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Deters v. Nemaha-Marshall Electric Cooperative Association, Inc.

Court of Appeals of Kansas

May 24, 2019

Stephen M. Deters and Donna K. Deters, Appellants,
Nemaha-Marshall Electric Cooperative Association, Inc., and Alliance Indemnity Company, Appellees.


         1. Under K.S.A. 60-513(b), it is the last original wrongful act giving rise to the cause of action, not the last contact between the plaintiff and defendant that starts the running of the statute of repose clock. The statute of repose time limits do not restart simply because the defendant interacted with the plaintiff after completing the original negligent act.

         2. Parties will not avoid summary judgment when their arguments are based on supposition and conjecture. Parties must state facts based in evidence to support their position and avoid summary judgment.

         3. Courts will not consider a party's self-serving affidavit that conflicts with earlier deposition testimony when the party is using the affidavit to avoid summary judgment.

          4. Insurance companies have a duty to make a good-faith investigation of the circumstances surrounding a claim before refusing to pay a claim. When considering whether insurance companies acted in good faith, courts must consider the circumstances under which the insurer was investigating the claim.

         5. Insurance companies cannot be held to have acted in bad faith in denying a claim where plaintiff fails to establish damage to his or her property.

          Appeal from Nemaha District Court; John L. Weingart, judge.

          William C. O'Keefe, of O'Keefe Law Office, of Seneca, for appellants.

          Glenda Cafer and Terri Pemberton, of Cafer Pemberton LLC, of Topeka, for appellee Nemaha-Marshall Electric Cooperative Association, Inc.

          Joel W. Riggs, of Larson & Blumreich, Chartered, of Topeka, for appellee Alliance Indemnity Company.

          Before Leben, P.J., Green and Powell, JJ.

          GREEN, J.

         Stephen M. Deters and Donna K. Deters appeal from the judgment of the district court granting Nemaha-Marshall Electric Cooperative Association, Inc.'s (Nemaha-Marshall) and Alliance Indemnity Company's (Alliance) respective motions for summary judgment. On appeal, the Deters argue that the district court erred by ruling that their claims against Nemaha-Marshall were barred under the statute of repose, K.S.A. 60-513(b). The Deters further argue that the district court erred by ruling that their homeowner's insurance policy with Alliance did not cover their claims for damages.

         Nevertheless, we conclude that the Deters' arguments are unpersuasive. As a result, we affirm the district court's orders of summary judgment.

         Uncontroverted Facts

         The following facts are uncontroverted for purposes of this appeal: The Deters live in Nemaha County, Kansas, and receive electricity from Nemaha-Marshall. Stephen has lived on the same land in Nemaha County his entire life.

         In 1994, the Deters bought a "Ronk GTS" from Nemaha-Marshall. A GTS "allows a customer to safely connect a generator to his or her household wiring." Thus, if the utility power goes out, or a utility customer simply wants to use the generator, the utility customer has a generator backup. Nemaha-Marshall installed the GTS at the Deters' electric pole. Although Nemaha-Marshall installed the GTS, the Deters owned the GTS outright.

         While living in their current house, the Deters started constructing a new house on their land. The Deters purchased and installed a heat pump in the new house in 1998 (original heat pump). The Deters also purchased and installed an oven, microwave, dishwasher, washing machine, and dryer in the new house in 1999.

         In January 2000, the Deters moved into the new house. In the summer of 2000, the Deters removed their old house from their land. In addition to their new house, the Deters had a shop, implement shed, and a partial barn on their land. The new house, shop, and implement shed all received electricity.

         Nemaha-Marshall connected the GTS to the shop and implement shed sometime in 1994 or 1995. Nemaha-Marshall connected the GTS to the new house sometime between 1996 and January 2000. Nemaha-Marshall charged the Deters for labor, a truck roll, and pigtails-a term for a device used to connect electrical wires-on November 7, 1997. Nemaha-Marshall never charged the Deters for work related to the GTS following 1997.

         On May 28, 2010, the Deters' original heat pump stopped working. They installed a new heat pump on September 27, 2010. The Deters believed that this heat pump was defective. In October 2011, the Deters replaced this heat pump with another heat pump. Thus, the heat pumps were replaced twice: Replacement heat pump #1 and replacement heat pump #2.

         After their original heat pump stopped working in May 2010, the Deters filed an insurance claim with their insurer Alliance. The Deters alleged that an electrical event damaged the original heat pump. At first, the Deters asserted that the wiring on the original heat pump caused the heat pump to fail from low voltage. Eventually, though, the Deters asserted that lightning damaged the original heat pump.

         Ghattas Bitar, an independent engineer retained by Alliance, examined the heat pump's compressor, as well as photos of the heat pump. Bitar explained that the heat pump showed no signs of suffering an "electrical surge event." Instead, there were "signs of arcing and copper globules/balls . . . on the rotor and the stator of the compressor indicating severe failure of the windings insulation." Bitar determined that "the failure of the windings' insulation was due to the compressor running hot as a result of low level of refrigerant." Based on this, Bitar concluded that the heat pump underwent "prolonged electrical failure" while running on low refrigerant, ultimately resulting in the pump's failure.

         Alliance denied the Deters' claim. Alliance notified the Deters that their homeowner's insurance policy did not cover the damage to the original heat pump under Section 1-Perils Insured Against: A. Coverage A-Dwelling and Coverage B-Other Structures, (6)(a) and (b), which stated that Alliance did not cover losses caused by "[w]ear and tear, marring, deterioration" or "[m]echanical breakdown . . . ."

         The Deters also experienced some problems with some appliances during 2010. "[B]y November 2010," an electrical event damaged the Deters' oven, microwave, dishwasher, washing machine, and dryer. The Deters replaced only some of their appliances.

         On January 16, 2013, the Deters made a claim against Alliance for replacement of heat pumps #1 and #2. The Deters alleged that they were entitled to compensation for damage to the replacement heat pumps from low voltage. Since Alliance denied the Deters' claim for damage on their original heat pump, the Deters had purchased an equipment breakdown policy.

         Derek Geer, an independent engineer retained by Alliance, examined replacement heat pump #2. This was the only heat pump available for examination since the company the Deters bought replacement heat pump #2 from had already removed replacement heat pump #1. Geer determined that "[n]o indications of low voltage were observed." Geer noted that the Nemaha-Marshall's "electronic monitors have reported no low voltage events . . . ." He noted that there "was no electrical or physical damage observed in the heat pump control compartment." Moreover, he explained that the heat pump's voltage output was normal when he tested it while running other equipment. Geer determined that any issues with replacement heat pump #2 would resolve upon further breaking in of the new unit and installing a "hard start kit," which added "capacitance to the circuit."

         In September 2013, while the Deters' insurance claim was still pending, Stephen Deters opened the cover of the GTS. When he did this, he discovered that some load wire connections to the GTS were burned. Based on discoloration of some wires, he also believed that there was evidence of a repair attempt.

         On September 17, 2014, at the Deters' request, Nemaha-Marshall replaced the old GTS with a new GTS.

         On October 9, 2014, Alliance denied the Deters' pending claim, asserting that they had no coverage under the homeowner's insurance policy for low voltage events. Alliance explained that under the provision on dwellings, their homeowner's insurance policy excluded coverage caused by faulty, inadequate, or defective design, workmanship, repair, construction, or material used in repair or maintenance. It asserted that under the provision on personal property, their homeowner's insurance policy did not include coverage on improper wiring. Moreover, Alliance asserted that the low voltage events did not constitute an "accident" as meant under the Deters' equipment breakdown policy.

         On March 16, 2015, the Deters sued both Nemaha-Marshall and Alliance for damages related to the heat pumps and appliances. The Deters argued that Nemaha-Marshall's negligent wiring of the GTS resulted in the destruction or damage of their heat pumps and appliances. In their petition, the Deters alleged that Nemaha-Marshall was negligent from the moment it connected the GTS to their new house. The Deters also argued that Alliance was liable because Bitar and Geer "failed to examine the [GTS] or take any measurements from the connection box to determine if there exist[ed] a cause for low voltage events, and if such low voltage events could be related to how the wires were connected in the connection box." As a result, the Deters argued that Nemaha-Marshall and Alliance were jointly and severally liable for over $50, 000 of damages relating to the original heat pump, the replacement heat pumps, and appliances.

         During discovery, the Deters hired Cris Neagele as their electrical engineer expert. According to Neagele, Nemaha-Marshall's improper wiring of the GTS caused the damage to the Deters' original heat pump and appliances in 2010. Neagele opined that Nemaha-Marshall crimped wires, placed the wires in pigtails, and then inserted the wires in lugs not designed to fit those particular wires. He explained that this practice could "cause excessive heating, corrosion, and high resistance point, which may cause a voltage drop during periods of high current draw." Neagele also believed that discoloration on some wires suggested that somebody had removed, cleaned, and replaced the wires at least once in the past.

         During Stephen's deposition, Stephen testified to the following: He testified that he believed Nemaha-Marshall's wiring was responsible for the damage to his original heat pump, replacement heat pumps, and appliances. He testified that the first time he learned about the problem with the GTS was when he opened it in September 2013. He stated that he had no memory of "a service call out to [his] house" where Nemaha-Marshall electrical workers inspected the GTS. He explained that the company from whom he bought replacement heat pump #1 replaced it with replacement #2 at no cost. As a result, he did not have to pay for replacement #2. He explained that since the installation of the "hard start kit" and the new GTS, he had experienced no problems with replacement heat pump #2. He testified that he was unaware of any physical damage to the replacement heat pumps.

         Nemaha-Marshall and Alliance moved for summary judgment against the Deters.

         Nemaha-Marshall's ...

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