Ryan Fincher v. St. Paul Fire & Marine Ins. ( 2010 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 09-2040
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Ryan Fincher, *
*
Appellant, *
* Appeal from the United States
v. * District Court for the
* Western District of Missouri.
St. Paul Fire & Marine Insurance *
Company, *
*
Appellee. *
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Submitted: January 13, 2010
Filed: February 18, 2010
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Before GRUENDER and SHEPHERD, Circuit Judges, and JARVEY,1 District Judge.
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JARVEY, District Judge.
1
The Honorable John A. Jarvey, United States District Judge for the Southern
District of Iowa, sitting by designation.
Ryan Fincher (“Fincher”) appeals the district court’s2 grant of summary
judgment to St. Paul Fire & Marine Insurance Company (“St. Paul”) on his claim that
St. Paul vexatiously refused to pay his underinsured motorist (“UIM”) claim relating
to injuries he sustained while driving a motorcycle as part of his employment as a
police officer for the Unified Government of Wyandotte County/Kansas City, Kansas
(“Unified Government”). Fincher argues that he was eligible for UIM coverage
because the Unified Government employee who rejected the UIM coverage in excess
of the statutory minimum lacked the legal authority to do so. St. Paul, the Unified
Government’s insurer, refused to pay Fincher’s claim for UIM coverage, taking the
position that the Unified Government employee who signed the form rejecting UIM
coverage in excess of the statutory minimum (“the Rejection Form”) was duly
authorized to do so. Both parties filed motions for summary judgment, and the district
court granted St. Paul’s motion. For the reasons discussed below, we affirm.
I. BACKGROUND3
Fincher, a police officer for the Unified Government, sustained an injury on
May 29, 2006, when the police motorcycle he was operating collided with a vehicle
operated by Carl Anderson (“Anderson”). Fincher sued Anderson in state court and
recovered a judgment for damages in the amount of $575,000. Anderson’s
automobile liability insurance was limited to $50,000 for all claims arising out of
bodily injury to one person. Anderson’s insurer paid Fincher the $50,000 limit of his
liability coverage.
2
The Honorable Fernando J. Gaitan, Jr., Chief Judge, United States District
Court for the Western District of Missouri.
3
Neither side to this appeal disputes the material facts, as set forth by the district
court. Thus, the background facts recited here are taken largely from the district
court’s Order Granting St. Paul’s Motion for Summary Judgment.
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At the time of the accident, St. Paul provided automobile liability insurance
coverage to the Unified Government. The Unified Government’s policy in place
provided coverage for bodily injury liability for up to $500,000 per occurrence, but
it also included a $50,000 limit for UIM coverage. Fincher notified St. Paul of the
state court judgment, but St. Paul, relying on the UIM coverage limit, refused to pay
the remaining judgment. Fincher sued St. Paul for vexatious refusal to pay.
Both parties agree that Kansas law applies in this case. JN Exploration & Prod.
v. W. Gas Res., 153 F.3d 906, 909 (8th Cir. 1998) (“[I]t is axiomatic that federal
courts apply state substantive law in diversity suits.”). Under Kansas law, an insurer
may not issue an automobile insurance policy unless it contains uninsured motorist
coverage in an amount equal to the limits of liability coverage for bodily injury or
death. Kan. Stat. Ann. § 40-284(a). UIM motorist coverage is included as a part of
the uninsured motorist coverage required above. Id. at § 40-284(b). However, an
insured may reject, in writing, the amount of uninsured/underinsured motorist
coverage in excess of that mandated by Kan. Stat. Ann. § 40-3017, which in this case
is $50,000. Id. at § 40-284(c).
With respect to the insurance policy in place at the time of Fincher’s accident,
David Coleman (“Coleman”), the Risk Manager for the Unified Government, signed
the Rejection Form on June 5, 2006. The Rejection Form reads, in pertinent part:
I acknowledge that I have been provided
Underinsured/Uninsured Motorists Coverage and, in
addition, I have been offered the following in accordance
with the State law of Kansas.
I. Single Limit Policies
I have been given the opportunity to purchase
Uninsured/Underinsured Motorists Coverage
equal to my limit for bodily injury or death
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and instead I select a lower limit of $50,000
[amount is handwritten]. (Note: Limit
selected may not be less than $50,000 Single
Limit.)
As Risk Manager, Coleman was charged with selecting insurance for the
Unified Government, negotiating with insurance companies, and recommending to his
supervisor, Harold Walker (“Walker”), which insurance the Unified Government
should purchase. Walker is General Counsel for the Unified Government and reports
directly to the County Administrator. From 1989 through 2006, Coleman signed
rejection forms similar to the one at issue in this case. However, in 2007 and 2008,
the rejection forms were signed by someone in the County Administrator’s office.
In granting St. Paul’s motion for summary judgment, the district court noted
that there were no genuine issues of material fact. Instead, the parties “dispute[d] the
legal significance of particular actions and whether the Unified Government
effectively rejected the excess limits for uninsured/underinsured mototist coverage.”4
Fincher v. St. Paul Fire & Marine Ins. Co., No. 08-00148, 2009 WL 973190, at *2
(W.D. Mo. 2009). The district court found that the Rejection Form was not a contract
“in and of itself, but rather it is the insurance policy in its entirety, which represents
the contract. At best, the 2006 rejection form is a confirmation regarding one of the
terms of the contract, i.e., rejection of excess coverage.” Id. at *4. Thus, the district
court assumed, without deciding, that the Rejection Form was a document which
required the signature of the County Administrator pursuant to the Unified
4
Fincher apparently concedes this issue as the “Statement of Facts” in his brief
to this court begins with the sentence, “This case revolves around a legal question.”
(Appellant’s Br. at 8.) Likewise, St. Paul notes in its brief that, “These statutory and
policy provisions frame the dispute between the parties.” (Appellee’s Br. at 17.)
Specifically, St. Paul is referring to Kan. Stat. Ann. § 40-284 and the UIM policy
language.
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Government Charter. Id. The district court then found that Coleman was impliedly
authorized to sign the rejection form because the
Unified Government’s manifestations to Coleman would
lead him to believe that he was authorized to act on behalf
of the Unified Government. Although the county
administrator or the Unified Government never expressly
stated that Coleman would be authorized to sign the
rejection forms, the authority for his actions can be inferred
from the circumstances.
Id. at *5. Finding that Coleman was authorized to sign the Rejection Form, the
district court held that the rejection of excess UIM coverage was valid. Id. Fincher’s
appeal followed.
II. DISCUSSION
We review a district court’s decision on cross-motions for summary judgment
de novo. Thirty and 141, L.P. v. Lowe’s Home Ctrs. Inc., 565 F.3d 443, 445-46 (8th
Cir. 2009) (citing J.E. Jones Constr. Co. v. Chubb & Sons, Inc., 486 F.3d 337, 340
(8th Cir. 2007)). “Summary judgment is appropriate when, viewing the facts in the
light most favorable to the non-movant, there are no genuine issues of material fact
and the movant is entitled to judgment as a matter of law.” Id. at 446.
Fincher argues that the district court erred in granting St. Paul’s motion for
summary judgment because Coleman was an unelected employee of the Unified
Government who possessed no authority to sign the Rejection Form. Thus, Fincher
claims that the Unified Government’s rejection of UIM coverage in excess of the
$50,000 statutory minimum is void as a matter of law and St. Paul is liable for the full
$500,000 policy limit. According to Fincher, the fact that only Coleman signed the
rejection of the excess UIM coverage renders the rejection ultra vires and
unenforceable.
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St. Paul argues that the district court did not err in granting its motion for
summary judgment as Anderson was not underinsured.5 It is St. Paul’s position that
the Rejection Form is valid, which therefore limits the Unified Government’s UIM
coverage to $50,000, because Coleman possessed the authority to sign the Rejection
Form.
It is a question of law for a court to determine whether there is “competent
evidence reasonably tending to prove” agency. Greep v. Bruns, 159 P.2d 803, 807
(Kan. 1945). Moreover, the party relying on the agency relationship has the “burden
of establishing its existence by clear and satisfactory evidence.” Town Ctr. Shopping
Ctr., L.L.C. v. Premier Mortgage Funding, Inc., 148 P.3d 565, 569 (Kan. Ct. App.
2006).
Authority of an actual agent may be either express or implied. Shawnee State
Bank v. N. Olathe Indus. Park, Inc., 613 P.2d 1342, 1347 (Kan. 1980). Express
authority is when the agent is directly authorized. See id. A court must ascertain if
authority was delegated “by words which expressly and directly authorized him to do
a delegable act.” Greep, 159 P.2d at 807. Implied agency may result from a single
transaction, but it is “more readily inferable from a series of transactions.” Mohr v.
State Bank of Stanley, 734 P.2d 1071, 1076 (Kan. 1987) (internal quotations omitted).
Implied agency arises when the principal and the agent “intended to make it appear
5
See Halsey v. Farm Bureau Mut. Ins. Co., 61 P.3d 691, 700 (Kan. 2003):
We conclude that the plain and unambiguous language of
Kan. Stat. Ann. § 40-284(b) requires a limits-to-limits
comparison in determinations as to whether UIM coverage
exists. In those cases where the UIM coverage exceeds the
limits of the bodily injury coverage carried by the owner or
operator of the other motor vehicle, UIM coverage exists.
However, in those cases such as the case we now consider,
where the UIM coverage equals or does not exceed such
limits no UIM coverage exists.
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to others that the acts of the agent were authorized by the principal.” Id. And such
an agent contracting on behalf of a principal binds the principal if the contract was
authorized by the principal. Bucher & Willis Consulting Eng’rs, Planners and
Architects v. Smith, 643 P.2d 1156, 1159 (Kan. Ct. App. 1982).
Coleman testified that he was the sole person responsible for negotiating with
insurers, either directly or through agencies, to get the best deal on automobile
insurance he could get. He would then make a recommendation to Walker as to which
policy the Unified Government should purchase. Walker described Coleman’s job as
follows: “He administers our insurance program.” (Appellant’s App. Tab C, Depo.
p. 8, lines 10-11). Walker elaborated that it is Coleman’s job “To procure and
determine what insurance needs are necessary and to determine the risks that are to
be covered by insurance.” (Appellant’s App. Tab C, Depo. p. 10, lines 6-8).
Once the invoice for the policy recommended by Coleman and approved by
Walker was received, Coleman would send the bill to the Accounts Payable
Department, and a check was signed by the Mayor and the County Administrator to
purchase the insurance. Per Coleman’s recollection, the Unified Government’s
automobile policy for 2006 cost between $200,000 and $300,000. Coleman would
then sign the rejection form limiting the Unified Government’s UIM coverage to
$50,000. This practice was repeated every year since the Unified Government was
formed in 1997, and actually dated back to 1989 when Coleman was employed as the
Risk Manager for the City of Kansas City, Kansas, which later became the Unified
Government. Coleman testified that it was his belief that he had been given authority
to sign the rejection form by Walker. Walker also testified that Coleman was
authorized to execute the rejection form, which would be part of his job as Risk
Manager.
We hold, as a matter of law, that Coleman possessed the actual, implied
authority to sign the Rejection Form. Coleman is the Risk Manager for the Unified
Government. Coleman alone negotiated with the insurance companies, either directly
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or through insurance agents, and selected a policy to recommend to Walker, his
supervisor. The automobile insurance policy selected by Coleman and approved by
Walker limited UIM coverage to $50,000. The Mayor and the County Administrator
then signed the check purchasing the policy containing said limitation. After the
policy was in place, Coleman signed the Rejection Form in order to satisfy Kan. Stat.
Ann. § 40-284(c). This practice began, at the latest, in 1997 when the Unified
Government was created, and continued until the 2006 policy at issue in this case.
Coleman testified that he believed that he was authorized to sign the Rejection Form.
Coleman’s direct supervisor testified that Coleman possessed such authority. Their
testimony stands undisputed. The evidence is clear and satisfactory that Coleman was
an implied agent of the Unified Government when he signed the Rejection Form. See
Town Ctr. Shopping Ctr., 148 P.2d at 569.
Finally, the court rejects Fincher’s reliance on Blevins v. Bd. of County
Comm’rs of County of Douglas, 834 P.2d 1344, 1351 (Kan. 1992), and its progeny.
In Blevins, the county possessed no power or authority to call a binding election, yet
the plaintiffs claimed that the statements made regarding holding such an election
created an implied contract to follow through with that promise. Id. at 1351.
Rejecting plaintiff’s estoppel argument, the court in Blevins held, “If a municipal
corporation enters into a contract it has no power to make, it is ultra vires and
unenforceable and no further inquiry into the contract’s validity is necessary.” Id.
(citing 10 McQuillin, Municipal Corporations § 29.02 (3d ed. rev. 1990)).
There is no doubt that the Unified Government possessed the power and
authority to enter into a contract to purchase automobile insurance, and that the
Unified Government had the power to reject excess UIM Coverage. Fincher’s
argument on this issue is internally inconsistent. Fincher does not claim that the entire
policy negotiated and selected by Coleman is invalid. To the contrary, Fincher seeks
to recover under the terms of this policy. The Unified Government’s rejection of the
excess UIM coverage was not ultra vires.
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III. CONCLUSION
For the foregoing reasons, we affirm the district court’s grant of summary
judgment to St. Paul.
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