O'DONOGHUE v. Farm Bureau Mut. Ins. Co.

• Decision Date: 18 April 2003
• Docket Number: No. 87,002,87,002
• Citation: 66 P.3d 822,275 Kan. 430
• Parties: PETER O'DONOGHUE, Administrator of the Estate of CHONG AE O'DONOGHUE, and SEAN O'DONOGHUE, heir-at-law of CHONG AE O'DONOGHUE, Appellees, v. FARM BUREAU MUTUAL INSURANCE CO., INC., Appellant.
• Court: Kansas Supreme Court

275 Kan. 430

66 P.3d 822

PETER O'DONOGHUE, Administrator of the Estate of CHONG AE O'DONOGHUE, and SEAN O'DONOGHUE, heir-at-law of CHONG AE O'DONOGHUE, Appellees, v. FARM BUREAU MUTUAL INSURANCE CO., INC., Appellant.

No. 87,002

Supreme Court of Kansas

Opinion filed April 18, 2003.

Arthur S. Chalmers, of Hite, Fanning & Honeyman, L.L.P., of Wichita, argued the cause, and Don D. Gribble, II, and Vince P. Wheeler, of the same firm, were with him on the briefs for appellant.

Corlin J. Pratt, of Grace, Unruh & Pratt, L.C., of Wichita, argued the cause, and Terry L. Unruh, of the same firm, was on the briefs for appellees.

The opinion of the court was delivered by

DAVIS, J.:

The question we must resolve involves an interpretation of K.S.A. 40-284(b) under undisputed facts. Chong Ae O'Donoghue died in an automobile accident and because of multiple claims against the tortfeasor's liability coverage her estate recovered only a small portion of her actual damages from the tortfeasor. The district court determined, and the Court of Appeals agreed, that O'Donoghue was entitled to recover underinsured motorist (UIM) benefits for actual damages sustained up to the limit of her UIM coverage less the amount recovered from the tortfeasor. Farm Bureau claims her recovery should be limited to the difference between her UIM coverage limit and the tortfeasor's liability limit. We granted Farm Bureau's petition for review.

The following facts set forth in the Court of Appeals' opinion O'Donoghue v. Farm Bureau Mut. Ins. Co., 30 Kan. App. 2d 626, 627-28, 49 P.3d 22, 24 (2002), are not in dispute:

"In July 1999, O'Donoghue, a passenger in a vehicle driven by Sarah Brown, was killed in a single-car accident. There were two other passengers in the vehicle; one was also killed in the accident and the other was severely injured. Thus, there were three claimants against the driver's insurer, American Family Insurance Company (American Family).

"Brown's American Family automobile insurance policy provided bodily injury liability limits of $50,000 per person and $100,000 per occurrence (50/100), i.e., American Family would not pay any one person more than $50,000 and would not pay more than a total of $100,000 to compensate all of the persons injured in the same accident. Brown's coverage limits were insufficient to fully compensate all three claimants. The parties agreed to divide the total per occurrence monies available under the American Family policy as follows: the injured passenger would receive $50,000 and each of the decedents' estates would receive $25,000. Farm Bureau, as O'Donoghue's insurer, approved of the settlement with American Family as being a fair and reasonable distribution of Brown's liability limits.

"O'Donoghue's Farm Bureau policy provided UIM coverage with limits of $100,000 per person and $300,000 per occurrence (100/300). The parties have agreed that O'Donoghue's damages exceeded $100,000. O'Donoghue made a claim under Farm Bureau's UIM coverage for $75,000, representing the $100,000 per person limit less the $25,000 recovery from American Family. Farm Bureau countered that its maximum liability to O'Donoghue was $50,000, computed by subtracting Brown's per person limit of $50,000 from O'Donoghue's per person limit of $100,000.

"The estate filed a petition and a motion for partial summary judgment, asking the district court to declare $75,000 in UIM coverage available to O'Donoghue. The district court granted O'Donoghue's partial summary judgment, finding that $75,000 in UIM coverage was available, but the court denied O'Donoghue's motion for attorney fees under K.S.A. 40-256. The parties later agreed to a journal entry of judgment. Farm Bureau paid the uncontested amount of $50,000 to O'Donoghue, but appealed the $75,000 judgment. O'Donoghue cross-appealed the denial of attorney fees."

The issue involving attorney fees is not involved in this appeal. We granted Farm Bureau's petition for review on the sole issue of whether, under the provisions of K.S.A. 40-284(b) in the circumstances of this case, O'Donoghue is entitled to recover from Farm Bureau UIM benefits of $75,000 or whether she is limited to the difference between her UIM limit of $100,000 and Brown's liability limit of $50,000.

The interpretation of a statute is a question of law subject to unlimited review. Halsey v. Farm Bureau Mut. Ins. Co., Inc., 275 Kan. 129, Syl. ¶ 1, 61 P.3d 691 (2003). The fundamental rule of statutory construction is that the intent of the legislature governs if that intent can be ascertained. When a statute is plain and unambiguous, the court must give effect to the intention of the legislature as expressed, rather than determine what the law should or should not be. State ex. rel. Stovall v. Meneley, 271 Kan. 355, 378, 22 P.3d 124 (2001). However, where the intent is not clearly expressed, courts are not limited to consideration of the language employed but may properly look into the historical background of the enactment, the circumstances attending its passage, the purposes to be accomplished, and the effect the statute may have under various suggested constructions. A statute should never be given a construction that leads to uncertainty, injustice, or confusion if possible to construe it otherwise. In construing a statute, words and phrases should be construed according to context and the approved usage of the language, and words in common use are to be given their natural and ordinary meaning. KPERS v. Reimer & Koger Assocs. Inc., 261 Kan. 17, Syl. ¶ 2, 927 P.2d 466 (1996).

This court recently interpreted the provisions of K.S.A. 40-284(b) in Halsey. Unlike the question we face in this case, the question in Halsey was whether UIM coverage existed. Here, there is no question that UIM coverage existed for O'Donoghue. The Court of Appeals rendered its decision in this case on April 26, 2002. Halsey was decided on January 24, 2003, after we had granted Farm Bureau's petition for review in this case. Halsey argued that the Court of Appeals' opinion in this case supported his claim that coverage existed. However, we noted in Halsey: "A petition for review was filed with this court in O'Donoghue which we subsequently granted. Pursuant to [Supreme Court] Rule 8.03(i) (2002 Kan. Ct. R. Annot. 56), O'Donoghue has no precedential value." 275 Kan. at 140. Thus, we did not take into consideration the Court of Appeals' holding in this case in our Halsey opinion.

We did interpret the provisions of K.S.A. 40-284(b) on the issue of whether UIM coverage existed for Halsey under her Farm Bureau policy. K.S.A. 40-284(b) provides:

"(b) Any uninsured motorist coverage shall include an underinsured motorist provision which enables the insured or the insured's legal representative to recover from the insurer the amount of damages for bodily injury or death to which the insured is legally entitled from the owner or operator of another motor vehicle with coverage limits equal to the limits of liability provided by such uninsured motorist coverage to the extent such coverage exceeds the limits of the bodily injury coverage carried by the owner or operator of the other motor vehicle."

Highly summarized, Halsey's UIM coverage was in the amount of $500,000 and the tortfeasor carried liability coverage of $1,000,000. Because of the number of claimants recovering from the tortfeasor, Halsey received less than her actual damages and looked to her UIM coverage. In denying coverage and keying upon the statutory language in the last two lines of the statute, "to the extent such coverage [UIM] exceeds the limits of the bodily injury coverage carried by the owner or operator of the other motor vehicle," we concluded:

"The plain and unambiguous language of K.S.A. 40-284(b) requires a limits-to-limits comparison when determining whether underinsured motorist (UIM) coverage exists. In those cases where the UIM coverage exceeds the limits of the bodily injury coverage carried by the owner or operator of the other motor vehicle, UIM coverage exists. However, in those cases, such as the case we now consider where the UIM coverage equals or does not exceed the limits of the bodily injury coverage carried by the owner or operator of the other motor vehicle, there is no UIM coverage." (Emphasis added.) 275 Kan. 129, Syl. ¶ 4.

Halsey tracked the statutory language and relied heavily on earlier decisions by this court and the Court of Appeals with particular emphasis on State Farm Mut. Auto. Ins. Co. v. Cummings, 13 Kan. App. 2d 630, 778 P.2d 370 (1989), wherein the Court of Appeals adopted the following test in determining whether UIM coverage is available: "(1) The opposing party's liability coverage must be below the claimant's liability coverage, and (2) the claimant must have damages in excess of the opposing party's liability coverage." 13 Kan. App. 2d at 639. We noted in Halsey that K.S.A. 40-284(b) had been in existence for a number of years, that Cummings based its decision on the plain language of the statute, and that the legislature had not altered the statute in the past 13 years since the Cummings decision. 275 Kan. at 136.

Unlike Halsey, the question involved in this case involves the amount of UIM coverage where that coverage exists. This question is one of first impression in this state, although two Kansas appellate decisions have touched on the amount of coverage in cases where it has been determined coverage exists. Jones v. Automobile Club Inter-Insurance Exchange,26 Kan. App. 2d 206, 981 P.2d 767, rev. denied 268 Kan. 847 (1999), and Cashman v. Cherry, 270 Kan. 295, 13 P.3d 1265 (2000), as discussed below, deal with the amount of UIM coverage but do not directly address the issue we must resolve in this case.

After a thorough discussion of Kansas cases involving an interpretation of K.S.A. 40-284(b), the Court of Appeals in this case noted that Farm Bureau again focuses on the statutory language we relied on in Halsey. Farm...