Opinion ID: 2510879
Heading Depth: 1
Heading Rank: 6

Heading: The undersheriff's report

Text: As mentioned, the district court also found that no one in Evenson's law firm made any investigation prior to the filing of the lawsuit, other than sending the one demand letter to the wrong address. Regarding Evenson's alleged reliance upon the undersheriff's report as basis for filing suit, the court specifically found that Moore, who was in charge of the presuit investigation, did not even obtain the accident report until September 10, 2001, over 60 days after suit had been filed on July 2, 2001. The court affirmed this finding of fact in its order denying reconsideration. The Court of Appeals found that Evenson's presuit inquiry was reasonable under the circumstances. It specifically noted that counsel had not only relied upon (1) the lack of response to at least four demand letters that were apparently addressed to Aranda at his previous address (receipt of Aranda's responsive letter of denial is discussed earlier in our opinion), but also (2) the formal police report naming Aranda as the responsible party. We decline to construe K.S.A. 2003 Supp. 60-211 as requiring a re-investigation of information compiled or reflected in third-party sources that are generally accepted as reasonably authoritative under the circumstances. The identification of Aranda as the responsible party in a formal police report, together with reasonable attempts to confirm the facts through letters of inquiry or demand seems reasonable under these circumstances. See Nelson v. Miller, 227 Kan. 271, 278-85, 607 P.2d 438 (1980). Although it may be unfortunate that the letters were directed to the wrong address, we disagree with the district court in its apparent conclusion that errant addresses on the demand letters was some evidence of bad faith by Evenson. Again, there is no record support for the inference that Evenson or its insurers knew or should have known that Aranda had moved and had a new address. In examining the reasonableness of counsel's efforts, we also believe that it is material that the amount of the claim was less than $10,000, thus making any more time-consuming and expensive pre-suit inquiry unwarranted under the circumstances. Evenson Trucking Co. v. Aranda, slip op. at 7. We disagree with the Court of Appeals determinations suggesting Evenson's presuit possession of the undersheriff's report for several reasons. First, the Court of Appeals overlooks the district court's finding, both original and repeated in denying the motion for reconsideration, that Evenson's law firm did not receive the report until after suit had been filed. Because of this oversight, the Court of Appeals makes no search of the record to determine if the finding is supported by substantial competent evidence. Second, it mistakenly, and solely, relies upon representations made by Evenson's counsel that the report was contained in the investigative file received from the insurance company prior to filing suit. Regarding whether the district court finding is supported by substantial competent evidence, Moore's deposition testimony provides it. Although she testified she performed a presuit investigation, that testimony is contradicted by the dates she provided, e.g., September 2001, 2 months after suit was filed. Accordingly, the district court could easily find that her investigation was not actually performed until after suit was filed. On appeal, we do not weigh conflicting evidence. U.S.D. No. 233 v. Kansas Ass'n of American Educators, 275 Kan. at 320. We acknowledge that Moore did testify she believed Aranda was the horse owner because [i]t was on the police report. However, the only evidence in the record indicating when she got the report was her testimony that it was faxed to her on September 10, 2001. There is no evidence in the record that she obtained the report from the insurance company before suit was filed 60 days earlier and no evidence that she ever received a copy from the company. While the petition alleged that Aranda was the owner, and an inference could be drawn that the allegation was based upon the undersheriff's report, an inference could also be drawn, and a finding made, that the report was not obtained until later. The petition's allegation instead could have been based upon rumor, conjecture, a partial investigation, or a combination of these factors, i.e., an allegation not based upon any reliable fact. Moore also testified she essentially was the only investigator for the firm before suit was filed; if she did not clearly testify that she received the report, or read it, before the suit was filed, there is no evidence that anyone else for Evenson did either. As mentioned, the record is silent on who prepared the petition. There is also the matter of Evenson's inconsistent interrogatory answers in the record. While the sequence of the documents is unclear, it can be inferred that the unsigned answers represent only a draft. They expressly and specifically state that Evenson relied upon the findings in the undersheriff's report to prepare the petition. Accordingly, the signed versions came later; perhaps because of reflection by their preparer, they remove any reference to reliance upon the report for petition preparation. In short, there is substantial competent evidence in the record for the district court to find that Evenson's firm did not have the undersheriff's report before suit was filed, and therefore could not have relied upon it to prepare the petition. Because the district court's findings are supported by substantial competent evidence, we cannot reverse them. U.S.D. No. 233 v. Kansas Ass'n of American Educators, 275 Kan. at 320 (During the review of the record for substantial competent evidence, we do not weigh conflicting evidence, pass on the credibility of witnesses, or redetermine questions of fact. We also accept as true all inferences to be drawn from the evidence which support or tend to support the findings of the district court.). Regarding representations by Evenson's counsel, the Court of Appeals held that Evenson's counsel explained to the court that the police report was contained in the investigative file from the insurer prior to filing the suit and that counsel had not `just kind of named Mr. Aranda at random.' Evenson, slip op. at 7. The problem with the Court of Appeals' statement is that there is no evidence in the record on appeal to support this attorney's allegation. Attorney arguments are not evidence. See Kenyon v. Kansas Power & Light Co., 17 Kan. App. 2d 205, Syl. ¶ 3, 836 P.2d 1193 (1992) (Assertions or arguments of counsel before the trial or appellate courts or in appellate briefs neither constitute evidence nor remedy inadequacy in the record on appeal.). The minimalist strategy employed by Evenson and its counsel is also worth noting. The district court correctly found that when they learned that horse ownership was in dispute in the lawsuit, they dismissed the case because it was not worth the costs of discovery; that when Aranda sought to depose Evenson's three attorneys on the sanctions issue, they moved to quash, obtained a protective order, and represented that their paralegal had the relevant information; and that at the sanctions hearing, they called no witnesses and introduced no exhibits other than a copy of the accident report and a copy of their claim for attorney fees. We also observe that at the deposition of paralegal Moore, they made no effort to clarify the contradictions in her testimony. While their chosen strategy is certainly their prerogative, such an approach runs the risk of failing to address Aranda's argument that they made no inquiry that was reasonable under the circumstances to demonstrate that their petition's allegations and other factual contentions have evidentiary support. See K.S.A. 2004 Supp. 60-211(b)(3). Evenson argues in the alternative that even if it did not obtain the undersheriff's report until after suit was filed, the independent third-party report did show that Aranda owned the horse. It therefore asserts that no sanctions can be imposed. This is incorrect. One must certify reasonable investigation and factual basis when the suit is filed, not later. See Reyna v. General Group of Companies, 15 Kan. App. 2d 591, 599, 814 P.2d 961, rev. denied 248 Kan. 996 (1991) (court must address whether a reasonable basis in fact for the claim existed at the time it was made). To be clear, this court's opinion is not prohibiting a plaintiff or its counsel from relying upon a law enforcement report as a basis for filing a lawsuit. We simply need not address that issue in the present case because we affirm the district court's finding that the report was not in Evenson's possession before suit was filed; hence, it could not have been relied upon. In short, we hold that substantial competent evidence supports the district court's findings that Evenson conducted no presuit investigation; that Evenson did not obtain the undersheriff's accident report before filing suit (and therefore could not have relied upon it); and that Evenson's insurance company received Aranda's letter of December 3, 1999, denying liability. Accordingly, the elements for sanctions under K.S.A. 2004 Supp. 60-211 have been met.