Justia Insurance Law Opinion Summaries

Articles Posted in Kansas Supreme Court
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In the garnishment action below, Plaintiffs sought to collect the consent judgments they had previously obtained in settlement of their tort actions against Americold Corporation, which was insured by Northwestern Pacific Indemnity Company (NPIC). NPIC, the garnishee in the instant action, appealed the district court's adverse rulings, contending that the underlying judgments against Americold had become dormant and extinguished, thus depriving the district court of subject matter jurisdiction to proceed with this garnishment action. Finding in favor of NPIC on that issue, the Supreme Court reversed, holding (1) when the district court entered its judgment against NPIC in this garnishment proceeding, Plaintiffs' underlying consent judgments against Americold had been extinguished by operation of the dormancy and revivor statutes; (2) because Americold was not legally obligated to pay an unenforceable judgment, NPIC was no longer indebted to Americold under its contract to pay the judgments for which Americold was legally liable; and (3) accordingly, without an indebtedness from NPIC to Americold, the district court lacked subject matter jurisdiction to grant Plaintiffs judgment against NPIC in a garnishment proceeding. Remanded with directions to dismiss these garnishment proceedings.

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John Brennan sued his physician, who had a $200,000 professional liability insurance policy, for medical malpractice. The insurer was declared insolvent after Brennan filed his claim but before he recovered. The insurer's insolvency triggered the Kansas Insurance Guaranty Association's (KIGA) statutory obligation to cover the insurer's obligations to the extent provided by the Kansas Insurance Guaranty Association Act. KIGA, which intervened in the suit, denied liability because Brennan received medical reimbursements from his personal health insurance policy that totaled more than the insolvent insurer's policy limits. The dispositive issue was whether Brennan's due process rights were violated by a retroactive statutory amendment permitting KIGA to offset Brennan's personal health insurance benefits against its liability on the insolvent insurer's $200,000 policy. The district court declared the statute's retroactive feature unconstitutional and entered judgment against KIGA for $200,000. The Supreme Court affirmed, holding (1) the retroactivity provision violated due process, and (2) Brennan's rights were governed by the preamended statute.