State Farm Insurance Company v. Thomas A. Young and Mary E. Young, Joel P. Genth and Philip K. Genth, INGENIX , 2013 Ind. App. LEXIS 126 ( 2013 )

FOR PUBLICATION
ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEES:
Attorneys for Thomas A. and Mary E.Young
ROBERT J. PALMER PHILLIP R. TERRILL
May Oberfell Lorber MARK A. THOMA
Mishawaka, Indiana Leonard, Hammond, Thoma & Terrill
Fort Wayne, Indiana
IN THE
COURT OF APPEALS OF INDIANA Mar 15 2013, 9:16 am
_____________________________________________________________________________
STATE FARM INSURANCE COMPANY, )
)
Appellant-Third Party Plaintiff/Defendant, )
)
vs. ) No. 92A05-1205-CT-258
)
THOMAS A. YOUNG and MARY E. YOUNG, )
)
Appellees-Plaintiffs, )
)
JOEL P. GENTH and PHILIP K. GENTH, )
)
Appellees-Defendants, )
)
INGENIX, )
)
Appellee-Third Party Defendant. )
APPEAL FROM THE WHITLEY CIRCUIT COURT
The Honorable James R. Heuer, Judge
Cause No. 92C01-0910-CT-664
March 15, 2013
OPINION - FOR PUBLICATION
MAY, Judge
State Farm Insurance Company (hereinafter, “Policy One”)1 appeals an order reducing
the subrogation lien that Policy One held against Thomas and Mary Young. We affirm.
FACTS AND PROCEDURAL HISTORY
On December 4, 2007, Joel Genth was driving a car owned by his father, Philip Genth,
and insured with State Farm Insurance Company (hereinafter “Policy Two”). Genth’s
vehicle struck Thomas Young’s vehicle from behind. Thomas suffered physical injuries for
which he sought treatment. Thomas’s medical insurance company, Ingenix, and Policy One
paid for those treatments.
On October 29, 2009, the Youngs sued Philip and Joel Genth. As part of their
damages, the Youngs listed two subrogation liens – one to Ingenix for $19,276.61, and one to
Policy One for $5,000. The parties entered mediation, and Policy Two offered to settle the
Youngs’ claim for $17,432.00, which was less than the total of $24,276.61 the Youngs owed
in subrogation liens.
As the settlement offer was less than the amount due in subrogation liens, the Youngs
filed a motion to reduce the subrogation liens pursuant to Ind. Code § 34-51-2-19, which
provides:
If a subrogation claim or other lien or claim that arose out of the payment of
medical expenses or other benefits exists in respect to a claim for personal
injuries or death and the claimant’s recovery is diminished:
(1) by comparative fault; or
(2) by reason of the uncollectibility of the full value of the claim for
personal injuries or death resulting from limited liability insurance or
from any other cause;
1
State Farm insured both the Youngs and Genth. For clarity, we refer to the Youngs’ State Farm policy as
“Policy One” and the Genth’s State Farm policy as “Policy Two.”
2
the lien or claim shall be diminished in the same proportion as the claimant’s
recovery is diminished. The party holding the lien or claim shall bear a pro
rata share of the claimant’s attorney’s fees and litigation expenses.
In their motion, the Youngs asserted they should be responsible for only 17.43% of the value
of each subrogation lien because they were receiving only 17.43% of Genth’s $100,000
policy limit.
Prior to the hearing on the Youngs’ motion, Ingenix accepted a reduction of its
subrogation lien from $19,276.61 to $2,410.84. That reduction represents a decrease to
17.43% of the lien, minus Ingenix’s pro rata share of the attorney fees. See Ind. Code § 34-
51-2-19 (“The party holding the lien or claim shall bear a pro rata share of the claimant’s
attorney’s fees and litigation expenses.”).
Policy One agreed to reduce the amount of its lien against the Youngs from $5,000 to
$3,250, which accounts for its pro rata share of the attorney fees plus $100.2 Policy One
would not agree to reduce the lien to 17.43% of its value.
After a hearing, the court reduced the subrogation liens and ordered Policy One to
accept $581, which represents 17.43% of the value of its original subrogation lien, minus
Policy One’s pro rata share of attorney’s fees and litigation expenses pursuant to Ind. Code §
34-51-2-19. Sixteen days after the court entered its order reducing the liens, the Youngs and
Joel and Philip Genth stipulated to dismissal with prejudice of the Youngs’ personal injury
2
It is not clear from the record what the $100 represents. At the reduction in subrogation lien hearing, Policy
One stated, “So it’s [Policy One’s] position that they’re entitled to the full amount of their lien minus the one-
third statutory reduce [sic] in attorney fees. They have agreed to take another $100 off that and accept
$3,250[.]” (Tr. at 6.)
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action, indicating the matter had been settled.
DISCUSSION AND DECISION
In reducing the subrogation liens, the trial court sua sponte made findings of fact and
conclusions of law. In such a case, our standard of review is well-settled:
Where the trial court enters specific findings sua sponte, [ ] the specific
findings control our review and the judgment only as to the issues those
specific findings cover. Where there are no specific findings, a general
judgment standard applies and we may affirm on any legal theory supported by
the evidence adduced at trial.
We apply the following two-tier standard of review to sua sponte
findings and conclusions: whether the evidence supports the findings, and
whether the findings support the judgment. Findings and conclusions will be
set aside only if they are clearly erroneous, that is, when the record contains no
facts or inferences supporting them. A judgment is clearly erroneous when a
review of the record leaves us with a firm conviction that a mistake has been
made. We consider only the evidence favorable to the judgment and all
reasonable inferences flowing therefrom, and we will neither reweigh the
evidence nor assess witness credibility. While we defer substantially to
findings of fact, we do not do so to conclusions of law. We evaluate questions
of law de novo and owe no deference to a trial court’s determination of such
questions.
Trust No. 6011, Lake County Trust Co. v. Heil’s Haven Condominiums Homeowners Ass’n,
967 N.E.2d 6, 14 (Ind. Ct. App. 2012) (citations omitted).
Policy One argues the trial court erred when it reduced the amount of its subrogation
lien against the Youngs. Subrogation is a long-standing doctrine of equity in which a party,
not acting as a volunteer, pays the debt of another that, “in good conscience, should have
been paid by the one primarily liable.” Wirth v. Am. Family Mut. Ins. Co., 950 N.E.2d 1214,
1216 (Ind. Ct. App. 2011). When a claim of subrogation is recognized, “a court substitutes
another person in the place of a creditor, so that the person in whose favor it is exercised
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succeeds to the right of the creditor in relation to the debt.” Erie Ins. Co. v. George, 681
N.E.2d 183, 186 (Ind. 1997). Ultimately, the purpose of the doctrine is to prevent unjust
enrichment. Id.The trial court concluded “I.C. 34-51-2-[1]9 is applicable.” (Appellant’s App. at 7.)
That statute provides, in relevant part, that a lien “shall be diminished” if “the claimant’s
recovery is diminished” because “the full value of the claim for personal injuries” is
uncollectible. Ind. Code § 34-51-2-19. Here, the record leaves no doubt the “claimant’s
recovery” was diminished. Policy Two would not pay more than $17,432.00 to settle the
Youngs’ suit against the Genths, while the Youngs owed $24,276.61 in subrogation liens and
their suit also prayed for unspecified damages for pain and suffering, loss of earnings, and
loss of consortium. Thus, the Youngs were not going to receive the full value of their claim.
In light of the unusual facts before us, i.e., that State Farm issued both Policy One and
Policy Two, we decline to adopt State Farm Policy One’s premise that its subrogation lien
should not be reduced based on State farm Policy Two’s refusal to pay the full amount of the
Youngs’ claim. The purpose of subrogation is to avoid unjust enrichment. George, 681
N.E.2d at 186. State Farm paid under Policy One for some of the Youngs’ damages, and thus
was entitled to a subrogation lien. But “the one primarily liable,” Wirth, 950 N.E.2d at 1216,
and who “in good conscience should have been” paying, id., was State Farm under Policy
Two. Therefore, to allow State Farm to recover the full value of its subrogation lien under
Policy One, when State Farm did not pay the full value of Youngs’ claim under Policy Two,
would unjustly enrich State Farm.
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As we may “affirm on any legal theory supported by the evidence adduced at trial,”
Trust No. 6011, 967 N.E.2d at 14, we affirm the decision of the trial court.
Affirmed.
ROBB, C.J., and PYLE, J., concur.
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