Whisenant v. State Farm Mutual Automobile Insurance Company

Filing 16

MEMORANDUM OPINION AND ORDER by Judge John G. Heyburn, II on 3/5/2013; 11 Motion for Summary Judgment is SUSTAINED. Plaintiff Whisenants claims are DISMISSED with prejudice. This is a final order. cc:counsel (TLB)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE
CIVIL ACTION NO. 3:12-CV-00290-H

KAREN S. WHISENANT,

PLAINTIFF

V.
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,

DEFENDANT

MEMORANDUM OPINION AND ORDER
Plaintiff, Karen S. Whisenant, brought this action after being denied underinsured motorist
benefits (“UIM benefits”) from her insurer, Defendant State Farm Mutual Automobile Insurance
Company (“State Farm”), for injuries she sustained in a motor vehicle accident. Whisenant asserts
breach of contract and bad faith claims. State Farm has moved for summary judgment on all claims,
arguing that Whisenant’s breach of contract claim is time barred by the two-year contractual
limitations period set forth in an endorsement to the insurance contract. For the reasons that follow,
this Court sustains State Farm’s motion.1
I.
Whisenant was involved in a motor vehicle accident on March 26, 2009, when Stephen G.
Fogle crossed the median of Dixie Highway and collided with Whisenant’s vehicle. At the time of
the accident, Whisenant had an automobile insurance policy issued by State Farm (the “Policy”).

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Whisenant argues that the motion for summary judgment is premature and asks the Court to defer ruling to allow the
parties to engage in discovery. However, the parties do not dispute the facts, and the only legal issue presented, the
applicability of the amendatory Endorsement 6126GP, is straightforward. At this stage, the matter is ripe for summary
judgment.

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The Policy, in part, provided UIM benefits where the insured is in an accident with someone who
is found at fault but has insufficient insurance to fully compensate the insured’s injuries.
Whisenant suffered injuries that exceeded the liability coverage of the at-fault driver, Fogle.
After exhausting her PIP benefits under the Policy,2 Whisenant sought UIM benefits from State
Farm. On March 15, 2012, Whisenant made a demand for UIM benefits in the amount of $75,000.
State Farm denied Whisenant’s demand, stating that she failed to make the claim within the
contractual limitations period set forth in the Policy. Specifically, State Farm points to Policy
Endorsement 6126GP, which provides that policy holders must file a claim for UIM benefits within
two years from the date of the accident or from the last basic or added reparation payment made,
whichever occurs later.3 As the accident occurred on March 26, 2009 and the last basic reparation
payment occurred on January 26, 2010, State Farm maintains that Whisenant’s March 12, 2012
demand for UIM benefits is time-barred by the contractual period of limitations. Following the
denial of her claim for UIM benefits, Whisenant filed this action asserting the following claims: (1)
breach of contract, (2) violation of the Unfair Claims Settlement Practices Act (“UCSPA”), (3)
common law bad faith, (4) attorney’s fees, and (5) punitive damages.
State Farm has moved for summary judgment on all claims. Summary judgment is proper
where "the movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). The party moving for summary
judgment bears the burden of proving that the nonmoving party has presented no genuine issues of
2

Consistent with the Policy, State Farm paid basic reparation benefits (also known as “PIP benefits”) to, or on behalf
of Whisenant, for medical expenses resulting from the accident.
3
Policy Endorsement 6126GP provides in full:
There is no right of action against us: (d) under insured motor vehicle coverage or underinsured motor
vehicle coverage unless such action is commenced not later than two (2) years after the injury, or
death, or the last basic or added reparation payment made by any reparation obligor, whichever later
occurs.

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material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has satisfied this
burden, the nonmoving party bears the burden of proving the existence of a disputed factual element
upon which the nonmoving party bears the burden of proof at trial. Id. The Court will view the
facts and draw all inferences in favor of the nonmoving party. Matsushita Electric Indus. Co., Ltd.
v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
II.
Policy Endorsement 6126GP unequivocally provides that suits for UIM benefits must be
filed within two years after the injury or the last basic reparation payment, whichever occurs later.
Whisenant does not dispute that her UIM demand is not within two years of the accident or the last
basic reparation payment. Rather, Whisenant’s sole defense is that she was unaware of the
contractual time limitation set forth in Policy Endorsement 6126GP. She maintains that she did not
receive any documentation containing Policy Endorsement 6126GP, and as such, the contractual
time limitation set therein cannot be applied to her. Consequently, she argues that the default fifteen
year breach of contract limitation period must apply. State Farm counters that Whisenant was put
on notice of the time limitation, because State Farm included the amendatory endorsement in
documents provided to Whisenant.
In issuing the Policy on or about September 14, 2004, State Farm sent Whisenant a general
automobile insurance policy booklet. Policy Endorsement 6126GP was not in the policy booklet
Whisenant received; that booklet required suit to be filed within two years from the date of the
accident.4 However, a Declaration Page sent with the policy booklet, dated September 14, 2004,

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Kentucky Courts have previously held such a provision to be void and unenforceable. See Gordon v. Ky. Farm Bureau
Ins. Co., 914 S.W.2d 331 (Ky. 1995).

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contained Policy Endorsement 6126GP. ECF No. 11-3.

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As such, State Farm argues that

Whisenant did have notice of the policy change, and Policy Endorsement 6126GP was in effect on
the date of the accident, March 26, 2009.
This factual scenario in the case at bar is remarkably similar to a recent Kentucky Court of
Appeals opinion that addressed the applicability of the same contractual period limitation present
in the Policy. The plaintiff in that case asserted a similar defense to Whisenant, maintaining that
State Farm presented no evidence that the “insurance contract, along with its amendatory
endorsement, was ever delivered, received, and/or acknowledged by” the insured. Perry v. State
Farm Mut. Auto. Ins. Co., 2012 WL 1556311, at *1 (Ky. Ct. App. May 4, 2012). The plaintiff
argued she was not on notice of the contractual time limitation, and as such, it was unenforceable.
The Court held that, in admitting receipt of the policy and paying the premiums on the policy, the
insured “bound herself to the terms of the policy, including the limitations for filing an action
contained therein.” Id. at *3. The Court found that lack of awareness of the policy provision could
not serve as a legal basis for voiding the provision at issue. Id.
Whisenant denies ever seeing Policy Endorsement 6126GP, but she does admit to receiving
the Policy. State Farm has established policies and procedures in mailing certain documentation to
policy holders, and has produced a Declarations Page Matching Form which confirms that the policy
booklet and September 14 Declarations Page was sent to Whisenant. Additionally, like the plaintiff
in Perry, Whisenant continued to pay premiums on the Policy and avail herself of Policy benefits.
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Declarations Pages are issued to policyholders upon inception or renewal of the policy. They are simply a summary
of the insurance policy. If a change is made to the policy, the Declaration Page will include an Exceptions and
Endorsements section delineating amendatory terms. Whisenant’s Policy went into effect August 30, 2004. The
Declaration Page, dated September 14, 2004, provides that a policy holder’s “policy consists of this declarations page,
the policy booklet – form 9817.5, and any endorsements that apply, including those issued to you with any subsequent
renewal notice.” EMF No. 11-3. On the next page, it lists four Exceptions and Endorsements, including Policy
Endorsement 6126GP. Id.

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As such, she is bound to all of the Policy’s provisions in effect on the date of her accident, including
the amendatory endorsement at issue.
There is no dispute that Whisenant filed her action against State Farm for UIM benefits more
than two years after the last basic reparation payment.6 Whisenant was not entitled to UIM benefits
when she made her March 15, 2012 demand, and as such, State Farm did not breach the Policy when
it denied her UIM benefits demand. Accordingly, Whisenant’s breach of contract claim fails as a
matter of law.
Because State Farm had no contractual obligation to pay UIM benefits to Whisenant, her
common law and statutory bad faith claims, and claims for attorney’s fees and punitives, must be
dismissed as a matter of law. See Davidson v. Am. Freightways, Inc., 25 S.W.3d 94, 100 (Ky.
2000)(holding that in the absence of a contractual obligation in an insurance policy for coverage,
“there simply is no bad faith cause of action, either by common law or statute”).
Being otherwise sufficiently advised,
IT IS HEREBY ORDERED that Defendant State Farm’s motion for summary judgment
is SUSTAINED. Plaintiff Whisenant’s claims are DISMISSED with prejudice.
This is a final order.

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The Kentucky Court of Appeals has held that a two-year statute of limitations to commence an action for UIM benefits
set forth in an insurance contract is “not unreasonable.” Perry, 2012 WL 1556311, at *8 (citing Elkins v. Ky. Farm
Bureau Mutual Ins. Co., 844 S.W.2d 423 (Ky. Ct. App. 1992)). Accordingly, the two-year contractual limitations period
set forth in the Policy is both reasonable and enforceable under Kentucky law.

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March 5, 2013

cc:

Counsel of Record

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