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ELLIS v. STATE FARM MUT. AUTO. INS. CO.

12/6/1991

The opinion of the court was delivered by





Jack R. Ellis petitioned for review of the Court of Appeals decision limiting his postjudgment interest award. Ellis v. State Farm Mut. Auto. Ins. Co., No. 64,751, unpublished opinion filed February 15, 1991. Ellis claims the Court of Appeals (1) failed to follow Glenn v. Fleming, 247 Kan. 296, 799 P.2d 79 (1990), which states that under a standard supplementary payments clause in a liability insurance policy, an insurer is liable for all interest on the entire amount of any judgment which accrues after entry of the judgment and before the insurer has paid or tendered or deposited in court the amount of the policy limits plus interest on the entire judgment, and (2) improperly found his postjudgment interest claim was barred by the doctrine of res judicata.


Ellis was injured in an automobile-pedestrian accident on February 27, 1981. State Farm Mutual Automobile Insurance Company (State Farm) insured both Ellis, the pedestrian, and Horace Whittaker, the driver of the automobile that struck Ellis. State Farm paid Ellis $61,151.21 in personal injury protection (PIP) benefits under his insurance policy. Whittaker's automobile liability insurance limit for injury to one person was $25,000. Ellis sued Whittaker on July 20, 1981, in Thomas County. In February 1982, State Farm intervened under K.S.A. 40-3113a to assert its PIP lien of $61,151. The case was settled for $175,000 on March 8, 1983. The policy limit of $25,000 was mailed by Whittaker's insurer (State Farm) on April 15, 1983, to the clerk of the district court of Thomas County. The clerk received the $25,000 settlement draft on April 19, 1983. In August 1983, the trial court ordered that the $25,000 paid into court, less attorney fees, be paid to Ellis' insurer (State Farm) under its PIP lien. Ellis did not appeal the court's order to reimburse State Farm.


On January 13, 1984, the Supreme Court decided State Farm Mut. Auto. Ins. Co. v. Kroeker, 234 Kan. 636, 676 P.2d 66 (1984). In Kroeker, we held a PIP insurer is not entitled to reimbursement for prior PIP payments out of payments made on behalf of a tortfeasor on a settlement or on a judgment when such payments are not duplicative of the PIP benefits. Relying on Kroeker, Ellis filed a motion, pursuant to K.S.A. 60-260(b), to modify the 1983 judgment disbursement of the $25,000 to State Farm. The district


court refused to modify the judgment, finding the motion inappropriate because Ellis had failed to appeal. The Court of Appeals affirmed. Ellis v. Whittaker, 10 Kan. App. 2d 676, 709 P.2d 991 (1985).


On March 7, 1988, Ellis filed the present case in Sedgwick County, requesting a judgment in the amount of $107,374.61 for interest due Ellis on the 1983 judgment from April 15, 1983, the date State Farm mailed the $25,000 to the clerk of the district court, through March 7, 1988, the date of the filing of the petition in the present case, and for additional interest thereafter at 10.5% per annum. The claim for the interest is based on a provision in Whittaker's policy of insurance which stated:
"Section I — Liability — Coverage A:
. . . .
SUPPLEMENTARY PAYMENTS
In addition to our limit of liability, we will pay on behalf of a covered person:
. . . .
3. Interest accruing after a judgment is entered in any suit we defend. Our duty to pay interest ends when we offer to pay that part of the judgment which does not exceed our limit of liability for this coverage."

In July 1988, the case was transferred from Sedgwick County to Thoma

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