Shelter Liable for Judgment in Excess of Limits

prevent the insurer from giving the settlement offer that offers from an injured party could result in a lawsuit being filed against its printup as the injured party did in wade. rather, based on the district court's wade. that it could reasonably have been anticipated or foreseen by the original wrong- filed patrick printup, jr., -13- against the insured; (4) the insurer's rejection of advice of its own district court faulted ms. roberts because she "filed suit before the deadline forward. (emphasis added). "if an insurer were permitted to `cure' an earlier breach of a thereafter, the district court found that ms. roberts had sustained past and treatment, and estimated medical expenses in excess of $150,000. aplt. app. at [w]e do not hold that an insurer's attempt to accept an expired offer "received" on april 15 at shelter's topeka claims office, where ms. roberts had decision." aplt. app. at 40. the parties agreed that ms. roberts would submit agreed not to execute her judgment against printup. aplt. app. at 39-42; see -9- -10- or bad faith rejection of an injured party's offer to settle within the policy's limits contractually based, breach of such duties is determined by a tort standard of care. fide settlement offer. we have found no support for the district court's novel "unjustified" within the meaning of sloan, 521 p.2d at 251. nevertheless, the statute of limitations on her claim, plaintiff reasonably set a ten-day deadline."); liability and damages; (2) attempts by the insurer to induce the "in cases arising under diversity jurisdiction, the federal court's task is not plaintiff-judgment creditor-appellant, principle. see, e.g., miller v. zep mfg. co., 815 p.2d 506, 518 (kan. 1991) (the from the consequences of an unjustified refusal to pay which made the suit offices, shawnee mission, kansas, for plaintiff-judgment creditor-appellant. -17- conduct, including any responsibility the plaintiff might have for the excess judgment. id. ms. roberts appeals. inquiry or the consideration of legal principles." estate of holl v. comm'r, 54 court in bollinger v. ness, 449 p.2d 502, 511 (1969), in deciding "[a] challenge here, ms. roberts reasonably set a ten-day limit on her offer, and the expiration findings, it is apparent that it was shelter's failure to implement a system to case shelter's negligence, not any semblance of impropriety on the part of ms. 2002, shelter did not have a written policy, procedure, or mechanism in place to been informed to send it when she called shelter to obtain an address the day she the letter explained the nature of her injury, her ongoing id. the court rejected the insurer's argument, stating that "the causal connection lawyer to defend printup in the lawsuit. subsequently, shelter, ms. roberts and faith claim," id. at 7 � 26; and (4) "[i]n light of the statute of limitations on her 409 s.e.2d at 858. the insurer contended there was no reason why the settlement wade, 483 f.3d at 667 (quoting bollinger, 449 p.2d at 512). applying kansas tenth circuit s.e.2d at 858); see also snodgrass, 804 p.2d at 1021 ("[w]hen a settlement offer the lawsuit if shelter accepted her offer before the statute of limitations expired, and only when no reasonable jury could conclude that the insurance 5 but to serve defendant if shelter did not accept her offer." id. � 31. the lawsuit relevant here, adopts by reference the unfair claims settlement in the meantime, ms. roberts' settlement offer to shelter was marked s. gen. ins. co. v. holt, 200 ga.app. 759, 409 s.e.2d 852, 858 unfair claims settlement practices model evidence to the district court to support her damages, and that they would abide settle prior to the expiration of the statute of limitations on filing the lawsuit was against: it would permit bad faith or negligence in the insurance milieu to become mailed ms. roberts' letter to the kansas city claims department, where it was failed to respond to plaintiff's april 11, 2002 letter within ten days." id. at 13 � in exchange for printup's assignment of his claim against shelter for bad was filed "on april 16, 2002, [requesting] issuance of summons on april 24." id. manufactures a lawsuit in an effort to recover a larger award and thereby causes publish notwithstanding these findings, the district court held that shelter's defendant-judgment debtor, (d.c. no. 2:02-cv-02333-cm) glenn v. flemming, 799 p.2d 79, 84 (kan. 1990). as contemplated by the the critical issue in determination of liability therefore is whether ensure that a claim would be acknowledged within ten working days," order at 8 response time in order to set up or manufacture a bad faith claim."). ms. roberts' economic loss, and $51,691.60 in medical expenses, for a total of $1,033,891.60. we note that in determining ms. roberts was not entitled to recover the f.3d 648, 650 (10th cir. 1995). ms. roberts does not challenge the district law imposes upon the insurer the duty to exercise diligence, who have failed to timely respond to, or even acknowledge, their offers before -12- district court created an additional burden on claimants to follow up with insurers passed . . . and elected to effect service three days after the deadline rather than united states court of appeals such notice unless payment is made within such period of time.' of the statute of limitations required her to file the lawsuit against her son. 1981))). as the court said in general southern, 409 s.e.2d at 764: seymour, circuit judge. was driving their car when the car's brakes failed.1 � 37; (2) ms. robert's "conduct was not arbitrary," id. at 14 � 17; (3) she "did not brenda c. roberts, -6- without reference to any kansas authority to support its conclusion, the the medical bills, it would pay the limits of its liability coverage. shelter then garnishee-appellee. arbitrary settlement deadlines and deprived the insurer of information in order to excess judgment against the insured . . . ." hawkins v. dennis, 905 p.2d 678, 690 attorney or agent; (5) failure of the insurer to inform the insured of a smith v. blackwell, 791 p.2d 1343, 1347 (kan. ct. app. 1989). we recognized "in an appeal from a bench trial, we review the district court's factual id. at 14, � 17. the court therefore concluded that shelter was not liable for the delay in attempting to settle a claim might set up a natural and continuous 2008 memorandum and order ("order"). rule that the causal connection between an actor's wrongful act and an injury is and if it fails to do so, it acts in bad faith. given that duty, to accept ms. roberts was still being treated for her injuries in february 2002,2 the insurer is causing a discernible injury to the insured. a refusal questions of law and fact will be "under the clearly erroneous or de novo rejected, the injury to the insured is traceable to the insurer's kansas' somewhat unique applicable law. against printup, relying on our decision in wade v. emcasco ins. co., 483 f.3d offer," id. at 9 � 2, and that "shelter breached a duty when it failed to respond to insurer's lack of adequate information upon which to judge a shelter mutual insurance settlement offers in the world after suit is filed will not immunize a company conclusion that ms. roberts did not cause the lawsuit to be filed against mr. we held in wade, however, the causal link is broken when an injured party -7- ms. roberts notified her attorney when she had not received a response from -5- between an original act of negligence and injury to another is not broken by the operations and the internal procedures it has promulgated in order to regulation � 6(a), available at policyholders. this we decline to do. in carrying out its duty to give application to shelter for pip benefits. shelter thereafter paid $4,500 towards kansas supreme court considers the various factors present in each case. see properly investigate the circumstances so as to ascertain the evidence to determine whether an insurance company is negligent in such cases, the united states court of appeals shelter acted negligently or in bad faith in handling the claim against its insured. after discovery, the district court granted shelter's motion for summary there is nothing in the record to show whether shelter made any effort to f.3d at 1220. circumstances and standard in the industry. see order at 15 ("in light of the party is exposed in the event of a refusal to settle; (7) the fault of the insurer cannot justify its failure to give equal consideration to its declined shelter's offer. consider all relevant factors bearing on the good faith of the insurer, claim shall, within ten working days, acknowledge the receipt of accepting the offer was attributable entirely to the injured party's manipulation of intervening act of a third person, if the nature of such intervening act was such fractures of her right tibia and fibula. the fractures failed to knit, i was a time-sensitive demand letter that created a duty for shelter to act without herein is fair and reasonable, is not collusive, and is entered into in good faith and 1021 (kan. ct. app. 1991)). snodgrass recognized that, time-sensitive settlement offers. consideration. insureds' interests by relying on internal operating procedures chain link fence, and park bench. as a result, ms. roberts, a passenger at the fair appraisal of the case." id. at 669. the injured party in wade imposed district court invoked wade to support its conclusion that shelter was not liable judgment. ms. roberts appealed, and we affirmed as to ms. roberts' claim of the incentive to manufacture bad faith claims by shortening the length of the negligence in handling ms. roberts' claim did not "cause" the excess judgment the case relied on by wade for this proposition is instructive. in general bad faith but reversed and remanded as to the negligence claim. see roberts, 422 after a bench trial on remand, the district court found that (1) "[i]n april printup, 422 f.3d 1211, 1212 (10th cir. 2005), and the district court's july 10, circumstances changed enough during the three weeks between plaintiff's offered to pay the $25,000 liability policy limit. as the district court found, co. v. holt, 262 ga. 267, 416 s.e.2d 274 (1992). under the kansas bollinger, 449 p.2d at 512. these factors include: necessary to take into consideration, in addition to the other pertinent f.3d 1204, 1211 (10th cir. 2006) (citations omitted). our review of mixed the circumstances of this case from those in wade. see, e.g., order at 14 � 17 not constitute negligence, "particularly in light of the unfair claims intentionally send her claim to the wrong office or artificially and unnecessarily company, mailed it. notwithstanding the need for immediate action expressed in the letter, for the district of kansas obligated to pay her attorney a portion of her recovery." id. at 13 � 13. roberts, resulted in mr. printup's exposure to the excess judgment. the facts of 657, 674 (10th cir. 2007). id. at 14, � 16. the court was "unconvinced that the time of the accident, was badly injured. accepting an offer to settle within the policy's limits. see id. at 667 (citing ms. roberts consulted counsel regarding the quality of her medical care. on her and she eventually had her right ankle joint fused. plaintiff required sequence of events that causes a claimant to reject a policy-limits settlement offer offer, which was good on a particular date, was unavailable two days later. see from the hospital, and her medical bills totaled over $125,000. received on may 6, 2002, three weeks after its initial delivery to shelter. compromise offer; (6) the amount of financial risk to which each limits of $25,000 before the statute of limitations expired, [she] would not owe for the excess judgment, reasoning that "[a]llowing plaintiff to recover for as a means of amicably resolving their dispute." id. at 42. home health care for approximately one year after returning home we reject [general southern's] argument that an insurer's conduct settlement, is liable for the entire judgment against the insured even incurred in the insured's defense. but when a settlement offer is also issue of fault and causation and submit the issue of damages to the court for insured caused by the insurer's earlier bad faith failure to settle. whether a third party's intervening cause produced the injury in question is handle reasonable time-sensitive offers in negligent disregard of its insured's -14- to defend, in itself, can be compensated for by paying the costs bollinger factors, relevant aspects of the third-party plaintiff's was not credible. -11- david a. hoffman (donald w. vasos with him on the briefs) of vasos law accordingly, we reverse and remand to the district court to enter craig c. blumreich (joel w. riggs with him on the brief) of larson & blumreich, the district court that it should consider the factors set out by the kansas supreme which provides that `[e]very insurer, upon receiving notification of a aplt. app. at 47. the court approved the settlement and entered judgment in place greater importance on their own interests in the regulation of letter that created a duty for shelter to act without negligence in handling the tenth circuit glenn, 799 p.2d at 82). construction in either kansas precedent or in ours. therefore, we conclude that insured in inducing the insurer's rejection of the compromise offer within the policy limits constituted a defense to liability. see general southern, summary judgment. southern, the insurer claimed that its acceptance of the expired offer to settle common interest of the insured as well as itself in determining $25,000 policy limit. ms. roberts claimed that she contacted shelter in late 2000 or early 2001 roberts, 422 f.3d at 1219. appeal from the united states district court printup signed a settlement agreement. the agreement stated that "[w]ith the bollinger v. nuss, 449 p.2d 502, 508 (kan. 1969)). the same rule applies to on april 21, 2000, patrick printup, jr., ms. robert's sixteen-year old son, (1991) [general southern], vacated on other grounds by s. gen. ins. settlement practices model regulation � 6(a)." id. at 1219.4 time, and resources invested in preparing for trial is just one example. see id. absolve it of liability for damages to its insured caused by its earlier negligent to make a fair appraisal of the case. in fact, the district court itself distinguished v. 37. she sent the letter to protect her claim against the two-year statute of consideration as its own or it would have set up an appropriate system to handle need your answer within ten days." id. at 7 � 27. the district court found that (citations and quotation marks omitted); wade, 483 f.3d at 666 ("the `real present a clear case where plaintiff `manufactured' a lawsuit, she appeared to be wade. in this regard, the district court found that "[t]he april 11, 2002 letter . . . see moses v. halstead, nos. 581f.3d 1248, 1251 (10th cir. sept. 8, 2009) (citing practices model regulation. no exceptions are set forth as to � 6(a), establish or negate bad faith on the part of the insurer. 2 4 brenda c. roberts appeals the district court's decision that barred her intelligence, good faith, and honest and conscientious fidelity to the ms. roberts's medical bills, exhausting the policy's pip benefits. whether to accept or reject an offer of settlement. while the insurer standard, depending on whether the mixed question involves primarily a factual following up with shelter to see why she had not received a response." id.6 the wrong office or artificially and unnecessarily shorten shelter's available future damages in the amount of $732,200 for economic loss, $250,000 for non- conclusion, the facts of this case do not raise a suspicion of the "cat-and-mouse" judgment in favor of ms. roberts. declining to entertain an offer after expiration of a deadline. it is also relevant that in general under kansas law "all the good faith and supreme court's multi-factor approach in bollinger, the jury should proposed settlement offer and the reasons the plaintiff had for letter to the pip department in columbia, missouri. the pip department then a defense for which the defendant bears the burden of proof. see worden v. as a result of the accident, plaintiff sustained open compound internal business operations than they place on the interests of their days . . . , plaintiff became obligated to pay her attorney a portion of her question,' according to the court, is `the degree of consideration which an insurer f.3d at 669-670. shelter's negligence was the cause of printup's exposure to the the district court found that: excess judgment from shelter, the district court said that "[w]hile this does not roberts, 422 f.3d at 1218-1219. attempt to settle claims in a fair and expeditious manner would be undermined." excess judgment because it necessitated ms. roberts' filing of the lawsuit against aplt. app. at 78-79 (shelter's witness testified that reasonable time-sensitive clerk of court insured to contribute to a settlement; (3) failure of the insurer to faith give at least equal consideration to the interest of the insured, circumstances as a direct result of shelter's negligence, unlike the situation in settlement offers are standard in the industry).5 shelter seeking to collect the judgment in excess of the policy limits, arguing that shelter at the end of ten days, aplt. app. at 72, and he permitted the lawsuit to go union gas system, inc., 324 p.2d 513, 514 (kan. 1958). unlike in wade, in this from the accident.3 printup to protect herself against the running of the statute of limitations. those claims procedures may have upon its insureds' interests. the to an insurer's handling of a claim[, which] requires an individualized approach." did not believe her son was at fault, however, shelter did not further investigate we advised discloses that the delay resulted in a change of circumstances to the detriment of negotiate above its policy limits to account for the additional loss to ms. roberts. instances in which the insurance company negligently or in bad faith delays in contract duty. see id. personal injury protection (pip). shelter received notice of the accident on april garnishment action against shelter mutual insurance company ("shelter"), which shelter's errors in handling ms. roberts' time-sensitive offer of settlement could -3- once the lawsuit was filed. these events caused a change in ms. roberts' insurer was not liable for the insured's exposure to excess damages. settlement agreement, ms. roberts then filed a garnishment action against district court ruled for shelter, finding that the trial testimony of ms. roberts and to reach its own judgment regarding the substance of the common law, but simply serves to absolve the insurer of any liability for damages to the an arbitrary deadline or that she provided insufficient information to shelter for it 6 moreover, under established kansas law an insurance company's negligent holding that "there must be a causal link between the insurer's conduct and the "when [shelter] failed to respond to plaintiff's april 11, 2002 letter within ten this case do not trigger the concern we had in wade, which was "to avoid creating company acted negligently or in bad faith is the company entitled to as we held in wade, "there are a number of reasons why an insurer's must give to those interests of the insured which conflict with its own.'" (quoting ("order"). shelter's note on the accident file stated: "`may have bi' (bodily findings for clear error and its legal conclusions de novo." lippoldt v. cole, 468 by misleading it as to the facts; and (8) any other factors tending to between the time that the deadline of her offer expired and the time that she sought collection of a judgment in excess of policy limits. we reverse. plaintiff's april 11, 2002 letter within ten days. as a result, plaintiff became shelter's mistake in this instance would promote the situation that wade warned f.3d at 674. six days later, on april 21, 2002, shelter's claims office mistakenly mailed the [general southern's] argument would be to authorize insurers to the insurer. see wade, 483 f.3d at 672-73. we therefore concluded that the bollinger, 449 p.2d at 510)). shelter did not give mr. printup's interest the same insured. accordingly, its attempt to accept the expired offer in this case did not -15- by the court's determination. they also agreed that the "settlement provided unwanted lawsuit against a family member. these findings support the promulgated by the insurer when the effect of such procedures is to -16- court's findings of fact and shelter has not cross-appealed. -4- ii filing a lawsuit against them for negligent refusal or delay in accepting a bona conduct or by any arbitrary conduct on the part of ms. roberts, as was the case in the theory behind this position is that by refusing a settlement offer, ms. roberts and her attorney "had an agreement that if shelter paid its policy it is readily apparent that it was foreseeable to shelter that its negligence in collected." id. � 13. after ms. roberts told one of shelter's employees that she above, the court determines that shelter breached a duty to defendant when it breach. . . . game between claimants and insurers cautioned against in wade. see wade, 483 -8- policy limits to satisfy all her claims against printup, shelter's insured, arising ms. roberts � her unnecessary exposure to costs and attorneys fees, and an the district court's reliance on wade was misplaced. unlike wade, in this settlement offer, while starving the insurer of the information needed to make a on may 7, 2002, shelter advised ms. roberts that, upon confirmation of limitations for filing claims against printup, which was expiring on april 22, the facts are taken from our previous decision in this case, roberts v. having had four surgeries and a skin graft. aple. app. at 23. on april 11, 2002, was insured by shelter. the insurance policy provided up to $25,000 in liability before murphy, seymour and tymkovich, circuit judges. if it exceeds the policy limits. broken by an independent intervening cause does not apply when the intervening compensation under printup's liability policy. shelter disputed this claim. the appropriate consideration to settlement offers of limited duration, an failure to settle. see id. at 518; wade, 483 f.3d at 670 n.3 (citing holt, 409 3 the district court erred in imposing such a burden on ms. roberts. 13. in other words, shelter's negligent failure to address ms. roberts' offer to we explained: chartered, topeka, kansas, for garnishee-appellee. cause might reasonably have been foreseen by the actor.) case shelter provided no evidence raising any concern that ms. roberts imposed recovery." id. � 13. accordingly, ms. roberts declined the offer. shelter hired a (1) the strength of the injured claimant's case on the issues of 1 based on the foregoing, we hold that, contrary to the district court's eager to capitalize on shelter's mistake." order at 14 � 17. specifically, the an insurer, who wrongfully declines to defend and who refuses to to ascertain and apply the state law." wade, 483 f.3d at 665 (citation and 25, 2000. "shelter logged the incident as a code 39, which means, `one-car kansas administrative regulation 40-1-34, with some exceptions not http://www.ksinsurance.org/company/model_laws/ref_40-1-34.htm. the circumstances of the accident. in june 2000, ms. roberts submitted an a game." order at 15 � 18 (internal quotations and brackets omitted). for that doer." id. (citation and internal quotation marks omitted). kansas follows this -2- the car was titled and registered to both ms. roberts and mr. printup and february 17, 2010 quotation marks omitted). accordingly, our analysis starts with summarizing consent of shelter, printup offers to confess judgment in favor of roberts on the consideration of all of these factors and the factual findings issued by the court (citing george r. winchell, inc. v. norris, 633 p.2d 1174, 1177 (kan. ct. app. at 7, � 26 ("[t]he court finds that plaintiff did not intentionally send her claim to elisabeth a. shumaker equally important, the record negligence in handling the offer." order at 9 � 2. it then concluded that "[u]pon may properly give consideration to its own interest, it must in good fiduciary duty, the policy of encouraging an insurer to exercise due care and order at 3 � 8. as relevant here, we disagreed with the district court's conclusion that is . . . rejected, the injury to the insured is traceable to the insurer's breach." attorney fees on her recovery." id. � 29. she "instructed her attorney to dismiss reason, it required ms. roberts to show a sufficient change of circumstance another witness, a friend who was with ms. roberts at the time she made the call, no. 08-3189 court concluded that "[t]he april 11, 2002 letter . . . was a time-sensitive demand its duty to consider in good faith the interest of the insured in the claim, plaintiff reasonably set a ten-day deadline," id. at 14 � 17. the district favor of ms. roberts. see roberts, 422 f.3d at 1214. shelter then paid the to inquire about making a liability claim but was told that she was not entitled to ("this case is factually distinguishable from both examples given in wade."); id. shorten shelter's available response time in order to set up or manufacture a bad accept a reasonable settlement within the policy limits in violation of the car struck a utility pole, interest that exposed mr. printup to damages in excess of policy limits. conduct its business in the fashion it prefers, regardless of the impact 483 f.3d at 670 (emphasis added). mr. printup's exposure to the excess judgment was caused by shelter's negligent accident, insured at fault.'" district court order at 3 � 10 (july 10, 2008) failing to implement a system to handle reasonable time-sensitive settlement faith or negligent failure to settle ms. robert's claim against him, ms. roberts hamper the insurer's ability to investigate the accident. see id. at 671. the necessary." sloan v. employers cas. ins. co., 521 p.2d 249, 251 (kan. 1974) coverage per person for both property damage and bodily injury, and $4,500 in 2002. as the district court noted, the letter stated: "i am running out of time and glenn v. fleming, 799 p.2d 79, 90 (kan. 1990)). as a result, kansas courts use must be viewed exclusively within the context of the scale of its deadline and shelter's attempted settlement to justify plaintiff's refusal to settle." ten-day deadline contained in her time-sensitive offer was reasonable under the moreover, she became obligated to pay a portion of her recovery to her attorney any judgment in excess of the policy limits. see wade, 483 f.3d at 660 (citing the insurance company's delay in accepting the settlement offer. see wade, 483 counsel's advice, ms. roberts hand wrote a letter to shelter offering to settle for negligence, due care, and other tort concepts to describe the substance of this our reasoning in wade is consistent with the kansas supreme court's this concept in wade, 483 f.3d at 670 n.3, where we said: injury) and that pip would apply and that medical information should be under kansas law, even though an insurer's duties to its insured are constitutes a breach of its contract with the insured and gives rise to liability for that he would have accepted earlier." wade, 483 f.3d at 674. the expenses, (kan. 1995) (citing snodgrass v. state farm mut. auto. ins. co., 804 p.2d 1012, evidence was clear in that case that the insurer acted reasonably, not negligently 804 p.2d at 1021 (emphasis added) (citations and quotation marks omitted). as or in bad faith, and did not cause the insured's damages; instead, the delay in law and considering the factors present in wade, we held there that it was