Case 5:24-cv-04029-JAR Document 52 Filed 04/14/25 Page 1 of 17
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF KANSAS
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`KANSAS MASONIC FOUNDATION, INC.,
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`Plaintiff,
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`v.
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`AUTO-OWNERS INSURANCE COMPANY,
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`Defendant.
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` Case No. 5:24-CV-04029-JAR
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`MEMORANDUM AND ORDER
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`Plaintiff Kansas Masonic Foundation, Inc. filed this removal action against Defendant
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`Auto-Owners Insurance Company seeking a judicial declaration that it could recover employee
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`dishonesty losses under an insurance policy issued by Defendant. This matter is now before the
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`Court on the parties’ cross-motions for summary judgment (Docs. 40, 42). For the reasons stated
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`in more detail below, the Court denies Plaintiff’s motion for summary judgment and grants
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`Defendant’s motion for summary judgment.
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`I.
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`Summary Judgment Standard
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`Summary judgment is appropriate if the moving party demonstrates that there is no
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`genuine dispute as to any material fact and that it is entitled to judgment as a matter of law.1 In
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`applying this standard, the Court views the evidence and all reasonable inferences therefrom in
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`the light most favorable to the nonmoving party.2 “There is no genuine issue of material fact
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`unless the evidence, construed in the light most favorable to the non-moving party, is such that a
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`reasonable jury could return a verdict for the non-moving party.”3 A fact is “material” if, under
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`1 Fed. R. Civ. P. 56(a); see also Grynberg v. Total, 538 F.3d 1336, 1346 (10th Cir. 2008).
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`2 City of Herriman v. Bell, 590 F.3d 1176, 1181 (10th Cir. 2010).
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`3 Bones v. Honeywell Int’l, Inc., 366 F.3d 869, 875 (10th Cir. 2004).
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`Case 5:24-cv-04029-JAR Document 52 Filed 04/14/25 Page 2 of 17
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`the applicable substantive law, it is “essential to the proper disposition of the claim.”4 An issue
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`of fact is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the
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`non-moving party.”5
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`The moving party initially must show the absence of a genuine issue of material fact and
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`entitlement to judgment as a matter of law.6 Once the movant has met this initial burden, the
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`burden shifts to the nonmoving party to “set forth specific facts showing that there is a genuine
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`issue for trial.”7 The nonmoving party may not simply rest upon its pleadings to satisfy its
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`burden.8 Rather, the nonmoving party must “set forth specific facts that would be admissible in
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`evidence in the event of trial from which a rational trier of fact could find for the nonmovant.”9
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`To accomplish this, the facts “must be identified by reference to an affidavit, a deposition
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`transcript or a specific exhibit incorporated therein.”10 The non-moving party cannot avoid
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`summary judgment by repeating conclusory opinions, allegations unsupported by specific facts,
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`or speculation.11
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`“Where, as here, the parties file cross motions for summary judgment, we are entitled to
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`assume that no evidence needs to be considered other than that filed by the parties, but summary
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`4 Wright ex rel. Trust Co. of Kan. v. Abbott Labs., Inc., 259 F.3d 1226, 1231–32 (10th Cir. 2001) (citing
`Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998)).
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`5 Thomas v. Metro. Life Ins. Co., 631 F.3d 1153, 1160 (10th Cir. 2011) (quoting Anderson v. Liberty Lobby,
`Inc., 477 U.S. 242, 248 (1986)).
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`6 Spaulding v. United Transp. Union, 279 F.3d 901, 904 (10th Cir. 2002) (citing Celotex Corp. v. Catrett,
`477 U.S. 317, 323–24 (1986)).
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`7 Anderson, 477 U.S. at 256.
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`8 Id.; accord Eck v. Parke, Davis & Co., 256 F.3d 1013, 1017 (10th Cir. 2001).
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`9 Mitchell v. City of Moore, 218 F.3d 1190, 1197–98 (10th Cir. 2000) (quoting Adler, 144 F.3d at 671).
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`10 Adams v. Am. Guar. & Liab. Ins. Co., 233 F.3d 1242, 1246 (10th Cir. 2000).
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`11 Argo v. Blue Cross & Blue Shield of Kan., Inc., 452 F.3d 1193, 1199) (10th Cir. 2006) (citations
`omitted).
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`2
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`Case 5:24-cv-04029-JAR Document 52 Filed 04/14/25 Page 3 of 17
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`judgment is nevertheless inappropriate if disputes remain as to material facts.”12 Cross summary
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`judgment motions should be evaluated as two separate motions.13 Just because the Court denies
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`one does not require that it grant the other.14
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`Finally, summary judgment is not a “disfavored procedural shortcut;” on the contrary, it
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`is an important procedure “designed ‘to secure the just, speedy and inexpensive determination of
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`every action.’”15
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`II.
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`Uncontroverted Facts
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`The following facts are either uncontroverted or stipulated. The Court disregards
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`conclusory allegations without specific supporting facts that do not have probative value16 and
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`“statements of mere belief.”17 The Court does not consider legal arguments included in the
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`parties’ statements of facts.
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`Plaintiff is a not-for-profit corporation. From July 1, 2015, to July 1, 2023, Plaintiff
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`purchased business insurance from three providers: Cincinnati Insurance Company
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`(“Cincinnati”), New Hampshire Insurance Company (“New Hampshire”), and Defendant. Each
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`policy included commercial crime coverage. Each policy’s policy periods were as follows:
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`12 James Barlow Fam. Ltd. P’ship v. David M. Munson, Inc., 132 F.3d 1316, 1319 (10th Cir. 1997)
`(citation omitted).
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`13 Banner Bank v. First Am. Title Ins. Co., 916 F.3d 1323, 1326 (10th Cir. 2019).
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`14 Id.
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`15 Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986) (quoting Fed. R. Civ. P. 1).
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`16 Fitzgerald v. Corr. Corp. of Am., 403 F.3d 1134, 1143 (10th Cir. 2005) (citations omitted).
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`17 Argo v. Blue Cross Blue Shield of Kan., Inc., 452 F.3d 1193, 1200 (10th Cir. 2006) (quoting Tavery v.
`United States, 32 F.3d 1423, 1427 n.4 (10th Cir. 1994)).
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`3
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`Case 5:24-cv-04029-JAR Document 52 Filed 04/14/25 Page 4 of 17
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`Policy
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`Term
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`Cincinnati Policy18
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`New Hampshire Policy 119
`New Hampshire Policy 220
`New Hampshire Policy 321
`New Hampshire Policy 422
`Auto-Owners Policy 123
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`Auto-Owners Policy 224
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`Auto-Owners Policy 325
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`On September 7, 2022, Plaintiff discovered that one of its employees had written and
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`7/1/2013–7/1/2016
`7/1/2016–7/1/2017
`7/1/2017–7/1/2018
`7/1/2018–7/1/2019
`7/1/2019–7/1/2020
`7/1/2020–7/1/2021
`7/1/2021–7/1/2022
`7/1/2022–7/1/2023
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`cashed numerous checks to herself without authority. The employee’s scheme spanned several
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`years. The employee was immediately terminated and eventually pled guilty to one count of
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`bank fraud. Plaintiff’s losses totaled $554,491.14.
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`On October 17, 2022, Plaintiff submitted to Defendant a claim for losses sustained due to
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`the employee’s dishonesty. Plaintiff claimed $138,336.14 in losses for checks cashed by the
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`employee from March 19, 2019, to September 1, 2022. In response, Defendant paid $137,152.54
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`to Plaintiff for losses sustained from July 1, 2020, to September 7, 2022.
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`Next, Plaintiff submitted a claim to New Hampshire for losses sustained due to the
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`employee’s theft from July 1, 2019, to July 1, 2020. New Hampshire denied Plaintiff’s claim as
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`18 “Cincinnati Policy” refers to Policy Number EPP 019 83 80 issued by Cincinnati. Doc. 41-2.
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`19 “New Hampshire Policy 1” refers to Policy Number 01-LX-011395277-0 issued by New Hampshire.
`Doc. 41-3.
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`20 “New Hampshire Policy 2” refers to Policy Number 01-LX-011395277-1 issued by New Hampshire.
`Doc. 41-4.
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`21 “New Hampshire Policy 3” refers to Policy Number 01-LX-011395277-2 issued by New Hampshire.
`Doc. 41-5.
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`22 “New Hampshire Policy 4” refers to Policy Number 01-LX-011395277-3 issued by New Hampshire.
`Doc. 41-6.
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`23 “Auto-Owners Policy 1” refers to Policy Number 204613-75896443-20 issued by Defendant. Doc. 41-7.
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`24 “Auto-Owners Policy 2” refers to Policy Number 204613-75896443-21 issued by Defendant. Doc. 41-8.
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`25 “Auto-Owners Policy 3” refers to Policy Number 204613-75896443-22 issued by Defendant. Doc. 41-9.
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`Case 5:24-cv-04029-JAR Document 52 Filed 04/14/25 Page 5 of 17
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`untimely because “[t]he extended period to discover a loss ended on July 1, 2021, or when the
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`replacement crime coverage purchased went into effect in January 2020.”26
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`On June 26, 2023, Plaintiff submitted another claim to Defendant for $410,000 under the
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`“Loss Sustained During Prior Insurance” provisions of the Auto-Owners policies. Plaintiff
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`sought insurance coverage for losses it sustained due to the employee’s theft that occurred
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`between August 28, 2015, and March 17, 2020. During this period, the employee wrote checks
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`to herself in the following amounts, totaling $410,000:
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`July 1, 2015 to July 1, 2016: $111,750
`July 1, 2016 to July 1, 2017: $120,500
`July 1, 2017 to July 1, 2018: $62,750
`July 1, 2018 to July 1, 2019: $69,000
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`On October 17, 2023, Defendant denied Plaintiff’s claim. Plaintiff requested reconsideration of
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`the denial, and Defendant responded that its prior payment of $137,152.54 in response to
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`Plaintiff’s first claim “represent[s] the maximum amount of its obligation under its insurance
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`policies for these thefts and that it has no further payment obligations to [Plaintiff] for this
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`occurrence.”27
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`Each of the policies Defendant issued to Plaintiff contains Crime General Provisions.
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`General Condition 4, Discovery Period for Loss, states: “We will pay only for covered loss
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`discovered no later than one year from the end of the policy period.”28 General Condition 10,
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`Loss Sustained During Prior Insurance,29 states:
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`26 Doc. 41-15 at 2.
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`27 Doc. 41-19 at 2.
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`28 Docs. 41-7 at 151; 41-8 at 153; 41-9 at 153.
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`29 The Court refers to General Condition 10 and similar provisions in other insurance policies designed to
`provide coverage for losses sustained during the policy periods of prior insurance policies as “prior loss provisions.”
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`Case 5:24-cv-04029-JAR Document 52 Filed 04/14/25 Page 6 of 17
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`a. If you, or any predecessor in interest, sustained loss
`during the period of any prior insurance that you or the
`predecessor in interest could have recovered under that
`insurance except that the time within which to discover
`loss had expired, we will pay for it under this insurance
`provided:
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`(1) This insurance became effective at the time of
`cancellation or termination of the prior insurance;
`and
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`(2) The loss would have been covered by this insurance
`had it been in effect when the acts or events causing
`the loss were committed or occurred.
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`b. The insurance under this Condition is part of, not in
`addition to, the Limits of Insurance applying to this
`insurance and is limited to the lesser of the amount
`recoverable under:
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`(1) This insurance as of its effective date; or
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`(2) The prior insurance had it remained in effect.30
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`General Condition 15, Policy Period, states, in relevant part, that “[s]ubject to the Loss Sustained
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`During Prior Insurance condition, we will pay only for loss that you sustain through acts
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`committed or events occurring during the Policy Period.”31
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`On March 6, 2024, Plaintiff filed a petition for declaratory judgment against Defendant in
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`the Shawnee County, Kansas District Court seeking a declaration that it could recover $410,000
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`in employee dishonesty losses from Defendant for losses sustained between August 28, 2015,
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`and March 17, 2020. Plaintiff’s petition also sought attorneys’ fees pursuant to K.S.A. § 40-256,
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`costs, and expenses, claiming Defendant refused to pay Plaintiff’s claim without just cause or
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`excuse. Defendant timely removed the action to this Court on April 12, 2024. Plaintiff filed its
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`30 Docs. 41-7 at 152; 41-8 at 154; 41-9 at 154.
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`31 Docs. 41-7 at 153; 41-8 at 155; 41-9 at 155.
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`Case 5:24-cv-04029-JAR Document 52 Filed 04/14/25 Page 7 of 17
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`First Amended Complaint in this Court on June 25, 2024, seeking the same relief sought in the
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`state court petition.
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`III. Discussion
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`Both parties move for summary judgment on two issues: (1) interpretation of Auto-
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`Owners Policy 3’s prior loss provision and Defendant’s obligations thereunder, and (2) whether
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`Plaintiff is entitled to attorneys’ fees pursuant to K.S.A. § 40-256.
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`A. Interpretation of Auto-Owners Policy 3’s Prior Loss Provision
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`Plaintiff claims that it is entitled to recover from Defendant $410,000 in losses it
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`sustained due to its employee’s theft that occurred between August 28, 2015, and March 17,
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`2020. Plaintiff argues that although those losses occurred before it was insured by Defendant, it
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`is entitled to recover under Auto-Owners Policy 3. Specifically, Plaintiff contends that General
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`Condition 10 of Auto-Owners Policy 3, the prior loss provision, requires Defendant to pay for
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`losses that occurred during the policy periods of any of Plaintiff’s prior insurance policies if
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`certain factors are met. Defendant argues that Auto-Owners Policy 3’s prior loss provision only
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`requires Defendant to pay for losses sustained during Auto-Owners Policy 2’s policy period, the
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`policy immediately preceding Auto-Owners Policy 3. Thus, the principal issue is interpretation
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`of Auto-Owners Policy 3’s prior loss provision. The Court agrees with Defendant’s
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`interpretation of the provision.
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`When exercising diversity jurisdiction, federal courts apply the law of the forum state in
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`which they are sitting, including that state’s choice of law rules.32 The parties agree that Kansas
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`substantive law is controlling.33 Under Kansas law, interpretation of a written insurance contract
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`32 Tucker v. R.A. Hanson Co., 956 F.2d 215, 217 (10th Cir. 1992).
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`33 Doc. 38 at 2.
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`Case 5:24-cv-04029-JAR Document 52 Filed 04/14/25 Page 8 of 17
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`is a question of law properly decided at the summary judgment stage.34 “If the state’s highest
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`court has not addressed the issue presented, the federal court must determine what decision the
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`state court would make if faced with the same facts and issue.”35 To do so, courts “consider state
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`court decisions, decisions of other states, federal decisions, and the general weight and trend of
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`authority.”36
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`In construing an insurance policy, a court must consider the instrument as a whole and
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`interpret the policy language in such a way as to give effect to the intent of the parties.37 “If an
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`insurance policy’s language is clear and unambiguous, it must be taken in its plain, ordinary, and
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`popular sense.”38 However, if the policy language is ambiguous, it must be construed in favor of
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`the insured.39 “To be ambiguous, a contract must contain provisions or language of doubtful or
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`conflicting meaning, as gleaned from a natural and reasonable interpretation of its language.
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`Ambiguity in a written contract does not appear until the application of pertinent rules
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`of interpretation to the face of the instrument leaves it genuinely uncertain which one of two or
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`more meanings is the proper meaning.”40 A court should not strain to find ambiguity where none
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`exists.41 “The test in determining whether an insurance contract is ambiguous is not what the
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`34 Crist v. Hunan Palace, Inc., 89 P.3d 573, 576 (Kan. 2004).
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`35 Armijo v. Ex Cam, Inc., 843 F.2d 406, 407 (10th Cir. 1988) (first citing Farmers Alliance Mut. Ins. v.
`Bakke, 619 F.2d 885, 888 (10th Cir.1980); and then citing Hartford v. Gibbons & Reed Co., 617 F.2d 567, 569 (10th
`Cir.1980)).
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`36 Id.
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`37 O’Bryan v. Columbia Ins. Grp., 56 P.3d 789, 792 (Kan. 2002).
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`38 Id.
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`39 Brumley v. Lee, 963 P.2d 1224, 1226 (Kan. 1998).
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`40 Catholic Diocese of Dodge City v. Raymer, 840 P.2d 456, 459 (Kan. 1992) (citing Patrons Mut. Ins. v.
`Harmon, 732 P.2d 741, 746 (Kan. 1987)).
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`41 Cent. Sec. Mut. Ins. v. DePinto, 681 P.2d 15, 17 (Kan. 1984).
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`insurer intends the language to mean, but what a reasonably prudent insured would understand
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`the language to mean.”42
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`Here, the parties have not cited, and the Court has not independently found, any Kansas
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`cases interpreting a prior loss provision. Thus, the Court must predict how the Kansas Supreme
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`Court would interpret such a provision.
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`Plaintiff can only recover under Auto-Owners Policy 3 if the requirements of General
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`Conditions 4, 10, and 15, discussed above, are satisfied.43 General Condition 4 states that
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`Defendant will only pay for losses “discovered no later than one year from the end of the policy
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`period.”44 Auto-Owners Policy 3’s policy period was from July 1, 2022, to July 1, 2023. The
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`losses at issue were discovered on September 7, 2022. Thus, General Condition 4 is satisfied.
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`General Condition 15 states that, subject to General Condition 10, Defendant will only
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`pay for losses sustained through events occurring during the policy’s policy period. Again,
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`Auto-Owners Policy 3’s policy period was from July 1, 2022, to July 1, 2023. The losses at
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`issue occurred between August 28, 2015, and March 17, 2020, before the policy period went into
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`effect. Thus, General Condition 15 precludes coverage under Auto-Owners Policy 3 unless
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`General Condition 10 permits recovery.
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`The parties agree that General Condition 10 creates four requirements, and Defendant is
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`only obligated to pay Plaintiff under this provision if all four requirements are satisfied. The
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`parties agree that the first, second, and fourth requirements are: (1) the loss occurred during a
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`period that “prior insurance” was in place; (2) the loss would have been covered under the prior
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`policy had the time to discover the loss not expired; and (4) the loss would have been covered by
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`42 O’Bryan, 56 P.3d at 793.
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`43 Doc. 41-9 at 152–55.
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`44 Id. at 153.
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`the current policy if it was in effect when the events causing the loss occurred.45 Defendant
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`concedes that these requirements are satisfied.
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`The parties disagree on the third requirement. Defendant contends that the third
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`requirement is that “the policy under which coverage is sought . . . must have become effective at
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`the time of the cancellation or termination of the prior insurance.”46 Defendant argues that this
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`requirement limits recovery to the single insurance policy that immediately preceded the Auto-
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`Owners policy under which coverage is sought. Therefore, Auto-Owners Policy 3’s prior loss
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`provision would limit recovery to Auto-Owners Policy 2; Auto-Owners Policy 2’s prior loss
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`provision would limit recovery to Auto-Owners Policy 1; and Auto-Owners Policy 1’s prior loss
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`provision would limit recovery to New Hampshire Policy 4. Thus, according to Defendant,
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`recovery for the losses at issue are not available under Auto-Owners Policy 3’s prior loss
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`provision because the losses did not occur during Auto-Owners Policy 2’s policy period, which
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`was from July 1, 2021, to July 1, 2022.
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`Plaintiff contends that the third requirement is that “the current policy was effective at the
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`time of cancellation/termination of the prior policy.”47 Plaintiff argues that the third requirement
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`does not limit recovery to the immediately preceding insurance policy; instead, Plaintiff urges
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`that it can recover under all of its prior policies if each one “terminated when the subsequent
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`policy became effective.”48 To support its argument, Plaintiff points to the phrase “any prior
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`insurance” found in the prior loss provision. Plaintiff contends that the phrase is not
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`accompanied by any qualifying language that restricts coverage to just one prior policy. Plaintiff
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`45 See Doc. 41 at 17; Doc. 43 at 10.
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`46 Doc. 47 at 3.
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`47 Doc. 41 at 17.
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`48 Id. at 18.
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`further contends that under Defendant’s interpretation of the prior loss provision, General
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`Condition 10 is illusory and meaningless. Plaintiff argues that:
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`[T]here would never be “any prior insurance” coverage, as
`under [Defendant’s] interpretation, no policy with an
`expired discovery period could be invoked by General
`Condition 10. Instead . . . only losses discovered within the
`General Condition 4 discovery period would ever be
`covered by the Prior Loss Provision. Put another way, if
`General Condition 10 was omitted from the policy entirely,
`the result would be the same—only losses occurring during
`the policy period would be covered.49
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`General Condition 10’s third requirement stems from the following language in the prior
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`loss provision: “This insurance became effective at the time of cancellation or termination of the
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`prior insurance.” Because this language is clear and unambiguous, the Court will take it in its
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`plain, ordinary, and popular sense. “This insurance” clearly refers to the insurance policy under
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`which coverage is sought, here, Auto-Owners Policy 3. “Became effective at” clearly refers to
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`the time at which Auto-Owners Policy 3 became effective, July 1, 2022. “The time of
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`cancellation or termination of the prior insurance” clearly refers to the time at which the prior
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`insurance policy that was effective when the losses occurred was cancelled or terminated.
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`Here, the losses at issue occurred between August 28, 2015, and March 17, 2020, and
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`spanned five insurance policies. Cincinnati Policy terminated on July 1, 2016; New Hampshire
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`Policy 1 terminated on July 1, 2017; New Hampshire Policy 2 terminated on July 1, 2018; New
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`Hampshire Policy 3 terminated on July 1, 2019; and New Hampshire Policy 4 terminated on July
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`1, 2020. None of these policies terminated on July 1, 2022, when Auto-Owners Policy 3 became
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`effective. Only Auto-Owners Policy 2 terminated when Auto-Owners Policy 3 became effective,
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`49 Doc. 41 at 20 (citation omitted).
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`Case 5:24-cv-04029-JAR Document 52 Filed 04/14/25 Page 12 of 17
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`but the losses at issue did not occur during Auto-Owners Policy 2’s policy period. Thus, this
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`requirement is not satisfied and coverage under the prior loss provision is not permitted.
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`The Court’s interpretation of the prior loss provision does not render General Condition
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`10 illusory and meaningless. Nor does the coexistence of General Condition 4 and General
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`Condition 10 create an ambiguity. There are instances where General Condition 10 would allow
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`an insured to recover losses that would otherwise be unrecoverable without the provision. In
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`fact, Defendant’s payment to Plaintiff in response to Plaintiff’s first insurance claim is an
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`example. Plaintiff’s first claim to Defendant included losses that occurred between July 1, 2020,
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`and July 1, 2021, during Auto-Owners Policy 1’s policy period. General Condition 4 would
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`have prohibited recovery under Auto-Owners Policy 1 because the losses were discovered on
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`September 7, 2022, more than one year from the end of Auto-Owners Policy 1’s policy period
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`which ended on July 1, 2021. However, Defendant used Auto-Owners Policy 2’s prior loss
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`provision to pay Plaintiff for those losses. Defendant could use Auto-Owners Policy 2’s prior
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`loss provision because General Condition 10’s four requirements were satisfied, and the losses
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`were discovered within a year of Auto-Owners Policy 2’s policy period which ended July 1,
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`2022. Defendant would not have covered Plaintiff’s losses that occurred between July 1, 2020,
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`and July 1, 2021, if Defendant’s policies did not include General Condition 10.
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`The Court’s interpretation of General Condition 10 is consistent with how other courts
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`have interpreted similar provisions. For example, in American Auto Guardian, Inc. v. Acuity
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`Mutual Ins., a Northern District of Illinois court interpreted a prior loss provision with language
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`nearly identical to General Condition 10’s.50 There, the court held that the provision only
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`50 548 F. Supp. 2d 624 (N.D. Ill. 2008).
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`Case 5:24-cv-04029-JAR Document 52 Filed 04/14/25 Page 13 of 17
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`covered losses incurred during the effective dates of the immediately preceding policy.51 The
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`court explained that the coexistence of the discovery period provision and the prior loss
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`provision did not create an ambiguity and concluded that both provisions could be given full
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`effect.52
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`Similarly, in Summit Real Estate Management, LLC v. Mid-Century Ins., the Oregon
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`Court of Appeals interpretated a prior loss provision with language nearly identical to General
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`Condition 10’s and concluded that the provision only permitted recovery under the immediately
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`preceding policy.53 There, the insured made an argument similar to Plaintiff’s that the court
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`should interpret “any prior insurance” to mean all prior insurance policies so long as there were
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`no gaps in coverage.54 But the court disagreed, explaining the following:
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`Focusing on certain isolated text in paragraph h, we agree
`with Summit that the phrase “any prior insurance” is broad
`and without temporal limitation. See generally Webster’s
`Third New Int’l Dictionary 97 (unabridged ed. 2002)
`(including, as definitions of “any,” “unlimited in amount,
`quantity, number, time, or extent” and “up to
`whatever measure may be needed or desired”). But we do
`not interpret that phrase in isolation, removed from the
`remainder of the operative provision. Contextually,
`subparagraph (1) imposes an explicit temporal limitation on
`what prior insurance is covered by paragraph h. That
`subparagraph limits the application of the paragraph to
`circumstances in which the “Optional Coverage” for
`employee dishonesty “became effective at the time of
`cancellation or termination of the prior insurance.”55
`
`
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`51 Id. at 629–30.
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`52 Id. at 630.
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`53 445 P.3d 905 (Or. Ct. App. 2019).
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`54 Id. at 909.
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`55 Id. at 910.
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`Case 5:24-cv-04029-JAR Document 52 Filed 04/14/25 Page 14 of 17
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`Likewise, Plaintiff’s argument that “the phrase ‘any prior insurance’ contains no qualifying
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`language that confines the reach back on the referenced prior insurance” fails because the phrase
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`is qualified by the other language in General Condition 10.
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`This case is unlike the cases Plaintiff compares it to. For example, Plaintiff argues that
`
`this case is like Armbrust International, Ltd. v. Travelers Casualty & Surety Co.56 However,
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`Armbrust International did not even address whether recovery under the prior loss provision was
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`limited to the insurance policy that immediately preceded the policy under which recovery was
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`sought. Instead, the court simply held that the requirements for recovery under the provision
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`were not satisfied because the policy under which recovery was sought overlapped with the
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`immediately preceding policy, meaning that it did not become effective at the time of
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`termination or cancelation of the prior policy.57
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`This case is also unlike Cincinnati Ins. v. Hopkins Sporting Goods, Inc.58 There, the
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`insured argued, and the court agreed, that the prior loss provision covered losses that occurred
`
`during the policy period of the immediately preceding insurance policy.59 Here, Plaintiff argues
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`that the prior loss provision covers losses that occurred during all of its prior insurance policies,
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`so long as there were no gaps in coverage. Further, the prior insurance at issue in Cincinnati
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`Ins., was issued by the same insurer under which recovery was sought, leading the court to
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`explain that the prior loss provision was “a clear incentive for insureds to continue to purchase
`
`
`56 No. 04-212, 2006 WL 1207659 (D.R.I. May 1, 2006).
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`57 Id. at *10.
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`58 522 N.W.2d 837 (Iowa 1994).
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`59 Id. at 839.
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`Case 5:24-cv-04029-JAR Document 52 Filed 04/14/25 Page 15 of 17
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`coverage with Cincinnati.”60 Here, the prior insurance policies in effect during the losses at issue
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`were issued by insurers other than Defendant.
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`Plaintiff also compares this case to Universal Underwriters Ins. Co. v. Ford, but the
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`language used in that prior loss provision was different and less precise than the language at
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`issue here.61
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`Lastly, Plaintiff cites Brigham Young University v. Lumbermens Mutual Casualty Co.62
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`There, the court allowed recovery for losses sustained during the policy periods of insurance
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`policies in place before the policy immediately preceding the policy under which coverage was
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`sought. However, the insurer in that case, for whatever reason, did not appear to argue that the
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`provision should be interpreted to limit coverage to the insurance policy immediately preceding
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`the policy under which coverage was sought. Thus, the court did not specifically address the
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`issue. None of these cases support Plaintiff’s interpretation of General Condition 10.
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`The Court agrees with Defendant that the plain language of General Condition 10 limits
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`recovery to the insurance policy that immediately preceded the Auto-Owners policy under which
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`recovery is sought and predicts that this is how the Kansas Supreme Court would interpret the
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`provision.63
`
`
`
`
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`60 Id. at 839.
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`
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`61 734 So. 2d 173, 178 (Miss. 1999) (“If EMPLOYEE DISHONESTY replaces a bond or policy carried by
`YOU (or YOUR predecessor in interest) that is no longer in effect . . . .”).
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`62 965 F.2d 830 (10th Cir. 1992).
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`63 To the extent Plaintiff argues that it is entitled to recovery pursuant to the Employee Dishonesty
`Endorsement (Doc. 41-9 at 44), the Court’s analysis would be identical. The “Discovery Period For Loss,” “Loss
`Sustained During Prior Insurance,” and “Policy Period” provisions in the Employee Dishonesty Endorsement use
`the same language as the identically titled provisions in the Crime General Provisions.
`
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`Case 5:24-cv-04029-JAR Document 52 Filed 04/14/25 Page 16 of 17
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`B. Auto-Owners Policy 1 and Auto-Owners Policy 2
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`Moreover, Plaintiff cannot recover under Auto-Owners Policy 1 nor Auto-Owners Policy
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`2’s prior loss provisions. As discussed above, Plaintiff cannot recover under Auto-Owners
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`Policy 1’s prior loss provision because General Condition 4 is not satisfied. Again, the losses at
`
`issue were discovered on September 7, 2022, more than one year after Auto-Owners Policy 1’s
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`policy period ended on July 1, 2022. Plaintiff cannot recover under Auto-Owners Policy 2’s
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`prior loss provision because the losses at issue occurred during the policy periods of policies that
`
`did not terminate when Auto-Owners Policy 2 became effective. Recovery under Auto-Owners
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`Policy 2’s prior loss provision would only be available if the losses at issue occurred during
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`Auto-Owners Policy 1’s policy period.
`
`C. Attorneys’ Fees
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`Both parties also move for summary judgment on Plaintiff’s request for attorneys’ fees
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`pursuant to K.S.A. § 40-256, which states, in relevant part, that:
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`[I]n all actions . . . in which judgment is rendered against
`any insurance company . . . if it appear[s] from the
`evidence that such company . . . has refused without just
`cause or excuse to pay the full amount of such loss, the
`court in rendering such judgment shall allow the plaintiff a
`reasonable sum as an attorney’s fee for services in such
`action . . . .
`
`Here, the Court has not rendered judgment against Defendant. Therefore, Plaintiff is not
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`entitled to recover attorneys’ fees under K.S.A. § 40-256.
`
`
`
`
`
`
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`Case 5:24-cv-04029-JAR Document 52 Filed 04/14/25 Page 17 of 17
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`IT IS THEREFORE ORDERED BY THE COURT that Plaintiff’s Motion for
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`Summary Judgment (Doc. 40) is denied; Defendant’s Motion for Summary Judgment (Doc. 42)
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`is granted. The Clerk is directed to enter judgment in favor of Defendant and terminate the
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`action.
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`IT IS SO ORDERED.
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`Dated: April 14, 2025
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`
`
`
`
`
`
`S/ Julie A. Robinson
`JULIE A. ROBINSON
`UNITED STATES DISTRICT JUDGE
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`17
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`