United States District Court, D. Kansas
STEPHANIE L. ESPARZA, Plaintiff,
REGENT INSURANCE CO., Intervenor.
MEMORANDUM AND ORDER
THOMAS MARTEN, JUDGE
Stephanie Esparza was injured in an auto accident while
driving a rental car when she was in Wichita, Kansas, for job
training. The original defendant, Ruben D. Baker, settled
with Esparza under his insurance policy. Regent Insurance
Company (“Regent”) intervened and declined to
substitute its funds because it concluded that Esparza was
not an insured entitled to underinsured motorist coverage
under Regent's policy with Esparza's employer. This
matter is before the court on the parties' cross motions
for summary judgment on the issue of coverage (Dkts. 24, 27).
Both parties seek a declaratory judgment in her/its favor.
For the reasons provided below, the court declares that
Esparza is an insured under Regent's insurance policy and
is entitled to UIM coverage.
Stipulated and Uncontroverted Facts 
issued a commercial auto policy to K.C. Bell, Inc.
(“K.C. Bell”), No. CBA1228034, for the period of
April 1, 2016, to April 1, 2017, which was a renewal of a
prior policy. The policy provides uninsured
(“UM”) and underinsured motorist
(“UIM”) coverage with limits of $1, 000, 000 for
specific vehicles identified and scheduled in the policy.
20, 2016, Esparza, a California resident, was in Wichita to
complete 30 days of training as a manager for a new
Freddy's Frozen Custard franchise in San Diego,
California, which is owned by K.C. Bell, Esparza's
employer. Esparza did not have a credit card and therefore, a
K.C. Bell employee, Tyler Hoover, rented a car for her use
while she was training in Wichita. The rental was a 2016 Ford
Mustang (the “rental car”) obtained from Budget
Car and Truck Rental of Wichita, Kansas
(“Budget”). K.C. Bell paid Budget for the rental
car as a covered expense benefit to Esparza, however, she was
not listed as a driver on the rental car.
last day of her training, Esparza was driving the rental car
when it was struck by Baker's car. Baker carried an
insurance policy with Farmers Insurance Company
(“Farmers”) containing a liability limit of $30,
000. Farmers tendered its policy limit of $30, 000 to
proceeded pursuant to K.S.A 40-284(f) to give Regent the
opportunity to substitute payment. Regent elected not to
substitute its payment thereby allowing plaintiff to accept
Farmers' policy limit and preserve her UIM claim against
plaintiff's accident occurred within the commercial
policy's applicable period, Regent denied plaintiff's
UIM claim based on provisions contained within the policy.
filed a workers' compensation claim pursuant to
California law and some of her losses will be recovered in
that proceeding. Plaintiff sustained personal injury damages
because of the collision, however, the exact amount of
damages plaintiff is entitled to recover is currently
disputed and will be determined at a later date pending the
outcome of a determination by the Court on the coverage
claims that Esparza was not an insured under the policy;
Esparza disagrees and seeks a declaratory judgment, pursuant
to 28 U.S.C. §§ 2201, 2202, that the UIM provision
extends to her as an insured. The parties agree that
Regent's policy was issued in Kansas and the issue of
coverage under the policy for UIM benefits is governed by
Summary Judgment Standards
judgment is appropriate if the moving party demonstrates that
there is no genuine dispute as to any material fact, and the
movant is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(a). A fact is “material” when it
is essential to the claim, and the issues of fact are
“genuine” if the proffered evidence permits a
reasonable jury to decide the issue in either party's
favor. Haynes v. Level 3 Communs., 456 F.3d 1215,
1219 (10th Cir. 2006). The movant bears the initial burden of
proof and must show the lack of evidence on an essential
element of the claim. Thom v. Bristol-Myers Squibb
Co., 353 F.3d 848, 851 (10th Cir. 2004) (citing
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986)). The nonmovant must then bring forth specific facts
showing a genuine issue for trial. Garrison v. Gambro,
Inc., 428 F.3d 933, 935 (10th Cir. 2005). The court
views all evidence and reasonable inferences in the light
most favorable to the nonmoving party. LifeWise Master
Funding v. Telebank, 374 F.3d 917, 927 (10th Cir. 2004).
denied payment under the policy because Esparza was in a
rental car, which, according to Regent, is not a covered auto
licensed or principally garaged in Kansas. Regent refers to
Item Two, Schedule of Coverages and Covered Autos, and
asserts that UM and UIM coverage is limited to Category 6
Covered Autos, which does not include hired or rented autos.
Regent contends that K.S.A. 40-284 does not mandate UIM
coverage for rented autos, nor under the facts of this case.
one, Regent's policy states,
Each of these coverages will apply only to those autos shown
as covered autos. Autos are shown as covered autos for a
particular coverage by the entry of one or more of the
symbols from the covered auto section of the business ...