Court Opinion

ID: 7075034
Source: CourtListenerOpinion
Date Created: 2022-07-24 08:09:43.349328+00
Date Added: 2024-06-11T16:12:43.944800
License: Public Domain

NAJAM, Judge,
concurring in result
I concur in the result reached by the majority but write separately because the majority opinion addresses issues that are unnecessary to decide the case. The discussion on the merits of State Farm’s childcare policy exclusion claim is surplus-age.
As a preliminary matter, this case comes to us following the trial court’s grant of T.B.’s motion in proceedings supplemental to enforce her judgment against the Dob-sons, which named State Farm as garnishee defendant. A trial court is vested with broad discretion in conducting proceedings supplemental. Hermitage Ins. Co. v. Salts, 698 N.E.2d 856, 858 (Ind.Ct.App.1998). Proceedings supplemental, as provided for in Indiana Trial Rule 69, are summary in nature because the claim has already been determined to be a justly owed debt reduced to judgment. Id. As this court recognized in Gallant Ins. Co. v. Wilkerson:
The filing of a motion for proceedings supplemental “speaks only to how the claim is to be satisfied, whereas the complaint in the original action speaks to whether the claim should be satisfied.” Proceedings supplemental are merely a continuation of the underlying claim initiated under the same cause number for purposes of enforcing a judgment.
720 N.E.2d 1223, 1229 (Ind.Ct.App.1999) (citations omitted).
In light of these principles, it is apparent that State Farm cannot raise the childcare exclusion in an attempt to shield its policy from proceedings supplemental. Such an attempt is an impermissible collateral attack on the underlying judgment against its insureds. See Salts, 698 N.E.2d at 859. “Clearly, proceedings supplemental ‘are not appropriate vehicles for creating, enlarging or reducing liability!.]’” Wilkerson, 720 N.E.2d at 1229 (citation omitted). Moreover, it is well settled that the contractual provisions of an insurance policy may be waived or that the insurer may be estopped from asserting such provisions in an effort to disclaim liability. Id. at 1227. “The doctrine of collateral estoppel applies to insurance contracts and an insurer is ordinarily bound by the result of litigation to which its insured is a party, so long as the insurer had notice and the opportunity to control the proceedings.” Liberty Mut. Ins. Co. v. Metzler, 586 N.E.2d 897, 900 (Ind.Ct.App.1992), trans. denied.
It is undisputed that State Farm had notice of and opportunity to control the proceedings in the underlying tort action against its insureds. State Farm was served with a courtesy copy of T.B.’s complaint against the Dobsons and even went so far as to take statements from both Murl and Vicki Dobson regarding the incident. It thus had “a full and fair opportunity” to raise its childcare policy exclusion *927claim during the course of the underlying litigation and could have protected itself (against the fraud, collusion, and bad faith which it now alleges) either by filing- a declaratory judgment action on the issue of coverage or defending the Dobsons under a reservation of rights. See Wilkerson, 720 N.E.2d at 1229.
Having done neither, and having declined to defend the Dobsons altogether, State Farm waived the right to raise the defense of a policy exclusion based on facts previously resolved in the consent judgment and is now estopped from asserting the same in proceedings supplemental. See id. An insurer cannot take its first bite from the proverbial apple to defeat a judgment in proceedings supplemental. Cf id. (characterizing insurer’s attempt to claim insured’s breach of cooperation clause to avoid liability in proceeding supplemental as an attempt “to take a second bite at the proverbial apple at the expense of [the judgment creditor.]”). This court has stated time and time again that “[a]n insurer may not sit idly by and wait until an adverse judgment is entered before raising a dispositive defense.” See, e.g., Salts, 698 N.E.2d at 859. That issue alone decides this case.
For these reasons, I concur in result.