Eric Dulworth v. Melissa Bermudez and Progressive Southeastern Insurance Company

FILED
Mar 15 2018, 7:44 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEES
Kevin P. Podlaski Attorney for Melissa Bermudez
Nicholas A. Podlaski William A. Ramsey
Beers Mallers Backs & Salin, LLP Barrett McNagny, LLP
Fort Wayne, Indiana Fort Wayne, Indiana
Attorneys for Progressive Southeastern
Insurance Company
J. Blake Hike
Michael C. Ross
Carson Boxberger, LLP
Fort Wayne, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Eric Dulworth, March 15, 2018
Appellant-Plaintiff, Court of Appeals Case No.
02A05-1707-PL-1556
v. Appeal from the Allen Superior
Court
Melissa Bermudez and The Honorable Craig J. Bobay,
Progressive Southeastern Judge
Insurance Company, Trial Court Cause No.
Appellees-Defendants. 02D02-1608-PL-398
Riley, Judge.
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STATEMENT OF THE CASE
[1] Appellant-Plaintiff, Eric Dulworth (Dulworth), appeals the trial court’s
summary judgment in favor of Appellees-Defendants, Melissa Bermudez
(Bermudez) and Progressive Southeastern Insurance Company (Progressive),
on Dulworth’s Complaint for damages arising out of a vehicle collision.
[2] We affirm.
ISSUES
[3] Dulworth presents us with four issues on appeal, which we consolidate and
restate as the following two issues:
(1) Whether the trial court properly concluded that, as a matter of law,
Bermudez was released under the terms of the Release Agreement
executed between Dulworth and Charity Cherneski, even though
Bermudez was not a party to the Release Agreement; and
(2) Whether the trial court properly concluded that, as a matter of law,
Dulworth is barred from pursuing underinsured motorist benefits from
Progressive.
FACTS AND PROCEDURAL HISTORY
[4] On August 22, 2014, Dulworth was involved in a motor vehicle accident on
West Jefferson Boulevard, in Fort Wayne, Indiana. Approaching the
intersection with Webster Street, Bermudez came to a sudden stop. Dulworth,
who was driving behind Bermudez, stopped but Charity Cherneski (Cherneski),
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who was following Dulworth, failed to brake in time. Cherneski collided with
Dulworth’s vehicle, causing property damage and bodily injury.
[5] On August 1, 2016, Dulworth resolved his bodily injury claim against
Cherneski by entering into a Release of All Claims (Release), with Cherneski
and her automobile insurer, Founders Insurance Company (Founders). This
Release stated, in pertinent part:
KNOW ALL MEN BY THESE PRESENTS: That the
undersigned, being of lawful age, for the sole consideration of
Twenty-five thousand and 00/100 ($25,000.00), to the
undersigned in hand paid, receipt whereof is hereby
acknowledged, do/does hereby and for my/our/its heirs,
executors, administrators, successors, and assigns release, acquit
and forever discharge Charity Cherneski and Founders Insurance
Company and his, her, their, or its agents, servants, successors,
heirs, executors, administrators, and all other persons, firms,
corporations, associations or partnerships of and from any and all
claims, actions, causes of action, demands, rights, damages,
costs, loss of service, expenses and compensation whatsoever
which the undersigned now has/have or which may hereafter
accrue on account of or in any way growing our of any and all
known and unknown, foreseen and unforeseen bodily and
personal injuries and property damage and the consequences
thereof resulting or to result from the accident, casualty or event
which occurred on or about the 22nd day of August 2014, at or
near Jefferson Street, Fort Wayne, Indiana.
It is understood and agreed that this settlement is the
compromise of a doubtful and disputed claim, and that the
payment made is not to be construed as an admission of liability
on the part of the party or parties hereby released, and that said
releases deny liability therefore and intend merely to avoid
litigation and buy their peace.
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****
This Release expressly reserves all rights of the person, or
persons, on whose behalf the payment is made and the rights of
all persons in privities or connected with them, and reserves to
them their right to pursue their legal remedies, if any, including
but not limited to claims for contribution, property damage and
personal injury against the undersigned or those in privities or
connected with the undersigned.
(Appellant’s App. Vol. II, p. 32).
[6] On August 22, 2016, after settling his claim against Cherneski, Dulworth filed
his Complaint for damages against Bermudez, alleging that Bermudez
negligently caused or contributed to the collision by making an unwarranted
stop. In addition, Dulworth sought to recover underinsured motorist (UIM)
benefits from Progressive, under a policy with benefit limits in the amount of
$100,000 to $300,000. To qualify for these UIM benefits, the policy provides:
We will pay under this Part III [Uninsured/Underinsured
Motorist Coverage] only after the limits of liability under all
applicable bodily injury liability bonds and policies have been
exhausted by payment of judgments or settlements. An insured
person must notify us of any bona fide offer of agreement or
settlement with the owner or operator of an underinsured motor
vehicle and must provide certification of the limits of liability of
the underinsured motorist.
(Appellant’s App. Vol III, p. 18).
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[7] On February 9, 2017, Bermudez filed her motion for summary judgment,
together with a memorandum in support thereof, and designation of evidence.
On March 13, 2017, Dulworth filed a response to Bermudez’s motion, as well
as a motion to strike. The following day, Progressive filed its motion for
summary judgment, to which Dulworth replied on May 8, 2017. On April 21,
2017 and April 24, 2017, Bermudez and Progressive, respectively, each filed
their own motion to strike. On May 17, 2017, the trial court conducted a
hearing on Bermudez’s and Progressive’s motions for summary judgment and
associated motions to strike. On June 7, 2017, the trial court entered summary
judgment in favor of Bermudez and Progressive, concluding, in pertinent part:
The Release in the present case is not analogous to that evaluated
in Bank One [v. Surber, 899 N.E.2d 693 (Ind. Ct. App. 2009)], and
that the present Release unambiguously operates as a release of
everyone, without limitation. Therefore, extrinsic evidence may
not be introduced in an attempt to qualify the plain meaning of
the words as they appear in the four corners of the document. As
the agreement at issue is a Release, the case law also makes clear
that no privity is required for this document to operate in favor of
third parties, and the Stranger to the Contract Rule is not an
exception to the bar against extrinsic evidence.
****
The [c]ourt agrees that a reading of the plain language of the
Policy indicates that since Bermudez was released without
payment [], Bermudez’s bodily injury limits were not exhausted.
As Dulworth did not abide by the Policy language, Dulworth is
not entitled to recover UM/UIM benefits from Progressive. The
[c]ourt concludes there are no genuine issues of material fact
regarding Progressive’s liability, and that Dulworth cannot
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sustain an action against Progressive for UIM benefits.
Therefore, entry of summary judgment in favor of Progressive is
proper.
(Appellant’s App. Vol. II, pp. 28, 30).
[8] Dulworth now appeals. Additional facts will be provided if necessary.
DISCUSSION AND DECISION
I. Standard of Review
[9] 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.
When the defendant is the moving party, the defendant must show that the
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undisputed facts negate at least one element of the plaintiff’s cause of action or
that the defendant has a factually unchallenged affirmative defense that bars the
plaintiff’s claim. Id. Accordingly, the grant of summary judgment must be
reversed if the record discloses an incorrect application of the law to the facts.
Id.[10] We observe that, in the present case, the trial court entered 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.
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. The Release
[11] Dulworth contends that the Release is unambiguous and only released
Cherneski and Founders and therefore does not bar his claim against
Bermudez. Generally, only parties to a contract or those in privity with the
parties have rights under the contract. OEC-Diasonics, Inc. v. Major, 674 N.E.2d
1312, 1314-15 (Ind. 1996). However,
[o]ne not a party to an agreement may nonetheless enforce it by
demonstrating that the parties intended to protect him under the
agreement by the imposition of a duty in his favor. To be
enforceable, it must clearly appear that it was the purpose or a
purpose of the contract to impose an obligation on one of the
contracting parties in favor of the third party. It is not enough
that performance of the contract would be of benefit to the third
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party. It must appear that it was the intention of one of the
parties to require performance of some part of it in favor of such
third party and for his benefit, and that the other party to the
agreement intended to assume the obligation thus imposed.
Id. (internal citation omitted). The intent of the contracting parties to bestow
rights on a third party must affirmatively appear from the language of the
instrument when properly interpreted and construed. Id. It is not necessary
that the intent to benefit a third party be demonstrated any more clearly than
the parties’ intent regarding any other terms of the contract. Id.[12] “A release executed in exchange for proper consideration works to release only
those parties to the agreement unless it is clear from the document that others
are to be released as well.” Evan v. Poe & Associates, Inc., 873 N.E.2d 92, 98
(Ind. Ct. App. 2007) (citing Huffman v. Monroe Co. Cmty. Sch. Corp., 588 N.E.2d
1264, 1267 (Ind. 1992)). “A release, as with any contract, should be interpreted
according to the standard rules of contract law.” Evan, 873 N.E.2d at 98.
“[R]elease documents shall be interpreted in the same manner as any other
contract document, with the intention of the parties regarding the purpose of
the document governing.” OEC-Diasonics, Inc., 674 N.E.2d at 1314. A contract
is ambiguous only if a reasonable person could find its terms susceptible to
more than one interpretation. Evan, 873 N.E.2d at 98. Where “a contract is
unambiguous, the intent of the parties should be determined by the language
employed in the document.” Id. Thus, if the contract is ambiguous, “we give
effect to the intentions of the parties as expressed in the four corners of the
documents.” Id. We will neither construe clear and unambiguous provisions
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nor add provisions not agreed upon by the parties. Id. The meaning of a
contract is to be determined from an examination of all of its provisions, not
from a consideration of individual words, phrases, or even paragraphs read
alone. Id.[13] While the Release contains language purportedly discharging “all other
persons,” Dulworth maintains this is a general term “restricted to that class, or
types of persons, and encompasses any other persons related by blood or legal
right to Cherneski and/or Founders not specifically, previously named.”
(Appellant’s Br. p. 16). Bermudez and Progressive, on the other hand, both
maintain that the unambiguous language of the Release intended to release “all
other persons” without restrictions, in the absence of any limiting provisions.
In support of their respective positions, the parties rely on the same precedents.
[14] Dulworth centers his argument on Bank One, Nat. Ass’n. v. Surber, 899 N.E.2d
693, 703 (Ind. Ct. App. 2009), trans. denied, in which we found that
contradictory language in the release prevented the release of “all other
persons.” Bank One involved an argument between a widow and the decedent’s
daughters over estate funds which were held in the decedent’s bank account.
Id. at 697. Because the bank could not locate the widow’s signatory card giving
her authorization to be on the decedent’s account, the bank deemed the account
the sole property of the decedent. Id. The dispute was eventually settled
through a mediated settlement agreement and subsequent release. Id. at 698.
Thereafter, the widow brought a claim against Bank One for negligence, and
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Bank One, relying on the release, argued the agreement released it from
liability. Id. The release contained the following paragraph:
[Widow], [decedent’s daughters], and the Estate of [the decedent]
(hereinafter ‘Signatories’), conditioned upon and for and in
consideration of the [c]ourt’s approval of and the performance of
the Compromise, the sufficiency of which is hereby
acknowledged, hereby forever release and discharge each other,
their heirs, personal representatives, attorneys, agents and
assigns, and all other persons or entities who might be liable, not
of whom admit any liability to the Signatories, but all dispute any
liability to the Signatories, of and from any and all manner of
actions, causes of action, suits, accounts, contracts, debts, claims,
and demands whatsoever, at law or in equity, and however
arising, on or before the date of this release, including but not
limited to, all matters asserted, or which could have been
asserted, by and of the Signatories in that certain actions pending
in the Hamilton Superior Court, State of Indiana, as above
entitled under Cause No. [].
Id. Finding that the release contained language contradicting the general
statement of “all other persons or entities who might be liable . . .” this court
focused on the multiple ambiguities included in the paragraph. Id. at 702. The
release specifically referenced the Signatories when limiting its applicability to
claims “asserted, or which could have been asserted” and “any and all
disputes” existing “between the Signatories.” Id. The Release also explicitly
referenced the cause number identifying the case in which the Signatories to the
release were litigating their dispute. Id. Accordingly, given the contradictory
provisions, we concluded that the Signatories intended to limit the release to the
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pending litigation over the decedent’s estate and did not release Bank One from
liability. Id. at 703.
[15] Bermudez and Progressive refer this court to our decision in Evan v. Poe &
Assocs., Inc., 873 N.E.2d 92 (Ind. Ct. App. 2007), where we construed a
settlement agreement as barring claims against the defendant, who was not
specifically named in the release. This specific release stated, in pertinent part:
[] [Evan] do hereby release, acquit and forever discharge the
Safeco Insurance Co. of America, and [its Attorneys], their
representative agents, employees, representatives, attorneys,
heirs, executors, administrators, successors and assigns, together
with all other persons, firms and corporations, from any and all
claims for damages, costs, expenses and compensations,
including but not limited to any claim for breach of a duty of
good faith and fair dealing or for punitive damages, whatsoever
at law or in equity, and however arising, on account of, or in any
way growing out of the issuance of Safeco Insurance Policy [] to
[Evan], and/or a fire loss which occurred on February 12, 2001
at []; and damages and losses for which the parties hereby
released are legally liable, all of which is denied and disputed by
them.
Id. at 96. Interpreting the release to be unambiguous, the Evan court noted that
the instrument did not contain any limitations of claims or other language that
contradicted the notion that “all other persons” were released. Id. at 101.
While the document did contain a policy number, the court did not find that
this reference limited the expansive language of “all other persons.” Id.Accordingly, the court held that the release clearly and unambiguously released
the world. Id.Court of Appeals of Indiana | Opinion 02A05-1707-PL-1556 | March 15, 2018 Page 11 of 16
[16] We find Evan more persuasive to the facts at hand. By executing the Release,
Dulworth did not only release Cherneski and her insurer, but also “all other
persons, firms, corporations, associations, or partnerships.” (Appellant’s App.
Vol. II, p. 32). Even though the Release initially references the release of
Cherneski, Founders, and their agents, servants, successors, heirs, executors,
and administrators, the instrument then, without any limiting language, also
releases “all other persons, . . . from any and all claims, actions, . . .”
(Appellant’s App. Vol. II, p. 32). Unlike Bank One, the instrument here simply
does not contain any recitation of ‘affected parties’ or any other constricting
language. See Bank One, 899 N.E.2d at 698. Despite the fact that the Release
includes the claim number and policy number in the top right corner of the
document, these references are not tied to the releasing language and cannot
function as a limiting factor. Rather, we agree with the trial court, that based
on their location, these indicators merely represent “a record-keeping device,
not as a statement of release limitation.” (Appellant’s App. Vol. II, p. 28).
Furthermore, the Release preserves the rights of Cherneski and Founders to
pursue other claims related to the accident, but includes no such provisions that
reserves Dulworth’s rights with respect to other claims related to the accident.
[17] Dulworth now argues that the stranger to the contract rule exception applies
and that his affidavit, expressing his intent not to release Bermudez and
Progressive must be considered. In general, “[t]he parol evidence rule provides
that extrinsic evidence is inadmissible to add to, vary, or explain the terms of a
written instrument if the terms of the instrument are clear and unambiguous.”
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Cooper v. Cooper, 730 N.E.2d 212, 215 (Ind. Ct. App. 2000). However, under
the stranger to the contract rule, “the inadmissibility of parol evidence to vary
the terms of a written instrument does not apply to a controversy between a
third party and one of the parties to the instrument.” Id. at 216. Accordingly,
as the parol evidence rule does not apply to this controversy due to the stranger
to the contract exception, we must determine whether, in light of the
unambiguous nature of the release, extrinsic evidence allowed under the
stranger to the contract exception should be considered.
[18] In Huffman, our supreme court abolished the common law rule that the release
of one joint tortfeasor released all other tortfeasors. Huffman, 588 N.E.2d at
1267. The court reasoned that a rule which assumed total release did not give
appropriate deference to the parties’ intent. To remedy this failing, the court
held that a release should be interpreted like any other contract “with the intent
of the parties regarding the purpose of the document governing.” Id. In
applying this new rule, the court stated:
The release document in this case cannot be said to be ‘clear and
unambiguous on its face . . . These contradictory references
[between the first and second paragraph of the release document]
cloud the intent of the document. Consequently, parol evidence
may be utilized to determine the parties’ true intention respecting
the documents’ application.
Id. Accordingly, in the absence of ambiguity, Huffman does not require or
permit us to look beyond the language of the release. Id. See also Evan, 873
N.E.2d at 103 (in the context of a controversy that exists between a third party
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and one of the parties to the instrument, when a release is unambiguous we
need not look at any other evidence to determine the parties’ intent.”); Bank
One, 899 N.E.2d at 703 (finding the release to be ambiguous, the court
considered extrinsic evidence). As we determined the Release between
Dulworth and Cherneski to be unambiguous, we establish the intent of the
Release from the four corners of the instrument and cannot consider extrinsic
evidence. 1
[19] Accordingly, “[l]anguage which releases ‘all persons’ does just that and is clear
as long as no other terms are contradictory.” Dobson v. Citizen Gas & Coke Util.,
634 N.E.2d 1343, 1345 (Ind. Ct. App. 1994). The location of the clause “[a]ll
other persons” in the Release mirrors its location in other releases, which were
determined by this court to have released the world. See, e.g., Stemm v. Estate of
Dunlap, 717 N.E.2d 971, 976 (Ind. Ct. App. 1999) (in which the releasor
executed a release discharging “Arnold Ray Rivera[,] [his] heirs,
administrators, executors, successors and assigns, and all other persons and
organizations”), reh’g denied. Here, Dulworth “affirmatively intended to
release” Bermudez based in the language of the instrument. See Kirtley v.
McClelland, 562 N.E.2d 27, 37 (Ind. Ct. App. 1990) (“One not a party to an
1
Even if we were to hold otherwise and determine that extrinsic evidence may be considered in the dispute
between Dulworth, on the one hand, and Bermudez and Progressive, on the other, even when the Release is
unambiguous, we would reach the same result. In support of his argument to utilize extrinsic evidence,
Dulworth encourages us to consider his affidavit that was designated evidence with his motion for summary
judgement. However, the trial court in its Order struck Dulworth’s affidavit in response to Bermudez’s
motion to strike. As Dulworth did not appeal the trial court’s grant of Bermudez’s motion, the affidavit is
not before this court.
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agreement may nonetheless enforce it by demonstrating that the parties
intended to protect him under the agreement by the imposition of a duty in his
favor.”), trans. denied. Therefore, there remain no genuine issues of material
fact and we affirm the trial court’s summary judgment in favor of Bermudez.
III. The Pursuit of UIM Benefits from Progressive
[20] With respect to Progressive, Dulworth contends that Progressive’s subrogation
rights under the policy were not foreclosed because Dulworth’s duty to notify
Progressive was never triggered.
[21] In light of the all-encompassing language of the Release, Dulworth can no
longer pursue his claim, if any, against Progressive. If Dulworth had wished to
preserve his claim against Progressive, he was free to do so; however, he did
not. See Estate of Spry v. Greg & Ken, Inc., 749 N.E.2d 1269, 1275 (Ind. Ct. App.
2001) (“If a litigant wishes to settle a claim against some defendants without
releasing other defendants, an appropriately drafted release or a general release
accompanied by a stipulation signed by all parties will allow a litigant to do just
that.”).
[22] Notwithstanding the inclusive language of the Release, even if Progressive had
not been released under the instrument, Dulworth would still be barred from
pursuing a claim against the insurance company. Dulworth’s policy with
Progressive required Dulworth to exhaust all applicable injury liability bonds
and policies by payment of judgment or settlement in order to qualify for UIM
benefits. As Dulworth admitted that he failed to recover any sums from
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Bermudez, whom he claimed to be at fault for the accident, in satisfaction of his
claim, he breached the policy and is barred from pursuing UIM benefits from
Progressive. Furthermore, under the terms of the policy, Dulworth was
required to notify Progressive of any bona fide offer of agreement or settlement.
Dulworth never notified Progressive of the Release prior to its execution and
prior to releasing Bermudez of any further litigation. See Hockelberg v. Farm
Bureau Ins. Co., 407 N.E.2d 1160, 1161 (Ind. Ct. App. 1980) (where the insured
releases his right of action against the wrongdoer before settlement with the
insurer, the release destroys by operation of law the insured’s right of action on
the policy). Therefore, there are no genuine issues of material fact remaining
regarding Progressive’s liability under the policy and the trial court properly
entered summary judgment in favor of the insurance company.
CONCLUSION
[23] Based on the foregoing, we hold that the trial court properly entered summary
judgment as a matter of law in favor of Bermudez and Progressive.
[24] Affirmed.
[25] Robb, J. and Pyle, J. concur
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