Court Opinion

ID: 2784675
Source: CourtListenerOpinion
Date Created: 2015-03-09 14:03:10.990119+00
Date Added: 2024-06-11T11:29:23.426777
License: Public Domain

MEMORANDUM DECISION
      Pursuant to Ind. Appellate Rule 65(D), this                        Mar 09 2015, 9:21 am
      Memorandum Decision shall not be regarded as
      precedent or cited before any court except for the
      purpose of establishing the defense of res judicata,
      collateral estoppel, or the law of the case.

      ATTORNEY FOR APPELLANTS                                    ATTORNEYS FOR APPELLEE
      Mark L. Phillips                                           Michael D. Sears
      La Porte, Indiana                                          Jacquelyn S. Pillar King
                                                                 Crist, Sears & Zic, LLP
                                                                 Munster, Indiana

                                                   IN THE
          COURT OF APPEALS OF INDIANA

      T.R. Bulger, Inc. and                                     March 9, 2015
      Thomas R. Bulger,                                         Court of Appeals Case No.
      Appellants-Defendant,                                     46A03-1405-PL-188
              v.                                                Appeal from the La Porte
                                                                Superior Court 3
      Indiana Insurance Company,                                Honorable Jennifer Koethe,
                                                                Judge
      Appellee-Plaintiff                                        Cause No. 46D03-0709-PL-
                                                                388

      Friedlander, Judge.

[1]   Thomas R. Bulger is the president and owner of T.R. Bulger, Inc. (henceforth,

      unless otherwise noted, we will collectively refer to Thomas Bulger and his

      company as “Bulger”). Bulger was in the business of providing heating and air

      Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015                    Page 1 of 22
      conditioning services. Between 1999 and 2001, Bulger provided such services

      at the beach home of Rhys and Sally Mussman. Disputes arose between Bulger

      and the Mussmans regarding the quality of Bulger’s work. This led to the filing

      of various lawsuits and a demand for arbitration. At all relevant times, Bulger

      was insured by Indiana Insurance Company (IIC) under two policies of

      insurance, one a Comprehensive Contractors Policy, and the other a

      Commercial Umbrella Liability Policy (collectively, the IIC policies). Bulger

      claimed that from April 2001 to April 2002, it incurred expenses of almost

      $65,000 in assisting counsel with the defense of the Mussman litigation. Bulger

      further claimed that pursuant to the IIC policies, it was entitled to

      reimbursement of those expenses. IIC denied liability under the policies and

      Bulger sued. The trial court ultimately granted summary judgment in IIC’s

      favor and Bulger appeals, presenting the following restated issues for review:

              1. Did the trial court err in granting summary judgment in favor of
              IIC with respect to Bulger’s claim for reimbursement under the IIC
              insurance policies?
              2. Did the trial court abuse its discretion in ruling that Bulger’s motion
              in limine was moot?
              3. Did the trial court err in denying Bulger’s motion to strike the
              affidavit of Lyle Hardman?
[2]   We reverse and remand.

[3]   At all times relevant to this lawsuit, Bulger was insured by IIC under two policies

      of insurance. In 2001 the Mussmans sued Bulger for what the Mussmans

      claimed was defective work performed at their beach home. IIC provided

      Bulger with a legal defense, and attorney Lyle Hardman of the law firm of

      Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015          Page 2 of 22
Hunt, Suedhoff and Kalamaros, LLP was ultimately selected to defend the

action. To assist him in defending the Mussmans’ lawsuits, Hardman requested

information and materials from Bulger. In turn, Bulger recorded the time its

employees spent in complying with these requests and generated invoices

purportedly reflecting the cost to Bulger (hourly rate1 multiplied by the hours

spent gathering the relevant materials and information). Bulger forwarded

these invoices to Hardman. Sometimes they were sent at the time they were

generated, and sometimes they would be forwarded after several had

accumulated. Bulger claimed that from April 2001 to April 2002, it incurred

$64,620.35 in expenses in assisting Hardman with the defense of the Mussman

lawsuit. According to Bulger, these expenses represent manpower (e.g., wages

paid to employees for copying, obtaining documents, stapling, responding to

discovery, deposition preparation, and depositions), office supplies, and

postage. Bulger claimed that under the IIC policies, it was entitled to

reimbursement of these expenses. The claim for reimbursement is premised

upon the following supplementary payments provision of both policies:

        1. We will pay, with respect to any claim we investigate or settle, or
        any “suit” against an insured we defend:
                                             * * * * *
                 d. All reasonable expenses incurred by the insured at our
                 request to assist us in the investigation or defense of the claim
                 or “suit”, including actual loss of earnings up to $250 a day
                 because of time off from work.

1
  Thomas Bulger acknowledged that the hourly rate reflected on the invoices was the rate that would be billed
to a customer or client, and was more than the employee in question earned in wages or salary.

Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015                          Page 3 of 22
      Appellant’s Appendix at 47, 229.

[4]   The record is not clear as to precisely when and how it occurred, but at some

      point Thomas Bulger learned that IIC might not pay the invoices. He did later

      recall, however, that on or about April 30, 2002, Hardman informed him that

      IIC was not going to reimburse Bulger for those expenses. According to

      Thomas Bulger, Hardman stated: “[IIC] will pay somebody to come to your

      office and make all these copies. They will bring their own printer, they will

      bring their own paper, they will bring the boxes.” Id. at 760.

[5]   When Bulger learned from Hardman that IIC would likely not pay the invoices,

      Bulger attempted to contact IIC himself. According to Thomas Bulger, the

      woman who answered his phone call to IIC “wouldn’t even talk to me.” Id. at

      762. Thereafter, IIC refused to reimburse Bulger for the expenses allegedly

      incurred in assisting Hardman with the defense of the Mussman lawsuit.

[6]   On September 7, 2007, Bulger filed the present action, claiming that pursuant to

      the IIC policies, IIC had a duty to reimburse Bulger for expenses incurred in

      assisting with the defense of claims made by Mussman, and that IIC breached

      this duty. Discovery ensued. More than six years later, on August 20, 2013,

      counsel for Bulger requested the deposition of Sandy Bennett, a former

      employee of IIC. On September 6, 2013, Bulger requested the deposition of

      George Bedrava, also a former employee of IIC. On September 24, 2013, IIC’s

      counsel informed Bulger that she had not been able to locate either person:

      Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015   Page 4 of 22
              the last known location for Sandy Bennett was Northern Indiana
              (perhaps Elkhart/South Bend/Osceola) and then (I think) she went to
              Florida for winters. George Bedrava is also retired and may be in
              Illinois. We have attempted to locate them, but have been
              unsuccessful.
              Frankly, the last time we spoke to Sandy Bennett was a couple of years
              ago, and, at that time, she advised that she had no independent
              recollection of this case. Even though we have not spoken to Bedrava,
              as the manager at the time, he likely would have less knowledge than
              Sandy.
      Id. at 570.

[7]   The following day, counsel for Bulger requested a Trial Rule 30(B)(6)

      deposition. On October 3, 2013, Bulger’s counsel sent a T.R. 30(B)(6) Notice

      of Deposition for October 15, 2013, which was four days before the close of

      discovery. The Notice directed IIC to

              designate one or more persons as duly authorized and consenting to
              testify on its behalf regarding the following matters:
              1.       All communications between Indiana Insurance and T.R.
                       Bulger, Inc. and/or Thomas Bulger relating to the Mussman
                       litigation matters.
              2.       All communications between Hunt Suedoff [sic] law firm and
                       Indiana Insurance relating to Thomas Bulger and/or T.R.
                       Bulger, Inc. regarding the defense of the Bulger defendants.
              3.       All reasons why the claims of Thomas Bulger and/or T.R.
                       Bulger, Inc. for reimbursement of expenses incurred during the
                       defense of the Mussman litigation matters were denied and not
                       paid.
              4.       All facts upon which Indiana Insurance Company based its
                       denial of coverage for reimbursement of expenses incurred by
                       Thomas Bulger and/or T.R. Bulger, Inc. in the defense of the
                       Mussman litigation matters.
      Id. at 163. After receiving this notice, IIC’s counsel responded as follows:

      Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015          Page 5 of 22
              Please note that neither Ms. Bennett nor Mr. Bedrava are “lost.” As I
              previously advised you, we believe that Ms. Bennett is in the
              Elkhart/Osceola area, and Mr. Bedrava is in Illinois. Clearly, the fact
              that we do not have current contact information for these former
              employees does not render them “unavailable.”
              Notwithstanding, please allow this correspondence to serve as Indiana
              Insurance Company’s response to the Rule 30(B)(6) Notice, as you
              referenced in your letter. As to areas (1) and (2), Indiana Insurance
              Company is unable to produce witnesses that can testify as to these
              matters. Again, any such information would be contained in the
              documents you have already received. As to areas (3) and (4), Indiana
              Insurance Company’s position as to the claimed expenses is that the
              Policy at issue does not provide for reimbursement of these expenses.
              Further, your contention that Indiana Insurance Company has been
              aware of this request for “many years” is simply incorrect. Your client
              has never produced any information as to what these alleged
              “expenses” relate to and, in fact, testified that the expenses represent
              his employees’ wages in “assisting” with the defense of the litigation.
              He has no additional information as to these claimed expenses. This is
              simply insufficient to put Indiana on notice of anything, as your
              client’s evidence is speculative, at best.
      Id. at 165. Bulger responded that if someone from IIC did not appear for the

      deposition, Bulger would file a motion in limine to prevent IIC “from

      introducing any evidence at trial on the areas if [sic] inquiry noted on the

      deposition notice.” Id. at 166. On October 14, 2013, counsel for Bulger

      advised that Bulger would be moving forward with the deposition. The

      deposition was scheduled the next day, on October 15, 2013. No one from IIC

      appeared for deposition.

[8]   On November 5, 2013, Bulger filed its motion in limine seeking to prohibit IIC

      from presenting any evidence regarding the areas of inquiry listed in the T.R.

      30(B)(6)Notice of Deposition. On November 18, 2013, Bulger filed a motion

      Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015        Page 6 of 22
      for summary judgment. On December 16, 2013, IIC filed a response to

      Bulger’s motion for summary judgment, as well as a summary judgment

      motion of its own. Among the materials designated by IIC was the affidavit of

      Hardman, which included the following pertinent statements:

              2. I, along with the firm of Hunt, Suedhoff, Kalamaros, LLP,
              represented T.R. Bulger, Inc. and Thomas R. Bulger (collectively
              “Bulger”) in an action entitled Rhys Mussman, Sally Mussman and Royal
              Developments, Ltd. v. T.R. Bulger, Inc. and Thomas R. Bulger, Cause No.
              46C01–0103–CP–00092 (“underlying proceeding”).
              3. The firm was contacted by Indiana Insurance Company to defend
              Bulger in the underlying proceeding on March 12, 2001. The first
              contact made with Bulger by my firm was on March 15, 2001.
              4. While representing Bulger, I did not request that he incur any
              expenses to assist me with the defense of the underlying litigation.
              5. While representing Bulger, Mr. Bulger did inquire about whether
              his time and the time of his staff spent on issues raised by the litigation
              were reimbursable under his insurance policy. He also inquired as to
              whether copying costs were reimbursable under his policy.
              6. I informed Mr. Bulger that he should read his policy and raise those
              issues with Indiana Insurance. I do not recall discussing Bulger’s
              inquiries with anyone at Indiana Insurance.
              7. I have no knowledge of any expenses Bulger is not claiming he
              incurred in assisting me with the defense of the underlying litigation.
      Id. at 750-51. On December 30, 2013, Bulger filed a motion to strike

      Hardman’s affidavit. On March 20, 2014, the court conducted a hearing on all

      pending motions and took the matter under advisement.

[9]   On May 1, 2014, the court denied Bulger’s motion for summary judgment,

      granted IIC’s motion for summary judgment, and denied Bulger’s motion to

      strike the Hardman affidavit. The court explained in pertinent part:

      Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015            Page 7 of 22
               While no Indiana case has interpreted the policy provision at issue,
               other jurisdictions have found that the “reasonable expenses incurred
               at our request” can only mean that the insurer will be liable for
               authorized expenses over which it had control.
                                                   * * * * *
               The policies at issue also contain a voluntary payments clause, which
               provides that the insured will not incur any expense without prior
               approval except at his own cost. Indiana law provides that an insurer
               is not liable when an insured breaches a voluntary payment clause by
               not obtaining the insurer’s consent prior to incurring the expense.
               Here, there is no evidence that Defendant requested that Plaintiffs
               incurred [sic] the expenses claimed and, further, Bulger has admitted
               through his testimony that he did not request consent from the
               Defendant prior to incurring the expenses. Attorney Hardman also
               testified in his affidavit that he did not request that Plaintiffs incur any
               expenses. In light of this evidence and applicable and persuasive law,
               the Court finds that [IIC] has not breached the policies at issue.
               Plaintiffs further claim that the Defendant’s failure to speak with
               Bulger or to attend a Rule 30(B)(6) deposition now requires that this
               Court deem [IIC’s] claims waived or barred by estoppel. There is no
               evidence of express waiver. The issue is, therefore, whether estoppel
               or implied waiver may apply. However, Bulger cannot demonstrate
               prejudice, as his claimed expenses have remained unchanged since
               April 2002, so these theories are inapplicable.
       Id. at 13-14 (internal citations to authority omitted).

                                                          1.

[10]   Bulger contends the trial court erred in granting summary judgment in favor of

       IIC with respect to Bulger’s claim for reimbursement under the IIC policies.

       Summary judgment is appropriate where the moving party shows there are no

       genuine issues of material fact with respect to a particular issue or claim. Ind. Trial

       Rule 56(C); Bleeke v. Lemmon, 6 N.E.3d 907 (Ind. 2014). We review a summary

       Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015             Page 8 of 22
       judgment order de novo. Hughley v. State, 15 N.E.3d 1000 (Ind. 2014).

       Considering only the facts supported by evidence designated to the trial court by the

       parties, we must determine whether there is a “genuine issue as to any material fact”

       and whether “the moving party is entitled to a judgment as a matter of law.” T.R.

       56(C); see also TP Orthodontics, Inc. v. Kesling, 15 N.E.3d 985 (Ind. 2014). Where

       the moving party designates material demonstrating there are no genuine issues of

       material fact with respect to a particular issue or claim, the burden shifts to the non-

       moving party to come forward with designated evidence showing the existence of a

       genuine issue of material fact. Bleeke v. Lemmon, 6 N.E.3d 907. Upon review, we

       will accept as true those facts alleged by the nonmoving party. Sees v. Bank One,

       Indiana, N.A., 839 N.E.2d 154 (Ind. 2005). “All designated evidence and

       reasonable inferences must be construed in favor of the non-moving party, and

       doubts resolved against the moving party.” Bleeke v. Lemmon, 6 N.E.3d at 917.

       The appellant bears the burden of demonstrating that the grant of summary

       judgment was erroneous. Hughley v. State, 15 N.E.3d 1000. Finally, we will

       affirm a grant of summary judgment on any theory supported by the record.

       Holiday Hospitality Franchising, Inc. v. AMCO Ins. Co., 983 N.E.2d 574 (Ind.

       2013).

[11]   “The construction of a contract is particularly well-suited for de novo appellate

       review, because it generally presents questions purely of law.” Id. at 577.

       When reviewing an insurance policy, we use the same rules of interpretation

       that are applied to other contracts. Justice v. Am. Family Mut. Ins. Co., 4 N.E.3d
1171 (Ind. 2014). Prominent among these rules is that clear and unambiguous

       Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015        Page 9 of 22
       language is given its ordinary meaning. Holiday Hospitality Franchising, Inc. v.

       AMCO, Ins Co., 983 N.E.2d 574. An insurance policy is ambiguous where a

       provision is susceptible to more than one interpretation and reasonable persons

       would differ as to its meaning. Justice v. Am. Family Mut. Ins. Co., 4 N.E.3d
1171. The mere fact that parties favor different interpretations does not

       necessarily mean that the language in question is ambiguous. Id.

       “Additionally, the power to interpret contracts does not extend to changing

       their terms, and we will not give insurance policies an unreasonable

       construction to provide added coverage.” Liberty Mut. Ins. Co. v. Mich. Mut. Ins.

       Co., 891 N.E.2d 99, 101-02 (Ind. Ct. App. 2008) (quoting American Family Ins.

       Co. v. Globe Am. Cas. Co. 774 N.E.2d 932, 935 (Ind. Ct. App. 2002), trans.

       denied).

[12]   In order to prevail, Bulger must prove that IIC breached its duties under the

       insurance policy. The provision in question provides that, with respect to any

       claim against an insured that it investigates or settles, or any lawsuit against one

       of its insured that IIC defends, IIC will pay “[a]ll reasonable expenses incurred

       by the insured at our request[.]” Appellant’s Appendix at 47, 229. Bulger

       contends that the criteria set out in this provision were satisfied and therefore

       that IIC was obligated to pay the expenses incurred by Bulger in assisting

       Attorney Hardman in defending the Mussman lawsuit. As reflected in the

       language of the provision, the two criteria are that the expenses must be

       “reasonable”, and that they were incurred at IIC’s request. IIC contends that

       neither condition was met, while Bulger contends that both were. We begin

       Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015   Page 10 of 22
       with the claim that the expenses incurred by Bulger were “at IIC’s request”

       within the meaning of the IIC policies.

[13]   We can find no Indiana case that interprets this provision. We note, however,

       that in Mikel v. Am. Ambassador Cas. Co., 644 N.E.2d 168 (Ind. Ct. App. 1994),

       trans. denied, this court addressed the meaning of “request” in an insurance

       policy. In that case, the provision in question provided: “in addition to our

       limit of liability, we will pay on behalf of a covered person: … 5. Other

       reasonable expenses incurred at our request.” Id. at 170. The court determined

       that “request” in that context meant “to ask for, not to compel through legal

       action.” Id. (quoting Gohn v. Akron School, 562 N.E.2d 1291, 1292 (Ind. Ct.

       App. 1990)). This definition does little to resolve the current dilemma. The

       Mikel court determined that the insurer did not ask the insured to incur attorney

       fees when it denied coverage. Further, the court concluded that although the

       insured’s only recourse after the insurer denied coverage was to file suit, the

       denial of coverage was not tantamount to a request that the insured incur

       attorney fees. Mikel v. Am. Ambassador Cas. Co., 644 N.E.2d 168. In other

       words, the court was not inclined to view a decision on the part of the insurer

       that would lead inevitably to the expenditure of attorney fees on the part of the

       insured as constituting a request that the insured incur such fees. Bulger

       contends that IIC chose Hardman’s law firm to represent Bulger, and that in so

       doing, that attorney – Hardman – became the agents of IIC. Therefore, the

       argument goes, when Hardman requested documents or information from

       Bulger or Bulger personnel, it was the same as IIC requesting it.

       Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015   Page 11 of 22
[14]   As indicated, no Indiana case has yet decided the meaning of this provision, or

       of a provision substantially similar to it. Our research reveals, however, that

       courts in at least two other states have decided the question, and the decisions

       arguably fall on either side of the issue. In Florida Ins. Guar. Ass’n, Inc. v. All The

       Way With Bill Vernay, Inc., 864 So. 2d 1126 (Fla. Dist. Ct. App. 2003), an

       insured brought an action against its liability insurer to recover attorney fees

       and costs incurred after the insurer allegedly breached the duty to defend. In

       conjunction with this action, the insured filed a declaratory judgment action

       seeking a ruling that the insurer had a duty to defend. During the pendency of

       these actions, the insurer was declared insolvent and Florida Insurance

       Guaranty Association, Inc. (FIGA) was statutorily substituted as its successor

       in interest in the declaratory judgment action. The trial court conducted a

       hearing regarding the insured’s assertion that the insurer was obligated to pay,

       as damages, the insured’s attorney fees and costs incurred in defending the

       underlying action. The trial court found in favor of the insured and FIGA

       appealed.

[15]   Upon appeal, the appellate court agreed as an initial matter that the insurer was

       legally responsible for attorney fees and costs that the insured incurred in

       defending the underlying action by the third party. The court further

       determined, however, that the award of attorney fees and costs “is not ‘within

       the coverage’ of the policy.” Id.            In so holding, the court noted that “the only

       Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015           Page 12 of 22
       possible source of coverage [was] the ‘supplemental payments’ provision of [the

       insured’s] policies with [the insurer].” Id. The court described those provisions

       as follows: “[T]he provisions provide that [the insurer] will pay all reasonable

       expenses incurred by the insured at [the insurer’s request]”. Id. (emphasis in

       original). This provision is substantially similar to the provision in the IIC

       policies at issue in the present case. The appellate court analyzed the liability of

       the original insurer, as well as FIGA, under this provision, as follows:

               In addition, the provisions provide that Reliance will pay all
               reasonable expenses incurred by the insured at Reliance’s request. This
               court has held that this latter portion of the supplementary payments
               provision means that the insurer will pay for “expenses that it had
               authorized and over which it had control.” Steele v. Kinsey, 801 So. 2d
297, 299 (Fla. 2d DCA 2001). Thus, if the insurer has not expressly
               authorized the insured to incur the expense, the expense is not covered
               under the policy. Id. “The words at issue here, ‘reasonable expenses
               incurred at our request,’ can only mean that the insurer must request
               the product or service that incurs the expense.” Id. at 300.
       Florida Ins. Guar. Ass’n, Inc. v. All The Way With Bill Vernay, Inc., 864 So. 2d at

       1130 (emphasis in original).

[16]   For our purposes, the import of the court’s treatment of this provision,

       according to IIC, is its determination that “reasonable expenses incurred at our

       request” is interpreted to require explicit authorization for expenses over which

       the insurer had control. IIC contends that this holding dovetails with this

       court’s holding in Mikel, which focused upon the meaning of the term “request”

       under a supplemental payments provision in an insurance policy. The issue in

       Mikel was framed thus: “[W]hether an insured is entitled to recover attorney’s

       Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015       Page 13 of 22
       fees incurred in a declaratory judgment action brought by the insured to

       establish coverage where (1) the insured prevails in the coverage dispute and (2)

       the policy states that the insurer will pay all reasonable expenses “incurred at

       our request.” Id. at 169. With respect to the second question, the court

       concluded that the insured is entitled to recover attorney fees under this

       provision only in cases where it could prove that the insurer denied coverage in

       bad faith. In so holding, the court determined that “request” in this context

       means “to ask for, not to compel through legal action.” Id. at 170 (quoting

       Gohn v. Akron School, 562 N.E.2d at 1292). The court concluded that American

       Ambassador did not request that Mikel file his declaratory judgment action,

       and “it follows that American Amassador did not request that he incur

       attorney’s fees in prosecuting the action.” Id. 172.

[17]   Synthesizing the holdings in Mikel and Florida Ins. Guar. Ass’n, Inc. v. All The

       Way With Bill Vernay, Inc., IIC contends that, as was the case with the insurers

       in Mikel and Florida Ins. Guar. Ass’n, Inc. v. All The Way With Bill Vernay, Inc.,

       IIC did not affirmatively request that Bulger incur expenses as a direct result of

       assisting with defending the underlying Mussman lawsuit. Accordingly, it

       asserts that the trial court did not err in granting summary judgment in IIC’s

       favor. We reject this argument and the reasoning upon which it is based, and

       adopt instead the reasoning espoused in Regis Radio Corp. v. Am. Emp. Ins. Co.,

       30 Misc. 2d 341, 343, 214 N.Y.S.2d 976 (Sup. Ct. 1961) when confronted with a

       similar policy provision and substantially the same issue.

       Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015     Page 14 of 22
[18]   In Regis Radio Corp. v. Am. Emp. Ins. Co., the insured sought to recover from the

       insurer expenses allegedly incurred in connection with the defense of an action

       for copyright infringement and unfair competition instituted against the insured

       by Warner Brothers Pictures, Inc. Briefly, Warner Bros. instituted an action

       against the insured for alleged copyright infringement and unfair competition

       arising from broadcast of the “Adventures of Sam Spade” programs. Pursuant

       to a policy of insurance, the insurer undertook the defense of this action and

       retained a California law firm to represent the insured. The insured contended

       that at the request of this California firm, it incurred traveling and other

       expenses in the amount of almost $8000 in connection with the defense of the

       Warner Brothers action. The insured sought reimbursement under a policy

       provision that stated: “The Insured shall cooperate with the Company and,

       upon the Company’s request shall attend hearings and trials and shall assist in

       effecting settlements, securing and giving evidence, obtaining the attendance of

       witnesses and in the conduct of suits; and the Company shall reimburse the Insured

       for expenses, … incurred at the Company’s request.” Id. at 979 (emphasis in

       original). The insurer denied liability under the provision in question,

       contending that the California firm “had no authority to empower [the insured]

       to incur expenses in connection with such lawsuit.” Id. at 978. The court

       rejected this argument on two bases. First, the court noted that, generally,

       “unless specifically ordered to the contrary by the person retaining him … an

       attorney charged with the legal and moral duty to prosecute or defend an action

       to the best of his ability has the implied power and authority to make and

       authorize such reasonable expenditures as the diligent prosecution or defense of
       Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015     Page 15 of 22
       the lawsuit may require.” Id. at 978 (emphasis in original). Second, in addition

       to this implied power, specific provisions of the insurance policy required the

       insured to cooperate with the insurer and its designated counsel in defense of

       the Warner Brothers lawsuit.

[19]   Essentially, the court reasoned that the insured had a duty to cooperate with the

       insurer in defending against lawsuits implicating the insurance policy. Such

       duty included the duty to cooperate with counsel appointed by the insurer to

       defend the action. Thus, the expenses incurred by the insured at the behest of

       the insurer-appointed counsel were incurred “at the Company’s request”,

       within the meaning of the policy provision in question. Id. In effect, the court

       held that under these circumstances, the insurer-appointed attorney has the

       implied power to authorize, on behalf of the insurer, requests that the insured

       incur reimbursable expenditures.

[20]   In the present case, the IIC policies required Bulger to “cooperate with [IIC] in

       the investigation or settlement of the claim or defense against the ‘suit’[.]”

       Appellant’s Appendix at 49, 231. The Mussman litigation was such a lawsuit,

       thus triggering Bulger’s duty to assist. IIC appointed Hardman as legal counsel

       to defend against the Mussmans’ lawsuit. Hardman requested information and

       materials from Bulger for use in defending against the Mussman litigation.

       Bulger complied with those requests, presumably incurring expenses in doing

       so. We are persuaded by the reasoning in Regis Radio Corp. v. Am. Emp. Ins. Co.

       that under these circumstances, IIC impliedly authorized the requests made of

       Bulger by Hardman, within the meaning of the policy provisions in question.

       Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015    Page 16 of 22
       Therefore, the trial court erred in holding that Bulger was not entitled to

       reimbursement on grounds that the activities giving rise to the reimbursement

       expenses did not come at IIC’s request.

[21]   Having determined that the trial court erred in holding that IIC did not

       “request” the expenses incurred by Bulger within the meaning of the insurance

       policies, we note that there was a second condition for reimbursement stated in

       the policy, i.e., that the reimbursable expenses must be “reasonable.” To that

       end, IIC contends that Bulger failed to establish via the evidence designated in

       conjunction with its motion for summary judgment that the expenses it claims

       are reimbursable were, in fact, reasonable. Because this issue will arise upon

       remand, we pause here to make a few observations about this condition of

       coverage. An insurer has a right to challenge the nature and reasonableness of

       defense expenses that the insured claims to have incurred. Emp’rs Ins. of Wausau

       v. Recticel Foam Corp., 716 N.E.2d 1015 (Ind. Ct. App. 1999), trans. denied.

       Moreover, the insured bears the burden of proof in establishing that it has

       satisfied the conditions that render it entitled to coverage under an insurance

       policy. See PSI Energy, Inc. v. Home Ins. Co., 801 N.E.2d 705, 727 (Ind. Ct. App.

       2004), trans. denied.

[22]   As indicated previously, Bulger presented invoices to Hardman that ostensibly

       were generated as a result of efforts expended by Bulger to comply with the

       requests of Hardman (and thus IIC) for information and materials related to the

       Mussman lawsuit. Those invoices represented the only documentary evidence

       detailing the grounds for Bulger’s request for reimbursement. At a deposition,

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Thomas Bulger was questioned about the services reflected on those invoices.

The following excerpt is representative of his explanation of those records:

        Q. And based on [one of the invoices that Bulger submitted], what
        services were performed that were performed at the request of Lyle
        Hardman and his firm?
        A. I can’t tell you what services. I can only tell you man hours, and
        anything that is billed on here would be the person. If it’s man hours,
        it would be the person’s name, the pay period that they put their hours
        down, and how many hours it was.
        Q.     Okay.
        A.     I can’t tell you what they did. I don’t remember what they did.
        Q. So that whole group exhibit, because I mean we’re talking at
        least what, 40 something pages?
        A. It’s every person that ever worked on that job for every hour they
        ever worked, and every nut and bolt that went into the job, that’s
        correct.
        Q. And here’s my question, Mr. Bulger. Those backup documents
        are only going to tell you the person that performed the work and the
        amount of hours that they allege that they performed –
        A.     Uh-huh.
        Q. – in responding to Lyle’s request or his firm’s request and the
        amount that you pay them, correct?
        A. Yeah. It’s going to capture all of the T.R. Bulger expenses
        assigned to that job number.
        Q. But it’s not, for example, let’s say Susie Smith did some of the
        work. It’s not going to say Susie Smith spent eight hours copying?
        A. No. It will just say Susie Smith, eight hours. Not copying, that’s
        correct.
        Q. So those are the backup documents that you have; they delineate
        the employee, the amount of hours the employee worked, and any sort
        of expenses relative to copying or postage?
        A. Yeah, whatever we find. I just can’t tell you what those items will
        be until we see them.

Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015           Page 18 of 22
        Q. And then are the amounts represented on this invoice the amount
        that you would bill a customer for the employee’s services, or the
        amount you actually paid the employee for its services; do you see the
        difference? And if you need to look through those backup documents
        to –
        A. No, it won’t tell me. I think that this is – I know that it covers
        part of my cost. I don’t know if it picks up FUTA, SUTA, FICA and
        all that. I don’t remember if it does.
        Q.     Okay.
        A. But it will pick up their wage rate that we got built into the
        program. Each employee that paid so much, and however that was
        distributed on our accounting system.
        Q. So, for example, if an employee made, and I’m going to throw
        out a number, ten dollars an hour, and the employee worked forty
        hours responding to a request it would be $400 represented on this
        invoice is that what you’re telling me?
        A.     It could be more.
Appellant’s Appendix at 338. Thus, according to Thomas Bulger, the invoices

reflected the name of the person who performed the allegedly reimbursable

tasks, and the number of hours worked by that person in a given pay period. In

other words, he acknowledged that the invoices did not reflect what services

those employees allegedly performed. He also acknowledged that his records

did not reflect the specific requests made by Hardman to which the work

reflected on the invoices, such as they were, allegedly corresponded. Finally, he

acknowledged that he would have billed IIC at an hourly rate equivalent to that

employee’s labor rate with respect to the Mussman job. He further

acknowledged that this rate would be more than the hourly rate that Bulger

actually paid those employees.

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[23]   Upon remand, the trial court will ultimately be required to determine whether

       the amount requested by Bulger is reasonable and, if not, what a reasonable

       amount would be. Our review of the evidence before the court at the summary

       judgment stage on this question reflects that Bulger’s designated evidence failed

       to adequately establish the reasonableness of the amount Bulger requested, at

       least based upon that designated evidence. The lack of specificity concerning

       the nature of the work reflected in those invoices is problematic. Also, it

       appears that Bulger charged IIC an hourly rate for the employees’ time spent

       allegedly complying with Hardman’s requests that exceeded the amount of

       those employees’ actual pay. “[T]he measure of damages in a contract action is

       limited to those actually suffered as a result of the breach which are reasonably

       assumed to have been within the contemplation of the parties at the time the

       contract was formed.” Erie Ins. Co. v. Hickman by Smith, 622 N.E.2d 515, 519

       (Ind. 1993). It seems clear that this aspect of the measure of damages would

       consist of what Bulger actually paid the employee in question for complying

       with Hardman’s requests, not the hourly rate at which it would have billed that

       employee’s time had the work been performed for the Mussmans in furtherance

       of Bulger’s business. In the final analysis, these are evidentiary matters that the

       parties will have the opportunity to develop more fully when this litigation

       moves beyond the summary judgment phase.

                                                       2. & 3.

[24]   Bulger’s second and third issues stem ultimately from IIC’s refusal to participate

       in the T.R. 30(B)(6) deposition. Recall that Bulger sent IIC a request for

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       deposition pursuant to T.R. 30(B)(6). Pursuant to this request, Bulger directed

       IIC to designate a person or persons authorized to testify on IIC’s behalf

       regarding (1) communication between IIC and Bulger relating to the Mussman

       litigation, (2) communication between IIC and Hardman’s law firm regarding

       the legal defense of Bulger concerning the Mussman litigation, (3) the reasons

       why Bulger’s claims for reimbursement were denied, and (4) the facts upon

       which IIC based its denial of coverage for expenses for reimbursement

       submitted by Bulger. As a result of IIC’s refusal to designate a person to

       participate in the T.R. 30(B)(6) deposition, Bulger submitted a motion in

       limine, seeking to prevent IIC from presenting evidence on the four subject

       areas identified in the T.R. 30(B)(6) notice. As a second issue, Bulger appeals

       the denial of that motion in limine.

[25]   Also as a result of IIC’s refusal to participate in the T.R. 30(B)(6) deposition,

       Bulger submitted a motion asking the court to strike an affidavit submitted by

       Hardman in which Hardman averred that (1) he did not ask Bulger to incur

       expenses to assist Hardman with the defense of the Mussman litigation, (2)

       when asked by Bulger about whether certain expenses were reimbursable under

       his insurance policy, Hardman informed Thomas Bulger that he should read his

       policy and ask IIC, and (3) he had no knowledge of any expenses Bulger

       ultimately claimed that he incurred in assisting Hardman with the defense of

       the Mussman litigation. Again based upon IIC’s failure to participate in the

       T.R. 30(B)(6) deposition, Bulger petitioned the trial court to strike the Hardman

       Court of Appeals of Indiana | Opinion 46A03-1405-PL-188| March 9, 2015    Page 21 of 22
       affidavit. The third issue presented by Bulger is the trial court’s denial of the

       motion to strike.

[26]   These issues stem from IIC’s failure to participate in the T.R. 30(B)(6)

       deposition, which in turn would have been relevant for the purpose of

       determining whether Bulger was entitled to reimbursement under the IIC

       insurance policies. More specifically, that deposition presumably would have

       focused on the “request” element of the coverage question. Having determined

       that IIC, through Hardman, did request Bulger’s assistance within the meaning

       of the insurance policies, we need not address these issues. All that remains is

       the reasonableness of the requested reimbursement.

[27]   Judgment reversed, and cause remanded for further proceedings consistent with

       this opinion.

       Kirsch, J., and Crone, J., concur.

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