Auto-Owners Insurance Company v. Cathy Benko and Gerald Ewing, as Executors of the Estate of Laverna Ewing

FILED
Mar 20 2012, 9:10 am
CLERK
of the supreme court,
court of appeals and
FOR PUBLICATION tax court
ATTORNEYS FOR APPELLANT: ATTORNEY FOR APPELLEES:
DAVID L. TAYLOR DOUGLAS D. SMALL
THOMAS R. HALEY III Foley & Small
Jennings Taylor Wheeler & Haley P.C. South Bend, Indiana
Carmel, Indiana
IN THE
COURT OF APPEALS OF INDIANA
AUTO-OWNERS INSURANCE COMPANY, )
)
Appellant-Defendant, )
)
vs. ) No. 75A04-1108-CT-440
)
CATHY BENKO and GERALD EWING, )
as Executors of the ESTATE OF LAVERNA )
EWING, Deceased, )
)
Appellees-Plaintiffs. )
APPEAL FROM STARKE CIRCUIT COURT
The Honorable Kim Hall, Judge
Cause No. 75C01-0908-CT-20
March 20, 2012
OPINION – FOR PUBLICATION
BAKER, Judge
In this case, a woman was injured in a vehicular accident and filed a claim for
bodily injury against the man who had struck her. She settled for the policy limits of his
insurance policy, but it was insufficient to cover her injuries, so she filed an underinsured
motorist claim with her own insurance company, who denied the claim stating that she
had not complied with a provision in the policy requiring that she bring a claim against
them within two years of the accident. We conclude that the plain language of the
provision would lead an ordinary policyholder to believe that they were required to bring
a bodily injury claim against the alleged tortfeasor within the applicable statute of
limitations, which occurred in this case. Additionally, if the insurance company intended
a different interpretation, it should have stated so in plain English so that their
policyholders understand what is necessary to protect their interests and collect their
benefits under the policy.
Appellant-defendant Auto-Owners Insurance Company (Auto-Owners) appeals
the trial court’s grant of summary judgment in favor of appellees-plaintiffs, Cathy Benko
and Gerald Ewing as Executors of the Estate of Laverna Ewing, (collectively, “the
Appellees”). More particularly, Auto-Owners contends that the trial court erred by
denying its motion to strike the Appellees’ untimely designated evidence that they had
filed in support of their motion and by finding that Auto-Owners’s underinsured motorist
coverage contractual limitation provision (the Provision) is unenforceable because it is
vague and ambiguous. Concluding that the trial court did not err by denying Auto-
2
Owners’s motion to strike or by granting the Appellees’ motion for summary judgment,
we affirm.
FACTS
The Accident
On August 17, 2007, Laverna Ewing’s vehicle was stopped at a railroad crossing
on State Road 8 near Knox when it was struck from behind by a vehicle driven by Brent
Vannorman. Ewing sustained property damage and bodily injury as a result of the
accident.
Ewing obtained counsel before the expiration of the two-year statute of limitations
applicable to her bodily injury claims, which according to Indiana statute, expired on
August 15, 2009. On August 11, 2009, Ewing and Benko, as her legal guardian, filed a
complaint for damages against Vannorman, alleging bodily injury and property damage.
On or about September 23, 2009, State Farm, Vannorman’s liability insurer,
offered to settle Ewing’s claim against Vannorman for his policy limits of $100,000 per
person. Following State Farm’s offer, Ewing notified Auto-Owners of Vannorman’s
offer to settle Ewing’s claim for his policy limits.
Ewing’s Claim for Underinsured Motorist Benefits
Ewing first provided Auto-Owners with notice of a possible underinsured motorist
claim on October 23, 2009. On March 4, 2010, Auto-Owners filed a motion to intervene
in Ewing’s bodily injury lawsuit against Vannorman and filed its complaint for
3
declaratory judgment. More particularly, Auto-Owners sought a declaration that Ewing’s
underinsured motorist claim was barred by the Provision in her policy which provides:
a. TIME LIMITATION FOR ACTIONS AGAINST US
Any person seeking Uninsured or Underinsured Motorist Coverage must:
(1) present a claim for compensatory damages according to the terms and
conditions of the policy; and
(2) conform with any applicable statute of limitations applying to bodily
injury claims in the state in which the accident occurred.
Appellant’s App. p. 74 (quoting from complaint seeking declaratory judgment) (emphasis
in original). Auto-Owners pointed out that the applicable statute of limitations for bodily
injury claims in Indiana is two years from the date of the accident and that Ewing had
failed to file suit for underinsured motorist coverage under the policy by failing to file
suit against Auto-Owners on or before August 15, 2009.
On April 26, 2011, Ewing filed a motion for partial summary judgment solely on
the issue of the validity of the Provision. Specifically, Ewing alleged that the Provision
was “impermissibly vague and ambiguous and, therefore, unenforceable as sought to be
applied by Auto-Owners.” Appellant’s App. p. 168.
On July 21, 2011, just before the trial court’s hearing on the motion for summary
judgment, Ewing supplemented her designation of evidence with deposition testimony
without seeking leave from the court to do so. Auto-Owners moved to strike Ewing’s
untimely designated evidence. This motion was denied.
4
At the July 25, 2011 summary judgment hearing, Ewing argued that the Provision
of the underinsured motorist endorsement was not enforceable because the policy
language was vague and ambiguous. More particularly, Ewing argued that the Provision
created an ambiguity as to who an insured must bring a claim against for underinsured
benefits, the time period in which a claim must be made, and the operation of the policy’s
subrogation provisions. Auto-Owners opposed Ewing’s motion, arguing that the policy
is unambiguous and enforceable and that Indiana courts have enforced the same or
similar provisions.
To address questions raised by the trial court at that hearing, Auto-Owners filed a
post-hearing brief, discussing certain issues considered by prior panels of the Indiana
Court of Appeals. More particularly, Auto-Owners countered Ewing’s assertion that the
issue of vagueness and ambiguity had not been raised or decided in Indiana.
On August 5, 2011, the trial court granted summary judgment in favor of Ewing,
concluding that the “underinsured motorist coverage limitations clause of the Auto-
Owners policy is impermissibly vague and ambiguous,” and therefore “unenforceable.”
Appellant’s App. p. 12. On August 17, 2011, the trial court entered an order of final
judgment against Auto-Owners on its complaint for declaratory relief. Auto-Owners now
appeals.
5
DISCUSSION AND DECISION
I. Motion to Strike Designated Evidence
Auto-Owners argues that the trial erred by denying its motion to strike the
Appellees’1 July 21, 2011 supplemental designation of evidence that it contends was
untimely. Auto-Owners points out that the Appellees failed to seek leave from the trial
court, and, in any event, the local rules did not provide for the filing of a reply brief or
supplemental designated evidence.
The Appellees counter that the supplemental designated evidence included the
deposition of Cathy Benko, which was taken after the Appellees had filed their motion
for summary judgment. Additionally, the Appellees point out that Auto-Owners cited
Benko’s deposition testimony in its response to the Appellees’ summary judgment
motion, and, therefore, it was proper for the Appellees to respond by filing a reply brief
and supplemental designated evidence. In other words, the Appellees contend that their
reply brief “merely includes further and more complete information to clarify and
respond to that set for in Auto-Owners’[s] response.” Appellees’ Br. p. 38.
In Spudich v. Northern Indiana Public Service Co, 745 N.E.2d 281, 285-86 (Ind.
Ct. App. 2001), a panel of this Court was confronted with whether a local rule permitting
reply briefs conflicted with Trial Rule 56. The panel recognized that “Trial Rule 56
neither expressly permits nor precludes such a reply brief. The supreme court has, in
1
Laverna Ewing died following the filing of this lawsuit due to causes unrelated to the accident, although
it is unclear exactly when she passed away. In any event, this appeal has been brought by Cathy Benko
and Gerald Ewing as Executors of the Estate of Laverna Ewing (collectively, “the Appellees”).
6
other instances, either expressly permitted or expressly prohibited reply briefs.” Id. at
287 (comparing Trial Rule 56 with Appellate Rule 56(D) (“Reply briefs on Rehearing are
prohibited”) and Appellate Rule 46(C) (“The appellant may file a reply brief responding
to the appellee’s argument”)). The panel noted that regarding Trial Rule 56, although our
Supreme Court has remained silent on the specific subject of a reply brief, the Rule does
provide for affidavits in support or opposition of summary judgment to be supplemented
by depositions, interrogatories, and other affidavits. Id. (citing Trial Rule 56(E)).
Here, as stated above, the Appellees filed a reply brief and designated Benko’s
deposition that was taken after the Appellees had filed their motion for summary
judgment. Moreover, in Auto-Owners’s response to the Appellees’ motion, it referred to
Benko’s deposition. In the absence of any language in Trial Rule 56 explicitly
prohibiting reply briefs and such designations and in light of these facts and
circumstances, we cannot say the trial court erred in denying Auto-Owners’s motion to
strike.
II. Enforceability of the Contractual Limitation Provision
Auto-Owners appeals the grant of the Appellees’ motion for partial summary
judgment on Auto Owners’s complaint for declaratory relief. When reviewing a grant of
summary judgment, we apply the same standard as the trial court, namely, summary
judgment should be granted only if the designated evidence demonstrates that there are
no genuine issues of material fact and the moving party is entitled to judgment as a matter
of law. Scribner v. Gibbs, 953 N.E.2d 475, 479 (Ind. Ct. App. 2011); see also Ind. Trial
7
Rule 56(C). Additionally, we must construe all factual inferences in favor of the
nonmoving party, and all doubts as to the existence of a material issue must be resolved
against the moving party. Id.Moreover, “a trial court’s grant of summary judgment is clothed with a
presumption of validity, and the party who lost in the trial court has the burden of
demonstrating that the grant of summary judgment was erroneous.” Cox v. N. Ind. Pub.
Serv. Co., Inc., 848 N.E.2d 690, 695-96 (Ind. Ct. App. 2006). An appellate court “will
affirm upon any theory or basis supported by the designated materials.” Id.At the center of this dispute is the Provision contained in the insurance policy.
Auto-Owners argues that the uninsured motorist claim is time-barred by the Provision,
which, according to Auto-Owners, has been previously upheld by panels of this Court.
The Appellees counter that the Provision is vague and ambiguous, and therefore,
unenforceable.
Initially, we observe that we interpret the terms of an insurance policy using the
same rules of interpretation applied to other contracts. Cincinnati Ins. Co. v. Am. Alt.
Ins. Corp., 866 N.E.2d 326, 332 (Ind. Ct. App. 2007). More particularly, if the language
is clear and unambiguous, we will apply the plain and ordinary meaning. Id.Nevertheless, courts are to interpret policy terms “from the perspective of an ordinary
policyholder of average intelligence.” Allgood v. Meridian Sec. Ins. Co., 836 N.E.2d
243, 246-47 (Ind. 2005). Where an ambiguity exists, that is, where reasonably intelligent
8
people may interpret the policy’s language differently, Indiana courts construe insurance
policies strictly against the insurer. Id. at 247.
Here, as stated above, the Provision provides:
a. TIME LIMITATION FOR ACTIONS AGAINST US
Any person seeking Uninsured or Underinsured Motorist Coverage must:
(1) present a claim for compensatory damages according to the terms and
conditions of the policy; and
(2) conform with any applicable statute of limitations applying to bodily
injury claims in the state in which the accident occurred.
Appellant’s App. p. 230. Additionally, Section V, which encompasses what a
policyholder must do after an accident or loss to preserve Auto-Owners’s right to recover
payments provides:
a. If we make a payment under this policy and the person to or for whom
payment is made has a right to recover damages from another, we will
be entitled to that right. That person shall do everything necessary to
transfer that right to us and shall do nothing to prejudice it.
b. The person to or for whom payment is made under the Uninsured
Motorist Coverage and/or Underinsured Coverage must hold in trust for
us his rights of recovery against any legally liable person. He must do
all that is proper to secure such rights and must do nothing to prejudice
them. He must take any required action in his name to recover damages
and reimburse us out of any proceeds to the extent of our payment.
Appellant’s App. p. 44.
In light of the plain language of these provisions, we think that an ordinary
policyholder would interpret the Provision as requiring them to bring a claim for bodily
injury against the alleged tortfeasor within the applicable statute of limitations, thereby
9
protecting Auto-Owners’s subrogation rights, and reimburse Auto-Owners out of the
proceeds to the extent of Auto-Owners’s prior payments. Otherwise, policyholders are
basically required to bring a claim against Auto-Owners at the same time that they bring
a claim against the alleged tortfeasor. While we recognize that this may have been Auto-
Owner’s intent, it should have stated so in plain English in its policy documents so that
its policyholders know how to protect their interests and collect their benefits.
In any event, we conclude that the language in the policy is clear from the
perspective of an ordinary policyholder and that the Appellees did what was required of
them under the policy, inasmuch as they filed a complaint against Vannorman before the
expiration of the statute of limitations. Consequently, we affirm the decision of the trial
court.
The judgment of the trial court is affirmed.
DARDEN, J., and BAILEY, J., concur.
10