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Nungesser v. Bryant

March 23, 2007


Appeal from Sedgwick district court; RICHARD T. BALLINGER and PAUL W. CLARK, judges.


1. When entertaining a motion to dismiss for failure to state a claim, the district court is required to assume that the facts alleged by the plaintiff are true. It is then required to draw any reasonable inferences from those facts and determine whether the facts and inferences state a claim, not only on the theory espoused by the plaintiffs, but on any possible theory the court can divine.

2. K.S.A. 60-214 provides a procedural vehicle for a defendant, acting as a third-party plaintiff, to implead a third-party defendant. However, it does not create any substantive rights.

3. An insured may not implead his or her insurer to litigate its negligence or bad faith in failing to settle a claim while the underlying liability of the insured is unresolved on that claim.

4. When the evidence pertaining to the existence of a contract or the content of its terms is conflicting or permits more than one inference, a question of fact is presented. However, whether undisputed facts establish the existence and terms of a contract raises a question of law for the court's determination.

5. An unconditional and positive acceptance is required to form a contract; a conditional acceptance of a settlement offer is but a counteroffer, which does not create a contract.

6. On the facts of this case, the proper identity of the payee of settlement proceeds was an essential, material term of the settlement agreement; and the parties' disagreement on that point was fatal to formation of a binding contract.

The opinion of the court was delivered by: Beier, J.

Affirmed in part, reversed in part, and remanded.

This case arises out of an auto accident in which plaintiff Jimmy L. Nungesser was seriously injured. It requires us to consider whether Kansas law permitted defendant Josh M. Bryant to pursue an action alleging negligent or bad faith failure to settle by his insurer, EMCASCO Insurance Company (EMCASCO), before his liability on Nungesser's personal injury claim had been established.

The district court permitted Bryant's claim against EMCASCO to go forward, and EMCASCO now appeals the determination that it must pay a $2 million consent judgment entered in favor of Nungesser and against Bryant, as well as attorney fees under K.S.A. 40-256 and K.S.A. 40-908.

A review of the relevant factual and procedural chronology is required for our analysis.

The accident occurred on July 8, 2002. Bryant, a minor, driving a pickup truck, failed to yield the right of way to Nungesser, who was riding a motorcycle. Nungesser suffered a serious brain injury.

For a period of time after the accident, Nungesser was hospitalized at Wesley Medical Center in Wichita, pursuant to a preferred-provider arrangement between Wesley and Nungesser's health maintenance organization, Coventry Health Care. After Nungesser was discharged, Wesley filed notice of a $45,532.85 hospital lien and served Nungesser, Bryant, and EMCASCO.

The Bryant family's auto policy with EMCASCO had a $300,000 single liability limit. EMCASCO received notice of the collision and Nungesser's claim 2 days after the accident, and its claims adjuster, Bruce Fischer, began his investigation. During the third week of August 2002, when Fischer learned the extent of Nungesser's injuries, he suggested to EMCASCO that potential liability to Nungesser would exceed the policy limit and that EMCASCO should settle the claim.

Within a few days, Fischer extended an oral offer to Nungesser's wife, Carolyn, to settle for the policy limit, payment to be made in the form of a check made out to Nungesser and Wesley jointly. The Nungessers' attorney, David G. Crockett, discussed the offer with Fischer, including the Wesley lien. Crockett was investigating the validity of the lien, which he believed was contrary to law.

Fischer confirmed EMCASCO's earlier oral offer to settle for the policy limit in a September 4, 2002, letter to Crockett.

On September 30, 2002, Wesley submitted Nungesser's bill to Coventry. The amount due from the Nungessers personally, according to a Coventry statement sent to the Nungessers on October 4, 2002, was $180.

On October 2, 2002, Crockett drafted but never mailed a letter to Fischer. The draft expressed specific objections to the Wesley lien and suggested that the Nungessers were prepared to accept EMCASCO's offer of the policy limit if the settlement check were made payable to Nungesser and his attorney, rather than to Nungesser and Wesley.

On October 9, 2002, Carolyn Nungesser attempted to pay Wesley $180 with a "payment in full" notation on her check. She included a note, which read in part:

"I am enclosing our check for $180.00 to pay the enclosed bill.

"Your hospital [lien], 'Wesley's,' will not let [EMCASCO] pay $300,000.00 to Jim for our settlement.

"This check should take care of Wesley[']s bill. Please notify [EMCASCO] that you have withdrawn [the lien] immediately so we can conclude our settlement."

Wesley rejected the check marked "payment in full" and requested one without such a notation, as Coventry had not yet paid Nungesser's balance. The Nungessers offered no such payment.

On October 23, 2002, Fischer mailed a second letter to Crockett, offering to settle Nungesser's claim against Bryant for the policy limit by forwarding a check payable jointly to Nungesser and Wesley. Fischer later testified that Crockett did not respond to this offer.

On October 28, 2002, Wesley served on Nungesser, Bryant, and EMCASCO an amended lien notice in the amount of $49,993. Approximately 1 month later, the Nungessers hired attorney Jacob S. Graybill to assist Crockett with claims against Bryant and Wesley.

On December 18, 2002, in a telephone conversation with Fischer, Crockett orally offered to settle Nungesser's claim in exchange for a $300,000 check payable to Nungesser and Crockett rather than to Nungesser and Wesley. Crockett also offered to escrow money in his trust account to address Wesley's $49,993 lien.

The next day, before taking time off during the holidays, Fischer left a telephone message for Crockett, stating that EMCASCO would not agree to settle unless ...

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