Moore v. Luther ex rel. Luther

• Decision Date: 08 September 2003
• Docket Number: No. 02-4108-RDR.,02-4108-RDR.
• Citation: 291 F.Supp.2d 1194
• Parties: Sandra R. MOORE and Richard L. Moore, Jr., Plaintiffs, v. Virginia M. LUTHER, n/k/a Hillman, as Executor of the Estate of Glen E. LUTHER, Deceased; State Farm Mutual Automobile Insurance Co.; and Bradley S. Russell, Defendants.
• Court: U.S. District Court — District of Kansas

Page 1194

291 F.Supp.2d 1194

Sandra R. MOORE and Richard L. Moore, Jr., Plaintiffs, v. Virginia M. LUTHER, n/k/a Hillman, as Executor of the Estate of Glen E. LUTHER, Deceased; State Farm Mutual Automobile Insurance Co.; and Bradley S. Russell, Defendants.

No. 02-4108-RDR.

United States District Court, D. Kansas.

September 8, 2003.

Elizabeth R. Herbert, Pedro L. Irigonegaray, Robert V. Eye, Irigonegaray & Associates, Topeka, KS, for Plaintiffs.

Dana M. Harris, Harris, Jason P. Roth, McCausland & Schmitt, P.C., Kansas City, MO, Craig W. West, Michael J. Norton, Foulston Siefkin LLP, Wichita, KS, for Defendants.

MEMORANDUM AND ORDER

ROGERS, District Judge.

This is an action for damages arising from an automobile accident based on diversity jurisdiction. Plaintiffs assert claims of negligence, fraud and intentional infliction of emotional distress or outrage. Plaintiff Sandra R. Moore was injured in an accident involving a vehicle driven by Glen E. Luther. Luther was insured by State Farm Mutual Automobile Insurance Company. Plaintiffs are Mrs. Moore; her husband, Richard L. Moore, Sr.; and the Moore's insurer, Cincinnati Insurance Company.¹ Defendants are Virginia Luther, as executor of the estate of Glen E. Luther; and State Farm Mutual Insurance Company. This matter is presently before the court upon the following motions: defendant State Farm's motion to dismiss (Doc. # 17); defendant State Farm's motion to dismiss amended complaint (Doc. # 40); and defendant Luther's motion to dismiss (Doc. # 36). Having carefully reviewed the very complicated factual background and the legal arguments of the parties, the court is now prepared to rule.

In reviewing a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), the court examines the sufficiency of the complaint rather than the merits of the lawsuit. Sutton v. Utah State School for Deaf and Blind, 173 F.3d 1226, 1237 (10th Cir.1999). "[T]he issue is not whether the plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence that supports the claims." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). A motion to dismiss will be granted only if the court finds that the plaintiff can put forth no set of facts that would entitle her to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). On a motion to dismiss, the court draws all inferences and resolves all ambiguities in the plaintiff's favor and assumes that all well pleaded facts are true. Sutton, 173 F.3d at 1237.

On March 31, 1997, Mr. Luther was involved in an accident with Mrs. Moore. Mrs. Moore submitted a claim to State Farm, Mr. Luther's insurer, for property damage and personal injuries. The claims were denied on the grounds that comparative fault barred any recovery. Plaintiffs were advised of that decision as early as April 11, 1997.

Mrs. Moore hired attorney Irving Shaw to represent her. He filed a lawsuit on behalf of Mr. and Mrs. Moore against Mr. Luther on March 26, 1999 in the District Court of Lyon County, Kansas. This filing was made five days before the statute of limitations ran. Plaintiffs attempted to serve Mr. Luther, who was an Iowa resident, by certified mail, addressed to the residence he had provided at the time of the accident. The return receipt for the summons and petition indicated someone at that address signed for the documents on April 8, 1999, but the signature is not legible. State Farm retained Bradley Russell to defend the lawsuit on behalf of its insured.

Mr. Luther died on September 5, 1997. No one on behalf of State Farm communicated that information to plaintiffs. One week later, Mrs. Luther was appointed executor of his estate in Iowa. The estate was closed on January 30, 1998.

Despite knowing of Mr. Luther's death, Russell entered an appearance and filed an answer in the state court case on behalf of Luther in May 1999. The answer contained various affirmative defenses including lack of subject matter and personal jurisdiction, lack of capacity to be sued, and insufficient process. Plaintiffs neglected to investigate the basis for the affirmative defenses. Russell served discovery documents on plaintiffs ostensibly propounded by the deceased defendant. On July 23, 1999 Russell filed a suggestion of death. Three days later he filed a motion to dismiss the case.

Plaintiffs attempted to substitute Mrs. Luther as the defendant, as executor of the estate. This motion was denied because the estate was closed. Russell incorrectly informed the trial court that the only proper party would be a special administrator appointed by an Iowa court and cited Kent v. Chase, 1 Kan.App.2d 251, 563 P.2d 1103 (1977) as support. The trial court and the plaintiffs were unaware that the 1980 amendments to K.S.A. 59-805 overturned Kent and permitted an administrator to be appointed in Kansas for an out-of-state decedent. The trial court, in light of Kent, withheld ruling on the motion to dismiss to give plaintiffs an opportunity to reopen the estate. Plaintiffs did petition in Iowa to reopen the estate, which was opposed by Mrs. Luther. After several months, Russell renewed the motion to dismiss, and the trial court dismissed plaintiffs' action with prejudice, finding the plaintiffs' claims barred by the two-year statute of limitations. Plaintiffs moved to alter or amend alleging, inter alia, Russell's misconduct in filing an answer for a dead defendant. At the hearing on the motion, plaintiffs added the argument that the defense's concealment of Luther's whereabouts tolled the statute of limitations pursuant to K.S.A. 60-517. The trial court found K.S.A. 60-517 inapplicable because there was no evidence that defendant was out of state when the cause of action arose or that defendant absconded or concealed himself. The trial court found that Russell had not engaged in misconduct. The trial court then denied the motion to alter or amend.

The Kansas Court of Appeals affirmed in part and reversed in part on November 30, 2001. Moore v. Luther, 29 Kan.App.2d 1004, 35 P.3d 277 (2001). The Court reversed the trial court's ruling that plaintiffs' claims were barred by the statute of limitations. Id., 35 P.3d at 279. The Court found that the trial court lacked jurisdiction because plaintiffs had named a defendant who was dead at the time of filing. Id. The Court further found that substitution of a special administrator or other personal representative under K.S.A. 60-225(a)(1) was inapplicable where the defendant died prior to the commencement of the action. Id. at 280-81. The Court determined that the trial court had properly dismissed plaintiffs' case and properly denied the motion to alter or amend. Id. at 281. The Court, however, remanded the case with instructions to dismiss without prejudice for lack of jurisdiction. Id. The Court, in dicta, implied that the two-year statute of limitations may be tolled because of Russell's failure to inform plaintiffs that Mr. Luther was deceased. Id. The Court cited Yoh v. Hoffman, 29 Kan. App.2d 312, 27 P.3d 927 (2001) with approval. Id.

Upon remand, the trial court dismissed the case on January 9, 2002. The Iowa estate was reopened, and Mrs. Luther was appointed executor as of June 28, 2002. The Moores filed this case on July 3, 2002. STATE FARM'S MOTIONS TO DISMISS

In its motions to dismiss, State Farm contends that (1) plaintiffs' fraud and outrage claims are barred by the two-year statute of limitations; and (2) plaintiffs suffered no injury as a result of its alleged fraud.

Plaintiffs' fraud claim against State Farm is based upon Russell "filing an answer on behalf of a nonexistent defendant." Plaintiffs' outrage claim against State Farm is based upon "the totality of its conduct in the investigation and denial of plaintiffs' claim."

Concerning the fraud claim, State Farm contends that the plaintiffs were aware of the alleged fraud on July 23, 1999, when the suggestion of death was filed. Thus, State Farm argues that the fraud claim must be dismissed because plaintiffs did not assert it until well after the applicable two-year statute of limitations had expired. With regard to the outrage claim, State Farm asserts that the last date of misconduct concerning its investigation and denial of plaintiffs' claim stated in the complaint is November 12, 1997. Thus, State Farm argues that this claim must also be dismissed because it was also not asserted until after the applicable one-year statute of limitations had expired.

Plaintiffs have argued various alternative theories in support of their contention that their fraud claim was timely filed. First, they contend that they did not have a cause of action against State Farm until the decision of Yoh v. Hoffman in June 2000. Second, they assert any cause of action against State Farm did not accrue until the state court action was dismissed on July 19, 2000 or until the Kansas Court of Appeals reached its decision on November 30, 2001. Third, they argue that the application of equitable tolling is appropriate here.

The response of the plaintiffs concerning State Farm's arguments on the outrage claim is curious. They suggest that, "despite the language of the complaint," they never intended to limit their outrage claim to the "investigation and denial" of their personal injury claim. They assert that they "intended to incorporate in that claim all of defendant's actions in defense of the claim, including defendant Russell's fraudulent conduct and State Farm's ratification thereof." Thus, they suggest that they filed this claim within two years of July 19, 2000, the date they suffered great emotional distress when the state trial court denied their motion to alter or amend. They further argue that their outrage claim is timely because the actions of Russell and State Farm continued until August 17, 2001, when Russell appeared in oral argument in the Kansas Court of Appeals on the appeal of the dismissal of the state...