Court Opinion

ID: 9742625
Source: CourtListenerOpinion
Date Created: 2023-08-26 21:17:10.337838+00
Date Added: 2024-06-11T07:24:34.274881
License: Public Domain

FRIEDLANDER, Judge,
concurring in part and dissenting in part
The majority concludes that certain questions of fact exist that render summary judgment inappropriate with regard to whether the life insurance policy on Lewis had been cancelled at the time of his death. I agree with the majority's conclusion that the summary judgment motion should be resolved in favor of L & K on that issue. I disagree, however, with the majority's determination that a question of fact remains as to whether L & K is entitled to punitive damages.
Our supreme court has set forth the following principles to guide us in cases such as this:
The erroneous denial of coverage does not necessarily violate an insurance company's duty of good faith. Furthermore, proof that a tort was committed does not necessarily establish the right to punitive damages. Punitive damages may be awarded only if there is clear and convincing evidence that defendant "acted with malice, fraud, gross negligence, or oppressiveness which was not the result of a mistake of fact or law, honest error or judgment, overzealousness, mere negligence, or other human failing."
USA Life One Ins. Co. of Indiana v. Nuckolls 682 N.E.2d 534, 541 (Ind.1997); (quoting Erie Ins. Co. v. Hickman, 622 N.E.2d 515, 520 (Ind.1998)). The foregoing reflects that the bar of eligibility for punitive damages in this context has been set at a considerable height. After reviewing the designated evidence, I believe that Conseco has met its burden of proving that L & K did not satisfy that rigorous standard and thus is not entitled to punitive damages.
That evidence reflects that, among other things, L & K persisted in its efforts to terminate the life insurance policy shortly before Lewis's death. In responding, Con-seco did not immediately cancel the policy, but instead informed L & K that it must follow certain procedures in order to accomplish that end. The majority concludes that there are questions of fact concerning whether Conseco engaged in delaying tactics and, if so, the motivation behind those actions. In effect, the majority holds that there is evidence to support a conclusion that the procedure employed by Conseco when responding to requests to cancel permits it to take inconsistent positions with respect to the timing and effect of an insured's attempt to cancel coverage. As a result, according to the majority, Conseco arguably is able to have it both ways. It can deem the cancellation effective immediately upon receipt of the first request, or it can deem the effort ineffective until receipt of certain signed forms and thereby collect premiums for the time period between the initial notification and cancellation. Under this seenario, Conseco's financial benefit is the factor that ultimately determines which of the two dates prevails.
It is an undehbiable fact that insurance companies sometimes wrongfully deny claims. I have no doubt that they occasionally also adopt contradictory positions with respect to the same question pertaining to insurance coverage. In each such situation, it is no doubt often the case that the respective parties advocate a position that is, not coincidentally, one that is in their own financial best interest. In either case, for the purpose of eligibility for punitive damages, the question is not whether a position ultimately proved to be correct, or even whether it was entirely consistent with other positions advocated by the company at one time or another. Rather, the question is whether the particular position adopted here by Conseco was outrageous and unreasonable.
*1025It is clear to me that, given all of the facts and inferences surrounding L & K's claim, Conseco denied coverage in good faith under its interpretation of the relevant policy language. The evidence designated by L & K revealed that L & K interpreted the policy language differently. than did Conseco. Thus, L & K's claim for punitive damages rests upon a disagreement over how to interpret the policy. See USA Life One Ins. Co. of Indiana v. Nuckolls, 682 N.E.2d 584. Such is not the stuff of which punitive damages awards are made. I would grant summary judgment in favor of Conseco with respect to the availability of punitive damages.