Hamilton v. State Farm Fire and Cas. Co.

• Decision Date: 30 January 1998
• Docket Number: No. 76573,76573
• Parties: Timothy D. HAMILTON, Appellant/Cross-Appellee, v. STATE FARM FIRE AND CASUALTY COMPANY, Appellee/Cross-Appellant.
• Court: Kansas Supreme Court

Page 1027

953 P.2d 1027

263 Kan. 875

Timothy D. HAMILTON, Appellant/Cross-Appellee, v. STATE FARM FIRE AND CASUALTY COMPANY, Appellee/Cross-Appellant.

No. 76573.

Supreme Court of Kansas.

Jan. 30, 1998.

Syllabus by the Court

1. Interpretation of a statute is a question of law, and this court's review is unlimited. When interpreting a statute, the fundamental rule 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 intent of the legislature as expressed, rather than determining what the law should or should not be.

2. The purpose of K.S.A. 40-908 is not to penalize an insurance company for making what it deems to be a bona fide defense to an action to recover on an insurance policy, but to permit the allowance of a fair and reasonable compensation to the assured's attorney in the event, after having been compelled to sue on the policy, he or she is successful in that effort.

3. The plain language of K.S.A. 40-908 states that it applies to any case in which a judgment is rendered on any policy given to insure any property against loss by fire, tornado, lightning, or hail. The policy controls, not the actual type of loss. If the loss is covered by a policy which insures against fire, tornado, lightning, or hail, the statute applies regardless of whether the actual loss occurred by one of those named causes or some other cause covered by the same policy.

4. K.S.A. 16-201 provides for prejudgment interest on liquidated claims. A claim becomes liquidated when both the amount due and the date on which such amount is due are fixed and certain, or when the same become definitely ascertainable by mathematical computation.

Donald T. Taylor, of Robb, Taylor & O'Connor, Kansas City, argued the cause and was on the briefs, for appellant/cross-appellee.

Gerald A. King, of Armstrong, Teasdale, Schlafly & Davis, Kansas City, MO, argued the cause and was on the brief, for appellee/cross-appellant.

DAVIS, Justice:

Timothy D. Hamilton submitted a claim under his homeowner's policy for the collapse of a basement wall. State Farm Fire and Casualty Company (State Farm) denied coverage. The jury awarded Hamilton $4,750, the cost of repairs. The trial court granted Hamilton prejudgment interest but denied attorney fees, concluding that fees may be awarded under K.S.A. 40-908 only when the loss is caused by fire, tornado, lightning, or hail. We reverse and remand for a determination of reasonable fees. We also affirm the award of prejudgment interest.

Hamilton purchased from State Farm a homeowner's policy covering his house. The policy covered direct physical loss from fire, tornado, lightning, or hail, as well as other losses. It specifically covered direct physical loss involving collapse of an insured building or any part of the building caused by hidden decay. The policy contained an exception for losses caused by earth movements or water damage.

Hamilton filed a claim with State Farm for damages suffered when part of a basement wall collapsed. Based upon the exception for losses caused by earth movements or water damage, State Farm denied coverage. Hamilton filed suit against State Farm for $4,750, the amount he spent to repair the wall.

Laura Williard, Hamilton's estranged wife, testified that on April 19, 1994, she was residing at the Hamilton's address. Williard stated that she heard a noise from the basement and smelled natural gas. Upon entering the basement, she found that part of the basement wall had fallen and knocked over the water heater. She called State Farm and was informed that it did not pay for foundation problems. She then referred the matter to Hamilton. Willard stated that there had been no problems with the wall prior to its collapse.

Hamilton testified that he was not living at the house at the time of the wall's collapse because he and his wife were separated. Upon receiving notice of the collapsed wall, he called Jannel Munk, a claims specialist at State Farm. According to Hamilton, Munk told him that State Farm did not cover basements or foundations. However, Munk agreed to inspect the damage. Hamilton testified that he contacted two companies, Grant Renne & Sons, Inc., and May Development, to come out and give bids to repair the damage. He stated that he also contacted Brad Hagan, another contractor, on the advice of Munk, who told him that Hagan did a lot of work with State Farm.

Hamilton testified that Munk, C. Douglas Carey from State Farm, and Brad Hagan arrived at his house on the afternoon of April 20, 1994. Hagan, Munk, and Carey went into the basement to look at the wall. According to Hamilton, the group spent only a few minutes in the basement. Carey informed him that the loss was not covered and he would be receiving a letter to that effect. Hamilton hired Grant Renne & Sons to repair the damage at a cost of $4,750.

Hamilton testified that State Farm sent him a letter denying coverage on the basis that the collapse of the wall was caused by heavy rains and water pressure. Hamilton introduced meteorological records for April 1 to April 19, 1997, which showed that the total rainfall in that time period had been 2.13 inches.

Charles Anderson, a contractor for Grant Renne & Sons, who repaired the wall, testified that the earth behind the wall was dry and packed and required the use of a pick and mattock to dig it out to make repairs. Dean Hannen, another contractor for Grant Renne & Sons, also testified. Based upon his 19 years in the foundation repair business, he was of the opinion that the wall collapsed due to hidden decay. He also testified that the dirt behind the wall was hard and the pattern of damage did not look as though it had been caused by settling or expansion of the foundation.

State Farm presented the testimony of Jannel Munk, the claims specialist who had worked on Hamilton's claim. Munk testified that she first talked to Williard and implied that the claim might not be covered but that she would take a look at the damage. According to Munk, Williard asked her to contact Hamilton. Munk stated that she went with her supervisor, C. Douglas Carey, to inspect the damage. They found Brad Hagan already at the site, although Munk denied that she had ever advised Hamilton to contact him.

Munk stated that she, Carey, and Hagan went into the basement and took pictures of the damage. They then went outside to look at the north side of the house where the collapse had occurred. She testified that there was a concrete trough on the north side of the house and there was a sunken area in the trough which looked as if it might trap water. She stated she and Carey advised Hamilton and Williard that there was no coverage and later sent a letter to that effect. Carey also testified that there was a low spot in the trough outside the wall. In Carey's opinion, the collapse was caused by heavy soil due to moisture. Hagan was also of the opinion that the collapse was caused by moisture as well as the fact that the wall was not properly installed.

On cross-examination, Carey admitted that when he initially assigned the case to Munk, he wrote a note to her stating that he could not think of any way that Hamilton's claim would be covered under the insurance policy because the collapse was probably caused by settling, underground water, or earth movement. He also admitted that he did not perform any tests on the wall.

The jury was charged with determining the cause of the collapse. The only real issue involved coverage under the policy. The only evidence on damages was the cost of repair, $4,750. The jury found that the cause of the collapse was hidden decay and found for Hamilton, awarding damages in the amount of $4,750.

Hamilton filed a motion for his reasonable attorney fees and costs based on K.S.A. 40-908 and K.S.A. 40-256. The district court denied Hamilton's motion. Hamilton also filed a motion to determine interest and costs. The district court granted the motion and awarded Hamilton prejudgment interest in the amount of $688.52.

Hamilton appeals the district court's denial of his motion for attorney fees. State Farm cross-appeals the district court's granting of prejudgment interest.

Attorney Fees Under K.S.A. 40-908

Hamilton argues that the district court erred in failing to award him attorney fees under K.S.A. 40-908. He contends that under the plain language of K.S.A. 40-908, he is entitled to recover.

K.S.A. 40-908 provides:

"That in all actions now pending or hereafter commenced in which judgment is rendered against any insurance company on any policy given to insure any property in this state against loss by fire, tornado, lightning or hail, the court in rendering such judgment shall allow the plaintiff a reasonable sum as an attorney's fee for services in such action including proceeding upon appeal to be recovered and collected as a part of the costs: Provided, however, that when a tender is made by such insurance company before the commencement of the action in which judgment is rendered and the amount recovered is not in excess of such tender no costs shall be allowed."

Hamilton argues that since judgment was rendered against State Farm on his homeowner's policy, which is a policy given to insure his property against loss by fire, tornado, lightning, or hail, among other things, he is entitled to attorney fees under the statute. State Farm, on the other hand, argues that in order for attorney fees to be recovered under the statute, the actual loss must come from fire, tornado, lightning, or hail. It is undisputed that no tender was ever made by State Farm.

Interpretation of a statute is a question of law, and this court's review is unlimited. Seabourn v. Coronado Area Council, B.S.A., 257 Kan. 178, 192, 891 P.2d 385 (1995). When interpreting a statute, the fundamental rule is that the intent of the legislature governs if that intent can be...