State Farm Mut. Auto. Ins. Co. v. Baker

• Decision Date: 07 September 1990
• Docket Number: No. 64440,64440
• Citation: 797 P.2d 168,14 Kan.App.2d 641
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. Wayne O. BAKER, Appellee.
• Court: Kansas Court of Appeals

Page 168

797 P.2d 168

14 Kan.App.2d 641

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. Wayne O. BAKER, Appellee.

No. 64440.

Court of Appeals of Kansas.

Sept. 7, 1990.

Review Denied Nov. 13, 1990.

Syllabus by the Court

1. A nonresident owner of a motor vehicle operated on the highways of this state is subject to the provisions of the Kansas Automobile Injury Reparations Act. K.S.A. 40-3101 et seq.

2. Under Kansas law, the choice of which state's law is applicable to the construction of a contract depends on where the contract is made. For choice of law purposes, a contract is made where the last act necessary to complete the contract occurs.

3. Under the facts of this case, an out-of-state coverage clause in a Missouri automobile liability policy provides coverage as required under K.S.A. 40-3101 et seq. but is not to be construed as a choice of law provision.

4. Under Missouri law, subrogation of automobile insurance medical payments under a Missouri policy is void as against public policy; under the Kansas Automobile Injury Reparations Act, personal injury protection benefits which include medical payments are subject to subrogation.

5. Under the facts present here, there is no provision within the insurance policy nor mandated under the provisions of the Kansas Automobile Injury Reparations Act that would require elimination of first-party medical benefits insurance explicitly bargained for and provided in the Missouri-based policy.

6. Under the terms of the Missouri policy in this case, first-party medical benefits payments, up to $1,000, were not subject to subrogation.

Gary M. Cupples and Philip R. Dupont, of Deacy & Deacy, Kansas City, Mo., and

William D. Mize, of Deacy & Deacy, Prairie Village, for appellant.

Phil M. Cartmell, Jr., Overland Park, and Joseph W. Amick, Kansas City, Mo., for appellee.

Before BRAZIL, P.J., LARSON, J., and DAVID S. KNUDSON, District Judge, assigned.

DAVID S. KNUDSON, District Judge.

State Farm Mutual Automobile Insurance Company (State Farm) appeals from the district court's granting of summary judgment to Wayne O. Baker. Finding no error, we affirm.

State Farm, doing business in Missouri, issued an automobile liability insurance policy to Baker, a Missouri resident. The liability section of the policy contained an out-of-state provision that allowed Baker to drive the insured automobile upon the highways of other states in full compliance with a particular state's mandatory insurance law. The policy also included separate first-party medical payment coverage of up to $1,000 not subject to subrogation by the insurer.

In August 1983, while driving the insured automobile, Baker was involved in a two-car collision in Wyandotte County, Kansas. He received medical attention due to injury caused by the collision, for which State Farm reimbursed him $511. Baker contends the payments were made under the medical payments provision of the insuring agreement. State Farm contends that it paid Baker personal injury protection (PIP) benefits, as required under Kansas law and consistent with the out-of-state coverage clauses within the policy. At the time of the collision, Kansas required $2,000 in medical benefits as part of the personal injury protection package. K.S.A. 40-3103(k).

When Baker settled his tort claim with the driver of the other automobile, State Farm refused to endorse the settlement check over to Baker. Ultimately, State Farm filed suit seeking a declaratory judgment finding that, under the provisions of the policy and pursuant to Kansas law, it was entitled to subrogation.

Both Baker and State Farm filed motions for summary judgment. The trial court granted Baker's motion, finding Missouri law must be applied to the construction of the insurance contract and, under Missouri law and the terms of the insuring agreement, subrogation was not permitted.

Neither party disputes the propriety of this litigation being ripe for summary judgment under their respective motions. We note summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Danes v. St. David's Episcopal Church, 242 Kan. 822, 830, 752 P.2d 653 (1988). In the case at bar, the terms of the written insurance agreement are unambiguous. Thus, this litigation is a proper subject for summary judgment and presents questions of law subject to unlimited review on appeal. Atkins v. Hartford Cas. Ins. Co., 801 F.2d 346, 347 (8th Cir.1986); Hutchinson Nat'l Bank & Tr. Co. v. Brown, 12 Kan.App.2d 673, 674, 753 P.2d 1299, rev. denied 243 Kan. 778 (1988).

The parties each state the controlling issues somewhat differently. State Farm starts from the premise that the payments were PIP benefits. Conversely, Baker starts from the viewpoint that the payments were medical payment benefits as bargained for and provided in the insuring agreement. We believe it is within the framework of the issues presented on appeal to state the dispositive issues to be: (1) whether Kansas or Missouri law is determinative of State Farm's right to subrogation, and (2) whether State Farm is entitled to subrogation.

K.S.A. 40-3106(a) provides that a nonresident owner of a motor vehicle may not operate such vehicle on the highways of Kansas unless a motor vehicle liability policy conforming with K.S.A. 40-3107 is in effect for such vehicle. K.S.A. 40-3107(f) requires that a motor vehicle liability policy provide personal injury protection benefits to the named insured that, under K.S.A 40-3103(k), include medical benefits up to $2,000.

Based upon the above-referenced statutes and Mayer v. Harris, 224 Kan. 231, Syl. p 1, 579 P.2d 715 (1978), we conclude that a nonresident owner of a motor vehicle operated on the highways of this state is subject to the provisions of the Kansas Automobile Injury Reparations Act (KAIRA). K.S.A. 40-3101 et seq.

Baker's automobile liability policy contains separate coverages for liability, for first-party medical benefits, and for uninsured motorist coverage. Missouri does not have no-fault insurance as mandated under Kansas law. In addition to liability limits of $50,000/$100,000/$25,000, Baker's policy in SECTION I--LIABILITY--COVERAGE A provides:

"Motor Vehicle Compulsory Insurance Law or Financial Responsibility law

"1. Out-of-State Coverage.

If an insured under the liability coverage is in another state or Canada and, as a non-resident, becomes subject to its motor vehicle compulsory insurance, financial responsibility or similar law;

a. the policy will be interpreted to give the coverage required by the law; and

b. the coverage so given replaces any coverage in this policy to the extent required by the law for the insured's operation, maintenance or use of a car insured under this policy.

Any coverage so extended shall be reduced to the extent other coverage applies to the accident. In no event shall a person collect more than once."

Baker's policy does conform to the requirements of K.S.A. 40-3107, and it provides personal injury protection benefits, which include up to $2,000 in medical benefits. As we have noted, Baker's policy also provides first-party medical payments insurance up to $1,000. The policy states:

"MEDICAL EXPENSES

"We will pay medical expenses, for bodily injury caused by accident, for services, furnished within one year of the date of the accident....

"Persons for Whom Medical Expenses are Payable.

"We will pay medical expenses for bodily injury sustained by:

"1. a. the first person named in the declarations;...."

The policy further provides:

"If There Are Other Medical Payments Coverages.

"1. Your Car.

The amount payable for medical expenses to a person who sustains bodily injury while occupying your car will not be reduced if there is other vehicle medical payments coverage."

Is State Farm then entitled to subrogation for the $511 paid in medical benefits? To resolve...