Telling it like it is
Diana Metzger drove her personally insured vehicle to a feed supply store to purchase inventory for resale at Metzger’s Country Store, LLC, a limited liability company to which Metzger, her husband Gary, and Gary’s brother and sister belonged.
After Metzger completed her purchase, she was walking to her personal vehicle when she was struck by a vehicle driven by Courtney Gebben. Metzger sustained severe injuries to her left ankle that required six surgeries and resulted in the accrual of more than $200,000 in medical expenses. Because Gebben carried only $25,000 in liability limits, Gebben was an underinsured motorist (UIM) under Kentucky statute.
After Gebben’s insurer paid Metzger its $25,000 limits, Metzger settled with her personal insurer under the policy’s UIM coverage for an undisclosed amount. The payments from Gebben’s policy and Metzger’s personal UIM coverage did not fully compensate Metzger for her injuries or Gary for his loss of consortium. Metzger then submitted a UIM claim to the LLC’s automobile insurer, Auto-Owners Insurance Company.
Auto-Owners had issued a commercial automobile policy with UIM coverage to Metzger’s Country Store, LLC. The LLC was the only named insured on the policy. The policy had combined liability limits of $1 million and UIM limits of $1 million. Four vehicles were covered under the policy, and Metzger’s personal vehicle was not among them. The declarations contained a list of scheduled drivers that included Metzger, the other three LLC members, and several LLC employees. None of these scheduled drivers, however, was a named insured.
The policy’s liability form defined “You or Your” as the “first named insured shown in the Declarations, and if an individual, your spouse who resides in the same household.” The policy’s relevant language concerning UIM coverage provided:
a. We will pay compensatory damages, including but not limited to loss of consortium, any person is legally entitled to recover from the owner or operator of an underinsured automobile because of bodily injury sustained by an injured person while occupying an automobile that is covered by SECTION II—LIABILITY COVERAGE of the policy.
b. If the first named insured in the Declarations is an individual, this coverage is extended as follows:
(1) We will pay compensatory damages, including but not limited to loss of consortium, you are legally entitled to recover from the owner or operator of any underinsured automobile because of bodily injury you sustain:
(a) when you are not occupying an automobile that is covered by SECTION II—LIABILITY COVERAGE of the policy, or
(b) when occupying an automobile you do not own which is not covered by SECTION II—LIABILITY COVERAGE of the policy.
Based on this policy language, Auto-Owners denied Metzger’s claim. She filed a declaratory judgment action asking the trial court to declare that Auto-Owners was obligated to provide UIM benefits under the terms of the policy. Gary filed a derivative claim for loss of spousal consortium. Auto-Owners filed a motion for summary judgment, arguing that Metzger was not entitled to UIM coverage because she was not operating a scheduled vehicle at the time of the accident, as required by the policy. The trial court granted Auto-Owners’ summary judgment motion, and the ruling was unanimously affirmed by the court of appeals. The Metzgers then filed a motion for discretionary review to the supreme court of Kentucky, and it was granted.
On appeal, the Metzgers first argued that the appellate court erred in holding that the commercial automobile policy was unambiguous. In support of this argument, they asserted that the policy was rife with ambiguity, as it used familial and individual terms as well as terms that were confusing and undefined. The supreme court disagreed.
In each instance the Metzgers cited to support their claim of ambiguity, the court found no ambiguity. The court stated that Metzger was not the named insured under the policy. She did not purchase the coverage, nor did her name appear on the policy’s declarations page. The policy’s terms unambiguously distinguished between policies in which the named insured was an individual and those in which the named insured was not.
Metzger v. Auto-Owners Insurance Company—September 24, 2020—Supreme Court of Kentucky—No. 2016-CA-1625-MR.