Estate of Lahoma Salyer Bramble v. Greenwich Insurance Company

Summary

The Supreme Court of Kentucky held that a third-party claimant may pursue a bad-faith action against an insurer before a final judicial determination of policy coverage. The court concluded that the Court of Appeals improperly treated the bad-faith claim as premature under Pryor v. Colony Insurance Co. and remanded for consideration of remaining coverage and trial-related issues. The opinion was modified on July 5, 2023, to correct a typographical error in footnote 5.

Holdings

1. A third-party claimant is not required to obtain a final judicial determination of insurance coverage before filing a statutory or common-law bad-faith claim against the insurer. The claimant must ultimately prove that the insurer was obligated to pay under the policy, along with the other Wittmer elements.
2. Pryor and Knotts should not be construed as requiring a final judicial determination of coverage before a third-party claimant files a bad-faith tort claim.
3. The Court of Appeals erred by reversing on the prematurity issue and was required on remand to address the remaining issues concerning policy coverage and the Magoffin Circuit Court trial.

Questions Presented

1. Whether a third-party claimant may bring a statutory or common-law bad-faith action against an insurer before coverage has been finally and conclusively adjudicated.
2. Whether Pryor v. Colony Insurance Co. improperly requires a final judicial determination of coverage before a third-party bad-faith claim may be filed.
3. Whether the Court of Appeals erred by reversing the circuit-court judgment solely because coverage had not been finally determined when the third-party bad-faith complaint was filed.

Disposition

reversed_and_remanded