Glenn v. Fleming

• Decision Date: 03 November 1989
• Docket Number: No. 63230,63230
• Citation: 781 P.2d 1107,14 Kan.App.2d 62
• Parties: Everett GLENN, Plaintiff/Appellant, v. Dale FLEMING, Defendant. AETNA CASUALTY & SURETY COMPANY, Garnishee/Third-Party Plaintiff/Appellee, v. Randall WELLER, Third-Party Defendant.
• Court: Kansas Court of Appeals

Page 1107

781 P.2d 1107

14 Kan.App.2d 62

Everett GLENN, Plaintiff/Appellant, v. Dale FLEMING, Defendant.

AETNA CASUALTY & SURETY COMPANY, Garnishee/Third-Party Plaintiff/Appellee, v. Randall WELLER, Third-Party Defendant.

No. 63230.

Court of Appeals of Kansas.

Nov. 3, 1989.

Review Granted January 26, 1990.

Syllabus by the Court

1. A plaintiff who has entered into a covenant not to execute against an insured who is liable to pay a judgment to the plaintiff is precluded from garnishing the insurer to collect a judgment in excess of the policy limits if the language of the covenant not to execute relieves the insured of any liability for payment of the judgment. Heinson v. Porter, 244 Kan. 667, 772 P.2d 778 (1989).

2. Summary judgment is appropriate when there is no genuine issue of material fact remaining and a party is entitled to judgment as a matter of law. K.S.A. 60-256(c). In considering a motion for summary judgment, both the trial court and the appellate court upon review are required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought.

3. If the language of a policy of insurance is clear and unambiguous, the words are to be taken and understood in their plain, ordinary, and popular sense and there is no need for judicial interpretation or the application of rules of liberal construction; the court's function is to enforce the contract according to its terms.

4. Where an insurer is obligated under its policy to pay "all interest on the entire amount of any judgment therein which accrues after entry of the judgment and before the company has paid or tendered or deposited in court that part of the judgment which does not exceed the limit of the company's liability thereon," the insurer is liable for interest on the entire judgment, including the part of the judgment in excess of the policy limits.

Jerry R. Palmer, of Palmer, Marquardt & Snyder, Topeka, for plaintiff/appellant.

Donald A. McKinney and H. Lee Turner, of Turner & Boisseau, Chartered, Great Bend, for garnishee/third-party plaintiff/appellee.

Before GERNON, P.J., LEWIS, J., and DAVID F. BREWSTER, District Judge, assigned.

GERNON, Judge:

Everett Glenn won a judgment against Aetna's insured, Dale Fleming, in a personal injury action. Glenn filed a garnishment action against Aetna, alleging that Aetna had acted in bad faith during the settlement negotiations and seeking payment of the amount of the judgment in excess of the policy limits. The district court granted Aetna's motion for summary judgment. Glenn appeals this ruling, and also appeals the district court's earlier denial of his motion for summary judgment. Aetna cross-appeals from one of the findings made by the district court in its ruling denying summary judgment to Glenn.

Glenn was severely injured as a result of a propane gas fire that occurred as he finished fueling Fleming's vehicle. He sued five different defendants, and settled with four of the defendants prior to the pretrial conference. Fleming did not settle with Glenn, nor did he allege fault as to the other defendants. In his answer, he denied that any of the defendants were at fault.

At trial the jury found Glenn to be 30% at fault for the accident and Fleming to be 70% at fault. The total verdict was $1,500,000. The verdict reduced by 30% was $1,050,000. This case was appealed to the Kansas Supreme Court on the question of whether the fault of the defendants who had settled should have been compared. Glenn v. Fleming, 240 Kan. 724, 732 P.2d 750 (1987).

In May of 1986, Fleming signed a covenant not to execute agreement with Glenn. In this covenant, Fleming assigned all of his contractual rights with Aetna under the insurance policy to Glenn, and Glenn agreed not to execute upon or impose liens on any other property of Fleming, either real or personal, tangible or intangible, presently owned or after acquired.

In June of 1986, Glenn filed a praecipe for garnishment against Aetna. Aetna admitted to owing the $25,000 amount, its maximum coverage through its policy, but denied liability for any judgment in excess of that.

Glenn responded that Aetna was liable for the entire judgment because it had acted in bad faith in settlement negotiations. The dispute concerning the bad faith claim continued for some time with numerous motions and hearings. Voluminous pleadings were filed, expert witnesses were consulted, and more discovery took place.

To complicate the record further, Aetna was given permission to file a third-party petition against its own attorney. This petition alleged that its attorney had handled the defense of Fleming negligently and that he was liable for any judgment rendered against Aetna in the bad faith action by Glenn. This legal malpractice case was later bifurcated from the garnishment action.

Glenn first moved for summary judgment against Aetna. Aetna responded to this motion, but the court denied Glenn's motion, finding that substantial triable issues of fact still existed. As part of its decision, the court ruled that Aetna's attorney was acting on behalf of Aetna and that Aetna had the right to control and direct the litigation.

Aetna filed a summary judgment motion and statement of uncontroverted facts in March of 1988. Glenn filed a general response to this, stating that the number of uncontroverted facts was too great to respond to individually and that analyzing the statements and presenting documentation to controvert them would not be helpful to the court.

Aetna then countered with a motion for partial summary judgment and a statement of uncontroverted facts. Glenn responded and addressed the uncontroverted facts paragraph by paragraph.

A hearing was held on Aetna's summary judgment motions and a motion of Aetna for clarification and reconsideration of the earlier decision denying Glenn's summary judgment motion. A pretrial conference was also held during this hearing. At this conference Glenn agreed to drop all claims against Aetna except the bad faith claim.

The court ruled by sending a letter to counsel stating that it had reviewed everything and was granting Aetna's first motion for summary judgment. The court adopted as its own all of the arguments and statements of uncontroverted facts put forth by Aetna pursuant to its motion. The attorney for Aetna was instructed to cause the matter to be journalized.

Glenn timely appealed the court's decisions denying his motion for summary judgment and sustaining Aetna's motion for summary judgment. Aetna filed a general cross-appeal.

The case was set for oral argument in August of 1989, but shortly before oral argument Aetna filed a motion for summary disposition of the case on the basis of a recently reported Kansas Supreme Court case, Heinson v. Porter, 244 Kan. 667, 772 P.2d 778 (1989). This court denied the motion for summary disposition but granted leave that it be renewed at oral argument.

The issues we are called upon to resolve are (1) should the case be decided summarily, (2) did the district court err in denying Glenn's motion for summary judgment, (3) did the district court err in granting Aetna's motion for summary judgment, (4) if Glenn prevails, for what amount of interest should Aetna be liable, and (5) did the district court err in ruling that Aetna could be vicariously liable for any negligence of its attorney?

Our resolution of this appeal makes it unnecessary to address issues (3) and (5) identified above.

(1) SHOULD THE CASE BE DECIDED SUMMARILY?

Aetna argues that this case should be summarily affirmed because it is controlled by the recent Kansas Supreme Court case of Heinson v. Porter, 244 Kan. 667, 772 P.2d 778.

In Heinson, Metropolitan Property and Liability Insurance Company had issued a $100,000 homeowner's policy to Porter with the knowledge that she ran a children's day care business in her home. The Heinson's child was injured at the home and suit was filed against Porter. Metropolitan and Porter reached an agreement in a declaratory judgment action in which Porter stated that she had no coverage in regard to the Heinson allegations and no right of defense under the Metropolitan insurance policy. Heinson knew nothing about this settlement. Heinson and Porter settled the personal injury lawsuit for $500,000. One of the terms of the settlement was that Heinson would never seek collection of the judgment from Porter but would look to Metropolitan for payment. Heinson then filed a garnishment action against Metropolitan. The district court concluded that Metropolitan was liable for the $500,000, which generated an appeal to the Kansas Supreme Court. The Kansas Supreme Court first upheld the finding that the non-coverage agreement between Metropolitan and Porter was not binding upon Heinson because Heinson was a necessary party who should have been named in the declaratory judgment action.

The court also considered the $400,000 judgment, which was in excess of the policy limits. The district court had awarded the excess judgment because it found that Metropolitan had acted in bad faith and had breached its fiduciary duty to its insured. The Kansas Supreme Court noted that bad faith is a tort claim, and that tort claims are not assignable in Kansas. The court then discussed whether Heinson was entitled to recover the policy excess amount of $400,000 through the garnishment action. The court stated that, no matter how miserably an insurance company had treated its insured in handling a third party's claim against the insured, the company's liability is limited to the actual damage suffered by the insured. In this case, the court found that Porter, the insured, could never have any liability for the payment of the judgment because of the agreement between the plaintiff Heinson and Porter. Because Porter had no liability to pay the judgment, she had no actual damages, and therefore Metropolitan was not liable...