Bertels v. Farm Bureau Prop. & Cas. Ins. Co.

1

AUTUMN BERTELS, Plaintiff, v. FARM BUREAU PROPERTY and CASUALTY INSURANCE CO., Defendant.

No. 20-2298-JWB

United States District Court, D. Kansas

December 21, 2023

MEMORANDUM AND ORDER

JOHN W. BROOMES, UNITED STATES DISTRICT JUDGE

This matter is before the court on Defendant's post-remand motion for summary judgment. (Doc. 122.) The motion is fully briefed and ripe for review. (Docs. 123, 125, 137.) The court GRANTS the motion for summary judgment because Plaintiff lacks standing.

I. Background ^[[1]]

Much of the factual background of this case is irrelevant to the court's decision. And the court presumes the parties are familiar with the facts outlined in its prior order. (Doc 111.) For purposes of the current motion, this case stems from a two-vehicle accident on October 15, 2010, where Plaintiff Autumn Bertels was a passenger in a car driven by her grandmother. Plaintiff's grandmother died due to the injuries she sustained, and Plaintiff also sustained severe injuries. Plaintiff's family informed Defendant in December 2010 that they had retained Steven Sanders as an attorney. By April 15, 2011, six months later, no one had made a claim against Plaintiff's grandmother; no estate had been opened. Sanders filed a petition in Jefferson County, Kansas, to open a probate estate for Plaintiff's grandmother on August 25, 2014. Plaintiff sued the estate (by

ORDER

and through Next Friend Lisa Swigert) alleging that her grandmother's negligent vehicle operation contributed to or caused her injuries.^[2] Plaintiff and the estate entered a covenant not to execute in July 2016. This covenant provided that,

• The case would have a bench trial;

• The estate would not object to Plaintiff's evidence and would permit Plaintiff to submit evidence by report or affidavit;

• The estate would not seek judgment as a matter of law file post-trial motions, or appeal the verdict of the court;

• In the event of an award against the estate, the estate agreed to assign any and all rights or causes of action it may have against Farm Bureau to Plaintiff;

• In exchange for the covenant, Plaintiff agreed not to execute any judgment against the estate's assets.

(Doc. 85-6 at 1; Doc. 83 at 5; Doc. 123 ¶ 71.) Elsewhere in the agreement, Plaintiff agreed to pay for the administrator's hourly fees, the legal fees of any independent counsel hired by the estate, and any related costs or expenses. (Doc. 85-6 at 2.) The case was transferred from Jefferson County to Johnson County in 2017. Subsequently, the estate did not move for judgment as a matter of law or assert the nonclaim statute defense at the hearing in Johnson County District Court. (Doc. 123 ¶ 71.) Judgment was issued against the estate for $15,758,245.20; sixty percent of fault for the accident was attributed to Plaintiff's deceased grandmother. (Doc. 125 ¶ 93.) Thereafter, Plaintiff, standing in the shoes of the estate per the covenant, sued Defendant in federal court for breach of contract for bad faith and negligent refusal to settle. The court granted summary judgment based on Defendant having no duty to initiate settlement when it had no notice Plaintiff was going to make a claim. (Doc. 111 at 7-10.) The Tenth Circuit reversed and remanded based on an intervening decision from the Kansas Supreme Court, Granados v. Wilson, 317 Kan. 34, 523 P.3d 501 (2023). (Doc. 119.) In its remand order, the Tenth Circuit directed the court to see whether Granados precluded summary judgment for Defendant and whether Defendant's alternative arguments provided a basis for summary judgment. (Id. at 2.) The Tenth Circuit specifically flagged concerns that Plaintiff may not have standing to sue due to the covenant failing for lack of consideration. (Id. at 11 n.5.)

II. Standard

“Regardless of the stage of litigation at which the court evaluates standing, the standing inquiry remains focused on whether the party invoking jurisdiction had a sufficient stake in the outcome when the suit was filed.” Rio Grande Found. v. Oliver, 57 F.4th 1147, 1162 (10th Cir. 2023). Thus, the court must determine whether Plaintiff had a personal stake in the case at the time she filed her complaint considering all the evidence now before the court. Id. The facts are construed in the light most favorable to Plaintiff and the court makes all reasonable inferences in her favor. Id.

III. Analysis

Plaintiff's standing to sue depends on whether the covenant not to execute whereby the estate assigned its rights to Plaintiff is enforceable. US Fax L. Ctr., Inc. v. iHire, Inc., 476 F.3d 1112, 1120 (10th Cir. 2007) (“If a valid assignment confers standing, an invalid assignment defeats standing if the assignee has suffered no injury in fact himself.”).

Regarding the covenant, Defendant argues that from April 15, 2011, the Kansas nonclaim statute provided an absolute defense that protected the estate's assets beyond insurance policy proceeds. (Doc. 123 at 13.) Therefore, the covenant not to execute lacked consideration because the estate received nothing of value in exchange for giving up all defenses and agreeing to a completely uncontested trial. (Id. at 14.) Plaintiff first argues that Defendant's argument overlooks that Plaintiff agreed to pay the estate's attorney's fees and expenses. (Doc. 125 at 28.) Plaintiff also argues that Defendant misinterprets the nonclaim statute because subsection two provides that an estate can be opened more than six months after a person's death for claims arising out of tort. (Id. at 29.) Plaintiff further argues that Defendant's argument ignores the judgment rule. (Id. at 32.) Plaintiff also argues for equitable estoppel and tolling. (Id. at 30-32.)^[3]

The Kansas nonclaim statute provides as follows:

(1) No creditor shall have any claim against or lien upon the property of a decedent other than liens existing at the date of the decedent's death, unless a petition is filed for the probate of the decedent's will pursuant to K.S.A. 59-2220 and amendments thereto or for the administration of the decedent's estate pursuant to K.S.A. 59-2219 and amendments thereto within six months after the death of the decedent and such creditor has exhibited the creditor's demand in the manner and within the time prescribed by this section, except as otherwise provided by this section.

(2) Nothing in this section shall affect or prevent the enforcement of a claim arising out of tort against the personal representative of a decedent within the period of the statute of limitations provided for an action on such claim. For the purpose of enforcing such claims, the estate of the decedent may be opened or reopened, a special administrator appointed, and suit filed against the administrator within the period of the statute of limitations for such action. Any recovery by the claimant in such action shall not affect the distribution of the assets of the estate of the decedent unless a claim was filed in the district court within the time allowed for filing claims against the estate under subsection (1) or an action commenced as provided in subsection (2) of K.S.A. 59-2238 and amendments thereto. The action may be filed in any court of competent jurisdiction and the rules of pleading and procedure in the action shall be the same as apply in civil actions. Any such special administration shall be closed and the special administrator promptly discharged when the statute of limitations for filing such actions has expired and no action has been filed or upon conclusion of any action filed. All court costs incurred in a proceeding under this subsection shall be taxed to the petitioner.

K.S.A. § 59-2239. Therefore, a tort claim filed more than sixth months after an individual's death is not barred by the nonclaim statute, but recovery for the tort claim is limited to insurance proceeds because those liability insurance proceeds are not considered assets of the estate. Kannaday v. Ball, 44 Kan.App.2d 65, 234 P.3d 826, 830-31 (2010). And “[consideration may be any legal benefit or detriment. However, forbearing to prosecute an unenforceable claim is no consideration at all.” Id. at 832. Plaintiff argues that the nonclaim statute specifically provides for tardy tort claims, but this argument ignores the plain text of the statute prohibiting such claims from affecting the decedent's asset distribution. Therefore, as an initial matter, Plaintiff's reading of the nonclaim statute is incorrect and her promise not to execute a judgment against the estate's assets was illusory because she was already limited to recovering only insurance proceeds.

This case resembles Kannaday, where the Kansas Court of Appeals reversed in part and remanded because the district court had conducted a trial based on the parties having entered a valid settlement agreement. 234 P.3d at 832-33. There, the plaintiff had entered a contract whereby she received a consent judgment and an assignment of the defendant estate's claims against its insurer, and she agreed to not execute her anticipated judgment against the estate's assets. Id. at 832. At the ex parte hearing set forth in the settlement agreement, the district court found the decedent at fault and entered a $7,219,064.37 judgment against the estate. Id. at 829. On appeal the estate argued for reversal in part based on the settlement agreement's invalidity. Id. at 832. Specifically, “Kannaday's promise not to collect any judgment against the [e]state was worthless because she was already barred from proceeding against the [e]state's assets by the nonclaim statute.” Id. (Kannaday had not sued the estate until eight months after the decedent's death. Id. at 828.) The Kansas Court of Appeals agreed with the estate and held that the settlement agreement was invalid because it was not supported by...