Tate v. Secura Ins.
| Decision Date | 28 February 1992 |
| Docket Number | No. 49S02-9202-CV-135,49S02-9202-CV-135 |
| Citation | 587 N.E.2d 665 |
| Parties | Thomas TATE, Appellant (Plaintiff Below), v. SECURA INSURANCE, a Mutual Company Appellee (Defendant Below). |
| Court | Indiana Supreme Court |
W.F. Conour, Rex E. Baker, Conour Doehrman, Indianapolis, for appellant.
Steven H. Frank, Carter & Leerkamp, Indianapolis, for appellee.
Plaintiff-appellant Thomas Tate seeks transfer to this Court following the decision of the Court of Appeals affirming summary judgment for Secura Insurance, A Mutual Company, the defendant-appellee, as to the interpretation to be given an automobile insurance policy providing underinsured motorists coverage. Tate v. Secura Insurance (1990), Ind.App., 561 N.E.2d 814.
Tate was seriously injured as he was providing assistance to a car stalled in the parking lane of an Indianapolis street when it was struck by a vehicle operated by an intoxicated driver. Tate settled with the driver's insurance company for $50,000, the maximum payable under the driver's bodily injury liability coverage. With alleged preliminary medical expenses already in excess of $60,000, past and future income losses, permanent impairment, and the possibility of future amputation, Tate claimed that the reasonable value of his total damages was in excess of $100,000 and asserted a claim under the underinsured motorists provision of his own automobile insurance policy with Secura, which denied the claim. Tate's law suit for breach of contract ensued, resulting in summary judgment in favor of Secura, and the Court of Appeals affirmed. We now grant Tate's petition for transfer.
Secura contends, and we agree, that the summary judgment should be affirmed if the trial court was correct upon any one of the of the following potentially dispositive issues:
1. whether Tate is entitled to receive up to $50,000 under his Secura underinsured motorists coverage with $50,000 limits where his total damages exceed the tortfeasor's $50,000 bodily injury liability insurance limits;
2. whether Tate's claim is precluded for failure to comply with the provisions requiring exhaustion of applicable bodily injury liability insurance; and
3. whether Tate's claim is precluded for failure to obtain Secura's consent to his settlement with the underinsured driver.
Arguing that summary judgment in favor of Secura is improper on each of these questions, Tate presents an additional issue regarding the affidavit of an expert witness, which we will not address due to our resolution of the dispositive issues.
Tate contends that when the total damages to an insured person exceed the tortfeasor's liability limits, the amount of recovery under his underinsured motorists coverage is the full amount of damages sustained less the tortfeasor's liability limits already received, or the limits of the underinsured motorists coverage, whichever is less. Secura contends that where, as here, the tortfeasor's liability insurance limits are equal to those of its policyholder's underinsured motorists coverage, the reduction provisions of the policy preclude payment.
The following policy provisions 1 are pertinent to this issue:
PART III--UNINSURED MOTORISTS COVERAGE AND UNDERINSURED MOTORISTS COVERAGE
* * * * * *
We will pay damages which an insured person is legally entitled to recover from the owner or operator of an underinsured motor vehicle because of bodily injury sustained by an insured person and caused by an accident.
* * * * * *
ADDITIONAL PROVISIONS APPLICABLE TO PART III ONLY
* * * * * *
A. Definitions
As used in this part:
* * * * * *
3. "Underinsured motor vehicle" means a land motor vehicle or trailer, which is insured by a liability policy or bond at the time of the accident which provides bodily injury liability limits less than the amount of total damages an insured person is legally entitled to recover but which are uncompensated because the damages exceed those limits.
* * * * * *
D. Reductions in the Amounts Payable
Amounts payable will be reduced by:
1. Amounts paid because of the bodily injury by, or on behalf of, persons or organizations who may be legally responsible.
Record at 10-11. The declaration page of the policy specified that Tate's limit of liability for underinsured motorists coverage was $50,000 per person. Record at 146.
The interpretation of an insurance policy, as with other contracts, is primarily a question of law for the court, even if the policy contains an ambiguity needing resolution. Eli Lilly & Co. v. Home Insurance Co. (1985), Ind., 482 N.E.2d 467, cert. denied, 479 U.S. 1060, 107 S.Ct. 940, 93 L.Ed.2d 990. It is only where a contract is ambiguous and its interpretation requires extrinsic evidence that the fact finder must determine the facts upon which the contract rests. Kordick v. Merchants Nat'l Bank and Trust Co. (1986), Ind.App., 496 N.E.2d 119; Wilson, Adm'x v. Kauffman (1973), 156 Ind.App. 307, 296 N.E.2d 432. If insurance policy language is clear and unambiguous, it should be given its plain and ordinary meaning. Spears v. Jackson (1980), Ind.App., 398 N.E.2d 718. If there is an ambiguity, the policy should be interpreted most favorably to the insured. Miller v. Dilts (1984), Ind., 463 N.E.2d 257. It should be construed to further the policy's basic purpose of indemnity, Eli Lilly, 482 N.E.2d 467.
The Court of Appeals correctly identifies the focus of the controversy to be the section of the policy in Part III entitled which provides in pertinent part that "[a]mounts payable will be reduced by ... [a]mounts paid" to the insured by or on behalf of the tortfeasor. The parties dispute the meaning to be given "amounts payable," a phrase not expressly defined in the policy. The Court of Appeals majority declares that it "unambiguously refers to the policy limits of $50,000." 561 N.E.2d at 818, and thus it is Tate's coverage limits which must be reduced by the amounts paid from the tortfeasor to determine whether he is entitled to payment. The dissent, although likewise declaring this provision "unambiguous," asserts that the phrase means the "amount of bodily injuries Tate is entitled to recover from the tortfeasor," and concludes that "in plain words" the contract provides underinsured motorists coverage for bodily injury damages to the extent they exceed the tortfeasor's liability coverage, up to Tate's limits for this coverage. 561 N.E.2d at 820.
This issue must be resolved against Secura. By failing to clearly express a contrary meaning, Secura is bound by the plain and ordinary meaning of its words as viewed from the standpoint of the insured. We find the phrase "amounts payable" to refer to the initial insuring agreement for Coverage C-2 Underinsured Motorists Coverage wherein Secura promises to pay such bodily injury damages as its insured is legally entitled to recover from the operator of an underinsured motor vehicle. It is this amount of damages, not the coverage limit, which is the "amounts payable" to be reduced by the amount paid to Tate by or on behalf of the tortfeasor.
This result is also supported by Secura's definition of "underinsured motor vehicle" as one whose applicable bodily injury liability coverage is less than the "total damages" which would be recoverable, "but which are uncompensated because the damages exceed those limits." Secura did not define "underinsured motor vehicle" as one whose applicable liability coverage was also less than the limits of the insured's underinsured motorists coverage.
Secura contends that the interpretation of its policy should follow the type of underinsured motorists coverage required under Ind.Code Secs. 27-7-5-4(b), 5(c). However, as Tate correctly points out, these statutes did not exist in 1986 when this policy was issued. Indiana did not then require Secura to provide underinsured motorists coverage, nor did it impose statutory limits upon the nature and operation of such coverage.
Also arguing that "amounts payable" must necessarily mean Tate's coverage limits of $50,000, Secura claims that to hold otherwise would be to "totally eliminate the reducing clause, thus rewriting the contract of insurance." Brief of Defendant-Appellee at 20. We disagree. Such clause operates to assure that Secura will not have to pay to its insured amounts already received from the tortfeasor, which would be its obligation under the language used in Secura's Coverage C-2 insuring agreement.
Secura urges that its position is supported by Meridian Mutual Ins. Co. v. Richie (1988), Ind.App., 517 N.E.2d 1265, vacated (1989), Ind., 540 N.E.2d 27, reinstated on reh'g (1989), Ind., 544 N.E.2d 488, which also involved the interpretation of underinsured motorists coverage language in an insurance contract. In Richie the term "underinsured automobile" was contractually defined to apply only when its limits of bodily injury liability coverage were less than "the applicable limit of liability under this insurance." 517 N.E.2d 1265. This phrase was found to refer to the liability limits of the underinsured motorists coverage itself, rather than the insurance policy's bodily injury liability coverage limits. The decision in Richie is not applicable to the present facts because the Meridian Mutual policy language is altogether different from that used in the Secura policy, which defines "underinsured automobile" to apply whenever the tortfeasor's bodily injury liability limits are "less than the amount of total damages an insured person is legally entitled to recover but which are uncompensated because the damages exceed those limits."
We therefore conclude that Tate's underinsured motorist coverage limits do not bar his claim. We agree with the analysis of Judge Shields in her dissent, and we find that the contract provides Tate with underinsured motorists coverage for his bodily injury damages, to the extent...
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