Levier v. Koppenheffer, 70,830
| Decision Date | 12 August 1994 |
| Docket Number | No. 70,830,70,830 |
| Citation | 19 Kan.App.2d 971,879 P.2d 40 |
| Parties | Alex LEVIER, Plaintiff/Appellee, v. Jeffrey S. KOPPENHEFFER, Defendant, and Aetna Casualty & Surety Co., Garnishee/Appellant. |
| Court | Kansas Court of Appeals |
Syllabus by the Court
1. Once an insurer steps into the negotiations between its insured and an injured claimant, the insurer must exercise due care to protect the rights of its insured. An insurer shall be liable for the full amount of its insured's resulting loss, even if that amount exceeds the limits of the insurance policy, for negligence or bad faith in defending or settling actions against its insured.
2. Interpretation of an insurance policy, like the construction of any written instrument, is a question of law. The appellate court's review of conclusions of law is unlimited.
3. Courts will enforce an insurance policy as written so long as its terms are certain and do not conflict with pertinent statutes or with public policy.
4. If there is a genuine uncertainty as to the meaning of terms in an insurance contract, the policy is ambiguous and will be construed to mean what a reasonable person in the position of the insured would have understood it to mean.
5. A liability insurer may in good faith settle part of multiple claims arising from the negligence of its insured even though such settlements deplete or exhaust the policy limits of liability so that the remaining claimants have little or no recourse against the insurer.
6. Whether an insurer acted in bad faith or was negligent in the handling of settlement negotiations is a question for the trier of fact in each case. The standard of appellate review of the trial court's findings of fact is to determine if the findings are supported by substantial competent evidence and whether they are sufficient to support the trial court's conclusions of law.
7. In Kansas, a duty is imposed on the insurer to communicate to its insured the results of any investigation indicating liability in excess of policy limits and any offers of settlement, so that the insured may take proper steps to protect his or her own interests.
8. A claim for damages in excess of policy limits creates a duty on the part of the insurer to consider the interests of its insured as equal to its own. In general, the insurer must conduct itself with the same degree of care which would be used by an ordinarily prudent person in the management of his or her own business affairs.
Ronald D. Heck and David N. Tulbert, of Heck & Sheppeard, P.A., of Topeka, for appellant.
John F. Stites, of Stites, Hill, Wilson & Knopp, of Manhattan, for appellee.
Before BRISCOE, C.J., PIERRON, J., and CARLOS MURGUIA, District Judge, assigned.
Following an automobile accident, Alex Levier secured a judgment against Jeffrey Koppenheffer for $600,000, an amount far in excess of Koppenheffer's $100,000 single limit liability insurance policy. In satisfaction of the judgment, Koppenheffer assigned to Levier any cause of action for bad faith or negligence that Koppenheffer might have against his insurer, AEtna Casualty and Surety Company (AEtna).
Levier commenced a garnishment proceeding against AEtna. The court found that AEtna had acted with negligence in its handling of the liability claims against Koppenheffer and entered judgment against AEtna for $600,000 plus interest. AEtna appeals from the district court ruling.
On October 1, 1988, a car driven by Jeffrey Koppenheffer suddenly crossed the highway's center line and collided head-on with a truck driven by Alex Levier. Levier was seriously injured in the accident, as was Koppenheffer's passenger, Vanessa Cartwright. Levier's vehicle, which was owned by his brother, was totally destroyed.
Koppenheffer's insurer, AEtna, investigated the accident within 30 days of its occurrence and concluded that the personal injury claims of Cartwright and Levier would probably exceed the limits of Koppenheffer's $100,000 single limit insurance policy. Furthermore, AEtna determined that Koppenheffer was 95-100% responsible for the accident.
In November 1988, AEtna sent a letter to Koppenheffer notifying him that the claims from the accident could potentially exceed the limits of his insurance policy. The letter further advised Koppenheffer that he might want to retain his own attorney to represent him in the matter.
Also in November, AEtna wrote to its private counsel and asked for advice on how to proceed in settling the multiple claims against Koppenheffer. The attorney's response outlined several possible approaches to settling the claims and reminded AEtna that
In January 1989, AEtna settled the property damage claim by paying Levier's brother $3,100, the total value of his truck at the time of the accident. AEtna sent a letter to Koppenheffer notifying him of the property damage settlement.
In March 1989, AEtna prepared a detailed intermediate report concerning the Koppenheffer accident. The report stated that Koppenheffer was 95-100% at fault for the severe injuries suffered by Levier and Cartwright. The liability value of Levier's claim was estimated to be $2,120,000, and the liability value of Cartwright's claim was estimated to be $49,965.67. The report recommended that both personal injury claimants be offered $25,000 and that the remainder of the policy be paid into the district court in an interpleader action.
In March 1989, AEtna made settlement offers of $25,000 each to Levier and Cartwright. AEtna received a response from Levier's attorney offering to settle all claims against Koppenheffer for $100,000. AEtna did not respond to Levier's settlement offer, nor did it notify Koppenheffer of the offer until June 1989.
In April 1989, Cartwright accepted the $25,000 offer and signed a release of all claims. Following Cartwright's settlement, AEtna paid the balance of its policy, which was $71,900, into the district court in an interpleader action. This sum was eventually paid to Levier on his claim.
In October 1990, Levier secured a consent judgment against Koppenheffer for $600,000. Koppenheffer later assigned any and all of his claims against AEtna to Levier. Levier filed a garnishment action against AEtna for $600,000 in the Geary County District Court.
In a memorandum decision, the district court found that AEtna was negligent in settling the relatively small claims of the truck owner and Cartwright, while refusing to settle the large claim of Levier. Furthermore, the court found that AEtna's settlement with Cartwright was an act of preferential treatment that was not in the best interests of Koppenheffer. The court stated that AEtna exhibited a lack of care in controlling offers and acceptance that was confusing and negligent.
The court also found that AEtna was negligent in handling Levier's offer to settle for $100,000 by not conveying that offer to Koppenheffer for three months. Furthermore, the court said AEtna was negligent in not considering the best interests of Koppenheffer or allowing him to participate in the negotiations.
In reaching its decision, the district court interpreted certain provisions of the insurance contract between Koppenheffer and AEtna. That contract covers Koppenheffer with a single limit liability of $100,000. The limit of liability provision of the contract states:
"A. If separate limits of liability for bodily injury and property damage liability are shown in the Declarations for this coverage:
1. The limit of liability for 'each person' for bodily injury liability is our maximum limit of liability for all damages for bodily injury sustained by any one person in any one auto accident.
2. Subject to the above limit for 'each person,' the limit of liability shown in the Declarations for 'each accident' for bodily injury liability is our maximum limit of liability for all damages for bodily injury resulting from any one auto accident.
3. The limit of liability shown in the Declarations for 'each accident' for property damage liability is our maximum limit of liability for all damage to property resulting from any one auto accident.
1. $25,000 for bodily injury or death of one person in any one auto accident;
2. $50,000 for bodily injury or death of two or more people in any one auto accident; and
3. $10,000 for injury to or destruction of property of others in any one auto accident.
This provision will not change our total limit of liability.
"C. The applicable limit of liability under paragraph A. or B. above is the most we will pay regardless of the number of:
1. Covered persons;
2. Claims made;
3. Vehicles or premiums shown in the Declarations; or
4. Vehicles involved in the auto accident."
Once an insurer steps into the negotiations between its insured and an injured claimant, the insurer must exercise due care to protect the rights of its insured. Bennett v. Conrady, 180 Kan. 485, 489, 305 P.2d 823 (1957). An insurer shall be liable for the full amount of its insured's resulting loss, even if that amount exceeds the limits of the insurance policy, for negligence or bad faith in defending or settling actions against its insured. 180 Kan. 485, Syl. p 3, 305 P.2d 823.
The district court found that AEtna was negligent in two respects: its settlement of claims exhibited preferential treatment for Cartwright, and it...
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