Associated Wholesale Grocers, Inc. v. Americold Corp.

• Decision Date: 23 December 2011
• Docket Number: No. 99,506.,99,506.
• Citation: 293 Kan. 633,270 P.3d 1074
• Parties: ASSOCIATED WHOLESALE GROCERS, INC., et al. (Conagra, Inc., Swift–Eckrich, Inc., Safeway, Inc., Kraft Foodservice, Inc., Phillips Confections, Inc. d/b/a Phillips Confections & Hanover, Inc., The Fleming Companies, Inc., Institute of London Underwriters, and Commerce and Industry Insurance Company), Appellees/Cross-appellants, v. AMERICOLD CORPORATION and Americold Services Corporation, Defendants,andNorthwestern Pacific Indemnity Company, Appellant/Cross-appellee.
• Court: Kansas Supreme Court

270 P.3d 1074

293 Kan. 633

ASSOCIATED WHOLESALE GROCERS, INC., et al. (Conagra, Inc., Swift–Eckrich, Inc., Safeway, Inc., Kraft Foodservice, Inc., Phillips Confections, Inc. d/b/a Phillips Confections & Hanover, Inc., The Fleming Companies, Inc., Institute of London Underwriters, and Commerce and Industry Insurance Company), Appellees/Cross-appellants,

v.AMERICOLD CORPORATION and Americold Services Corporation, Defendants,andNorthwestern Pacific Indemnity Company, Appellant/Cross-appellee.

No. 99,506.

Supreme Court of Kansas.

Dec. 23, 2011.

Syllabus by the Court

1. An irregularity in the caption of a notice of appeal that could not have misled the appellee as to the matter being appealed does not deprive the appellate court of jurisdiction over the appeal.

2. A notice of appeal that specifies an appeal is being taken from the district court's final judgment in the case is sufficient to permit a challenge to the district court's subject matter jurisdiction to enter that final judgment.

3. The continued pendency of a garnishment proceeding does not toll the time provisions of K.S.A. 60–2403(a) governing the dormancy and extinguishment of a judgment. The fact that a garnishment proceeding has been appealed and remanded to the district court during its pendency does not affect the dormancy and revivor time provisions.

4. During the pendency of a garnishment proceeding, a judgment creditor wanting to stop and restart the 5–year dormancy time limit period must issue another execution or garnishment or must file a renewal affidavit as provided by K.S.A. 60–2403(a).

5. The 5–year time period before a judgment becomes dormant is not a statute of limitation and is not an affirmative defense that must be pled to avoid waiver.

6. K.S.A. 60–2403(c) tolls the time within which action must be taken to prevent the dormancy of a judgment during any period when enforcement of the judgment by legal process is stayed or prohibited. A judgment creditor does not invoke the tolling provision of K.S.A. 60–2403(c) by voluntarily agreeing not to execute upon the judgment. James D. Oliver, of Foulston Siefkin LLP, of Overland Park, and Benjamin E. Zuckerman, of Cozen O'Connor, of Philadelphia, Pennsylvania, argued the cause, and Stephen A. Cozen, of Cozen O'Connor, of Philadelphia, was with them on the briefs for appellant/cross-appellee.

John M. Duggan, of Duggan, Shadwick, Doerr & Kurlbaum, of Overland Park, and Jack C. Hsu, of Christensen & Ehret, L.L.P., of Chicago, Illinois, argued the cause, and Deron A. Anliker, of Duggan, Shadwick, Doerr & Kurlbaum, P.C., of Overland Park, Mark E. Christensen and Katherine Amelotte Jones, of Christensen & Ehret, L.L.P., of Chicago, Robert D. Mullin, Jr., of McGrath, North, Mullin & Kratz, P.C., LLO, of Omaha, Nebraska, JoAnn Butaud, of Evans and Mullinix, P.A., of Shawnee, Edward L. Smith, of Kansas City, Missouri, William J. Gotfredson, of Monaco, Sanders, Gotfredson, Racine & Barber, L.C., of Kansas City, Missouri, and Patrick N. Fanning and Richard N. Bien, of Lathrop & Gage, LC, of Kansas City, Missouri, were with them on the briefs for appellees/cross-appellants.

The opinion of the court was delivered by JOHNSON, J.:

This garnishment action, together with its voluminous appellate record, returns to this court for the third time. See Associated Wholesale Grocers, Inc. v. Americold Corp., 261 Kan. 806, 934 P.2d 65 (1997) ( Americold I ); Associated Wholesale Grocers, Inc. v. Americold Corp., 266 Kan. 1047, 975 P.2d 231 (1999) ( Americold II ). Accordingly, we will refer to the current appeal as Americold III.

The appellant in Americold III is the garnishee, Northwestern Pacific Indemnity Company (NPIC). The appellees/cross-appellants are the plaintiffs in the garnishment action below (hereafter referred to as Plaintiffs). In that garnishment action, Plaintiffs were seeking to collect the consent judgments they had previously obtained in settlement of their tort actions against Americold. The judgment debtor in the settled tort action, Americold, is not a participant in the garnishment action, despite being the eponymous party.

NPIC appeals the district court's adverse rulings on the issues that were remanded by Americold I, which focused principally on two questions: (1) whether NPIC had acted in bad faith toward its insured, Americold; and (2) whether the consent judgments between Plaintiffs and Americold were reasonable and in good faith. However, the parties also raise jurisdictional issues, one of which is NPIC's contention that the underlying judgments against Americold were extinguished pursuant to K.S.A. 60–2403, thus depriving the district court of subject matter jurisdiction to proceed with this garnishment action. Finding in favor of NPIC on that issue, we reverse the district court and remand with instructions to dismiss these garnishment proceedings.

Factual and Procedural Overview

Given that we are not reaching the merits of NPIC's issues of bad faith or the reasonableness of Americold's settlement, we need not set forth a detailed recitation of the facts. In Americold II, Justice Six provided a summary of what had transpired prior to that 1999 Supreme Court ruling. His recitation will serve our purposes, except that we would note that Justice Six referred to the Plaintiffs as “Associated,” which we have modified to “Plaintiffs” here for clarity:

“Our background journey requires a brief return to Associated Wholesale Grocers, Inc. v. Americold Corp., 261 Kan. 806, 934 P.2d 65 (1997) ( Americold I ). Americold I involved lawsuits arising out of a fire in Americold's 170 acre underground cold storage facility. Americold had primary general liability coverage for tenant claims of $1 million through National Union Fire Insurance Company (National Union), with $25 million excess coverage through NPIC. TIG Insurance Company (TIG) provided $15 million excess coverage to National Union and NPIC. National Union eventually tendered the $1 million policy limit to plaintiffs, who were various tenants and their subrogated insurers, referenced here as [Plaintiffs].

“Although the fire burned only a part of the stored goods, smoke and other contaminants discharged by the fire damaged other goods stored in the facility. NPIC disclaimed coverage, reasoning that the claimed damages were excluded by the policy's pollution exclusion.

“Concluding that NPIC and TIG were denying coverage, Americold negotiated a settlement with [Plaintiffs]. The settlement included consent judgments totalling $58,670,754, a covenant by [Plaintiffs] not to execute against the assets of Americold, and an assignment of Americold's claims against its excess insurers, NPIC and TIG. After the settlement, [Plaintiffs] filed a garnishment action against NPIC. The district court granted summary judgment in favor of [Plaintiffs]. We reversed. TIG settled while Americold I was on appeal. Material issues of fact remained ‘as to the good faith and reasonableness of the settlement amount resulting in the consent judgments, the excess insurer's bad faith in denial of coverage and rejection of settlement within the policy limits, and the liability of the excess insurer for the judgments over policy limits.’ 261 Kan. 806, Syl. ¶ 15 . We held, however, that the pollution exclusion in the NPIC policy did not exclude coverage. 261 Kan. at 811 .” 266 Kan. at 1048–49, 975 P.2d 231.

Upon remand to the district court, the parties engaged in extensive discovery for a number of years. Ultimately, in the fall of 2005, the district court conducted a 10–week bench trial on the remand issues identified by Americold I.

On January 10, 2006, the court conducted a hearing on NPIC's motion to dismiss, in which the garnishee contended that the consent judgments entered in 1994 and 1995 had become dormant and extinguished pursuant to the provisions of K.S.A. 60–2403 and K.S.A. 60–2404. Therefore, NPIC argued, without valid judgments for Plaintiffs to collect, the district court did not have subject matter jurisdiction to proceed with a garnishment action. By journal entry filed January 19, 2006, the district court overruled the motion, finding that enforcement of the consent judgments had been stayed or prohibited within the meaning of K.S.A. 60–2403(c) and that the Supreme Court's remand with directions stayed the time provisions of the dormancy and revivor statutes and prohibited Plaintiffs from executing on their judgments.

A little over a year later, on February 16, 2007, the district court filed a journal entry describing its rulings on the various issues. On the principal issues, the court found that the settlement agreement between the Plaintiffs and Americold represented a reasonable, good faith settlement and that NPIC's denial of coverage was in bad faith, as was its refusal to participate in the settlement conferences and its refusal to settle Plaintiffs' claims within policy limits. The trial court found NPIC liable for the entire amount of the consent judgments, including the amounts in excess of its policy limits. The court directed the Plaintiffs to prepare, circulate, and present to the court for approval separate journal entries reflecting the adjusted amount of judgment for each plaintiff after deducting the TIG settlement and adding accrued interest and attorney fees to that date. Those journal entries were filed August 27, 2007, with an amended journal entry filed August 28, 2007.

NPIC filed a notice of appeal, the particulars of which will be discussed below. Plaintiffs cross-appealed, claiming the district court erred in denying their claim for punitive damages and complaining about the trial court's exclusion of an exhibit. Upon motion by NPIC, the appeal was transferred from the Court of Appeals to the Supreme Court. See K.S.A. 20–3017.

Jurisdictional Questions

Notice of Appeal

The Plaintiffs filed a motion to dismiss the appeal based on alleged flaws in NPIC's notice of appeal. Specifically, Plaintiffs con...