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Westport Insurance Corp. v. Guideone Mutual Insurance Co.

United States District Court, D. Kansas

August 31, 2017

WESTPORT INSURANCE CORPORATION, Plaintiff
v.
GUIDEONE MUTUAL INSURANCE COMPANY, Defendant.

          MEMORANDUM AND ORDER

          CARLOS MURGUIA United States District Judge

         Plaintiff Westport Insurance Company (“Westport”) brings this action to recover a payment from defendant GuideOne Mutual Insurance Company (“GuideOne”) that Westport made to Grace Evangelical Lutheran Church (“Grace Evangelical”) on behalf of third-party defendants Al Shank Insurance (“Shank Insurance”), Al Shank (“Shank”), and Sandra Edgerly. Shank Insurance is an agency that issued insurance policies written by GuideOne to various religious institutions. Grace Evangelical suffered a water damage loss in early 2014, and submitted a claim to GuideOne. But GuideOne denied Grace Evangelical's claim, stating that no policy was issued because its application procedures were not followed. Westport-liability carrier for Shank Insurance-paid the water loss to the church, allegedly pursuant to Gilbert v. Mutual Benefit Health & Accident Ass'n, 241 P.2d 768 (Kan. 1952). Westport then filed this action as assignee to Grace Evangelical and subrogee to Shank Insurance. Westport seeks reimbursement from GuideOne for Westport's payment of around $165, 000 to Grace Evangelical.

         Westport filed a motion for partial summary judgment on liability (Doc. 154). GuideOne filed a motion for summary judgment on all claims (Doc. 157). For the following reasons, the court grants GuideOne's motion and denies Westport's.

         I. Legal Standards

         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 judgment as a matter of law.” Fed.R.Civ.P. 56(a). In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. 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)). The court takes up GuideOne's motion first, so Westport receives the benefit of having the evidence viewed in the light most favorable to it.

         II. Factual Background

         GuideOne, Shank Insurance, and Shank were parties to an Independent Agent Contract (“IAC”). Under that contract, Shank Insurance and Shank were independent contractors-not employees of GuideOne. Grace Evangelical is a client of Shank Insurance, and Westport is Shank Insurance's liability insurer.

         Under the IAC, Shank Insurance and Shank have the authority to bind, issue, and deliver insurance contracts for GuideOne, subject to restrictions outlined in GuideOne's manuals and underwriting rules. Any money that Shank Insurance collects on behalf of GuideOne must be promptly transmitted to GuideOne, along with all applications. GuideOne's Commercial Lines Underwriting Guidelines require that:

[a]ll bound applications must be submitted to the Home Office within ten (10) business days of the binding effective date. All supporting materials (cost guides, diagrams, photos) required by the Commercial Underwriting Department must accompany the application. The prior three-year loss history must be submitted within 30 days after binding coverage.

         For a full submission, GuideOne requires the following:

. Fully completed application signed by the applicant;
. Cost guide for each building;
. Photos of each building;
. Commercial policy rate quote sheet, if applicable;
. Prior three-year loss history; and
. Down payment of at least a quarter of the annual ...

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