FOR PUBLICATION
ATTORNEYS FOR APPELLANTS: ATTORNEY FOR APPELLEE:
KEVIN C. TYRA GINNY L. PETERSON
JERRY M. PADGETT Kightlinger & Gray, LLP
The Tyra Law Firm, P.C. Indianapolis, Indiana
Indianapolis, Indiana
Apr 08 2013, 9:29 am
IN THE
COURT OF APPEALS OF INDIANA
GARY HAMMERSTONE, SUSAN )
HAMMERSTONE, PALMOR PRODUCTS, INC., )
NORTHHAMPTON FARM BUREAU )
COOPERATIVE ASSOCIATION, and )
CANNS-BILCO DISTRIBUTORS, INC., )
)
Appellants-Defendants/Counterclaimants, )
)
vs. ) No. 06A04-1211-PL-595
)
INDIANA INSURANCE COMPANY, )
)
Appellee-Plaintiff/Counterclaim Defendant.1 )
APPEAL FROM THE BOONE SUPERIOR COURT
The Honorable Matthew C. Kincaid, Judge
Cause No. 06D01-1005-PL-259
April 8, 2013
OPINION - FOR PUBLICATION
KIRSCH, Judge
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We note that Mayberstein-Burnell Co., Inc., d/b/a MBAH Insurance (“MBAH”) was a third-
party defendant below and filed an answer to the third-party complaint filed by Palmor Products, Inc., but
there is no further record of their participation in the case below. MBAH was not listed in the summary
judgment order issued by the trial court and did not file an appellate brief with this court. However,
pursuant to Indiana Appellate Rule 17(A), a party of record in the trial court shall be a party on appeal.
Gary Hammerstone (“Gary”), Susan Hammerstone (collectively “the
Hammerstones”), together with Palmor Products, Inc. (“Palmor”), Northhampton Farm
Bureau Cooperative Association (“Northhampton”), and Canns-Bilco Distribution, Inc.
(“CBD”) (collectively “the Appellants”) appeal the trial court’s order granting summary
judgment in favor of Indiana Insurance Company (“Indiana Insurance”) and denying
summary judgment in the favor of the Appellants. The Appellants raise the following
dispositive issue for our review: whether the trial court erred in granting summary
judgment in favor of Indiana Insurance because the umbrella policy was ambiguous due
to the fact that the declarations page stated that there was product liability coverage and
the policy denied coverage through a structural ambiguity in the language of the policy.
We reverse and remand.
FACTS AND PROCEDURAL HISTORY
Palmor is engaged in the business of designing and manufacturing a machine
called a Trac-Vac, which was sold to the general public for the purpose of vacuuming
mulched leaves, grass, sticks, and other yard debris, storing the mulched debris, and
removing the debris. CBD and Northhampton are engaged in the business of sales and
service of lawn and garden equipment. CBD is a distributor for Palmor, and
Northhampton is a customer of CBD. Northhampton purchased products, including the
Trac-Vac, manufactured by Palmor and distributed through CBD. There were no written
contracts or agreements between Palmor, CBD, and Northhampton.
In 2004, Gary purchased a Model 580 Trac-Vac lawn and leaf vacuum,
manufactured by Palmor from Northhampton in Pennsylvania. On November 2, 2009,
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Gary was using the Trac-Vac to clear and mulch leaves in his yard when he noticed that
the Trac-Vac was no longer suctioning the leaves into the trailer. Gary thought there was
a clog in the system and attempted to remove the inlet hose of the outtake/intake end
while the Trac-Vac was still running in order to determine where the clog was located.
As he was doing this, Gary severely injured his right hand and arm.
On December 10, 2009, the Hammerstones filed a complaint in Pennsylvania
against Palmor and Northhampton (“the Hammerstone Claim”); CBD was later joined as
a defendant in the complaint. In their complaint, the Hammerstones alleged that Palmor,
Northhampton, and CBD were each negligent when they designed, manufactured,
marketed, distributed, supplied, advertised, maintained, serviced, repaired, and sold the
Trac-Vac and that they failed to properly and adequately warn Gary of the hazards of the
Trac-Vac, failed to properly instruct Gary on the safe use of the Trac-Vac, failed to
adequately inspect the Trac-Vac for defective conditions, and failed to repair known
defective conditions with the Trac-Vac. The complaint also alleged that Palmor,
Northhampton, and CBD were negligent, careless, and engaged in gross negligence,
recklessness, malice, and conscious disregard or indifference to the high degree of risk
imposed by the Trac-Vac which constituted outrageous wanton and willful misconduct
entitling Gary to recover punitive damages in addition to compensatory damages. The
complaint also contained an allegation that Palmor, Northhampton, and CBD were
strictly liable because the Trac-Vac was inherently dangerous.
Consolidated Insurance Company (“Consolidated”) issued a general liability
policy to Palmor under policy number CBP9307708 effective April 1, 2009 to April 1,
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2010. Indiana Insurance issued an umbrella insurance policy to Palmor under policy
number CU8131861 effective April 1, 2009 to April 1, 2010 (“the Umbrella Policy”).
Northhampton and CBD were not named as additional insureds under the Umbrella
Policy. The Umbrella Policy contains the following pertinent language:
COMMERCIAL UMBRELLA LIABILITY COVERAGE FORM
….
SECTION I – COVERAGE
1. Insuring Agreement
a. We will pay on behalf of the insured those sums in excess of the
“retained limit” that the insured becomes legally obligated to pay as
damages because of “bodily injury” or “property damage” or
“personal and advertising injury” to which this insurance applies.
The amount we will pay is limited as described in SECTION III –
LIMITS OF INSURANCE. No other obligation or liability to pay
sums or perform acts or services is covered unless explicitly
provided for under paragraph 2. Defense and Expense of Claims
and Suits under SECTION 1 – COVERAGE.
….
2. Defense And Expenses Of Claims And Suits
a. Defense, Investigation, And Settlement
(1) We shall have the right and duty to defend the insured against
any claim or “suit” seeking damages to which this insurance
applies when:
(a) Such damages are not covered by “scheduled underlying
insurance” or “other underlying insurance”; or
(b) The applicable limits of liability of the “scheduled underlying
insurance” or “other underlying insurance” have been
exhausted by payment of judgments or settlements.
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However, we will have no duty to defend the insured against any
“suit” seeking damages to which this insurance does not apply.
(2) When insurance is available to the insured under any “scheduled
underlying insurance” or “other underlying insurance,” we will
have the right and opportunity, although not the obligation, to
associate with the “underlying insurers” in the defense and
control of any claim or “suit” which, in our opinion, may create
liability under this Coverage Part.
(3) At our discretion, we may:
(a) Investigate any “occurrence,” “offense,” or claim; and
(b) Settle any claim or “suit” of which we assume charge of the
settlement of defense.
….
SECTION V – DEFINITIONS
….
20. “Products-completed operations hazard”:
a. Includes all “bodily injury” and “property damage” occurring
away from premises you own or rent and arising out of “your
product” or “your work” except:
(1) Products that are still in your physical possession; or
(2) Work that has not yet been completed or abandoned.
However, “your work” will be deemed completed at the
earliest of the following times:
(a) When all of the work called for in your contract has been
completed.
(b) When all of the work to be done at the job site has been
completed if your contract calls for work at more than one
job site.
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(c) When that part of the work done at a job site has been put
to its intended use by any person or organization other
than another contractor or subcontractor working on the
same project.
Work that may need service, maintenance, correction, repair,
or replacement, but which is otherwise complete, will be
treated as completed.
….
28. “Your product”:
a. Means:
(1) Any goods or products, other than real property,
manufactured, sold, handled, distributed, or disposed of by:
(a) You;
….
(2) Containers (other than vehicles), material, parts, or equipment
furnished in connection with such goods or products.
b. Includes:
(1) Warranties or representations made at any time with respect
to the fitness, quality, durability, performance, or use of “your
product”; and
(2) The providing of or failure to provide warnings or
instructions.
PRODUCTS-COMPLETED OPERATIONS EXCLUSION
This endorsement modifies insurance provided under the following:
COMMERCIAL UMBRELLA LIABILITY COVERAGE PART
The following is added to paragraph 3. Exclusions under SECTION –
COVERAGE:
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This insurance does not apply to:
“Bodily injury” or “property damage” included within the “products-
completed operations hazard.”
Appellants’ App. at 29-30, 50-53. The declarations page of the Umbrella Policy
identified the coverages provided by Indiana Insurance under the Umbrella Policy,
specifically stating that there was an occurrence limit of $2,000,000 for any one
occurrence or offense subject to the general aggregate and products-completed operations
aggregate limits. Id. at 17. It also stated that there were aggregate limits of $2,000,000
each for the general aggregate limit and for products-completed operations aggregate
limit. Id. Additionally, the declarations page listed the forms and endorsements that
were made a part of the policy, which included form number “14-95 -0204
EXCLUSION-PRODUCTS-COMPLETED OPERATIONS HAZARD.” Id.
Palmor notified Indiana Insurance and Consolidated of the Hammerstone Claim.
Consolidated, as the primary insurer, accepted the defense of Palmor, but Indiana
Insurance issued a notification reserving its right to deny coverage under the Umbrella
Policy due to the products-completed operations hazard that it stated was excluded under
the Umbrella Policy language. On December 17, 2009, Northhampton sent
correspondence to Palmor requesting that Palmor accept indemnity and defend against
the Hammerstone Claim on behalf of Northhampton. There was no evidence that CBD
formally requested a defense and indemnity from Palmor.
On May 3, 2010, Indiana Insurance and Consolidated filed a complaint in Boone
County, Indiana requesting declaratory judgment as to Palmor, Northhampton, and the
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Hammerstones. On September 24, 2010, Indiana Insurance and Consolidated filed a
motion for leave to file an amended complaint to add CBD as a defendant. On March 12,
2012, Indiana Insurance filed a motion for summary judgment against Palmor,
Northhampton, and CBD. On June 13, 2012, it filed a motion for summary judgment as
to the Hammerstones. All of the parties filed cross-motions for summary judgment
against Indiana Insurance. On October 22, 2012, the trial court granted Indiana
Insurance’s motion for summary judgment as to the Hammerstones, and on December 3,
2012, the trial court granted Indiana Insurance’s motion for summary judgment as to
Palmor, Northhampton, and CBD; the trial court also denied the Appellants’ cross-
motions for summary judgment. The Appellants now appeal.
DISCUSSION AND DECISION
On appeal from a grant of summary judgment, our standard of review is the same
as that of the trial court. Wilcox Mfg. Grp., Inc. v. Mktg. Servs. of Ind., Inc., 832 N.E.2d
559, 562 (Ind. Ct. App. 2005). We stand in the shoes of the trial court and apply a de
novo standard of review. Cox v. N. Ind. Pub. Serv. Co., 848 N.E.2d 690, 695 (Ind. Ct.
App. 2006). Our review of a summary judgment motion is limited to those materials
designated to the trial court. Ind. Trial Rule 56(H); Robson v. Tex. E. Corp., 833 N.E.2d
461, 466 (Ind. Ct. App. 2005), trans. denied. Summary judgment is appropriate only
where the designated evidence shows there are no genuine issues of material fact and the
moving party is entitled to judgment as a matter of law. T.R. 56(C). For summary
judgment purposes, a fact is “material” if it bears on the ultimate resolution of relevant
issues. Wilcox Mfg., 832 N.E.2d at 562. We view the pleadings and designated materials
8
in the light most favorable to the non-moving party. Id. Additionally, all facts and
reasonable inferences from those facts are construed in favor of the nonmoving party.
Troxel Equip. Co. v. Limberlost Bancshares, 833 N.E.2d 36, 40 (Ind. Ct. App. 2005),
trans. denied.
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, 848 N.E.2d at 695-96. Where a trial
court enters specific findings and conclusions, they offer insight into the rationale for the
trial court’s judgment and facilitate appellate review, but are not binding upon this court.
Id. We will affirm upon any theory or basis supported by the designated materials. Id.
When a trial court grants summary judgment, we carefully scrutinize that determination
to ensure that a party was not improperly prevented from having his or her day in court.
Id.
In this case, the parties filed cross-motions for summary judgment. However, the
fact that cross-motions for summary judgment were made does not alter our standard of
review. Mahan v. Am. Standard Ins. Co., 862 N.E.2d 669, 676 (Ind. Ct. App. 2007),
trans. denied. “Instead, the reviewing court must consider each motion separately to
determine whether the moving party is entitled to judgment as a matter of law.” Id.
The Appellants argue that the trial court erred when it granted summary judgment
in favor of Indiana Insurance and denied their cross-motions for summary judgment.
They contend that it was error to find that the Umbrella Policy unambiguously denied
coverage because the Umbrella Policy was actually ambiguous as to the coverage sought
9
here. The Appellants allege this ambiguity existed because the declarations page clearly
stated that the Umbrella Policy included coverage for products-completed operations
hazard, but that later the Umbrella Policy language stated that the insurance did not apply
to injuries and damages included within the products-completed operations hazard.
Because there is an ambiguity in the Umbrella Policy, the Appellants assert that it should
be construed against the insurer, Indiana Insurance, and that coverage should be found to
exist.
The interpretation of an insurance policy is primarily a question of law and,
therefore, is a question particularly suited for summary judgment. Id. (citing Lake States
Ins. Co. v. Tech Tools, Inc., 743 N.E.2d 314, 318 (Ind. Ct. App. 2001)). “Where there is
an ambiguity, policies are to be construed strictly against the insurer.” Lake States Ins.,
743 N.E.2d at 318. “An insurance contract is ambiguous when it is susceptible to more
than one interpretation and reasonably intelligent persons would honestly differ as to its
meaning.” Allstate Ins. Co. v. Bradtmueller, 715 N.E.2d 993, 997 (Ind. Ct. App. 1999),
trans. denied. An ambiguity does not exist, however, merely because the parties favor a
different interpretation. Mahan, 862 N.E.2d at 676. Where terms are unambiguous, they
should be given their plain and ordinary meaning. Id. (citing Farmers Ins. Exch. v.
Smith, 757 N.E.2d 145, 149 (Ind. Ct. App. 2001), trans. denied). A court should construe
the language of a contract so as not to render any words, phrases, or terms ineffective or
meaningless. Id.
Here, the declarations page of the Umbrella Policy, under the “Limits of
Insurance” section, stated that the aggregate limit for “Products-Completed Operations”
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was $2,000,000. Appellants’ App. at 17. The Umbrella Policy’s language defines
“Products-Completed Operations Hazard” as “bodily injury” and “property damage”
occurring away from the insured’s premises and arising out of “your product” or “your
work” subject to several limited exceptions that do not apply in the present case. Id. at
50-51. Included in the Umbrella Policy is an endorsement which changes the Umbrella
Policy, entitled the “Products-Completed Operations Exclusion.” Id. at 53. This
endorsement modifies the insurance coverage in the Umbrella Policy by stating, “This
insurance does not apply to: ‘Bodily injury’ or ‘property’ damage included within the
‘products-completed operations hazard.’” Id. Thus, the Umbrella Policy states that it
both provides $2,000,000 of coverage for products-completed operations and that the
insurance does not apply to products-completed operations hazard injuries. As a result,
the Umbrella Policy is inherently ambiguous.
Indiana Insurance argues that the declarations page actually clearly and
unambiguously states that the products-completed operations hazard is excluded from
coverage and that, therefore, the Appellants’ argument fails. However, we disagree. We
believe that this language stating that there is an exclusion for products-completed
operations hazard actually further demonstrates the inherent ambiguity in the Umbrella
Policy. When taking this language into consideration, the information found on the
declarations page both provides $2,000,000 of coverage for products-completed
operations and then states that such coverage is excluded. We find this to make the
Umbrella Policy inherently ambiguous.
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Finding an ambiguity in the Umbrella Policy, we must construe the Umbrella
Policy strictly against the insurer. Lake States Ins., 743 N.E.2d at 318. Construing the
Umbrella Policy against Indiana Insurance, we conclude that there is coverage for Palmor
as to products-completed operations claims as a matter of law. Therefore, the trial court
erred in granting summary judgment in favor of Indiana Insurance and in denying the
Appellants’ motion for summary judgment. We reverse the trial court’s order and
remand for proceedings consistent with this opinion, including findings by the trial court
as to whether Northhampton and CBD qualify as indemnitees of Palmor under the
Umbrella Policy and whether Northhampton, CBD, and the Hammerstones have assignee
rights as part of the Hammerstone Claim.
Reversed and remanded.
VAIDIK, J., and PYLE, J., concur.
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