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UM/UIM COVERAGE FOR FAMILY MEMBERS AFTER Kyle v. Buckeye Union Ins. Co.,

103 Ohio St.3d 170, 2004-Ohio-4885Robert W. Kerpsack, Esq.

ROBERT W. KERPSACK CO., L.P.A.21 East State Street, Suite 300

Columbus, OH 43215Telephone: (614) 242-1000Facsimile: (614) 242-4180

Email: bob@rwklaw.comNovember 19, 2004

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KYLE TOPICS:• REVIEW OF RELEVANT LEGISLATIVE HISTORY OF

FORMER R.C. 3937.18(J) AND (K)

• REVIEW OF FACTS/ISSUES IN KYLE, AND IN OTHER OH.

SUP. CRT. CASES DECIDED ON AUTHORITY OF KYLE

• REVIEW OF KYLE HOLDING

• REVIEW OF KYLE DISSENT

• WHERE ARE WE AFTER KYLE?

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LEGISLATIVE HISTORY OF FORMER R.C. 3937.18(J) AND (K)

• H.B. 261 (EFFECTIVE 9/3/97) ADDED SUBSECTION (J)(1) TO R.C. 3937.18

– “OWNED BUT UNINSURED AUTO” EXCLUSION:

• PERMISSIBLE FOR INSURERS TO EXCLUDE UM/UIM COVERAGE FOR AN INSURED INJURED WHILE OCCUPYING A VEHICLE THAT IS “AVAILABLE FOR HIS/HER REGULAR USE,” BUT NOT COVERED UNDER POLICY’S BI COVERAGE

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LEGISLATIVE HISTORY OF FORMER R.C. 3937.18(J) AND (K) (con’t)

• H.B. 261 ALSO ADDED (K)(2) TO R.C. 3937.18:

– VEHICLE “AVAILABLE FOR THE REGULAR USE” OF AN INSURED IS EXCLUDED FROM THE DEFINITION OF AN “UNINSURED MOTOR VEHICLE”

• S.B. 267 (EFFECTIVE 9/21/00) REPEALED (K)(2)

– VEHICLES “LISTED” IN A POLICY (BUT EXCLUDED UNDER BI COVERAGE) ARE INCLUDED IN THE DEFINITION OF AN “UNINSURED MOTOR VEHICLE”

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OH SUP CT CASES HELD FOR KYLE:Morris v. United Ohio Ins. Co.

• MORRIS FACTS: WIFE INJURED BY NEGLIGENCE OF HUSBAND WHILE RIDING IN INSURED FAMILY VEHICLE

– DENIAL OF COVERAGE ON WIFE’S UM CLAIM, CITING R.C. 3937.18(K)(2)

• MORRIS HOLDING (4th District Court of Appeals):

– (K)(2) RENDERS THE (J)(1) “PROMISE” OF COVERAGE FOR A “LISTED VEHICLE” ILLUSORY IN NATURE

– TAKEN TOGETHER, (J)(1) AND (K)(2) ARE SO AMBIGUOUS AS TO BE UNENFORCEABLE

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OH SUP CT CASES HELD FOR KYLE:Ratkosky v. Scottsdale Surplus Lines Ins. Co. • RATKOSKY FACTS: RESIDENT BROTHERS INVOLVED IN A

ONE-CAR CRASH WHILE RIDING IN INSURED FAMILY VEHICLE

– DENIAL OF COVERAGE ON INJURED BROTHER’S UM CLAIM, CITING R.C. 3937.18(K)(2)

• RATKOSKY HOLDING (8th District Court of Appeals):

– (J)(1) “IMPLIES” THAT UM COVERAGE IS AVAILABLE FOR “LISTED” VEHICLES, WHILE (K)(2) MAKES IT CLEAR THAT, EVEN IF LISTED, COVERAGE CAN NEVER BE AVAILABLE

• THIS “DOUBLESPEAK” CREATES AN AMBIGUITY, WHICH MAKES R.C. 3937.18(K)(2) UNENFORCEABLE

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OH SUP CT CASES HELD FOR KYLE: Kuhnle v. Zander

• KUHNLE FACTS: MOTHER INJURED IN CRASH CAUSED BY RESIDENT DAUGHTER’S NEGLIGENCE WHILE RIDING IN INSURED FAMILY VEHICLE

– DENIAL OF COVERAGE ON MOTHER’S UM CLAIM, CITING R.C. 3937.18(K)(2)

• KUHNLE HOLDING: (6th District Court of Appeals):

– NO AMBIGUITY: (J)(1) IS “LIMITED BY” (K)(2)

– (J)(1) APPLIES ONLY WHEN THE INSURED IS DRIVING A VEHICLE NOT COVERED BY THE POLICY AND THE TORTFEASOR IS NOT THE NAMED INSURED, SPOUSE, OR RESIDENT RELATIVE OF THE NAMED INSURED

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OH SUP CT CASES HELD FOR KYLE: Cincinnati Cos. v. Albers

• ALBERS FACTS: MULTIPLE UNRELATED TEENAGERS INJURED IN ONE-CAR CRASH. AFTER LIABILITY INSURER DEPOSITED ITS BI LIMITS WITH THE COURT, THE COURT ORDERED DISTRIBUTION OF BI LIMITS TO CLAIMANTS IN AMOUNTS LESS THAN “PER PERSON” UIM LIMITS

– DENIAL OF COVERAGE ON UIM CLAIMS, CITING R.C. 3937.18(K)(2)

• ALBERS HOLDING: (3rd District Court of Appeals):

– POLICY UNAMBIGUOUSLY EXCLUDES VEHICLES OWNED BY THE NAMED INSURED FROM THE DEFINITION OF AN “UN/UNDERINSURED MOTOR VEHICLE”

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KYLE FACTS• ON JUNE 11, 2000, KATHRYN KYLE WAS INJURED IN A

CRASH CAUSED BY THE NEGLIGENCE OF HER SISTER, ANDREA, WHILE RIDING IN AN INSURED FAMILY CAR

• ANDREA AND KATHRYN EACH RESIDED IN PARENTS’ HOUSEHOLD

– EACH SISTER IS AN INSURED UNDER THE BUCKEYE UNION POLICY COVERING THE CRASH VEHICLE

– THE POLICY EXPRESSLY IDENTIFIED ANDREA AS THE “RATED DRIVER” OF CRASH VEHICLE

• THE BUCKEYE UNION POLICY PROVIDED EQUIVALENT AMOUNTS OF BI AND UM COVERAGE

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KYLE FACTS (con’t)• BUCKEYE UNION DENIED BI COVERAGE FOR

KATHRYN’S PERSONAL INJURY CLAIM, CITING THE POLICY’S INTRA-FAMILY EXCLUSION

– KATHRYN CONTENDED, THEREFORE, THAT ANDREA WAS AN UNINSURED DRIVER, AND PRESENTED AN UM CLAIM AGAINST THE BUCKEYE UNION POLICY

• BUCKEYE UNION DENIED COVERAGE FOR KATHRYN’S UM CLAIM, CITING R.C. 3937.18(K)(2) AND THE POLICY’S EXPRESS EXCLUSION OF VEHICLES OWNED BY FAMILY MEMBERS FROM THE DEFINITION OF AN “UNINSURED MOTOR VEHICLE”

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KYLE LEGAL ISSUES• WHETHER THE PROVISIONS OF FORMER R.C. 3937.18

(J)(1) AND (K)(2) CONFLICT, WHEN READ TOGETHER?

• WHETHER AN AMBIGUITY ARISES BY THE ALLEGED CONFLICT BETWEEN FORMER (J)(1) AND (K)(2)?

– IS THE EXCLUSION” IN R.C. 3937.18(J)(1) “PERMISSIVE” AND THE (K)(2) EXCLUSION “MANDATORY?”

• WHETHER R.C. 3937.18(J)(1) ALONE CONTROLS WHEN THE ALLEGED CONFLICT BETWEEN (J)(1) AND (K)(2) IS LIBERALLY CONSTRUED IN FAVOR OF COVERAGE?

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KYLE HOLDING (BY VOTE OF 4-3)• FORMER R.C. 3937.18(J)(1) AND (K)(2) NEITHER CONFLICT

NOR ARE AMBIGUOUS BECAUSE EACH PARAGRAPH REGULATES DIFFERENT “TOPICS”

– SUBSECTION (J) ADDRESSES CERTAIN “CIRCUMSTANCES” FOR THE PERMISSIBLE DENIAL OF UM/UIM COVERAGE

– SUBSECTION (K) EXPRESSLY EXCLUDES CERTAIN “TORTFEAORS’ VEHICLES” FROM THE DEFINITION OF AN “UNINSURED MOTOR VEHICLE”

• (J)(1) AND (K)(2) ARE “COMPLEMENTARY”

– (J) AND (K) MAY FUNCTION “IN THE ALTERNATIVE” OR TOGETHER

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KYLE HOLDING (con’t)• (J)(1) IS INAPPLICABLE TO THE “CIRCUMSTANCES” OF

KATHRYN’S UM CLAIM BECAUSE THE VEHICLE SHE WAS OCCUPYING IS EXPRESSLY IDENTIFIED IN THE POLICY

– (J)(1) PERMITS THE EXCLUSION OF UM COVERAGE FOR OCCUPYING “OWNED BUT UNINSURED” AUTOS

• (K)(2) EXPRESSLY EXCLUDES THE VEHICLE OCCUPIED BY KATHRYN KYLE FROM THE DEFINITION OF AN “UNINSURED MOTOR VEHICLE”

– THE TORTFEAOR’S VEHICLE (OCCUPIED BY KATHRYN) IS 1) INSURED UNDER THE SAME POLICY UNDER WHICH KATHRYN SEEKS UM/UIM COVERAGE; AND 2) IS AVAILABLE FOR ANDREA’S AND KATHRYN’S REGULAR USE

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KYLE DISSENT• (J)(1) AND (K)(2) ADDRESS THE SAME TOPIC:

UM/UIM COVERAGE FOR OTHER-OWNED AUTOS

• THE STATUTORY LANGUAGE OF (J)(1) AND (K)(2) IS AMBIGUOUS AND DIRECTLY CONFLICTING

– (J)(1) EXPRESSLY “PERMITS” UM/UIM COVERAGE FOR OTHER-OWNED VEHICLES SPECIFICALLY IDENTIFIED IN THE POLICY

– SUBSECTION (K)(2) PROVIDES, HOWEVER, THAT ALL OTHER-OWNED VEHICLES ARE, BY DEFINITION, NOT UNINSURED VEHICLES

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KYLE DISSENT (con’t)• THE ONLY LOGICAL INFERENCE THAT CAN BE

DRAWN FROM THE LANGUAGE OF SUBSECTION (J)(1) IS THAT THIS EXCLUSION IS LIMITED TO VEHICLES THAT THE CLAIMANT OWNS BUT HAS CHOSEN NOT TO COVER UNDER THE POLICY.

– IF THE VEHICLE IS LISTED IN THE UNINSURED MOTORIST COVERAGE, THE EXCLUSION CANNOT APPLY BY ITS OWN TERMS.

– SUBSECTION (J)(1) MEANS THAT YOU HAVE NO UM/UIM COVERAGE ON A VEHICLE YOU OWN, UNLESS THAT VEHICLE IS EXPRESSLY IDENTIFIED IN THE POLICY.

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KYLE DISSENT (con’t)• (K)(2) PROVIDES THAT AN INSURED’S VEHICLE CAN

NEVER BE AN UNINSURED MOTOR VEHICLE, EVEN IF YOU EXPRESSLY IDENTIFY THE VEHICLE IN THE POLICY AND PAY A PREMIUM TO INSURE IT.

– STANDING ALONE, (K)(2) MEANS THAT UM/UIM COVERAGE CAN BE PURCHASED ONLY FOR ACCIDENTS THAT ARE NOT CAUSED BY THE INSURED’S OWN VEHICLE.

• HOWEVER, WHEN SUBSECTION (J)(1) IS ADDED TO THE MIX, SUBSECTION (K)(2) CANNOT BE READ SO RESTRICTIVELY.

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KYLE DISSENT (con’t)• AFTER CONSTRUING FORMER R.C. 3937.18 TO GIVE

EFFECT TO THE GENERAL ASSEMBLY’S INTENT IN ENACTING THE UM STATUTE, SUBSECTIONS (J)(1) AND (K)(2) CANNOT BE RECONCILED.

• THE PURPOSE BEHIND R.C. 3937.18 IS TO PROTECT PERSONS FROM LOSSES THAT, BECAUSE OF THE TORTFEASOR’S LACK OF LIABILITY COVERAGE, WOULD OTHERWISE GO UNCOMPENSATED. [Citing Abate v. Pioneer Mut. Cas. Co. (1970), 22 Ohio St.2d 161,165]

• R.C. 3937.18 IS REMEDIAL LEGISLATION; THEREFORE, A COURT MUST CONSTRUE THE STATUTE LIBERALLY TO GIVE EFFECT TO ITS LEGISLATIVE PURPOSE. [Citing Moore v. State Auto. Mut. Ins. Co. (2000), 88 Ohio St.3d 27, 31]

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KYLE DISSENT (con’t)• THE GENERAL ASSEMBLY’S OBJECTIVE IN

ENACTING (J)(1) AND (K)(2) AT THE SAME TIME WAS TO ALLOW THE EXCLUSION OF UM/UIM COVERAGE FOR OCCUPANTS OF VEHICLES OWNED BY AN INSURED, BUT ONLY IF THOSE VEHICLES WERE NOT IDENTIFIED IN THE POLICY.

– IN THIS WAY, WHILE THE INSURANCE COMPANY COULD EXCLUDE VEHICLES OWNED BY THE INSURED BUT NOT IDENTIFIED IN THE POLICY, THE INSURED AND INSURER COULD ALSO AGREE TO IDENTIFY ALL THE FAMILY VEHICLES IF THEY SO CHOSE.

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KYLE DISSENT (con’t)• SUBSECTIONS (J)(1) AND (K)(2) CONFLICT;

HOWEVER, THEY CAN BOTH BE GIVEN EFFECT AND HARMONIZED WHEN (K)(2) IS INTERPRETED AS APPLYING ONLY TO VEHICLES NOT IDENTIFIED IN THE INSURANCE POLICY.

– THIS LIBERAL CONSTRUCTION IS CONSISTENT WITH THE PURPOSE OF R.C. 3937.18, WHICH IS TO PROVIDE PROTECTION FOR PERSONS INJURED BY TORTFEASORS WHO LACK SUFFICIENT LIABILITY INSURANCE.

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KYLE DISSENT (con’t)• BY REFUSING TO FIND COVERAGE, THE KYLE

MAJORITY “UNDERMINES” THE PURPOSE BEHIND R.C. 3937.18

• THE TRAGEDY OF THE KYLE DECISION:

– THE KYLES SPECIFICALLY IDENTIFIED IN THEIR BUCKEYE UNION POLICY THE VEHICLE THAT WAS INVOLVED IN THE CRASH, AND A PREMIUM WAS PAID FOR UM/UIM COVERAGE ON THIS VEHICLE

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OH SUP CT CASES DECIDED ON THE AUTHORITY OF KYLE

• Morris v. United Ohio Ins. Co.–Court of Appeals’ judgment reversed at 103 Ohio St.3d 462, 2004-Ohio-5706

• Ratkosky v. Scottsdale Surplus Lines Ins. Co.–Court of Appeals’ judgment reversed at 103 Ohio St.3d 462, 2004-Ohio-5705

• Kuhnle v. Zander –Court of Appeals’ judgment affirmed at 103 Ohio St.3d 474, 2004-Ohio-5699

• Cincinnati Cos. v. Albers—Court of Appeals’ judgment affirmed at 103 Ohio St.3d 475, 2004-Ohio-5702

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WHERE ARE WE AFTER KYLE?• OHIO FAMILIES ARE LEFT WITH NO UM COVERAGE

UNDER MOTOR VEHICLE LIABILITY INSURANCE POLICIES ISSUED BETWEEN SEPTEMBER 3, 1997, AND SEPTEMBER 21, 2000, WHEN ONE FAMILY MEMBER IS INJURED BY THE NEGLIGENCE OF ANOTHER FAMILY MEMBER WHILE RIDING IN A FAMILY-OWNED VEHICLE.

• IT IS POSSIBLE, HOWEVER, THAT THIS GAP IN FAMILY UM COVERAGE EXTENDS UNTIL SEPTEMBER 21, 2002.

– SEE Flowers v. Ohio Mut. Ins. Grp., Seneca App. No. 13-02-28, 2003-Ohio-441, CITING THE TWO-YEAR COVERAGE “GUARANTEE” CONTAINED IN FORMER R.C. 3937.31(A)

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