Opinion
Civil Action No: 00-2301-DJW.
March 27, 2002
MEMORANDUM AND ORDER
This is an action for declaratory judgment to determine whether Plaintiff American Casualty Company of Reading, Pennsylvania ("American Casualty") is obligated to reimburse Defendant Healthcare Indemnity, Inc. ("HCII") for amounts HCII paid in settling and defending a medical malpractice lawsuit. The matter presently is before the Court on American Casualty's Motion for Summary Judgment (doc. 75). American Casualty's Motion is granted in part and denied in part as specifically set forth below.
I. Facts
The following facts are uncontroverted or, where controverted, construed in a manner most favorable to HCII as the non-moving party:
• On July 29, 1999, Shirley Keck ("Keck") filed a medical malpractice lawsuit against Wesley Medical Center in the District Court of Sedgwick County, Kansas for personal injuries she allegedly suffered as the result of negligent care and treatment rendered to her while a patient at Wesley Medical Center in February of 1998 ("the Keck v. Wesley Medical Center lawsuit").
• The Keck v. Wesley Medical Center lawsuit alleged that Wesley Medical Center was vicariously liable for the negligence of health care providers employed by Wesley Medical Center.
• In February of 1998, Nurse Carol Seek ("Nurse Seek") was a health care provider employed at Wesley Medical Center.
• At all relevant times, Nurse Seek was an insured under a Healthcare Providers Professional Liability Insurance policy issued by American Casualty ("the American Casualty policy").
• The American Casualty policy did not insure Wesley Medical Center.
• The American Casualty policy provides, in pertinent part:
• COVERAGE AGREEMENT
We will pay all amounts up to the limit of liability which you become legally obligated to pay as a result of injury or damage. . . .
• Nurse Seek also was insured under a liability policy issued by HCII, which provided medical malpractice liability coverage to Wesley Medical Center and its employees.
• Nurse Seek was not named as a defendant in the Keck v. Wesley Medical Center lawsuit.
• The statute of limitations for a tort in Kansas is two years.
• No suit or claim was ever filed against Nurse Seek by Keck.
• Throughout 2000, and at all times relevant to the issues raised by this lawsuit, Leatrice Schmidt ("Schmidt") was a Claims Specialist authorized to adjust claims for American Casualty.
• At all times relevant to the issues raised by this lawsuit, Lisa Beard ("Beard") was employed as a Claims Supervisor for HCII.
• In early April of 2000, Schmidt and Beard talked by telephone to discuss the Keck v. Wesley Medical Center lawsuit.
• The April phone call between Schmidt and Beard was the first contact between the parties to this suit about the Keck v. Wesley Medical Center case.
• During the conversation, Schmidt and Beard agreed to exchange insurance policy information.
• On April 28, 2000, Beard contacted Schmidt by telephone to discuss each company's respective obligations in connection with the Keck v. Wesley Medical Center lawsuit.
• During that conversation, Schmidt and Beard assumed that American Casualty and HCII were "co-primary policy holders for Nurse Seek."
• During Schmidt's conversations with Beard in April and May of 2000, Beard indicated that she believed American Casualty owed coverage under the American Casualty policy for claims asserted in the Keck v. Wesley Medical Center lawsuit.
• In the discussions between the claims representatives about defense costs, there was no discussion whether defense costs would be costs incurred before the date of the conversation of April 28, 2000 or costs incurred after the date of the conversation.
• On May 1, 2000, Schmidt forwarded a letter to Beard, which read in pertinent part:
It is the position of American Casualty Company of Reading, Pennsylvania that the American Casualty policy and the Healthcare Indemnity, Inc. policy are co-primary for this matter. We agree to an HCI 75% and CNA 25% split in indemnity on behalf of Nurse Seek. If this case settles, we can discuss the indemnity split at that time.
• On June 8, 2000, Schmidt sent another letter to Beard which stated in pertinent part:
My May 1, 2000, letter to you contains a typographical error. In reviewing that correspondence, the letter should have stated that we have agreed to a 25 percent CNA and 75 percent HCII split on defense costs. As the next sentence reads ". . . we can discuss the indemnity split at that time." My investigation into this case is continuing and I will contact you when I am ready to discuss indemnity.
• In June of 2000, the trial court in the Keck v. Wesley Medical Center case sustained a motion by Keck permitting her to assert punitive damages against Wesley Medical Center.
• The case of Keck v. Wesley Medical Center was pre-tried in June of 2000.
• HCII settled the Keck v. Wesley Medical Center lawsuit for $2.7 million on July 1, 2000.
• Throughout all of Schmidt's conversations with Beard, Schmidt believed American Casualty was obligated to provide coverage to Nurse Seek under the American Casualty policy for the claims asserted in the Keck v. Wesley Medical Center lawsuit.
American Casualty ultimately filed the instant cause of action against HCII requesting the Court determine the following issues:
• Whether the communications between the insurance companies created a contract for indemnification;
• Whether CNA owes HCII equitable contribution and/or indemnity;
• Whether, in the event CNA is liable for equitable indemnity and/or contribution to HCII under its policy of insurance issued to Nurse Seek, the settlement was reasonable; and
• Whether, in the event CNA is liable for equitable indemnity and/or contribution to HCII under its policy of insurance issued to Nurse Seek, what portion of that settlement is fairly attributable to the alleged negligence of Nurse Seek versus that of other personnel for whom Wesley Medical Center was vicariously liable.
In its Answer to American Casualty's request for declaratory judgment, HCII asserts counterclaims against American Casualty for (a) breach of contract; and (b) equitable indemnity and equitable contribution for payment of twenty-five percent (25%) of the settlement amount paid and the defense costs in the underlying cause of action.
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. (citing Anderson, 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. In attempting to meet that standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; 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 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)).
Once the movant has met this 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 also Adler, 144 F.3d at 671 n. 1 (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. Analysis
American Casualty contends it is entitled to judgment against HCII declaring that American Casualty is not contractually obligated to reimburse HCII for amounts HCII paid toward settlement of the Keck v. Wesley Medical Center lawsuit. American Casualty also contends it is entitled to judgment as a matter of law on HCII's counterclaims for breach of contract and for equitable indemnity and/or equitable contribution. With respect to the two equity counterclaims, American Casualty argues both causes of action fail as a matter of law. With respect to the alleged breach of contract claim, American Casualty argues the referenced contract is void for lack of consideration and/or is not enforceable because it is based on mutual mistake. The Court will address each of American Casualty's arguments in turn.
• Equity Issues
In its counterclaims, HCII alleges that, under the theories of equitable indemnity and/or equitable contribution, American Casualty is liable to contribute to the amount HCII paid with respect to defense and settlement costs associated with the Keck v. Wesley Medical Center lawsuit.
• Equitable Indemnity
HCII has not alleged the existence of an express contract of indemnity; rather, its indemnity counterclaim is based upon obligations of indemnity implied by law. The doctrine of "comparative implied indemnity" is an equitable remedy that allows one tortfeasor to seek contribution from other potential tortfeasors in proportion to their comparative negligence. Kennedy v. City of Sawyer, 228 Kan. 439, 618 P.2d 788 (1980). Kansas law restricts the use of this doctrine, however, to cases where an actual claim has been properly asserted against a joint tortfeasor. Ellis v. Union Pac. R.R., 231 Kan. 182, 643 P.2d 158, 165, aff'd., 232 Kan. 194, 653 P.2d 816 (1982) (emphasis added).
American Casualty contends comparative implied indemnity is inapplicable to the present case because there was never an actual claim asserted against Nurse Seek as a joint tortfeasor. The Court agrees. The underlying Keck v. Wesley Medical Center lawsuit asserted claims of negligence against Wesley Medical Center as the sole defendant; Nurse Seek was never sued and the limitations period has expired with respect to any claim Keck may have had against Nurse Seek. Accordingly, no valid claim existed against Nurse Seek either at the time HCII settled the underlying lawsuit or at the time HCII asserted its counterclaim in this lawsuit. Since a negligence claim was never brought against Nurse Seek and no negligence claim properly can be asserted against Nurse Seek at this time, an action for comparative implied indemnity is not available. See, U.S. Fidelity Guar. Co. v. Sulco, Inc., 939 F. Supp. 820 (D.Kan. 1996) (running of statute of limitations on insured's negligence claim against agent precluded subsequent action for comparative implied indemnity by insurer who settled with insured); Travelers Ins. Co. v. Jackson Communications Corp., 573 F. Supp. 1139, 1141 (D.Kan. 1983) (settling defendants could not settle claims on behalf of a party against whom the underlying plaintiff had no legal right to recover; thus, no right to indemnification); Schaefer v. Horizon Building Corp., 26 Kan. App. 2d 401, 985 P.2d 723 (Kan.Ct.App. 1999) (same).
American Casualty's policy insured only Nurse Seek. HCII's policy insured the hospital as an entity as well as the employees of the hospital, including Nurse Seek. Both polices would have covered Nurse Seek under a duty to defend and/or indemnify if a claim had been asserted directly against her. Neither American Casualty nor HCII, however, had to defend a claim against Nurse Seek because Nurse Seek was never sued directly. Notably, HCII was required to defend the suit against Wesley Medical Center to the extent any damage sustained by Mrs. Keck was attributable to Nurse Seek's conduct. But again, HCII did not defend Nurse Seek's interests directly.
• Equitable Contribution
HCII alternatively contends American Casualty is liable for a portion of the settlement between Keck and Wesley Medical Center under a theory of equitable contribution. HCII alleges it is entitled to equitable contribution because HCII and American Casualty both insured Nurse Seek. "The doctrine of equitable contribution has long been recognized by [the Kansas Supreme Court] as a remedy available to one who is compelled to bear more than his fair share of a common burden or liability to recover from others their ratable proportion of the amount paid by him." American States Ins. Co. v. Hartford Acc. Indem. Co., 218 Kan. 563, 571, 545 P.2d 399 (1976) (emphasis added). Thus, it is not the "co-primary" status of the insurers that is conclusive on this issue, but liability.
With respect to settlement monies, the Court finds as a matter of law that HCII did not bear more than its fair share of a common burden or liability as compared to American Casualty. This is so because American Casualty was not required to provide coverage — and thus was not liable — to Nurse Seek in the absence of any direct claim against her. The American Casualty policy provides coverage for "amounts up to the limit of liability which you become legally obligated to pay . . ." caused by a medical incident. Exhibit C at Section II(7), Plaintiff's Memorandum in Support of Summary Judgment (doc. 76) (emphasis in original). Because Nurse Seek was never sued within the two-year statute of limitations, this section of the American Casualty policy was never triggered.
Neither was there a duty on behalf of American Casualty to defend the suit or to provide coverage to Nurse Seek under the defense and settlement provision within the referenced policy. This provision states American Casualty has the right to defend any claim, even if groundless, or to investigate and settle any claim it feels appropriate. Id. at Section III (emphasis in original). A "claim" is defined as a demand for money or services or "the filing of suit or the starting of arbitration proceedings naming you and alleging injury or damage." Id. at Section XVIII (emphasis in original). Again, there was no demand made against Nurse Seek during the two-year limitation period.
Simply put, HCII seeks to create liability for settlement monies against American Casualty where there is none.
See, Ellis v. Union Pacific, 231 Kan. 182, 643 P.2d at 166, where the court stated:
The settling defendant cannot . . . create liability where there is none. One defendant in a comparative negligence action cannot settle a claim on behalf of a party against whom the plaintiff could not recover and then seek contribution from that party in proportion to the percentage of causal negligence attributable to that party. The plaintiff may choose to forego any recovery from the other tortfeasors. In that event, a settling defendant has no claim to settle but his own.
American Casualty's insured was never sued personally in the first place and, at the time the underlying suit settled, its insured was not going to be sued personally because the statute of limitations for any negligence claim had expired. Simply put, American Casualty cannot be liable — as a matter of law — for amounts paid by HCII to settle claims asserted only against HCII. See Ellis v. Union Pacific, 231 Kan. 182, 643 P.2d 158 (1982) (party cannot recover under theory of equitable contribution for settlement of a non-existent claim); Travelers Ins. Co. v. Jackson Communications Corp., 573 F. Supp. at 1141 (same).
Regarding costs associated with defending Nurse Seek's deposition, however, the Court is unable to find as a matter of law that HCII bore its fair share of a common burden or liability as compared to American Casualty. The American Casualty policy under which Nurse Seek was insured specifically states:
• DEPOSITION FEES AND EXPENSE
We will pay up to the limit of liability stated on the certificate of insurance for reasonable fees, costs and expenses necessary to represent you at a deposition which you are required to attend, involving your profession as indicated on the certificate of insurance, or where modified by endorsement.
Ex. C at Section II(8), Plaintiff's Memorandum in Support of Summary Judgment (doc. 76) (emphasis in original). There is no prerequisite in this provision of the policy that the insured be sued; the only requirement is that the insured be required to attend a deposition.
The evidence reflects Nurse Seek informed an American Casualty representative on September 29, 1999 that Wesley Medical Center was being sued and that she (Nurse Seek) "was asked to give a deposition." Ex. C, Appendix to Defendant's Memorandum in Opposition to Summary Judgment (doc. 86). American Casualty subsequently confirmed with Nurse Seek by written letter that, because she was an employee of Wesley Medical Center, the attorney representing Wesley Medical Center would defend her deposition. Id. at Ex. G.
Further documentation establishes that Nurse Seek was compelled by subpoena to attend this deposition. Id. at Ex. D.
Based on the policy language, American Casualty and HCII were "co-primary policy holders for Nurse Seek" with respect not just to liability incurred by Nurse Seek if she became legally obligated for damages, but for fees, costs and expenses related to Nurse Seek's deposition as a fact witness — even if she was not a party to the lawsuit. There is nothing in the record to establish, however, that American Casualty contributed to payment of reasonable fees, costs and expenses necessary to represent Nurse Seek at her deposition. Thus, the Court is unable to find as a matter of law that HCII bore its fair share of the common burden or liability related to fees, costs and expenses of Nurse Seek's deposition as compared to American Casualty. The Court will deny summary judgment on this narrow issue.
• Contractual Issues
• Consideration
Through its counterclaim, HCII alleges American Casualty and HCII entered into a binding contract requiring American Casualty to contribute to the settlement of Keck's claim against Wesley Medical Center and defense costs related thereto. In moving for summary judgment on this issue, American Casualty argues, inter alia, that any alleged contract between the parties is void for lack of consideration.
"Every contract requires consideration to be enforceable." First Nat. Bankshares of Beloit, Inc. v. Geisel, 853 F. Supp. 1344, 1351-52 (D.Kan. 1994) (citing Flight Concepts Ltd. Partnership v. Boeing Co., 819 F. Supp. 1535, 1553 (D.Kan. 1993); State ex rel. Ludwick v. Bryant, 237 Kan. 47, 697 P.2d 858, 861 (1985); Belt v. Shepard, 15 Kan. App. 2d 448, 808 P.2d 907, 911 (1991); K.S.A. 16-107 (all written contracts shall import a consideration)). "[C]onsideration is sufficient if there is a benefit to the debtor or an inconvenience or deprivation to the creditor." Ludwick, 237 Kan. 47, 697 P.2d at 861. "The question of the presence of a benefit or detriment to the promisor, sufficient to constitute consideration, is ordinarily a question of fact." First Nat. Bankshares of Beloit, Inc. v. Geisel, 853 F. Supp. at 1351-52.
In resolving this question of fact, Kansas law "presume[s] that consideration has been given in support of a written contract." Id. (citing Ferraro v. Fink, 191 Kan. 53, 379 P.2d 266, 269 (1963)). "The presumption of consideration 'extends to any fact which under the situation and circumstances of the parties might reasonably supply a consideration, and it cannot be overthrown except by proof of facts warranting an inference of no consideration of any kind.'" Id. (citing Ferraro v. Fink, 191 Kan. 53, 379 P.2d at 269 (interpreting K.S.A. 16-107, 16-108)). "The presumption of consideration is a presumption of fact." Id.
When the party seeking to void a contract files a motion for summary judgment asserting lack of consideration and supports such motion with substantial competent evidence, however, the statutory presumption of fact is rebutted. Id. The burden then shifts to the party seeking to enforce the contract to come forward with sufficient evidence to show that a genuine issue of fact exists as to whether the contract in question was supported by consideration. Id. (citing State ex rel. Ludwick v. Bryant, 237 Kan. 47, 697 P.2d at 861; Ferraro v. Fink, 191 Kan. 53, 379 P.2d at 269.).
American Casualty argues the undisputed facts in this case establish American Casualty received no benefit for its alleged agreement to reimburse HCII for costs in defending and/or settling the Keck v. Wesley Medical Center lawsuit. In support of this argument, American Casualty maintains its insured, Nurse Seek, had no exposure to liability in May 2000 — the date of the alleged contract — because Nurse Seek was never named as a defendant in the Keck v. Wesley Medical Center lawsuit and the statute of limitations for any claim against Nurse Seek by Shirley Keck expired in February 2000; thus, neither American Casualty nor its insured were exposed to liability at the time of the alleged contract or at the time the release of liability was signed by Shirley Keck. American Casualty argues that because it gained nothing and HCII gave nothing for the alleged agreement to reimburse HCII, the agreement is void for lack of consideration.
The uncontroverted facts establish that communications between American Casualty and HCII occurred in April, May and June of 2000. The document purportedly memorializing the agreement between American Casualty and HCII, however, is a letter dated May 1, 2000.
Based on these assertions of uncontroverted facts, the Court finds American Casualty has presented sufficient evidence to rebut the statutory presumption of consideration; thus, the burden now shifts and HCII must come forward with sufficient evidence to show that a genuine issue of fact exists as to whether the contract in question was supported by consideration. See, First Nat. Bankshares of Beloit, Inc. v. Geisel, 853 F. Supp. at 1351-52 (citing State ex rel. Ludwick v. Bryant, 237 Kan. 47, 697 P.2d at 861; Ferraro v. Fink, 191 Kan. 53, 379 P.2d at 269.). To that end, HCII asserts that at the time American Casualty agreed to pay a portion of the defense and settlements costs in the underlying Keck v. Wesley Medical Center case, American Casualty faced a potential contribution claim by HCII with respect to the Keck v. Wesley Medical Center litigation. Construing HCII's assertion broadly, it appears HCII is arguing that the contract in question was supported by consideration in the form of avoiding a lawsuit.
In support of its argument, HCII presents portions of the deposition of Leatrice Schmidt, a Claims Specialist authorized to adjust claims for American Casualty, who testified that the reason American Casualty considered paying out money on behalf of Nurse Seek in the underlying lawsuit was because of a risk that "after the lawsuit was over . . . Wesley Hospital [w]ould come back and sue their own employee." Schmidt Depo. at 107:10-15, Ex. F to Index of Exhibits to HCII's Memorandum in Opposition (doc. 86). In further support of its position, HCII submits a document dated June 8, 2000 within American Casualty's claim file, which notes that "if an action is taken against [American Casualty] after a settlement, [American Casualty] need[s] to review [Kansas] law re: suing an employee under their own policy." Ex. T to Index of Exhibits to HCII's Memorandum in Opposition (doc. 86). Finally, HCII submits a June 20, 2000 letter from Schmidt to outside counsel for HCII stating that its "previous offer to contribute . . . is not an admission of liability but is offered to avoid the cost of trial and the uncertainty of trial by jury." Ex. Y to Index of Exhibits to HCII's Memorandum in Opposition (doc. 86).
Based on these facts, the Court is persuaded both parties believed at the time the contract was formed that American Casualty could be sued by HCII for contribution and/or indemnity after settlement. The Court is not persuaded, however, that forbearance of an invalid claim or defense constitutes consideration sufficient to support the alleged contract. In this case, there was no benefit to American Casualty in entering into the alleged contract because Nurse Seek had not been named as a party to the underlying suit by the time the statute of limitation had run against her. The alleged contract serves only to create a new obligation — that of requiring American Casualty to pay monies it did not owe in the first place. Hence, any benefit to American Casualty is illusory.
This conclusion is supported in the law as well. It is a well-established rule in Kansas that "forbearance to prosecute or defend a claim or action, or to do an act which one is not legally bound to perform, is usually a sufficient consideration for a contract based thereon, unless the claim or defense is obviously invalid, worthless or frivolous." Snuffer v. Westbrook, 134 Kan. 793, 8 P.2d 950, Syl. 1 (1932) (emphasis added) ; see, also, State ex rel. Ludwick v. Bryant, 237 Kan. 47, 697 P.2d at 861-62 (citing Snuffer v. Westbrook for same proposition). Because this Court holds HCII's equitable indemnity action, as well as HCII's contribution action for cost of overall defense and settlement monies, is invalid, see Sections A(1) and A(2), supra, forbearance of such claims are insufficient consideration for a contract based thereon.
With respect to consideration in the form of contribution to those specific costs associated with defending Nurse Seek's deposition, however, the Court is unable to reach the same conclusion. As set forth, supra, the Court was unable to find as a matter of law that HCII's equitable contribution action for costs related to defending Nurse Seek's deposition was without merit, either now or when the parties entered the alleged agreement. Thus, the ultimate question presented now is whether forbearance of an equitable contribution cause of action for costs associated to defending Nurse Seek's deposition constitutes consideration sufficient to support the alleged contract between American Casualty and HCII. The Court finds there exists a genuine issue of material fact precluding summary judgment on this narrow issue. See, State ex rel. Ludwick v. Bryant, 237 Kan. 47, 697 P.2d at 858 ("'[a]ny forbearance to prosecute or defend a claim or action . . . is usually a sufficient consideration for a contract based thereon, unless the claim or defense is obviously invalid, worthless or frivolous.'" (quoting Snuffer v. Westbrook, 134 Kan. 793 (1932)). See, also, First Nat. Bankshares of Beloit, Inc. v. Geisel, 853 F. Supp. at 1351-52. ("The question of the presence of a benefit or detriment to the promisor, sufficient to constitute consideration, is ordinarily a question of fact.").
• Mutual Mistake
In support of summary judgment on the breach of contract issue, American Casualty also argues the alleged contract should not be enforced because the uncontroverted facts establish the parties were operating under the mistaken assumption that consideration for the contract existed in the form of potential liability to American Casualty if Keck ultimately sued Nurse Seek in her individual capacity. HCII disagrees, arguing such a mutual mistake, even if true, is not material for purposes of summary judgment on the issue of consideration because there was no mutual mistake regarding an alternate basis for consideration: potential liability to American Casualty in the event HCII sued American Casualty for equitable contribution and/or indemnity after settling the underlying suit.
In order for parties to form a binding contract, there must be a meeting of the minds as to all essential terms. Sidwell Oil Gas Co., Inc. v. Loyd, 230 Kan. 77, 79, 630 P.2d 1107 (1981). "In the event of a mutual mistake, either of law or fact, on the terms of the contract, the contract is not binding on the parties." Albers v. Nelson, 248 Kan. 575, 580, 809 P.2d 1194, 1198 (Kan. 1991) (citing Rosenbaum v. Texas Energies, Inc., 241 Kan. 295, 301-02, 736 P.2d 888 (1987)). "As a general rule, however, in the absence of fraud, a unilateral mistake will not excuse nonperformance of a contract." Id. (citing Triple A Contractors, Inc. v. Rural Water Dist. No. 4, 226 Kan. 626, 628, 603 P.2d 184 (1979); Squires v. Woodbury, 5 Kan. App. 2d 596, 598, 621 P.2d 443 (1980), rev. denied 229 Kan. 671 (1981)).
As noted, supra, it appears both parties believed at the time the contract was formed that American Casualty could be sued by HCII for contribution and/or indemnity after settlement. The question presented here is whether the parties belief regarding subsequent suit by HCII against American Casualty was a mutual mistake of law or of fact rendering the contract void. For the reasons stated in the preceding subsection, the Court finds the parties' beliefs regarding viability of subsequent litigation for indemnity and for contribution to cost of overall defense and settlement monies were, indeed, mutual mistakes that now render the contract void as to those issues; thus summary judgment will be granted consistent with this finding. With that said, the Court further finds the parties' belief regarding viability of subsequent litigation for costs associated with defending Nurse Seek's deposition was not a mutual mistake and summary judgment will be denied on this narrow issue.
IV. Conclusion
Based on the discussion above, it is ordered that American Casualty's Motion for Summary Judgment is granted to the extent that
• judgment is hereby entered in favor American Casualty with respect to HCII's counterclaim for equitable indemnity;
• judgment is hereby entered in favor of American Casualty with respect to HCII's counterclaim for equitable contribution by American Casualty to settlement monies paid by HCII in the underlying Keck v. Wesley Medical Center case;
• judgment is hereby entered in favor of American Casualty with respect to American Casualty's request for declaratory judgment in that the Court finds
• Communications between the insurance companies did not create an explicit contract for indemnification;
• American Casualty is not liable to HCII under a theory of equitable indemnity; and
• American Casualty is not liable to HCII under a theory of equitable contribution for settlement monies paid by HCII in the Keck v. Wesley Medical Center case.
It is further ordered that American Casualty's Motion for Summary Judgment is denied with respect to
• HCII's counterclaim for equitable contribution by American Casualty to costs incurred by HCII associated with defending the deposition of Nurse Seek;
• American Casualty's request for declaratory judgment on the issue of its liability to HCII under the theory of equitable contribution for monies paid by HCII related to defending the deposition of Nurse Seek in the underlying Keck v. Wesley Medical Center case; and
• HCII's counterclaim for breach of contract with respect to American Casualty's contribution to HCII for monies paid in defending the deposition of Nurse Seek in the underlying Keck v. Wesley Medical Center case.
IT IS SO ORDERED.