IN THE SUPREME COURT OF THE STATE OF KANSAS
No. 92,704
HAYES SIGHT & SOUND, INC., d/b/a WOODY'S FURNITURE,
Appellee/Cross-appellant,
v.
ONEOK, INC. and MID CONTINENT MARKET CENTER, INC.,
Appellants/Cross-appellees.
DECOR PARTY SUPPLIES OF KANSAS, INC. and
ARNOLD FROESE AND CAROL FROESE,
Appellees/Cross-appellants,
v.
ONEOK, INC. and MID CONTINENT MARKET CENTER, INC.,
Appellants/Cross-appellees.
SYLLABUS BY THE COURT1. The standard of review on a district court's determination regarding a postverdict motion for a setoff is abuse of discretion.
2. Where the total loss has been paid by the insurer, the insurer is the real party in interest and must bring the action against the wrongdoer; conversely, where the insured has only been partially reimbursed for the loss, it is the proper party to bring suit against the wrongdoer for the entire loss. However, recovery of the insured part of the loss is held in trust for the insurer.
3. Where the defendant settles with the plaintiff's insurance carrier for its subrogation claim, the insurer's subrogation rights are extinguished, and the plaintiff no longer retains the right to recover damages for the benefit of the insurer.
4. At common law, the collateral source rule prevented the jury from hearing evidence of payments made to an injured party by a source independent of the tortfeasor as a result of the occurrence upon which the personal injury action is based.
5. Under the collateral source rule, benefits received by the plaintiff from a source wholly independent of and collateral to the wrongdoer will not diminish the damages otherwise recoverable from the wrongdoer.
6. Under the collateral source rule, double recovery by the plaintiff is acceptable where the defendant has not paid the full amount of plaintiff's damages.
7. The Due Process Clause of the Fourteenth Amendment to the United States Constitution prescribes substantive limits on the discretion of states to impose grossly excessive or arbitrary punishments on tortfeasors.
8. The standard of review is de novo when determining whether an award of punitive damages is grossly excessive and therefore violate the Due Process Clause of the Fourteenth Amendment to the United States Constitution.
9. The Due Process Clause of the United States Constitution dictates that the defendant receive fair notice both that certain conduct will subject him or her to punishment and the possible severity of the punishment that may be imposed.
10. In determining whether a defendant received adequate notice of the magnitude of the sanction that might be imposed for its misconduct, this court must consider (1) the degree of reprehensibility of defendant's conduct, (2) the disparity between the harm or potential harm suffered by the plaintiff and the punitive damages award, and (3) the difference between the punitive damages award and the civil penalties authorized or imposed in comparable cases.
11. In Kansas, punitive damages are awarded to punish the wrongdoer for malicious, vindictive, or willful and wanton invasion of another's rights, with the ultimate purpose being to restrain and deter others from the commission of similar wrongs.
12. Punitive damages are not given upon any theory that the plaintiff has any just right to recover them, but are given only upon the theory that the defendant deserves punishment for his or her wrongful acts and that it is proper for the public to impose them upon the defendant.
13. When two cases are consolidated for trial, the punitive damage caps set out in K.S.A. 60-3702(e) apply separately in each case.
14. Whether the trial court had authority to impose attorney fees under K.S.A. 55-1210(c)(3) and K.S.A. 66-176 is a question of law over which the appellate court has unlimited review.
Appeal from Sedgwick district court; JAMES R. FLEETWOOD, judge. Opinion filed June 16, 2006. Affirmed in part, reversed in part, and remanded.
Lynn W. Hursh, of Armstrong Teasdale LLP, of Kansas City, Missouri, argued the cause, and Gerald A. King, Darren K. Sharp, and Karrie J. Clinkinbeard, of the same firm, and Ross Hollander, of Joseph & Hollander, P.A., of Wichita, were with him on the briefs for appellants/cross-appellees ONEOK, Inc., and Mid Continent Market Center, Inc.
Jay F. Fowler, of Foulston Siefkin LLP, of Wichita, argued the cause, and James D. Oliver, Timothy B. Mustaine, Mark A. Biberstein, and Todd N. Tedesco, of the same firm, were with him on the briefs for appellees/cross-appellants Hayes Sight & Sound, Inc., d/b/a Woody's Furniture, Decor Party Supplies of Kansas, Inc., and Arnold Froese and Carol Froese.
The opinion of the court was delivered by
ALLEGRUCCI, J.: The Hutchinson businesses Hayes Sight & Sound, Inc., d/b/a Woody's Furniture (Woody's) and Decor Party Supplies of Kansas, Inc. (Decor) were destroyed on January 17, 2001, when natural gas migrated from underground storage caverns and ignited. In the negligence action brought by Woody's and Decor against ONEOK, Inc. (ONEOK) and its wholly owned subsidiary, Mid Continent Market Center, Inc. (MCMC), a jury found each defendant 50% at fault. The compensatory damages awarded to Woody's were $955,636.76, and to Decor were $755,251.40. The jury also found that punitive damages should be awarded against MCMC. The trial judge awarded punitive damages in the amount of $5,250,000 for the two consolidated cases.
ONEOK and MCMC do not appeal the jury's finding of liability or its finding that MCMC's wanton conduct warranted an award of punitive damages. They do appeal the trial court's denial of their requests for setoff of subrogation claims and the amount of the punitive damages award.
Woody's and Decor cross-appeal the trial court's denial of their request for attorney fees and expenses.
The case was transferred to this court on the parties' motions. K.S.A. 20-3017.
ISSUES
The following issues are raised by ONEOK and MCMC in their appeal:
1. DID THE TRIAL COURT ERR IN DENYING ONEOK AND MCMC'S MOTIONS FOR SETOFF OF SUBROGATION CLAIMS?
2. IS THE PUNITIVE DAMAGES AWARD GROSSLY EXCESSIVE SO AS TO VIOLATE DUE PROCESS?
3. DOES THE PUNITIVE DAMAGES AWARD VIOLATE THE STATUTORY CAP OF K.S.A. 60-3702(e)?
FACTS:
On the morning of Wednesday, January 17, 2001, an explosion tore a 12-foot hole through the masonry fire wall between the buildings that housed Woody's and Decor. The concussion of the explosion blew out the plate glass windows of approximately 25 downtown Hutchinson businesses.
Firefighters at the fire station 2 1/2 blocks away heard the explosion. Within a minute of the alarm at 10:47, the first firefighter, Mike Patterson, was on the scene. When he arrived, the entire Decor building was engulfed in fire. By afternoon, 80 to 90% of the Decor building was completely consumed.
The fire immediately spread to Woody's through the hole in the common wall and from burning material that blew from Decor onto Woody's roof. Unable to enter the Decor building, firefighters conducted a defensive operation using large streams of water from elevated positions. Offensive efforts were focused on Woody's, including a search-and-rescue squad and water lines in from both front and back of the building. But when rumbling indicated that the upper floors of Woody's were beginning to shift, Patterson had to order all firefighters out.
Unlike in an ordinary building fire, the flames were white-hot. Even though 4,000 gallons of water were being pumped on the fire every minute, the Woody's and Decor fire was unabated. All indications were that the fire was fuel-fed. Electricity and gas supplies to the buildings had been cut off. Efforts, including digging out the alley looking for an abandoned gas line, were made to find the fuel source. Firefighters continued to pour water on the fire, directing the streams to protect excavators and loading equipment from the heat. By approximately 1:30 or 2 a.m. the next morning, enough rubble had been removed from around the fuel source to allow a view of it.
Joe Palacioz, the Hutchinson city manager, had contacted CUDD, the oil field fire company that worked in Kuwait during the Persian Gulf war, to help determine the source of the problem, the degree of danger, what to expect, and what steps should be taken. CUDD representatives arrived in Hutchinson about 2:30 a.m. on January 18.
Joe Ratigan, an engineer with 30 years experience consulting on storing commodities in underground salt caverns, was hired and brought to Hutchinson by one of the companies with storage facilities in the area. Once the company was satisfied that its facility was not involved, Ratigan went to work for the City.
At approximately 4:45 on Wednesday afternoon, a geyser had been reported at another location in Hutchinson. There was something under tremendous pressure pushing liquid 25 to 30 feet up out of the ground. It was flammable. From that and its other characteristics, it was determined that natural gas was involved. Other geysers developed, and, from Wednesday through Sunday, they erupted from the ground. Ratigan had never seen geysers of brine and gas like there were in Hutchinson.
The geysers were indicative of gas at a depth at significant pressure. They developed where minerals had been extracted at a much earlier time from wells that had surface casings but not deep steel casings. The gas traveled along a geologic formation until it came to such a hole with no steel restraints, and there it was able to shoot to the surface. The Woody's and Decor explosion, as well as the geysers, occurred when gas rose to the surface through old wells that lacked deep casings.
Thursday morning, January 18, two people were killed in an explosion in the Big Chief Mobile Home Park, which is approximately 2 1/2 miles from the downtown explosion. The mobile home park was evacuated, and, when it was learned that there were a number of brine wells in the vicinity, the evacuation area was expanded to include other residences and businesses. An evacuation center was set up at the state fairgrounds. State resources became available when Reno County was declared in a state of emergency. Kansas Highway Patrol, the Reno County Sheriff's staff, National Guard, and prison guards helped Hutchinson police patrol the area. Nearby railroad traffic was stopped to prevent sparks from igniting any of the geysers.
Yaggy is a natural gas storage field located outside Hutchinson. It is operated by MCMC, a subsidiary of ONEOK, which stores natural gas in caverns in underground salt formations. MCMC contracts with Kansas Gas Service for service, legal, and corporate functions. No one is employed by MCMC, and the people performing Yaggy Field functions are employed by ONEOK. Kansas Gas Service is an incorporated division of ONEOK. The names Yaggy, ONEOK, Kansas Gas, Kansas Gas Service, and MCMC all seem to have been used in the evidence to refer to one or both of the defendants.
At the time of the Hutchinson explosions, the Yaggy storage field consisted of 70 caverns, also referred to as wells. The wells were organized in clusters, called pods. Before MCMC developed the natural gas storage field in the early 1990's, the caverns had been used for propane storage and then were plugged and abandoned in 1989.
On Thursday afternoon, Mike Patterson and CUDD representatives went to the Yaggy facility to find out if it was losing pressure through loss of product. Rather than having Patterson and the CUDD representatives come into the office at Yaggy, management there met the visitors outside. Patterson was told that MCMC had experienced a 15% pressure loss and that MCMC had become concerned when the loss had been at 1%.
Larry Fischer, vice president of operations and engineering for ONEOK and MCMC, was in charge of the company's response to the Woody's and Decor explosion and fire. He was the person from ONEOK who dealt with government officials and representatives. He was informed Wednesday evening of a leak at Yaggy. Fischer testified: "I ordered that we start withdrawing from Yaggy and tried to find a plug to set a plug in the well where we had determined there could be a breach in the casing."
On Thursday afternoon, Fischer told Palacioz he had no knowledge of any leaks at any facility. Fischer denied knowing what the problem was but said MCMC would look into it.
On Friday morning, 2 days after the Woody's and Decor explosion, Palacioz met with representatives of all the utility companies. All power and gas lines to the Woody's and Decor site were shut off, but the fire was still being fueled. The circumstances pointed to a leak at one of the facilities in the vicinity, but it was not known which one.
For Palacioz and the city, the effort to find the source of the gas and shape a remedy included meetings two to three times a day with experts and utility representatives. Ratigan advised the city to drill holes that would allow gas to vent to the atmosphere -- vent wells. According to Palacioz, a lot of time was wasted by Fischer's "stonewalling." The city, through Ratigan and other consultants, supplied geologic data to ONEOK, but, according to Ratigan, ONEOK was reluctant to the point of an occasional refusal to share its information. Fischer was not forthcoming with information, and he was reluctant to drill vent wells. In these circumstances, Palacioz repeatedly confronted Fischer and threatened to put pressure on ONEOK by going to the news media. It took three threats to get information the city sought -- where the gas was and how much there was in order to determine where vent wells should be located.
The City's having the information was extremely important to the public safety. When ONEOK was withholding information, Ratigan told ONEOK's consulting geologist that "if I were him I would walk out the door, based on professional ethics."
The distance between the Yaggy field and downtown Hutchinson is approximately 8 miles. Ratigan's first impression was that Yaggy was too far away from the Woody's and Decor explosion to be the origin of the gas, but, after learning about the operation there, he firmly concluded it was the source.
A maximum allowable operating pressure (MAOP) for natural gas storage wells is calculated by multiplying the pressure gradient by the feet of depth at the lowest intact portion of the casing, the casing "shoe." The MAOP was established by the Kansas Department of Health and Environment (KDHE) as the maximum pressure at which the storage wells may be operated. The initial operating authorization issued by KDHE in October 1994 for Yaggy allowed .75 psi (pounds per square inch)/foot of depth. For Pod 1 at the Yaggy storage field, the depth used in the calculation was 745 feet. Thus, the calculated storage pressure was .75 x 745 = 558.75 psi. Well S-1, from which approximately 143 billion cubic feet of gas escaped in January 2001 and surfaced in Hutchinson, was in Pod 1.
Increased pressure allows an increased volume of gas to be stored within the same space. An internal economic analysis showed that an increased volume of gas would significantly increase MCMC's profitability. Eventually the MAOP was increased by KDHE for Pod 1 at the Yaggy storage field to 682 pounds per square inch at the casing shoe. A Yaggy pressure of 682 at the casing shoe corresponded with a surface pressure reading of 670. Because pressure was monitored at the surface, the operative MAOP was 670. KDHE considered the maximum pressure to mean absolute maximum with no exceptions for exceeding the maximum pressure during injection of gas or any other process. Because the MAOP is set to maintain a safety factor, a monitoring system's alarms should not be set above the MAOP.
Gas Service internal correspondence from June 1997 revised maximum pod storage pressures so that they exceeded the MAOP. For Pod 1 the maximum operating pressure was increased from 670 to 675. In August 1999, another internal memorandum increased it to 680. In addition, the memorandum set higher limits for alarms and shutdown. For Pod 1, the high alarm was reset to 690, the high-high alarm was reset at 695, and the shutdown was set at 700. KDHE was unaware of the changes.
Richard Armer, who was a consultant on the reopening and development of Yaggy as a natural gas storage facility and was involved in initially setting the pressure gradient at .75, repeatedly had cautioned Steve Luthye, MCMC's Manager of Gas Control, that the MAOP was "just like a glass table" that could not be broken. Armer also told Luthye that pressure could not be raised without KDHE authorization. Armer testified that Gas Control people never listened to him – their job was to move large quantities of natural gas. When the operating pressure for Pod 1 was raised to exceed the MAOP set by KDHE, Armer was not informed about it. When Armer later was shown the memo in which operating pressure was raised to 675, he disapproved of the increase because the field "had never been tested for anywhere close to that."
In January 2001, when natural gas prices were extremely high, the Yaggy gas controllers were directed to keep Pod 1 topped off. At 5:10 the morning of Sunday, January 14, 2001, while gas was being injected, the high alarm for Pod 1 was hit. At 6:02 that morning, the high-high alarm for Pod 1 was hit, and the gas controller stopped injecting gas into Pod 1. A pressure reading of 691.1 had been recorded at 6 a.m. By the next hour, the pressure had fallen to 685.2.
Luthye testified that during injection, because the gas is being pumped to the wellhead, the pressure reading in the compressor station will be higher than at the wellhead. When injection is stopped the pressure reading in the compressor station will drop to approximate the pressure at the wells. For this reason, according to Luthye, the compressor station pressure reading may exceed the MAOP during injection. Once injection is stopped, the compressor station pressure reading typically will drop 3 to 5 pounds before stabilizing. If the pressure "settled out" below the MAOP, MCMC commonly injected more gas to bring up the pressure in a pod. Ratigan testified that the gas storage industry's standard operating procedure is to keep operating pressure below the MAOP at all times, including during injection.
The Pod 1 pressure did not stop dropping off, as would have been expected. In the first hour after injection was halted, the pressure fell almost 6 pounds to 685.2. Twelve hours later it had fallen to 676.5; 24 hours after injection was stopped the pressure had fallen to 673 or 674. The drop in pressure was not investigated, but injection of gas into Pod 1 was resumed with the intention of bringing pressure back up to 690. Gas was injected into Pod 1 on Monday and Tuesday, January 15 and 16, and until 11 a.m. on Wednesday, January 17. The Woody's and Decor explosion occurred before 10:47 on Wednesday morning.
Several gas controllers on duty from Sunday through Wednesday noticed that the pressure was not rising as would have been expected and discussed it among themselves, but the gas controllers made no calls to check on or report the circumstance until 1:10 Wednesday afternoon. The call made at 1:10 on Wednesday by one of the gas controllers was to the Yaggy Field to report that pressure in Pod 1 continued to decrease. The controller was then told not to inject any more gas into Pod 1. The explanation he was given was that it looked like one well had a restriction and was not taking as much gas as the other wells during injection but lowered the pressure after injection stopped by taking gas then.
When the pressure of stored gas is greater than the geology of the structure can contain, the cavern fractures and gas escapes, decreasing the pressure. The rupture in well S-1 that allowed large volumes of gas to escape occurred early Sunday morning. Large quantities of gas continued to be injected into Pod 1 on Sunday, Monday, Tuesday, and Wednesday morning. Injecting more gas after a fracture occurs widens it. As additional gas was pumped into Pod 1 after early Sunday morning, more and more gas was pumped along the top of a shale formation toward Hutchinson, where the gas was able to push to the surface.
ONEOK admits that gas escaping from Yaggy Storage Field created the geysers and explosions in Hutchinson in January 2001. According to ONEOK, approximately 143 billion cubic feet of natural gas was lost as a result of the leak in well S-1. Well S-1 was one of a number of connected caverns making up Pod 1, so that gas from all the Pod 1 wells escaped through S-1.
Edward Ziegler, a petroleum and safety consultant, looked at the training provided by defendants to the gas controllers and found it quite deficient. In particular, he noted that the controllers' lack of training left them unable to recognize the problem that arose on January 14, and he faulted the company for not training the gas controllers in procedures to follow when they began to recognize that there was a problem. Vic Blair, who was the chief gas controller for MCMC and ONEOK Field Services, was not trained in how to assess the integrity of a pod, how to monitor pressure decreases, or what to do if pod pressure decreased more rapidly than usual. Nor were the gas controllers trained to assess integrity by comparing the volume of gas injected against capacity.
In addition to not being trained to identify or resolve a problem, the gas controllers were not properly schooled to observe the MAOP. Ronald Bonilla began working as a gas controller for MCMC in September 2000. The training he received was on-the-job training. With regard to the MAOP, he was told it was a goal to reach rather than a pressure not to be exceeded. The MCMC Pod 1 cavern pressure reports show that the 670 MAOP set by KDHE was exceeded on 45 days during the 3 months preceding January 13, 2001 (October 13, 2000, to January 13, 2001--five days in October, 30 days in November, 10 days in December). The MAOP also was exceeded on January 14, 15, 16, and 17, 2001. Ratigan viewed MCMC's exceeding the MAOP as unprecedented and noted that violations in Texas of just a few pounds per square inch had resulted in heavy fines. Ziegler testified that he had "never, except in this case, ever heard anyone in the industry suggest that it's appropriate to inject gas above the MAOP. M stands for maximum."
KDHE required an annual report from defendants that included maximum pressure applied in each pod. The 1999 report for Yaggy Storage Field shows a maximum storage pressure for Pod 1 as 678. The pressure reading for November 10, 1999, actually was 686. For 1998 the maximum storage pressure reported for Pod 1 was 672. The pressure reading for December 7, 1998, was 688.8.
DISCUSSION
We first consider the appellants' claim for a setoff.
In the district court, defendants filed a motion for partial summary judgment. Defendants sought to preclude plaintiffs from recovering damages for losses that had been paid by plaintiffs' insurers "to the extent ONEOK has already settled with the insurance companies and received a release." With their motion, defendants filed a statement of proposed uncontroverted statements of fact that included the following paragraphs:
"58. On October 21, 2002, a Settlement Agreement and Release was entered into between State Farm Fire & Casualty Company, on behalf of the Decor Party Supplies, Arnold Froese and Carol Froese, and ONEOK, Inc. and Mid Continent Market Center. See Settlement Agreement and Release between State Farm Casualty Company, Inc. and ONEOK, Inc. and Mid Continent Market Center dated October 21, 2002 ('Settlement Agreement'), a true and correct copy of which is attached hereto as Exhibit F."
"107. On January 31, 2003, a Settlement Agreement and Release was entered into between Hartford Insurance, on behalf of the Woody's Plaintiffs, and ONEOK. See Settlement Agreement and Release between Hartford Insurance and ONEOK, Inc. and Mid Continent Market Center dated January 31, 2003 ('Settlement Agreement'), a true and correct copy of which is attached hereto as Exhibit L."
Exhibit F is an unsigned form of Settlement Agreement and Release between State Farm and defendants. Exhibit L is a Settlement Agreement and Release between The Hartford and defendants. It is signed on behalf of The Hartford. In their response to paragraph 58 of the proposed uncontroverted facts of defendants' motion for partial summary judgment, plaintiffs stated they
"do not controvert the factual statements about the Settlement Agreement between defendants and State Farm, which agreement in any case speaks for itself. Plaintiffs do not admit, but need not and will not here address, the many legal conclusions set forth or implicit in defendants' characterization of the agreement as to the agreement's meaning or legal effect."
Substituting The Hartford for State Farm, plaintiffs' response was the same to paragraph 107. The district judge determined that defendants' paragraphs 58 and 107 were uncontroverted.
Plaintiffs contend that defendants' proof of their settlements with the insurers is deficient. Plaintiffs direct the court's attention to the redacted and unsigned State Farm settlement form, but in responding to the motion for partial summary judgment they did not controvert defendants' factual statement about the settlement and the agreement. Plaintiffs also assert that the subrogation amounts are not in "evidence," but the record on appeal includes the insured loss amounts.
Announcing his conclusions of law from the bench, the district judge ruled on the motion for partial summary judgment that "the collateral source rule applies. And the Court agrees with the plaintiffs' proposition that the plaintiffs should be allowed in this case to pursue the full extent of their damages, irrespective of any amount that has been paid . . . by the insurance companies and by ONEOK for the insurance companies." Although denying the motion for partial summary judgment, the district judge told defendants that they could reassert the issue of double recovery in a postjudgment motion should the plaintiffs recover damages.
The district court denied defendants' postjudgment motion for setoff without stating why. On appeal, defendants contend that the district court's decision should be overruled in order to prevent Woody's and Decor from recovering twice, once from their insurers and once from defendants, for the same losses.
MCMC and ONEOK contend that the standard of review is de novo. Their contention is based on their view that this issue is to be determined by subrogation rights drawn from the insurance policies. The construction of an insurance policy is a question of law over which the appellate court has unlimited review. Catholic Diocese of Dodge City v. Raymer, 251 Kan. 689, 691, 840 P.2d 456 (1992). Woody's and Decor contend that the standard of review is abuse of discretion. Their view is that the court is reviewing the district court's denial of defendants' postverdict motion for setoff. Examination of Kansas case law reveals that a setoff is within the discretion of the trial court and that abuse of discretion is the standard of review of a district court's determination on setoff. Mynatt v. Collis, 274 Kan. 850, 863, 57 P.3d 513 (2002); Taylor v. Taylor, 180 Kan. 213, 218, 303 P.2d 133 (1956). We further agree with the plaintiffs that in the present case the setoff should be decided on equitable considerations.
Here, simply stated, is defendants' position: The jury determined that Woody's sustained damages in the amount of $955,636.76 and that Decor sustained damages in the amount of $755,251.40. Woody's insured losses amounted to $873,288.66 and Decor's insured losses amounted to $576,405.50. Also according to defendants, Woody's insurer, The Hartford, paid Woody's the amount of its insured losses and Decor's insurer, State Farm, paid Decor the amount of its insured losses. When the plaintiff insureds accepted the payments, their claims were subrogated to the insurers to the extent of the payments for the insured losses. Then, according to defendants, they settled with the insurers for undisclosed amounts and entered into a Settlement Agreement and Release with each insurance company. As a result of defendants settling with the insurers, the contention continues, the insurers' rights of subrogation were extinguished and the plaintiffs could not recover the insured loss from the defendants. With the insurers' subrogation rights extinguished, damages awarded to Woody's and Decor for insured losses will not be passed on to the insurers. In those circumstances, according to defendants, they will pay twice–once to insurers in settlement and once to Woody's and Decor in satisfaction of the judgment– and Woody's and Decor will collect twice–once from their insurers and once from defendants. The way to prevent this inequity, according to defendants, is to offset the compensatory damages award by the amounts paid to plaintiffs by their insurers for insured losses or for the amount of the subrogation claim. The setoff would be the same in either case. For Woody's, the offset would be $873,288.66 from $955,636.76 for net damages of $82,348.10. For Decor, the offset would be $576,405.50 from $755,251.40 for net damages of $178,845.90.
Defendants' position is grounded on their argument that the insurers' settlement of their subrogated claims bars recovery by the insureds of the amounts paid by the insurers. Defendants rely on Thompson v. James, 3 Kan. App. 2d 499, 597 P.2d 259 (1979), in which Thompson's house was damaged when struck by a car driven by James. Thompson was compensated for insured losses by her insurer, and she filed suit against James seeking damages not covered by her policy. James argued that Thompson was not the real party in interest because she had been compensated for her losses, and the district court granted summary judgment in James' favor. According to the Court of Appeals, "[t]he sole substantive issue before this court on appeal is whether plaintiff was in fact a real party in interest." 3 Kan. App. 2d at 500. The Court of Appeals concluded that Thompson was the real party in interest because she had not been compensated for her uninsured losses. "When the owner's loss has