Overbaugh v. Strange
| Decision Date | 25 January 1994 |
| Docket Number | No. 68488,68488 |
| Parties | Robin C. OVERBAUGH, Plaintiff, v. James W. STRANGE, Defendant/Appellee, and Kansas City Power & Light Company, Defendant/Appellant. |
| Court | Kansas Supreme Court |
Syllabus by the Court
1. K.S.A.1992 Supp. 40-3103(u), K.S.A.1992 Supp. 40-3104(f), K.S.A. 40-3106, and K.S.A. 40-3107 of the Kansas Automobile Injury Reparations Act are discussed and applied.
2. A K.S.A.1992 Supp. 40-3103(u) self-insurer may assume the defense of an insured
under a reservation of rights and later appeal questions of coverage and of the duty to defend.
3. A K.S.A.1992 Supp. 40-3103(u) nonresident self-insurer is required by the Kansas Automobile Injury Reparations Act to pay judgments entered against an employee arising out of the use of the self-insurer's vehicle with the expressed or implied consent of the self-insurer under K.S.A. 40-3107(b).
4. Although a duty to pay is imposed in Syl. p 3, absent a contractual relationship, a self-insurer under K.S.A.1992 Supp. 40-3103(u) has no duty imposed by operation of law to defend an employee in a damage action arising out of the use of the self-insurer's vehicle.
5. The K.S.A. 40-3107(b) phrase "loss from the liability imposed by law for damages" does not include attorney fees or other costs of defense.
Michael A. Rump, of Kansas City Power & Light Co., Kansas City, MO, argued the cause and was on the brief, for appellant.
William O. Isenhour, Jr., of Soden, Isenhour & Cox, P.A., Mission, argued the cause and was on the brief, for appellee.
Carlton W. Kennard, of Spigarelli, McLane & Short, Pittsburg, was on the brief, for amicus curiae Kansas Trial Lawyers Ass'n.
J. Nick Badgerow, of Spencer Fane Britt & Browne, Overland Park, was on the brief, for amicus curiae Kansas Ass'n of Defense Counsel.
This case involves the relationships under K.S.A.1992 Supp. 40-3103(u) between Kansas City Power & Light Company (KCPL), a nonresident self-insurer employer, and James Strange, an employee, arising from their status as codefendants in an automobile negligence action. KCPL owned and self-insured the vehicle Strange was driving when he was involved in an accident. The trial court granted summary judgment for Strange on a cross-claim against him by KCPL, holding that Strange was acting within the scope of his employment and that KCPL had a duty to defend Strange and to pay attorney fees incurred by Strange. The Court of Appeals reversed. Overbaugh v. Strange, 18 Kan.App.2d 365, 853 P.2d 80 (1993). We granted Strange's petition for review.
We affirm the result of the Court of Appeals opinion. We modify the opinion's analysis of the application of K.S.A.1992 Supp. 40-3104(f) to KCPL. See Strange, 18 Kan.App.2d at 367, 853 P.2d 80.
The Court of Appeals summarized the facts as follows:
....
18 Kan.App.2d at 365-66, 853 P.2d 80.
The van Strange was driving was registered in the State of Missouri.
KCPL responded to Overbaugh's claim, asserting that (1) it was not vicariously liable for Strange's action because he was acting outside the scope of his employment at the time of the accident and (2) Strange did not have KCPL's express or implied consent to operate the van at the time of the accident; thus, KCPL was not liable as a self-insurer. Both of these allegations were based on the contention that Strange's intoxication violated KCPL's employee conduct rules. Strange's position with KCPL was as a telephone technician, and his responsibilities involved the installation, repair, and maintenance of telephone systems at KCPL facilities.
Strange reported to the first assigned job site, performed his assigned work, and left. He failed to report to either the second or third job sites. Strange ate lunch after he left the first job site and then went to an American Legion hall where he spent the remainder of his regular working hours consuming beer and vodka. At some time in the afternoon, Strange left the Legion hall. He testified it was his intent to return the company van to the KCPL service center and drive his car home. During the drive to the service center, Strange collided with Overbaugh's car, which was stopped in front of him.
KCPL moved for summary judgment on the issues of vicarious liability and self-insurer coverage. Strange filed a motion for partial summary judgment on the same issues and sought a ruling that KCPL had a duty, as self-insurer, to defend Strange and pay his attorney fees.
After the district court's adverse ruling, KCPL entered into a settlement agreement with Overbaugh, who is not a party in this appeal, and obtained a release for both KCPL and Strange. A journal entry of partial dismissal was filed which dismissed all claims and issues in the case, with the exception of the question of KCPL's duty to defend Strange and to pay his attorney fees.
The Kansas Association of Defense Counsel (KADC) and the Kansas Trial Lawyers Association (KTLA) have filed amicus curiae briefs.
Strange does not dispute the facts as set forth by the Court of Appeals. Additionally, he asserts that his personal liability insurer disclaimed insurance coverage for the accident, reasoning that "[t]he involved vehicle does not meet the policy definition of non-owned car; therefore, no coverage will extend." This uncontroverted fact was adopted by the trial court.
....
18 Kan.App.2d at 367, 853 P.2d 80.
18 Kan.App.2d at 367-68, 853 P.2d 80.
The court concluded as follows: 18 Kan.App.2d at 368, 853 P.2d 80.
The Court of Appeals placed KCPL under K.S.A.1992 Supp. 40-3104(f) as a resident self-insurer having 25 or more motor vehicles registered in Kansas. We reason that the correct placement is under K.S.A. 40-3106(b) by reason of the K.S.A.1992 Supp. 40-3103(u) reference to nonresident self-insurers. K.S.A. 40-3106(b) references the K.S.A. 40-3107(b) requirements. The vehicle in question was registered in Missouri. KCPL is a Missouri corporation. The trial court adopted, as uncontroverted, the fact that KCPL had been approved as a self- insurer under Missouri law for vehicles registered in Missouri.
Strange argues that Kansas has mandated the assumption of all obligations that exist under a standard automobile liability insurance policy by requiring certification of compliance with K.S.A. 40-3107. According to Strange, assuming the obligations of an insurer under K.S.A. 40-3107 includes the obligation to provide a defense to drivers.
Strange maintains that KCPL was required to provide him with coverage "against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of any such vehicle" under K.S.A. 40-3107(b). He asserts that 40-3107(b) must be interpreted to give the term "loss from" a meaning which includes the defense against claims and the costs and expenses of litigation.
Strange takes the position that the Court of Appeals failed to address the significance of the phrase "loss from" and interpreted the statute in such a way as to render the term meaningless. He believes the Court of Appeals has rewritten that statute to require insurers and self-insurers to insure only "against damages" or only "against the liability imposed by law for damages."
The Court of Appeals addressed Strange's reliance on Spruill Motors, Inc. v. Universal Underwriters Ins. Co., 212 Kan. 681, 512 P.2d 403 (1973), and Upland Mutual Insurance, Inc. v. Noel, 214 Kan. 145, 519 P.2d 737 (1974), by reasoning that these Strange, 18 Kan.App.2d at 367, 853 P.2d 80.
Strange counters with the claim that the holding in Spruill was not based upon a contractual obligation to furnish a defense. Strange...
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