White v. Allied Mutual Insurance

31 P.3d 328, 29 Kan. App. 2d 797, 2001 Kan. App. LEXIS 880
CourtCourt of Appeals of Kansas
DecidedSeptember 21, 2001
DocketNo. 85,093
StatusPublished
Cited by12 cases

This text of 31 P.3d 328 (White v. Allied Mutual Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
White v. Allied Mutual Insurance, 31 P.3d 328, 29 Kan. App. 2d 797, 2001 Kan. App. LEXIS 880 (kanctapp 2001).

Opinion

Beier, J.:

This case requires us to decide whether an insurance company is bound to a settlement agreement negotiated on behalf of an injured minor if the company changes its mind about the value of the claim before scheduling a “friendly” hearing intended by both sides to obtain approval of the settlement.

Elizabeth White, 15, was a passenger in a car driven by her boyfriend and owned by her father, Steven, when the car was involved in a single-car accident. She suffered severe and permanent injuries to her right hand. Defendant Allied Mutual Insurance Company (Allied) was the liability carrier on the car.

Allied agreed with Steven to settle Elizabeth’s claim for $45,000, subject to approval of the court in a “friendly” hearing, and Allied turned the matter over to counsel to arrange for and conduct the hearing. Allied’s counsel made initial contact with Steven about the hearing. Then there was a sudden and lengthy silence.

Several months later, Steven contacted Allied because Allied had neither initiated the hearing nor paid the $45,000. Allied informed Steven that it had decided not to settle after all. Since negotiating with Steven and arriving at the $45,000 settiement amount, it had become aware of legal authority supporting a defense to Elizabeth’s claim.

Steven sought specific enforcement of the settlement agreement. The district court granted summary judgment in favor of Allied, finding Steven “had no legal authority to enter into a binding settlement contract on behalf of his minor daughter and, therefore, Allied lawfully withdrew its offer to setde. Without the existence of a settlement contract the plaintiffs breach of contract lawsuit must be dismissed.”

The standard of review for a motion for summary judgment is well established and often recited:

“Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. K.S.A. 60-256(c). On appeal, we apply die same rules, and where we find reasonable minds could differ as to the con[799]*799elusions drawn from the evidence, summary judgment must be denied.’’Jackson v. U.S.D. 259, 268 Kan. 319, 322, 995 P.2d 844 (2000).

A settlement agreement is a type of contract and, therefore, governed by contract law. See Marquis v. State Farm Fire & Cas. Co, 265 Kan. 317, 323-24, 961 P.2d 1213 (1998). To create a contract, the parties involved in making the contract must have the capacity to contract. See Aetna Life & Cas. v. Americas Truckway Systems, Inc., 23 Kan. App. 2d 315, 319, 929 P.2d 807 (1997) (there must be at least two parties to a contract); see also U.S.D. No. 443 v. Kansas State Board of Education, 266 Kan. 75, 88, 966 P.2d 68 (1998) (municipal corporations cannot bind themselves by a contract in a manner that is beyond the scope of their powers).

Steven argues that he and Allied had a binding oral contract. Allied argues that there was no contract because die court never approved the settlement agreement and Steven lacked the capacity or legal authority to enter into an enforceable contract on his own.

Both parties cite Railway Co. v. Lasca, 79 Kan. 311, 99 Pac. 616 (1909). In Lasca, the minor plaintiff was 18 months old when his hands were run over by the wheel of a railroad car. His parents settled his claim against the railway company for $100, and the settlement was approved by the district court. Later, a second suit was brought to set aside the judgment entered on the basis of the settlement. The district court ordered the judgment set aside and the Supreme Court affirmed, finding the parents could negotiate for a fair adjustment of the controversy, but a settlement could not bind the infant without court approval after careful review. 79 Kan. at 316; See Childs v. Williams, 243 Kan. 441, 441, 757 P.2d 302 (1988) (“Because a minor can disavow a contract within a reasonable time after reaching majority [under K.S.A. 38-102], it is necessary to reduce a minor s settlement to judgment with court approval to make it binding.”); cf. Myers v. Anderson, 145 Kan. 775, 67 P.2d 542 (1937) (mother lacked authority to settle child’s cause of action for support from father; trial court erred in holding mother’s settlement with father bars child’s recovery).

Thus there is ample authority in Kansas for the idea that a minor is not bound by a settlement agreement such as the one in this [800]*800case until court approval has been obtained. Even then, the minor may escape the settlement if the review hearing was inadequate to protect his or her interests. See Leslie v. Manufacturing Co., 102 Kan. 159, 164, 169 Pac. 193 (1917). And courts in other jurisdictions have applied this rule to permit minors to repudiate or withdraw from a settlement prior to its approval by the court. See e.g., Dacany v. Mendoza, 573 F.2d 1075, 1079-80 (9th Cir. 1978) (applying Guam law; settlement voidable at election of minor until it receives court’s imprimatur); Scruton v. Korean Air Lines Co., 39 Cal. App. 4th 1596, 1608, 46 Cal. Rptr. 2d 638 (1995) (compromise of claim could be repudiated by guardian for minor at any time until approval rendered); Wreglesworth v. Arctco, Inc., 316 Ill. App. 3d 1023, 1027-28, 738 N.E.2d 964, 969 (2000) (release of minor’s claims ineffective absent probate court approval). We agree that this is logical. The question becomes: Does the party responsible for paying the settlement amount have the same right?

Steven is correct that the public policy behind the requirement of court approval is protection of the minor’s interests, not those of the minor’s opponent. Kansas’ appellate decisions repeatedly urge reviewing courts to exercise extensive oversight, ensuring that the injured minor’s claims are not sold short by an agreed settlement merely outlined at a “friendly” hearing. As we said in Baugh v. Baugh, 25 Kan. App. 2d 871, 872-73, 973 P.2d 202 (1999): “The district court may not simply rely on the fact that the minor’s parents have consented to the proposed agreement. Instead, the court must determine whether the agreement is in the minor’s best interests.” See also Leslie, 102 Kan.

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31 P.3d 328, 29 Kan. App. 2d 797, 2001 Kan. App. LEXIS 880, Counsel Stack Legal Research, https://law.counselstack.com/opinion/white-v-allied-mutual-insurance-kanctapp-2001.