Haas v. Freeman, 56896

• Decision Date: 26 January 1985
• Docket Number: No. 56896,56896
• Citation: 236 Kan. 677,693 P.2d 1199
• Parties: Harlan A. HAAS, Appellant, v. Mark S. FREEMAN and Horace Mann Insurance Company, Appellees.
• Court: Kansas Supreme Court

Page 1199

693 P.2d 1199

236 Kan. 677

Harlan A. HAAS, Appellant, v. Mark S. FREEMAN and Horace Mann Insurance Company, Appellees.

No. 56896.

Supreme Court of Kansas.

Jan. 26, 1985.

Syllabus by the Court

1. In an action involving an underinsured motorist, the parties shall proceed as follows: when a litigant determines the opposing party's liability coverage is below the litigant's liability coverage as well as the amount of damages claimed, and he wishes to invoke the underinsured motorist clause of his insurance policy, he shall notify his insurance carrier in the manner prescribed in his insurance policy.

The insurance company may then intervene in the action at its election. If it elects to intervene, the insurance company becomes a named party to the action. If the insurance company elects not to intervene, K.S.A. 60-454 is applicable. In either case, the litigant's underinsured motorist insurance carrier is bound by any judgment obtained in the action.

2. This court lacks jurisdiction over a cross-appeal filed out of time and without statutory authority as an interlocutory appeal.

Richard T. Merker of Wallace, Saunders, Austin, Brown & Enochs, Chartered, Overland Park, argued the cause and was on the briefs for appellant Harlan A. Haas.

Edward M. Boyle of Payne & Jones, Chartered, Olathe, argued the cause and Bruce Keplinger, Olathe, was with him on the brief for appellee Mark S. Freeman.

Mark Beam-Ward of Couch, Strausbaugh & Pierce, Chartered, Overland Park, argued the cause and Harold Pierce, Overland Park, was with him on the brief for cross-appellant Horace Mann Ins. Co.

Fletcher Bell, Com'r of Ins., Kansas Ins. Dept. and Pamela Sjoholm, Sp. Asst. Atty. Gen., Kansas Ins. Dept., were on brief amicus curiae.

HERD, Justice:

This is an interlocutory appeal in a tort action arising out of an automobile accident between Harlan A. Haas, plaintiff-appellant, and Mark S. Freeman, defendant-appellee. Horace Mann Insurance Company, appellant's insurer, was joined as a party defendant under the underinsured motorist provision of K.S.A. 40-284. The trial court dismissed the insurance company to prevent the potential jury prejudice of having an insurance company as a named party but ruled the insurance company would be bound by any judgment rendered.

On January 5, 1982, at 63rd Street and Ward Parkway, in Kansas City, Missouri, Mark S. Freeman and Harlan A. Haas were involved in an automobile accident with each other. As a result of the accident, Haas suffered physical injuries. Haas brought suit against Freeman for recovery of his damages.

During the initial stages of the action, it was discovered Mark Freeman was an underinsured motorist. At the time of the accident, Freeman had a policy of insurance with Farmers Insurance Company for automobile liability coverage in the amount of $25,000. Freeman's insurance coverage was insufficient for the damages claimed by Haas as a result of Freeman's alleged negligent acts. At the time of the collision Haas had in effect an insurance policy with Horace Mann Insurance Company for coverage in the amount of $100,000. Haas was granted a motion to amend his petition to bring suit against Horace Mann Insurance Company, contending Freeman was an underinsured motorist. Horace Mann filed a motion to be dismissed from this suit. The district court dismissed Horace Mann Insurance Company from the suit, but held it would be bound by any judgment rendered in the action above appellee Freeman's insurance limits.

Haas was then granted a motion allowing him to take an interlocutory appeal on this ruling.

The primary issue raised by appellant's interlocutory appeal is whether a plaintiff's insurance company may be included in an action against a tortfeasor when the tortfeasor is an underinsured motorist.

In 1968, the Kansas Legislature enacted the uninsured motorist statute, K.S.A. 40-284. This statute allowed motorists who incurred damages in an automobile accident with an individual who had no automobile insurance to recover from their own insurance company, limited by the amount of their liability coverage. The 1981 legislature amended the law to include within the uninsured motorist statute provisions for coverage for underinsured motorists. This section of the statute provides:

"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."

We must now consider whether our interpretations of the uninsured motorist statute also apply to the underinsured motorist. Appellant argues prior case law concerning uninsured motorists should also apply to underinsured motorists. Appellant argues this was the legislative intent since the underinsured motorist coverage appears as an "inclusion" in uninsured motorist coverage, according to the statutory language. In the brief of the State Commissioner of Insurance, submitted as amicus curiae, the same argument is made. The insurance commissioner alleges it was the legislative intent for prior case law concerning uninsured motorist coverage to apply also to underinsured motorist coverage. As evidence of this intent, the commissioner notes that the two provisions were included within the same statute, and that the statutory language itself states the underinsured motorist provision is included within uninsured motorist coverage. The commissioner thereby concludes they are not separate entities or coverage programs, but rather one includes the other.

Appellees argue the two cannot be compared because of their distinct differences. Appellee Freeman notes that ordinarily in an uninsured motorist coverage case the only attorney opposing plaintiff is plaintiff's insurance company's attorney, while in an underinsured motorist coverage case the defendant is represented already by his insurance company's attorney. Without citing any authority, Freeman concludes this situation is therefore like an excess liability insurance carrier suit where there is no authority for direct suits in Kansas.

Appellee Horace Mann Insurance Company argues in an uninsured motorist case the defendant usually has no attorney, since he has no insurance, so it is a waste of plaintiff's and the court's time to require suit against the defendant and then against the plaintiff's insurance company. Thus, Horace Mann concludes direct actions should be allowed in the case of an uninsured motorist, but not in the case of an underinsured motorist. Appellee also argues the issue of insurance is irrelevant and prejudicial in an underinsured motorist case, but is not in an uninsured motorist case. Appellant argues it is irrelevant because the issue in an underinsured case is fault and the extent of plaintiff's damages, not the insurance coverage.

Appellee's argument that uninsured motorist court cases should not be applied to underinsured cases is an attempt to avoid the application of this court's decision in Winner v. Ratzlaff, 211 Kan. 59, 65, 505 P.2d 606 (1973) to this case. In Winner, we held:

"We think an insured who has a claim against an uninsured motorist has three options open to him, complying, of course, in each with policy provisos consonant with the statute: He may file an action directly against his uninsured motorist liability carrier without joining the uninsured motorist as a party defendant; he may file an action joining both the insurer and the uninsured motorist as party defendants; or, he may file an action against the uninsured motorist alone without joining the insurer as a party defendant. In each of these options he may litigate all of the issues of liability and damages [citation omitted]."

Winner, therefore, stands for the proposition that a plaintiff may include his own insurance company in a suit against the tortfeasor when there is an issue of uninsured motorist coverage. Appellant argues the legislative intent of the underinsurance provisions was to apply all prior uninsurance case law to the new underinsurance statute. Pursuant to Winner, this would allow the inclusion of the insurance company in the suit against the tortfeasor also in cases of underinsured motorist coverage.

Appellant cites cases in several other states which purportedly recognize that uninsured motorist coverage includes underinsured motorist coverage. See Connolly v. Royal Globe Ins. Co., 455 A.2d 932, 935 (Me.1983); Kobert v. Zarem, et al., 437 So.2d 730, 731 (Fla.Dist.App.1983); Yamamoto v. Premier Ins. Co., 4 Hawaii App. ---, 668 P.2d 42 (1983); Nationwide Insurance Company v. Gode, 187 Conn. 386, 446 A.2d 1059 (1982); U.S. Fidelity & Guaranty v. State Farm Mut. Auto., 369 So.2d 410, 411 (Fla.Dist.App.1979). Appellees argue these cases are not persuasive since they deal with separate actions against the tortfeasor and that of the plaintiff's insurance company; they occurred in states which explicitly allow a direct action against an insurance company; or they were cases to the court, rather than a jury.

Appellee Freeman cites an Alabama case where it was held the primary nature of the tortfeasor's insurance policy required that recovery first be had under the tortfeasor's policy prior to bringing an action for underinsured motorist coverage under the uninsured motorist provisions of the plaintiff's policy. See Gaught v. Evans, 361 So.2d 1027 (Ala.1978).

Appellee also cites an Oklahoma case where the Supreme Court considered whether, in a personal injury action arising out of a motor vehicle accident where plaintiff sues defendant and also sues plaintiff's insurance...