Novak v. Mutual of Omaha Ins. Co., 84,963.
| Decision Date | 03 August 2001 |
| Docket Number | No. 84,963.,84,963. |
| Citation | 28 P.3d 1033,29 Kan. App.2d 526 |
| Parties | ROGER NOVAK, REBECCA MASSEY, and CINDY LUSHER, ON BEHALF OF THEMSELVES and OTHERS SIMILARLY SITUATED, Appellants, v. MUTUAL OF OMAHA INSURANCE Co., a Nebraska corporation, MUTUAL OF OMAHA LIFE INSURANCE COMPANY, a Nebraska corporation, and JOHN DOES I-V, Appellees. |
| Court | Kansas Court of Appeals |
Richard D. Greene, Robert W. Coykendall, and Joseph W. Kennedy, of Morris, Laing, Evans, Brock & Kennedy, Chartered, of Wichita, Glen E. Smith, of Glen E. Smith & Associates, of Cheyenne, Wyoming, and John R. Vincent, of Riverton, Wyoming, for appellants.
James D. Oliver, of Foulston & Siefkin L.L.P., of Topeka, Patrick R. Day, of Holland & Hart L.L.P., of Cheyenne, Wyoming, and Debra Egli James, of Hampton & Royce, L.C., of Salina, for appellees.
Before GREEN, P.J., KNUDSON, J., and PHILIP C. VIEUX, District Judge, assigned.
Rebecca Massey and Cindy Lusher appeal from a judgment of the trial court dismissing their action against Mutual of Omaha Insurance Company and Mutual of Omaha Life Insurance Company (Mutual) for lack of personal jurisdiction over Mutual. Both companies were incorporated in Nebraska and have conducted business in Kansas. Mutual has a division office in Wichita, which recruits and supports agents in central Kansas. On appeal, Massey and Lusher, who are nonresidents of Kansas, maintain that the trial court had personal jurisdiction over Mutual because of its presence within Kansas and because it was served with process in Kansas. We agree and reverse and remand.
Roger Novak, who is a resident of Kansas, appeals from the decision of the trial court granting summary judgment in Mutual's favor, finding his action to be time barred. On appeal, Novak contends that his suit should not be time barred because of a clause contained in Mutual's contract. We agree and reverse and remand.
Mutual is a corporation headquartered in Omaha, Nebraska. Mutual offers various insurance products nationwide, including health and disability insurance. Mutual's products are made available by a network of agents employed throughout the United States. The agents are independent contractors and may sell insurance products for other companies. Agents are assigned to local division offices managed by district sales managers and general managers.
New Mutual employees are required to sign the Mutual of Omaha Agent's Contract (MOC). The MOC articulates an agent's basic duties as well as the company's responsibilities and a separate set of "schedules" which describe and control the specific terms of compensation and benefits depending upon the different products and associated contract incentives an agent decides to sell or accept. The sections of the MOC most relevant to this appeal state as follows:
Mutual maintains an account for each agent. The account tracks income, expense items, and compensation payment described as credit and debit transactions. The agent also receives a monthly agent statement detailing the agent's financial activities with Mutual. Agents continue to receive a monthly agent statement for a period after termination of their employment until the account clears.
A large part of an agent's compensation is from commissions received for selling insurance products. "First year" commissions are commissions based upon a percentage of the eligible first-year premium received from the insured in the first policy year. If an agent's employment with Mutual ends before the entire first year of premiums is paid on an issued policy, Mutual stops crediting the agent's account for first-year commissions unless the agent is vested, that is, has been employed by Mutual for 10 consecutive years.
Novak was recruited in Salina, Kansas, to sell Mutual's products in Kansas. Novak began selling Mutual products in early 1992, and his contract was terminated on January 20, 1995, due to lack of production. Upon termination, Novak was furnished with a final agent statement and made no written objection to its contents as required by the contract.
Massey lived and worked in West Palm Beach, Florida. From May 1991 until she left the company in July 1993, Massey sold Mutual products. Lusher began working for Mutual in 1991 and left in 1993. Lusher lived and worked in Wyoming.
On January 20, 1999, Lusher brought an action against Mutual in Saline County, Kansas. Lusher claimed that Mutual breached the MOC by not paying out first-year commissions, regardless of the length of her employment. Novak and Massey were also plaintiffs in Lusher's action. Mutual moved to dismiss Massey's and Lusher's claims on the ground that they could not obtain jurisdiction over Mutual in Kansas. The trial court agreed and dismissed Massey's and Lusher's claims.
Mutual also moved for summary judgment on Novak's claim, arguing he was barred by the 1-year limitation period under the MOC agreement. On the other hand, Novak argued that the contract should be construed under Nebraska law, and Nebraska law does not allow parties to limit the applicable statute of limitations for a breach of contract claim, which is 5 years. The trial court determined that the contract was a Kansas contract and was to be performed wholly in Kansas. As a result, the trial court applied Kansas law and determined that the 1-year limitation period barred Novak's claim.
Although Massey and Lusher assert several arguments as to why the trial court improperly dismissed their suit, those arguments distilled to their bare essence present the following question: Did the trial court properly dismiss this action for lack of personal jurisdiction over Mutual? Whether jurisdiction exists is a question of law over which an appellate court exercises unlimited review. Cypress Media, Inc. v. City of Overland Park, 268 Kan. 407, 414, 997 P.2d 681 (2000).
The thrust of Mutual's argument is that Lusher and Massey have no connections to Kansas and their cause of action did not arise in this state. Mutual relies on the Kansas "long arm statute," K.S.A. 60-308, and Three Ten Enterprises, Inc. v. State Farm Fire & Cas. Co., 24 Kan. App.2d 85, 942 P.2d 62, rev. denied 262 Kan. 969 (1997).
Three Ten and its predecessor cases adhere to the theory that questions of personal jurisdiction in Kansas require a finding that the case falls within the purview of the Kansas long arm statute. Three Ten involved an action by Three Ten Enterprises, Inc., Foam Form (Three Ten), a limited partnership organized under the laws of Kansas and licensed to transact business in Nebraska, against State Farm Fire & Casualty Company (State Farm), a foreign corporation authorized to do business in Kansas. State Farm issued a policy to Three Ten covering Three Ten's premises in Papillion, Nebraska. Three Ten made a claim with State Farm to recover losses suffered from an employee theft.
Unhappy with the result of the claim, Three Ten sued State Farm in Miami County, Kansas, and argued a theory of recovery under Nebraska law. State Farm moved to dismiss for lack of personal jurisdiction. The trial court denied the motion, holding personal jurisdiction existed under a theory of general jurisdiction.
On appeal, Three Ten argued that the Kansas long arm statute, K.S.A. 60-308(b), is to be liberally construed over nonresident defendants. In addition, Three Ten argued that the doctrine of "general jurisdiction" makes it unnecessary for plaintiffs to show that defendants' conduct falls within the parameters of 60-308(b). 24 Kan. App.2d at 90. The Three Ten court disagreed. Our court determined that general jurisdiction is a due process concept and does not excuse a plaintiff from satisfying the test for long arm jurisdiction under 60-308. As a result, our court reversed the trial court's decision.
Although State Farm in Three Ten was apparendy served with process under K.S.A. 40-218, which required foreign insurers to consent in advance to jurisdictions in certain situations in return for doing business in this state, Three Ten failed to argue jurisdiction under this statute. Moreover, the Three Ten court neglected to address the service under 40-218.
Service in this case was made by serving the Insurance Commissioner under 40-218. After Mutual moved to dismiss for a lack of personal jurisdiction, the plaintiffs re-served Mutual under K.S.A. 60-304(e) and (g). Mutual argues in its brief that K.S.A. 40-218 is not an independent source of statutory authority for gaining jurisdiction over an insurance company by serving it within the state; rather, the statute only According to Mutual, Three Ten must be read to require K.S.A. 40-218 to be used in conjunction with K.S.A. 60-308(b) to gain jurisdiction over a foreign insurer, and K.S.A. 60-308(b) confers statutory authority for the assertion of jurisdiction.
Mutual cites Deines v. Vermeer Mfg. Co., 752 F. Supp. 989 (D. Kan. 1990), as support for the proposition that jurisdiction must be predicated upon K.S.A. 60-308(b),...
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