Med James, Inc. v. Barnes, 88,194

• Decision Date: 10 January 2003
• Docket Number: No. 88,194,88,194
• Citation: 31 Kan.App.2d 89,61 P.3d 86
• Parties: MED JAMES, INC., Appellant, v. DONALD BARNES, d/b/a ECKBERG INSURANCE AGENCY, Appellee.
• Court: Kansas Court of Appeals

31 Kan.App.2d 89

61 P.3d 86

MED JAMES, INC., Appellant, v. DONALD BARNES, d/b/a ECKBERG INSURANCE AGENCY, Appellee.

No. 88,194

Court of Appeals of Kansas

Opinion filed January 10, 2003.

J. Franklin Hummer, of Med James, Inc., of Shawnee Mission, for the appellant.

Lee M. Smithyman and Constance L. Shidler, of Smithyman & Zakoura, Chartered, of Overland Park, for the appellee.

Before PIERRON, P.J., LEWIS, J., and BUCHELE, S.J.

PIERRON, J.:

This case involves an action seeking recovery of money damages that Med James, Inc. (Med James) claims to have lost as a result of Donald Barnes, d/b/a Ekberg Insurance Agency, failing to properly prepare an insurance application. Med James appeals the district court's award of summary judgment in favor of Barnes. Med James contends its action is not barred by the 2-year statute of limitations, that the district court should not have considered Barnes' motion for summary judgment due to deficiencies in procedural compliance, that Med James' action was not barred by the "one-trial" rule, and that the district court incorrectly found that a principal had to be without fault in order to recover in an implied indemnity case against an agent.

Guaranty National Insurance Company (Guaranty) is a Colorado insurance corporation authorized to do business in Kansas. Med James is Guaranty's general agent in Kansas. Donald Barnes is the owner of the Ekberg Insurance Agency (Ekberg) in Kansas City. Barnes is an independent insurance agent and writes for six or seven insurance companies, including Guaranty.

On April 11, 1997, Theodoro Hernandez, Sandra Simental's boyfriend, purchased a 1989 Ford Escort. Simental is listed on the bill of sale as the purchaser. The Escort was titled and registered in Simental's name. It is undisputed that Theodoro gave the Escort to Angel Hernandez, his brother, but the actual date of the transfer is contested. Simental first testified Theodoro gave the Escort to Angel 2 or 3 days after she bought it. However, when examined by the court, Simental testified Theodoro gave the Escort to Angel after she had applied for insurance.

On April 15, 1997, Simental applied for insurance on the Escort at Ekberg. Simental's spoken English is extremely limited. Felicia Ortega, who speaks and reads both English and Spanish, accompanied Simental to Ekberg. Barnes testified that except for one time when Simental came in to make a payment, she always had someone with her as an interpreter to inform Barnes what she desired. However, at trial, Barnes testified that while Simental brought someone with her, she spoke to him in English.

At Ekberg, Simental completed an application from Guaranty for automobile insurance on the Escort. The "APPLICANT STATEMENT" portion of the application asks five questions used by Guaranty to determine insurability: (1) Have all individuals residing in your household, 15 years old and older, been disclosed on this application? (2) Are all vehicles in the household listed on this application? (3) Have all accidents and violations within the last 3 years by all drivers been listed on the application? (4) Are any vehicles used for delivery purposes, such as business/commercial, newspaper or pizza delivery? and (5) Have all possible drivers, even those who may operate your vehicle on an irregular or infrequent basis, been listed on this application?

Barnes testified he filled out Simental's application in his own hand and gave the completed application for her to review, and she signed it without making any changes. Barnes testified that he asked Simental the five questions on the application and he recorded her answers of "yes" on questions 1, 2, 3, and 5, and "no" on question 4. Immediately under the five questions there is a line stating: "Applicant to initial after completing ____." Barnes testified that when the applicant initials the blank, Guaranty knows the applicant has reviewed the information and verifies that it is correct. On Simental's application, the line does not contain her initials but is blank. Barnes said he does not normally ask applicants to initial the blank.

Contrary to Barnes' testimony, Simental testified that he did not ask her any questions. She testified through an interpreter that the only information Barnes asked for was her driver's license. Simental testified she was unable to read the application except for her signature.

Guaranty received Simental's application and ordered her driving record. On April 11, 1997, Guaranty received a copy of Simental's driving record indicating her license was on administrative suspension for failure to present evidence of liability insurance coverage. On April 23, 1997, Guaranty issued a statement of liability insurance coverage effective for 1 year from April 15, 1997, certifying that it had issued Simental a motor vehicle liability policy.

Guaranty issued a policy for Simental on the Escort, but informed Ekberg that the monthly premium would be increased from $67 to $74 because of the information on her driving record. On May 16, 1997, Simental went to Ekberg and paid $74 cash on the premium for insurance coverage from May 10, 1997, through June 16, 1997.

On May 23, 1997, Theodoro bought an Acura Legend for Simental from Cool Tint. The Acura broke down and was returned to the dealership that day. The same day, Theodoro purchased a 1989 Nissan Maxima for Simental from Cool Tint. The bill of sale for the Nissan lists Simental and Angel as the buyers of the car. Simental testified Theodoro bought the Nissan because Simental, Theodoro, and Gilberto Ortiz were going to Colorado for a wedding and Theodoro's car was in the shop being fixed.

The same day of the purchase, May 23, 1997, Simental went to Ekberg to obtain insurance on the Nissan. Simental told Barnes she wanted to add two vehicles to her existing policy. Barnes issued identification cards providing proof of insurance for the Acura and the Nissan and added endorsements to the existing policy for liability only on the two additional vehicles. Simental paid an additional $80 cash on the premium for coverage during the period of May 23, 1997, through June 16, 1997.

On May 24, 1997, the 1989 Nissan was involved in a fatal head-on collision in Colorado while being driven by Theodoro, who was killed. Oritz, as well as the driver of the other car involved, were also killed in the accident.

In June 1997, Melanie Belz, a personal lines manager for Med James, conducted an investigation of the accident and Simental's application. Belz made the decision to rescind the Simental policy based on a failure to disclose other potential operators who lived in the household. On August 11, 1997, Belz sent Simental a rescission letter, written in English, informing her Guaranty was claiming its policy was void ab initio. Five days before the rescission letter, on August 6, 1997, Guaranty filed a petition for declaratory judgment alleging that on April 15, 1997, Simental submitted an application for insurance containing materially false information in violation of the Kansas Fraudulent Insurance Act, K.S.A. 40-2,118 et seq. Guaranty argued Simental's fraudulent acts relieved Guaranty of any obligation to provide coverage or pay any claims.

The trial court conducted a 2-day trial and then took the matter under advisement. The court denied Guaranty's requested remedy and granted judgment in favor of Simental. The court found Simental had a valid and enforceable insurance policy with Guaranty. The court believed Simental's testimony in finding that Barnes did not ask her the pertinent questions on the insurance application and, therefore, Guaranty failed in its burden of proving she acted knowingly and with intent to defraud in signing the application. The court concluded Barnes was Guaranty's agent in placing the insurance, and it could not benefit from his actions in providing incorrect information.

We affirmed the trial court's ruling in favor of Simental in Guaranty Nat'l Ins. Co. v. Simental, Nos. 85,220 and 85,404, unpublished opinion filed June 1, 2001. We found the verdict was supported by substantial competent evidence; that Guaranty had not established fraud on the part of Simental; that Guaranty's estoppel issue was of no concern; that Guaranty, based on its previous statements, was prohibited from arguing that Barnes was an independent insurance agent acting as Simental's agent; and that the amount of attorney fees was reasonable.

After the trial court entered its ruling, but before we entered our decision in Guaranty Nat'l Ins. Co., Med James filed the case at bar. Med James claimed it was entitled to 100% indemnification from Barnes due to his failure to ask the material questions and supply material and accurate answers on Simental's insurance application, and that Barnes negligently completed the insurance application and breached his fiduciary duty by failing to properly complete the insurance application.

Barnes moved for summary judgment on Med James' petition. The district court granted summary judgment to Barnes, finding that Med James' claims were barred by the 2-year statute of limitations for actions involving negligence, comparative implied indemnity, and breach of fiduciary duty. The court also found that the "one-trial rule" prohibited Med James' lawsuit, that Med James was collaterally estopped from asserting that Barnes was Simental's agent, and that Med James was guilty of negligence such that its claim of implied indemnity from the one causing the loss was barred by that negligence.

The standard of review for cases decided on summary judgment is well established:

"`Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The trial court is required to resolve all facts and

...