Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-03327/USCOURTS-ca10-89-03327-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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• 

MID-WEST 

v. 

AMERICAN 

. FILED 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

Umted s,races Coun of A peals 

f emh Cirmit P 

OCT 16 1990 

CONVEYOR co. I INC. I ) 

) 

Appellant, ) 

) 

) 

) 

PROTECTION INSURANCE co. I ) 

· Appellee. 

) 

) 

ORDER AND JUDGMENT * 

.ROBERT L. HOECKER 

Clerk 

No. 89-3327 

(D.C. No. 88-2172S) 

(D. Kansas) 

Before ANDERSON, BARRETT, Circuit Judges, and CHRISTENSEN,** 

District Judge. 

**Honorable A. Sherman Christensen, Senior District Judge, United 

States District Court for the District of Utah, sitting by 

designation. 

This appeal is from an order of the district court granting 

summary judgment in favor of defendant American Protection 

Insurance Company ("American Protection") on the grounds that suit 

by plaintiff Mid-West Conveyor Co. ("Mid-West") is barred by the 

applicable statute of limitations. The sole issue on appeal is 

whether the insurance policy at issue in this case is a property 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 89-3327 Document: 010110059652 Date Filed: 10/16/1990 Page: 1 
insurance policy or a liability policy. The characterization of 

the policy determines the date on which the loss occurred and the 

date on which the applicable statute of limitations began to run. 

We affirm. 

In considering Mid-West's challenge of summary judgment, we 

apply a de novo standard of review. Burak v. General Am. Life 

Ins. Co., 836 F.2d 1287, 1289 (10th Cir.), cert. denied 488 U.S. 

828 (1988). 

The facts are not disputed by the parties. In 1979, in 

consideration only for business goodwill, Mid-West agreed to store 

a conveyor system owned by a subsidiary of the Brunswick 

Corporation at Mid-West's facilities in Kansas City, Kansas. 

Mid-West stored the equipment until approximately January 15, 

1982, when a Mid-West employee gave a portion of the conveyor 

equipment to General Motors. Over the next few months Mid-West 

employees dismantled and disposed of the entire conveyor system. 

When Brunswick returned in 1985 for its conveyor system, Mid-West 

was unable to deliver it. Brunswick sought reimbursement from 

Mid-West for the loss, and on August 18, 1986, Mid-West notified 

American Protection of the loss. 1 In 1987, Brunswick filed suit 

1 Notification of loss was in the form of a memo 

Mid-West's insurance broker, which in pertinent part, stated: 

Find attached loss notice and material papers from our 

insured. We reported this incident to their liability 

carrier, but insured wants our office to report to their 

property carrier for possible coverage. Insured 

believes that actual date of loss may be in 1981 or 

1982. Items were placed in storage in 1979. We would 

appreciate your review in advising our insured 

possibility of coverage for this loss. 

R., doc. 44, ex. I. 

2 

from 

Appellate Case: 89-3327 Document: 010110059652 Date Filed: 10/16/1990 Page: 2 
against Brunswick's own insurance company to recover for the loss 

of the conveyor. Brunswick's insurance company joined Mid-West as 

a third-party defendant. That lawsuit eventually settled. On 

August 24, 1987, Mid-West's insurer, American Protection, denied 

coverage under the insurance policy on the grounds that Mid-West 

lacked an insurable interest in the conveyor system. On February 

26, 1988, Mid-West brought this suit against American Protection 

claiming that American Protection had breached its insurance 

contract with Mid-West by denying coverage. 

The parties agree that the applicable statute of limitations 

is Kan. Stat. Ann.§ 60-511 (1983 & Supp. 1989), which requires 

that actions on a contract be brought within five years of the 

date of loss. If this policy is characterized as a property 

insurance policy, as American Protection urges, the date of the 

loss occurred between January and May of 1982. If the policy is 

characterized as a liability insurance policy, Mid-West argues 

that the date of loss was August 24, 1987, the date upon which 

defendant denied coverage. 

We agree with the district court that the insurance policy at 

issue here is unambiguously one for property rather than liability 

insurance. When read as a whole, the entire policy is insurance 

against loss or damage to property at specified locations when the 

loss is the result of certain specified perils. Although 

plaintiff points to Part V. B. 1 as evidence that the coverage for 

property not belonging to the insured is liability rather than 

property insurance, we disagree. The use of the word liability in 

that section merely clarifies which property is insured under the 

3 

Appellate Case: 89-3327 Document: 010110059652 Date Filed: 10/16/1990 Page: 3 
general property insurance coverage. The provision simply has the 

effect of extending property insurance coverage to some property 

not owned by the insured. Because this policy is one for property 

insurance, the date of loss of the conveyor system is 

January - May, 1982. 

We find no provision in law or equity that authorizes a 

tolling of the statutory period under the circumstances of this 

case. In Insurance Company of North America v. Board of 

Education, 196 F.2d 901 (10th Cir. 1952), this court suspended the 

statutorily-imposed twelve-month limitations period following 

notification of loss because of the continuing negotiations and 

dilatory tactics on the part of the insurer. See also Ferrell v. 

Ferrell, 11 Kan. App. 2d 228, 719 P.2d 1, 5 (1986). However, the 

holdings of Insurance Company of North America and Ferrell are 

rooted in equitable considerations of fairness. By contrast, 

equitable considerations do not impact the case before the court 

today. Brunswick demanded reimbursement for the loss of the 

conveyor. Mid-West notified American Protection of the property 

"loss." In the meantime, Brunswick brought a lawsuit against 

Brunswick's insurance company for Brunswick's loss. Brunswick's 

insurance company joined Mid-West as a defendant in the lawsuit. 

Without requesting a defense from American Protection or making 

any attempt to join American Protection in the Brunswick action, 

Mid-West settled the matter prior to judgment. After this 

settlement and after the expiration of the limitations period, 

American Protection denied coverage. Before the limitations 

period lapsed, however, there was nothing to prevent Mid-West from 

4 

Appellate Case: 89-3327 Document: 010110059652 Date Filed: 10/16/1990 Page: 4 
• 

' attempting to join its insurer in the lawsuit filed by Brunswick. 

If it had done so, the limitations period would have been 

satisfied and the issue of coverage by American Protection would 

have been resolved as part of ongoing discovery and negotiations 

for the Brunswick lawsuit. 

There is no evidence of inappropriate dilatory tactics by 

American Protection in the record. In addition, because the 

limitations period in question here was statutorily-imposed rather 

than contractual, the unequal bargaining position of the parties 

played no part in the fashioning of the deadline. And finally, 

the limitations period was not the mere twelve-month period at 

issue in Insurance Company of North America and several cases 

cited by Mid-West in its briefs, but rather was a generous 

five-year period. Mid-West had ample time and opportunity to 

protect its rights under these circumstances. 

The judgment of the United States District Court for the 

District of Kansas is AFFIRMED. 

ENTERED FOR THE COURT 

PER CURIAM 

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