Allstate Indem. Co. v. Brown

• Decision Date: 30 June 1998
• Docket Number: No. 49A04-9710-CV-452,49A04-9710-CV-452
• Citation: 696 N.E.2d 92
• Parties: ALLSTATE INDEMNITY COMPANY, Appellant-Defendant, v. Lee O. BROWN, Jr., Appellee-Plaintiff.
• Court: Indiana Appellate Court

Page 92

696 N.E.2d 92

ALLSTATE INDEMNITY COMPANY, Appellant-Defendant, v. Lee O. BROWN, Jr., Appellee-Plaintiff.

No. 49A04-9710-CV-452.

Court of Appeals of Indiana.

June 30, 1998.

John W. Hammel, Yarling, Robinson, Hammel & Lamb, Indianapolis, for Appellant-Defendant.

William A. Waddick, The Waddick Law Firm, P.C., Indianapolis, for Appellee-Plaintiff.

OPINION

NAJAM, Judge.

STATEMENT OF THE CASE

In July of 1995, Lee O. Brown filed his Complaint for Damages against Charles Figures, an uninsured motorist, and Allstate Indemnity Company ("Allstate"), Brown's insurer. The complaint was subsequently amended. Allstate filed answers to both the original and amended complaint. In December of 1996, the trial court entered a default judgment on the issue of liability against Figures and, after a hearing on damages, entered a money judgment against Figures in the amount of $34,875.00. At that hearing counsel for Allstate appeared briefly and asserted that the company could not be collaterally estopped by any judgment entered against Figures. Next, Brown filed his Motion for Summary Judgment against Allstate. After a hearing, the court granted Brown's motion. Allstate now appeals. The sole issue presented for our review is whether the trial court erred when it entered summary judgment against Allstate.

We affirm.

FACTS AND PROCEDURAL HISTORY

On December 31, 1994, Figures' vehicle struck Brown's vehicle in the rear while Brown was stopped at a traffic light. Brown sustained injuries from the collision. At the time of the accident, Figures was uninsured, while Brown had insurance coverage through Allstate. Brown's policy included an Uninsured Motorists Insurance Coverage provision ("uninsured motorist provision") with policy limits of $25,000.00 per person and $50,000.00 per accident. That provision provides in relevant part:

Part III

Uninsured Motorists Insurance--Coverage SS

If a limit of liability is shown on your declarations page for Coverage SS, we will pay all damages that an insured person is legally entitled to recover from the owner or operator of an uninsured auto because of:

1. bodily injury sustained by an insured person, and

2. property damage. Property damage is covered only if a separate limit is shown on the declarations page for Uninsured Motorists Insurance--Property Damage. We will not pay for property damage caused by an underinsured motor vehicle.

The bodily injury and property damage must be caused by accident and arise out of the ownership, maintenance or use of an uninsured auto. We will not pay any punitive or exemplary damages.

If an insured person sues a person believed responsible for the accident without our written consent, we aren't bound by any resulting judgment.

As a result of the accident, Brown filed a complaint for damages in which he named both Figures and Allstate as defendants. Specifically, Count I of the original complaint alleged that Figures' negligent operation of his vehicle caused Brown's injuries. Count I also sought a judgment against Allstate for any damages awarded against Figures.

In February of 1996, Brown's counsel wrote Allstate a letter in which he explained Brown's injuries and enumerated his medical expenses. Under the uninsured motorist provision of the insurance policy, Brown made demand upon Allstate to pay Brown a sum of either $60,593.00 or the policy limit in order to settle the claim. Allstate declined. Brown then filed an amended complaint and added Count II, which alleged that Allstate had breached the terms of the insurance contract, Count III, which alleged that Allstate had acted in bad faith and sought punitive damages, and Count IV, which alleged that Allstate's actions were fraudulent. Allstate answered and pled affirmative defenses.

Brown then filed a Verified Application for Default Judgment against Figures. The following day, the court entered a default judgment against Figures on the issue of liability and set a hearing on the issue of damages. At the hearing, counsel for Allstate appeared and argued that Allstate could not be bound by any award of damages assessed against Figures. Allstate's counsel then left the hearing, and the court heard evidence. In January of 1997, the trial court entered a judgment for damages against Figures in the amount of $34,875.00.

Brown then filed a motion for summary judgment and designation of evidence. On that same day, Brown also filed a Motion for Filing Discovery, in which he moved the court to order Allstate to file its original Answers to Brown's Interrogatories. Pursuant to Brown's motion, the court ordered Allstate to produce its original answers. Brown, in turn, relied on those answers to support his motion for summary judgment. Specifically, Brown designated Allstate's answers to Interrogatory No. 7 and Interrogatory No. 10, in which Allstate admitted that Brown's accident was covered under the uninsured motorist provision and that the only dispute between Allstate and Brown involved a good faith disagreement on the amount of damages. Thus, Brown claimed in his motion for summary judgment that Allstate should be bound by the default judgment against Figures. In response, Allstate agreed that there were no genuine issues of material fact but maintained that Brown was not entitled to judgment as a matter of law. The trial court granted Brown's motion for summary judgment. Allstate now appeals.

DISCUSSION AND DECISION

Standard of Review

When reviewing a summary judgment decision, an appellate court applies the same standard as does the trial court. USA Life One Ins. Co. of Indiana v. Nuckolls, 682 N.E.2d 534, 537 (Ind.1997). Summary judgment is warranted 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); Trotter v. Nelson, 684 N.E.2d 1150, 1152 (Ind.1997). Just as the trial court, we may only consider those parts of the pleadings, depositions, answers to interrogatories, admissions, matters of judicial notice, and other matters which have been designated by the parties to the trial court for consideration. Id. We do not weigh the evidence presented by the parties. Rather, we consider the evidence designated by the parties in the light most favorable to the non-moving party. USA Life, 682 N.E.2d at 534.

The trial court entered specific findings of fact and conclusions thereon. However, our standard of review is unchanged by the entry of such findings and conclusions. Chicago Southshore & South Bend R.R. v. Itel Rail Corp., 658 N.E.2d 624, 629 (Ind.Ct.App.1995). Specific findings and conclusions are not required in the summary judgment context, and although they offer valuable insight into the trial court's rationale for its judgment and facilitate our review, they are not binding on this court. Trout v. Buie, 653 N.E.2d 1002, 1005 (Ind.Ct.App.1995), trans. denied.

Brown's Motion for Summary Judgment

As noted above, Brown argued in his motion for summary judgment that Allstate should be bound by the default judgment against Figures because it failed to participate in the determination of fault and damages as alleged in Count I and, thus, that he was entitled to summary judgment as a matter of law. In response, Allstate asserts that it cannot be bound by the judgment against Figures, relying on footnote four in Erie Ins. Co. v. Hickman by Smith, 622 N.E.2d 515, 523, n. 4 (Ind.1993), and, thus, contends that Brown is not entitled to judgment as a matter of law. ¹

Judgment as a Matter of Law

Allstate presents multiple arguments in support of its contention that the trial court erred when it determined that Brown was entitled to judgment as a matter of law. First, Allstate maintains that the court erred when it dismissed footnote four in Erie Ins. Co. v. Hickman by Smith, as dicta. Second, Allstate argues that it could not have defended Figures during the default judgment proceedings because of conflicts of interest. Third, Allstate asserts that the court erred when it determined that the "consent to sue" provision in Brown's insurance policy was void as against public policy. We address each argument in turn.

1. Applicability of Footnote

Allstate directs us to a footnote in the Indiana Supreme Court case of Erie Ins. Co. v. Hickman by Smith, Id., to support its argument that it cannot be bound by the default judgment entered against Figures and that it should be able to relitigate the issues of liability and damages. In response, Brown argues that this case is not governed by Erie, but by Indiana Ins. Co. v. Noble, 148 Ind.App. 297, 265 N.E.2d 419 (1970), and its progeny. Brown asserts that because he chose to sue both Figures and Allstate within the same action, Allstate, which had notice and an opportunity to participate in the proceedings, is bound by the judgments entered against Figures on the issues of liability and damages. We agree with Brown.

In Erie, our supreme court addressed whether there was sufficient evidence to support the jury's award of punitive damages. 622 N.E.2d at 521. In that case, Hickman, who had been driving a vehicle owned by Smith, collided with Davis, an uninsured motorist. Smith's vehicle was insured by a policy issued by Erie Insurance Company, which provided only liability and uninsured motorist coverage. Smith sued both Erie and Davis in the same action. Specifically, Counts I and II sought recovery against Davis for personal injuries and property damage. Count III alleged that Erie had breached its contract of insurance by failing to pay under the uninsured motorist provision, and Count IV alleged that Erie had acted in bad faith and requested punitive damages. Id. at 522.

In its discussion of the trial between Smith and Erie, the court stated in a footnote that although a default judgment had been entered against Davis, that judgment could not have been used to collaterally estop Erie from litigating the percentages of fault for purposes of the...