Insurer's Delay on $100K Policy Limit Triggers $11.5M Judgment After Fatal Kansas Plane Crash

In April 2013, a small plane carrying Ronald Marshall and his passenger Christopher Gruber crashed near Manhattan, Kansas, killing both men. Investigators concluded Marshall lost control of the aircraft. Christopher Gruber was 40 years old, a development officer for the KSU Foundation earning $95,000 a year. He left a widow and three children.

The Gruber family's attorneys, including Lynn R. Johnson of Shamberg, Johnson and Bergman Chartered in Kansas City, filed a wrongful-death action against the Marshall estate. Marshall's liability insurer, United States Aircraft Insurance Group (USAIG), held a policy with a voluntary-settlement provision: if the insured or estate requested it within one year of the accident, USAIG was obligated to pay the $100,000 policy limit and resolve the claim. USAIG did not make that offer within the one-year window.

Because USAIG failed to timely offer the voluntary settlement, the Marshall estate assigned its bad-faith breach-of-contract claim against the insurer to the Gruber estate. That assignment became the basis for a separate garnishment action against USAIG directly.

After a May 2018 bench trial in Riley County District Court, Judge Grant D. Bannister entered a wrongful-death judgment of roughly $11.58 million against the Marshall estate, an amount the estate did not contest under its assignment agreement. The court then held USAIG liable for that full amount through the garnishment proceeding, on the theory that the insurer's negligent delay on the $100,000 voluntary settlement caused the excess judgment to exist in the first place.

USAIG appealed, arguing the voluntary-settlement provision imposed no enforceable duty and that the assignment was improper. The Kansas Court of Appeals disagreed on January 22, 2021, affirming USAIG's liability for the full judgment. The appellate court did reverse the trial court's prejudgment interest calculation and attorney-fee award, remanding those items for recomputation, but the underlying judgment against the insurer was upheld. The case, Gruber v. Estate of Marshall, No. 120,513, stands as a published Kansas precedent on insurer liability for failing to exercise voluntary-settlement provisions within the policy's one-year deadline.