Halsey v. Farm Bureau Mut. Ins. Co., 87,263

• Decision Date: 24 January 2003
• Docket Number: No. 87,263,87,263
• Parties: DUANE HALSEY, individually and as representative of the heirs of the estate of Norma Jean Halsey, deceased, Appellee, v. FARM BUREAU MUTUAL INSURANCE CO., INC., Appellant.
• Court: Kansas Supreme Court

275 Kan. 129

61 P.3d 691

DUANE HALSEY, individually and as representative of the heirs of the estate of Norma Jean Halsey, deceased, Appellee, v. FARM BUREAU MUTUAL INSURANCE CO., INC., Appellant.

No. 87,263

Supreme Court of Kansas

Opinion filed January 24, 2003.

Don D. Gribble II, of Hite, Fanning & Honeyman, L.L.P., of Wichita, argued the cause and Vince P. Wheeler, of the same firm, was with him on the briefs for appellant. Craig Shultz, Law Office of Craig Shultz, P.A., of Wichita, argued the cause and was on the brief for appellee.

The opinion of the court was delivered by

DAVIS, J.:

Three passengers died and four other passengers were injured in a Chevrolet Suburban when it collided with a tractor-trailer. After recovery from the tortfeasor, the husband of a deceased passenger brought suit against his insurance carrier, Farm Bureau Mutual Ins. Co., Inc. (Farm Bureau), to recover the difference between his recovery from the tortfeasor and his actual damages in underinsured motorist (UIM) coverage. Farm Bureau denied coverage because his UIM policy limits of $500,000 was less than the tortfeasor's limits of liability coverage of $1,000,000. Based upon the provisions of K.S.A. 40-284(b) and public policy, the trial court concluded that Halsey was entitled to UIM coverage. Farm Bureau appeals, and we reverse and remand with directions.

Facts

On August 20, 1997, in Wilson County, Kansas, a collision occurred between a Chevrolet Suburban owned by Paul and Peggy Winter and driven by Robert Pauly and a tractor-trailer owned by D&G Trucking and driven by Larry Holmes. The accident was the result of the negligence of both Holmes and Pauly. Norma Jean Halsey was a passenger in the Chevrolet Suburban and died as a result of injuries she sustained. Two other passengers, Isadore Devlin and Marcelline Weber, also died in the accident, and four other passengers, Addie Lang, Lotus Leddy, Kim Friess, and Agnes Ast, suffered injuries.

Heirs of the deceased, including the plaintiff Duane Halsey, the surviving spouse of Norma Jean Halsey, in addition to those passengers surviving, recovered damages through an interpleader action under a $1,000,000 single limit liability policy with Wilshire Insurance Company (Wilshire), which insured D&G Trucking and its driver Larry Holmes. Duane Halsey's proportionate share of Wilshire's $1,000,000 limit was $103,699.04.

Pauly, the driver of the Chevrolet Suburban, had two insurance policies with Patrons Insurance Company (Patrons) on the date of the accident — a personal policy and a business policy. The net effect of Pauly's two policies provided liability coverage limited to $300,000 per occurrence. The stipulated facts indicated that "[n]one of the occupants of the vehicle Mr. Pauly was driving, nor any representatives on their behalf, filed a claim with or against Patrons . . . concerning alleged negligence of Mr. Pauly."

The Winters, owners of the Chevrolet Suburban, had a liability policy also with Farm Bureau with a $300,000 per accident limit. Based upon its policy with the Winters, Farm Bureau paid its limits of $300,000. Halsey received $40,741.68 under the Winters' Farm Bureau policy.

Halsey's policy with Farm Bureau provided liability coverage limited to $500,000 per person and $500,000 per occurrence. Thus, Halsey's policy contained uninsured (UM) and UIM benefits of $500,000 per person and $500,000 per occurrence. See K.S.A. 40-284(a) and (b). Farm Bureau paid Halsey personal injury protection (PIP) benefits of $31,000.

Halsey filed this present suit against Farm Bureau to collect UIM benefits for his damages which exceeded the combined benefits he recovered under the Wilshire policy and the benefits he recovered under the Winters' Farm Bureau policy.

Farm Bureau denied UIM benefits to its insured under its policy and under K.S.A. 40-284(b) because the UIM limits of $500,000 were less than the liability limits of $1,000,000 under the tortfeasor's liability policy. Farm Bureau moved for summary judgment.

The district court accepted the following stipulations of the parties: 80% of the fault for the accident should be assessed to Holmes and the remaining 20% to Pauly; Halsey's total damages were in the amount of $581,235.11; and Holmes' share of the liability for Halsey's damages after applying the statutory cap for wrongful death was $304,988.09. After subtracting (1) Halsey's share of the benefits under the Wilshire policy of $103,699.04 and (2) PIP benefits paid attributable to the negligence of Holmes of $24,800, Halsey remained uncompensated for damages caused by Holmes in the amount of $176,489.05.

The district court also adopted the following stipulations of the parties: Pauly's share of Halsey's damages based upon his percentage of fault after applying the statutory cap for wrongful death was $76,247.02. After subtracting (1) Halsey's pro rata share of the Winters' $300,000 policy limit of $40,741.69, (2) Halsey's assumed pro rata collection from Pauly's $300,000 policy limit of $40,741.68, and (3) the PIP benefits paid attributable to the negligence of Pauly of $6,200, Halsey would be fully compensated as to the damage caused by Pauly's negligence, with $11,436.34 remaining. Because the PIP offset as to Pauly's negligence ($6,200) did not reduce the amount actually received by Halsey, that amount was used to further reduce the amounts Farm Bureau owed Halsey with respect to Holmes' negligence. Thus, Halsey, if UIM coverage exists under his Farm Bureau policy, would be entitled to UIM benefits of $170,289.05.

Following oral arguments on Farm Bureau's summary judgment motion, the district court denied Farm Bureau's motion, making the following findings from the bench:

"I'm going to rule that the public policy in this state is that contracted for uninsured or underinsured motorist coverage is to allow the purchase of that insurance to, quote, fill the gap and have that person be protected up to the level of their own coverage if the tortfeasor is underinsured or uninsured.

"Where that underinsured or uninsured coverage fails to give the injured motorist that protection, the public policy is defeated. The rulings of this Court, in my judgment in interpreting that statute, is to give effect to the intent of that legislative enactment. And I think to grant the motion for summary judgment would not do that, it would do the opposite. I'm going to overrule the motion for summary judgment for those reasons."

The trial court entered judgment for Halsey against Farm Bureau for UIM benefits of $170,289.05. Farm Bureau appeals.

Our jurisdiction is based upon a transfer under K.S.A. 20-3018(c).

Standard of Review

Whether UIM coverage is available to Halsey under Farm Bureau's policy involves an interpretation of K.S.A. 40-284(b) and construction of the Farm Bureau policy. The interpretation of a statute as well as the construction of a written insurance policy based upon stipulated facts are questions of law subject to unlimited review. Cashman v. Cherry, 270 Kan. 295, 298, 13 P.3d 1265 (2000); Colfax v. Johnson, 270 Kan. 7, 10, 11 P.3d 1171 (2000). Coverage Under K.S.A. 40-284(b)

K.S.A. 40-284(b) provides for and requires UIM coverage:

"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."

Whether the above statutory language requires UIM coverage under the facts of this case involves a construction of the above statutory language. The fundamental rule of statutory construction to which all other rules are subordinate is that the intent of the legislature governs if that intent can be ascertained. Mitchell v. Liberty Mut. Ins. Co., 271 Kan. 684, 694, 24 P.3d 711 (2001). The legislature is presumed to have expressed its intent through the language of the statutory scheme it enacted. 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. 271 Kan. at 694-95.

Farm Bureau argues that application of the plain and unambiguous language of K.S.A. 40-284(b) to the undisputed facts of this case results in a conclusion that no UIM coverage exists for Halsey. Farm Bureau's UIM coverage in this case is in the amount of $500,000, and the limits of the bodily injury coverage provided by Wilshire insuring the defendants, D&G Trucking and Larry Holmes, is in the amount of $1,000,000. According to the terms of K.S.A. 40-284(b), Farm Bureau argues that UIM coverage would exist only "to the extent such coverage [$500,000] exceeds the limits of the bodily injury coverage [$1,000,000] carried by the owner or operator of the other motor vehicle." Farm Bureau concludes, therefore, that since its UIM coverage is less that the limits of the bodily injury coverage carried by the owner or operator of the other motor vehicle, no UIM coverage exists for Halsey.

Halsey argues that our interpretation of K.S.A. 40-284(b) must consider the use of the word "coverage" and Kansas case law, particularly those cases calling for a liberal interpretation of the provisions of K.S.A. 40-284(b) "to provide broad protection to the insured against all damages resulting from injuries sustained by the insured that were caused by an automobile accident and arose out of the ownership, maintenance or use of the insured motor vehicle." Jones v. Automobile Club Inter-Insurance Exchange, 26 Kan. App. 2d 206, 208, 981 P.2d 767,rev. denied 268 Kan. 847 (1999). More importantly, Halsey argues...