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Sometimes the black letter law passed by the legislature is unclear. The legislature can’t anticipate every possible fact scenario when they pass a law, so it lay to the courts to interpret the law and give guidance to what it means. This interpretation is called case law. When the court decides a certain meeting to the law it essentially answers a legal question. Lawyers and other courts then can rely on that ruling when they have a similar issue in their case. The following case answers the question above.

O’Donoghue v. Farm Bureau Mut. Ins. Co., Inc., 49 P.3d 22 (Kan. Ct. App. 2002).

This case addresses the following issue:

Are attorney fees appropriate when a dispute between an insurance company and an insured involves an issue of first impression?

This case explored the issue of whether attorney fees were appropriate when the dispute between an insurance company and insured involved an issue of first impression. An issue of first impression occurs when something is being presented to the court for the first time and it has never been contested before. In exploring this issue, the court concluded that the award of attorney fees was inappropriate when a dispute between and insurance company and insured involved an issue of first impression. Id. at 29.

In July 1999, the plaintiff, a passenger in a vehicle, was killed in a single-car accident. Id. at 24. There were two other passengers in the vehicle; one who was also killed in the accident and the other was severely injured. Id. Thus, the three passengers brought claims against the driver’s insurance company. Id. The driver’s insurance company provided bodily injury liability limits of $50,000 per person and $100,000 per occurrence, i.e., the insurance company would not pay any one person more than $50,000 and would not pay more than a total of $100,000 to compensate all of the persons injured in the same accident. Id. Therefore, the driver’s coverage limits were insufficient to fully compensate all three passengers. Id. So, the parties agreed to divide the $100,000 and the severely injured passenger received $50,000 and the families of the deceased passengers each received $25,000. Id.

The plaintiff’s insurance policy provided an underinsured motorist (UIM) coverage with a limit of $100,000 per person. Id. So, the plaintiff’s family made a claim under the UIM coverage for $75,000, representing the difference between the $100,000 from the UIM policy and the $25,000 they received from the driver’s insurance. Id. However, the insurance company refused to pay the $75,000 and would only pay $50,000, representing the difference between the $100,000 from the UIM policy and the $50,000 per person from the driver’s insurance. Id. As a result, the plaintiff’s family filed a petition asking the district court to declare that the insurance company must make available the $75,000 and also pay their attorney fees. Id. Subsequently, the district court made the $75,000 available but denied the plaintiff’s motion for attorney fees. Id.

The plaintiff’s family argued that the district court made a mistake in denying its motion for attorney fees. Id. at 28. The plaintiffs relied on Kansas law which stated, “. . . if it appears from the evidence that an insurance company has refused without just cause or excuse to pay the full amount of such loss, the court shall allow the plaintiff a reasonable sum as an attorney’s fee for services in such action . . . .” Id. The plaintiffs really focused on the wording “without just cause or excuse” and felt like the insurance company did not have a reason to not pay the $75,000. Id. According to the court, whether there was just cause to refuse payment and, therefore, justification for denial of attorney fees was up to the district court. Id. In this case, the court determined that the district court’s denial of attorney fees was a valid exercise of their decision making power. Id. at 29. Furthermore, the court held that an award of attorney fees was inappropriate when a dispute between an insurance company and insured involved an issue of first impression. Id. In essence, this controversy involved an issue that had not been brought up in court before so attorney fees were not rewarded. Id.

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