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UPDATE: Kansas Issues Updated Executive Order Prohibiting Foreclosures and Evictions

As we previously reported, last week, Kansas Governor Laura Kelly issued Executive Order 20-06 prohibiting evictions, foreclosures and any related judicial proceedings in the State of Kansas through May 1, 2020. Now, Governor Kelly has issued Executive Order 20-10, which amends and supersedes the previous order and provides additional clarification on certain points.

First, the new order expressly states that pending foreclosures and evictions are not prohibited by the order. This was implicit in the first order but is now clearly stated.

Second, the new order restricts the foreclosure moratorium to financial institutions foreclosing on single-family residences, where the default is caused by financial hardship relating to the COVID-19 pandemic. So, if the default under the terms of the mortgage occurred before March, 2020, a financial institution likely still may proceed with foreclosure. The new order does, however, purport to place a new pleading burden on foreclosing entities, during the effective period, to establish that the default was not caused by the COVID-19 pandemic.

The new order clarifies that the eviction moratorium applies to any landlord, whether it is an individual, entity, financial institution, nursing or long-term care facility, or other entity. But again, the moratorium only applies where the financial hardship leading up to the eviction was substantially caused by hardship relating to the coronavirus.

Excepted from the new order are foreclosures initiated by the United States government. The new order also encourages, but does not require, lenders and landlords to try to work out “payment plans or other agreements” to address defaults caused by COVID-19.

Baker Sterchi will continue to monitor Kansas State policy concerning evictions and foreclosures and will provide updates as they are received.

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Related Services: Banking, Financial Services Litigation and COVID-19 (Coronavirus)

Attorneys: Noemi Donovan and Megan Stumph-Turner

Kansas Temporarily Prohibits Foreclosures and Evictions

In response to the COVID-19 pandemic, Kansas Governor Laura Kelly issued Executive Order 20-06 on March 17, 2020, prohibiting evictions, foreclosures and any related judicial proceedings in the State of Kansas through May 1, 2020.

Specifically, Executive Order 20-06 directs and orders “all financial institutions operating in Kansas to temporarily suspend the initiation of any mortgage foreclosure efforts or judicial proceedings and any commercial or residential eviction efforts or judicial proceedings until May 1, 2020.”

While this prohibitive language could arguably be read to only apply to financial institutions, Baker Sterchi has confirmed with the Governor’s Office that it intends for the prohibition to apply to any landlord, whether a financial institution, other entity, or even individuals. This executive intent is further reflected in the recitals that precede the Executive Order:

WHEREAS, the adverse economic impacts of COVID-19 include the potential for Kansans to miss mortgage or rent payments as a result of lost wages and now is not the time for creditors or landlords to initiate foreclosure or eviction proceedings; and

WHEREAS, this Administration will do whatever it can to assist Kansans in these challenging times, and that includes allowing Kansans to retain their homes and businesses to avoid immediate danger to their health, safety, and welfare.

Accordingly, unless otherwise directed, all landlords in Kansas should refrain from instituting foreclosure or eviction proceedings until May 1, 2020.

While new foreclosure and eviction proceedings are prohibited at this time, it is important to note that Executive Order 20-06 does not suspend any obligation to pay rent. So, tenants are advised to continue paying rent unless they have a written agreement with their landlords to suspend or forbear rent during this time. Moreover, the Executive Order does not impact judicial foreclosure and eviction proceedings that were commenced prior to entry of the Executive Order. Parties to pending eviction or foreclosure proceedings should monitor the policies and dockets of the courts in their respective counties in order to determine the status of each case.

Baker Sterchi will continue to monitor Kansas State policy concerning evictions and foreclosures and will provide updates as they are received.

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Related Services: Banking, Financial Services Litigation and COVID-19 (Coronavirus)

Attorneys: Noemi Donovan and Megan Stumph-Turner

Kansas Supreme Court Strikes Down Statutory Caps on Noneconomic Damages

On June 14, 2019, in the case of Hilburn v. Enerpipe, Ltd., the Kansas Supreme Court struck down the state’s statutory cap on noneconomic damages in personal injury cases. The court held that the damages cap deprives plaintiffs of the Constitutional right to have a jury decide damages. 

By eliminating one of the key protections Kansas has traditionally extended to businesses, insurers, and other personal injury defendants, the decision dramatically increases both the unpredictability of civil litigation in the state and the risk of being surprised by a potentially devastating runaway verdict. Furthermore, because the Kansas Supreme Court has ruled the statutory damages cap “facially unconstitutional,” the ruling will affect not only future claims, but also those currently pending in Kansas courts.

I.  The Judicial Invalidation of the Kansas Noneconomic Damages Cap

The Hilburn case arose out of a motor vehicle accident. Plaintiff Diana Hilburn was a passenger in a car that was rear-ended by a semi-truck owned by Defendant Enerpipe, Ltd. Enerpipe admitted liability but contested damages. After a trial solely on the damages question, the jury awarded Ms. Hilburn $33,490 for medical expenses and $301,510 for noneconomic losses. The trial court reduced the award of noneconomic damages to the noneconomic damages cap of $250,000, pursuant to K.S.A. §60-19a02.

Hilburn appealed on several bases, including a challenge to the constitutionality of the damages cap. The Supreme Court held that Section 5 of the Kansas Constitution provides that “the right of trial by jury shall be inviolate.” Courts have interpreted this language to preserve the right to a jury trial “in those causes of action that were triable to a jury under the common law extant in 1859, when the Kanas Constitution was ratified by the people of our state.” The plurality opinion emphasized that that “the determination of noneconomic damages was a fundamental part of a jury trial at common law” and, therefore, ought to be protected as “inviolate” under Section 5 of the state constitution. 

“The cap’s effect,” Justice Beier concluded, “is to disturb the jury’s finding of fact on the amount of the award. Allowing this substitutes the Legislature’s nonspecific judgment for the jury’s specific judgment. The people deprived the Legislature of that power when they made the right to a trial by jury inviolate. Thus we hold that the cap on damages imposed by K.S.A. §60-19a02 is facially unconstitutional because it violates Section 5 of the Kansas Constitution Bill of Rights.”

Until recently, the cap on noneconomic damages seemed to be very well entrenched in Kansas law.  The limits were codified in the statute books, and judges and practitioners had become familiar with their application and importance in personal injury cases. As recently as 2012, the Kansas Supreme Court, in Miller v. Johnson, affirmed the constitutionality of a very similar cap applicable in medical malpractice cases. The majority held that the legislature’s cap on noneconomic damages was “an adequate and viable substitute” to the common-law right to a jury trial on the question of damages. With its decision in Miller, Kansas had become the eighteenth state to affirm the constitutionality of some type of cap on noneconomic damages. 

In Hilburn, the Kansas Supreme Court tossed out the same statutory cap that it had affirmed a mere 7 years ago. The recent case illustrates the importance a single judicial appointment can have. Justices Johnson, Beier, Biles, and Luckert remained consistent in their opinions from Miller (2012) to Hilburn (2019). Justices Rosen, who did not participate in the Miller decision, and Stegall, who was not on the Court in 2012, both sided with the plurality in Hilburn to hold the damages cap unconstitutional.

II.  Conclusion

Kansas law still presents advantages to civil defendants. It follows a modified comparative fault rule that precludes any recovery by a plaintiff who bears more than 50% of the fault for an occurrence. It allows the comparison of fault of non-parties and has enacted a “one-action rule,” requiring that all parties have their fault determined in a single trial. It has abandoned joint and several liability, holding each defendant responsible only for its percentage of the damages awarded. 

But make no mistake, the cap on noneconomic damages provided by K.S.A. §60-19a02 was one of the more important protections Kansas law offered to defendants in personal injury cases. That protection is now gone, and it seems unlikely to come back with the current court makeup.

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Related Services: Automotive, Healthcare, Hospitality & Leisure, Insurance, Pharmaceutical & Medical Device, Retail, Trucking, Propane, Recreational Transportation, Appellate, Medical Malpractice, Personal Injury Defense, Premises Liability and Product Liability

Attorneys: Douglas Hill