Horace Mann Ins. Co. v. Ammerman, Civ. A. No. 84-2475.

• Decision Date: 15 January 1986
• Docket Number: Civ. A. No. 84-2475.
• Citation: 630 F. Supp. 114
• Parties: HORACE MANN INSURANCE COMPANY, a corporation, Plaintiff, v. Gloria A. AMMERMAN, Dennis D. Ammerman, Ramona A. Roberts, and Leigh A. Ross, Defendants.
• Court: U.S. District Court — District of Kansas

630 F. Supp. 114

HORACE MANN INSURANCE COMPANY, a corporation, Plaintiff, v. Gloria A. AMMERMAN, Dennis D. Ammerman, Ramona A. Roberts, and Leigh A. Ross, Defendants.

Civ. A. No. 84-2475.

United States District Court, D. Kansas.

January 15, 1986.

Hal Pierce, Couch & Pierce, Chartered, Overland Park, Kan., for plaintiff.

Craig A. Strayer, Condon, Baker, Strayer & Shouse, Kansas City, Mo., John H. Hardy, Overland Park, Kan., for defendants.

MEMORANDUM AND ORDER

EARL E. O'CONNOR, Chief Judge.

In this declaratory judgment action, the following motions are now pending: (1) defendants' motions to dismiss, (2) defendants' motion for summary judgment, and (3) plaintiff's motion for summary judgment. We are now prepared to rule on those motions.

The facts in this case are undisputed. Plaintiff issued an automobile insurance policy to Mr. Lee Dean Ammerman, with the last renewal thereof valid through April 29, 1984. The policy included underinsured motorist coverage with policy limits of $250,000.00 per person or $500,000.00 per occurrence. On November 17, 1983, Mr. Ammerman was in a fatal two-car accident. The driver of the other car, Mrs. Robinette Chadwick, was insured through the Allstate Insurance Company. Her auto liability insurance policy limit was $50,000.00.

Defendants are the heirs-at-law of Mr. Ammerman. Under the Kansas Wrongful Death Act, K.S.A. 60-1901 et seq., such heirs are authorized to recover damages for the death of their decedent. Because Mr. Ammerman's underinsured motorist policy defines "insured" to include "any person entitled to recover damages because of bodily injury to or death of" a policyholder, defendants also qualify as "insureds" under that policy. The policy elsewhere contains the following provision:

There is no coverage for any insured who, without our written consent, settles with any person or organization who may be liable for the bodily injury.

On March 29, 1984, defendant Gloria Ammerman (Mr. Ammerman's widow) signed the following "RELEASE OF ALL CLAIMS":

THIS INDENTURE WITNESSETH that, in consideration of the sum of Fifty Thousand and No/100 Dollars ($50,000.00), receipt whereof is hereby acknowledged for myself, Gloria A. Ammerman, widow of Lee Dean Ammerman, and for my heirs, personal representatives and assigns I do hereby release and forever discharge Mr. Lonnie Chadwick and Mrs. Robinette Chadwick, husband and wife, of Spring Hill, Miami County, Kansas, and the Allstate Insurance Company, their heirs, representatives and assigns, from any and all claims, demands, damages, costs, expenses, loss of services, actions, and causes of action, arising from any act or occurance (sic) up to the present time and particularly on account of all expenses, personal injury, disability, death, property damages, losses and damages of any kind already sustained by Lee Dean Ammerman or myself, heirs, personal representative and assigns, or that may hereinafter be sustained as a consequence of an accident that occurred on or about the 17th day of November, 1983, at or near the intersection of 175th Street and Lone Elm, Olathe, Johnson County, Kansas.

To procure payment of said sum, I hereby declare: that I am more than 21 years of age; that no representations about the nature and extent of said injuries, disabilities, damages or death, made by any physician, attorney or agent of any party hereby released, nor any representations regarding the nature and extent of legal liability or financial responsibility of any of the parties hereby released, have induced me to make this settlement; that in determining said sum there has been taken into consideration not only the ascertained injuries, disabilities and damages, but also the possibility that the injuries sustained may be permanent and progressive and recovery therefrom uncertain and indefinite, so that consequences not now anticipated may result from the said accident.

I hereby agree that as a further consideration and inducement of this compromise settlement, this settlement shall apply to all unknown and unanticipated injuries and damages resulting from said accident, casualty or event, as well as, to those now disclosed.

I understand that the parties hereby released admit no liability of any sort by reason of said accident and that said payment and settlement in compromise is made to terminate further controversy respecting all claims for damages that I have heretofore asserted or that I or my personal representative might hereafter assert because of this accident.

I further understand that such liability as may or shall have been incurred, directly or indirectly, in connection with or for damages arising out of the accident to each person or organization released and discharged of liability herein, and to any other person or organization, is expressly reserved to each of them, such liability not being waived, agreed upon, discharged nor settled by this release.

It is understood and agreed that this settlement reserves the right of the undersigned to proceed under K.S.A. 40-284(b) and/or his personal automobile liability insurance policies for benefits issued under the underinsured coverages of said policies in relation to damages for bodily injury or death to the extent such coverage exceeds the limits of bodily injury coverage carried by Lonnie Chadwick and/or Robinette Chadwick, which are being paid herewith. The rights of the undersigned to recover under said policies shall not be abrogated or diminished by this settlement.

Signed and sealed this 29 day of March, 1984.

/s/Gloria A. Ammerman GLORIA A. AMMERMAN

(Emphasis added.)

Although the last paragraph of this release does make reference to a reservation of rights to proceed under Mr. Ammerman's underinsured motorist policy, the release was subsequently reformed to more clearly reflect the intention of the parties thereto. In a journal entry of November 28, 1984, the District Court of Johnson County, Kansas, ordered that the following sentence be added at the end of the sixth paragraph of the above-quoted release:

The subrogation rights of Horace Mann Insurance Company against Robinette Chadwick, if any, arising from any payment made or to be made by Horace Mann Insurance Company under the underinsured motorist coverages are not affected by this agreement.

In accordance with the terms of the release, Allstate Insurance Company paid to defendants the $50,000.00 provided for in Mrs. Chadwick's insurance policy. On February 11, 1985, defendants filed suit in the District Court of Johnson County, Kansas, against Mrs. Chadwick, alleging that her negligence caused the death of Mr. Ammerman. Mrs. Chadwick confessed judgment in that action. On March 20, 1985, the state court entered judgment in favor of defendants and against Mrs. Chadwick in the amount of $200,000.00. Although properly notified of that state court proceeding, plaintiff chose not to intervene.

Plaintiff filed this action for declaratory relief on December 6, 1984, (i.e., after reformation of the release, but before defendants filed their state court action against Mrs. Chadwick). Plaintiff seeks a declaratory judgment that the release executed by Mrs. Ammerman without plaintiff's written consent violated the quoted clause from Mr. Ammerman's underinsured motorist policy, and that said policy is therefore void. Defendants have counterclaimed for the $200,000.00 allegedly due them under that policy—said amount being the difference between the $250,000.00 per person policy limit and the $50,000.00 already received from Allstate Insurance Company.

I. Motions to Dismiss.

Initially, a joint motion to dismiss was filed by the three defendants who had then been served with process. When the fourth defendant eventually received service of process, he also moved to dismiss. Because both motions raise identical issues, they will be considered together.

Defendants argue that the relief plaintiff seeks is foreclosed by plaintiff's failure to intervene in the state court action filed by defendants against Mrs. Chadwick. As authority for this argument, defendants cite the recent Kansas Supreme Court decision in Haas v. Freeman, 236 Kan. 677, 693 P.2d 1199 (1985). Especially pertinent is the following language from that opinion:

We reiterate our previous conclusions in Winner v. Ratzlaff, 211 Kan. 59, 505 P.2d 606 (1973) that all issues in a lawsuit should be tried in one trial. Multiplicity of suits does not promote substantial justice. Thus, the issues in cases involving uninsured motorists and underinsured motorists should be tried in one lawsuit.

236 Kan. at 682, 693 P.2d at 1203.

Contrary to the implication of defendants' argument, however, Haas did not establish a rule of mandatory intervention in a case such as this. The court's actual holding was as follows:

For these reasons we hold in an action involving an underinsured motorist, the parties shall proceed as follows:

When the litigant determines the opposing party's liability coverage is below his 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 the insurance policy.

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

236 Kan. at 682-83, 693 P.2d at 1203-04 (emphasis added). Clearly, plaintiff retained the right not to intervene in the state court action. By electing not to do so, of course, it did become bound by the state court's determination that defendants had suffered damages of $200,000.00 and that Mrs. Chadwick was liable therefor. However, the question at...