Gilmore v. Attebery

• Decision Date: 06 June 1995
• Docket Number: No. WD,WD
• Citation: 899 S.W.2d 164
• Parties: James GILMORE and Sondra Zinn, Respondents, v. Julie ATTEBERY, Appellant. 50069.
• Court: Missouri Court of Appeals

Page 164

899 S.W.2d 164

James GILMORE and Sondra Zinn, Respondents, v. Julie ATTEBERY, Appellant.

No. WD 50069.

Missouri Court of Appeals Western District.

June 6, 1995.

Robert O. Jester, Sharon Kennedy, Kansas City, for appellant.

Karl Kuckelman, Kansas City, for respondents.

Before FENNER, C.J., P.J., and BERREY and ULRICH, JJ.

BERREY, Judge.

Appellant Julie Attebery appeals the trial court's grant of summary judgment in favor of respondents. The facts of the case are not in dispute and were stipulated by the parties. As the trial court indicates, the pivotal question is whether Missouri or Kansas substantive law governs an automobile accident occurring in Missouri and involving an Illinois defendant and Kansas plaintiffs.

On July 20, 1991, appellant and respondents James Gilmore and Sondra Zinn were involved in a motor vehicle accident in Osage Beach, Camden County, Missouri. Appellant's vehicle struck the rear of a vehicle driven by Gilmore and in which Zinn was a passenger. Gilmore and Zinn received injuries and incurred medical costs and/or lost wages of $751.26 and $4,006.74, respectively. These amounts were paid to Gilmore and Zinn under Gilmore's Kansas automobile insurance policy of personal injury protection coverage (PIP) issued by State Farm Mutual Automobile Insurance Company.

Appellant admits fault for the accident and has no affirmative defenses. At the time of the accident, appellant was insured by Springfield Fire and Casualty Company. Springfield Fire and Casualty, through its adjustment company, General Adjustment Bureau (GAB), investigated and adjusted Gilmore and Zinn's claims.

On August 23, 1991, State Farm notified appellant's insurer, Springfield Fire and Casualty, that it was making a subrogation claim for moneys it paid under its PIP coverage to or on behalf of Gilmore. On October 4, 1991, State Farm notified Springfield Fire and Casualty's adjustment company, GAB, that it was making a subrogation claim for moneys it paid under its PIP coverage to or on behalf of Zinn.

On December 20, 1991, Gilmore gave a release to appellant in consideration of $1,250.00 paid by appellant's insurer, Springfield Fire and Casualty. On February 16, 1992, Zinn gave a release to appellant in consideration of $5,000.00 paid by appellant's insurer, Springfield Fire and Casualty. The sufficiency of the release considerations is not contested.

In March 1993, the present action was filed in the names of Gilmore and Zinn; State Farm seeks reimbursement from appellant of the sums paid on behalf of Gilmore and Zinn under its PIP coverage and pursuant to K.S.A. § 40-3113a.

Gilmore and Zinn were residents of Kansas on the date of the accident, and Gilmore had contracted with State Farm for his Kansas policy of automobile insurance. Appellant was a resident of Illinois on the date of the accident and maintained automobile insurance through Springfield Fire and Casualty of Springfield, Illinois. Springfield Fire and Casualty is not registered, nor does it have agents, in either Kansas or Missouri.

The parties each filed motions for summary judgment. Appellant's motion contended that the releases given by Gilmore and Zinn operate as a bar to State Farm's reimbursement efforts and that the Kansas PIP statute cannot be enforced in a Missouri court against an Illinois defendant who had no contacts at all with the state of Kansas. Gilmore and Zinn's motion alleged that appellant entered into a settlement with Gilmore and Zinn despite notice of State Farm's statutory PIP liens and therefore the releases do not bar the present action.

On September 14, 1994, the trial court held that Kansas substantive law applied. Applying Kansas law, the trial court determined that State Farm was authorized to bring a subrogation action in the names of the injured parties to enforce its PIP liens against appellant. The court therefore granted Gilmore and Zinn's motion for summary judgment and denied appellant's motion for summary judgment.

Appellant asserts the trial court erred in holding that the substantive law of Kansas, rather than the substantive law of Missouri, applies to the facts of this case. Appellant concedes that if Kansas law properly applies, then summary judgment granted to Gilmore and Zinn is proper. We are faced then with a conflict of laws.

Under Kansas' system of no-fault insurance, Kansas insurers are required to provide PIP benefits for its insureds who sustain personal injury as a result of motor vehicle accidents. K.S.A. § 40-3107, et seq. The insurer then has a statutory lien on any recovery its insured receives from a tortfeasor to the extent of PIP benefits provided. K.S.A. § 40-3113a(b). If an injured person does not bring a suit against the tortfeasor within 18 months of the accident, the insured is deemed to have assigned his personal injury claim to the insurer who can then bring an action against the tortfeasor in its own name or in the name of the injured person. K.S.A. § 40-3113a(c).

Missouri's public policy, however, forbids the "assignment or subrogation" of personal injury claims to an insurer. Waye v. Bankers Multiple Line Ins. Co., 796 S.W.2d 660, 661 (Mo.App.1990); Travelers Indem. Co. v. Chumbley, 394 S.W.2d 418, 423 (Mo.App.1965).

Appellant argues that Missouri law should govern and bar State Farm from asserting its subrogation claim. The trial court recognized Missouri's policy of non-assignability of personal injury claims but felt bound by the "principal location of the insured risk" rule, discussed infra, to apply Kansas substantive law.

On appeal from summary judgment, the issue is one of law and our review is essentially de novo. We must test the propriety of summary judgment by the same standards as those which should be employed by the trial court. Dana Commercial Credit Corp. v. Cukjati, 880 S.W.2d 612 (Mo.App.1994).

Appellant's primary contention is that the trial court erred in applying the "principal location of the insured risk" rule rather than the "significant relationship" test and the "governmental interest" analysis because the principal location of the insured risk rule applies only to contract disputes. Appellant asserts that the issue here involved is not a contract dispute but whether a Kansas insurance company as assignee of its insureds who are Kansas residents can enforce a lien created under Kansas statute against an Illinois defendant in a Missouri court when it is against the public policy of Missouri to assign personal injury claims.

In reviewing the trial court's judgment, we must determine whether Kansas does indeed have the most significant relationship to the occurrence and the parties. The most significant relationship test was adopted by Missouri to govern tort actions in Kennedy v. Dixon, 439 S.W.2d 173, 180 (Mo. banc 1969). It is also the test adopted by the Restatement (Second) of Conflict of Laws (1969), and it has been extended to govern contract actions as well. See Hartzler v. American Family Mut. Ins. Co., 881 S.W.2d 653 (Mo.App.1994).

Section 145(2) of the Restatement (Second), in discussing the significant relationship test, states:

(2) Contacts to be taken into account ... to determine the law applicable to an issue include:

(a) the place where the injury occurred,

(b) the place where the conduct causing the injury occurred,

(c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and

(d) the place where the relationship, if any, between the parties is centered.

In this case, the injury and the conduct causing the injury occurred in Missouri. In addition, the relationship between the parties is centered in Missouri. Appellant is an Illinois resident apparently not subject to the personal jurisdiction of Kansas for purposes of the instant action. Because of conduct occurring in Missouri, State Farm seeks to enforce Kansas subrogation rights against appellant in a Missouri court.

However, Kansas' interests and contacts cannot be ignored in the analysis. Gilmore and Zinn are Kansas residents, and State Farm is bound by Kansas law to provide its Kansas insureds with PIP protection. K.S.A. § 40-3107, et seq. To effectuate its policy of prompt personal injury protection to Kansas residents, Kansas has enacted a comprehensive insurance scheme which grants Kansas insurers a right of assignment to the claims of its injured insureds. K.S.A. § 40-3113a. These contacts give Kansas a significant interest in this matter.

Thus, we must proceed to the so-called "governmental interest" analysis. Where two states have significant contacts and legitimate state interests in the choice of law, we must apply the law of the state whose interest would be more impaired if its policy were subordinated to the policy of the other state. Hicks v. Graves Truck Lines, Inc., 707 S.W.2d 439, 445 (Mo.App.1986).

In Hicks, Missouri's fault apportionment law, rather than Kansas' modified comparative fault statute, was held applicable to an automobile accident occurring in Kansas. Id. After recognizing that both Missouri and Kansas had significant contacts with the parties and the accident, the court decided that Missouri's state interest would be more impaired if Kansas law were applied. Id. The court determined that application of Kansas law would impose economic hardship contrary to Missouri public policy while Kansas interests were not as greatly impaired by application of Missouri law. "Even though a Kansas resident may thereby be required to pay some damages, he still receives some protection in that the amount is reduced in direct proportion to the contributing fault." Id. The court in Hicks noted that the case involved Missouri claimants suing in Missouri courts. Id. at 444. Moreover, the court reasoned that Kansas residents become subject to the Missouri comparative fault rule only by conduct which also subjects them to the jurisdiction of Missouri courts. Id. at 445.

Applying the governmental...