The Supreme Court of Kentucky recently decided a “Coots” case in favor of the Underinsured Motorist Carrier (UIM Carrier). In June of 2009, the Kentucky Supreme Court held that a letter sent by a Plaintiff to his UIM Carrier did not satisfy the legal Coots standard and thus the dismissal by the lower court was appropriate.
In Malone v. Kentucky Farm Bureau Mutual Insurance Co., 287 S.W.3d 656 (Ky. 2009) Mr. Malone was involved in a car accident with Mr. Bruce. Mr. Malone, via his car accident lawyer, sued Mr. Bruce and then added his own UIM Carrier Kentucky Farm Bureau (KFB). In July of 2005, Mr. Bruce’s insurance company, Atlanta Casualty, offered to pay its policy limits to Mr. Malone. In Kentucky, pursuant to a well known case, Coots, in order to properly resolve a car accident case that involves a UIM carrier, the injured party must follow KRS 304.39-320 which describes what type of notification the injured party must give to his or her UIM carrier prior to settling a claim with the underlying bodily injury carrier; in this case, Mr. Bruce’s carrier.
Pursuant to KRS 304.39-320, if an injured person, or, in the case of death, the personal representative agrees to settle a claim (emphasis added) with a liability insurer and its insured, and the settlement would not fully satisfy the claim for personal injuries or wrongful death so as to create an underinsured motorist claim, then written notice of the proposed settlement must be submitted by certified or registered mail to all underinsured motorist insurers that provide coverage. The underinsured motorist insurer then has a period of thirty (30) days to consent to the settlement or retention of subrogation rights. An injured person, or in the case of death, the personal representative, may agree to settle a claim with a liability insurer and its insured for less than the underinsured motorist’s full liability policy limits. If an underinsured motorist insurer consents to settlement or fails to respond as required by subsection (4) of this section to the settlement request within the thirty (30) day period, the injured party may proceed to execute a full release in favor of the underinsured motorist’s liability insurer and its insured and finalize the proposed settlement without prejudice to any underinsured motorist claim.
In Malone’s car accident case, after it received the offer from Atlanta Casualty for the policy limits, Mr. Malone’s car accident lawyer sent a “Coots” letter to KFB and wrote in pertinent part “Atlanta Casualty has advised that they have policy limits of $25,000.00 and this amount has been offered to settle their portion of Mr. Malone’s claim. We are considering whether to accept this offer….” The letter then went on to site the “Coots” case and put in the rest of the legal language that was needed to satisfy KRS 304.39.320.
The car accident lawyer for KFB responded to Mr. Malone’s Coot’s letter and stated in part “[y]ou indicate that “we are considering whether to accept [Atlanta Casualty’s] offer. When your client makes his decision, Farm Bureau can make its decision whether or not it is going to substitute payment in order to preserve its subrogation rights.” Mr. Malone’s car accident lawyer never responded to this letter. And a month or so later, Mr. Malone’s car accident lawyer accepted Atlanta Casualty’s offer and signed a release. KFB’s car accident lawyer then made a motion to dismiss which was granted by the trial court for Plaintiff’s counsel failing to follow KRS 304.39.320.
The Supreme Court of Kentucky agreed with the lower courts’ rulings in that the initial letter did not state that Mr. Malone had “agreed to settle” a claim, rather the letter stated that Mr. Malone was “considering whether to accept this offer.” This slight difference was enough, for this Court to sustain the dismissal of the UIM claim. The letter sent did not indicate that an actual agreement had taken place and thus did not satisfactorily place the UIM carrier on notice that an agreement had been reached as required by the statute.
If you have been the subject of a Louisville car accident matter, please call and speak to a Louisville car accident lawyer at the Law Offices of Andrew S. Alitowski at 888-ASK-ANDREW (275-2637) or contact us online. We are available 24 hours a day, 7 days a week.
If you are injured…Ask Andrew!!!