Title: Brenda S. Wagner and Darren M. Wagner v. Bobbi J. Yates, et al
Citation: N/A
Docket Number: 22S01-0808-CV-475
State: Indiana
Issuer: Indiana Supreme Court
Date: September 3, 2009

ATTORNEYS FOR APPELLANTS 
 
 
 
 
ATTORNEYS FOR APPELLEE 
Stephen T. Naville 
 
 
 
 
 
Sandra L. Heeke 
Gregory M. Reger 
 
 
 
 
 
George A. Budd, V 
Lorch & Naville, LLC 
 
 
 
 
 
Waters, Tyler, Scott, Hoffman & 
New Albany, Indiana 
 
 
 
 
 
    Doane, LLC 
 
 
 
 
 
 
 
 
New Albany, Indiana 
 
 
 
______________________________________________________________________________ 
 
In the 
Indiana Supreme Court  
_________________________________ 
 
No. 22S01-0808-CV-475 
 
BRENDA S. WAGNER AND 
DARREN M. WAGNER, 
 
 
 
 
 
 
 
 
Appellants (Plaintiffs below), 
 
v. 
 
BOBBI J. YATES, ET AL., 
 
 
 
 
 
 
 
 
Appellee (Defendant below). 
_________________________________ 
 
Appeal from the Floyd Superior Court, No. 22D01-0512-CT-525 
The Honorable Susan L. Orth, Judge 
_________________________________ 
 
On Petition To Transfer from the Indiana Court of Appeals, No. 22A01-0710-CV-474 
_________________________________ 
 
 
September 3, 2009 
 
 
Rucker, Justice. 
FILED
CLERK
of the supreme court,
court of appeals and
tax court
Sep 03 2009, 11:45 am
 
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Interpreting an insurance policy as including set-off and anti-stacking provisions, the trial 
court granted summary judgment in favor of Insurer.  Concluding both provisions are 
ambiguous, we strictly construe the policy against the Insurer and reverse the judgment of the 
trial court. 
 
Facts and Procedural History 
 
 
This is an appeal from the grant of summary judgment.  The following facts are not in 
dispute.  Brenda Wagner sued Bobbi Yates for injuries she received in an automobile collision 
while driving a vehicle owned by her employer.  Wagner‟s husband joined the action on a loss of 
consortium claim.  At the time of the collision Wagner maintained an auto insurance policy with 
American Family Insurance; Yates maintained an auto liability policy with Allstate Insurance 
Company; and the company car Wagner drove was insured by her employer through a policy 
with State Farm.  
 
 
Wagner initially sued only Yates.  However, seeking underinsured motorist (UIM) 
coverage Wagner later amended her complaint to include American Family and State Farm.  
Both the American Family policy and the State Farm policy provided $100,000 per person in 
UIM coverage.  
 
 
Allstate settled with Wagner for policy limits in the amount of $50,000.  And Yates was 
dismissed from this action.  The parties agree that under the terms of Allstate‟s liability policy 
Allstate was responsible for the first $50,000.  The parties also agree that if applicable State 
Farm will be liable for the next $50,000.  American Family is of the view that because of anti-
stacking and set-off provisions in the Wagner insurance policy, it has no liability.  In essence 
American Family contends that Wagner is entitled to a total recovery of $100,000.  And because 
(i) Allstate has already settled for $50,000, and (ii) State Farm would be responsible for the next 
$50,000, if any, American Family‟s exposure is zero.  On this basis American Family moved for 
summary judgment.  
 
 
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Wagner contested this claim and filed a cross-motion for summary judgment.  The trial 
court agreed with American Family and granted summary judgment in its favor.  On appeal 
Wagner conceded that an insurer may limit its exposure by including an “anti-stacking” 
provision in its insurance policy; but Wagner argued that a plain reading of American Family‟s 
policy shows that no such provision is included.  Wagner also contended that based on the 
language of the policy, American Family was not entitled to set off any amounts that may be 
paid by State Farm.  Concluding that American Family may set off payments made by State 
Farm, the Court of Appeals affirmed the judgment of the trial court.  It did not address the anti-
stacking claim.  Wagner v. Yates, 884 N.E.2d 331 (Ind. Ct. App. 2008).  Having previously 
granted transfer we now reverse the trial court‟s judgment.   
 
Standard of Review 
 
 
When reviewing the grant of a summary judgment motion, we apply the same standard 
applicable to the trial court.  Summary judgment is proper only when there is no genuine issue as 
to any material fact and the moving party is entitled to judgment as a matter of law.  Ind. Trial 
Rule 56(C).  We do not weigh the evidence, but will consider the facts in the light most favorable 
to the non-moving party.  Freidline v. Shelby Ins. Co., 774 N.E.2d 37, 39 (Ind. 2002).  We must 
reverse the grant of a summary judgment motion if the record discloses an incorrect application 
of the law to those facts.  Ayres v. Indian Heights Volunteer Fire Dep‟t, Inc., 493 N.E.2d 1229, 
1234 (Ind. 1986).  The interpretation of an insurance policy is primarily a question of law for the 
court, and it is therefore a question which is particularly suited for summary judgment.  Morris v. 
Econ. Fire & Cas. Co., 848 N.E.2d 663, 665-66 (Ind. 2006).  
 
Discussion 
I. 
 
 
In the case before us no dispute of material facts exists.  Rather, this matter involves the 
question of whether American Family is entitled to summary judgment as a matter of law based 
upon a clause in its insurance policy which, according to American Family, allows it to set off 
payments made by State Farm.  The clause at issue provides:  
 
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The limits of liability of this coverage will be reduced by: 
 
1. 
A payment made or amount payable by or on behalf of any 
person or organization which may be legally liable, or under 
any collectible auto liability insurance, for loss caused by an 
underinsured motor vehicle. 
 
Appellant‟s App. at 65.  American Family cites authority for the general proposition that 
“language requiring setoffs has been and should be enforced.”  Appellee‟s Br. at 10.  See, e.g., 
Hardiman v. Governmental Interinsurance Exch., 588 N.E.2d 1331, 1334 (Ind. Ct. App. 1992) 
(enforcing a set-off provision in an action against automobile insurer to recover underinsured 
motorist benefits despite receipt of worker‟s compensation where relevant provision of insurance 
policy declared, “Any amount payable under this policy shall be reduced by: (a) All sums 
payable under any worker‟s compensation, disability, or similar law . . . .”); Castillo v. Prudential 
Prop. & Cas. Ins. Co., 834 N.E.2d 204, 207 (Ind. Ct. App. 2005) (enforcing a set-off clause 
against an insured who received a settlement amount from the tortfeasor‟s liability insurer, which 
provided that “[p]ayments will be reduced by any amount payable by persons responsible for the 
accident . . . [and] will also be reduced by any amount payable under this policy or by other 
sources”).  We have no quarrel with this general proposition.  The problem in this case however 
is whether the language of the policy accomplishes the desired result.  
 
 
There is no dispute here that the amounts Allstate paid to Wagner were on behalf of a 
person – purported tortfeasor Yates – who “may be legally liable” for “loss caused by an 
underinsured motor vehicle.”  Thus American Family‟s liability is reduced by the $50,000 
Allstate paid to Wagner.  At stake however is whether any sums that may be payable to Wagner 
by State Farm are similarly treated.  American Family argues that a UIM provider “effectively 
stand[s] in the shoes of a tortfeasor during evaluation of coverage.”  Appellee‟s Br. in Resp. to 
Pet. to Trans. at 6.  But the Court of Appeals rejected a similar argument in Progressive Ins. Co., 
Inc. v. Bullock, 841 N.E.2d 238 (Ind. Ct. App. 2008), trans. denied.  The summarized facts in 
Progressive are these.  Misty Bullock and her children were passengers in a car driven by Teresa 
Jones.  They were injured when struck by a car that Rosie Kemp was driving.  The following 
insurance was in play:  Kemp was insured by Indiana Insurance Company in the amount of 
 
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$25,000 per person and $50,000 per accident; Jones had UIM coverage with Farm Bureau 
Insurance Company in the amount of $50,000 per person and $100,000 per accident; and Bullock 
had UIM coverage with Progressive Insurance Company in the amount of $50,000 per person 
and $50,000 per accident.  
 
 
 
Under terms of an agreement with Kemp, Indiana Insurance, Jones, and Farm Bureau, 
Bullock released the children‟s claims against those parties in exchange for $24,500 from 
Indiana Insurance and $80,500 from Farm Bureau.  This left only the issue of Progressive‟s 
liability to Bullock.  Progressive argued that after set-offs of payments made by Farm Bureau 
and Indiana Insurance Progressive owed no obligation under its policy.  In relevant part the 
policy declared:  
 
The Limits of Liability under [the UIM provision] shall be reduced 
by all sums . . . paid because of bodily injury or property damage 
by or on behalf of any person or organizations who may be legally 
responsible . . . . 
 
Id. at 241 (emphasis and alterations in original).  The Court of Appeals agreed that Progressive 
was entitled to a set-off for the $14,500 paid by Indiana Insurance.  However, the court rejected 
Progressive‟s argument that “Farm Bureau effectively stands in the shoes of the tortfeasor” and 
thus Progressive was entitled to set off the payment made by Farm Bureau.  Id. at 242.  The court 
elaborated: 
 
To the extent . . . Progressive is arguing that Farm Bureau is 
legally responsible for Kemp‟s negligence simply because Farm 
Bureau provided UIM coverage to Jones, this argument . . . fails.  
The underlying purpose of UIM coverage is to give the insured the 
recovery he or she would have received if the underinsured 
motorist had maintained an adequate policy.  Progressive provides 
us with no authority that UIM coverage is intended to make a UIM 
insurance provider directly liable for the negligent acts of the 
tortfeasor. 
 
Id. (internal citations and quotations omitted).  We agree with the Court of Appeals‟ assessment. 
And as applied in this case we construe the phrase in American Family‟s policy, “payment made 
or amount payable by or on behalf of any person or organization which may be legally liable” as 
 
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referring to payments by or on behalf of those directly liable for causing the injuries.  This phrase 
does not require reduction from amounts payable for sums from State Farm‟s UIM coverage. 
Accord Am. Econ. Ins. Co. v. Motorists Mut. Ins. Co., 605 N.E.2d 162, 165 n.5 (Ind. 1992) 
(construing similar provision and declaring the “reduction would not include underinsured 
motorists coverage payments made by [a third party‟s insurance carrier]”).  
 
 
American Family counters that aside from the “legally liable” phrase, it is nonetheless 
entitled to set off the amounts paid by State Farm under the second phrase: “under any collectible 
auto liability insurance.”  American Family argues, and the Court of Appeals agreed, that “a 
payment by an insurance company under its UIM/UM coverage is a payment under „collectible 
auto liability insurance.‟”  Wagner, 884 N.E.2d at 334.  Wagner insists however that in order for 
American Family to set off payments under State Farm‟s UIM coverage, UIM coverage must 
constitute auto liability coverage.  
 
 
We first observe that the policy itself does not define “auto liability insurance.”  But 
typically UIM coverage is characterized as first-party loss insurance, not third-party liability 
insurance.  See, e.g., Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3d § 122:5 (2005) 
(“UM [and UIM] coverage is not another liability coverage available to the innocent victim, but, 
rather, provides first-party benefits as opposed to a liability policy which pays third-party 
benefits.”).  On the other hand, as the Court of Appeals noted in Gen. Housewares Corp. v. Nat‟l 
Sur. Corp., 741 N.E.2d 408, 415 n.7 (Ind. Ct. App. 2000) “First-party insurance is „insurance 
which applies to the insured‟s own property or person.‟  In contrast, liability insurance 
„indemnifies against liability on account of injuries to the person or property of another.‟”  Id. at 
419 n.7 (quoting Black‟s Law Dictionary 722 (5th ed. 1979)) (emphasis added).  And as the 
court pointed out in the case before us the State Farm policy was not Wagner‟s policy; but rather 
it was “paid for by her employer” . . . and “applies to the property of her employer.”  Wagner, 
884 N.E.2d at 334.  
 
 
We acknowledge that failure to define a term in an insurance policy does not necessarily 
make it ambiguous.  Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664, 667 (Ind. 1997).  
Additionally, an ambiguity is not affirmatively established simply because controversy exists and 
 
7 
one party asserts an interpretation contrary to that asserted by the opposing party.  Beam v. 
Wausau Ins. Co., 765 N.E.2d 524, 528 (Ind. 2002).  But, an insurance policy is ambiguous if a 
provision is susceptible to more than one reasonable interpretation.  Colonial Penn, 690 N.E.2d 
at 667.  
 
 
 
In this case we conclude that the American Family policy is ambiguous on the question 
of whether “collectible auto liability insurance” includes a payment by an insurance company 
under its UIM coverage.  As noted above there is authority for the proposition that while UIM 
coverage is not considered “liability insurance” under some circumstances, it may be considered 
as such under other circumstances.  
 
 
Although some “special rules of construction of insurance contracts have been developed 
due to the disparity in bargaining power between insurers and insureds, if a contract is clear and 
unambiguous, the language therein must be given its plain meaning.”  Beam 765 N.E.2d at 528 
(quoting Allstate Ins. Co. v. Boles, 481 N.E.2d 1096, 1101 (Ind. 1985)).  On the other hand, 
“„[w]here there is ambiguity, insurance policies are to be construed strictly against the insurer‟ 
and the policy language is viewed from the standpoint of the insured.”  Id. (quoting Bosecker v. 
Westfield Ins. Co., 724 N.E.2d 241, 244 (Ind. 2000)).  “This strict construal against the insurer is 
driven by the fact that the insurer drafts the policy and foists its terms upon the customer.  „The 
insurance companies write the policies; we buy their forms or we do not buy insurance.‟”  Am. 
States Ins. Co. v. Kiger, 662 N.E.2d 945, 947 (Ind. 1996).  
 
Applying our strict construction review to the set-off provision in American Family‟s 
Insurance‟s policy, we conclude the trial court erred in granting summary judgment in favor of 
American Family.  On this issue the judgment of the trial court is reversed. 
 
II. 
 
 
As indicated earlier in this opinion American Family‟s motion for summary judgment 
was premised on the contention that anti-stacking and set-off provisions in Wagner‟s insurance 
policy resulted in American Family having no exposure.  Citing both grounds the trial court 
 
8 
agreed and granted summary judgment in American Family‟s favor.  Wagner addressed both 
grounds on appeal; but in affirming the judgment of the trial court, the Court of Appeals 
addressed only the set-off argument and did not reach the anti-stacking claim.  American Family 
argued before the Court of Appeals, and again in opposition to transfer, that Wagner is 
foreclosed from making any “substantive argument on appeal concerning the interpretation of the 
anti-stacking provision of American Family‟s insurance policy at issue in the current matter.”  
Br. in Resp. to Pet. to Trans. at 9.  According to American Family this issue is waived because 
Wagner did not address the anti-stacking provision in argument before the trial court.  Id.  
 
 
American Family‟s argument is not well-taken.  First, in her brief before the trial court in 
response to American Family‟s motion for summary judgment Wagner argued (i) the anti-
stacking clause was not relevant in this case, and (ii) if relevant, the clause was ambiguous.  
Appellant‟s App. at 77-78.  Although Wagner‟s argument was not extensive, it was nonetheless 
sufficient to avoid a claim of waiver on appeal.1  Second, and more important, the trial court 
granted the American Family motion for summary judgment based on both its anti-stacking 
claim and its set-off claim.  Because we are reversing the trial court‟s judgment on the set-off 
claim, we examine any other ground on which the trial court may be affirmed.  And this is so 
because we are not limited to reviewing the trial court‟s reasons for granting or denying 
summary judgment but rather we may affirm a grant of summary judgment upon any theory 
supported by the evidence.  Keaton & Keaton v. Keaton, 842 N.E.2d 816, 821 (Ind. 2006).  
American Family‟s anti-stacking theory – the only other theory supported by the Rule 56 
materials – is thus available for review regardless of whether Wagner addressed this claim in 
argument before the trial court.  
 
                                                 
1 We agree with the following observation: 
 
The rule that parties will be held to trial court theories by the appellate 
tribunal does not mean that no new position may be taken, or that new 
arguments may not be adduced; all it means is that substantive questions 
independent in character and not within the issues or not presented to the 
trial court shall not be first made on appeal.  Questions within the issues 
and before the trial court are before the appellate court, and new 
arguments and authorities may with strict propriety be brought forward.  
 
Dedelow v. Pucalik, 801 N.E.2d 178, 183-84 (Ind. Ct. App. 2003) (internal quotation omitted). 
 
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“Stacking” of insurance policies occurs when more than one policy is applicable to a loss 
thus allowing the insured to recover under all policies applicable to the loss (i.e., stack the 
policies) up to the total damages.  See generally High v. United Farm Bureau Mut. Ins. Co., 533 
N.E.2d 1275, 1277 (Ind. Ct. App. 1989).  However, because the purpose of insurance is to 
indemnify, double recovery by an insured is prohibited even when multiple policies apply to a 
loss.  Id.  Thus, anti-stacking clauses “limit coverage when coverage under another policy is 
currently available so as to preclude stacking or double recovery of uninsured motorist 
coverages.”  Bullock, 841 N.E.2d at 240 (quoting Pafco Gen. Ins. Co. v. Providence Washington 
Ins. Co., 587 N.E.2d 728, 729 n.2 (Ind. Ct. App. 1992)).  The use of anti-stacking provisions for 
uninsured and underinsured motorist coverage has been codified in Indiana Code Section 27-7-5-
5(a) which provides in pertinent part: 
 
The policy or endorsement affording coverage specified in this 
chapter may provide that the total limit of all insurers‟ liability 
arising out of any one (1) accident shall not exceed the highest 
limits under any one (1) policy applicable to the loss . . . . 
 
 
In this case American Family contends that it has no exposure because its insurance 
policy with Wagner contains an anti-stacking provision.  The provision reads:  
 
The limits of liability of this coverage as shown in the declarations 
apply, subject to the following: 
 
1. 
The limit of each person is the maximum for all 
damages sustained by all persons as a result of bodily 
injury to one person in any one accident. 
 
2. 
Subject to the limit for each person, the limit for 
each accident is the maximum for bodily injury sustained 
by two or more persons in any one accident. 
 
We will pay no more than these maximums no matter how many 
vehicles are described in the declarations, insured persons, claims, 
claimants or policies or vehicles involved in the accident. 
 
Appellant‟s App. at 65.  It is of course true that an insurance company is not required to draft an 
anti-stacking clause that tracks the language of I.C. § 27-7-5-5.  High, 533 N.E.2d at 1279.  But 
to avoid a claim of ambiguity and thus unenforceability, an insurance company would be well 
 
10 
advised to apprise itself of anti-stacking clauses that Indiana‟s appellate courts have found 
effective in the past.  For example, in High, supra, the Court of Appeals examined the anti-
stacking provision contained in a United Farm Bureau Insurance policy which provided in 
pertinent part: 
 
Except as provided in the foregoing paragraphs, if the Insured has 
other uninsured motorists insurance available to him and 
applicable to the occurrence, the damages shall be deemed not to 
exceed the highest limits under any one policy of insurance 
available to the Insured.  The Company shall not be liable for the 
greater proportion of any such loss to which the coverage applies 
than the limit of liability hereunder bears to the highest limits 
available to the Insured under one such policy. 
 
High, 533 N.E.2d at 1276-77 (emphasis added).  The insured argued that the foregoing language 
was ambiguous and did not preclude stacking of coverages.  Id. at 1277.  However, the Court of 
Appeals agreed with the insurer that the provision clearly and unambiguously precluded 
stacking. 
 
 
 
Similarly, in Am. Econ. Ins. Co. v. Motorists Mut. Ins. Co., 593 N.E.2d 1242, 1244 (Ind. 
Ct. App. 1992), the Court of Appeals examined the following policy provision:   
 
If this policy and any other policy providing similar insurance 
apply to the same accident, the maximum limit of liability under 
all policies shall be the highest applicable limit of liability under 
any one policy. 
 
(emphasis added).  The other policy at issue in the case provided in relevant part: 
 
If there is other applicable similar insurance available under more 
than one policy or provision of coverage: 1. Any recovery for 
damages for bodily injury or property damage sustained by an 
insured may equal but not exceed the higher of the applicable limit 
for any one vehicle under this insurance or any other insurance.  
 
Id. (emphasis added).  Although this Court reversed on other grounds, we summarily affirmed 
that portion of the opinion analyzing the anti-stacking provisions that found they were clear and 
unambiguous.  See Am. Econ. Ins. Co., 605 N.E.2d at 165. 
 
 
11 
 
The common thread binding these anti-stacking provisions together is that each clearly 
refers to insurance other than that provided by the insured‟s own policy: “other applicable similar 
insurance,” or “any other policy providing similar insurance,” or “other uninsured motorist 
coverage available.”  In this way the policy holder is on notice that anti-stacking will occur when 
other UIM policies are involved.  By contrast, American Family‟s purported anti-stacking 
provision makes no reference to other insurance policies or UIM coverage to indicate the 
insured‟s maximum recovery will be limited by other policies.  Nor does the provision mention 
anything about other insurance companies‟ policy limits or aggregate recovery with respect to 
losses. In sum, American Family‟s purported anti-stacking provision does not appear to 
condition the maximum amount of recovery available to an injured party on an external policy. 
Instead, the American Family policy appears to refer only to itself.  That is to say that American 
Family will only pay up to its own policy limits for any one accident.  
 
 
We are of the view that at most the provision at issue is not an anti-stacking provision at 
all; and at least the provision is ambiguous and therefore unenforceable.  Because of this 
ambiguity we strictly construe the provision against American Family and in favor of Wagner. 
See Beam, 765 N.E.2d at 528.  On this issue the trial court also erred in granting summary 
judgment in American Family‟s favor.   
 
Conclusion 
 
 
We reverse the judgment of the trial court.2 
 
Shepard, C.J., and Dickson, Sullivan and Boehm, JJ., concur. 
 
 
                                                 
2 Although Wagner filed a cross-motion for summary judgment which the trial court denied, Wagner 
makes no claim on appeal of trial court error in this regard.  We therefore do not address this issue.