USA Life One Ins. Co. of Indiana v. Nuckolls

• Decision Date: 14 July 1997
• Docket Number: No. 11S04-9610-CV-682,11S04-9610-CV-682
• Court: Indiana Supreme Court
• Parties: USA LIFE ONE INSURANCE COMPANY OF INDIANA, Appellant (Defendant Below), v. Marshall E. NUCKOLLS, as personal representative of the Estate of Robert L. Nuckolls, deceased; Marshall Nuckolls and Ada Nuckolls, Appellees (Plaintiffs Below).

Page 534

682 N.E.2d 534

USA LIFE ONE INSURANCE COMPANY OF INDIANA, Appellant (Defendant Below), v. Marshall E. NUCKOLLS, as personal representative of the Estate of Robert L. Nuckolls, deceased; Marshall Nuckolls and Ada Nuckolls, Appellees (Plaintiffs Below).

No. 11S04-9610-CV-682.

Supreme Court of Indiana.

July 14, 1997.

J. Lamont Harris, Henthorn, Harris & Taylor, Crawfordsville, for Appellant.

Virginia King Shema, Anderson & Nichols, Haute, for Appellees.

ON CIVIL PETITION TO TRANSFER

SELBY, Justice.

The issue before this Court on interlocutory appeal is whether the trial court properly denied USA Life One Insurance Company's ("USA Life") summary judgment motion. The Court of Appeals, Judge Friedlander dissenting, reversed the trial court's decision and ordered the trial court to grant summary judgment in favor of USA Life's denial of coverage under the accidental death benefit exclusion. USA Life One Insurance Co. v. Nuckolls, 663 N.E.2d 541 (Ind.Ct.App.1996). This Court granted the Nuckolls' petition to transfer, and we now address the two issues presented: 1) whether the trial court properly denied USA Life's summary judgment motion upon the Nuckolls' claim for the accidental death benefit; 2) whether the trial court erred in denying USA Life's summary judgment

motion upon the Nuckolls' claim for punitive damages. Because we answer both questions affirmatively, we affirm on the first issue, reverse on the second, and remand to the trial court for further proceedings.

FACTS

Early in the morning of January 13, 1991, the Lewis Township volunteer firefighters were called to the scene of a car fire and fatality. The badly burned body of Robert Nuckolls was removed from the car and sent to Regional Hospital for an autopsy. Robert Nuckolls had apparently fallen asleep in his car while smoking a cigarette, and the lit cigarette started the fire.

The autopsy was conducted by Dr. Roland Kohr. The results of a toxicological test showed that Robert Nuckolls had a blood alcohol level of 0.29% and a blood carbon monoxide level of 71.6% at the time of his death. Dr. Kohr concluded in his report that the cause of death was "carbon monoxide and acute alcohol intoxication." (R. at 38.) The Clay County Coroner also conducted an investigation into Robert Nuckolls' death. The Coroner concluded that the death was an accident and that the cause of death was "carbon monoxide poisoning" from "smoke inhalation from burning auto" with the contributing cause of "acute blood alcohol level of .294%." (R. at 32.)

The beneficiaries of Robert Nuckolls' insurance policy, his parents Marshall and Ada Nuckolls, filed a claim with his insurance company, USA Life. Robert Nuckolls had a life insurance policy with USA Life which would pay the named beneficiaries $10,000 upon his death. Robert Nuckolls also had a death benefit rider which would pay his beneficiaries another $10,000 if his death was accidental. The death benefit rider contained a clause which excepts USA Life from liability for "death resulting directly or indirectly from: ... (g) taking of poison or gas, whether voluntarily or involuntarily, accidental or otherwise, except with direct relation to the Insured's occupation." (R. at 11.) USA Life admitted to liability under the basic life insurance policy. USA Life denied liability under the accidental death benefits rider.

The Nuckolls filed a complaint alleging that they are entitled to coverage under the accidental benefit provision and that they are entitled to punitive damages because the denial of the claim was in bad faith. USA Life filed a motion for summary judgment on both claims, asserting that Robert's death fell under the poison exclusion and, therefore, USA Life was not liable. After a hearing before the trial court, the trial judge denied USA Life's motion.

DISCUSSION

USA Life argues that the trial court erred in denying its summary judgment motion. When reviewing a summary judgment decision, an appellate court applies the same standard as does the trial court. Webb v. Jarvis, 575 N.E.2d 992, 994 (Ind.1991). We do not weigh the evidence presented by the parties; instead, we consider the evidence designated by the parties in the light most favorable to the non-moving party. Id. at 995. Summary judgment is granted only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Ind.Trial Rule 56(C); Stephenson v. Ledbetter, 596 N.E.2d 1369, 1371 (Ind.1992).

I. Accidental Death Policy Benefits

USA Life argues that the undisputed facts preclude the Nuckolls from receiving any benefits under the accidental death benefits policy, and, therefore, USA Life is entitled to summary judgment. USA Life contends that, because it is undisputed that Robert Nuckolls died from carbon monoxide poisoning, his death clearly falls within the policy exclusion for "the taking of poison or gas." USA Life further contends that, even if the death was caused by the alcohol and not the carbon monoxide, it is still entitled to summary judgment either because alcohol is also a "poison" or because Robert's intoxication was voluntary and, thus, his death was not accidental.

Under Indiana law, a contract for insurance is subject to the same rules of interpretation as are other contracts. Eli Lilly and Co. v. Home Ins. Co., 482 N.E.2d 467, 470 (Ind.1985). The interpretation is "primarily a question of law for the court, even if the policy contains an ambiguity needing resolution." Tate v. Secura Ins., 587 N.E.2d 665, 668 (Ind.1992). If the language in the insurance policy is clear and unambiguous, then it should be given its plain and ordinary meaning. Id. If, however, the language of the policy is ambiguous, then the court may apply the rules of construction in interpreting the language. Eli Lilly, 482 N.E.2d at 470. When an insurance contract contains an ambiguity, it should be strictly construed against the insurance company. This is especially true where the policy language in question concerns an exclusion clause. American States Ins. Co. v. Kiger, 662 N.E.2d 945, 947 (Ind.1996). When an insurance company has failed to clearly exclude that which the insured attempted to protect against, a court must construe the ambiguous contract to further the policy's basic purpose of indemnity. Eli Lilly, 482 N.E.2d at 470.

An ambiguity does not arise merely because the two parties proffer differing interpretations of the policy language. Lexington Ins. v. American Healthcare Providers, 621 N.E.2d 332, 336 (Ind.Ct.App.1993). Rather, the policy is ambiguous only if it is "susceptible to more than one interpretation and reasonably intelligent persons would differ as to its meaning." Commercial Union Ins. v. Moore, 663 N.E.2d 179, 181 (Ind.Ct.App.1996); see Masonic Accident Ins. Co. v. Jackson, 200 Ind. 472, 481, 164 N.E. 628 (1929).

In the present case, the Court of Appeals held that the policy was unambiguous and that Robert Nuckolls' death was excluded by the policy. USA Life One Ins. Co. v. Nuckolls, 663 N.E.2d 541 (Ind.Ct.App.1996). The court held that "taking" as used in the policy was a synonym of "ingest," and that, no matter Robert's state (conscious or unconscious, voluntary or involuntary), he did "ingest" the poisonous gas. Id. at 544. Therefore, the court reversed the trial court and ordered the trial court to grant USA Life's motion for summary judgment. Id.

As noted by the parties and the Court of Appeals, we can find only one Indiana case that is even somewhat similar to the present case. In Miller v. Fort Wayne Mercantile Accident Ass'n, 87 Ind.App. 561, 153 N.E. 427 (1926), the policy holder died after accidentally swallowing carbolic acid instead of medicine. Id. The holder had accidental death insurance; however, the policy excluded from its coverage "death ... caused by, or resulting from ... injury (fatal or otherwise) resulting from any poison, or infection, or from anything accidentally or otherwise taken, administered, or inhaled." Id. at 562, 153 N.E. 427. The court held that the policy was not ambiguous so far as it excluded from coverage death resulting from poison. Id. at 569, 153 N.E. 427. The present case is, however, quite different from Miller. Both the policy language and the facts are different.

The policy language used by USA Life appears to be somewhat unusual, and, in fact, we have not been able to find any cases discussing a policy exclusion for "the taking of poison or gas, whether voluntarily or involuntarily, accidental or otherwise." The more usual version of this policy clause would exclude "death from the taking of poison or asphyxiation from or inhaling of gas, whether voluntary or involuntary." See Welch v. Professional Ins. Corp., 140 Ga.App. 336, 231 S.E.2d 103, 104 (1976).

Courts have interpreted the more usual version of this particular exclusion with respect to death from the inhalation of gas. In general, these courts have held that death by inhalation of gas is excluded by the policy language. For example, courts have held that death resulting from carbon monoxide poisoning while sitting in a car, or in a garage with a running car, were excluded by the policy language. See Transport Life Ins. Co. v. Karr, 491 S.W.2d 446 (Tex.Civ.App.1973); King v. New York Life Ins. Co., 72 F.2d 620 (8th Cir.1934). Courts have also found that death due to the inhalation of escaping gas fumes from a gas heater while asleep in a room was excluded by the policy language. Safe Deposit & Trust Co. v. New York Life Ins. Co., 14 F.Supp. 721 (D.Md.1936). These courts generally conclude that death by inhalation, whether voluntary or involuntary, conscious or unconscious, intentional or unintentional, is excluded by the policy language. See id. at 726; Transport Life, 491 S.W.2d at 448; King, 72 F.2d at 624.

However, we are not presented with a situation similar to those presented above. In the present case, Robert Nuckolls was trapped,...