Sandra K. Combs v. Meridian Security Insurance Company ( 2023 )

RENDERED: JUNE 23, 2023; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2022-CA-0448-MR
SANDRA K. COMBS APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
v. HONORABLE BRIAN C. EDWARDS, JUDGE
ACTION NO. 16-CI-005108
MERIDIAN SECURITY INSURANCE
COMPANY APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: JONES, KAREM, AND LAMBERT, JUDGES.
LAMBERT, JUDGE: Sandra K. Combs has appealed from the summary judgment
of the Jefferson Circuit Court in which it held that Meridian Security Insurance
Company properly denied coverage for an automobile accident due to her failure to
make a timely premium payment. We affirm.
On October 27, 2014, Sandra K. Combs was involved in an
automobile accident when she claimed another driver, Shaima N. Mohammad
Shah, struck the 2007 Ford Econoline van she was driving. Combs was injured in
the accident and incurred medical and hospital expenses, and her van was also
damaged. At the time of the accident, Combs believed she was covered by a
policy of automobile liability insurance through Meridian Security Insurance
Company (Meridian), policy number AKY0092273 03, which she stated was
effective between November 29, 2013, and November 29, 2014. She purchased
this policy from an agent of Meridian, Darrell E. Russell of Darrell E. Russell
Insurance Agency, LLC. Combs called Russell from the scene to inform him of
the accident. She later received a letter from Russell stating that she had been
insured with Meridian from November 29, 2011, through October 25, 2014,
without any lapse in coverage.
Combs received a letter from Meridian dated October 27, 2014,
stating that her policy had been cancelled effective at 12:01am on October 25,
2014, due to the nonpayment of the premium pursuant to the Notice of
Cancellation dated October 3, 2014. That notice stated:
WE ARE CONCERNED THAT WE HAVE NOT
RECEIVED YOUR PREMIUM PAYMENT FOR THE
ABOVE POLICY. PERHAPS YOU ALREADY HAVE
MAILED YOUR PAYMENT. HOWEVER, SINCE IT
HAD NOT BEEN RECEIVED BY THE DATE OF THE
NOTICE SHOWN BELOW, STATE LAW REQUIRES
WE SEND YOU THIS NOTICE.
BECAUSE PAYMENT OF THE PREMIUM THAT IS
NOW PAST DUE HAS NOT BEEN RECEIVED,
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YOUR INSURANCE TERMINATES AS OF THE
CANCELLATION EFFECTIVE DATE AND TIME
SET FORTH BELOW. NO OTHER NOTICE WILL BE
PROVIDED. TO KEEP THIS POLICY IN FORCE,
PLEASE NOTE THAT PAYMENT IN FULL MUST
BE RECEIVED PRIOR TO THE CANCELLATION
EFFECTIVE DATE. IF NOT RECEIVED BY THIS
DATE, WE WILL SEND YOU CONFIRMATION OF
CANCELLED STATUS OF YOUR POLICY.
DATE OF NOTICE: 10/03/2014
CANCELLATION EFFECTIVE:
10/25/2014 AT 12:01 AM
REASON FOR CANCELLATION: NON-
PAYMENT OF PREMIUMS
The amount past due was listed as $159.46.
Meridian denied coverage to Combs under the liability, collision, and
reparation benefits portions of her policy because it had lapsed. State Farm
Insurance Company (the company that insured Shah) later asserted a claim against
her for $17,796.11 that it had paid on her behalf.
Two years later, on October 14, 2016, Combs filed a complaint in
Jefferson Circuit Court against Shah, Russell and his insurance agency
(collectively, “Russell”), and Meridian,1 alleging causes of action for personal
injuries, declaratory relief, bad faith, and punitive damages. The causes of action
1
Combs originally named State Auto Insurance Companies as a defendant; Meridian was named
as the proper defendant in an amended complaint.
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included a negligence claim against Shah, a claim for wrongful denial of coverage
against Meridian (based upon waiver due to past dealing between her and Meridian
as to the payment of her premium), and claims of common law bad faith and
violations of Kentucky’s Unfair Claims Settlement Practices Act, Kentucky
Revised Statutes (KRS) 304.12-230 and the Kentucky Consumer Protection Act,
KRS 367.170, against Meridian and Russell. She also alleged that Meridian failed
to pay basic reparation benefits or for the damage to her van. In an amended
complaint, Combs alleged that Russell negligently failed to procure insurance for
her. Combs sought a judgment against Shah for compensatory damages, a
declaration that her automobile liability insurance policy with Meridian was in
effect at the time of the accident, and a judgment against Russell and Meridian
declaring she was entitled to coverage. She also sought compensatory damages,
punitive damages, and reasonable attorney fees and costs from Russell and
Meridian.2
Meridian filed a motion for summary judgment in January 2018
related to coverage. It argued that Combs’ insurance policy was properly canceled
on October 25, 2014, because she had failed to make her premium payment after
receiving a notice of cancellation dated October 3, 2014. Meridian also argued that
2
Combs’ claims against Russell and Shah were settled and dismissed in 2020 and 2022,
respectively.
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it was not estopped from denying coverage because it had only allowed Combs to
make late payments prior to her policy lapsing, distinguishing this case from
Howard v. Motorists Mut. Ins. Co., 955 S.W.2d 525 (Ky. 1997). And the one time
her policy was reinstated after it lapsed in 2013, Combs both paid her outstanding
premium and signed a “Statement of No Loss,” which she would not have been
able to do following her 2014 accident. In her response, Combs stated that
Meridian continued to accept her premium payments after sending a notice of
cancellation and issuing retroactive coverage. She also requested time to take
additional discovery. The court did not rule on this motion.
In January 2022, Meridian filed a renewed motion for summary
judgment related to coverage for the same reasons set forth in its initial motion.
Because she failed to pay her insurance premium prior to the cancellation date and
time, Combs was not insured at the time of the accident, and Meridian did not owe
any coverage to her or any duties that would support claims for bad faith, either
statutory or common law. Combs again objected to the motion, citing to the
previous course of dealing between them.
The court heard oral arguments from the parties and on March 24,
2022, entered an order granting the motion for summary judgment. It set forth the
background more specifically as follows:
Ms. Combs purchased automobile liability
insurance from agent Darrell Russell for more than
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twenty years. Since at least 2012, Ms. Combs was
insured through [Meridian]. Between 2012 and 2014,
Ms. Combs began caring for her dying mother, her
mother and sister passed away, and she had knee surgery.
During this period, Ms. Combs was late paying her
monthly insurance premiums seven times. Each time
Meridian did not receive a timely payment, it sent Ms.
Combs Notices of Cancellation and eventually, she paid
the premium and Meridian would then issue Policy
Status Notices stating that the policy’s termination issues
had been resolved and the coverage was in force without
interruption.
On October 3, 2014, Ms. Combs received notice
from Meridian that she had not paid her monthly
premium due September 29, 2014. The notice stated that
the policy would terminate if Ms. Combs failed to make
the payment by October 25, 2014. On October 27, 2014,
Ms. Combs received from Meridian a Confirmed
Cancellation Notice stating that effective October 25,
2014, her policy had been terminated due to failure to
pay her premiums. After Ms. Combs received the notice,
she called her agent Mr. Russell to determine whether
she still had insurance. Mr. Russell told Ms. Combs that
his computers were down and that he could not advise
her on the policy. Ms. Combs then called Meridian,
which advised her to speak with her insurance agent.
Later that day, Ms. Combs was attempting to turn left
across two lanes of traffic on Dixie Highway when her
car collided with Ms. Shah’s car traveling in the right-
hand lane. When Ms. Combs contacted Meridian
seeking coverage for the accident, Meridian denied her
claim and advised that her coverage had been terminated
prior to the accident. Ms. Combs then filed the instant
action alleging that Ms. Shah was negligent and alleging
that Meridian acted in bad faith in denying her claim.
Meridian is now seeking Summary Judgment on this
claim.
....
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Ms. Combs does not dispute that prior to the
accident, she received Meridian’s notice of cancellation
of her coverage. In addition, Ms. Combs does not
dispute Meridian’s assertion that her premiums due had
not been timely paid as required and that this was the
basis for the cancellation. Notwithstanding these
concessions, Ms. Combs argues that Summary Judgment
is improper because her claim that Meridian acted in Bad
Faith in denying her claim is supported by the legal
doctrine of estoppel. Specifically, Ms. Combs contends
that because Meridian had accepted late payments from
her on previous occasions and maintained her coverage,
it was reasonable for her to assume that this would
continue to happen and that as a result, Meridian is
estopped from being able to deny coverage due to her
failure to make timely payment.
(Emphases original.) The circuit court ultimately granted summary judgment in
favor of Meridian, holding that Howard, supra, was distinguishable and that
estoppel was not warranted. This appeal now follows.
On appeal, Combs again concedes that she is not challenging that she
had not paid her insurance premium after receiving the October 3, 2014, Notice of
Cancellation. Her argument continues to be that Meridian improperly denied
coverage based upon estoppel due to their past course of dealings related to her late
payment of premiums. Meridian disputes this argument.
Our standard of review is set forth in Bratcher v. State Farm Fire &
Cas. Co., 642 S.W.3d 724, 726 (Ky. App. 2021):
On appeal, “[t]he standard of review . . . of a
summary judgment is whether the circuit judge correctly
found that there were no issues as to any material fact
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and that the moving party was entitled to a judgment as a
matter of law. Summary judgment is appropriate where
the movant shows that the adverse party could not prevail
under any circumstances.” Pearson ex rel. Trent v. Nat’l
Feeding Sys., Inc., 90 S.W.3d 46, 49 (Ky. 2002).
Further, the construction and interpretation of an
insurance policy is a question of law which we review de
novo. Isaacs v. Sentinal Ins. Co. Ltd., 607 S.W.3d 678,
681 (Ky. 2020). When interpreting insurance contracts,
courts in Kentucky are guided by two cardinal principles:
“(1) the contract should be liberally construed and all
doubts resolved in favor of the insureds; and, (2)
exceptions and exclusions should be strictly construed to
make insurance effective.” Kentucky Farm Bureau
Mutual Insurance Co. v. McKinney, 831 S.W.2d 164, 166
(Ky. 1992) (citations omitted).
We agree with Meridian that the circuit court properly held that Meridian was not
estopped from denying coverage.
Combs cites to Howard, supra, to support her argument that Meridian
is estopped from denying coverage in the present case. In Howard, the Supreme
Court of Kentucky defined the concept of estoppel and set out its elements as
follows:
[E]stoppel “offsets misleading conduct, acts, or
representations which have induced a person to rely
thereon to change his position to his detriment.”
[Edmondson v. Pennsylvania Nat’l Mut. Casualty Ins.
Co., 781 S.W.2d 753, 755 (Ky. 1989)] (quoting Long,
The Law of Liability Insurance § 17.14). Gray v.
Jackson Purchase Credit Ass’n, Ky. App., 691 S.W.2d
904 (1985), sets forth the elements of estoppel:
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(1) Conduct, including acts, language and
silence, amounting to a representation or
concealment of material facts; (2) the
estopped party is aware of these facts; (3)
these facts are unknown to the other party;
(4) the estopped party must act with the
intention or expectation his conduct will be
acted upon; and (5) the other party in fact
relied upon this conduct to his detriment.
Id. at 906.
Howard, 955 S.W.2d at 527.
Based upon our review of the record, we agree with Meridian and the
circuit court that the facts in Howard are distinguishable from those of the present
case. We find no error in the holding of the circuit court set forth below:
The primary case cited by Ms. Combs in support of her
claim is [Howard]. In that case, an insurance company
demonstrated a pattern of accepting late premium
payments from an insured. After missing a payment due
date of February 3, 1991, the insured submitted payment
on February 7, 1991 and this payment was accepted by
the insurer. When the insured was involved in an
accident on February 22, 1991, the insurer refused to
provide coverage arguing that the policy was invalid due
to payment not having been made on February 7, 1991 as
required. The Court in Howard held that because the
Insurer had a history of accepting late payments and
because they had accepted the late payment prior to the
accident at issue, they were estopped from denying
coverage.
The case before this Court is factually
distinguishable in that Meridian had formally cancelled
Ms. Combs[’] policy prior to the accident and because
they had not received her past due late payment prior to
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the cancellation or the accident. Therefore, the Court
must find that at the time of the accident, Ms. Combs was
not insured by Meridian, no payment to bring the policy
up to date had been received, and further that Meridian
was not estopped from denying Ms. Combs’ post-
accident claim.
(Emphases original.)
In addition, the record reflects that while Combs’ policy had been
previously canceled for non-payment of premium and subsequently reinstated,
Combs had paid her past-due premium and signed a “Statement of No Loss” in
which she confirmed that she had not been involved in an accident or any incident
during the period of time that her policy had lapsed. For the current lapse, Combs
could not have signed such a statement as she had been involved in an accident in
the interim. In addition, we reject Combs’ attempts to blame Russell for the lapse
of her policy or that any issues of material fact remain as to “reasonable reliance”
for a jury to decide. Finally, because there was no coverage under the policy,
Meridian could not have acted in bad faith. Therefore, we hold that the circuit
court did not err as a matter of law in ruling that Meridian had properly denied
coverage in this case.
For the foregoing reasons, the summary judgment of the Jefferson
Circuit Court is affirmed.
ALL CONCUR.
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BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE:
George R. Carter David A. Shearer, Jr.
Louisville, Kentucky Christopher T. Brann
Ft. Mitchell, Kentucky
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