BANK IV SALINA, NA v. Aetna Cas. & Sur. Co., 91-4246-R.

• Decision Date: 18 December 1992
• Docket Number: No. 91-4246-R.,91-4246-R.
• Citation: 810 F. Supp. 1196
• Parties: BANK IV SALINA, N.A., as Conservator for the Estate of Michael Ray Russ, Plaintiff, v. The AETNA CASUALTY & SURETY CO., Defendant.
• Court: U.S. District Court — District of Kansas

810 F. Supp. 1196

BANK IV SALINA, N.A., as Conservator for the Estate of Michael Ray Russ, Plaintiff, v. The AETNA CASUALTY & SURETY CO., Defendant.

No. 91-4246-R.

United States District Court, D. Kansas.

December 18, 1992.

COPYRIGHT MATERIAL OMITTED

Gerald W. Scott, Wichita, KS, Mickey W. Mosier, Lawton M. Nuss, Clark, Mize & Linville, Chtd., Salina, KS, for plaintiff.

Keith U. Martin, Payne & Jones, Chtd., Overland Park, KS, Ronald D. Heck, Cynthia J. Sheppeard, Heck & Sheppeard, P.A., Topeka, KS, for defendant.

MEMORANDUM AND ORDER

ROGERS, District Judge.

This is a diversity action brought by plaintiff Bank IV Salina, as conservator for the Estate of Michael Ray Russ, a minor, for breach of a settlement agreement and misrepresentation. The defendant is The Aetna Casualty & Surety Company. This matter is presently before the court upon Aetna's motion to dismiss or, in the alternative, for summary judgment.

In the instant motion, defendant essentially argues that plaintiff has failed to state claims upon which relief can be granted. In doing so, the defendant has relied upon matters outside the pleadings. Accordingly, we find that the motion should be construed as one for summary judgment.¹ Fed.R.Civ.P. 12(b); Torres v. First State Bank of Sierra County, 550 F.2d 1255, 1257 (10th Cir.1977).

In considering the defendant's motion for summary judgment, the court must examine all the evidence in the light most favorable to the plaintiff. Barber v. General Electric Co., 648 F.2d 1272, 1276 n. 1 (10th Cir.1981). Summary judgment is proper only when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Under this rule, the initial burden is on the moving party to show the court "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). The moving party's burden may be met when that party identifies those portions of the record which demonstrate the absence of a genuine issue of material fact. Id. at 323, 106 S.Ct. at 2553.

Once the moving party has met these requirements, the burden shifts to the party resisting the motion. The nonmoving party must "make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322, 106 S.Ct. at 2552. The party resisting the motion "may not rest upon the mere allegations or denials of his pleadings ..." to avoid summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The mere existence of a scintilla of evidence will not avoid summary judgment; there must be sufficient evidence on which a jury could reasonably find for the nonmoving party. Id. at 251, 106 S.Ct. at 2511 (quoting Improvement Co. v. Munson, 81 U.S. (14 Wall.) 442, 448, 20 L.Ed. 867 (1872)).

Although discovery has not as yet been undertaken in this case, most of the facts are not in dispute. On or about February 3, 1989, Michael Ray Russ, who was then four years old, was traveling in an automobile with his natural mother, Lacene Hall, from Kansas to Texas. Michael Ray was the only passenger in the car. Lacene and Michael Ray were relocating to Texas. Lacene had two other children, Christina Gardenhire and Linda Hall, and a husband, Alfred Hall. Each of her children had a different father. Lacene had a flat tire while driving that night on I-35 near Perry, Oklahoma. After parking on the shoulder, she refused a ride for help from a passing motorist. Although informed that the motorist would call for a tow truck, Lacene grew impatient waiting and drove back into the right-hand lane of I-35. The flat tire limited the car's speed to approximately 10 to 15 miles per hour. The car was subsequently struck by a truck driven by Anthony Bruce Rogers. Sometime after the impact, the car caught on fire. Lacene died from her injuries at the scene. Michael Ray suffered severe burns over the majority of his body. It was later discovered that Lacene's blood alcohol content at the time of the accident was .13%.

Rogers, the driver of the truck, was employed by Jack Hood Transportation, Inc., whose liability carrier was Aetna. Aetna's policy with Jack Hood Transportation, Inc. had a coverage limit of $1,000,000.00 per accident.

In November 1989, Michael Russ, Michael Ray's father, brought suit against Aetna, Rogers, Jack Hood Transportation, and Hood's News Agency, Inc., in the District Court of Saline County, Kansas. The suit sought damages for Michael Ray's personal injuries arising from the February 3, 1989 accident.

Prior to filing suit, an Aetna representative had indicated to Michael Ray's attorney that Aetna would resist any claim brought on behalf of Lacene because her negligence completely barred recovery. The Aetna representative further stated that Aetna considered Michael Ray's claim to be one of "policy limits."

Following the filing of the lawsuit, Michael Ray's attorney wrote a letter to Ronald Barta, attorney for Christina Gardenhire, who was a potential wrongful death claimant. The letter contained a thorough review of the pertinent facts and the applicable law concerning Michael Ray's personal injury claims and the other potential claimants' wrongful death claims. The letter evaluated the various claims as follows:

On November 22, 1989, we filed suit in Saline County against the other driver, his employers and their liability carrier (Aetna). I enclose a copy of the petition for your reference. As the petition indicates, we are seeking damages only for Michael Ray's personal injuries. We are not seeking "wrongful death" damages for Michael Ray's claim for loss of his mother. In our opinion, those damages are not recoverable because of Lacene's large degree of comparative negligence.

. . . . .

Aetna and its counsel believe that the wrongful death claims have no validity. As indicated earlier, we agree. Still, Aetna is hesitant to tender policy limits to Michael Ray. The purpose of this letter, therefore, is to ask your clients to waive in writing all claims arising out of this accident. In addition to explaining our position in this letter, we would be glad to answer any questions you or your clients may have. If your clients should choose not to waive their rights and this matter should proceed to trial on the wrongful death claims, Aetna has assured us they will vigorously contest all death claims because of Lacene's large amount of comparative negligence. The resultant extended litigation will do nothing more than cost all parties unnecessary attorneys' fees and expenses.

. . . . .

Any party seeking to recover for the wrongful death of Lacene Hall therefore steps in her shoes and must prove that her negligence is less than or equal to that of the truck driver Rogers. See Wrongful Death in Oklahoma, 11 Okla. City U.L.Rev. 287, 292 n. 17 (Summer 1986). Because of Lacene's high blood alcohol content, her refusal to wait for help at the shoulder of the interstate, her driving on the interstate (and not the shoulder) at well below minimum interstate speed, and her driving on interstate with a flat tire, it is extremely unlikely that a Saline County jury would find her 50% or less negligent. We therefore believe with Aetna that the claimants for her wrongful death will recover nothing. Consequently, we have chosen not to seek damages for her wrongful death in the present Saline County suit.

. . . . .

We continue to strongly believe that Michael Ray's personal injury claim is worth substantially more than Aetna's policy limits. We also continue to strongly believe that Michael Ray will recover against Aetna's insured, with no diminution of his claim due to comparative negligence of himself or his mother. We also believe that his claim for wrongful death, like those of his two sisters, has no value as evidenced by our decision not to claim it in our pending lawsuit. Aetna agrees with our opinions. Because of the fact these wrongful death claims technically exist, however, Aetna hesitates to pay the policy limits to Michael Ray.

The letter asked Christina Gardenhire and her father to waive any claims arising out of the accident. A similar letter was sent to Karen Faulk, an attorney who represented Linda Hall and Alfred Hall, other potential wrongful death claimants. Attorneys for Michael Ray made additional efforts to obtain a waiver or a small settlement of these claims, but were unsuccessful.

At a settlement conference on January 16, 1990, Aetna representatives offered to settle Michael Ray's case by paying him the policy limits of $1 million. Aetna would use $300,000.00 to purchase an annuity, and the balance would be paid to Michael Ray's conservator. On January 17, 1990, counsel for Aetna informed Michael Ray's attorneys that Aetna would require that $50,000.00 of the $1 million settlement be placed in reserve for the potential wrongful death claims, even though Aetna believed that they had no value. Michael Ray's counsel objected to the reserve as unnecessary and suggested that the entire amount be paid to Michael Ray who would then agree to indemnify Aetna and its insureds for payment of any claims to wrongful death claimants. Aetna rejected the indemnity idea. Michael Ray's attorneys contend that Aetna's counsel told them that the cost of defending any wrongful death claims would be Aetna's and would not be deducted from the $50,000.00. During the conversation of January 17, 1990, Aetna also requested that a local attorney be appointed as Michael Ray's guardian ad litem. The guardian ad litem would review and approve the settlement on Michael Ray's behalf. David M. Moshier, an attorney, was subsequently appointed as the guardian ad litem.

On January 19, 1990, Michael Ray's attorneys notified counsel for Aetna that the settlement offer would...