Baldwin v. Ky. Nat'l Ins. Co.

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BETTY BALDWIN APPELLANT v. KENTUCKY NATIONAL INSURANCE COMPANY; AND HOLTON, MELUGIN AND HAVERSTOCK INSURANCE AGENCY, INC., D/B/A HAVERSTOCK INSURANCE AGENCY, INC. APPELLEES

No. 2022-CA-0840-MR

Court of Appeals of Kentucky

January 19, 2024

NOT TO BE PUBLISHED

APPEAL FROM CALLOWAY CIRCUIT COURT HONORABLE JAMES T. JAMESON, JUDGE ACTION NO. 20-CI-00092

BRIEF FOR APPELLANT: Robert L. Prince Benton, Kentucky ORAL ARGUMENT FOR APPELLANT: Bethany Willcutt Benton, Kentucky

BRIEF AND ORAL ARGUMENT FOR APPELLEE KENTUCKY NATIONAL INSURANCE COMPANY: Ben E. Stewart Paducah, Kentucky BRIEF FOR APPELLEE HOLTON, MELUGIN AND HAVERSTOCK INSURANCE AGENCY, INC., D/B/A HAVERSTOCK INSURANCE AGENCY, INC.: Ben S. Fletcher, III Hopkinsville, Kentucky

BEFORE: CALDWELL, JONES, AND TAYLOR, JUDGES.

OPINION

TAYLOR, JUDGE:

Betty Baldwin brings this appeal from a June 21, 2022, summary judgment of the Calloway Circuit Court in favor of Kentucky National Insurance Agency (KNIC) and Holton, Melugin, and Haverstock Insurance Agency, Inc., d/b/a Haverstock Insurance Agency, Inc. (Haverstock). We affirm in part, reverse in part, and remand.

This appeal involves the denial of insurance coverage to Baldwin relating to the total loss of her home by fire in October of 2019. The circuit court summarized the facts as follows:

1. It is undisputed that Betty Baldwin, hereinafter "Baldwin," incurred a fire loss in 1994. Baldwin received approximately $90,000 in insurance proceeds as a result of that fire. Baldwin rebuilt the existing structure damaged by fire. The new structure was a two-story home. Baldwin lived in this home until October 13, 2019.

2. On or about 2012, according to Baldwin's Complaint in Calloway 20-CI-00120, Baldwin purchased homeowner insurance for the abovedescribed home from American Commerce through Holton, Melugin and Haverstock Insurance Agency, Inc., d/b/a Haverstock Insurance Agency Inc., hereinafter "Haverstock." Specifically, Baldwin interacted with Van Haverstock.

3. Van Haverstock is an agent for multiple insurance companies, including American Commerce and Kentucky National Insurance Company.

4. Prior to procuring insurance through American Commerce Baldwin called [Van] Haverstock due to her relationship with Haverstock's brother, Gary Haverstock. Shortly after the initial call, [Van] Haverstock went to Baldwin's home and performed an inspection of the premises. Baldwin's brother, Jerry Davidson, was the only individual present at the home during the inspection. Neither Baldwin nor her husband were present.

5. Defendant had homeowner insurance from American Commerce until approximately November of 2017.

6. On or about 2017, Baldwin called [Van] Haverstock. Baldwin asked Haverstock to look into cheaper options for homeowner insurance. [Van] Haverstock did not perform any inspections or present questions to Baldwin regarding a new application for homeowner insurance.

7. On or about November 21, 2017, Baldwin received a phone call from "Betsy" at Haverstock. Betsy advised Baldwin that she needed to come to the office and sign her application. On November 21, 2017, Baldwin appeared at Haverstock's office to sign the application. The secretary presented the application for homeowner's insurance to Baldwin in the reception area of the office. The secretary instructed Baldwin on where her signature was needed. Without reading, Baldwin signed the application. The application was dated November 21, 2017. Baldwin was not denied an opportunity to review the application before signing.

8. According to Baldwin in her deposition on September 14, 2021, two of the answers provided on the application were incorrect at the time of signing. Baldwin indicated in Question 28 that she did not specifically have a German Shepperd [sic]. Further, Baldwin in Question 32 indicated that she had never had a prior fire loss. See Attached Kentucky Homeowners Application.

9. Sometime after signing the Kentucky Homeowner Application, Baldwin purchased a homeowner insurance policy through Kentucky National Insurance Company.

10. On October 13, 2019, a fire occurred and resulted in a total loss of the above-described home.

11. On March 5, 2020, after denying Baldwin's coverage, Kentucky National Insurance Company (hereinafter "KNI") filed a Complaint for Declaration of Rights and Monetary Damages arising from the house fire on October 13, 2019.

12. On March 26, 2020, Baldwin answered KNI's complaint and filed her own counterclaims.

13. On March 26, 2020, Baldwin filed a separate action (Calloway Circuit 20-CI-00120) against Haverstock. Baldwin claimed that Haverstock was liable for the damages incurred by Baldwin which were caused by the representations of [Van] Haverstock.

14. On June 18, 2020, this case was consolidated with 20-CI-00120. Third-Party Defendant, Holton, Melugin and Haverstock Insurance Agency, Inc., d/b/a Haverstock Insurance Agency, Inc., was joined because of the similarity in basic facts and circumstances.

Order on Summary Judgment at 1-3.

On March 10, 2022, KNIC filed a motion for summary judgment. KNIC alleged that Baldwin signed the application for insurance with KNIC and that the application contained two misrepresentations. According to KNIC, Baldwin answered in the negative as to whether she had any fire losses in the past and as to whether she owned a German Shepherd dog; however, KNIC pointed out that Baldwin had a prior fire loss to her home in 1994 and owned a German Shepherd dog.^[1] Because of these misrepresentations in the application, KNIC maintained that it was permitted to rescind the homeowner's insurance policy pursuant to Kentucky Revised Statutes (KRS) 304.14-110 and Hornback v. Bankers Life Insurance Company, 176 S.W.3d 699 (Ky. App. 2005). Haverstock joined in KNIC's motion for summary judgment and sought summary judgment in its favor.

Baldwin filed a response and argued that she did not make the misrepresentations in the application. Rather, Baldwin asserted that Van Haverstock or an employee under his direction completed the application, and she merely signed same without reading it. Baldwin also alleged that Van Haverstock knew that her prior home was destroyed by fire and that she owned a German Shepherd dog but negligently completed the application. As Van Haverstock was an agent of KNIC, Baldwin maintains that KNIC was estopped from rescinding coverage and/or that Haverstock was liable for Van Haverstock's negligence.

On June 21, 2022, the circuit court rendered summary judgment in favor of KNIC and Haverstock. In so doing, the circuit court reasoned:

Plaintiff, in their renewed and second motion for summary judgment, argues that Hornback v. Bankers Life Insurance Company, 176 S.W.3d 699 (Ky. Ct. App. 2005) is controlling in the matter sub judice based on the facts and circumstances presented supra. This Court agrees....

The application process in Hornback is similar to the application process in the matter sub judice, though not identical. However, the outcome remains the same. In Hornback, Garrett, an employee of AMI and an agent of the insurer, renewed the application with the Hornbacks. The employee read the questions and completed the application based on the answers they supplied. After completing the application, the employee asked the Hornbacks to sign it. The Hornbacks testified that they were hurried and did not read the application before singing it. The Hornbacks further acknowledged that no one prevented them from either reading the form or filling out the answers themselves.

In the matter sub judice, some conversations were had between Baldwin and [Van] Haverstock. These conversations were held telephonically. [Van] Haverstock, on one occasion, visited and inspected the premises. [Van] Haverstock, after the inspection, completed an application for homeowner's insurance through American Commerce in approximately 2012. Baldwin eventually purchased a policy through American Commerce. A few years later, in 2017, Baldwin sought a new, cheaper policy. The record reflects that Haverstock used information from Baldwin's prior application for American Commerce to complete the new application for Plaintiff, Kentucky National Insurance Company. At no point, as the record reflects, did Haverstock direct new questions to Baldwin regarding her new policy. Once instructed to appear at Haverstock's office to sign the application, Baldwin complied. Baldwin was not precluded from reviewing the application or altering answers contained therein. Most importantly, Baldwin did not correct the answers provided in Questions 28 and 32 - i.e., German Shepherd ownership and prior fire losses. ....

Dating back to at least 1945, Kentucky Courts have long held that the statements written in applications for insurance coverage by a local agent, signed [by] the applicant without reading the contents therein, were actually or constructively known to the applicant and that "she may not thereafter repudiate the answers in the application and recover on the policy." Commonwealth Life Ins. Co. v. Bruner, 299 Ky. 335, 185 S.W.2d 408 (1945). See also Reserve Life Ins. Co. v. Thomas, 310 S.W.2d 267, 269-70 (Ky. 1958). Here, it is undisputed that Baldwin did not read the application before signing it. Immediately above Baldwin's Signature is the following language:

"I have read the entire application and I warrant that to the best of my knowledge and belief all of the statements made herein are true. I understand that this application is part of my policy contract. I understand if any check or credit card offered in payment is not honored by my bank or credit card company, the Company shall be deemed not to have accepted the check or credit card, and the policy shall be deemed void from inception and I will be charged

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