Court of Appeals of Kansas.

Arthur Neil WARNER, Individually; and Arthur Neil Warner, for and on Behalf of

all of the Surviving Heirs of Patricia Ann Warner, Deceased, Appellants,

v.

Robert Harry STOVER; Canal Insurance Company; and Farm Bureau Mutual Insurance

Company, Appellees.

No. 94,766.

June 30, 2006.

Before MALONE, P.J., GREEN and BUSER, JJ.

MEMORANDUM OPINION

PER CURIAM.

Arthur Neil Warner appeals the district court’s decision granting summary judgment in favor of Canal Insurance Company (Canal). The district court determined that a commercial insurance policy issued by Canal to Western Liquid Express, Inc. (Western) did not provide coverage for a motor vehicle involved in the accident leading to this action. We affirm.

On December 25, 2002, Robert Stover was driving a 2002 Ford F250 pickup truck near Dalhart, Texas, to attend a Kansas State University football game. Arthur and his wife, Patricia, were passengers. Robert lost control of the pickup truck after hitting a patch of ice, and the vehicle went off the roadway and rolled twice. Patricia died as a result of the accident, and Arthur sustained personal injuries. Arthur filed a lawsuit individually for his injuries and damages and for and on behalf of Patricia’s heirs for her wrongful death. The pickup truck was owned by Robert’s son, Charles W. Stover. Farmers Insurance Company, Inc. (Farmers), insured the pickup truck under Charles’ personal policy. Charles reported the accident and made a claim for the accident to Farmers under his personal insurance policy.

Charles is also the president and owner of Western. Western’s business vehicles were insured under a commercial trucking liability policy issued by Canal which applied strictly to commercial motor vehicles owned by Western. The F250 pickup truck was not identified as a scheduled vehicle in Canal’s policy. Nevertheless, Canal was named as a defendant in the personal injury and wrongful death action brought by Arthur.

Substantial discovery conducted by the parties revealed the following undisputed facts. The F250 pickup truck was titled and registered to Charles. However, the address listed on the vehicle title was Western’s business address. The accident report listed the owner of the vehicle as “Charles Stover, Western Liquid Express.” A 2002 truck list, required by K.S.A. 66- 1,139(b) and prepared and submitted by Western to the Kansas Corporation Commission (KCC), included the F250 pickup truck as a vehicle owned by Western. However, on January 7, 2002, several months before the accident, Western had notified the KCC that the F250 pickup truck was listed in error. The pickup truck was not deleted from the KCC list until December 29, 2003. At the time of the accident, the F250 pickup truck was operating with and displaying a prorate license tag issued to Charles under Western’s KCC motor carrier identification number. As previously stated, the F250 pickup truck was not identified as a scheduled vehicle in Canal’s policy. Canal was unaware that the pickup truck had ever been listed with the KCC as a business vehicle, and Canal was also unaware of the prorate license tag. Finally, the evidence was undisputed that the F250 pickup truck had never been used by Western for any business purpose, and on December 25, 2002, the vehicle was being driven for personal use.

Canal filed a motion for summary judgment. The motion alleged that Canal was not a proper party to the lawsuit because the insurance policy issued to Western did not provide any liability coverage for either Robert or the pickup truck involved in the accident. In granting the summary judgment motion, the district court concluded since Canal’s policy was issued to Western and the pickup truck was titled to Charles, the Canal policy provided no coverage. In a letter decision responding to a motion to reconsider, the district court stated that “ownership of the vehicle controls the coverage question and vehicle ownership in Kansas is controlled by title and registration.” After Canal was dismissed from the lawsuit, the matter proceeded to a trial and a judgment was entered for the plaintiff in the amount of $607,990.80. Farmers satisfied the judgment up to its policy limits. Arthur appeals Canal’s dismissal on summary judgment.

Arthur claims the district court erred in granting summary judgment to Canal. He argues the ownership and insurable interest of the pickup truck were subject to disputed facts which should have precluded the district court from granting summary judgment.

” ” ‘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. The trial court is required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. On appeal, we apply the same rules and where we find reasonable minds could differ as to the conclusions drawn from the evidence, summary judgment must be denied.” [Citations omitted.]” ‘ State ex rel. Stovall v. Reliance Ins. Co., 278 Kan. 777, 788, 107 P.3d 1219 (2005).

The district court determined that ownership of the vehicle controlled the insurance coverage question and that vehicle ownership in Kansas is controlled by title and registration. Arthur cites Tyler v. Employers Mut. Cas. Co., 274 Kan. 227, 49 P.3d 511 (2002), to support his argument that ownership and title are not dispositive of whether a vehicle is insured under a policy. In Tyler, a Jefferson County deputy sheriff was injured on duty in a collision with an uninsured motorist. The deputy brought a claim against Employers Mutual Casualty Company (EMC), which provided uninsured motorist coverage for vehicles owned by Jefferson County. EMC attempted to deny coverage and argued that Jefferson County did not own the patrol car involved in the accident because the title listed Jefferson County Sheriff’s Department as the owner. Under these facts, the court distinguished ownership from legal title and found that despite the title being held under the Sheriff’s Department, the insurance policy at issue provided coverage for the vehicle. 274 Kan. at 235.

Arthur also cites Maryland Cas. Co. v. American Family Insurance Group, 199 Kan. 373, 429 P.2d 931 (1967). In this case, two individuals traded cars and shortly after the trade one of the individuals was involved in an accident. The car involved in the accident was still titled in the name of the previous owner in order to secure payment of a promissory note. A dispute arose as to which party’s insurance company was responsible to provide coverage for the accident. In resolving the insurance coverage issue, the court recognized that a person may have an insurable interest in a vehicle even though the person does not possess legal title to the vehicle. 199 Kan. at 379.

Tyler and Maryland Cas. Co., are distinguishable from the present case. In these cases, the vehicles in question were listed in the disputed policies of insurance as covered vehicles. In the present case, however, the Canal policy did not include the F250 pickup truck as one of the vehicles covered by the policy. Canal’s policy applied strictly to commercial motor vehicles owned by Western and was never intended to cover Charles’ personal vehicles.

Arthur tries to establish coverage under the Western policy by noting that the pickup truck was temporarily listed with the KCC as a business vehicle and that it displayed a prorate license tag under Western’s motor carrier identification number. However, this evidence was refuted by the fact that Western informed the KCC prior to the accident that the pickup truck was erroneously listed. Although Charles used his position in Western to receive a prorate license tag for the pickup truck, it was undisputed that the vehicle was driven strictly for personal use. Canal was not aware that the pickup truck was ever listed with the KCC or that it displayed a prorate license tag.

Warner points to the MCS-90 endorsement to the Canal insurance policy which provides coverage for all vehicles used in the motor carrier’s operation regardless of whether the vehicles are specifically listed in the policy. However, even under this endorsement, there must be evidence that the vehicle was used within the motor carrier’s operation in order to provide insurance coverage. Here, the evidence is undisputed that the F250 pickup truck was never used by Western for any business purpose, and the vehicle was certainly being driven for personal use on the day of the accident.

The undisputed evidence clearly established that the F250 pickup truck was titled and registered to Charles. The district court was correct in concluding that vehicle ownership in Kansas is generally controlled by title and registration. Farmers insured the pickup truck under Charles’ personal policy. The pickup truck had never been used by Western for any business purpose, and on December 25, 2002, the vehicle was being driven for personal use. Canal’s policy applied strictly to commercial motor vehicles owned by Western and was never intended to cover Charles’ personal vehicles. The F250 pickup truck was not identified as a scheduled vehicle in Canal’s policy. The evidence that the pickup truck once had been mistakenly listed with the KCC as a business vehicle and that it displayed a prorate license tag was insufficient to create a genuine issue of material fact as to the ownership or insurable interest of the vehicle. Without evidence that the pickup truck was intended to be covered by the Canal policy, or was used by Western for any business purpose, there was no support for a finding that Canal was liable for coverage.

We agree with the district court that there were no genuine issues of material fact concerning ownership of the F250 pickup truck and coverage provided by the Canal insurance policy. Accordingly, the district court did not err in granting summary judgment in favor of Canal.

Affirmed.

United States District Court,

N.D. Oklahoma.

MELTON TRUCK LINES, INC., and Henry Perry, Jr., Plaintiffs,

v.

INDEMNITY INSURANCE COMPANY OF NORTH AMERICA, Motor Transport Underwriters,

Inc., and Gulf Insurance Company., Defendants,

and

Indemnity Insurance Company of North America, Third Party Plaintiff,

v.

Gulf Insurance Company, Third-Party Defendant.

June 26, 2006.

ORDER

JAMES H. PAYNE, District Judge.

Now before the court is Plaintiffs’ Partial Motion for Summary Judgment  (Dkt.# 223). The instant case involves an insurance coverage dispute in which the Plaintiffs, Melton Truck Lines, Inc. (“Melton”), and Henry Perry, Jr. (“Perry”), have filed a Fourth Amended Complaint against Gulf Insurance Company (“Gulf”), Indemnity Insurance Company of North America (“IINA”), Motor Transport Underwriters, Inc. (“Motor Transport”), and Swett & Crawford of Texas, Inc. (“Swett & Crawford”)  []. Melton is an insured of both Gulf and IINA. Melton and Gulf entered into a motor carrier excess indemnity contract, and Melton and IINA entered into a commercial umbrella liability policy. Pursuant to its terms, the policy issued by IINA to Melton will not become effective until exhaustion of the self-insured rententions of Melton and the underlying coverage provided by Gulf take place.

Swett & Crawford was dismissed from this case on February 1, 2006.

Motor Transport acted as an insurance broker for Melton in obtaining the insurance contracts with Gulf and IINA. Swett & Crawford’s predecessor provided notice of the underlying lawsuit to IINA and allegedly assisted Melton in obtaining the insurance contracts that Melton entered into with Gulf and IINA.

In general, summary judgment is proper where the pleadings depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). An issue of fact is “genuine” if the evidence is significantly probative or more than merely colorable such that a jury could reasonably return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc. ., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue is “material” if proof thereof might affect the outcome of the lawsuit as assessed from the controlling substantive law. Id. at 249.

In considering a motion for summary judgment, this court must examine the factual record and reasonable inferences therefrom in the light most favorable to the party opposing summary judgment. Gray v. Phillips Petroleum Co., 858 F.2d 610, 613 (10th Cir.1988) . In regard to the necessary burdens, however, the Supreme Court has instructed that:

in cases like the instant one, where the nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the “pleadings, depositions, answers to interrogatories, and admissions on file. Such a motion, whether or not accompanied by affidavits, will be “made and supported as provided in this rule,” and Rule 56(e) therefore requires the nonmoving party to go beyond the pleadings and by their own affidavits, or by the “depositions, answer to interrogatories, and admissions on file,” designate “specific facts showing that there is a genuine issue for trial.”

Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Furthermore, if on any part of the prima facie case there is insufficient evidence to require submission of the case to the jury, summary judgment is appropriate. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In addition, one of the principal purposes of summary judgment is to isolate and dispose of factually unsupported claims or defenses, and the rule should be interpreted in a way that allows it to accomplish this purpose. Celotex, 477 U.S. at 323-24.

The record reveals that on February 18, 2000, Perry was driving a semi-tractor/trailer owned by Melton when he was involved in an accident in Illinois with another commercial truck driven by Dale Karr, Jr. (“Karr”). Karr sustained serious injuries and sued Melton and Perry in the United States District Court for the Central District of Illinois on February 4, 2002. Notice of the claim, or lawsuit, was allegedly provided to IINA on three separate occasions. On November 14, 2003, after a four day trial, a jury returned a verdict in favor of Karr in the amount of $14,650,000.

The claims in the Fourth Amended Complaint seek alleged damages as a result of the underlying verdict in favor of Karr. It is IINA’s position, however, that Melton did not provide adequate notice of the claim at issue, thereby violating a condition precedent to coverage contained in Section IV of the policy. IINA has filed a Counterclaim against the Plaintiffs seeking reimbursement of the funds it incurred to settle Karr’s judgment on behalf of the Plaintiffs, and with the acquiescence of Melton. IINA has also filed a Third Party Complaint against Gulf alleging that it failed to settle the claim within its policy limits when it had the opportunity to do so.

First, Plaintiff argues notice to IINA was timely and was provided to IINA on three different occasions. Specifically, Plaintiff contends notice was provided on April 22, 2004, October 8, 2003, and October 31, 2003. IINA concedes it received notice on October 31, 2003, but claims Plaintiff has failed to prove IINA received the April 22, 2002 notice letter until November 5, 2003, or the October 8, 2003 fax.

The provision of notice to an insurer under an insurance contract is a condition precedent to coverage. Assoc. of County Commnr’s of Oklahoma v. National American Ins. Co., 116 P.3d 206, 211 (Okla.2005). It is clear from the record before the court that a question of fact remains as to the timeliness of the notice provided to IINA. Further, pursuant to Oklahoma law, an insurer must also demonstrate prejudice from lack of notice. Fox v. National Savings Insurance Co., 424 P.2d 19, 25 (1967). The issue of prejudice is also a matter which must be determined by the trier of fact.

Plaintiff next asserts IINA’s settlement with Karr waives any coverage defenses. Plaintiff contends that “after sending Melton a reservation of rights letter, and after trial, and after repeatedly denying that it owed any coverage on this claim, IINA (along with Gulf) settled Karr’s claim.” (Plaintiff’s Brief at 6). Plaintiff further alleges the settlement was made without any participation by Melton. IINA argues it has not waived any defense to coverage. To the contrary, IINA states that it did nothing which was inconsistent with its intention to rely on the requirements of the policy.

Under Oklahoma law, an insurer who settles an underlying claim on behalf the insured does not waive any of its coverage defenses. Lester v. Sparks, 583 P.2d 1097 (1978). The court finds, consistent with Lester, the payment under the IINA policy is distinct from the failure of the insured to comply with the notice condition of the IINA policy. As in Lester, two different portions of the policy are at issue, the notice condition and the “Coverage” provision. Further, the insured is not prejudiced by a requirement that the insured reimburse its insurer for settlement payments if there is no coverage. Excess Underwriters at Lloyds v. Franks Casing Crew & Rental Tools, 2005 WL 1252321. The insured is in the same position, or at least no worse position, than it would have been if there had been no insurance policy. Id. “Reimbursement rights encourage insurers to settle cases even when coverage is in doubt. This inures to the benefit of the injured third parties … The coverage dispute between an insured and its insurer can be resolved after the injured plaintiff is compensated.” Id. Therefore, the court finds IINA’s settlement with Karr did not constitute a waiver of alleged coverage defenses.

Additionally, IINA claims it reserved its rights to assert coverage defenses in a November 7, 2003, reservation of rights letter attached to the Plaintiff’s Motion for Partial Summary Judgment as Exhibit 7. The letter specifically states:

As a result of the policy provisions discussed herein which may become applicable as our investigation continues, IICNA hereby asserts its full and complete reservation of rights concerning these claims. Nothing contained herein, nor any further actions taken by IICNA, should be construed as a waiver of any rights or defenses, whether or not stated herein, which IICNA may possess under its policy and applicable law. It should be understood that any actions taken by IICNA, its agents, representatives or attorneys do not constitute and are not intended as a waiver of any rights or defenses available to IICNA whether or not stated herein that may be available now or at any point in time …

IINA specifically referenced Melton’s alleged noncompliance with the notice provision of the policy and stated that this provision was a condition precedent to coverage.

Further, in addition to the November 7, 2003, reservation of rights letter, Mr. Robert Peterson, the president of Melton Truck Lines, executed a statement on April 5, 2004, in which Melton agreed that IINA has not waived its defenses in this case. The April 5, 2004, statement also stated that Melton would not claim, then or in the future, that IINA has waived its defenses in this case.

Finally, IINA claims Melton was involved in the settlement discussions with the underlying plaintiff, which were held by the United States Circuit Court for the Seventh Circuit, and Plaintiff was informed of developments after the two settlement conferences with the Seventh Circuit. IINA claims Melton has benefitted from the settlement as the $14,650,000 verdict was settled for $14,000,000 and $1,300,000 of post-judgment interest was avoided.

Plaintiff admits that Melton’s representatives were present for the appellate settlement conferences; however, contend the case was not settled at the settlement conferences, rather, it was settled just before oral argument. The court finds Plaintiff participated in the settlement conferences, Plaintiff did not refuse to accept the benefits of the settlement, and Plaintiff has not objected to the settlement.

Accordingly, this court finds IINA did not waive any coverage defenses and Plaintiff’s Motion for Partial Summary Judgment is denied.