Tyler v. Employers Mut. Cas. Co.

• Citation: 274 Kan. 227,49 P.3d 511
• Decision Date: 12 July 2002
• Docket Number: No. 87,406.,87,406.
• Parties: MICHAEL E. TYLER, Appellee, v. EMPLOYERS MUTUAL CASUALTY COMPANY, Appellant, and FARMERS CASUALTY INSURANCE COMPANY, Appellee.
• Court: Kansas Supreme Court

274 Kan. 227

49 P.3d 511

MICHAEL E. TYLER, Appellee, v. EMPLOYERS MUTUAL CASUALTY COMPANY, Appellant, and FARMERS CASUALTY INSURANCE COMPANY, Appellee.

No. 87,406.

Supreme Court of Kansas.

Opinion filed July 12, 2002.

Steve R. Fabert, of Fisher, Patterson, Sayler & Smith, L.L.P., of Topeka, argued the cause and was on the briefs for the appellant.

Richard F. Hayse, of Morris, Laing, Evans, Brock & Kennedy, Chtd., of Topeka argued the cause, and Phillip L. Turner and Dan E. Turner, of Topeka, were with him on the brief for appellee Michael E. Tyler.

Michael J. Schenk, of Topeka, argued the cause and was on the brief for appellee Farmers Casualty Insurance Company.

The opinion was delivered by

SIX, J.:

This is an uninsured motorist (UM) coverage case arising from a UM claim successfully litigated by Michael Tyler against Employers Mutual Casualty Company (EMC). Tyler, a deputy sheriff, was injured on duty in a collision with an uninsured motorist. EMC denied UM coverage. The district court granted summary judgment to Tyler. EMC appeals. Farmers Casualty Insurance Company (Farmers), also a defendant below, adopts many of the arguments advanced by Tyler on appeal.

Our jurisdiction is under K.S.A. 20-3018(c) (transfer on our own motion).

The issues are: (1) Did EMC's policy issued to Jefferson County (County) provide UM coverage for Tyler's collision? (2) If the policy provided UM coverage, how should Tyler's worker's compensation settlement impact the judgment against EMC? and (3) Was the form of the judgment and the award of interest and attorney fees proper?

We hold that under the facts here, Tyler is entitled to UM coverage and an award of attorney fees and prejudgment interest. However, we reverse on the date prejudgment interest is to commence.

FACTS

Deputy Sheriff Michael Tyler was injured while operating a Jefferson County Sheriff's department 1994 Crown Victoria patrol car on July 12, 1996. Tyler, in pursuit, collided with an uninsured car driven by Mark Hosler, an uninsured driver. Because of the collision, Tyler suffered bodily injury. Tyler's personal auto insurance was with Farmers. Jefferson County was insured by EMC under a Business Auto Coverage form policy.

Tyler sued Hosler for personal injuries in Shawnee County. EMC moved to intervene in September 1996. Farmers elected not to intervene. EMC, in its motion to intervene, acknowledged that it issued a liability insurance policy covering the patrol car and that the "policy contains an underinsured motorist provision which, under certain conditions, provides insurance coverage for the insureds identified in the policy."

After Tyler submitted his case to the jury, EMC moved for a directed verdict, which was denied. EMC then presented its case and again moved for a directed verdict, which was again denied. The jury found Tyler 10% at fault and Hosler 90% at fault. Tyler was awarded damages totaling $500,000 (reduced for comparative fault to $450,000). All other claims were dismissed without prejudice in anticipation that a separate suit would resolve the insurance-related questions.

Tyler filed a workers compensation claim against Jefferson County. EMC was also the compensation carrier. Tyler was awarded $16,098.25 in disability compensation, $21,847.02 in authorized medical expenses, and $500 in unauthorized medical expenses. In June 2000, the compensation award was amended to show no amount for future medical benefits. In its motion to intervene in the tort action against Hosler, EMC asserted its subrogation lien under K.S.A. 40-284(e)(4) against any payments received from Hosler.

Tyler made demand upon EMC for UM benefits. EMC denied coverage. In its December 22, 1999, letter of denial EMC said: (1) "Tyler would be entitled to UM benefits under EMC's policy only if he could qualify as a permissive user of a vehicle with respect to which the policy provides UM coverage." (2) "EMC's policy provides UM coverage only with respect to vehicles owned by the named insured which are subject to the mandatory insurance provisions of Kansas law. The accident vehicle was a patrol car titled to the Jefferson County Sheriff." (3) "The sheriff of a county is a separate and distinct legal entity from the county, not a subdivision of it." (4) "Even if the accident vehicle had been owned by the County, the policy would not be required to provide UM benefits for persons operating it, because the vehicle was exempt from the [Kansas Automobile Injury Reparations Act] KAIRA and K.S.A. 40-284.... Any UM coverage for a government owned vehicle is purely contractual in nature, since no such coverage is mandated by statute." and (5) If "Tyler could qualify for UM benefits under EMC's policy, the amount demanded ... would clearly exceed any potential liability for benefits of that type."

EMC also asserted that any amount payable as UM benefits would still be subject to dispute because of Tyler's alleged pending appeal of the workers compensation award. According to EMC, the appeal was voluntarily dismissed in November 2000.

The Contract Action Against EMC

After EMC's refusal to pay UM benefits under its policy, Tyler sued EMC and Farmers in Jefferson County in a contract action to compel payment. He prayed for judgment against EMC and Farmers in the amount of the Shawnee County judgment entered against Hosler.

After discovery, Tyler moved for summary judgment against EMC. He argued that EMC's refusal to pay under the policy was an example of bad faith in light of its earlier admission (when it moved to intervene in Shawnee County) that the patrol car was insured and that there was UM coverage in the policy. Tyler also claimed that EMC was estopped from asserting that the patrol car was not insured because EMC admitted in the Shawnee County litigation that the patrol car was insured, and EMC also paid for the patrol car's repairs.

The District Court's Findings

In granting summary judgment against EMC, the district court set out "undisputed controlling facts." We summarize the district court's pertinent findings.

Hosler, an uninsured driver, was driving an uninsured Datsun on July 12, 1996. On the day of the accident, Tyler was assigned to and was driving a patrol car. After the accident, Tyler provided the investigating officers with the insurance card that was given to him by Jefferson County and kept in the patrol car.

Before the accident, Dean Cook, president and owner of Insurance is a Helping Hand, Inc., the policy "producer," had submitted a bid to procure insurance for Jefferson County. The bid was for property and casualty insurance, which included coverage for Jefferson County automobiles ranging from ambulances to sheriff's vehicles. As part of the insurance coverage process, Cook submitted a document titled "Automobile Coverages" which requested a $1,000,000 limit for underinsured motorist (UIM) and UM coverage, with a $500 deductible for physical damage and comprehensive coverage. He requested hired and borrowed auto coverage. Attached to that form was a listing of the vehicles that were to be insured.

EMC provided Cook with a document labeled "Quotation— Business Auto Policy" (quotation) valid from October 23, 1995, through December 7, 1995, including the premiums to be paid and policy coverages; liability coverage limits of $1,000,000 for a premium of $16,340.00; UM coverage limits of $1,000,000 for a premium of $3,987.00; and UIM coverage limits of $1,000,000 for a premium marked as "included." All vehicles to be covered by this quotation were listed.

The patrol car was listed, along with a breakdown of the cost of the insurance premium for this individual vehicle. The listing specified that the liability premium was $288, the UM premium was $81, UIM coverage was included, and the comprehensive premium was $253, with a collision premium of $206.

Cook received the quotation from EMC in the fall of 1995 and presented it to the Jefferson County Commissioners. The commissioners decided to accept the proposed coverage, paying $32,938, the quotation price for the coverage.

The EMC policy was effective January 1, 1996, through January 1, 1997. Cook received a stack of insurance cards, which he provided to Jefferson County for all of the insured vehicles. EMC also issued and delivered to Cook the Commercial Auto Declarations-Business Auto Coverage form with the schedule of covered autos. The premium and coverages were as listed on the quotation.

EMC paid $3,942.79 for the repairs to the patrol car.

Cook testified that EMC never notified him that the patrol car was not covered by insurance. As far as Cook knew, the patrol car was insured by EMC at the time of the accident. Cook testified that Jefferson County did not provide him with any documents rejecting in writing the UM or UIM coverage for the vehicles being insured by EMC. Linda Hibberts, an employee of Helping Hand, Inc., in the normal course of business prepared and sent a letter to the Jefferson County Sheriff's department listing the vehicles that were insured. This list included the patrol car. In fact, for each and every motor vehicle listed on the EMC policy form with the schedule of covered autos, a charge for UM coverage was included. EMC's insurance contract specifically provided that permissive users were to be considered insureds.

The District Court's Conclusions

The district court concluded that EMC was contractually liable. Tyler was entitled to $411,554.73, plus accrued interest of $74,633.01 through September 1, 2000, plus $113.07 per day thereafter until paid. Based on this conclusion, the district court deducted the workers compensation award from the $450,000 judgment. Tyler was also awarded $12,568.75 in attorney fees and $946.11 in costs.

EMC later filed a motion for reconsideration and for supplemental findings. The district court amended its previous decision to "accurately reflect" that its decision against EMC was based upon a finding of contractual...