Kannaday v. Ball, 2:12-cv-02742

Background

Hoyt caused a fatal crash on July 13, 2005; Geico insured with $25k per person, $50k per accident; three passengers Gold, Wright, and Kannaday were injured; Kannaday obtained a judgment against Hoyt’s Estate; estate assets were effectively nonexistent and later protected by the non-claim statute; Geico offered and paid policy limits and pursued interpleader to resolve competing claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Geico’s settlement conduct violated duties to the claimants	Kannaday argues Geico acted negligently/bad faith by not settling within limits	Geico acted in good faith, sought full policy payment, and used interpleader to manage competing claims	No liability; Geico acted in good faith and not negligently harmed the Estate.
Whether there was a conflict of interest between Geico and Fleeson	Estate/Kannaday contend conflict due to dual representation	No actual conflict; Estate assets were nonexistent and non-claim statute protected interests	No actual conflict; interests were aligned and no harm shown.
Whether Special Administrator Ball’s conduct breached duties and prejudiced Geico	Ball failed to cooperate and pursued a separate settlement	Ball’s cooperation breakdown was the principal cause of issues; Fleeson acted for the Estate	Ball’s lack of cooperation supported Geico’s defense; no recovery against Geico.
Whether the non-claim statute bars recovery or affects liability	Argues the Estate’s lack of assets should not bar claims entirely	Statute protected assets; interpleader and limits-based analysis applied	Estate assets protected; no recovery against Geico; the insolvency context is accounted for but does not create liability.
Whether interpleader was an appropriate tool for resolving the claims	Interpleader used to distribute policy limits among claimants	Interpleader was appropriate and consistent with Kansas practice	Interpleader was reasonable and proper to satisfy policy obligations.

Key Cases Cited

Farmers Ins. Exh. v. Schropp, 222 Kan. 612 (1977) (interpleader and settlement principles in multiple-claim scenarios)
Bollinger v. Nuss, 202 Kan. 326 (1969) (negligence/bad faith standards in settling claims within policy limits)
Glenn v. Fleming, 247 Kan. 296 (1990) (public policy supporting fair settlement practices)
Wade v. EMCASCO Insurance, 483 F.3d 657 (10th Cir. 2007) (insurer bad faith standards and settlement incentives in insurance context)
McNally v. Nationwide Ins. Co., 815 F.2d 254 (3d Cir. 1987) (insurer duties when insolvent insured context and settlement incentives)