Summary
holding that "[i]nsurance policy provisions which purport to condition, limit or dilute the broad, unqualified, uninsured motorist coverage mandated by § 40-284 of the Kansas statutes are void and of no effect"
Summary of this case from Escue v. Allstate Fire & Cas. Ins. Co.Opinion
CIVIL ACTION No. 00-2452-CM
July 30, 2001
MEMORANDUM AND ORDER
Plaintiffs filed suit against defendant seeking the court to enter judgment declaring that plaintiffs are "insureds" who are entitled to uninsured/underinsured motorist coverage under defendant's policy of automobile insurance. Plaintiffs also seek "further necessary or proper relief pursuant to 28 U.S.C. § 2202. Defendant denies plaintiffs' entitlement to coverage and has filed a counterclaim, seeking the court to enter a declaratory judgment that plaintiffs are not entitled to uninsured/underinsured motorist coverage under defendant's policy of automobile insurance.
Pending before the court is plaintiffs' motion for summary judgment (Doc. 27). Plaintiffs seek judgment in their favor on plaintiffs' declaratory judgment claim. Also pending before the court is defendant/counter-claimant's motion for summary judgment (Doc. 29). Defendant seeks judgment in its favor on defendant's declaratory judgment counterclaim. For the reasons set forth below, plaintiffs' motion is denied and defendant's motion is granted. Plaintiffs' complaint is dismissed in its entirety.
Generally, according to the applicable summary judgment standard, the facts set forth in a summary judgment ruling are either uncontroverted or related in the light most favorable to the non-moving party. Fed.R.Civ.P. 56. Here, as the court is setting out facts material to both the plaintiffs' and the defendant's motions for summary judgment, the facts set forth are either: a) uncontroverted or b) controverted by either party, as explained in the facts.
This case arises out of a motor vehicle accident occurring on April 20, 2000 on 1-35 near 119th Street in Olathe, Kansas in Johnson County. The accident involved a 1988 Chrysler Reliant automobile owed and operated by plaintiff Ronica Kettelhake and containing passengers plaintiff Josiah Kettelhake, a minor, and James Kettelhake, also a minor. The second vehicle involved in the accident was a 1990 Chevrolet pick-up truck owned and operated at the time of the accident by James W. Keefer. The accident occurred when Mr. Keefer's Chevrolet truck collided with the rear of the Kettelhake's Chrysler Reliant.
A. Insurance Policies on Vehicles Involved in Accident
At the time of the accident, the Kettelhake's 1998 Chrysler Reliant vehicle was insured by a policy of automobile liability insurance issued by American Family Mutual Insurance Company (American Family). The American Family insurance policy contained coverages mandated by Kansas state law, including liability coverage and uninsured/underinsured motorist coverage with limits of $50,000 and $100,000. Mr. Keefer's 1990 Chevrolet pick-up was also insured at the time of the accident by a policy of automobile liability insurance issued by Fanners Insurance Company (Farmers). The Farmer's policy on Mr. Keefer's Chevrolet truck has coverage limits identical to those of the Kettelhake's American Family insurance policy.
Plaintiffs claim that Josiah Kettelhake, the minor child of plaintiffs Lloyd and Ronica Kettelhake, sustained bodily injuries as a result of the accident of April 20. Plaintiffs seek damages due to the injuries. Plaintiffs claim the April 20 accident was caused as a proximate result of the negligence and fault of Mr. Keefer and have made a bodily injury liability claim to Mr. Keefer's Farmers Insurance Company, pursuant to the Farmer's policy.
B. Insurance Policy Issued by Defendant to Plaintiff Lloyd Kettelhake's Employer
At the time of the accident, plaintiff Lloyd Kettelhake was employed by Horsepower Control Systems, Inc. (Horsepower), a Missouri corporation whose offices are located in Kansas City, Missouri. Although its offices are located in Missouri, Horsepower conducts business in Kansas. In accordance with their employment agreement, Horsepower provided plaintiff Lloyd Kettelhake with a company owned 2000 Ford Taurus automobile for business and personal use. Both Lloyd and Ronica Kettelhake had the consent and permission of Horsepower to use the Ford Taurus for personal and family use. Horsepower deducted $25 from every paycheck of Lloyd Kettelhake for reimbursement to Horsepower of the Kettelhakes' personal use of the vehicle. The Ford Taurus was registered and licensed in Missouri. However, the Taurus was principally garaged at the Kettelhake's residence in Olathe, Kansas.
Plaintiff contends that Michelle Sampson, a Horsepower employee, confirmed to Lloyd Kettelhake that Ronica Kettelhake was allowed to drive the car. Plaintiff further contends that Michelle Sampson received this confirmation through Horsepower's insurance company, defendant Hawkeye. Defendant objects to the court's consideration of this fact as asserted by plaintiff, claiming that it constitutes inadmissible hearsay, disallowed for consideration on summary judgment. It is well settled in this circuit that the court can consider only admissible evidence in deciding a motion for summary judgment. See Gross v. Burggraf Constr. Co., 53 F.3d 1531, 1541 (10th Cir. 1995). Thus, hearsay evidence not subject to an exception cannot be considered. See Thomas v. Int'l Bus. Machs., 48 F.3d 478, 485 (10th Cir. 1995) (inadmissible hearsay will not defeat summary judgment). Defendant argues that because the fact regarding Ronica Kettelhake is presented in the sworn affidavit of Lloyd Kettelhake, not through the sworn testimony or affidavit of Michelle Sampson, it is inadmissible hearsay. In his affidavit, Mr. Kettelhake asserts "Michelle Sampson, a Horsepower employee, specifically obtained confirmation from the insurance company that Ronica [Kettelhake] could drive the Taurus." The court agrees with plaintiffs assertion that, as this fact is personally known to Lloyd Kettelhake, it is not inadmissible hearsay pursuant to Fed.R.Evid. 801.
Defendant asserts that the deduction was taken only for income tax purposes; therefore, the $25 deduction is not relevant to the issues before the court and should not be considered. As defendant provides no support for this assertion, the court will not consider it in deciding the pending motions. Fed.R.Civ.P. 56; D. Kan. Rule 56.1.
Defendant Hawkeye issued a policy of "Business Automobile" insurance to Horsepower. The 2000 Ford Taurus used by the Kettelhakes was scheduled on defendant Hawkeye's policy as a covered auto. Defendant's policy was in effect at the time of the plaintiffs' accident. Defendant's policy provides liability coverage as well as uninsured/underinsured motorist coverage to the policy's insureds as specified in the policy. Horsepower is the named insured in the Hawkeye business automobile policy of insurance.
The Declarations page of defendant Hawkeye's business automobile policy indicates that the insured is charged a premium for uninsured motorists bodily injury and that the premium for "underinsured motorists bodily injury" is "INCL." Plaintiffs contend that this notation indicates that Hawkeye specifically charged a premium for the underinsured motorist coverage. In contrast, defendant contends that a premium is charged for uninsured motorist coverage and that the underinsured motorist coverage is included in the overall premium cost. Neither party has provided a supportive affidavit or sworn testimony regarding their interpretation of the Declarations page.
C. Plaintiffs' Claims
Plaintiffs claim the damages to which Josiah Kettelhake is entitled is an amount greater than the per person policy limit of the Farmer's policy on Mr. Keefer's Chevrolet truck. Accordingly, plaintiffs have presented a claim for underinsured motorist benefits to defendant Hawkeye against the defendant's business automobile policy, based upon the damages incurred by Josiah Kettelhake in the accident. Defendant Hawkeye has denied plaintiffs' underinsured motorist claim, asserting that plaintiffs are not covered by or entitled to underinsured motorist coverage under the business automobile policy issued to Horsepower.
D. Additional Facts
The 2000 Ford Taurus was not involved in the April 20 accident. In fact, at the time of the April 20 accident., plaintiff Lloyd Kettelhake was using the Ford Taurus in Missouri to conduct business. Therefore, neither plaintiff Josiah Kettelhake nor plaintiff Ronica Kettelhake were occupants of the 2000 Ford Taurus at the time of the April 20 accident. In addition, as relevant to interpretation of the Hawkeye policy, at the time of the April 20 accident, the Ford Taurus was not out of service because of its breakdown, repair, servicing, loss or destruction.
II. Summary Judgment Standard
Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party.Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). A fact is "material" if, under the applicable substantive law, it is "essential to the proper disposition of the claim." Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). An issue of fact is "genuine" if "there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way." Id. (citingAnderson, 477 U.S. at 248).
The moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Id. at 670-71. When attempting to meet that standard, a movant who bears the burden of persuasion at trial must support its motion with evidence which would entitle it to a directed verdict if not controverted at trial. See Celotex Corp. v Catrett, 477 U.S. 317, 331 (1986) (Brennan, J dissenting); United States v. One 107.9 Acre Parcel of Land Located in Warren Township, 898 F.2d 396, 398 (3d Cir. 1990): see also Prince v. Farmers Ins. Co., No. 92-6126, 1992 WL 367887, at *1 (10th Cir. Nov. 30, 1992) (A movant who asserts a right to summary judgment based upon an affirmative defense has the burden of persuasion at trial.).
Justice Brennan agreed with the majority's analysis of Rule 56. He dissented, however, because he believed that the majority did not adequately explain what is required of the moving party who does not bear the burden of persuasion at trial. See Celotex, 477 U.S. at 329-31.
In contrast, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim when attempting to meet that standard; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim. Id. at 671 (citingCelotex, 477 U.S. at 325).
Once the movant has met the initial burden, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256; see Adler, 144 F.3d at 671 n.l (concerning shifting burdens on summary judgment). The nonmoving party may not simply rest upon its pleadings to satisfy its burden. Anderson, 477 U.S. at 256. Rather, the nonmoving party must "set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant." Adler, 144 F.3d at 671. "To accomplish this, the facts must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein."Id.
Finally, the court notes that summary judgment is not a "disfavored procedural shortcut," rather, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action."Celotex, 477 U.S. at 327 (quoting Fed.R.Civ.P. 1).
III. Discussion
Plaintiffs assert that upon appropriate construction of the insurance policy and upon application of Kansas law, plaintiffs are entitled to underinsured coverage under the Hawkeye insurance policy. Therefore, plaintiffs seek summary judgment on their declaratory judgment action. In contrast, defendant asserts that plaintiffs are not entitled to underinsured coverage under the Hawkeye insurance policy. Defendant also seeks summary judgment on its declaratory judgment action.
A. Principles of Insurance Contract Interpretation
As this case is before the court on diversity, the court applies principles of Kansas state law to the issues placed before the court. "A federal court sitting in diversity applies the substantive law . . . of the forum state." Signature Dev. Cos., Inc. v. Royal Ins. Co. of Am., 230 F.3d 1215, 1218 (10th Cir. 2000). As set forth by the Kansas Supreme Court, "when a question arises regarding the interpretation of an insurance contract, a number of well-settled legal principles must be considered." Girrens v. Farm Bureau Mut. Ins. Co., 238 Kan. 670, 674, 715 P.2d 389, 393 (1986). Kansas courts have explained that:
[i]nsurance is a matter of contract. The parties to a contract of insurance may choose whatever terms they wish, and courts will enforce the policy as written so long as the terms do not conflict with pertinent statutes or with public policy. If a dispute arises as to the meaning of the terms chosen by the parties, courts will attempt to determine what the parties intended. To determine this intent, courts will consider the policy as a whole and will examine the language used by the parties, taking into account the situation of the parties, the nature of the subject matter, and the purpose to be accomplished. If there is no uncertainty about the meaning of the policy, it will be enforced as written. If there is uncertainty about the meaning of the policy, courts determine the meaning by applying rules of construction. The rules do not apply unless the court first determines that the policy is ambiguous.Penalosa Coop. Exchange v. Farmland Mut. Ins. Co., 14 Kan. App. 2d 321, 322, 789 P.2d 1196, 1198 (1990) (internal citations omitted).
A contract is ambiguous if it contains provision or language of doubtful or conflicting meaning. In determining whether ambiguity exists, the language of the contract is to receive a fair, reasonable, and practical construction. A reasonable construction of the contract is one that makes the contract fair, customary, and such as prudent persons would intend. Ambiguity does not appear until the application of pertinent rules of interpretation to the face of the instrument leaves it generally uncertain which one of two or more possible meanings is the proper meaning.Marquis v. State Farm Fire and Cas. Co., 265 Kan. 317, 324, 961 P.2d 1213, 1219 (1998) (internal citations omitted).
Ambiguity may not be created by viewing the policy in fragmentary segments. And the rules of construction do not authorize a perversion of the language, or the exercise of inventive powers for the purpose of creating an ambiguity where none exists.Penalosa, 14 Kan. App. 2d at 322, 789 P.2d at 1198 (internal quotations and citations omitted).
Where the terms of the policy at issue are not ambiguous, the language of the policy "must be given its natural and ordinary meaning."Sears v. Wilson, 10 Kan. App. 2d 494, 495, 704 P.2d 389, 390 (1985). However, where genuine ambiguity exists, the Kansas courts will apply one of the two following rules:
(1) The first is the doctrine of "reasonable expectations." This doctrine comes in many forms. The version recognized in Kansas is relatively narrow. Recognizing that insurance contracts are typically adhesion contracts in which the terms are drafted by the insurer and not negotiated between the parties, courts have required insurers to slate their intended meaning clearly and distinctly. If the meaning is not stated clearly, and a reasonable person in the insured's position would have understood the words of the policy to mean something other than what the insurer intended, that understanding will control.
(2) The second is the rule of liberal construction. If the intent of the parties cannot be determined from the contract, courts will construe the policy in the way most favorable to the insured. This rule is simply a rule of construction to aid the court in determining the intent of the parties, and its basis is that the drafter of a contract must suffer the consequences if he does not make the terms clear.Penalosa, 14 Kan. App. 2d at 324, 789 P.2d at 1198-99 (internal quotations and citations omitted). The court applies these construction principles in interpreting the policy at issue here.
B. Application
The central issue in this case is whether Josiah Kettelhake is an "insured" under the underinsured motorist coverage provision of the defendant's insurance policy in the circumstances here, where he was riding in a vehicle other than the one insured by the Hawkeye policy. To determine whether plaintiff Josiah Kettelhake is an "insured," the court must look to the provisions of the applicable policy. The interpretation of a written instrument is a question of law, reserved for the court.Galindo v. City of Coffeyville, 256 Kan. 455, 467, 885 P.2d 1246, 1253 (1994); Farmers Ins. Co., Inc. v. Gilbert, 14 Kan. App. 2d 395, 397, 791 P.2d 742, 744 (1990) (noting construction of written insurance policy is a question of law).
1. Underinsured Motorist Coverage
As the uninsured motorist endorsement in defendant's policy is central to the issue before this court, a summary of the policies and operations of such insurance are reviewed briefly. Underinsured motorist coverage operates not as liability insurance, but instead resembles "'limited accident insurance.'" Midwest Mut. Ins. Co. v. Farmers Ins. Co., 3 Kan. App. 2d 630, 632, 599 P.2d 1021, 1023 (1979) (quotingForrester v. State Farm Mut. Auto. Ins. Co., 213 Kan. 442, 448, 517 P.2d 173, 178 (1973). Operating under the same principles as uninsured motorists coverage, underinsured motorists coverage "'insures against losses occasioned by a limited group of tortfeasors.'"Id. The coverage is not "tied or limited to actual occupancy of a particular vehicle." Id. Instead, underinsured motorist coverage "'provides the named insured with two kinds of coverage: While he is in his insured automobile, and wherever else he may happen to be when he suffers bodily injury due to an uninsured [underinsured] motorist.'" Id. (quoting Sturdy v. Allied Mutual Ins. Co., 203 Kan. 783, 791, 457 P.2d 34, 40 (1969).
Pursuant to Kansas statute, insurers are required to offer uninsured motorist coverage to all persons purchasing automobile liability policies. Kan. Stat. Ann. § 40-284. In addition, the mandatory uninsured motorist covered is required to contain underinsured motorist coverage, protecting the insured from the risk of an underinsured tortfeasor, whose policy limits are less than the amount of the insured's damages. Id. § 40-284(b). In such a case, the underinsured coverage allows the insured to recover his excess damages from his own insurer up to his policy limits. Id.
Kansas court have noted that Kansas has a "vital interest" in the application of its underinsured motorist statute to the policy in question. Larsen v. Bath, 15 Kan. App. 2d 42, 46, 801 P.2d 1331, 1334 (1991). Insurance policy provisions which purport to condition, limit or dilute the broad, unqualified, uninsured motorist coverage mandated by § 40-284 of the Kansas statutes are void and of no effect. Clayton v. Alliance Mut. Cas. Co., 212 Kan. 640, 647, 512 P.2d 507, 513 (1973), superceded by statute on other grounds, as stated in Farmers Ins. Co., Inc. v. Gilbert, 14 Kan. App. 2d 395, 791 P.2d 742 (1990).
2. Analysis
a. Not Ambiguous
Upon consideration of the policy language as a whole, and taking into account the situation of the parties, the subject matter of the policy, the court finds there is no ambiguity in the applicability of the uninsured motorist endorsement. Therefore, the rules of construction asserted by the plaintiffs are not applicable here. Penalosa, 14 Kan. App. 2d at 322, 789 P.2d at 1198 ("rules do not apply unless the court first determines that the policy is ambiguous").
In reviewing the policy, the court has examined the policy as a whole and not "in fragmentary segments." Penalosa, 14 Kan. App. 2d at 322, 789 P.2d at 1198. The policy's Schedule of Forms and Endorsements lists all forms and endorsements applicable to the policy. Accordingly, to determine coverage under the policy, the court finds it is necessary to examine the entire policy, rather than examining only the endorsement at issue.
The policy's Schedule of Forms and Endorsements lists the "Business Auto Policy" form and the "Kansas Uninsured Motorists Coverage" endorsement as part of the policy. The Business Auto Policy specifies "Throughout this policy the words 'you' and 'your' refer to the Named Insured shown in the Declarations." The Declarations governing the policy indicate that Horsepower is the Named Insured. The Business Auto Policy further states that "[o]ther words and phrases that appear in quotation marks have special meaning." The Business Auto Policy then directs attention to the definition section of the policy. The term "insured" appears in quotation marks throughout the policy.
The Business Auto Policy defines "Insured" as "any person or organization qualifying as an insured in the Who Is An Insured provision of the applicable coverage." The "Who Is An Insured" provision of the Business Auto Policy indicates:
The following are "insureds:" a. You for any covered "auto." b. Anyone else while using with your permission a covered "auto" you own, hire or borrow . . .
The Business Auto Policy also indicates that "[v]arious provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered."
The Uninsured motorist endorsement indicates that "[f]or a covered "auto" licensed or principally garaged in, or "garage operations" conducted in, Kansas, this endorsement modifies insurance provided under the following: . . . Business Auto Coverage Form." The endorsement sets forth a separate section regarding "Who Is An Insured," which provides:
Who Is An Insured: 1. You. 2. If you are an individual, any "family member." 3. Anyone else "occupying a covered "auto" or a temporary substitute for a covered "auto." The covered "auto" must be out of service because of its breakdown, repair, servicing, loss or destruction. . . ."
The endorsement does not separately define "you;" however, it does define newly listed terms of "family member" and "occupying."
Construing the language of the policy as a whole and giving its language a practical construction, the court finds it is unambiguous that the "you" referred to in the uninsured motorist endorsement references the Named Insured, i.e., Horsepower. Further, it is unambiguous that "you" (Horsepower) is not an "individual" and therefore, the language referencing a "family member" is inapplicable. Therefore, construction of the policy is not ambiguous.
Plaintiff seems to assert that the policy is ambiguous because the liability portion of the policy was drafted in 1991 and the uninsured motorist provision was not added to the policy until 1993. The court disagrees. Even where the policy provisions were drafted at separate times, the current policy incorporates both provisions into the policy, as evidenced by the Schedule referenced above.
Plaintiff next contends that because plaintiff Lloyd Kettelhake paid for personal use of the 2000 Ford Taurus through a payroll deduction, it is ambiguous whether the uninsured motorist provision of the Hawkeye policy provides coverage to him and to his family under the facts before the court. Plaintiffs seem to assert that because a deduction is taken, plaintiff Lloyd Kettelhake is entitled to uninsured motorists coverage up to the limits set forth in the Kansas statutes. Again, the court disagrees. Even where plaintiff Lloyd Kettelhake made a payment for insurance coverage for his own and for his family's personal use of the company's 2000 Ford Taurus, it is not a proper assumption that he and his family will receive uninsured motorist coverage beyond the limits of the policy itself. As noted below, the court finds the circumstances presented here fall outside the terms of the policy; therefore, neither Lloyd Kettelhake nor his family members are covered by the uninsured motorist endorsement under the facts before the court.
Finally, plaintiff asserts that because the defendant's uninsured motorist provision contains inapplicable language, the policy is ambiguous. The court disagrees. Here, as noted above, the defendant's business automobile policy indicated in its uninsured motorist endorsement that "If you are an individual, any 'family member'" is a covered insured (emphasis added). As you in the policy is not an individual, the family member provision is inapplicable. The court finds that even though the defendant's uninsured motorist endorsement contains inapplicable language, it is not rendered ambiguous when it is considered in its context as one part of the defendant's entire insurance policy.
b. Plaintiffs Are Not Insureds Under Facts Before the Court
Because the terms of the policy at issue are not ambiguous, the court gives the language of the policy "its natural and ordinary meaning."Sears, 10 Kan. App. 2d 494, 495, 704 P.2d 389, 390 (1985). Following this construction, the court finds Josiah Kettelhake is not an insured either independently or by virtue of his relationship to plaintiffs Lloyd and Ronica Kettelhake under the Kansas uninsured motorist endorsement.
As set forth above, the uninsured motorist endorsement provides:
Who Is An Insured: 1. You. 2. If you are an individual, any "family member." 3. Anyone else "occupying a covered "auto" or a temporary substitute for a covered "auto." The covered "auto" must be out of service because of its breakdown, repair, servicing, loss or destruction. . . ."
None of the plaintiffs can be considered "You," as defined in the policy as a whole because they are not Horsepower, the Named Insured. Therefore, plaintiff Josiah Kettelhake does not qualify as a "family member" to "you" as you is not an individual. In addition, plaintiff Josiah Kettelhake was not "occupying" a covered "auto" at the time of the accident. The Chrysler involved in the accident is not an "auto" covered under the defendant's policy. Nor was Josiah Kettelhake riding in a substitute for the covered "auto" (i.e., the 2000 Ford Taurus) because the covered "auto" was out of service. The Taurus was in use by Lloyd Kettelhake for business purposes at the time of the accident. And finally, the facts do not establish that plaintiff Josiah Kettelhake is entitled to recover damages because of "bodily injury" sustained by another "insured." Accordingly, Josiah Kettelhake does not qualify as an insured under the Kansas uninsured motorist endorsement of the policy.
The court notes that under the same analysis, Ronica Kettelhake is also not an "insured" under the defendant's uninsured motorist endorsement.
In addition, construing the policy language, the court finds plaintiffs are not "insureds" under the liability provision of the policy with respect to the April 20 accident because a covered auto was not involved in the April 20 accident. As set forth above, the Business Auto Policy provides:
The following are "insureds": a. You for any covered "auto." b. Anyone else while using with your permission a covered "auto" you own, hire or borrow . . .
It is undisputed that the Kettelhake's Chrysler vehicle is not a "covered auto" under the terms of the defendant's policy. Accordingly, plaintiffs are not "insureds" under the liability portion of the defendant's policy.
IV. Plaintiffs' Arguments
A. Girrens
Plaintiff argues Josiah Kettelhake is an insured. First, plaintiff asserts that the Kansas Supreme Court precedent of Girrens prohibits an interpretation of defendant's policy where the liability coverage is greater than the available underinsured motorists coverage.Girrens v Farm Bureau Mut. Ins. Co., Inc., 238 Kan. 670, 715 P.2d 389 (1986). In Girrens, the Kansas Supreme Court held that "the class of insureds under such [uninsured motorist] coverage cannot be more restrictive than the class covered by the liability coverage for personal injury and property damage under K.S.A. 1985 Supp. 40-3107." 238 Kan. at 674-75, 715 P.2d at 393.
Section 40-3107 of the Kansas statutes "requires every motor vehicle liability policy to insure the named insured and persons using the vehicle with the consent of the named insured. . . . [and] requires personal injury protection benefits must include the named insured, relatives residing in the same household, permissive users and others under certain circumstances." 238 Kan. at 674, 715 P.2d at 393; Kan. Stat Ann. § 40-3107(b) (f). Plaintiff asserts that § 40-3107 expresses the legislature's intent that an "insured" must include anyone "using any such vehicle with the expressed or implied consent" of the named insured. Kan. Stat. Ann. § 40-3107(b). Plaintiff claims that defendant's efforts to distinguish or vary who is an insured, depending upon the applicable coverage directly contravenes Kansas law, citingGirrens in support. In contrast, defendant asserts that the uninsured/underinsured coverage provided by their policy is not inconsistent with the Girrens court's ruling.
The court finds defendant's policy is not inconsistent with the holding in Girrens or with the requirements of § 40-3107. The liability portion of defendant's policy conforms with the mandate in § 40-3107 requiring liability coverage be extended to the named insureds, to persons using the insured vehicle with the permission of the named insured, to persons riding as passengers in the insured vehicle, and to persons struck by the insured vehicle while not an occupant of it. As noted above, the court has found plaintiffs are not entitled to liability coverage under the defendant's policy, as they were not operating a vehicle insured under the policy at the time of the accident. Further, denial of uninsured/underinsured coverage to plaintiffs does not offend Girrens. As shown by the court's finding that plaintiffs are not entitled to either liability or uninsured motorist coverage under defendant's policy, the liability coverage available to plaintiffs under the policy is not greater than the available uninsured/underinsured motorists coverage.
Second, plaintiff also contends that denying plaintiffs coverage under defendant's uninsured motorist endorsement violates § 40-284 of the Kansas statutes. Section 40-284(b) provides in relevant part "Any uninsured motorist coverage shall include an underinsured motorist provision which enables the insured or the insured's legal representative to recover from the insurer the amount of damages for bodily injury or death to which the insured illegally entitled . . ." Kan. Stat. Ann. § 40-284(b) (emphasis added). Plaintiffs assert that because this mandatory coverage is not limited to the named insured, the plaintiffs as insureds under the defendant's general liability policy, must be covered by the underinsured motorist endorsement.
In support of this argument, plaintiffs cite Forrester v. State Farm Mutual Automobile Insurance Co., 213 Kan. 442, 517 P.2d 173 (1973). The court finds Forrester does not dictate the result desired by plaintiff. In Forrester, the Kansas Supreme Court construed the word "insured" in § 40-284(b). In so doing, the court held that "the statute [40-284(b)] requires that coverage be afforded those persons falling within "insured" as defined in the [relevant] policy." Therefore, § 40-284 requires underinsured motorist coverage for those "insureds" as defined in the policy at issue. As noted above, plaintiffs are not "insureds" under the circumstances presented here, either under the liability provisions or the uninsured motorist endorsement of defendant's policy. Accordingly, denying them underinsured motorist coverage does not run afoul of the mandates of § 40-284(b).
C. Public Policy
Third, plaintiff asserts that precluding coverage based upon the definition of "you" in the uninsured endorsement is counter to public policy. Specifically, plaintiff asserts that because "you" refers to a corporation, making the family member provision superfluous, the endorsement violates "public policy. In support of this argument plaintiff cites the Colorado state appellate court decision inHawkeye-Security Insurance Co. v. Lambrecht Sons, Inc., 852 P.2d 1317 (Colo.App. 1993).
In Hawkeye, the Colorado appellate court held the spouse of an insured corporation's sole shareholder was a "family member" within the meaning of the corporation's automobile policy and, therefore, was entitled to uninsured motorist benefits. Similar to the facts before this court, the corporate automobile policy in Hawkeye defined "you" as the corporation, and limited "family member" coverage to include only "a person related by you by blood, marriage or adoption who is a resident of your household." Where an individual did not qualify as "you" or a "family member" no uninsured motorist coverage was otherwise available. The court noted that under the policy as written no uninsured coverage would ever be available, as a corporation ( you) cannot sustain a "bodily injury" as required by the uninsured provision and a corporation can have no family members as defined in the policy. Therefore, the court concluded that a literal interpretation of the policy would violate public policy.
In contrast, in the facts before this court, there are circumstances where uninsured/underinsured motorist coverage may be available where someone has sustained bodily injury. The policy provides coverage not only for " you" (Hawkeye) and for the family members of you, but also for "Anyone else 'occupying' a covered 'auto' or a temporary substitute for a covered 'auto.'" Accordingly, the court is not faced with an "absurdity" requiring this court to interpret the coverage provision "to provide some meaningful coverage" as the court in Hawkeye did. Id. at 1319.
Further, the Kansas Supreme Court has addressed this issue in a manner contrary to the Colorado court in Hawkeye. In Sears v. Wilson, the Kansas Supreme Court examined whether the plaintiff was covered by the uninsured motorist clause of a corporate automobile policy when he was injured riding in a vehicle other than the vehicles insured by the policy. 10 Kan. App. 2d 494, 704 P.2d 389. The coverage provision of the corporation's uninsured motorist clause defined an "insured" as "1. You or any family member. 2. Anyone else occupying a covered auto." Similar to the facts before this court, the definitional section applicable to the entire corporate policy indicated that "'you' and 'your' mean the person or organization shown as the named insured. . . ." Under the policy the corporation, rather than an individual, was the named insured. Examining relevant precedent, the Kansas Supreme Court concluded "where an uninsured motorist policy issued to a corporation, in standard form language, includes as an insured any family member, related to the named insured by blood, marriage or adoption who is a resident in the named insured's household, the language is a nullity," 10 Kan. App. 2d at 497, 704 P.2d at 392. Further, the court concluded that "in the absence of a clause expressly granting coverage to family members of an employee of a corporate named insured, such a family member is only covered by the corporation's uninsured motorist policy when occupying a vehicle covered by the policy." Id.
As the facts in this case mirror those in Sears, and this court must follow Kansas state law precedent in this diversity case, the court finds Sears controlling. Accordingly, the court finds the Hawkeye's uninsured motorist policy as written does not violate public policy.
V. Order
IT IS THEREFORE ORDERED that, as set forth above, plaintiffs have not met their burden on summary judgment to establish entitlement to judgment as a matter of law and, therefore, the court denies plaintiffs' motion for summary judgment (Doc. 27). In contrast, the court finds defendant has established entitlement to judgment as a matter of law. Specifically, defendant has established entitlement to a declaratory judgment that plaintiffs are not covered insureds under defendant's uninsured/underinsured motorist policy under the circumstances of this case. Accordingly, the court grants defendant's motion for summary judgment (Doc. 29). Consequently, plaintiffs' complaint containing claims for declaratory judgment and for further relief pursuant to 28 U.S.C. § 2202 is dismissed.
IT IS SO ORDERED.
JUDGMENT IN A CIVIL CASE
Decision by Court. This action came to trial or hearing before the Court. The issues have been tried or heard and a decision has been rendered.
IT IS ORDERED AND ADJUDGED
pursuant to the Memorandum and Order filed July 30, 2001, plaintiff to take nothing and the action is dismissed on the merits. Defendant to recover of plaintiff their costs of action.