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Mitchell v. Liberty Mutual Insurance Co.6/8/2001
Appeal from Riley district court, PAUL E. MILLER, judge.
Affirmed in part and reversed in part.
The question we must resolve in this appeal is which of two separate policies providing underinsured motorist coverage applies to the plaintiff's damages. Plaintiff Michael P. Mitchell claimed Kansas law mandated that his employer's insurance contract with Liberty Mutual Insurance Company (Liberty) provide underinsured coverage equal to the limits of the liability coverage based upon the employer's failure to properly reject such coverage under K.S.A. 40-284. The trial court awarded summary judgment in favor of Liberty, concluding that the employer did reject the higher coverage, with the result that Mitchell's individual policy provided the only underinsured coverage for him. The trial court awarded Mitchell postjudgment interest, but only from the date the court determined that Mitchell's individual policy was responsible and only in an amount due under such policy. We affirm the decision of the trial court in part and reverse in part.
On November 1, 1991, Mitchell suffered bodily injury in a motor vehicle accident which occurred while he was operating a vehicle for the United Parcel Service (UPS). UPS was insured by Liberty under a policy which provided for liability coverage of $5,000,000. The policy expressly provided uninsured/underinsured motorist coverage in an amount equal to the Kansas minimum coverage requirement: $25,000 per person and $50,000 per accident. Mitchell was insured by defendant Shelter Mutual Insurance Company (Shelter). The Shelter policy provided uninsured/underinsured motorist coverage in the amount of $100,000 per person and $300,000 per accident.
Mitchell filed suit against the driver of the other automobile, Loretta Leonard, who was insured by Mid-Century Insurance Company (Mid-Century). Mid-Century tentatively offered to settle Mitchell's claims in exchange for its policy limit of $50,000. Mitchell provided both Liberty and Shelter with notice of the offer. Liberty refused to substitute payment or intervene. Shelter refused to substitute payment but did intervene to protect its interests.
All parties to the action reached a settlement in favor of Mitchell in the amount of $950,000, which the trial court reduced to $890,000 pursuant to the caps provided for in K.S.A. 60-19a02. This sum was reduced by $50,000 which had previously been paid by Leonard's insurance company, Mid-Century. After a hearing, the settlement was approved by the trial court. Within the same action, Mitchell attempted to enforce his underinsured motorist benefits under the Liberty policy and his own Shelter policy. The trial court, pursuant to Mitchell's request, involuntarily joined Liberty as a party and entered summary judgment against Liberty for Mitchell's underinsured coverage.
The resulting judgment against Liberty was overturned by this court in Mitchell v. Liberty Mut. Ins. Co., 265 Kan. 556, 961 P.2d 1235 (1998), wherein we found the district court had no jurisdiction over the underinsured motorist coverage dispute in the same action which determined plaintiff's damages. We held that the underinsured coverage dispute must be resolved by separate action from the damage action. Mitchell then filed the present action against Liberty and Shelter.
Mitchell claimed Liberty was liable for his underinsured motorist claim of $840,000 notwithstanding its policy provision limiting its liability for underinsured motorist coverage to $25,000 per person and $50,000 per accident. His claim was based upon K.S.A. 40-284, which provides that for policies issued in Kansas, uninsured/underinsured coverage is to be "equal to the limits of
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