Opinion
Case No. 01-2336-JWL.
July 15, 2003.
MEMORANDUM ORDER
Plaintiff John O'Shea filed suit against defendants alleging that he sustained injuries when the car that he was driving was struck by a car driven by defendant Anthony J. Welch, an employee of defendant American Drug Stores, Inc., d/b/a Osco Drug (hereinafter Osco). In his complaint, plaintiff alleged that defendant Welch was acting within the scope of his employment at the time of the accident such that defendant Osco would be liable for damages to plaintiff under a theory of respondeat superior. On March 21, 2002, this court issued an order dismissing plaintiff's complaint against Osco on the grounds that defendant Welch, as a matter of law, was not acting within the course and scope of his employment at the time of the accident. See O'Shea v. Welch, No. 01-2336-JWL, 2002 WL 485700 (D. Kan. Mar. 21, 2002). Thereafter, defendant Welch conceded liability, stipulated to entry of judgment against him in an amount to be determined by the court at trial, and further stipulated that he would not present any affirmative evidence at trial or cross-examine any of plaintiffs witnesses. See O'Shea v. Welch, No. 01-2336-JWL, 2002 WL 1974046, at *1 (D. Kan. Aug. 15, 2002). Thus, a trial on the issue of plaintiffs damages was held to the court on August 13, 2002 and, two days later, the court entered judgment against defendant Welch in the amount of $1,014,503.70. See id. at *2-3.
Plaintiff then filed a garnishment action against garnishee American Motorists Insurance Company (hereinafter "AMICO") seeking to recover benefits under the business auto policy issued by AMICO to Osco. On May 21, 2003, the court issued an order granting AMICO's motion for summary judgment on plaintiff's garnishment action. This matter is presently before the court on AMICO's motion for attorney fees pursuant to K.S.A. § 60-721(a)(5). Because the court cannot conclude that the garnishment action was "frivolous, unfounded and patently without any reasonable foundation," the court denies AMICO's motion. See Fletcher v. Anderson, 29 Kan. App. 2d 784, 786 (2001).
Background
In the underlying action, the court concluded, based on the uncontroverted facts, that defendant Welch was not acting with the course and scope of his employment when he departed from his planned route in an attempt to go to a service station for routine, non-emergency maintenance related to his personal vehicle and that, consequently, Osco was not vicariously liable to Mr. O'Shea for Mr. Welch's negligence. In the subsequent garnishment action, the sole issue before the court was whether Mr. Welch was an insured under the policy issued by AMICO to Osco and, more specifically, by virtue of Amendatory Endorsement #5 of that policy, which extended coverage "to include as an Insured any employee of the Named Insured while such employee is using his own automobile in your business." Analyzing cross-motions for summary judgment, the court concluded that the phrase "in your business" as used in Amendatory Endorsement #5 limits coverage to employees acting within the scope of their employment. Thus, based on the court's conclusion in the underlying action that Mr. Welch was not acting within the scope of his employment, the court concluded in the garnishment action that Mr. Welch was not acting "in Osco's business" for purposes of the policy.
Discussion
In its motion for attorney fees, AMICO contends that an award of fees is warranted because plaintiff's argument in the garnishment action that he was acting in Osco's business "flies in the face" of the court's ruling in the underlying action that plaintiff was not acting in the scope of his employment. AMICO's motion is brought pursuant to K.S.A. § 60-721(a)(5), which provides that if the answer of a garnishee in a garnishment proceeding is "controverted without good cause, the court may award the garnishee judgment against the party controverting such answer damages for his or her expenses, including reasonable attorneys' fees, necessarily incurred in substantiating the same." In Fletcher v. Anderson, 29 Kan. App. 2d 784 (2001), the Kansas Court of Appeals explained that the phrase "without good cause" as found in § 60-721(a)(5) is equivalent to the phrase "without just cause or excuse," which has been defined by the Kansas Supreme Court to mean "frivolous, unfounded, and patently without any reasonable foundation." Id. at 785-86 (citing Hartford Cas. Ins. Co. v. Credit Union 1 of Kansas, 268 Kan. 121, 131 (1999)).
The court cannot conclude that plaintiffs decision to controvert AMICO's answer was frivolous, unfounded and patently without any reasonable foundation. Plaintiff made several good faith arguments that this court's assessment, for purposes of analyzing Osco's vicarious tort liability, that Mr. Welch was not acting within the scope of his employment would not necessarily control the court's interpretation of the phrase "in your business" for purposes of analyzing Amendatory Endorsement #5 of the insurance policy issued to Osco. Indeed, in analyzing the parties' cross-motions for summary judgment in the garnishment action, the court did not simply rely on its prior ruling that Mr. Welch was acting within the scope of his employment and that ruling did not necessarily control the question presented in the garnishment action. While the court ultimately agreed with AMICO's interpretation of Amendatory Endorsement #5, it did so only after analyzing the relevant policy language in light of pertinent resources in the insurance context, including case law and authoritative treatises. Thus, the mere fact that this court had previously determined that Mr. Welch was not acting in the scope of his employment for purposes of analyzing Osco's vicarious tort liability is insufficient, in and of itself, to render plaintiffs arguments in the garnishment action frivolous.
In short, AMICO has not shown that plaintiff controverted its answer "without good cause" and, thus, the court declines to award AMICO its fees and expenses.
IT IS THEREFORE ORDERED BY THE COURT THAT garnishee American Motorist Insurance Company's motion for attorney fees (doc. #112) is denied.