Opinion
Case No. 99-2325-JWL
February 12, 2001
MEMORANDUM AND ORDER
This diversity suit arises from a motor vehicle accident which occurred on May 6, 1997, in Logan County, Kansas. A truck being driven by Robert C. Black in the course of his employment with Ameritruck Refrigerated Transport, Inc. ("Ameritruck") collided with a highway striping truck being operated by Charles W. Turman in the course of his employment with Kolbe Striping, Inc. ("Kolbe"). Mr. Turman sustained fatal injuries and the striping truck owned by Kolbe was destroyed. On July 23, 1999, Mr. Turman's surviving spouse, Kolbe, and Kolbe's insurance carrier ("plaintiffs") filed suit, asserting wrongful death, property damage, and loss of profit claims against Mr. Black and Ameritruck ("defendants"). The parties subsequently reached settlement agreements on the wrongful death claim and on the subrogation claims of Kolbe's insurance carrier.
Now before the court is a motion filed by defendants for partial summary judgment (Doc. 118). First, defendants seek summary judgment on plaintiffs' claims against Mr. Black, asserting that such claims are foreclosed by the applicable statute of limitations. Second, defendants seek summary judgment on Kolbe's claims for prejudgment interest on its lost profits claim. For the reasons set forth below, defendants' motion for partial summary judgment is denied as to plaintiffs' claims against Mr. Black and granted as to Kolbe's claims for prejudgment interest.
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. See 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 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. See Lopez v. LeMaster, 172 F.3d 756, 759 (10th Cir. 1999); 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).
II. Claims Asserted Against Mr. Black
Defendants' motion first seeks summary judgment on plaintiffs' claims against Mr. Black. Defendants argue that the two-year statute of limitations prescribed by K.S.A. § 60-513 bars plaintiffs' claims against Mr. Black. Plaintiffs concede that they filed their claims against Mr. Black two years and 79 days after the incident giving rise to their claims. Plaintiffs argue, however, that the two-year statute of limitations was tolled, pursuant to K.S.A. 60-519, by virtue of a bankruptcy petition filed by Ameritruck on November 9, 1998, and a subsequent stay order entered by the United States Bankruptcy Court for the Northern District of Texas on March 9, 1999. Under section 362 of the Bankruptcy Code, the filing of a bankruptcy petition gives rise to an automatic stay. Moreover, plaintiffs assert, the subsequent stay order expressly precluded them "from pursuing nonbankruptcy litigation against . . . any present or former drivers" of Ameritruck. Second Order Continuing Automatic Stay, attached as Exh. 2 to Pls. Mem. in Support (Doc. 123). Defendants respond that the bankruptcy court did not have jurisdiction to issue a stay against Mr. Black, who has not filed for bankruptcy. The parties do not dispute that if a valid stay was in effect, then plaintiffs' complaint was filed within the applicable limitation period.
The parties agree that K.S.A. 60-513 provides the applicable statute of limitations.
Plaintiffs bear the burden of establishing a factual basis for tolling the statute of limitations. See Riggs v. Boeing Co., 12 F. Supp.2d 1215, 1217 (D.Kan. 1998).
K.S.A. 60-519 reads: "Suits stayed by injunction. Whenever the commencement of an action shall be stayed by an injunction of any court, the time during which such injunction shall be in force shall not be deemed any portion of the time limit for the commencement of such action."
The court finds that the bankruptcy court had jurisdiction to issue a stay of litigation against Mr. Black. Under 11 U.S.C. § 362 (a)(1), the filing of a bankruptcy petition automatically stays "the commencement or continuation . . . of a judicial . . . proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title."
While the language of section 362 stays litigation against the "debtor," courts have recognized the extension of section 362(a)(1) to non-debtors in limited circumstances. "A narrow exception allows a stay to be imposed under section 362(a)(1) against a nonbankrupt party in 'unusual situations' as 'when there is such identity between the debtor and the third-party defendant that the debtor may be said to be the real party defendant and that a judgment against the third-party defendant will in effect be a judgment or finding against the debtor." Oklahoma Federated Gold Numismatics, Inc. v. Blodgett, 24 F.3d 136, 141 (10th Cir. 1994) (quoting A.H. Robins Co. v. Piccinin, 788 F.2d 994, 999 (4th Cir. 1986)). See also, In re Zale, 62 F.3d 746, 761 (5th Cir. 1995) (holding that the automatic stay may protect nondebtors in special circumstances, such as "1) when the nondebtor and the debtor enjoy such an identity of interests that the suit against the nondebtor is essentially a suit against the debtor, and 2) when the third-party action will have an adverse impact on the debtor's ability to accomplish reorganization."). In this case, there is no dispute that Ameritruck is liable for the actions of Mr. Black taken in the course of his employment under the doctrine of respondeat superior. Thus, the bankruptcy court was confronted with an "unusual situation" in which a judgment against Mr. Black would, for all practical purposes, be a judgment against Ameritruck, the debtor. See also In re Wolf Fin. Group, Inc., 1994 WL 913278, at *5 (Bankr.S.D.N.Y. Dec. 15, 1994) (recognizing that bankruptcy courts may stay "prosecution of civil actions against non-debtor employees of a chapter 11 debtor-in-possession on the grounds that by application of principles of respondeat superior, a judgment against the employees could collaterally estop the debtor in future litigation"). Accordingly, the bankruptcy court's jurisdiction to enter a stay extended to litigation against Mr. Black, thereby tolling the statute of limitations period in which plaintiffs could file their complaint against Mr. Black. Defendants' motion for summary judgment on plaintiffs' claims against Mr. Black is denied.
Some courts have also found that section 105 of the Bankruptcy Code, which gives bankruptcy courts the power to "issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title," provides bankruptcy courts jurisdiction to issue stays against non-debtors under certain circumstances. See Piccinin, 788 F.2d at 1002; In re Ionosphere Clubs Inc., 124 B.R. 635, 642-42 (S.D.N.Y. 1991); In re MacDonald Assocs., Inc., 54 B.R. 865, 867 (Bankr.D.R.I. 1985); In re Arrow Huss, Inc., 51 B.R. 853 (Bankr.D.UT 1985).
Defendants also make the argument that "if a stay was issued against Black the Stay was never lifted and this matter should not be allowed to proceed against Black." The bankruptcy court's Order Modifying the Automatic Stay states that, upon agreement of the parties, the "automatic stay pursuant to § 362 is modified . . . for the limited purpose of permitting Movants Turman, Kolbe and Transportation Insurance Co. to proceed with litigation on their claims for injuries and damages arising out of a motor vehicle collision which allegedly occurred on or about May 6, 1997, at or near the intersection of U-40 and U-83 in Logan County Kansas." Order Modifying Stay, attached as Exh. 3 to Pls. Mem. in Support (Doc. 123). The court finds that this order lifted the stay of litigation relating to the accident against Mr. Black, as well as against Ameritruck. Defendants' argument is without merit.
III. Claims for Prejudgment Interest
Defendants next move for summary judgment on Kolbe's prayer for prejudgment interest on its lost profits claim. Defendants assert that Kolbe is precluded from recovering prejudgment interest in this case because the amount of Kolbe's damages are disputed and not definitely ascertainable by mathematical computation. The court agrees.Plaintiffs seek prejudgment interest pursuant to K.S.A. 16-201, which provides:
Creditors shall be allowed to receive interest at the rate of ten percent per annum, when no other rate of interest is agreed upon, for any money after it becomes due; for money lent or money due on settlement of account, from the day of liquidating the account and ascertaining the balance.
Some courts have questioned the applicability of K.S.A. 16-201, located in the "Contracts and Promises" chapter of K.S.A., to tort cases. See Kilner v. State Farm Mutual Auto. Ins. Co., 252 Kan. 675, 687, 847 P.2d 1292, 1300 (1993); Zenda Grain Supply Co. v. Farmland Inds., Inc., 20 Kan. App.2d 728, 754, 894 P.2d 881, 898 (1995); Citizens State Bank v. Shearson Lehman Bros., Inc., 874 F. Supp. 307, 310 (D.Kan. 1994). As the parties have not addressed this issue and the court has determined that plaintiffs are not entitled to prejudgment interest for other reasons, the court need not concern itself with the questionable applicability of K.S.A. 16-201 to this tort case.
Plaintiffs asset that Kolbe's claim for lost profits is liquidated, thus entitling Kolbe to an award of prejudgment interest. "A claim becomes liquidated when both the amount due and the date on which it is due are fixed and certain, or when the same becomes definitely ascertainable by mathematical computation." Kilner v. State Farm Mutual Auto. Ins. Co., 252 Kan. 675, 687, 847 P.2d 1292, 1300 (1993). Prejudgment interest is not recoverable when damages "are not ascertainable by computation, based on some fixed standard of measurement." Foster v. City of Augusta, 174 Kan. 324, 332, 256 P.2d 121, 127 (1953).
In this case, as in most tort cases, the amount of damages due plaintiff are in dispute and will not become "fixed and certain" until the fact finder resolves questions of fact and the court enters judgment. See Wichita Fed. Sav. Loan v. Black, 245 Kan. 523, 544, 781 P.2d 707, 721 (1989) (damages not liquidated in negligence case because question remained as to whether plaintiff's damages were $17.5 million or $17.1 million) (overruled on other grounds); Whittenburg v. L.J. Holding Co., 838 F. Supp. 519, 519 (D.Kan. 1993) (where "the amount of damages was the primary issue in dispute" in negligence case and plaintiffs' claim for damages "was therefore not liquidated until the date the jury returned its verdict," plaintiffs not entitled to prejudgment interest under K.S.A. 16-201); Torre v. Federated Mutual Ins. Co., 906 F. Supp. 616, 618 (D.Kan. 1995) (where the amount of damages in sex discrimination case "was in dispute until the court entered judgment on the jury verdict," the sum was not liquidated for K.S.A. 16-201 purposes). The amount of lost profits claimed by Kolbe is based on the report of economist Melinda Harper. See Report, attached as Exh. C to Defs. Mem. in Support (Doc. 119). This is not an action in which Ms. Harper was able to ascertain Kolbe's lost profits simply by performing a mathematical computation using a fixed standard of measurement. Rather, Ms. Harper's opinion is premised on a number of factors which are in dispute, such as whether Kolbe bid on all the jobs that it desired to bid on following the accident and whether Kolbe completed all the jobs that it bid on in a timely fashion. See Harper Depo., attached as Exh. D to Defs. Mem. in Support (Doc. 119).
Under the rule in Kansas, absent an agreement among the parties, prejudgment interest is not recoverable where factors to be considered in determining damages remain in dispute. See Columbian Fuel Corp. v. Panhandle Eastern Pipe Line Co., 176 Kan. 433, 444, 271 P.2d 773, 781 (1954). This is consistent with the Tenth Circuit's recognition that "it would be unfair and inequitable to exact interest when the amount of an asserted claim is in dispute in good faith and could not be determined until after a judicial inquiry and sifting of all the facts." Southern Painting Co. v. Silver, 222 F.2d 431, 435 (10th Cir. 1955). Thus, the court finds that Kolbe's lost profit claim is unliquidated, such that plaintiffs are not entitled to recover prejudgment interest. Summary judgment is entered for defendants on this claim.
IT IS ACCORDINGLY ORDERED BY THE COURT that defendants' Motion for Partial Summary Judgment (Doc. 118) is granted in part and denied in part. Specifically, defendants' motion is denied as to plaintiffs' claims against Mr. Black and granted as to Kolbe's claims for prejudgment interest.
IT IS SO ORDERED.