APPELLEE, KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY:
Patrick A. Ross Hensley, Ross & Howard 207 East Main Street P. O. Box 350 Horse Cave, KY 42749
COUNSEL FOR APPELLEE, WILLIAM E . STINSON:
Jason B . Bell Kerrick, Stivers, Coyle 8v Van Zant, P.L.C . 2819 Ring Road, Suite 200 P. O. Box 844 Elizabethtown, KY 42702-0844
KENTUCKY DEFENSE COUNSEL:
William Baxter Orberson Sara Clark Davis Phillips, Parker, Orberson & Moore, P.L.C . 716 West Main Street Suite 300 Louisville, KY 40202
KENTUCKY JUSTICE ASSOCIATION:
Michael Anthony Breen Breen and Morgan 870 Fairview Avenue, Suite 5 P. O. Box 3310 Bowling Green, KY 42102-3310