Banuelos v. Hernandez–Diaz
| Decision Date | 18 May 2012 |
| Docket Number | No. 103,996.,103,996. |
| Citation | 276 P.3d 837 |
| Parties | Rosa BANUELOS, Appellee, v. Octavio HERNANDEZ–DIAZ, Appellant/Cross-appellee, v. Guideone Specialty Mutual Insurance Company, Appellee/Cross-appellant. |
| Court | Kansas Court of Appeals |
Rosa BANUELOS, Appellee,
v.
Octavio HERNANDEZ–DIAZ, Appellant/Cross-appellee,
v.
Guideone Specialty Mutual Insurance Company, Appellee/Cross-appellant.
No. 103,996.
Court of Appeals of Kansas.
May 18, 2012.
Appeal from Finney District Court; Philip C. Vieux, Judge.
N. Russell Hazlewood and Jacob S. Graybill, of Graybill & Hazlewood, L.L.C., of Wichita, for appellant/cross-appellee Octavio Hernandez–Diaz.
Marc A. Powell and Casey P. Murray, of Powell, Brewer & Reddick, L.L.P., of Wichita, for appellee/cross-appellant GuideOne Specialty Mutual Insurance Company.
Before GREENE, C.J., GREEN and BUSER, JJ.
PER CURIAM.
Octavio Hernandez–Diaz (Hernandez) appeals the district court's award of attorney fees for prosecuting his claim under K.S.A. 40–3111(b) for personal injury protection (PIP) benefits, arguing the award of $2,500 was objectively inadequate, without support in the record, based on inconsistent findings, and the product of a misapplication of controlling legal principles. GuideOne Specialty Mutual Insurance Company (GuideOne) cross-appeals the award, arguing that there should have been no attorney fee award for the PIP claim and that it was entitled to a directed verdict on Hernandez' related claim for attorney fees for GuideOne's failure to defend the liability claim against him. Concluding there was no error in the district court's award of PIP attorney fees or the denial of GuideOne's motion for directed verdict, we affirm the district court.
On March 5, 2001, Hernandez was driving a 1989 Hyundai Excel—purportedly with the permission of GuideOne policyholder Michelle Romo—when Hernandez was involved in a one-vehicle accident, injuring both Hernandez and his passenger, Rosa Banuelos.
At the time of the accident, the vehicle was insured by a liability insurance policy issued by GuideOne to Romo. GuideOne's policy was in full force and effect at the time the accident occurred; however, there was a dispute regarding whether Romo had sold the vehicle to Hernandez before the accident thus voiding coverage. The limits of liability under the policy for bodily injury were $25,000 for each person, $50,000 for each accident, and basic PIP benefits of $4,500 per person.
On May 8, 2001, Hernandez submitted a PIP benefit application to GuideOne. On August 22, 2001, GuideOne sent both Hernandez and Banuelos notices denying coverage for the accident on the belief that Romo had signed over the title to the vehicle to Hernandez before the accident.
On February 18, 2003, Banuelos filed suit against Hernandez alleging that Hernandez' negligence caused the accident. In the course of that protracted and contentious litigation, GuideOne waived its coverage defenses. And on August 2, 2005, Hernandez asserted a PIP claim for the first time in this lawsuit, in what appears to this court as an after-thought. On August 29, 2005, GuideOne paid the PIP benefits—but no interest—into the court. On September 23, 2005, by agreement of the parties, the clerk of the Finney County District Court was ordered to pay the $4,500 in PIP benefits to Hernandez and his attorneys.
On September 30, 2005, Hernandez filed a motion for partial summary judgment, asking for multiple findings on the Banuelos litigation but also requesting an award of overdue interest on the PIP benefits. In Hernandez' legal arguments, the section addressing interest on the PIP benefits was separately argued and encompassed less than four pages of the memorandum. On October 21, 2005, GuideOne filed a memorandum in opposition to Hernandez' motion for summary judgment, separately enumerating its PIP arguments in seven pages. Hernandez' response constituted an additional three pages regarding the PIP claim. On December 13, 2005, District Court Judge Robert J. Frederick heard oral arguments on the opposing motions and found that GuideOne was responsible for the interest on PIP benefits, but he denied summary judgment on the PIP attorney fees.
The litigation involving Banuelos continued, and on October 14, 2008, a jury decided that GuideOne breached its contractual duty to defend Hernandez and awarded him $10,225 in damages for defense costs sustained prior to being defended by GuideOne.
On February 23, 2009, the district court denied GuideOne's motion for a directed verdict on the “expressed single issue of whether or not GuideOne had breached its contract relating its duty to defend and the Plaintiffs' damages arising therefrom up to and including June 17, 2003.” The court also found that Hernandez was entitled to collect reasonable attorney fees related to the delay in payment of Hernandez' PIP claim. After a hearing regarding the amount of fees that should be awarded, Judge Philip C. Vieux entered judgment against GuideOne for $2,500.
Key to understanding the analysis to follow, and the district court's attorney fee award, is that the PIP recovery played a very minor role in the litigation between the belated assertion of the PIP claim in late 2005 and the conclusion of the proceedings in district court in early 2010. As noted above, the PIP claim was asserted as an afterthought in the final pretrial order for litigation that primarily involved Banuelos' claim against Hernandez and Hernandez' claim that GuideOne had breached its duty to defend him. Despite all the arguments of Hernandez in this appeal, PIP benefits were paid within 30 days of assertion, and the only attorney services thereafter related to those benefits were those required to procure interest on the benefits and the pursuit of attorney fees.
Hernandez timely appeals Judge Vieux's ruling regarding the amount of PIP attorney fees awarded. GuideOne timely cross-appeals Judge Vieux's ruling that Hernandez was entitled to collect PIP attorney fees and Judge Vieux's denial of GuideOne's motion for directed verdict on the issue of whether GuideOne breached its duty to defend.
Approaching the issues in logical order, we turn first to the cross-appeal issue whether the court erred in awarding attorney fees in connection with the PIP claim. We review this question for an abuse of discretion. See Moore v. Dudley, 31 Kan.App.2d 184, 186–88, 64 P.3d 429 (2002).
K.S.A. 40–3111(b) authorizes attorney fees in actions to collect overdue PIP benefits:
“An attorney is entitled to a reasonable fee for advising and representing a claimant in an action for personal injury protection benefits which are overdue. The attorney's fee shall be a charge against the insurer or self-insurer in addition to the benefits recovered, if the court finds that the insurer or self-insurer unreasonably refused to pay the claim or unreasonably delayed in making proper payment.”
The district court found as follows on this issue:
“1. The seminal event in this case took place on March 5, 2001 and involved an vehicular accident in which Octavio Hernendez–Diaz as the driver of the vehicle and Rosa Banuelos as a victim of the accident. PIP Claims were made by March 16, 2001, to Guideone. In May of 2001, Guideone sent to the Octavio Hernandez–Diaz, hereinafter referred to as plaintiff, an application for PIP and the same was completed and returned. Payment of the PIP was due within 30 days of the application being made.
“2. On July 16, 2001, Via Christi Hospital complained of not being paid. On August 22, 2001, Guideone wrote a letter of denial of PIP coverage to the plaintiff. Suit was filed in February of 2003.
“3. After suit was filed, in June of 2003, [G]uideone rescinded coverage denial. On June 24, 2003, liability limits and PIP was paid the plaintiff's accident victim. No accumulated interest was added to the sums paid and no release was sought or given by this victim.
“4. On or about August 29, 2005, Guideone paid the PIP benefits due to the plaintiff into the court rather than pay the same direcly to the plaintiff. Guideone later contended that it held and subsequently paid the sum into the court as there were competing claims and liens for the PIP monies. Guideone indicated that it needed to engage in an interpleader actions to determine who gets the money. However, Guideone made no attempt whatsoever to interplead anyone, arguing to the court that such was no its responsibility, but the responsibility of the plaintiff. The question is left begging as for what benefit, other more than delay, was accomplished by Guideone in this regard. It is also noted that no interest was paid upon the claim until June 28, 2006, ten months after the August 2005 payment. No explaination has ever been presented to the court as to why the PIP claim and interest were not timely paid.
“5. The only explanation proffered, which is in reality none at all, as to why the PIP was not paid earlier and then partially paid years after the event was that it was a “business decision.” Other than that characterization of the decision, no reason was ever proffered. It is noted that there was some testimony as to investigation into who owned the vehicle, but that was waived with its reversal of its position as to the PIP obligation. That delayed “business decision” by Guideone was the direct cause of a considerable amount of litigation that simply did not need to take place. And even after the decision was made there still was delay and litigation made necessary by the actions of Guideone. The statutes make it an absolute obligation to pay PIP when it states that the insurer “shall pay any personal injury protection benefits which are required: and shall pay them within a reasonable time. See K.S.A. 40–3109(a) and 40–3111(b).
“6. Pursuant to K.S.A. 40–3111(b) specifically states attorney fees are allowable if it is shown that the insurer refused to pay the claim or unreasonable delayed in making proper payment. It is noted that the instant case involved not only unreasonable delay in paying, but also the lack of...
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