Hernandez v. Farmers Insurance Co.

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NOT DESIGNATED FOR PUBLICATION

No. 116,203

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

YUDI HERNANDEZ,
Appellant,

v.

FARMERS INSURANCE COMPANY, INC.,
Appellee.


MEMORANDUM OPINION

Appeal from Cowley District Court; JAMES T. PRINGLE, judge. Opinion filed August 4, 2017.
Affirmed.

Stephen L. Brave, of Brave Law Firm, LLC, of Wichita, for appellant.

Craig Kennedy, of Kennedy & Willis, of Wichita, for appellee.

Before STANDRIDGE, P.J., LEBEN, J., and PATRICIA MACKE DICK, District Judge,
assigned.

Per Curiam: Yudi Hernandez filed this declaratory judgment action in Cowley
County District Court seeking interpretation of an automobile insurance policy issued by
Farmers Insurance Company, Inc. (Farmers), which limits the insured's liability for
bodily injury to $50,000 per person. Yudi and her father each had filed claims against
Farmers' insured and argued that they were both eligible to receive the maximum per-
person limit of $50,000. The district court entered summary judgment in favor of
Farmers, holding that the $50,000 limit did not apply separately to multiple claimants
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who incurred damages resulting from the same person's injuries. For the reasons stated
below, we affirm.

FACTS

On June 13, 2013, Yudi, a minor, was a passenger in a car accident that occurred
in Cowley County, Kansas. Yudi filed a personal injury suit against (1) Sarah Banta, the
driver of the car in which Yudi was riding; (2) Bryce Venable, the minor driver of the
other vehicle involved in the accident; and (3) Gregory Venable, Bryce's father. Ernesto
Hernandez, Yudi's father, also was named as a plaintiff in the case. Ernesto sought
recovery of expenses he incurred paying for Yudi's medical care.

At issue in this suit are Yudi's and Ernesto's claims against the Venables. The
Venables were insured by a policy issued by Farmers, which provided bodily injury
coverage of $50,000 per person and bodily injury coverage of $100,000 per occurrence.
Yudi and Ernesto argued that they each were entitled to separate $50,000 recoveries
under the terms of the policy.

Yudi, Ernesto, and Farmers entered into a settlement agreement releasing the
Venables. The parties stipulated that Ernesto incurred substantial medical expenses on
Yudi's behalf. Farmers agreed to pay the per-person policy limit of $50,000 to Ernesto
and Yudi would be entitled to pursue a declaratory judgment action against Farmers in
order to determine whether Farmers owed another $50,000 per-person limit to Yudi.

Yudi filed a declaratory judgment action, seeking to resolve the rights and
obligations of the parties. Farmers answered, claiming that payment of the $50,000 to
Ernesto for Yudi's medical bills exhausted the bodily injury liability limits available
under the policy. The parties filed competing motions for summary judgment in which
they argued their respective positions.
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The district court ultimately granted summary judgment in favor of Farmers.
Relying primarily on Farmers Ins. Co. v. Jokan, 30 Kan. App. 2d 1213, 57 P.3d 24
(2002), and Farmers Ins. Co. v. Rosen, 17 Kan. App. 2d 468, 839 P.2d 71 (1992), the
court concluded that "a minor parent's claim for recovery of the minor's medical expenses
under the terms of an automobile liability policy do not make the parent a separate
'person' for purposes of recovering more than the policy limits of liability for 'bodily
injury' 'per person.'"

ANALYSIS

On appeal, Yudi argues the district court erred by granting summary judgment in
favor of Farmers. Specifically, she contends that the court erroneously interpreted the
insurance policy to find that the $50,000 per-person policy limit did not separately apply
to the claims submitted by her and Ernesto.

"'Summary judgment is appropriate when the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as
a matter of law.' [Citation omitted.]" Drouhard-Nordhus v. Rosenquist, 301 Kan. 618,
622, 345 P.3d 281 (2015). Where, as here, there is no factual dispute, appellate review of
a summary judgment order is de novo. Martin v. Naik, 297 Kan. 241, 246, 300 P.3d 625
(2013). Additionally, appellate courts exercise unlimited review over the interpretation
and legal effect of written instruments and are not bound by the lower court's
interpretation of those instruments. Prairie Land Elec. Co-op v. Kansas Elec. Power Co-
op, 299 Kan. 360, 366, 323 P.3d 1270 (2014); see Bussman v. Safeco Ins. Co. of America,
298 Kan. 700, 707, 317 P.3d 70 (2014) (appellate courts exercise unlimited review over
interpretation of insurance policy).

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"'The primary rule for interpreting written contracts is to ascertain the parties'
intent. If the terms of the contract are clear, the intent of the parties is to be determined
from the language of the contract without applying rules of construction.'" Stechschulte v.
Jennings, 297 Kan. 2, 15, 298 P.3d 1083 (2013). When interpreting an insurance policy, a
court should review the policy as a whole and endeavor to ascertain the intent of the
parties from the language used, taking into account the parties' situation, the subject
matter of the policy, and the purpose to be accomplished. Insurance policy language is
reviewed by what a reasonably prudent insured would understand the language to mean,
not by what the insurer intended the language to mean. To the extent that an insurance
policy is ambiguous, the ambiguity is construed against the insurance company.
Bussman, 298 Kan. at 707.

Under the policy at issue in this case, Farmers agreed: "We will pay damages for
which any insured person is legally liable because of bodily injury to any person,
and/or property damage arising out of the ownership, maintenance or use of a private
passenger car, a utility car, or a utility trailer." The policy defined "bodily injury" as
"bodily injury to or sickness, disease or death of any person." The declarations page of
the policy indicated that Farmers agreed to liability limits for bodily injury to $50,000 per
person and $100,000 per occurrence. Finally, the policy set out a "Limits of Liability"
clause, which stated:

"The limits of liability shown in the Declarations page apply subject to the following:
"1. The bodily injury liability limit for 'each person' is the maximum for bodily injury
sustained by one person in any occurrence. Any claim for loss of consortium or
injury to the relationship arising from this injury shall be included in this limit.
"2. Subject to the bodily injury liability limit for 'each person' the bodily injury
liability for 'each occurrence' is the maximum combined amount for bodily injury
sustained by two or more persons in any occurrence.
"3. The property damage liability limit for 'each occurrence' is the maximum for all
damages to all property in any one occurrence.
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"4. We will pay no more than the maximum limits provided by this policy regardless of
the number of vehicles insured, insured persons, claims, claimants or policies, or
vehicles involved in the occurrence."

Yudi argues that Ernesto's claim for medical expenses was separate and distinct
from her bodily injury claim, so they cannot be considered to be the same "person" under
the terms of the policy. Yudi asserts that while she was entitled to recover damages under
the policy, Ernesto could not because he did not sustain bodily injury or make any claim
for loss of consortium or injury to the relationship. As a result, Yudi contends that
Farmers should not be allowed to avoid its obligation to cover her claim by settling a
claim with Ernesto, who was not actually covered.

But the issues presented by Yudi recently were resolved by the Tenth Circuit
Court of Appeals, where the court interpreted a policy similar to the one presented here in
a federal lawsuit brought by Yudi arising out of the same automobile accident. See
Hernandez v. Electric Insurance Company, 659 Fed. Appx. 500 (10th Cir. 2016)
(unpublished opinion). In that case, Yudi and Ernesto each brought claims against Banta,
with Ernesto seeking to recover medical expenses incurred in Yudi's medical care
exceeding $350,000. Banta was insured by a policy issued by Electric Insurance
Company (Electric) with bodily injury coverage of $100,000 per person. Yudi and
Ernesto settled with Electric, which agreed to pay Ernesto $100,000 and allowed Yudi to
file a declaratory judgment action to determine whether Electric was liable for another
$100,000 per-person limit to Yudi under the terms of the insurance policy. The district
court granted summary judgment in favor of Electric. 659 Fed. Appx. at 501; see
Hernandez v. Electric Insurance Company, No. 15-1170-JTM, 2015 WL 7274038 (D.
Kan. 2015) (unpublished opinion).

On appeal to the Tenth Circuit, the court reviewed the specific terms of Electric's
policy, which provided that the $100,000 per-person bodily injury coverage was the
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maximum limit of liability "for all damages, including damages for care, loss of services
or death, arising out of 'bodily injury' sustained by any one person in any one auto
accident." Hernandez, 659 Fed. Appx. at 502. The policy went on to state that the per-
person limit was the most that Electric will pay "'regardless of the number of [c]laims
made.'" 659 Fed. Appx. at 502. As a result, the court concluded that the $100,000 limit
applied to everyone asserting a claim arising out of Yudi's injuries:

"First, the policy states that the liability limit applies to all damages for each
person. The policy does not define damages, but makes clear that they can be sustained
by persons not involved in the auto accident. For example, the policy states that the
damages include those incurred in caring for another and the loss of services for those
involved in the accident. Thus, the per-person limit applies to damages sustained by the
father, as well as Yudi; the damages to both individuals are included in the per-person
limit.
"Second, the policy acknowledges the possibility of multiple claims, but states
that the per-person limit is the most that Electric will pay 'regardless of the number of
[c]laims made.' [Citation omitted.] In this way, the policy clarifies that the $100,000 limit
applies even when more than one person submits a claim arising from bodily injuries
sustained by someone involved in the accident." 659 Fed. Appx. at 502.

In support of its conclusion, the Tenth Circuit cited this court's decision in Rosen,
where we addressed whether a separate liability limit applied for the parents of a minor,
who incurred damages when the minor was involved in an automobile accident. The
Tenth Circuit noted that the only difference between Electric's policy and the policy in
Rosen was that the Rosen policy covered "'bodily injury'" rather than covering all
damages "'arising out of'" bodily injury. Hernandez, 659 Fed. Appx. at 503. Because we
held that the narrower language in the Rosen policy unambiguously covered the parents'
claims for loss of consortium and medical expenses, "Electric's more inclusive per-person
limit is also broad enough to cover the father's claims." Hernandez, 659 Fed. Appx. at
504. The Tenth Circuit concluded that under Kansas law, Electric's policy provided a
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$100,000 limit for all claims submitted by Yudi and Ernesto and affirmed the district
court's grant of summary judgment to Electric. 659 Fed. Appx. at 504.

The Tenth Circuit's decision in Hernandez is well reasoned and readily applicable
to the present case. The Farmers policy states that the liability limit applies to "damages
for which any insured person is legally liable because of bodily injury to any person . . .
arising out of the ownership, maintenance or use of a private passenger car." Like the
policy at issue in Hernandez, the Farmers policy did not define the term "damages," but
clearly contemplated that damages could be sustained by persons not involved in the
automobile accident, stating that "any claim for loss of consortium or injury to the
relationship arising from this injury shall be included" in the per-person bodily injury
liability limit. The policy's language did not specifically limit such claims to only those
listed. Also like the policy at issue in Hernandez, the Farmers policy expressly stated that
the $50,000 limit applies regardless of the number of claims made. The Farmers policy is
identical to the policy language in Rosen, where we held that the policy unambiguously
provided that claims of a minor's parents for loss of consortium and medical bills and
expenses were subject to the policy's per-person liability limit applicable to the minor's
claim. Rosen, 17 Kan. App. 2d at 469-70, 474; see Jokan, 30 Kan. App. 2d at 1217-18
(relying on Rosen to reach same conclusion). A reasonably prudent insured would
understand that the unambiguous terms of the Farmers policy provide a $50,000 limit for
all claims submitted by Yudi and Ernesto. See Bussman, 298 Kan. at 707. As a result, the
district court properly granted summary judgment in favor of Farmers.

Affirmed.