Troy Lee v. Liberty Mutual Fire Insurance Company , 121 N.E.3d 639 ( 2019 )

FILED
Apr 04 2019, 5:58 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Scott A. Faultless Crystal Gates Rowe
Indianapolis, Indiana New Albany, Indiana
Casey R. Stafford
Kightlinger & Gray, LLP
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Troy Lee, April 4, 2019
Appellant-Plaintiff, Court of Appeals Case No.
18A-CT-2048
v. Appeal from the Delaware Circuit
Court
Liberty Mutual Fire Insurance The Honorable Marianne Vorhees,
Company, Judge
Appellee-Defendant. Trial Court Cause No.
18C01-1608-CT-107
Riley, Judge.
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 1 of 17
STATEMENT OF THE CASE
[1] Appellant-Plaintiff, Troy Lee (Lee), appeals the trial court’s summary judgment
in favor of Appellee-Defendant, Liberty Mutual Insurance Company (Liberty
Mutual), concluding that Liberty Mutual is entitled to offer underinsured
motorist benefits (UIM) coverage in an amount below the bodily injury liability
coverage limits of the policy. 1
[2] We affirm.
ISSUE
[3] Lee presents this court with one issue on appeal, which we restate as: Whether
the trial court properly granted summary judgment to Liberty Mutual when the
policy’s coverage of UIM benefits is in a lesser amount than the underlying
liability coverage.
FACTS AND PROCEDURAL HISTORY
[4] On June 22, 2016, Lee was driving a Ford vehicle eastbound on State Road 32
in Delaware County, Indiana, when Jazmine Rice’s (Rice) vehicle went left of
center and collided into Lee’s vehicle. At the time of the collision, Lee was
driving his employer’s vehicle insured by Liberty Mutual under an insurance
policy offering $2,000,000 in bodily injury liability coverage, as well as UIM
1
We held oral argument in this cause on March 18, 2019 at the Court of Appeals’ courtroom in Indianapolis,
Indiana. We thank counsel for their excellent advocacy.
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 2 of 17
benefits of $60,000. The parties agree that Lee was an insured under the policy,
which contains the following pertinent language:
INDIANA UNDERINSURED MOTORIST COVERAGE
****
A. Coverage
1. We will pay all sums the “insured” is legally entitled to
recover as compensatory damages from the owner or driver of
an “underinsured motor vehicle.” The damage must result
from “bodily injury” sustained by the “insured” and caused
by the “accident” with an “underinsured motor vehicle.”
The owner’s or driver’s liability for this damage must result
from the ownership, maintenance or use of the “underinsured
motor vehicle.”
****
F. Additional Definitions
As used in this endorsement:
****
3. “Underinsured motor vehicle” means a land motor vehicle or
“trailer” for which the sum of all liability bonds or policies at the
time of an “accident” provides at least the amounts required by
the financial responsibility law of Indiana but their limits are
either:
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 3 of 17
a. Less than the limit of liability for this coverage; or
b. Reduced by payments to others injured in the “Accident” to
an amount which is less than the limit of liability for this
coverage.
(Appellant’s App. Vol. II, pp. 227-30).
[5] The parties do not dispute that Lee’s employer executed a document, titled
“Uninsured/Underinsured Motorists Coverage and Limit Options Indiana”
(Election Form), in which the employer elected as follows:
Indiana Law requires that we provide Bodily Injury
Uninsured/Underinsured Motorists Coverage equal to the Bodily
Injury Auto Liability Limit. Indiana Law also requires that we
provide Property Damage Uninsured Motorists Coverage at the
basic Financial Responsibility limit if Bodily Injury
Uninsured/Underinsured Motorists Coverage is provided. You
may reject these coverages.
Underinsured Motorists Coverage pays for bodily injury . . . to
you and your passengers as a result of an automobile accident . . .
with a driver whose liability limits have been reduced by
payment of claims arising from the same accident to an amount
less than the limit of liability stated in your policy.
****
Please indicate your choice for Bodily Injury
Uninsured/Underinsured Motorists Coverage and Property
Damage Uninsured Motorists Coverage by initialing next to the
appropriate item below.
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 4 of 17
________ I reject Bodily Injury Uninsured/Underinsured
Motorists Coverage and Property Damage
Uninsured Motorists Coverage.
__ZEY__ I select the Bodily Injury Uninsured/Underinsured
Motorists Coverage and Uninsured Motorists for
Property Damage at the following limit:
$60,000 single limit (We will not provide
Uninsured/Underinsured Motorists Coverage
higher than the policy’s liability limit.)
________ I select the Uninsured/Underinsured Motorists
Coverage only for Bodily Injury at the following
limit:
$_______ single limit (We will not provide
Uninsured/Underinsured Motorists Coverage
higher than the policy’s liability limit.)
****
Insured’s Acknowledgment
By my signature, I acknowledge that I have read the above
disclosure statement and offers for Uninsured/Underinsured
Motorists Coverage. I have indicated whether or not I wish to
purchase each coverage in the spaces provided. I understand that
the above explanations of these coverages are intended to be brief
descriptions of the additional coverages, and that payment of
benefits under any and all coverages is subject to the terms and
conditions of my insurance policy and Indiana law.
(Appellant’s App. Vol. II, pp. 237-38).
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 5 of 17
[6] On August 1, 2016, Lee filed a Complaint against Rice sounding in negligence
and against Liberty Mutual for UIM coverage. Lee eventually settled with Rice
for $225,000—the limits of her insurance policy. However, as he claims to have
sustained damages in excess of Rice’s policy limits, he continued his claim
against Liberty Mutual.
[7] On May 7, 2018, Lee moved for partial summary judgment against Liberty
Mutual, contending Rice’s vehicle was underinsured at the time of the accident
because the $225,000 policy limits available to Rice’s vehicle were less than the
underlying $2,000,000 liability policy limits covering Lee’s vehicle.
Specifically, he maintains that Liberty Mutual was required to offer UIM
coverage in the same amount as the bodily injury liability coverage pursuant to
Ind. Code § 27-7-5-2, and therefore, Liberty Mutual was not permitted to sell
UIM coverage in any amount less than the coverage amount for bodily injury.
On July 13, 2018, Liberty Mutual opposed Lee’s motion and filed its cross-
motion for summary judgment, arguing that Rice’s vehicle was not
underinsured because the limits of her insurance policy were greater than the
UIM limits of $60,000 purchased by Lee’s employer and applicable to Lee’s
vehicle.
[8] On August 22, 2018, after conducting a hearing on the parties’ cross-motions
for summary judgment, the trial court summarily found that “the law favors”
Liberty Mutual and concluded that “Liberty Mutual is entitled to offer
uninsured/underinsured motorists coverage limits below the bodily injury
limits specified in the policy.” (Appellant’s App. Vol. II, p. 13).
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 6 of 17
[9] Lee now appeals. Additional facts will be provided if necessary.
DISCUSSION AND DECISION
I. Standard of Review
[10] In reviewing a trial court’s ruling on summary judgment, this court stands in the
shoes of the trial court, applying the same standards in deciding whether to
affirm or reverse summary judgment. First Farmers Bank & Trust Co. v. Whorley,
891 N.E.2d 604, 607 (Ind. Ct. App. 2008), trans. denied. Thus, on appeal, we
must determine whether there is a genuine issue of material fact and whether
the trial court has correctly applied the law. Id. at 607-08. In doing so, we
consider all of the designated evidence in the light most favorable to the non-
moving party. Id. at 608. A fact is ‘material’ for summary judgment purposes if
it helps to prove or disprove an essential element of the plaintiff’s cause of
action; a factual issue is ‘genuine’ if the trier of fact is required to resolve an
opposing party’s different version of the underlying facts. Ind. Farmers Mut. Ins.
Group v. Blaskie, 727 N.E.2d 13, 15 (Ind. 2000). The party appealing the grant
of summary judgment has the burden of persuading this court that the trial
court’s ruling was improper. First Farmers Bank & Trust Co., 891 N.E.2d at 607.
[11] We observe that, in the present case, the trial court did not enter findings of fact
and conclusions of law in support of its judgment. Special findings are not
required in summary judgment proceedings and are not binding on appeal.
AutoXchange.com. Inc. v. Dreyer and Reinbold, Inc., 816 N.E.2d 40, 48 (Ind. Ct.
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 7 of 17
Ohio App. 2004). However, such findings offer this court valuable insight into the
trial court’s rationale for its review and facilitate appellate review. Id.
II. Analysis
[12] Although both parties commence their argument by relying on the same statute,
Ind. Code § 27-7-5-2, their interpretations are diametrically opposed. Indiana
Code section 27-7-5-2 provides, in pertinent part, that:
(a) Except as provided in subsections (d), (f), and (h), the insurer
shall make available, in each automobile liability or motor
vehicle liability policy of insurance which is delivered or
issued for delivery in this state with respect to any motor
vehicle registered or principally garaged in this state, insuring
against loss resulting from liability imposed by law for bodily
injury or death suffered by any person and for injury to or
destruction of property to others arising from the ownership,
maintenance, or use of a motor vehicle, or in a supplement to
such a policy, the following types of coverage:
****
The uninsured and underinsured motorist coverages must be
provided by insurers for either a single premium or for
separate premiums, in limits at least equal to the limits of
liability specified in the bodily injury liability provisions of an
insured’s policy, unless such coverages have been rejected in
writing by the insured. However, underinsured motorist
coverage must be made available in limits of not less than fifty
thousand dollars ($50,000). At the insurer’s option, the bodily
injury liability provisions of the insured’s policy may be
required to be equal to the insured’s underinsured motorist
coverage. * * * *
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 8 of 17
(b) A named insured of an automobile or motor vehicle liability
policy has the right, in writing, to:
(1) Reject both the uninsured motorist coverage and the
underinsured motorist coverage provided for in this
section; or
(2) Reject either the uninsured motorist coverage alone or the
underinsured motorist coverage alone, if the insurer
provides the coverage not rejected separately from the
coverage rejected.
****
(c) A rejection under subsection (b) must specify:
(1) That the named insured is rejecting:
(A)The uninsured motorist coverage;
(B) The underinsured motorist coverage; or
(C) Both the uninsured motorist coverage and the
underinsured motorist coverage;
That would otherwise be provided under the policy;
and
(2) The date on which the rejection is effective.
Indiana Code section 27-7-5-2 is a mandatory coverage, full-recovery, remedial
statute. United Nat. Ins. Co. v. DePrizio, 705 N.E.2d 455, 460 (Ind. 1999).
Underinsured motorist coverage is designed to provide individuals with
indemnification in the event negligent motorists are not adequately insured for
damages that result from motor vehicle accidents, and it has generally been
integrated into a given state’s uninsured motorist legislation by modifying the
definition of an “uninsured motorist.” Id. at 459. Together with uninsured
motorist coverage, the coverages serve to promote the recovery of damages for
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 9 of 17
innocent victims of auto accidents with uninsured or underinsured motorists.
Id. Given the remedial nature of these objectives, uninsured/underinsured
motorist legislation is to be liberally construed. Id. Like all statutes relating to
insurance or insurance policies, uninsured/underinsured motorist statutes are to
be read in a light most favorable to the insured. Id.
[13] The statute is directed at insurers operating within Indiana and its provisions
are to be “considered a part of every automobile liability policy the same as if
written therein.” Id. (citing Ind. Ins. Co. v. Noble, 265 N.E.2d 419, 425 (Ind.
1970)). Moreover, “[e]ven where a given policy fails to provide such uninsured
motorist coverage, the insured is entitled to its benefits unless expressly waived
in the manner provided by law.” Id. Accordingly, insurers can only avoid the
coverage by obtaining a written rejection from their insured. Liberty Mut. Fire
Ins. Co. v. Beatty, 870 N.E.2d 546, 549 (Ind. Ct. App. 2007).
[14] Focusing on subsection (a), Lee maintains that an insurer is not allowed to
provide primary UIM coverage in any amount less than the liability coverage.
He argues that, according to the plain language of the subsection, the insurer
must provide UIM limits at least equal to the limits of the liability coverage
unless rejected by the insured. Turning to subsection (c), Lee then asserts that
an insured can only opt out of UIM coverage by either a complete rejection of
BOTH UM AND UIM coverages or a complete rejection of UM OR UIM
coverage. As no partial rejection or selection of UIM coverage is permitted
under the statute, Lee contends that “the selection of $60,000 UIM coverage in
Liberty Mutual’s Election Form was an impermissible partial rejection of UIM
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 10 of 17
coverage and contrary to Indiana Code § 27-7-5-2(b) & (c).” (Appellant’s Br. p.
13).
[15] Based on the same statutory language, Liberty Mutual asserts that Rice’s
vehicle was not an underinsured motor vehicle because its liability policy limit
of $225,000 was more than the $60,000 UIM coverage limit applicable to Lee’s
vehicle. Furthermore, Liberty Mutual maintains that the statute allows an
insured—after being offered UIM coverage in the full amount of the underlying
liability limits—to select a UIM coverage plan with limits less than the liability
limits. As such, Liberty Mutual advances that the selection of $60,000 in
coverage in the instant cause constitutes a valid rejection in writing of the
offered UIM coverage limits equal to the limits of liability as long as the
insurance carrier has offered equal limits—which it did.
[16] In Marshall v. Universal Underwriters Ins. Co., 673 N.E.2d 513 (Ind. Ct. App.
1996), reh’g denied, disapproved of on unrelated grounds by United Nat. Ins. Co. v.
DePrizio, 705 N.E.2d 455 (Ind. 1999), the insurer for the motorcyclist who was
involved in an accident sought a declaratory judgment regarding the rights and
obligations of the parties with respect to the insurer’s UIM coverage plan.
Defined as an issue of first impression, the Marshall court was asked to
address—under a previous version of the statute—whether, “pursuant to I.C. [§]
27-7-5-2, an insured may elect UM/UIM coverage in limits which are less than
the specified bodily injury liability limits.” Id. at 515.
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 11 of 17
[17] Finding the sections of the UIM coverage statute clear and unambiguous and
rejecting the Marshall plaintiff’s argument (i.e., to select either no coverage at all
or coverage in limits equal to or exceeding the limits specified in the liability
policy), the court concluded that “[t]he plain and ordinary meaning of the
statutory language establishes that ‘must be provided by insurers . . . unless’
requires insurers to offer an UM/UIM coverage plan in limits equal to the limits
of liability specified in the bodily injury liability provisions. It does not limit the
insured’s option to either (1) no coverage, or (2) limits that are equal to or
exceed the limits specified in the bodily injury liability provisions.” Id. at 516.
Therefore, the court held that “Universal was allowed to provide Marshall a
[UIM] coverage plan that had limits which were less then [sic] the bodily injury
limits specified in his policy so long as it has offered equal limits.” Id. Applying
this conclusion to the facts before it, the Marshall court found:
The insurance policy issued by Universal offered Marshall the
option to choose a [UM/UIM] coverage liability plan with limits
equal to or greater than the minimum limits of the financial
responsibility law, or in limits equal to his chosen bodily injury
liability limits, or to completely reject such coverage. Therefore,
Universal was in compliance with the [UM/UIM] motorist
coverage statute.
Marshall selected the plan specifying liability limits equal to the
minimum limits of the financial responsibility law, specifically,
limits of $25,000 per person and $50,000 per accident. Marshall
selected this plan by writing an “X” in the box next to the chosen
option and signing the application. This constituted a valid
rejection in writing of the [UIM] motorist coverage limits equal
to the limits of liability specified in the bodily injury provisions.
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 12 of 17
Id.
[18] Even though Marshall is an older precedent and the statute has been amended
several times since the decision was issued, our supreme court implicitly
reached a similar result in Asklar v. Gilb, 9 N.E.3d 165 (Ind. 2014). In Asklar,
our supreme court remanded the cause to the trial court for consideration of
whether the waiver on the election form, which was in three parts and
purported to select the reduced amount of $75,000 of UIM coverage (with an
underlying liability coverage of $5,000,000), was valid. Id. At 168. Finding
that questions of material fact existed with respect to the format and the parties’
intent, the court reversed summary judgment and remanded for determination
of the conflicting facts by the factfinder. Id. The Asklar court’s remand would
be unnecessary and a waste of judicial economy and resources if the selection of
a lower limit of UIM coverage could never operate as a valid rejection of the
provided UIM coverage in the amount of the underlying liability limits.
[19] In support of his argument that Ind. Code § 27-7-5-2 is an all-or-nothing statute,
Lee relies on Frye v. Auto-Owners Ins. Co., 845 F.3d 782 (7th Cir. 2017). In Frye,
the appellant asked the court to declare that Indiana statutory law required
Auto-Owners to provide, through its commercial umbrella policy, UIM
coverage in an amount equal to the policy’s general liability limit of $5 million.
Frye argued that Ind. Code § 27-7-5-2 obligates insurers who provide UIM
coverage to make such coverage available in amounts equal to the limits of
liability for bodily injury in general. He maintained that, although the umbrella
policy capped Auto-Owners’ UIM liability at $1 million, the statute required a
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 13 of 17
UIM liability limit equal to the policy’s general per-accident limit of $5 million.
Id. at 786. In turn, Auto-Owners argued that subsection (d) 2 permits insurers
issuing commercial umbrella policies to selectively dispense with any
requirements set forth in subsection (a) of the statute. In other words, Auto-
Owners contended that “not only may insurance companies abstain from
providing UIM coverage in the first place, but if they do provide such coverage,
they may provide it in any form they choose.” Id.
[20] In analyzing the impact of subsection (d) of the statute on subsection (a), the
federal court noted that subsection (a) defined coverage as one of two
possibilities: UIM protection against bodily injury and property damage or
UIM protection against bodily injury only. The court explained that
“[s]ubsection (a) then states that these coverages must be provided . . . in limits
at least equal to the limits of liability [for] bodily injury generally. Id. “So the
limit-of-liability requirement is modifying the ‘coverage’ already described; the
liability requirement is not part of the description itself.” Id. Relying on
legislative history, the court stated that
Nothing in the language of subsection (d), however, permits
insurance companies—to the extent they do include UIM
coverage in their commercial umbrella policies—to provide that
coverage in any manner they like.
2
I.C. § 27-7-5-2(d) states “An insurer is not required to make available the coverage described in subsection
(a) in a commercial umbrella or excess liability policy. . .”
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 14 of 17
That the Indiana legislature did not intend such a result is further
evidenced by later amendments to the same statute. Section 27-
7-5-2(h), which appears in the current version of the statute,
provides that insurers are not required to make available in
personal (as distinguished from commercial) umbrella or excess
liability policies ‘the coverage described in subsection (a).’ . . .
But subsection (h) also states that, where an insurer does include
such coverage, the insurer ‘may make available the coverage in
limits determined by the insurer,’ and ‘is not required to make
available the coverage in limits equal to the limits specified in the
personal umbrella or excess liability policy. We must therefore
assume that the exception for commercial contracts in subsection
(d)—which (still) contains no such language—grants no such
permission. Otherwise, the permission explicitly afforded in
subsection (h) would be redundant.
Id. at 787. The Frye court concluded that
Section 27-7-5-2(d) allowed Auto-Owners to abstain from
providing UIM coverage in the umbrella policy issued to Frye’s
employer. Once the insurance company elected to afford such
coverage, however, it was required under [I.C. §] 27-7-5-2(a) to
provide that coverage in limits equal to or greater than the
policy’s general liability limit: $5 million.
Id.
[21] However, we find Frye to be inapposite to the case at hand and distinguishable
from the facts before us. Frye did not involve a primary auto policy, but rather
analyzed whether a UIM coverage in a commercial umbrella policy had to be
provided in an amount equal to the limit of liability for bodily injury in general
under the provisions of subsection (d) of the statute. Although the Frye court
ultimately held that an insurer who elected to afford UIM coverage under a
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 15 of 17
commercial umbrella policy was required to provide that coverage in limits at
least equal to the policy’s general liability limit, the language of subsection (d)
analyzed by the Frye court did not explicitly allow for liability limits to be
different than UIM coverage limits in commercial umbrella policies. Moreover,
in response to the Frye decision, our Legislature amended the language in
subsection (d).
[22] Today, we reaffirm our holding in Marshall, concluding that after an insurer has
provided UIM coverage in accordance with the liability limits, the insured may
reject the UIM coverage in writing. After the coverage is rejected, the insurer
may provide the insured with a UIM coverage plan with limits less than the
bodily injury limits specified in the insured’s policy. We determine this result to
be compliant with the statutory provisions as the statute itself is silent with
respect to the insurer’s obligations after the insured rejects the UIM coverage
provided. See I.C. § 27-7-5-2.
[23] However, if the insured elects UIM coverage in a primary auto policy, it cannot
be for less than $50,000, even though Indiana allows bodily injury limits to be
as low as $25,000. See I.C. §§ 27-7-5-2(a)(2); 9-24-4-5 (establishing the
minimum amounts of financial responsibility). Therefore, where the insured
chooses to include UIM coverage, I.C. § 27-7-5-2(a)(2) sets out two minimum
coverage amounts. The first minimum applies where the insured has not
rejected in writing the amount of coverage that must be “in limits at least equal
to the limits of liability specified in the bodily injury liability provisions.” I.C. §
27-7-5-2(a)(2). In this case, the minimum coverage amount is the bodily injury
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 16 of 17
amount. The second minimum applies where the insured rejects in writing
UIM coverage equal to the bodily injury coverage. In that case, the minimum
coverage amount is $50,000, even though Indiana allows bodily injury limits to
be as low as $25,000. See I.C. § 27-7-5-2(a)(2); 9-25-4-5. See also Vanhorn v.
Progressive Ins. Co., 2007 WL 1376229 (N.D. Ind. May 7, 2007) (“UIM coverage
is not an all-or-nothing proposition: the insured may reject the coverage that
equals the bodily injury liability and may agree to be insured for less.”)
Accordingly, as Liberty Mutual’s offered UIM coverage was $60,000, Rice’s
vehicle was not underinsured when the accident occurred and therefore, Liberty
Mutual is not obligated to pay UIM coverage benefits to Lee.
CONCLUSION
[24] Based on the foregoing, we hold that the trial court properly granted summary
judgment to Liberty Mutual when the policy’s coverage of UIM benefits is in a
lesser amount than the underlying liability coverage.
[25] Affirmed.
[26] Kirsch, J. and Robb, J. concur
Court of Appeals of Indiana | Opinion 18A-CT-2048 | April 4, 2019 Page 17 of 17