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E.H. v. Automobile Club Inter-Insurance Exchange

Court of Appeals of Kansas

July 26, 2019

E.H., a minor, by and through Melissa J. Hemenway, her mother and natural guardian, Appellee,
Automobile Club Inter-Insurance Exchange, Appellant.


         1. The interpretation of the clear language of an insurance policy raises a question of law subject to de novo review.

         2. The purpose of K.S.A. 40-284, which mandates the offer of uninsured and underinsured motorist coverage, is to fill the gap inherent in motor vehicle financial responsibility and compulsory insurance legislation. This coverage is intended to provide recompense to innocent persons who are damaged through the wrongful conduct of motorists who, because they are uninsured or underinsured and not financially responsible, cannot be made to respond in damages.

         3. The uninsured and underinsured motorist statutes are remedial in nature. They should be liberally construed to provide a broad protection to the insured against all damages resulting from bodily injuries sustained by the insured that are caused by an automobile accident and arise out of the ownership, maintenance, or use of the insured motor vehicle where those damages are caused by the acts of an uninsured or underinsured motorist.

         4. When reviewing a claim of underinsured motorist coverage under K.S.A. 40-284(b), a court must first determine whether UIM coverage exists. When determining whether underinsured motorist coverage is available under the provisions of K.S.A. 40-284(b) in a given case, (1) the tortfeasor's liability coverage must be below the claimant's liability coverage and (2) the claimant must have damages in excess of the tortfeasor's liability coverage.

         5. In calculating the amount of underinsured motorist benefits where the damages recovered from the tortfeasor are less than the total amount of actual damages because of multiple claims against the tortfeasor's liability insurance limits, the underinsured motorist provider is responsible for paying the difference between the insured's pro rata share of the settlement with the tortfeasor and the insured's total amount of damages up to the insured's underinsured motorist limits.

         6. The provisions of K.S.A. 40-284 are mandatory insofar as they stipulate what insurance policies in this state must contain. The provisions of the statute are to be considered a part of every automobile policy in this state, and an automobile policy is controlling only to the extent that it does not conflict with or attempt to diminish or omit the statutorily mandated coverage. Thus, unless authorized by statute, provisions of an insurance policy which purport to condition, limit, or dilute the broad, unqualified uninsured motorist coverage mandated by K.S.A. 40-284 are void and unenforceable.

          Appeal from Johnson District Court; Rhonda K. Mason, judge.

          Robert J. Luder and Lesley Renfro Willson, of Luder & Weist, LLC, of Overland Park, for appellant.

          Thomas B. Diehl, of Ralston, Pope & Diehl, LLC, of Topeka, for appellee.

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

          Powell, J.

         E.H., a minor, was a passenger in her parents' automobile when it was involved in a three-car accident. E.H., her mother and father, and her two siblings all filed claims against the tortfeasor's (at-fault driver's) insurance. Because the tortfeasor's insurance was insufficient to cover their injuries, E.H. and her father sought underinsured motorist (UIM) coverage from their insurance carrier, Automobile Club Inter-Insurance Exchange (ACIIE). A dispute arose between E.H. and ACIIE as to the amount of UIM coverage available to E.H.; E.H. filed suit, and the district court declared the maximum amount of UIM coverage available to E.H. was the $50, 000 per person limit minus the $12, 000 she received from the tortfeasor for a total of $38, 000. ACIIE now seeks interlocutory review of this ruling, arguing the district court erred because under its policy and K.S.A. 40-284(b), only $10, 000 in UIM coverage remains available for E.H.

         For the reasons we more fully explain below, we find that the district court erred in its calculation of the amount of UIM coverage to which E.H. is entitled and hold that E.H. is entitled to up to $35, 000 in UIM insurance coverage. We therefore reverse the district court and remand.

         Factual and Procedural Background

         According to the uncontroverted facts, on January 8, 2016, E.H.'s father, Paul, was driving the family's van with his wife, Melissa, and their minor children-E.H., J.H., and I.H.-as passengers. The accident occurred when Raphael Sherman drove his vehicle through a red light and collided with a truck driven by Mario Madero. Sherman's collision caused Madero's truck to slide across the lanes of the highway and into the driver's side of Paul's van.

         It is undisputed that Sherman was primarily at fault for the collision and the resulting bodily injuries to E.H. and her family. A passenger in Madero's truck, Denisse Lopez, died from her injuries, and all the occupants of E.H.'s family's van suffered bodily injuries to some extent. Sherman's insurance policy with GEICO provided bodily injury coverage limits of $25, 000 per person and $50, 000 per accident.

         Paul and Melissa had an insurance policy with ACIIE. Under the policy, Paul and Melissa were named insureds and E.H. was an "'insured person.'" The policy had bodily injury coverage with limits of $50, 000 per person and $100, 000 per accident. The UIM coverage had limits of $50, 000 per person and $100, 000 per accident. It is not disputed by the parties that E.H. is entitled to some UIM coverage under the ACIIE policy and Kansas law.

         After the filing of multiple claims, the injured parties in the accident agreed to a settlement with GEICO that divided Sherman's per accident limit of $50, 000 between the claimants as follows. The Lopez heirs-at-law received $25, 000. Paul received $10, 000; Melissa received $500; I.H. received $200; J.H. received $2, 300; and E.H. received $12, 000. E.H. provided ACIIE with notice of the settlement under K.S.A. 40-284(f).

         Later, Paul filed a claim with ACIIE for UIM benefits, and ACIIE paid Paul $40, 000 on his claim. E.H. then filed a demand on ACIIE, claiming that she was entitled to $38, 000 in UIM benefits. Melissa, I.H., and J.H. did not file claims for UIM benefits. ACIIE disputed the amount of UIM coverage available to E.H., which eventually resulted in E.H. filing a petition in the district court, claiming that ACIIE was in breach of contract and owed her $38, 000 under the policy, plus interest, damages, and attorney fees. ACIIE answered and filed a counterclaim seeking declaratory judgment from the district court setting forth E.H.'s rights and its obligations under the policy.

         Subsequently, the parties filed cross-motions for summary judgment on ACIIE's counterclaim. E.H. claimed she was entitled to $38, 000 in UIM coverage based on the difference between her $12, 000 pro rata share from the GEICO settlement and the $50, 000 per person UIM limit. In response, ACIIE claimed the policy actually only had a total of $50, 000 ...

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