Court Opinion

ID: 4015719
Source: CourtListenerOpinion
Date Created: 2016-07-14 15:04:25.736709+00
Date Added: 2024-06-11T14:31:08.777572
License: Public Domain

FILED
                                                                     Jul 14 2016, 8:52 am

                                                                           CLERK
                                                                      Indiana Supreme Court
                                                                         Court of Appeals
                                                                           and Tax Court

ATTORNEY FOR APPELLANT                                     ATTORNEY FOR APPELLEE
Jeffrey B. Fecht                                           Lane C. Siesky
Riley Bennett & Egloff, LLP                                Siesky & Viehe, PC
Indianapolis, Indiana                                      Evansville, Indiana

                                                           ATTORNEYS OF APPELLEE
                                                           (INTERVENOR), American
                                                           Casualty Company/American
                                                           Equity Risk Service

                                                           Laurie Goetz Kemp
                                                           Crystal G. Rowe
                                                           Kightlinger & Gray, LLP
                                                           New Albany, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Fireman’s Fund Insurance                                   July 14, 2016
Company,                                                   Court of Appeals Cause No.
Appellant-Third Party Defendant,                           82A01-1509-CT-1350
                                                           Appeal from the Vanderburgh
        v.                                                 Circuit Court
                                                           The Honorable David D. Kiely,
Matthew W. Ackerman,                                       Judge
Appellee-Third Party Plaintiff,                            Trial Court Cause No.
                                                           82C01-0911-CT-450
and,

American Casualty Company,

Court of Appeals of Indiana | Opinion 82A01-1509-CT-1350 | July 14, 2016                      Page 1 of 15
      American Equity Risk Service,

      Appellee-Intervenor Defendant.

      Barnes, Judge.

                                               Case Summary
[1]   Fireman’s Fund Insurance Company (“Fireman’s Fund”) appeals the trial

      court’s denial of its motion for summary judgment regarding a claim by

      Matthew W. Ackerman. We reverse and remand.

                                                       Issue
[2]   Fireman’s Fund raises one issue, which we restate as whether the trial court

      properly denied its motion for summary judgment regarding underinsured

      motorist coverage.

                                                       Facts
[3]   On January 8, 2009, Ackerman was injured in a motor vehicle accident

      allegedly caused by Janet Sipes. Ackerman sustained severe injuries in the

      accident, including the amputation of a leg. At the time of the accident,

      Ackerman was working for Evansville Marine Service, Inc. (“Evansville

      Marine”). Evansville Marine had uninsured/underinsured motorist
      Court of Appeals of Indiana | Opinion 82A01-1509-CT-1350 | July 14, 2016   Page 2 of 15
      (“UM/UIM”) coverage with American Casualty Company of Reading, PA, a

      subsidiary of CNA (“CNA”), an excess or umbrella policy with Fireman’s

      Fund, and workers’ compensation benefits with American Casualty

      Company/American Equity Risk Service (“AER”). Fireman’s Fund first

      issued an excess liability policy to Evansville Marine in March 2004. Beginning

      in September 2004, the policy was issued or renewed each year effective

      September 16th.

[4]   Ackerman received the $100,000 policy limits of Sipes’s policy with State Farm

      Insurance, and the $1,000,000 policy limits (minus an offset of $100,000 for the

      amount paid by State Farm) of Evansville Marine’s CNA Policy. Ackerman

      claims that his damages exceed the amount he has been paid, and this litigation

      concerns whether the Fireman’s Fund policy provides additional UM/UIM

      coverage.

[5]   In November 2009, Sipes filed a complaint against Ackerman, and Ackerman

      filed a counterclaim against Sipes. AER then filed a motion to intervene related

      to payments it made to Ackerman under the workers’ compensation policy, and

      the trial court granted the motion. In October 2011, Ackerman filed a motion

      for leave to file a third-party complaint against Fireman’s Fund, which the trial

      court also granted. Ackerman claimed that he was entitled to UM/UIM

      coverage under the Fireman’s Fund policy.

[6]   Fireman’s Fund filed a motion for summary judgment. Fireman’s Fund argued

      that the policy did not provide UM/UIM coverage and that UM/UIM

      Court of Appeals of Indiana | Opinion 82A01-1509-CT-1350 | July 14, 2016   Page 3 of 15
      coverage could not be imputed to the policy. Ackerman and AER filed

      responses to Fireman’s Fund’s motion for summary judgment. The trial court

      denied Fireman’s Fund’s motion for summary judgment. However, pursuant

      to Fireman’s Fund’s request, the trial court certified the order for interlocutory

      appeal. We accepted Fireman’s Fund’s interlocutory appeal pursuant to

      Indiana Appellate Rule 14(B).

                                                    Analysis
[7]   Fireman’s Fund argues that the trial court erred by denying its motion for

      summary judgment. An appellate court reviewing summary judgment analyzes

      the issues in the same way as would a trial court. Pfenning v. Lineman, 947
N.E.2d 392, 396 (Ind. 2011). A party seeking summary judgment must

      establish that “the designated evidentiary matter shows that there is no genuine

      issue as to any material fact and that the moving party is entitled to a judgment

      as a matter of law.” Ind. Trial Rule 56(C). The party moving for summary

      judgment bears the initial burden of establishing its entitlement to summary

      judgment. Pfenning, 947 N.E.2d at 396-97. “Only then does the burden fall

      upon the non-moving party to set forth specific facts demonstrating a genuine

      issue for trial.” Id. at 397. The reviewing court must construe the evidence in

      favor of the non-movant, and resolve all doubts against the moving party. Id.

[8]   Fireman’s Fund argues that its policy issued to Evansville Marine did not

      contain UM/UIM coverage and that it is entitled to summary judgment.

      Ackerman and AER argue that UM/UIM coverage was imputed to the policy.

      Court of Appeals of Indiana | Opinion 82A01-1509-CT-1350 | July 14, 2016   Page 4 of 15
      “Insurance contracts ‘are governed by the same rules of construction as other

      contracts.’” Justice v. Am. Family Mut. Ins. Co., 4 N.E.3d 1171, 1175 (Ind. 2014)

      (quoting Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664, 667 (Ind. 1997)).

      The interpretation of an insurance contract is a question of law, and we address

      it de novo. Id. Similarly, “the interpretation of a statute is a question of law,”

      and we consider it de novo. Id.

[9]   The analysis of this issue requires a review of UM/UIM coverage in Indiana,

      see Indiana Code Chapter 27-7-5. “The statute was originally enacted in 1965,

      see 1965 Ind. Acts. ch. 138, § 1, and it required insurers to offer uninsured

      motorist coverage in an amount equal to the statutory minimum financial

      responsibility requirements.” Justice, 4 N.E.3d at 1178. “In 1982, the General

      Assembly amended it, see P.L. 166-1982, § 1, 1982 Ind. Acts 1237, to require

      ‘that insurers not merely offer but provide uninsured motorist coverage in an

      amount equal to the minimum financial responsibility requirements (but not

      exceeding the bodily injury and property damage limits) of the insured’s

      policy.’” Id. (quoting United Nat. Ins. Co. v. DePrizio, 705 N.E.2d 455, 460 (Ind.

      1999)). In 1987, the General Assembly amended the statute again, see P.L. 391-

      1987, § 1, 1987 Ind. Acts 3558; this amendment further “broadened the scope of

      the statute by requiring insurers to provide underinsured motorist coverage in

      addition to uninsured motorist coverage . . . in limits equal to the limits of

      liability specified in the bodily injury and property damage provisions of an

      insured’s policy.” Id.

      Court of Appeals of Indiana | Opinion 82A01-1509-CT-1350 | July 14, 2016   Page 5 of 15
[10]   In 1995, the General Assembly enacted Indiana Code Section 27-7-5-2 to

       require insurance companies to provide UM/UIM coverage in all existing or

       newly-issued automobile policies up to the policy limits. Liberty Mut. Fire Ins.

       Co. v. Beatty, 870 N.E.2d 546, 549 (Ind. Ct. App. 2007). “The effect of the

       legislation granted implied UM/UIM coverage to all existing automobile

       policies that did not expressly provide UM/UIM coverage.” Id. “Insurers

       could only avoid the coverage by obtaining a written rejection from their

       insured.” Id.

[11]   Then, in 1999, our supreme court decided DePrizio, which concerned whether a

       commercial umbrella or excess liability insurance policy, like the policy at issue

       here, was required to provide UM/UIM coverage. DePrizio, 705 N.E.2d at 457.

       The court noted that the UM/UIM coverage statute “is a mandatory coverage,

       full-recovery, remedial statute.” Id. at 460. Its provisions were to be

       “considered a part of every automobile liability policy the same as if written

       therein.” Id. Moreover, “[e]ven where a given policy fails to provide such

       uninsured motorist coverage, the insured is entitled to its benefits unless

       expressly waived in the manner provided by law.” Id. Our supreme court

       concluded that, “absent an explicit statutory exemption to the contrary[,] an

       umbrella liability policy that does not provide for uninsured/underinsured

       motorist coverage by its own terms, yet provides coverage for liability arising

       from the ownership maintenance or use of motor vehicles, is an ‘automobile

       liability policy or motor vehicle liability policy’ within the meaning of Indiana

       Court of Appeals of Indiana | Opinion 82A01-1509-CT-1350 | July 14, 2016   Page 6 of 15
       Code 27-7-5-2(a).” Id. at 464. “As such, the statute requires such a policy to

       provide uninsured and underinsured motorist coverage.” Id.

[12]   In apparent response to DePrizio, effective July 1, 2005, the legislature enacted

       Indiana Code Section 27-7-5-1.5, which applied to commercial vehicle policies

       and provided: “(b) This chapter does not require an insurer to make available

       uninsured motorist or underinsured motorist coverage described in [Indiana

       Code Section 27-7-5-2] in connection with the issuance of a . . . (2) commercial

       umbrella or excess liability policy[.]”1 At the time that the 2008 policy was

       issued and the time of the accident, Indiana Code Section 27-7-5-2 provided:

                  (a)      The insurer shall make available, in each automobile
                           liability or motor vehicle liability policy of insurance
                           which is delivered or issued for delivery in this state with
                           respect to any motor vehicle registered or principally
                           garaged in this state, insuring against loss resulting from
                           liability imposed by law for bodily injury or death suffered
                           by any person and for injury to or destruction of property
                           to others arising from the ownership, maintenance, or use
                           of a motor vehicle, or in a supplement to such a policy, the
                           following types of coverage:

                           (1)      in limits for bodily injury or death and for injury to
                                    or destruction of property not less than those set
                                    forth in IC 9-25-4-5 under policy provisions
                                    approved by the commissioner of insurance, for the
                                    protection of persons insured under the policy who
                                    are legally entitled to recover damages from owners

       1
           In 2009, the legislature repealed Indiana Code Section 27-7-5-1.5, effective January 1, 2010.

       Court of Appeals of Indiana | Opinion 82A01-1509-CT-1350 | July 14, 2016                            Page 7 of 15
                          or operators of uninsured or underinsured motor
                          vehicles because of bodily injury, sickness or
                          disease, including death, and for the protection of
                          persons insured under the policy who are legally
                          entitled to recover damages from owners or
                          operators of uninsured motor vehicles for injury to
                          or destruction of property resulting therefrom; or

                 (2)      in limits for bodily injury or death not less than
                          those set forth in IC 9-25-4-5 under policy
                          provisions approved by the commissioner of
                          insurance, for the protection of persons insured
                          under the policy provisions who are legally entitled
                          to recover damages from owners or operators of
                          uninsured or underinsured motor vehicles because
                          of bodily injury, sickness or disease, including death
                          resulting therefrom.

                 The uninsured and underinsured motorist coverages must
                 be provided by insurers for either a single premium or for
                 separate premiums, in limits at least equal to the limits of
                 liability specified in the bodily injury liability provisions of
                 an insured’s policy, unless such coverages have been
                 rejected in writing by the insured. However, underinsured
                 motorist coverage must be made available in limits of not
                 less than fifty thousand dollars ($50,000). At the insurer’s
                 option, the bodily injury liability provisions of the
                 insured’s policy may be required to be equal to the
                 insured’s underinsured motorist coverage. Insurers may
                 not sell or provide underinsured motorist coverage in an
                 amount less than fifty thousand dollars ($50,000). Insurers
                 must make underinsured motorist coverage available to all
                 existing policyholders on the date of the first renewal of
                 existing policies that occurs on or after January 1, 1995,
                 and on any policies newly issued or delivered on or after
                 January 1, 1995. Uninsured motorist coverage or

Court of Appeals of Indiana | Opinion 82A01-1509-CT-1350 | July 14, 2016        Page 8 of 15
                 underinsured motorist coverage may be offered by an
                 insurer in an amount exceeding the limits of liability
                 specified in the bodily injury and property damage liability
                 provisions of the insured’s policy.

        (b)      Any named insured of an automobile or motor vehicle
                 liability policy has the right, on behalf of all other named
                 insureds and all other insureds, in writing, to:

                 (1)      reject both the uninsured motorist coverage and the
                          underinsured motorist coverage provided for in this
                          section; or

                 (2)      reject either the uninsured motorist coverage alone
                          or the underinsured motorist coverage alone, if the
                          insurer provides the coverage not rejected separately
                          from the coverage rejected.

                 No insured may have uninsured motorist property damage
                 liability insurance coverage under this section unless the
                 insured also has uninsured motorist bodily injury liability
                 insurance coverage under this section. Following rejection
                 of either or both uninsured motorist coverage or
                 underinsured motorist coverage, unless later requested in
                 writing, the insurer need not offer uninsured motorist
                 coverage or underinsured motorist coverage in or
                 supplemental to a renewal or replacement policy issued to
                 the same insured by the same insurer or a subsidiary or an
                 affiliate of the originally issuing insurer. Renewals of
                 policies issued or delivered in this state which have
                 undergone interim policy endorsement or amendment do
                 not constitute newly issued or delivered policies for which
                 the insurer is required to provide the coverages described
                 in this section.

Court of Appeals of Indiana | Opinion 82A01-1509-CT-1350 | July 14, 2016        Page 9 of 15
[13]   The parties do not dispute that, as a result of DePrizio, the Fireman’s Fund

       policies provided UIM protection at least until the first renewal of the policy

       after Indiana Code Section 27-7-5-1.5 went into effect in 2005. This dispute

       centers on the effect of Indiana Code Sections 27-7-5-1.5 and 27-7-5-2 on the

       policy. The accident occurred in January 2009, and the Fireman’s Fund policy

       at issue was effective September 16, 2008, to September 16, 2009 (“2008

       Policy”). The language of the 2008 Policy expressly did not provide UIM

       coverage. The question here is whether Fireman’s Fund was still required to

       provide UIM coverage at the time this policy was issued or whether Indiana

       Code Section 27-7-5-1.5 had eliminated that coverage.

[14]   Fireman’s Fund argues that Indiana Code Section 27-7-5-1.5(b) applied to the

       renewal of the policy in September 2008 to eliminate the UIM coverage

       previously required by DePrizio. Ackerman counters that the use of the word

       “issuance” in the statute means that the statute only applied to newly-issued

       policies, not renewal policies. According to Ackerman, because Indiana Code

       Section 27-7-5-1.5(b) is inapplicable, Fireman’s Fund was required to obtain a

       written rejection of UIM coverage pursuant to Indiana Code Section 27-7-5-2.

       Ackerman also argues that the adoption of Indiana Code Section 27-7-5-1.5(b)

       “did not obviate the language of I.C. 27-7-5-2(b), which then required (and still

       yet requires) an insurer to obtain a written rejection of UM and/or UIM

       coverage by the named insured in order to avoid providing such coverage to its

       insured in a future policy year.” Appellee’s Br. p. 16.

       Court of Appeals of Indiana | Opinion 82A01-1509-CT-1350 | July 14, 2016   Page 10 of 15
[15]   The federal district court addressed this same issue in Hall v. Travelers Property

       Cas. Co. of America, No. 3:08-CV-0007RLYWGH, 2009 WL 1148231 (S.D. Ind.

       2009). There, the district court held:

               Plaintiffs argue that the amended statute applies only to the
               issuance of “new” policies and not, as in this case, to the issuance
               of “renewal” policies. The plain language of the statute does not
               limit its application to newly issued policies. Rather, it applies to
               the “issuance” of any policy, whether entirely new or a renewal
               following a previous policy.

               The plain meaning of the statute must be read in light of Indiana
               Code § 27-7-6-3, which defines a renewal policy as the “issuance”
               of a replacement policy. See Little v. Progressive Ins., 783 N.E.2d
307, 314 (Ind. Ct. App. 2003) (citing Inman v. Farm Bureau Ins.,
               584 N.E.2d 567, 569 (Ind. Ct. App. 1992)).

               Further, Indiana Code § 27-7-5-1.5 must be read in light of the
               mandatory IUM statute, Indiana Code § 27-7-5-2. That statutory
               section begins by defining its application to every auto liability
               policy delivered or issued for delivery in Indiana. Ind. Code §
               27-7-5-2(a). The section goes on to make clear that this universe
               of policies that are “issued” in Indiana includes both “first
               renewal of existing policies” after the effective date, as well as
               “newly issued” policies. See Ind. Code § 27-7-5-2(a)(2) (“Insurers
               must make underinsured motorist coverage available to all
               existing policyholders on the date of the first renewal of existing
               policies . . . and on any policies newly issued . . . .”).

               The legislative intent must be presumed to be the same with
               respect to Indiana Code § 27-7-5-1.5, Inman, supra., especially
               because the word “issuance” in the statute is just another form of
               the word “issued” in Indiana Code § 27-7-5-2. “Webster’s Third
               New International Dictionary defines ‘issuance’ as the noun form

       Court of Appeals of Indiana | Opinion 82A01-1509-CT-1350 | July 14, 2016   Page 11 of 15
               of ‘issue.’” Mining Energy, Inc. v. Dir. OWCP, 391 F.3d 571, 575
               (4th Cir. 2004); see also In re Auto. Prof’ls, Inc., 370 B.R. 161, 171
               (Bankr. N.D. Ill. 2007) (“‘Issued,’ as used in reference to the
               issuance of an insurance policy, means when the policy is made
               and delivered, and is in full effect and operation.”).

               Thus, the meaning of policies that are “issued” in Indiana Code §
               27-7-5-2, i.e., both “first issued” policies and “renewals,” applies
               equally to Indiana Code § 27-7-5-1.5, which refers to the
               “issuance” of policies. Accordingly, the court finds that Illinois
               National was not required to provide underinsured motorist
               coverage in its renewal policy issued to Gohmann after the
               amended statute took effect.

       Hall, 2009 WL 1148231, at *8-9.

[16]   Ackerman argues that Hall is not controlling because Indiana Code Section 27-

       7-6-3, upon which the district court relied, is not relevant or applicable to the

       UM/UIM statutes or commercial policies. Consequently, Ackerman contends

       that any reliance on Hall is misplaced. Fireman’s Fund argues that Hall is

       “directly on point with the issues in this matter.” Appellant’s Br. p. 15.

[17]   We agree with Fireman’s Fund and find Hall to be persuasive. Although

       DePrizio had previously required commercial umbrella or excess liability

       policies to provide UM/UIM coverage, the 2005 enactment of Indiana Code

       Section 27-7-5-1.5 eliminated that requirement. The statute provided:

       “[Indiana Code Chapter 27-7-5] does not require an insurer to make available

       uninsured motorist or underinsured motorist coverage described in [Indiana

       Code Section 27-7-5-2] in connection with the issuance of a . . . (2) commercial

       Court of Appeals of Indiana | Opinion 82A01-1509-CT-1350 | July 14, 2016         Page 12 of 15
       umbrella or excess liability policy.” The term “issuance” is not explicitly

       limited to newly-issued policies and encompasses renewal policies. The

       legislature has shown that it was capable of differentiating between newly-

       issued or delivered policies and renewal policies, as it did in Indiana Code

       Section 27-7-5-2, but it did not do so in Indiana Code Section 27-7-5-1.5. As in

       Hall, we conclude that Indiana Code Section 27-7-5-1.5(b) applied to both

       newly-issued policies and renewal policies. Regardless of whether the 2008

       policy was a renewal or a newly issued policy, Fireman’s Fund was not

       required to include UM/UIM coverage in the policy. Both Ackerman and

       AER assert that a genuine issue of material fact exists as to whether the 2008

       policy was a newly issued or renewal policy, but we conclude that fact is not

       material.

[18]   Ackerman also argues that, even if Indiana Code Section 27-7-5-1.5(b) applies,

       Fireman’s Fund was still required to obtain a written rejection of the UM/UIM

       coverage from the insured. However, Indiana Code Section 27-7-5-1.5(b)

       specifically stated that the insurer was not required to provide such coverage. It

       would be inconsistent to require an insurer to obtain a written rejection of

       coverage that it was not required to offer at all. Consequently, Ackerman’s

       argument fails.

[19]   Finally, Ackerman and AER argue that a change in UM/UIM coverage as a

       result of Indiana Code Section 27-7-5-1.5 was a material change that required

       the provision of consideration. In support of his argument, Ackerman relies on

       Liberty Mut. Fire Ins. Co. v. Beatty, 870 N.E.2d 546 (Ind. Ct. App. 2007). There,

       Court of Appeals of Indiana | Opinion 82A01-1509-CT-1350 | July 14, 2016   Page 13 of 15
       during the umbrella policy’s term, the insurer sent the insured a form for the

       written rejection of UM/UIM coverage, which the insured signed and returned.

       The insured was later injured in an accident with an uninsured motorist, and

       the insurer denied coverage. The issue on appeal was whether the document

       signed by the insured was an effective rejection of UM/UIM coverage. We

       held that the rejection form was ambiguous and did not remove UM/UIM

       coverage. We held:

               Had Liberty Mutual desired to exclude any and all UM/UIM
               coverage based on the DePrizio decision, it should have either: 1)
               secured the written waiver of coverage required under the statute
               and included the waiver within the policy prior to the
               commencement of coverage; or 2) if Liberty Mutual wanted to
               remove UM/UIM coverage during the policy’s term, it should
               have proposed a modification to such effect and offered to reduce
               the premium to reflect the removed coverage. In either case, it
               would be clear that the existence or nonexistence of UM/UIM
               coverage was a negotiated term of the policy.

       Beatty, 870 N.E.2d at 551.

[20]   Ackerman relies on Beatty for the proposition that Fireman’s Fund was required

       to give consideration for the change in UIM coverage after the 2005 statute was

       enacted. However, Beatty is distinguishable. Beatty dealt with a change in

       coverage during a policy’s term. Also, Beatty concerned an ambiguous

       UM/UIM rejection form sent by the insurer, whereas here, the removal of

       UM/UIM coverage took place as the result of a clear statutory enactment.

       Ackerman cites no authority for the proposition that Fireman’s Fund was

       Court of Appeals of Indiana | Opinion 82A01-1509-CT-1350 | July 14, 2016   Page 14 of 15
       required to offer consideration for the change in UIM coverage when the policy

       was renewed.

[21]   We conclude that, given Indiana Code Section 27-7-5-1.5(b), Fireman’s Fund

       was not required to provide UM/UIM coverage in the 2008 Evansville Marine

       policy. Fireman’s Fund was entitled to judgment as a matter of law and there

       were no genuine issues of material fact. The trial court erred by denying

       Fireman’s Fund’s motion for summary judgment.

                                                   Conclusion
[22]   The trial court erred by denying Fireman’s Fund’s motion for summary

       judgment regarding the UM/UIM coverage issue. We reverse and remand.

[23]   Reversed and remanded.

       Vaidik, C.J., and Mathias, J., concur.

       Court of Appeals of Indiana | Opinion 82A01-1509-CT-1350 | July 14, 2016   Page 15 of 15