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Alliance Indemnity Co. v. Kerns

Court of Appeals of Kansas

June 2, 2017

Alliance Indemnity Co., Appellee,
v.
William Kerns and Cherity Kerns, Appellants.

         SYLLABUS

         1. Whether the district court has authority to award attorney fees is a question of law over which an appellate court has unlimited review.

         2. Interpretation of a statute is a question of law over which an appellate court has unlimited review. In examining a statute courts look for the intent of the legislature in enacting it. The intent of the legislature governs if that intent can be determined. Courts look for legislative intent by examining the words used by the legislature, giving common words their ordinary meaning. When the words are clear and the statute is unambiguous, courts do not speculate about the legislative intent behind the statute's clear language, nor do courts read something into the statute that is not readily found in its words.

         3. Interpretation of an insurance policy presents a question of law over which an appellate court has unlimited review. In doing so courts consider the policy as a whole and endeavor to ascertain the intention of the parties from the language used, taking into account the situation of the parties, the nature of the subject matter, and the purpose to be accomplished. Insurance policy language is tested by what a reasonably prudent insured would understand the language to mean. If an insurance policy is ambiguous, the ambiguity is construed against the insurer.

         4. Kansas applies the traditional American rule for attorney fees: our courts will not assess attorney fees absent a statute authorizing an award of fees or an agreement between the parties.

         5. The Kansas Declaratory Judgments Act, K.S.A. 60-1711 in particular, provides that in proceedings under the Act courts may make such award of costs as may seem equitable and just. But "costs" under the Act do not include attorney fees.

         6. Attorney fees are not a part of costs, absent express statutory authority. The plain language of the Uniform Declaratory Judgments Act does not authorize a district court to award fees to parties to a declaratory judgment action. When the legislature uses the word "costs, " it means the fees and charges of the court such as filing fees, fees for service of process, and the like. If the legislature intends to provide for the recovery of attorney fees, it knows very well what language to use in the statute to achieve that end.

         7. K.S.A. 40-908, which provides for attorney fees in certain instances to a prevailing plaintiff in an action against an insurance company on a policy that insures property against loss by fire, tornado, lightning, or hail, does not apply when the insured fails to obtain a judgment for a loss covered by the policy in excess of the amount tendered by the insurance company before commencement of the action.

         8. Upland Mutual Insurance, Inc. v. Noel, 214 Kan. 145, 519 P.2d 737 (1974), is discussed and distinguished.

         9. Under the facts presented, there is no agreement between an insurer and its insured for the payment of attorney fees in connection with a first-party claim for uninsured motorist benefits because the uninsured motorist provisions of the policy make no provision for the payment of such fees.

         Appeal from Johnson District Court; Paul C. Gurney, judge. Affirmed.

          Michael S. Mogenson, of Mogenson & Branson, LLC, of Mission, for appellants.

          Mark B. Schaffer, of Frischer & Schaffer, Chtd., of Overland Park, for appellee. Before Arnold-Burger, C.J., Green and McAnany, JJ.

          McAnany, J.

         In this appeal William and Cherity Kerns challenge the district court's denial of attorney fees they incurred in connection with a declaratory judgment action brought by Alliance Indemnity Co. (Alliance) to determine coverage under the Kernses' auto insurance policy.

         Facts

         The coverage issue was precipitated by an auto accident in July 2011 when Cherity and her minor son were involved in a head-on collision in Coffey County with a vehicle driven by Matthew Tucker. Cherity was driving an Enterprise rental vehicle which was rented for her by her employer. Cherity and her son were injured and Tucker was killed. Tucker was driving a vehicle owned by Brandon Anderson.

         The Kernses were insured under an auto policy issued by Alliance. Cherity's employer also carried a policy issued by Federal Insurance Company, and Cherity claimed she was covered by that policy as well. Tucker and Anderson were uninsured.

         The Kernses sued Tucker's estate and Anderson in Johnson County for negligently causing Cherity's personal injuries. (The Kernses apparently settled for their son's injuries so his claim is no longer at issue.) The Kernses obtained default judgments in excess of $1.4 million against Tucker's estate and against Anderson. Because both Tucker and Anderson were uninsured at the time of the collision, Alliance paid uninsured motorist (UM) benefits of $100, 000 to Cherity, the per-person policy limit under the Alliance policy.

         Thereafter, in May 2013, the Kernses filed suit in the Circuit Court of Jackson County, Missouri, for breach of contract and various theories of indemnification. They claimed Cherity was covered under the policies issued by Federal Insurance and Alliance. They also claimed Cherity was entitled to UM benefits from Enterprise, the owner of the rental car Cherity was driving. It is unclear whether Enterprise was insured or was self-insured. The Kernses asked the Missouri court to determine, among other things, that they were entitled to stack the UM benefits in the Alliance policy based on the number of vehicles insured under the policy and the number of tortfeasors involved in the accident.

         In August 2014, while the Missouri case was still pending, Alliance filed a petition for a declaratory judgment in Johnson County, seeking a determination of its applicable coverage under the policy and under the Kansas anti-stacking statutes.

         The Kernses moved to dismiss Alliance's declaratory judgment action. They contended that this declaratory judgment action was not the appropriate vehicle for deciding issues presently being litigated in Missouri. On that same day, Alliance moved for summary judgment on the coverage issue raised by the Kernses.

         In October 2014, the district court denied the Kernses' motion to dismiss.

         In November 2014, the district court granted Alliance's motion for summary judgment, finding that with respect to the auto accident, Alliance owed the Kernses nothing under the policy beyond the $100, 000 already paid. The Kernses appealed to our court.

         In May 2015, before our court decided the Kernses' appeal, the circuit court in Missouri granted Alliance's motion for summary judgment and found that (1) Kansas law governed the interpretation of the insurance policy and (2) K.S.A. 40-284(d) prohibits stacking of UM coverage.

         Given the circuit court's ruling, our court concluded in November 2015 that the issue presented in the appeal of the district court's ruling in the declaratory judgment action had become moot because of the Missouri court's May 2015 ruling on the same issue. We vacated the district court's decision granting Alliance's motion for summary judgment and remanded with directions that the district court dismiss the action without prejudice. Alliance Indemnity Co. v. Kerns, No. 112, 871, 2015 WL 7434692, at *2 (Kan. App. 2015) (unpublished opinion).

         At this point we note in passing that the Kernses did not request attorney fees in accordance with Supreme Court Rule 7.07 (2017 Kan. S.Ct. R. 50) for this first appeal. Although the Kernses briefly address this matter in their reply brief in our present case, they did not raise the matter in their opening brief, so we need ...


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