Marquis v. State Farm Fire and Cas. Co.

• Decision Date: 05 June 1998
• Docket Number: No. 78661,78661
• Citation: 961 P.2d 1213,265 Kan. 317
• Parties: Keith MARQUIS, et al., Appellees, v. STATE FARM FIRE AND CASUALTY COMPANY, Appellant.
• Court: Kansas Supreme Court

Page 1213

961 P.2d 1213

265 Kan. 317

Keith MARQUIS, et al., Appellees, v. STATE FARM FIRE AND CASUALTY COMPANY, Appellant.

No. 78661.

Supreme Court of Kansas.

June 5, 1998.

Syllabus by the Court

1. The interpretation of a settlement agreement, like other written contracts, is a question of law, and regardless of the construction given to the agreement by the trial court, an appellate court may construe the instrument and determine its effect.

2. The primary rule when interpreting a written contract is to ascertain the intent of the parties. As a general rule, if the language of the written instrument is clear, there is no room for rules of construction.

3. The meaning of a written agreement should always be ascertained by a consideration of all pertinent provisions and not by the critical analysis of a single or isolated provision.

4. A contract is ambiguous if it contains provisions or language of doubtful or conflicting meaning. In determining whether ambiguity exists, the language of the contract is to receive a fair, reasonable, and practical construction. Construction of the contract is one that makes the contract fair, customary, and such as prudent persons would intend. Ambiguity does not appear until the application of pertinent rules of interpretation to the face of the instrument leaves it genuinely uncertain which one of two or more possible meanings is the proper meaning.

5. Generally, exceptions, limitations, and exclusions to insurance policies require narrow construction on the theory that the insurer, having affirmatively expressed coverage through broad promises, assumes the duty to define any limitations on that coverage in clear and explicit terms. If an insurer intends to restrict or limit coverage, it must use clear and unambiguous language in doing so; otherwise, the insurance policy will be liberally construed in favor of the insured. The burden is on the insurer to prove facts which bring a case within the specified exception.

6. Under Kansas law, the theory of liability asserted, rather than the underlying cause of the accident, governs coverage.

7. Theories of negligent supervision or control and negligent hiring or negligent retention of employees are separate and distinct from theories of liability of negligent entrustment.

8. Negligent supervision includes not only the failure to supervise but also the failure to control persons with whom the defendant has a special relationship, including the defendant's employees or persons with dangerous propensities.

9. Under Kansas law, an admission that an employee was acting within the scope of his or her employment when the employee negligently caused injuries to another does not preclude an action for both respondeat superior and negligent entrustment or negligent hiring, retention, or supervision.

Michael J. Dutton, of Wallace, Saunders, Austin, Brown & Enochs, Chtd., Overland Park, argued the cause, and Arlen L. Tanner, of the same firm, was with him on the briefs, for appellant.

Edward M. Boyle, of Payne & Jones, Chtd., Overland Park, argued the cause, and John H. Johntz, Jr., and Donald R. Whitney, of the same firm, were with him on the brief, for appellee.

DAVIS, Justice:

Barbi Marquis was severely injured in an automobile collision. Jerry Auck, driving a vehicle within the scope of his employment by his wife, caused Marquis' injuries. State Farm Fire and Casualty Company (State Farm) appeals from a declaratory judgment that Marquis' claims of negligent hiring, retention, or supervision were permitted by the parties' settlement agreement and covered under its contractor's policy. We affirm.

On September 14, 1993, Barbi Marquis was injured when the car that she was driving was struck by a Mitsubishi pickup driven by Jerry Auck, which had run a red light. Jerry Auck's blood alcohol level was found to be .20 following the accident. The truck was owned by State Farm's insured, Sharon Auck, the wife of Jerry Auck. She was the owner of a sole proprietorship, Fresh Approach Cleaning Professionals (Fresh Approach). Fresh Approach was insured by State Farm Fire and Casualty Company under a contractor's policy. Jerry Auck was an hourly employee of Fresh Approach, earning approximately $5.50 per hour. At the time of the accident, Jerry Auck was acting in the course and scope of his employment with Fresh Approach.

Keith Marquis, both as conservator for his wife, Barbi, and individually (plaintiffs), filed the following action against Jerry and Sharon Auck in Johnson County District Court:

"COUNT I

"1. Keith Marquis is the husband and conservator for Barbi L. Marquis. He brings this lawsuit on her behalf and on his own behalf.

"2. Jerry L. Auck, defendant, is a resident of Johnson County, Kansas....

"3. On the 14th day of September, 1993, at approximately 5:37 p.m. in the evening, Barbi Marquis was operating a 1987 Suzuki Jeep in the outside left-turn lane of the northbound Strang Line Road at 119th Street.

"4. At about the same time and place as alleged above, Jerry Auck was operating a 1989 Mitsubishi westbound on 119th Street, in the city of Olathe, Johnson County, Kansas.

"5. As Barbi Marquis made her left turn with a left-turn arrow, Jerry Auck, coming westbound on 119th Street, ran a red light and struck Barbi Marquis' vehicle.

"6. As a result of the collision, Barbi Marquis sustained permanent brain injury and other serious personal injury, which has [sic] totally disabled her. She has incurred past medical bills and will incur future medical expenses. Her earnings capacity has been destroyed, and she has suffered great pain of mind and body.

"7. Keith Marquis has lost the consortium and services of Barbi Marquis as a result of the negligence of Jerry Auck.

"WHEREFORE, plaintiffs pray that they be granted judgment in a sum in excess of $50,000 against the defendants and for their costs and such other relief as to the court appears just and proper.

"COUNT II

"8. Plaintiffs reallege the allegations contained in Paragraphs 1 through 7 of Count I as if fully set forth hereafter.

"9. Jerry L. Auck and/or Sharon Auck own and operate a janitorial company called Fresh Approach. Sharon Auck was the owner of the 1989 Mitsubishi which Jerry Auck was driving on the 14th day of September, 1993.

"10. Jerry Auck was an agent, employee, and/or otherwise working within the scope and employment of Fresh Approach and/or his wife, Sharon Auck, d/b/a Fresh Approach.

"WHEREFORE, plaintiffs pray that they be granted judgment in a sum in excess of $50,000 against the defendants and for their costs and such other relief as to the court appears just and proper."

The Aucks answered the petition, admitting that Jerry Auck ran the red light and struck the Marquis vehicle. They also admitted that Jerry Auck was an employee of Fresh Approach at the time of the accident.

At the time of the accident, Sharon Auck's vehicle was covered by a State Farm Mutual Auto insurance policy with a $100,000 limit, which covered Jerry Auck's use of the vehicle. Sharon Auck's business was covered by a State Farm Fire and Casualty Company contractor's insurance policy with a $1,000,000 policy limit. Sharon Auck was also covered by a State Farm Fire and Casualty Company homeowner's extra policy with a policy limit of $300,000.

The plaintiffs and both State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Company entered into a settlement agreement in late 1994. The agreement was drafted by counsel retained to represent the Aucks under Sharon Auck's State Farm Mutual Automobile Insurance Company policy. It provided:

"WHEREAS, Keith Marquis, individually, and in his capacities as husband of Barbi L. Marquis and Conservator of the Estate of Barbi L. Marquis, has caused a lawsuit to be filed against Jerry L. Auck and Sharon Marie Auck in the District Court of Johnson County, Kansas, as the result of an automobile accident which occurred on or about the 14th day of September, 1993 at or near the intersection of 119th Street and Strangline Road in Olathe, Johnson County, Kansas, all as more specifically set forth in the Petition in the case styled Keith Marquis, as Conservator and Husband and in Such Capacities and on behalf of Barbi L. Marquis, and Keith Marquis, Individually, Plaintiffs, v. Jerry L. Auck and Sharon Auck, Defendants, Case No. 94-C-5244 which is now pending in the District Court of Johnson County, Kansas; and

"WHEREAS, Jerry L. Auck and Sharon Marie Auck are covered for the aforesaid accident by an automobile insurance policy, No. 2816-322-810-16C, issued by State Farm Mutual Automobile Insurance Company; and

"WHEREAS, there may be additional liability coverage in the amount of $1,000,000.00 for the aforesaid accident and claims under a Contractors policy issued by State Farm Fire and Casualty Company, Policy No. 91-03-6775-5, and in the amount of $300,000.00 under a Homeowners policy issued by State Farm Fire and Casualty Company, Policy No. 16-B7-8051-2; and

"WHEREAS, State Farm Mutual Automobile Insurance Company has offered to pay its full bodily injury liability limits of $100,000.00 in settlement of the claims set forth in the aforesaid Petition; and

"WHEREAS, State Farm Fire and Casualty Company has agreed that it is willing to participate in a declaratory judgment action to determine whether or not it owes coverage under either or both of its aforesaid policies, and has further agreed that if it should be determined by the court that it owes coverage under said policy or policies, it will forthwith pay the full amount of the liability limits of said policy or policies in settlement of the claims arising out of the aforesaid accident, and will make no effort to litigate the issue of fault or the amounts of coverage under the said policies;

"NOW, THEREFORE, the parties hereto agree as follows:

"1. In consideration of the payment of the sum of One Hundred Thousand and no/100 ($100,000.00) Dollars, the receipt...