State Farm Fire and Cas. Co. v. Liggett

• Decision Date: 26 October 1984
• Docket Number: No. 55905,55905
• Citation: 689 P.2d 1187,236 Kan. 120
• Court: Kansas Supreme Court
• Parties: STATE FARM FIRE AND CASUALTY COMPANY, Appellant/Cross-Appellee, v. Byron T. LIGGETT and Lorrieta A. Liggett, Appellees/Cross-Appellants, and Security State Bank of Great Bend, Kansas, Appellee.

Page 1187

689 P.2d 1187

236 Kan. 120

STATE FARM FIRE AND CASUALTY COMPANY, Appellant/Cross-Appellee, v. Byron T. LIGGETT and Lorrieta A. Liggett, Appellees/Cross-Appellants and Security State Bank of Great Bend, Kansas, Appellee.

No. 55905.

Supreme Court of Kansas.

Oct. 26, 1984.

Syllabus By The Court

1. The admission of exhibits not previously disclosed or the admission of the testimony of witnesses not previously disclosed is discretionary with the trial court.

2. The exercise of judicial discretion requires that a judge have proper regard for what is just and fair under the existing circumstances, and that he not act in an arbitrary fashion or unreasonable manner.

3. Where a mortgage on real estate provides the mortgagor shall keep the premises insured for the benefit of the mortgagee, and in fulfillment of this covenant the mortgagor takes the insurance in his own name--which policy is not assigned to or made payable to the mortgagee--in the event of a loss the mortgagee has an equitable lien upon the proceeds of the policy.

4. The judgment of a trial court, if correct, is to be upheld, even though the court may have relied upon a wrong ground or assigned an erroneous reason for its decision.

5. The enactment by the legislature of K.S.A. 40-256 did not, by implication, repeal K.S.A. 40-908. [Following Ferrellgas Corporation v. Phoenix Ins. Co., 187 Kan. 530, 358 P.2d 786 (1961).]

6. The reasonable value of attorney fees rests within the sound judicial discretion of the trial court and its determination will not be disturbed in the absence of an abuse of discretion.

7. The circumstances to be considered in determining the amount of a reasonable attorney fee are the amount and character of the services rendered; the labor, time and trouble involved; the nature and importance of the litigation or business in which the services were rendered; the responsibility imposed; the amount of money or the value of the property affected by the controversy, or involved in the employment; the skill and experience called for in the performance of the services; the professional character and standing of the attorney and the results secured.

8. The tort of bad faith is not recognized in Kansas. [Following Spencer v. Aetna Life & Casualty Ins. Co., 227 Kan. 914, 611 P.2d 149 (1980).]

Lee Turner, of Turner and Boisseau, Chartered, Great Bend, argued the cause, and Casey R. Law, Great Bend, of the same firm, was with him on briefs, for appellant/cross-appellee.

Donald E. Shultz, of Shultz & Associates, P.A., Dodge City, argued the cause and was on briefs, for appellees/cross-appellants Byron T. Liggett and Lorrieta A. Liggett.

Greg L. Bauer, of McPherson, Bauer & Pike, Chartered, Great Bend, argued the cause and was on brief, for appellee Security State Bank of Great Bend, Kansas.

MILLER, Justice:

This is an appeal by the plaintiff, State Farm Fire and Casualty Company, from a judgment against it in this declaratory judgment action and in favor of the defendants, Byron T. Liggett and Lorrieta A. Liggett, and Security State Bank of Great Bend, Kansas, following a six-week jury trial in the District Court of Barton County. We will state the issues raised as we discuss them later in this opinion.

Since State Farm does not challenge the sufficiency of the evidence to support the verdict and judgment, we need not state the facts in great detail. In the latter part of 1980, Dr. Byron Liggett and his wife, Lorrieta, purchased from Dr. Louis Graves a large suburban home located on a twenty-three acre tract of land west of Great Bend. The purchase price was $200,000. Colonial Savings and Loan Association held the first mortgage, Security State Bank of Great Bend held the second mortgage, and the seller, Dr. Graves, a third mortgage. The sale was closed on December 19, 1980, and the Liggetts began moving some of their personal property into the home. Dr. Graves vacated the premises before the first of the year, and in January the Liggetts completed their move. Mrs. Liggett contacted Dave Bair, local agent for State Farm, who had handled the Liggetts' insurance for some years. State Farm issued its policy, providing $220,000 coverage on the dwelling.

The Liggetts had occupied their new home for just over a month when, in the early morning hours of February 1, 1981, the house and contents were totally destroyed by fire. Arson was suspected, with Dr. and Mrs. Liggett being the prime suspects. No criminal prosecution, however, was ever commenced. State Farm refused to pay and instead brought this declaratory judgment action, seeking to have the policy declared void. Joined as defendants were the Liggetts, Colonial Savings, Security State Bank, and Dr. and Mrs. Graves. (Colonial Savings and Dr. and Mrs. Graves are not parties to this appeal.) State Farm claimed that the Liggetts had given inaccurate material information in their application, had misrepresented the extent of their loss, had breached the contract of insurance, and had caused the loss "by their deliberate act, design and/or procurement of the burning of their dwelling and contents therein."

Dr. and Mrs. Liggett answered and counterclaimed. They sought to enforce the policy and to recover the amount of their loss, which they claimed was $418,000. By separate tort counterclaims, they sought actual and punitive damages of some $25 million for bad faith, outrage, and invasion of privacy. The latter was subdivided into claims for intrusion on seclusion, placing the Liggetts before the public in a false light, and publicizing private matters of a kind highly offensive.

Security State Bank also answered and counterclaimed. It was not named in the policy under the loss payable clause, but by counterclaim it alleged that as a mortgagee it had an interest in the property and was entitled to the policy proceeds as its interest may appear. Security State also claimed that it would have been listed in the loss payable clause but for the failure of Dave Bair, State Farm's agent who wrote the policy. Security State also filed a cross-claim against the Liggetts, seeking in the alternative to recover from them.

The Liggetts were represented initially by Michael Holland; later he withdrew and other attorneys--Camilla Klein Haviland and Lelyn Braun--undertook the representation. Others were consulted. Present counsel were employed twenty days before trial. The discovery in this case was exhaustive. It included twenty-nine depositions taken by the plaintiff and eight by the Liggetts. Throughout the proceedings before trial, there were many detailed interrogatories, requests for production, motions, oral arguments before the trial court, and many briefs submitted. The district court clerk's file comprises eight volumes.

The case went to trial on May 17, 1983. Over forty witnesses testified and almost 200 exhibits were offered in evidence. The trial, as we have noted, lasted for six weeks. The trial transcript is over 4,000 pages long. The trial court struck the Liggetts' bad faith counterclaim, based upon Spencer v. Aetna Life & Casualty Ins. Co., 227 Kan. 914, 611 P.2d 149 (1980). The trial court entered judgment for Security State against State Farm at the close of State Farm's evidence. The remaining issues were submitted to the jury, which returned a verdict for the Liggetts on their policy counterclaim. It awarded them $220,000 for the loss of their residence, $75,500 for loss of personal property, $22,500 for loss of use, $6,900 for debris removal, and $750 for damage to trees, shrubs and other plants, for a total of $325,650. The jury denied relief on the tort counterclaims.

The trial court entered judgment on the verdict, and also allowed attorney fees. The judge specifically found that K.S.A. 40-908 is the applicable statute and that K.S.A. 40-256 is not applicable. He allowed to Security State Bank attorney fees of $17,929, and to Dr. and Mrs. Liggett attorney fees of $119,998.95.

Nothing would be gained by detailing the evidence, which was abundant but sharply conflicting. By its verdict, the jury has resolved the fact issues, totally rejecting State Farm's version. We now turn to the issues raised on appeal.

Appellant first contends that the trial court abused its discretion and committed prejudicial error in permitting the Liggetts to call witnesses and introduce evidence not disclosed as required by the pretrial order. That order, entered orally on February 7, 1983, but not filed until April 19, 1983, required the parties to submit lists of witnesses and exhibits by April 1, 1983. The Liggetts were without counsel at the time of pretrial, and did not retain counsel until after the April 1 deadline. On May 9, 1983, approximately two weeks after being retained counsel for the Liggetts filed a list of thirty-five witnesses and a list of some forty-nine exhibits. The one witness permitted to testify on behalf of the Liggetts who was not included in the list was Maggie Lee Rinehardt. Ms. Rinehardt, a newspaper editor, testified only of the newsworthiness of the suit filed by State Farm against the Liggetts. This testimony was relevant only to the "false light" counterclaim upon which the jury denied relief.

Appellant also complains of the testimony of Dr. W.C. Niederee. The doctor's testimony, including cross-examination, covers less than five pages in the record. He had been acquainted with Dr. Liggett sixteen years, had observed Dr. Liggett making his rounds at the medical center, found his demeanor appropriate to the situation, had consulted him as a physician, and thought his care and treatment most appropriate and helpful. Like that of Ms. Rinehardt, Dr. Niederee's testimony was relevant only as to the tort counterclaims. The third defense witness to which State Farm objected was Dr. Ronald L. Wells, who was the expert witness for the Liggetts. Counsel for State Farm had apparently not known of the witness prior to the filing of the list of...