Opinion
110,416.
09-26-2014
Kevin R. HILL, Appellant, v. AMERICAN FAMILY INSURANCE, Appellee.
Michael Peloquin, of Wichita, for appellant. Lyndon W. Vix, of Fleeson, Gooing, Coulson & Kitch, L.L.C., of Wichita, for appellee.
Michael Peloquin, of Wichita, for appellant.
Lyndon W. Vix, of Fleeson, Gooing, Coulson & Kitch, L.L.C., of Wichita, for appellee.
Before MALONE, C.J., LEBEN and ATCHESON, JJ.
MEMORANDUM OPINION
PER CURIAM.
Plaintiff Kevin Hill appeals the ruling of the Sedgwick County District Court dismissing his action to recover benefits from Defendant American Standard Insurance Company of Wisconsin, his motor vehicle insurance carrier, on the ostensible ground the petition named the wrong corporation. Without especially instructive guidance from the parties, the district court fumbled the issue in granting an oral motion to dismiss made by the insurance company the day the case had been set for jury trial. We reverse and remand for further proceedings.
Factual and Procedural Background
Much of the background to the dispute between Hill and American Standard is immaterial to the appeal, turning, as it does, on several civil procedure principles. We offer a few aspects of that history for context. Hill was injured in a motor vehicle collision in 2006 in Wichita. Hill retained a lawyer and sought personal injury protection benefits and uninsured motorist coverage under his policy with American Standard. In one letter from the claims adjuster to Hill's lawyer shortly after the collision, the insurance carrier is identified by name. But in other correspondence related to the claim, the various adjusters refer generically to American Family Insurance.
As American Standard explains in its brief, the American Family Insurance Group is an umbrella name for a number of independent corporations underwriting various forms of insurance. American Standard and American Family Mutual Insurance Company—both affiliated with the American Family Insurance Group—insure motorists living in Kansas. Both share the same corporate address and the same registered agent. Hill initially filed suit in 2010 on breach of contract and “bad faith” theories to recover benefits he says are due him under the insurance policy. The district court dismissed that action without prejudice on Hill's motion. Hill refiled the action the next year. The district court dismissed the second petition for a failure to prosecute—also a dismissal without prejudice. See K.S.A.2013 Supp. 60–241(b)(2).
That brings us to this iteration of the litigation. Hill filed his third action and petition in 2012 and named “American Family Insurance” as the defendant. Hill forwarded a summons in that name, along with the petition, to the Kansas Insurance Commissioner to serve process on the company. See K.S.A.2013 Supp. 60–304(g) (service of process on insurance companies doing business in state). The Insurance Commissioner's office forwarded process to the American Family Mutual Insurance Company and the attention of David C. Holman. But American Standard—not American Family Mutual Insurance—timely filed an answer. The answer bore the case caption from the petition, including the fractured corporate name of American Family Insurance as the defendant. But the opening of the answer plainly states that “Defendant American Standard Insurance Company of Wisconsin” is responding to the petition. In the answer, American Standard asserted defenses of lack of personal jurisdiction, insufficient process, insufficient service of process, and failure to state a claim upon which relief can be granted, all as provided in K.S.A.2013 Supp. 60–212(b). American Family Mutual Insurance never entered an appearance in the case or otherwise responded to Hill's petition.
Hill and American Standard undertook some discovery, although the extent isn't entirely clear from the appellate record. The district court entered a pretrial order that included as one of American Standard's contentions and theories of defense that Hill was not insured by American Family Insurance. The pretrial order, however, also included a stipulation that the district court had jurisdiction over the parties and the subject matter of the litigation.
When the lawyers met with the district court the morning of the first day set for the jury trial, counsel for American Standard orally moved to dismiss the action because Hill could not prove that American Family Insurance issued the policy covering him. The district court essentially construed the motion as one to dismiss because Hill didn't name or sue the correct party. Over Hill's objection, the district court granted the motion. In a brief journal entry filed a month later, the district court stated it dismissed the action because Hill had “su[ed] the incorrect party.” Hill has timely appealed.
Legal Analysis
Ruling on Motion to Dismiss
Applying civil procedure principles and K.S.A.2013 Supp. 60–203(b), we conclude that the district court improperly granted the motion to dismiss.
There is no question that the petition and the summons did not clearly identify American Standard by name. The ostensible defendant—American Family Insurance—doesn't exist as a corporate entity. And the form of the name is closer to American Family Mutual Insurance than to American Standard. The Insurance Commissioner forwarded the summons and petition to American Family Mutual Insurance.
But there is also no question that Hill intended to sue the company from which he purchased motor vehicle insurance—American Standard. Just as plainly, American Standard received actual notice of Hill's action, since it duly filed an answer. American Standard also knew full well it insured Hill and, therefore, was the intended defendant. At that point, American Standard was in the case and had asserted various defenses to the claim.
Despite Hill's inexactitude in naming the defendant and the Insurance Commissioner's mistake in forwarding process to the wrong corporation, Hill managed to secure the appearance of the true, intended defendant. As a result, the caption of the petition and the later filings identifying the defendant as American Family Insurance were in the nature of misnomers that could have been corrected by amendment at the request of either party or at the district court's direction. See K.S.A.2013 Supp. 60–215(a)(2) (party may amend its pleading with leave of court, and leave “should [be] freely give[n] ... when justice so requires”). The intended defendant appeared in the case, but its formal name didn't match the caption of the pleadings. That's a correctable defect and doesn't prejudice the substantive rights of any party. K . S.A.2013 Supp. 60–261 (“At every stage of the proceeding, the court must disregard all errors and defects that do not affect any party's substantial rights.”). Hill had no need to bring some new or different party into the case as a defendant, so no substantive amendment of the pleadings was required. See Roberts v. Michaels, 219 F.3d 775, 777–78 (8th Cir.2000) (discussing misnomer and contrasting it with situation in which plaintiff names and serves process on defendant with no legal liability to plaintiff and then must amend to name and serve party with purported legal liability); Foskey v. Vidalia City School, 258 Ga.App. 298, 299, 574 S.E.2d 367 (2002) (under Georgia law, amendment to correct name of party freely permitted but amendment to bring new party into suit should not be allowed); Drexelbrook Assoc. v. Penn. Human Relations, 51 A.3d 899, 903 (Pa.Cmw.2012).
As such, the district court should have allowed or directed the correction of the caption and the petition in response to the motion to dismiss. American Standard sought to dismiss on the grounds that American Family Insurance—the name in the caption of the petition—didn't insure Hill. But that was functionally a misnomer after American Standard answered, since the company insured Hill and was the intended defendant. So Hill had gotten the proper party into district court.
A party actually appearing in response to civil litigation cannot defend on the merits on the ground the caption of the case doesn't accurately or sufficiently state his, her, or its name. There is neither such an affirmative defense in K.S.A.2013 Supp. 60–208(c) nor a basis for dismissal under K.S.A.2013 Supp. 60–212(b). The corrective is not dismissal of the action but conforming the caption to the answering party's actual name. To do otherwise, places form over substance to no sensible end. The district court's explicit reason for dismissing fails as a matter of law.
We suppose (but do not decide) that the district court's ruling should be reviewed for abuse of discretion. We make that supposition because American Standard would be entitled to no more favorable a standard. A district court exceeds that discretion if it rules in a way no reasonable judicial officer would under the circumstances, if it ignores controlling facts or relies on unproven factual representations, or if it acts outside the legal framework appropriate to the issue. See Northern Natural Gas Co. v. ONEOK Field Services Co., 296 Kan. 906, 935, 296 P.3d 1106, cert. denied 134 S.Ct. 162 (2013) ; State v. Ward, 292 Kan. 541, Syl. ¶ 3, 256 P.3d 801 (2011), cert. denied 132 S.Ct. 1594 (2012). As we have already stated, the district court stepped outside the governing legal principles to dismiss because once American Standard—Hill's intended defendant—answered, the garbled name on the pleadings should have been corrected as a matter of course. The district court also misconstrued the facts and the law in a related way in failing to treat American Standard's motion as raising a correctable error amounting to misnomer.
Civil suits, such as Chapter 60 actions, provide a mechanism for parties with legal disputes to resolve those differences when they cannot manage to do so for themselves. The petition, service of process, and the answer serve to bring the disputants before the court and to outline in general terms the nature of the disagreement. If the actual disputant alleged to have caused the harm appears in the court, the judicial mechanism ought to move forward notwithstanding even some significant irregularity in the names used in the initial paperwork. To be sure, a disputant has the right to be sued in his, her, or its own name and to have an erroneous name corrected. But it would be an extravagant and inappropriate remedy to grant a disputant already in court a dismissal because of a nominal mix-up causing no legal disadvantage. American Standard angled for that extravagance, and the district court inappropriately obliged.
In this respect, the second sentence of K.S.A.2013 Supp. 60–261 is particularly instructive in requiring a court to disregard those errors or defects that do not adversely affect any party's substantial rights. American Standard doesn't identify any tangible harm it suffered because of the defective name in the petition or the summons. A leading commentator explained the purpose of an identical provision in Fed.R.Civ.P. 61 this way: “The theory of the harmless error rule generally is that procedure is a practical means to an end, the requirements of which should be no more exacting than efficiency requires.” 11 Wright, Miller & Kane, Federal Practice and Procedure: Civil 3d § 2881 (2012). Thus, courts should “ignore procedural errors” that do not prejudice a party. Federal Practice and Procedure: Civil 3d § 2881. While the first sentence of K.S.A.2013 Supp. 60–261 protects judgments from attacks premised on harmless errors, the second sentence precludes the reverse—entering judgments against parties based on errors that do not materially affect their opponent's rights. Hill suffered just that prohibited fate.
The factual and legal circumstances would have been materially different had American Family Mutual answered and denied liability because it never insured Hill. That would not be a mere misnomer, although the caption could be changed to reflect American Family Mutual Insurance's correct name. Had that happened, Hill would not have secured the presence of the correct or intended defendant in the district court. Rather, a party without any legal duty to Hill would have come before the district court, and it could not be held accountable for the conduct of American Standard. So Hill would have had to obtain American Standard's appearance in the case—that would be adding a new party—and he likely would have had to amend the petition to name the corporation correctly. Depending on the delay in getting that done, American Standard might have had a defense based on the running of the statute of limitations. But all of that is purely speculative because American Standard, rather than American Family Mutual Insurance, appeared and answered the petition.
American Standard's Affirmative Defenses
In its answer, American Standard did assert three defenses under K.S.A.2013 Supp. 60–212(b) directly related to service of process: lack of personal jurisdiction, the insufficiency of the process, and the insufficiency of its service. All of those rest on the fractured name Hill used in the summons and the Insurance Commissioner's direction of process to American Family Mutual Insurance rather than to American Standard. Those defenses cannot be disposed of as a matter of misnomer. A civil action is commenced by service of process and irregularities in that service cannot be excused simply by conforming the name in the papers to the name of the responding defendant. Similarly, personal jurisdiction cannot be conferred that way, since it depends upon service of process on the defendant. That is, a court acquires personal jurisdiction over a defendant when he, she, or it, has been served with valid process.
We presume the district court could have considered a motion to dismiss from American Standard because the summons and petition didn't adequately name it and because the Insurance Commissioner forwarded process to American Family Mutual Insurance, and, in turn, because the district court, thereby, failed to acquire personal jurisdiction. We also assume American Standard's oral motion may have included those defenses, although that isn't really how the company explained its position. We put to one side the stipulation in the pretrial order that appears to recognize the district court's jurisdiction over American Standard as a party to the action.
Assuming the district court relied on those affirmative defenses in granting American Standard's motion to dismiss, the ruling may be reviewed without deference because the relevant facts are undisputed and the resolution ultimately turns on the application of K.S.A.2013 Supp. 60–203. See State v. Murdock, 299 Kan. 312, 314, 323 P.3d 846 (2014) (interpretation of statute question of law given unlimited review on appeal); City of Neodesha v. BP Corporation, 295 Kan. 298, 324, 287 P.3d 214 (2012) (if facts undisputed, issue typically for jury may be decided as question of law). Even if the standard were abuse of discretion, the district court failed to consider K.S.A.2013 Supp. 60–203 and, thus, used an inadequate legal framework.
In any event, K.S.A.2013 Supp. 60–203(b) would permit Hill to correct a defect in the sufficiency or service of process, thereby also curing any resulting lack of personal jurisdiction. He wasn't afforded that opportunity—a clear error of law. The statute provides that “if service of process ... purports to have been made but is later adjudicated to have been invalid due to an irregularity in form or procedure or a defect in making service,” the plaintiff must be given 90 days from that adjudication to effect valid service.” The Kansas Supreme Court recently held that K.S.A.2013 Supp. 60–203(b) must be read in conformity with its plain wording to afford broad protection to a plaintiff attempting to serve process. Fisher v. DeCarvalho, 298 Kan. 482, 501–02, 314 P .3d 214 (2013). The court found that the statute should be applied whenever service of process purports to have been made and is then judicially determined to be defective for any reason. 298 Kan. at 502. The court recognized the legislature intended to foster, as public policy, the recognized principle that civil litigation typically should be resolved on the merits rather than on technical defects in pleadings or process. 298 Kan. at 500. The current version of K.S.A.2013 Supp. 60–203(b) was enacted to avoid the dismissal of claims when a defendant has learned of the action despite the faulty service of process, has appeared in the case, and then moves to dismiss based on defective process or its service after the limitations period has run. 298 Kan. at 496.
This case comes within the scope of the policy protected in K.S.A.2013 Supp. 60–203(b), especially as construed in Fisher. Hill intended to sue the company that had issued his motor vehicle insurance policy. The Insurance Commissioner purported to have served process and did, in fact, serve process on the company it believed to have been named in the petition. Process, however, was delivered to the wrong corporation. Nonetheless, that satisfied the first aspect of K.S.A.2013 Supp. 60–203(b) requiring that service of process purported to have been made. If the district court dismissed on American Standard's defenses of insufficiency of process, insufficiency of service of process, or the resulting lack of personal jurisdiction, it erred in failing to allow Hill the opportunity to effect valid service. Under K.S.A.2013 Supp. 60–203(b), Hill should have been given 90 days to correctly serve American Standard.
On appeal, American Standard principally contends Hill functionally named American Family Mutual Insurance in his petition and functionally summoned American Family Mutual Insurance to the district court. Therefore, according to American Standard, the motion to dismiss was well taken, and the district court properly granted it. As we have already suggested, we disagree with that reasoning. The petition, of course, didn't name a legal entity at all, but it described the defendant as Hill's insurance company—at the time of the 2006 mishap. But even assuming the premises underlying American Standard's contention, the argument has no real force because American Standard did appear and answered the petition knowing it was the described defendant. So even if Hill summoned American Family Mutual Insurance, he actually got American Standard-the defendant he really wanted all along. We fail to see any prejudice to American Standard in that situation. The argument would have more force if American Family Mutual Insurance had been the party answering the petition and sought to defend on the grounds it never insured Hill.
As part of that argument, American Standard goes to great lengths to explain why this is not simply a nominal error or misnomer. But, as we have discussed, the argument turns on a legal sleight of hand rather than sound principles. It depends on the notion that the true defendant in a civil action is the name on the papers rather than the individual or entity actually filing an answer and contesting the allegations of the petition. And, in turn, it invokes the equally untenable notion that the papers can't be conformed to reflect the actual litigants. American Standard's position conflicts with settled precepts of fairness that suffuse the Kansas Code of Civil Procedure. See K.S.A.2013 Supp. 60–102 (Kansas Code of Civil Procedure to be “construed and administered to secure the just, speed and inexpensive determination of every action”); K.S.A.2013 Supp. 60–208(e) (“Pleadings must be construed so as to do justice.”); K.S.A.2013 Supp. 60–215(a)(2) (leave to amend to be freely given as justice requires); K.S.A.2013 Supp. 60–261.
Conclusion
In sum, Hill should not have been deprived of his opportunity to litigate the merits of his claim against American Standard based on the motion to dismiss. The district court erred. The Kansas Code of Civil Procedure favors the fair adjudication of legal disputes on their substantive issues rather than dismissals on technicalities that otherwise prejudice no one. In keeping with that preference in the law, we reverse the judgment and remand for further proceedings consistent with this decision.
Reversed and remanded for further proceedings.