David Didion and Kristi Didion as Parents and Legal Guardians of Brayden Didion v. Auto-Owners Insurance Company

FOR PUBLICATION
ATTORNEY FOR APPELLANTS: ATTORNEYS FOR APPELLEE:
NICHOLAS J. WAGNER DAVID L. TAYLOR
Stewart & Stewart Attorneys CHRISTOPHER D. SIMPKINS
Carmel, Indiana Taylor Law Firm, P.C.
Indianapolis, Indiana
Dec 10 2013, 9:32 am
IN THE
COURT OF APPEALS OF INDIANA
DAVID DIDION and KRISTI DIDION as Parents )
and Legal Guardians of BRAYDEN DIDION, )
)
Appellants, )
)
vs. ) No. 27A02-1303-PL-232
)
AUTO-OWNERS INSURANCE COMPANY, )
)
Appellee. )
APPEAL FROM THE GRANT SUPERIOR COURT
The Honorable Jeffrey D. Todd, Judge
Cause No. 27D01-1002-PL-184
December 10, 2013
OPINION - FOR PUBLICATION
BRADFORD, Judge
In June of 2008, Braydon Didion was playing in the yard of a Gas City house (“the
House”) being lived in by Michael Carl when he was allegedly bit in the face by Michael’s
dog and injured (“the Loss”). Von Carl and Ginger Hawk, who lived in Kentucky at the
time, owned the House and had home owner’s insurance pursuant to a policy with Appellee
Auto-Owners Insurance Company (“the Policy”). Michael did not notify Auto-Owners, Von,
or Ginger of the Loss. Braydon’s parents, Appellants David and Kristi Didion (“the
Didions”), filed suit against Michael and eventually named Ginger as a defendant.
Ultimately, default judgment was entered against Michael and Ginger, although the judgment
as to Ginger was subsequently set aside. Most likely in July of 2009, Ginger became aware
of the Loss and the lawsuit and soon notified her insurance agent of both. In February of
2012, Auto-Owners filed a complaint, seeking a declaratory judgment that it had no liability
for the Loss. The trial court entered summary judgment in favor of Auto-Owners. The
Didions claim on appeal that the trial court erred in concluding that (1) Michael was not an
insured under the terms of the Policy and (2) Auto-Owners was not given timely notice of the
Loss. Concluding that Michael was not an insured and that Auto-Owners was not given
timely notice of the Loss pursuant to the terms of the Policy, we affirm.
FACTS AND PROCEDURAL HISTORY
In June of 2008, Von and Ginger owned the House, which was being lived in by
Michael, Ginger’s cousin. Ginger, who was born in 1957, had lived in the House at one time,
but had not done so since she was sixteen or seventeen years old. Ginger lived in Kentucky
with her husband and son, and had lived in her current residence for approximately eight
years. Ginger checked on the House “probably every couple months” but “would just drive
by, drive down the driveway, or drive down Broadway in front of the propery[,]” never going
inside. Appellant’s App. p. 35. Von and Ginger had secured home-owner’s coverage
pursuant to the Policy, which provided in part as follows:
HOMEOWNERS POLICY
FORM 3
INSURING AGREEMENT
The attached Declarations describe the property we insure and the Coverages
and Limits of Insurance for which you have paid a premium. In reliance upon
your statements in the Declarations and application(s), we agree to provide
insurance subject to all terms and conditions of this policy. In return, you must
pay the premium and comply with all the terms and conditions of this policy.
This policy applies to losses, bodily injury, property damage, and personal
injury which occur during the policy term shown in the Declarations.
DEFINITIONS
To understand this policy, you must understand the meaning of the following
words. These words appear in bold face type whenever used in this policy
and endorsements attached to this policy.
…
2. Bodily injury means physical injury, sickness or disease sustained by a
person including resulting death of that person. Bodily injury does not
include personal injury.
….
5. Insured means:
a. you;
b. your relatives; and
c. any other person under the age of 21 residing with you who is in
your care or the care of a relative.
….
13. Relative means a person who resides with you and who is related to
you by blood, marriage or adoption.
….
WHAT TO DO IN CASE OF LOSS
….
2. PERSONAL LIABILITY PROTECTION
In the event of bodily injury, property damage or personal injury,
the insured must
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a. notify us or our agency as soon as possible. The notice must
give:
(1) your name and policy number;
(2) the time, place and circumstance of the occurrence or
incident; and
(3) the names and addresses of injured persons and
witnesses;
b. promptly send us any legal papers received relating to any claim
or suit:
c. cooperate with us and assist us in any matter relating to a claim
or suit[.]
Appellant’s App. pp. 190-91, 213-14 (all emphases in original).
On June 16, 2008, Braydon was allegedly bit in the face by Michael’s dog as Braydon
played in the yard of the House. On July 24, 2008, the Didions filed a complaint for money
damages against Michael, amending the complaint to add Ginger on September 30, 2008. On
February 9, 2009, the Didions filed a motion for default judgment, which the trial court
granted the next day. On April 16, 2009, the trial court issued an order fixing the Didions’
damages at $250,000.00. At some point, most likely in July of 2009, Ginger notified her
insurance agent of the Loss and the lawsuit. Ginger had first heard of the Loss and the
lawsuit after learning that there was a lien on the House and then speaking with Michael on
the telephone. Very soon after, she notified Auto-Owners of both. On September 1, 2009,
the trial court granted Ginger’s motion to set aside the default judgment against her.
On February 25, 2010, Auto-Owners filed a complaint for declaratory judgment on the
issue of liability against Michael, Ginger, and the Didions. On September 28, 2012, the
Didions filed a motion for partial summary judgment against Auto-Owners, to which Auto-
Owners responded on October 30, 2012. On February 20, 2013, the trial court granted
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summary judgment in favor of Auto-Owners, concluding, inter alia, that
1. Michael Carl did not reside with Von Carl or Ginger Hawk at the time
of the Incident.
….
4. Michael Carl is not an insured under the Policy.
5. Michael Carl failed to provide timely and reasonable notice of the
Incident, claims or Tort Lawsuit of Didions to Auto-Owners, which
was a condition precedent to coverage under the Policy.
Appellant’s App. pp. 17-18.
DISCUSSION AND DECISION
When reviewing the grant or denial of a summary judgment motion, we apply the
same standard as the trial court. Merchs. Nat’l Bank v. Simrell’s Sports Bar & Grill, Inc.,
741 N.E.2d 383, 386 (Ind. Ct. App. 2000). Summary judgment is appropriate only where the
evidence shows there is no genuine issue of material fact and the moving party is entitled to a
judgment as a matter of law. Id.; Ind. Trial Rule 56(C). All facts and reasonable inferences
drawn from those facts are construed in favor of the nonmoving party. Id. To prevail on a
motion for summary judgment, a party must demonstrate that the undisputed material facts
negate at least one element of the other party’s claim. Id. Once the moving party has met
this burden with a prima facie showing, the burden shifts to the nonmoving party to establish
that a genuine issue does in fact exist. Id. The party appealing the summary judgment bears
the burden of persuading us that the trial court erred. Id.I. Whether Michael Was an “Insured” Under the Policy
The Didions argue that the trial court erred in concluding that Michael was not an
insured pursuant to the policy. Specifically, the Didions contend that Michael is a blood
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relative of Ginger and that he “resided” with Ginger in the Gas City house, making him an
“insured.”
[B]ecause the interpretation of a contract is a matter of law, cases involving the
interpretation of insurance contracts are particularly appropriate for summary
judgment.
Moreover, provisions of insurance contracts are subject to the same
rules of construction as other contracts. We interpret an insurance policy with
the goal of ascertaining and enforcing the parties’ intent as revealed by the
insurance contract. In accomplishing that goal we must construe the insurance
policy as a whole, rather than considering individual words, phrases, or
paragraphs. If the contract language is clear and unambiguous, it should be
given its plain and ordinary meaning.
Additionally, we must accept an interpretation of the contract language
that harmonizes the provision rather than one which supports a conflicting
version of the provisions. Policy terms are interpreted from the perspective of
an ordinary policyholder of average intelligence. If reasonably intelligent
persons honestly may differ as to the meaning of the policy language, the
policy is ambiguous. However, an ambiguity does not exist merely because
the parties proffer differing interpretations of the policy language.
Wright v. Am. States Ins. Co., 765 N.E.2d 690, 692-93 (Ind. Ct. App. 2002) (citations
omitted).
Contracts for insurance are subject to the same rules of interpretation
and construction as are other contracts. Eli Lilly and Co. v. Home Ins. Co.
(1985), Ind., 482 N.E.2d 467; Sharp v. Indiana Union Mut. Ins. Co. (1988),
Ind. App., 526 N.E.2d 237, trans. denied. Whenever summary judgment is
granted based upon the construction of a written contract, the trial court has
either determined as a matter of law that the contract is not ambiguous or
uncertain, or the contract ambiguity, if one exists, can be resolved without the
aid of a factual determination. Kutche Chevrolet, Inc. v. Anderson Banking
Co. (1992), Ind. App., 597 N.E.2d 1307. Generally, construction of a written
contract is a question of law for the trial court and therefore summary
judgment is particularly appropriate. Id. However, if reasonable minds differ
as to the meaning of the contract’s terms, then an ambiguity exists rendering
summary judgment inappropriate. Id.Plumlee v. Monroe Guar. Ins. Co., 655 N.E.2d 350, 354 (Ind. Ct. App. 1995), trans. denied.
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As a general rule, “[w]here provisions limiting coverage are not clearly and plainly
expressed, the policy will be construed most favorably to the insured, to further the policy’s
basic purpose of indemnity.” Meridian Mut. Ins. Co. v. Auto-Owners Ins. Co., 698 N.E.2d
770, 773 (Ind. 1998).
There is no dispute that Michael is a blood relative of Ginger’s, but he would have to
“reside” with her in the House in order to qualify as an insured pursuant to the Policy.
“Reside” may be defined as “[t]o be in residence; to occupy a fixed abode; [or] to dwell
permanently or continuously (reside in the district).” WILLIAM P. STATSKY, WEST’S LEGAL
THESAURUS/DICTIONARY 655 (1985). While we acknowledge that the word “reside” may be,
perhaps, not without some inherent ambiguity, that potential ambiguity is not even remotely
broad enough to support a conclusion that Ginger “resided” in the House with Michael. The
Indiana Supreme Court has made it clear that, while ambiguities will be strictly construed
against the insurer, “for ambiguity to confer coverage, the covered item must be somewhere
within the circle of ambiguity.” Allstate Ins. Co. v. Dana Corp., 759 N.E.2d 1049, 1057 (Ind.
2001).
The uncontradicted designated evidence indicates that Ginger lived permanently and
continuously in Kentucky with her immediate family and drove by the House every couple of
months to check on its condition, never even going inside. While Ginger had lived in the
House in the past, she had not done so since the early 1970s. There is no designated
evidence tending to show that Ginger had any personal property in the House or that she had
ready access to the house or any of its contents. Were we to interpret the word “reside” in the
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broad fashion urged by the Didions, it would render similar “insured’ clauses in other
insurance contracts meaningless and without effect. In summary, we do not believe that any
ordinary policyholder of reasonable intelligence would understand an absentee landlord who
does no more than drive by a house every so often to “reside” in that house. The trial court
did not err in concluding that Michael was not an “insured” under the Policy.1
II. Whether Auto-Owners Received Adequate Notice
The Didions also contend that the trial court erred in concluding that Auto-Owners did
not receive timely notice of the Loss. Although the trial court concluded that notice was
inadequate because Michael failed to notify Auto-Owner’s, we have already concluded that
Michael was not an “insured.” As previously mentioned, the notice provision of the Policy
provides, in part, that, “In the event of bodily injury, property damage or personal injury, the
insured must … notify us or our agency as soon as possible.” Appellant’s App. p. 214 (bold
emphasis removed and italics added). Michael had absolutely no obligation to notify Auto-
Owners of the Loss, and his failure to do so is therefore irrelevant. The only question, then,
is whether Ginger, as a named “insured” and party to the underlying lawsuit, provided
adequate notice to Auto-Owners pursuant to the policy.
We have held that the notice requirement is “material, and of the
essence of the contract.” London Guarantee & Accident Co. v. Siwy, 35 Ind.
App. 340, 66 N.E. 481, 482 (1903). The duty to notify an insurance company
of potential liability is a condition precedent to the company’s liability to its
1
The Didions rely on our decision in Erie Insurance Exchange v. Stephenson, 674 N.E.2d 607 (Ind.
Ct. App. 1996), a case in which we found coverage pursuant to an homeowner’s liability policy even though
the owner no longer lived in the house. Id. at 610. In that case, however, the question was not whether the
owner “resided” in the house but whether she could be a member of the “household” despite not living in the
house. Id. Consequently, our decision in Erie Insurance Exchange is inapposite and does not help the
Didions.
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insured. Shelter Mut. Ins. Co. v. Barron, 615 N.E.2d 503, 507 (Ind. Ct. App.
1993), trans. denied. When the facts of the case are not in dispute, what
constitutes reasonable notice is a question of law for the court to decide. Id.Unlike other policy provisions requiring the cooperation of the insured,
noncompliance with notice of claim provisions resulting in an unreasonable
delay triggers a presumption of prejudice to the insurer’s ability to prepare an
adequate defense. Miller v. Dilts, 463 N.E.2d 257, 265 (Ind. 1984). The
Indiana Supreme Court stated in Miller that:
The requirement of prompt notice gives the insurer an opportunity to
make a timely and adequate investigation of all the circumstances
surrounding the accident or loss. This adequate investigation is often
frustrated by a delayed notice.
Askren Hub States Pest Control Servs., Inc. v. Zurich Ins. Co., 721 N.E.2d 270, 277-78 (Ind.
Ct. App. 1999).
We must conclude that Ginger’s failure to notify Auto-Owners of the Loss until over
year had passed did not satisfy her obligation to do so “as soon as possible.” We have little
trouble concluding that the length of delay in this case was unreasonable. The facts of this
case amply support our conclusion: in the over one year that passed between the Loss and
Ginger’s notification to her agent, the Didions’ lawsuit had not only been filed but had
already proceeded to default judgment regarding liability and damages. In other words,
Auto-Owners had been denied of all opportunity to timely investigate the Loss and to control
the litigation from the early stages. See, e.g., Miller, 463 N.E.2d at 266 (concluding that
summary judgment should be entered in favor of three insurance companies which received
notice of the accidents giving rise to liability one month, six months, and seven months after
their occurrence and which received notice of the resulting lawsuits as early as five days after
filing).
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Moreover, we cannot excuse Ginger’s delay on the basis that she was ignorant of the
Loss and notified Auto-Owners almost immediately upon being made aware of it. Indiana
courts have been consistent in holding that there is no “discovery rule” in the insurance
context. In Brunner v. Economy Preferred Insurance Co., 597 N.E.2d 1317 (Ind. Ct. App.
1992), we adopted the rule that, for purposes of notice provisions in insurance contracts, “the
insured’s failure to discover the loss until some time after it occurred was immaterial[.]” Id.
at 1319; see also United Techs. Auto. Sys., Inc. v. Affiliated FM Ins. Co., 725 N.E.2d 871,
875 (Ind. Ct. App. 2000) (“In addition, we note that Indiana courts have followed the
reasoning of the vast majority of state courts in holding that failure to discover damages does
not toll the contractual period of limitation; rather, a policy’s period of limitation begins to
run at the time the loss occurs, regardless of whether the insured knew of it.”), trans. denied.
Ginger’s obligation to report the Loss to Auto-Owner’s was not altered by her ignorance of
it. The trial court correctly concluded that Auto-Owner’s did not receive timely notice.
We affirm the judgment of the trial court.
MAY, J., concurs.
BAILEY, J., concurs in result with opinion.
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IN THE
COURT OF APPEALS OF INDIANA
DAVID DIDION and KRISTI DIDION as Parents )
and Legal Guardians of BRAYDEN DIDION, )
)
Appellants, )
)
vs. ) No. 27A02-1303-PL-232
)
AUTO-OWNERS INSURANCE COMPANY, )
)
Appellee. )
BAILEY, Judge, concurring in result
I agree with the majority that the trial court did not err when it entered summary
judgment against the Didions on the question of the availability of insurance coverage for
Michael under the homeowners’ insurance policy of his sister, Ginger, and I concur in the
majority’s reasoning on that point. I write separately because I do not think there is any need
to examine the question of the timeliness of notice.
I reach this conclusion for two reasons. First, the lack of coverage inquiry is
dispositive. Michael does not fall within the scope of an insured under the policy, and thus I
think we need not reach the question of timely notice of an occurrence. And “statements not
necessary in the determination of the issues presented are obiter dictum. They are not
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binding and do not become the law.” Koske v. Townsend Eng’g Co., 551 N.E.2d 437, 443
(Ind. 1990). It would be better, then, for us to remain silent on the issue.
Second, while the majority is correct that Indiana courts have regularly held as
untimely notice of an occurrence or claim that occurred over the span of time at issue here, it
does not appear that our courts have been faced squarely with a case like this one. Here, the
party responsible for providing notice of an occurrence under the policy appears not to have
been aware of an occurrence, might have been actively prevented from obtaining the
requisite knowledge, and the policy language required notice “as soon as possible.” Neither
the majority nor the parties cite any cases that fit this fact pattern. Since we need not reach
that issue, and in the apparent absence of prior decisive law, I think it better as a matter of
judicial restraint that we not comment on the matter and permit our courts to address such
matters when those issues are squarely and necessarily before them.
For the foregoing reasons, I concur with the result reached by the majority.
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