Cont'l W. Ins. Co. v. Shultz

• Decision Date: 05 July 2013
• Docket Number: No. 103,776.,103,776.
• Citation: 297 Kan. 769,304 P.3d 1239
• Parties: CONTINENTAL WESTERN INSURANCE COMPANY, Appellant/Cross-appellee, v. Christopher J. SHULTZ; City of Great Bend, Kansas; and City of Great Bend, Kansas, Police Department, Appellees/Cross-appellants.
• Court: Kansas Supreme Court

297 Kan. 769

304 P.3d 1239

CONTINENTAL WESTERN INSURANCE COMPANY, Appellant/Cross-appellee,

v.Christopher J. SHULTZ; City of Great Bend, Kansas; and City of Great Bend, Kansas, Police Department, Appellees/Cross-appellants.

No. 103,776.

Supreme Court of Kansas.

July 5, 2013.

Syllabus by the Court

1. K.S.A. 2012 Supp. 12–105b(d) requires anyone bringing a claim against a municipality under the Kansas Tort Claims Act to provide that municipality with prior written notice setting out the specific facts and circumstances giving rise to the claim. Notice is a prerequisite to filing an action against a municipality.

2. K.S.A. 2012 Supp. 12–105b(d) provides that substantial compliance with its provisions and requirements is sufficient to constitute valid notice of a tort claim against a municipality. Within this statute's context, substantial compliance means providing the essential matters necessary to assure every reasonable statutory objective is met.

3. The statutory objectives of K.S.A. 2012 Supp. 12–105b(d) are to have the proper municipality advised of the time and place of the injury, to give that municipality an opportunity to ascertain the character and extent of the injury sustained, and to allow for the early investigation and resolution of claim disputes.

4. If the statutory notice provided to the municipality substantially complies with K.S.A. 2012 Supp. 12–105b(d) and the subsequent petition filed with the district court is consistent with that statutory notice, a party has complied with the statute. Absent a showing of misleading conduct or bad faith in the statutory notice's submission, subsequent amendments to the pleadings in the district court are controlled by K.S.A. 60–215.

Todd B. Butler, of Butler & Associates, P.A., of Topeka, argued the cause, and Stephanie B. Poyer, of the same firm, was with him on the briefs for appellant/cross-appellee.

Gaye B. Tibbets, of Hite, Fanning & Honeyman, LLP, of Wichita, argued the cause, and was on the briefs for appellees/cross-appellants.

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

State law requires anyone bringing a claim against a municipality under the Kansas Tort Claim Act, K.S.A. 75–6101 et seq., to provide that municipality with prior written notice of the claim. K.S.A. 2012 Supp. 12–105b(d). This requirement exists to advise the municipality of the time and place of the injury and allow it to ascertain the character and extent of the injury before suit is filed. Dodge City Implement, Inc. v. Board of Barber County Comm'rs, 288 Kan. 619, 639, 205 P.3d 1265 (2009). Among other things, the notice must include “a statement of the amount of monetary damages that is being requested.” K.S.A. 2012 Supp. 12–105b(d)(5).

In this case, the claimant alleged $19,590.07 in damages in the notice. Later, that same amount was alleged as damages when the claim first became a lawsuit in the district court. But several months after suit was filed, the alleged damages rose to $228,088.25. The municipality objected, arguing the notice did not adhere to the statute's disclosure requirements in light of the 11–fold increase in damages. A sharply divided Court of Appeals panel held that the notice substantially complied with the statute. Continental Western Ins. Co. v. Shultz, No. 103,776, ––– Kan.App.2d ––––, 2011 WL 2793583, at *13 (Kan.App.2011) (unpublished opinion). We granted review on that issue. We agree with the panel majority that the notice substantially complied with K.S.A. 2012 Supp. 12–105b(d)(5) and affirm.

Factual and Procedural Background

In March 2005, Layne Steinert was injured in a car accident with Christopher Shultz, a Great Bend police officer. Both were in the course of their employment when the accident occurred. Steinert obtained workers compensation benefits but did not bring a tort action to recover his damages from the accident. Consequently, that right was statutorily assigned to Continental Western Insurance Company, his employer's workers compensation carrier. K.S.A. 44–504(c) (injured worker's failure to bring tort action operatesas assignment to employer); K.S.A. 2012 Supp. 44–532(a) (insurer subrogated to employer's rights under Workers Compensation Act).

On March 27, 2007, Continental gave notice to the City of Great Bend that it was pursuing a claim against the city for damages resulting from Shultz' negligence in the March 2005 accident. The notice set out various details regarding the accident, includinga request for money damages in the amount of $19,590.07 for medical bills and indemnity. That same day, Continental prematurely filed suit in district court in violation of K.S.A. 2012 Supp. 12–105b(d), which states that no action may commence until after the municipality denies the claim or 120 days, whichever occurs first. Since it was premature, the suit was dismissed.

Continental filed a second petition on September 6, 2007, demanding judgment in the amount of $19,590.07 and naming as defendants Shultz, the City of Great Bend, and the Great Bend Police Department (collectively defendants). Continental alleged Shultz' negligence caused Steinert's injuries, and, as a result, Continental had paid workers compensation benefits to Steinert for “medical expenses, lost wages, temporary total disability payments, pain and suffering, and mental anguish.”

During pretrial discovery, Continental moved for leave to amend its petition under K.S.A. 60–215(a) (amendment by consent of opposing party or leave of court) to plead damages in excess of $75,000. Continental asserted its $19,590.07 damages calculation was incorrect because of an accounting error in which expenses related to the March 2005 accident were mistakenly attributed to a different incident. Continental also disclosed that the amount of Steinert's medical expenses and temporary total disability payments then totaled $93,000, but noted that its expenses on account of Steinert's injuries were ongoing. The district court granted Continental leave to amend its petition.

Defendants moved to set aside the order. Four days later, defendants also moved to dismiss the amended petition for lack of subject matter jurisdiction because the amount of monetary damages demanded therein differed from the amount requested in the 12–105b(d) notice. They further argued that Continental was requiredto file a new notice with the municipality reflecting the increased monetary damages to comply with K.S.A. 2012 Supp. 12–105b(d).

The district court ultimately reaffirmed its decision to grant Continental leave to amend its petition and denied defendants' motion to dismiss. The court specifically found Continental's statutory notice substantially complied with K.S.A. 2012 Supp. 12–105b(d). In doing so, the district court also found pursuant to K.S.A. 60–215(a) (the statute controlling amendments to pleadings) that “justice requires that Plaintiff should be allowed to increase its stated amount of damages in order to provide Plaintiff with the opportunity to recover the cost of workers compensation benefits and lost wages paid to and/or on behalf of Steinert.”

In subsequent proceedings, Continental revealed its damages were still accruing because of its ongoing temporary total disability compensation payments to Steinert. Continental announced it intended to seek $228,088.25 in damages—the policy limits applicable to Steinert's workers compensation claim. Defendants again moved to dismiss, arguing Continental's damages were speculative pending a final workers compensation award. The district court agreed and dismissed the case.

Both parties appealed. Continental challenged the dismissal, while defendants cross-appealed the district court's earlier determination that Continental's notice substantially complied with K.S.A. 2012 Supp. 12–105b(d). Notably, defendants did not challenge the district court's discretionary decision to permit Continental's amendment to its pleadings under K.S.A. 60–215(a). See Klose v. Wood Valley Racquet Club, Inc., 267 Kan. 164, Syl. ¶ 2, 975 P.2d 1218 (1999) (statute gives district court broad discretion to permit amendments to pleadings, and its actions will not be reversible unless it affirmatively appears the amendment was so material that it affected the adverse party's substantial rights).

The Court of Appeals reversed the district court's dismissal order that determined Continental's claims were speculative. Continental Western Ins. Co., 2011 WL 2793583, at *8. That issue is not before us. But the panel sharply divided over whether the claim notice substantially complied with K.S.A. 2012 Supp. 12–105b(d)(5). Each panel member viewed the problem differently.

Judge Joseph Pierron quickly disposed of the issue, writing simply that “[a]ll parts of the notice were correct at the time of the filing; therefore the notice was in substantial compliance with the law and the district court was correct in finding so.” 2011 WL 2793583, at *13. And in a separate concurring opinion, Judge Karen Arnold–Burger agreed the notice contained the information required by law and also noted that Continental's September 2007 petition demanded the same monetary damages sought in its 12–105b(d) claim notice. She argued the district court acquired jurisdiction at the time Continental filed the petition and, despite the increased damages sought later in the proceedings, once jurisdiction was acquired it was “not ousted or divested by subsequent events.” 2011 WL 2793583, at *15.

In dissenting from the other panel members' majority and concurring opinions Judge Thomas Malone, now Chief Judge, argued the district court erred when it found Continental's notice substantially complied with the statutory requirements of 12–105b(d) and denied defendants' motion to dismiss. He reasoned that the notice was inaccurate when Continental first submitted it to the municipality, the inaccuracy resulted from Continental's own error, and the notice failed to meet a statutory objective because...