Opinion
No. 103,996.
2012-05-18
Rosa BANUELOS, Appellee, v. Octavio HERNANDEZ–DIAZ, Appellant/Cross-appellee, v. Guideone Specialty Mutual Insurance Company, Appellee/Cross-appellant.
Appeal from Finney District Court; Philip C. Vieux, Judge. N. Russell Hazlewood and Jacob S. Graybill, of Graybill & Hazlewood, L.L.C., of Wichita, for appellant/cross-appellee Octavio Hernandez–Diaz. Marc A. Powell and Casey P. Murray, of Powell, Brewer & Reddick, L.L.P., of Wichita, for appellee/cross-appellant GuideOne Specialty Mutual Insurance Company.
Appeal from Finney District Court; Philip C. Vieux, Judge.
N. Russell Hazlewood and Jacob S. Graybill, of Graybill & Hazlewood, L.L.C., of Wichita, for appellant/cross-appellee Octavio Hernandez–Diaz. Marc A. Powell and Casey P. Murray, of Powell, Brewer & Reddick, L.L.P., of Wichita, for appellee/cross-appellant GuideOne Specialty Mutual Insurance Company.
Before GREENE, C.J., GREEN and BUSER, JJ.
MEMORANDUM OPINION
PER CURIAM.
Octavio Hernandez–Diaz (Hernandez) appeals the district court's award of attorney fees for prosecuting his claim under K.S.A. 40–3111(b) for personal injury protection (PIP) benefits, arguing the award of $2,500 was objectively inadequate, without support in the record, based on inconsistent findings, and the product of a misapplication of controlling legal principles. GuideOne Specialty Mutual Insurance Company (GuideOne) cross-appeals the award, arguing that there should have been no attorney fee award for the PIP claim and that it was entitled to a directed verdict on Hernandez' related claim for attorney fees for GuideOne's failure to defend the liability claim against him. Concluding there was no error in the district court's award of PIP attorney fees or the denial of GuideOne's motion for directed verdict, we affirm the district court.
Factual and Procedural Background
On March 5, 2001, Hernandez was driving a 1989 Hyundai Excel—purportedly with the permission of GuideOne policyholder Michelle Romo—when Hernandez was involved in a one-vehicle accident, injuring both Hernandez and his passenger, Rosa Banuelos.
At the time of the accident, the vehicle was insured by a liability insurance policy issued by GuideOne to Romo. GuideOne's policy was in full force and effect at the time the accident occurred; however, there was a dispute regarding whether Romo had sold the vehicle to Hernandez before the accident thus voiding coverage. The limits of liability under the policy for bodily injury were $25,000 for each person, $50,000 for each accident, and basic PIP benefits of $4,500 per person.
On May 8, 2001, Hernandez submitted a PIP benefit application to GuideOne. On August 22, 2001, GuideOne sent both Hernandez and Banuelos notices denying coverage for the accident on the belief that Romo had signed over the title to the vehicle to Hernandez before the accident.
On February 18, 2003, Banuelos filed suit against Hernandez alleging that Hernandez' negligence caused the accident. In the course of that protracted and contentious litigation, GuideOne waived its coverage defenses. And on August 2, 2005, Hernandez asserted a PIP claim for the first time in this lawsuit, in what appears to this court as an after-thought. On August 29, 2005, GuideOne paid the PIP benefits—but no interest—into the court. On September 23, 2005, by agreement of the parties, the clerk of the Finney County District Court was ordered to pay the $4,500 in PIP benefits to Hernandez and his attorneys.
On September 30, 2005, Hernandez filed a motion for partial summary judgment, asking for multiple findings on the Banuelos litigation but also requesting an award of overdue interest on the PIP benefits. In Hernandez' legal arguments, the section addressing interest on the PIP benefits was separately argued and encompassed less than four pages of the memorandum. On October 21, 2005, GuideOne filed a memorandum in opposition to Hernandez' motion for summary judgment, separately enumerating its PIP arguments in seven pages. Hernandez' response constituted an additional three pages regarding the PIP claim. On December 13, 2005, District Court Judge Robert J. Frederick heard oral arguments on the opposing motions and found that GuideOne was responsible for the interest on PIP benefits, but he denied summary judgment on the PIP attorney fees.
The litigation involving Banuelos continued, and on October 14, 2008, a jury decided that GuideOne breached its contractual duty to defend Hernandez and awarded him $10,225 in damages for defense costs sustained prior to being defended by GuideOne.
On February 23, 2009, the district court denied GuideOne's motion for a directed verdict on the “expressed single issue of whether or not GuideOne had breached its contract relating its duty to defend and the Plaintiffs' damages arising therefrom up to and including June 17, 2003.” The court also found that Hernandez was entitled to collect reasonable attorney fees related to the delay in payment of Hernandez' PIP claim. After a hearing regarding the amount of fees that should be awarded, Judge Philip C. Vieux entered judgment against GuideOne for $2,500.
Key to understanding the analysis to follow, and the district court's attorney fee award, is that the PIP recovery played a very minor role in the litigation between the belated assertion of the PIP claim in late 2005 and the conclusion of the proceedings in district court in early 2010. As noted above, the PIP claim was asserted as an afterthought in the final pretrial order for litigation that primarily involved Banuelos' claim against Hernandez and Hernandez' claim that GuideOne had breached its duty to defend him. Despite all the arguments of Hernandez in this appeal, PIP benefits were paid within 30 days of assertion, and the only attorney services thereafter related to those benefits were those required to procure interest on the benefits and the pursuit of attorney fees.
Hernandez timely appeals Judge Vieux's ruling regarding the amount of PIP attorney fees awarded. GuideOne timely cross-appeals Judge Vieux's ruling that Hernandez was entitled to collect PIP attorney fees and Judge Vieux's denial of GuideOne's motion for directed verdict on the issue of whether GuideOne breached its duty to defend.
Did the District Court Err in Determining Hernandez was Entitled to Attorney Fees on his PIP Claim?
Approaching the issues in logical order, we turn first to the cross-appeal issue whether the court erred in awarding attorney fees in connection with the PIP claim. We review this question for an abuse of discretion. See Moore v. Dudley, 31 Kan.App.2d 184, 186–88, 64 P.3d 429 (2002).
K.S.A. 40–3111(b) authorizes attorney fees in actions to collect overdue PIP benefits:
“An attorney is entitled to a reasonable fee for advising and representing a claimant in an action for personal injury protection benefits which are overdue. The attorney's fee shall be a charge against the insurer or self-insurer in addition to the benefits recovered, if the court finds that the insurer or self-insurer unreasonably refused to pay the claim or unreasonably delayed in making proper payment.”
The district court found as follows on this issue:
“1. The seminal event in this case took place on March 5, 2001 and involved an vehicular accident in which Octavio Hernendez–Diaz as the driver of the vehicle and Rosa Banuelos as a victim of the accident. PIP Claims were made by March 16, 2001, to Guideone. In May of 2001, Guideone sent to the Octavio Hernandez–Diaz, hereinafter referred to as plaintiff, an application for PIP and the same was completed and returned. Payment of the PIP was due within 30 days of the application being made.
“2. On July 16, 2001, Via Christi Hospital complained of not being paid. On August 22, 2001, Guideone wrote a letter of denial of PIP coverage to the plaintiff. Suit was filed in February of 2003.
“3. After suit was filed, in June of 2003, [G]uideone rescinded coverage denial. On June 24, 2003, liability limits and PIP was paid the plaintiff's accident victim. No accumulated interest was added to the sums paid and no release was sought or given by this victim.
“4. On or about August 29, 2005, Guideone paid the PIP benefits due to the plaintiff into the court rather than pay the same direcly to the plaintiff. Guideone later contended that it held and subsequently paid the sum into the court as there were competing claims and liens for the PIP monies. Guideone indicated that it needed to engage in an interpleader actions to determine who gets the money. However, Guideone made no attempt whatsoever to interplead anyone, arguing to the court that such was no its responsibility, but the responsibility of the plaintiff. The question is left begging as for what benefit, other more than delay, was accomplished by Guideone in this regard. It is also noted that no interest was paid upon the claim until June 28, 2006, ten months after the August 2005 payment. No explaination has ever been presented to the court as to why the PIP claim and interest were not timely paid.
“5. The only explanation proffered, which is in reality none at all, as to why the PIP was not paid earlier and then partially paid years after the event was that it was a “business decision.” Other than that characterization of the decision, no reason was ever proffered. It is noted that there was some testimony as to investigation into who owned the vehicle, but that was waived with its reversal of its position as to the PIP obligation. That delayed “business decision” by Guideone was the direct cause of a considerable amount of litigation that simply did not need to take place. And even after the decision was made there still was delay and litigation made necessary by the actions of Guideone. The statutes make it an absolute obligation to pay PIP when it states that the insurer “shall pay any personal injury protection benefits which are required: and shall pay them within a reasonable time. See K.S.A. 40–3109(a) and 40–3111(b).
“6. Pursuant to K.S.A. 40–3111(b) specifically states attorney fees are allowable if it is shown that the insurer refused to pay the claim or unreasonable delayed in making proper payment. It is noted that the instant case involved not only unreasonable delay in paying, but also the lack of proper payment that includes interest due.”
On appeal, GuideOne argues there was no unreasonable delay in its making a proper PIP payment because it had a reasonable belief there was no coverage in 2001, this was never disputed nor was any claim pursued or mentioned until August 2005, and a payment of PIP benefits was then made into court within 30 days.
The record on appeal fails to contain any findings as to GuideOne's diligence or lack thereof in determining the true state of facts governing coverage after the PIP claim was first asserted in 2001 (as noted by Judge Frederick in his previous summary judgment ruling). What is known, however, is that GuideOne waived its coverage defenses in June 2003. Given the pending PIP claim since 2001, and at least one reminder to GuideOne from health care providers that PIP benefits were due, together with the acknowledgement of coverage, the PIP claim was certainly due no later than June 2003. Moreover, even though no PIP claim was pursued until August 2005, GuideOne paid PIP benefits in late August 2005 but paid only the policy maximum without interest since the 2001 claim. The full amount of PIP benefits and interest thereon were not paid by GuideOne until June 2006, and GuideOne does not contest that payment on appeal.
For these reasons, we decline to hold that the district court's finding of unreasonable delay in payment of all PIP benefits and interest was an abuse of discretion. We cannot say that the finding was a view that no reasonable person would have taken. See Unruh v. Purina Mills, 289 Kan. 1185, 1202, 221 P.3d 1130 (2009). We must affirm the conclusion that GuideOne unreasonably delayed in making proper payment of PIP benefits to Hernandez.
Did the District Court Err in the Amount of Attorney Fees Awarded?
Having determined that Hernandez was entitled to an attorney fee award, we next turn to the issue of the adequacy of the amount awarded. Hernandez argues that the award was grossly inadequate and suggests that the proper award was $152,335. Upon a challenge to the amount of attorney fees awarded under statutory authority, we review the award for an abuse of discretion. Estate of Kirkpatrick v. City of Olathe, 289 Kan. 554, 572, 215 P.3d 561 (2009). An appellate court is an expert on the reasonableness of attorney fees. Nevertheless, we do not substitute our judgment for that of the trial court on the amount of the attorney fee award unless in the interest of justice the appellate court disagrees with the trial court. Johnson v. Westhoff Sand Co., 281 Kan. 930, 940, 135 P.3d 1127 (2006).
Although Hernandez urges us to embrace the lodestar two-step process in determining fees, our caselaw does not support this approach outside the context of a class action or a 18 U.S.C. § 1983 case. See Gigot v. Cities Service Oil Co., 241 Kan. 304, 737 P.2d 18 (1987); Freebird, Inc. v. Cimarex Energy Co., 46 Kan.App.2d 631, 643, 264 P.3d 500 (2011) (“the number of hours spent are one factor to consider in determining the reasonableness of the fee,” however, “it is not the only factor”), pet. for rev. filed November 7, 2011 (pending); Premier Pork, Inc. v. Rhone–Poulenc, S.A., No. CV 2000–3, 2006 WL 1388464, at *5 n.2 (Kan.Dist.Ct.) (unpublished opinion) (“While Gigot mentioned the other lodestar/multiplier method of determining attorneys' fees in a class action, it was not used in Gigot, and has not been used in any subsequent Kansas case since Gigot.”); see also Allison v. Board of Johnson County Comm'rs, 241 Kan. 266, 737 P.2d 6 (1987) (18 U.S.C. § 1983 case discussing attorney fees).
Our Supreme Court has urged consideration of the factors enumerated in Kansas Rule of Professional Conduct (KRPC) 1.5(a) in determining the reasonableness of attorney fees. See Davis v. Miller, 269 Kan. 732, 751, 7 P.3d 1223 (2000). In determining the reasonableness of attorney fees, Rule 1.5(a) (2011 Kan. Ct. R. Annot. 470–71) of the KRPC sets forth the eight criteria that should be considered by the court:
“(1) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
“(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
“(3) the fee customarily charged in the locality for similar legal services;
“(4) the amount involved and the results obtained;
“(5) the time limitations imposed by the client or by the circumstances;
“(6) the nature and length of the professional relationship with the client;
“(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
“(8) whether the fee is fixed or contingent.”
Our Supreme Court has indicated that in applying these factors, no one factor is to dominate the other seven, i.e., that one creates a presumption that controls unless and until it is rebutted by the others, whether solely or collectively. Johnson, 281 Kan. at 951.
Here, Judge Vieux's ruling carefully considered and made findings on each of the eight factors listed in KRPC 1.5(a). Hernandez challenges the court's findings on three of these factors. We analyze each such challenge to Judge Vieux's order. A. KRCP 1.5(a)(1) : The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly.
In addressing this factor, Judge Vieux made the following findings:
“a. There was no particular evidence submitted as to the time and labor expended upon the limited issue of the PIP payment. There was, however, the assertion that the entire litigation was necessary for to [ sic ] collect this matter and that the matter of PIP was so entwined in the entire process that attorney fees should be assessed hours spent on the entire case.
“b. This proposition that fees should be assessed for the entire case, in the amount of $152,335 is rejected by the court. The PIP matter in the first instance was forgotten by the plaintiff's attorneys when the case was first filed. When it was brought to the attention of the defendant it was paid immediately although there was some issue regarding the payment of interest. The total amount ultimately collected by the plaintiff for PIP, and which is the focus of this particular portion of the parties litigation was $4,147.16.
“c. The entire case was extremely over-litigated by both sides to an almost unimaginable degree. It would be gross error and a gross abuse of discretion to grant fees for the entire litigation, $152,335, in order to adequately compensate the plaintiff for having to sue to collect $4,147.16.
“d. This portion of this matter regarding the PIP is decidedly not novel in and of itself. And in this case, in particular, it did not require any particular expertise that the court would consider to be rare amongst attorneys of Kansas.” (Emphasis added.)
Hernandez makes three challenges to Judge Vieux's finding on KRPC 1.5(a)(1).
1. Did Judge Vieux abuse his discretion by rejecting the proposition that fees should be assessed for the entire case?
Hernandez first challenges Judge Vieux's rejection of his proposition that fees should be assessed for the entire case in the amount of $152,335. He acknowledges that the general rule in a lawsuit involving multiple claims is that the prevailing party's attorney is under a duty to segregate the work related to the claim warranting a recovery of fees; however, he argues that in this case, the claims were intertwined to the point of being inseparable. Our Supreme Court has treated this as a fact question. See York v. InTrust Bank, N.A., 265 Kan. 271, 308, 962 P.2d 405 (1998) (finding that substantial competent evidence supported trial court's award of because it was necessary for all of underlying facts to be fully developed in order to prosecute a claim).
“ ‘In a lawsuit involving multiple claims or multiple theories, an award of attorney fees must be based on the time spent by the prevailing party's attorney on the claim or theory under which attorney fees are allowable. Where several causes of action are joined and only some of them permit the award of attorney fees, the prevailing party's attorney is under a duty to segregate the work on several causes in determining an attorney fee award.’ DeSpiegelaere v. Killion, 24 Kan.App.2d 542, Syl. ¶ 1, 947 P.2d 1039 (1997).
“ ‘An exception to the duty of a prevailing party's attorney to segregate work on several causes of action arises when the attorney fees rendered are in connection with claims arising out of the same transaction and are so interrelated that their prosecution or defense entails proof or denial of essentially the same facts. Therefore, when the causes of action involved in the suit are dependent upon the same set of facts or circumstances and, thus, are intertwined to the point of being inseparable, the parties suing for attorney fees may recover the entire amount covering all claims.’ 24 Kan.App.2d 542, Syl. ¶ 2.” (Emphasis added.) Werdann v. Mel Hambelton Ford, Inc., 32 Kan.App.2d 118, 132, 79 P.3d 1081 (2003), rev. denied 277 Kan. 928 (2004).
Judge Vieux found that the rule requiring segregation—and not the exception asserted by Hernandez—applied in this case, stating his reasoning: “The PIP matter in the first instance was forgotten by the plaintiff's attorney when the case was first filed. When it was brought to the attention of the defendant it was paid immediately although there was some issue regarding the payment of interest.”
We agree. Judge Vieux's finding that the entire $152,335 was not recoverable is supported by substantial competent evidence. There was competing expert testimony on whether the PIP claim could be segregated. GuideOne's expert attorney fee witness, Charles Owens, found that Hernandez' attorneys could have separately billed for the PIP claim. He testified that the statute on PIP benefits is fairly clear, and the PIP claim was “very elementary.” For many of the items billed by Graybill and Hazelwood, Owens attempted to decipher the amount of time reasonably spent on the PIP claim.
Hernandez asks us to find that the district court abused its discretion in finding that the PIP claim could be segregated; however, making this finding would require us to reweigh the testimony of the expert witnesses, which is outside of this court's province. See In re Marriage of Strieby, 45 Kan.App.2d 953, 973, 255 P.3d 34 (2011) (“ ‘When reviewing an award of attorney fees, the appellate court does not reweigh the testimony or evidence presented or reassess the credibility of witnesses.’ ”); see Unruh v. Purina Mills, 289 Kan. 1185, 1203–04, 221 P.3d 1130 (2009). Here, Judge Vieux's finding that the claim could be segregated was supported by substantial competent evidence.
2. Was the fee of $2,500 supported by substantial competent evidence?
Hernandez next argues that it was an abuse of discretion for Judge Vieux to limit Hernandez' attorney fees to $2,500. Hernandez argues that GuideOne's activities required Hernandez to establish that he was covered under the policy in order to receive his PIP benefits, which GuideOne contested. This argument, however, disregards the timeline of events in this case. First, Hernandez failed to assert his PIP claim until August 2, 2005, and GuideOne paid the $4,500 in PIP benefits to the court on August 29, 2005, clearly stating that it was not challenging the PIP claim. On September 25, 2005, the court entered an order disbursing the PIP payments to Hernandez and his attorneys.
By the time Hernandez filed his motion for partial summary judgment on October 3, 2005, Hernandez' only issues remaining regarding the PIP claim were interest and attorney fees, not coverage. After Judge Frederick awarded interest on the PIP benefits, the only issue remaining was attorney fees on the PIP issue. The remaining proceedings focused on the duty to defend including a jury trial from October 14–16, 2008.
Hernandez also argues that the attorney fee awarded in this case was objectively inadequate. On this point, Hernandez first argues that GuideOne conceded that a fee award in excess of $2,500 was supported by the testimony of GuideOne's expert on the issue, where Owens stated:
“Exact computation of the hours works out to $4,915.13. I have no way of determining some of the issues because there is no exact breakdown in the billing concerning that. I would consider that to be a reasonable fee based on the information that is available in the record.” (Emphasis added.)
Granted, none of the experts said with precision that a reasonable fee to achieve the PIP recovery should be $2,500. But this was not necessary for us to affirm the award. Owens did his best to segregate the necessary work but admitted that “an exact breakdown” was difficult. And Judge Vieux specifically found that the entire case was “overlitigated to an almost unimaginable degree .” Given the per se expertise of the district court judge, the Owens testimony, and the finding of “overlitigated,” we do not conclude that the interest of justice requires us to substitute our judgment for that of the district court.
Hernandez next argues that the district court failed to provide an explanation of how the $2,500 fee was calculated, prohibiting meaningful appellate review. As a preliminary matter, this argument fails for three reasons.
First, this issue was not preserved for appeal. Hernandez argues that the district court was required to provide an explanation of its $2,500 calculation in order to permit meaningful appellate review. But in general, a litigant must object to inadequate findings of fact and conclusions of law before the district court to preserve the issue for appeal. This provides the district court with an opportunity to correct the findings and conclusions. Dragon v. Vanguard Industries, 282 Kan. 349, 356, 144 P.3d 1279 (2006); see K.S.A. 60–252(a); Supreme Court Rule 165 (2011 Kan. Ct. R. Annot. 246). Here, Hernandez did not object to Judge Vieux's finding in the district court; therefore, the issue is not preserved.
Second, as Judge Vieux found at the hearing on PIP attorney fees, Hernandez failed to present evidence segregating the attorney time spent on the PIP claim. The lawsuit involved multiple claims, and it was Hernandez' attorney's duty to segregate the work. See Werdann, 32 Kan.App.2d at 132. Having failed in that duty, Hernandez did not meet his burden of proof.
Third, the trial court itself is an expert in the area of attorney fees and can draw on and apply its own knowledge and expertise in determining their value. Johnson, 289 Kan. at 940. Thus, the trial court's discretion extends to making an adjustment to reflect the true value of the services rendered.
3. Were Judge Vieux's Findings antagonistic, inconsistent, or contradictory?
Hernandez next argues that the district court's determination was based on findings that were antagonistic, inconsistent, or contradictory as to material matters. Hernandez principally argues that Judge Vieux's rejection of the idea that Hernandez' claims were based on a common core of underlying facts is directly opposed to his recitation of the basis for his opinion that Hernandez was entitled to attorney fees. He points to a quoted passage of Judge Vieux's finding that he was entitled to a fee:
“Upon the facts presented in this case, those specifically cited in the opinion, those presented at the jury trial, and the facts determined by Judge Frederick in his decision upon a motion for summary judgment filed on June 16, 2006, the delay in the final payment of PIP with interest is decidedly unreasonable and still has not occurred. The plaintiff, Octavio Hernandez–Diaz, is entitled to collect his reasonable attorney fees, as the threshold has been met.” (Emphasis added.)
Judge Vieux's findings were not inconsistent. Rather, the first order reflects that based on the facts of the case, Hernandez was entitled to PIP benefits, with the amount of benefits to be determined at a later date. Before making a final determination on the amount to be awarded, Judge Vieux allowed the parties to present expert testimony and evidence on the amount of the fees. After considering this additional evidence, the second order delineates the amount of attorney fees awarded. B. KRPC 1.5(a)(2): The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer.
Next, Hernandez challenges Judge Vieux's finings on KRPC 1.5(a)(2), where Judge Vieux found:
“It is doubtful that this client ever considered that the acceptance of this case would ever preclude the attorneys involved in other employment. The client was a man of very limited means and little apparent education. The attorneys involved make their living in plaintiff insurance litigation and such will still be there when this case is complete.”
Hernandez argues that Judge Vieux misconceptualized the relevant inquiry by focusing on Hernandez rather than whether the work necessarily precluded the attorneys from enjoying other business. GuideOne correctly argues that KRPC 1.5(a)(2) explicitly states that the court is to consider the likelihood that the case would preclude other employment “ if apparent to the client.”
We agree with the district court. Given Hernandez' role in all this litigation, we fail to perceive that it became somehow apparent to him that his attorneys missed out on other work because of his PIP claim. C. KRPC 1.5(a)(4): The amount involved and the results obtained.
Hernandez next argues that it was error for Judge Vieux to consider proportionality in this case. A panel of this court recently found that that in determining attorney fees under K.S.A. 40–908, “the amount involved and the results obtained” is one of the factors to be considered under Rule 1.5(a),” however, “it should not form the sole basis for the award.” Snider v. American Family Ins. Co., 45 Kan.App.2d 196, 202, 244 P.3d 1281,rev. granted 292 Kan. 966 (2011) (pending). In this case, however, the amount involved was not the sole basis of the award, and was properly considered by Judge Vieux as one of the factors explicitly enumerated in KRPC 1.5(a).
For all these reasons, we certainly perceive no abuse of discretion in the district court's award of attorney fees. Although Hernandez argues the amount is contrary to the purpose of K.S.A. 40–3111(b), we disagree. We have never said the underlying policy is “fee-shifting,” but rather it is to benefit the insured.
“The purpose of the statute allowing an attorney fee in insurance cases is not to penalize an insurance company for making what it deems to be a bona fide defense to an action to recover on an insurance policy, but to permit the allowance of a fair and reasonable compensation to the assured's attorney in the event, after having been compelled to sue on his policy, he is successful in that effort.' [Citation omitted.]” State Farm Fire & Cos. Co. v. Liggett, 236 Kan. 120, 129–30, 689 P.2d 1187 (1984).
Here, we believe the award was designed to compensate Hernandez' attorney for work necessary to receive PIP benefits, but a larger award would have rewarded “overlitigation” and a wholesale failure to segregate the work necessary to achieve payment of those PIP benefits. We conclude there was adequate factual support for the award, that it was achieved after due consideration of all factors, that it was not objectively unreasonable, and that it constituted no abuse of discretion.
Did the District Court Err in Denying GuideOne's Motion for Directed Verdict?
GuideOne cross-appeals the district court's denial of its motion for a directed verdict, arguing that at the close of the evidence there was no breach of the duty to defend. GuideOne raised this issue at the close of Hernandez' evidence and renewed its motion at the close of all the evidence.
“When reviewing the grant or denial of a motion for directed verdict, the appellate court—like the trial court—must resolve all facts and inferences reasonably drawn from the evidence in favor of the party against whom the ruling is sought and determine whether evidence exists upon which a jury could find a verdict for that party. Where reasonable minds could reach different conclusions based on the evidence, the motion must be denied. However, when no evidence is presented on an issue or where the evidence is undisputed and the minds of reasonable persons may not draw differing inferences or arrive at opposing conclusions, it is a question of law for the court's determination. [Citation omitted.]” Munoz v. Clark, 41 Kan.App.2d 56, 62, 199 P.3d 1283,rev. denied 289 Kan. 1279 (2009).
The district court denied the motion for directed verdict with the following findings and conclusions:
“1. The trial of this matter to a jury of twelve was upon the expressed single issue of whether or not Guideone had breached its contract relating to its duty to defend and the Plaintiff's damages arising therefrom up to and including June 17, 2003.
“2. Guideone contends, as it did at trial, that it did in fact provide defense services as required by the contract.
“3. In determining a motion for judgemet notwithstanding the verdict the court must resolve all fact questions in favor of the prevailing party at trial as it would in a motion for directed verdict. See Simon v. National Farmer Organization, Inc., 250 Kan. 676, 683 (1992) and Fisher v. Sears, Roebuck & Co., 207 Kan. 493, 494 (1971).
“4. The facts presented at trial as viewed most favorably to the plaintiff are as follows:
A. Guideone denied coverage and defense on August 22, 2001. This was presented in the evidence and also determined previously in the court's decision upon a motion for summary judgment.
B. It was nearly two years, not mere days or even months, before Guideone admitted coverage.
C. Upon being sued nearly two years after Guideone repudiated coverage, Octavio Hernandez–Diaz, hereinafter referred to as plaintiff, secured his own counsel to defend himself.
D. When Guideone finally hired an attorney to defend the plaintiff, the plaintiff was not notified, the attorney did not visit with the plaintiff and the attorney was reporting directly to Guideone for the defense of the matter. The attorney, apparently in the eyes of the jury, was not an independent counsel for the defense of the plaintiff. The jury determined, as was their providence upon the evidence presented, that the plaintiff rightfully rejected the services of the counsel asserted to have been hired for his defense.
E. Additionally, it is apparent from the question sent out by the jury that it carefully considered the issue of reasonableness of the attorney fees claimed and their decision was within the evidence presented.
“5. In short, there were fact[s] presented at trial upon which the jury could have reasonably based its decision.”
We are convinced that reasonable minds could have reached different conclusions based on the evidence outlined, which we find to be consistent with the record. Accordingly, we must affirm the district court's denial of the motion for directed verdict under Supreme Court Rule 7.042(c), (e), and (f) (2011 Kan. Ct. R. Annot. 60).
Affirmed.