Allstate Ins. Co. v. Boles, Civ. A. No. IP83-834-C.

Decision Date30 May 1984
Docket NumberCiv. A. No. IP83-834-C.
PartiesALLSTATE INSURANCE COMPANY, Plaintiff, v. Cathy BOLES and Wilbur Boles, Defendants.
CourtU.S. District Court — Southern District of Indiana

Richard Yarling, John W. Hammel, Yarling, Robinson, Hammel & Lamb, Indianapolis, Ind., for plaintiff.

John F. Townsend, Jr., Townsend, Hovde, Townsend & Montross, Indianapolis, Ind., for defendant Cathy L. Boles.

No appearance for Wilbur B. Boles.

ENTRY

MOODY, District Judge.

This matter comes before the Court on the November 16, 1983 motion of the plaintiff for summary judgment on the issues of its June 24, 1983 amended complaint and the answer of defendant Cathy Boles of September 6, 1983. The motion was fully briefed as of December 7, 1983.

Allstate Insurance Company is a corporation organized and existing under the laws of the State of Illinois, with its principal place of business in Northbrook, Illinois. Allstate is engaged in the business of insurance, including the sale and issuance of policies of automobile liability insurance containing uninsured motorist coverage, and in insuring risks arising from the operation of automobiles. The plaintiff is admitted to conduct business in the State of Indiana.

Defendant Wilbur B. Boles and Defendant Cathy L. Boles were married on December 10, 1972 and have resided together as husband and wife ever since. From September of 1981 until August of 1983 the defendants resided together near the City of Indianapolis, Indiana.

Defendant Wilbur B. Boles is a citizen of the State of Indiana. Defendant Cathy L. Boles is a citizen of the State of Oregon.

The plaintiff issued Allstate Automobile Policy number 12913540 to Wilbur B. Boles, effective from August 10, 1981 through February 10, 1982 (hereinafter referred to as the Policy).

On November 12, 1981 Wilbur B. Boles was operating his automobile, listed as the covered automobile in the Policy, with Cathy L. Boles as a passenger when the automobile struck a pine tree which was lying in the roadway. Cathy L. Boles received injuries to her person as a result of the accident.

On May 17, 1983 Cathy L. Boles filed a Complaint for Damages in the Marion Superior Court, Civil Division, Room No. 7, Cause Number S783-0625. In her complaint, the defendant claims that Wilbur B. Boles' wrongful acts caused her to suffer injuries while she was a passenger on November 12, 1981. She claims permanent injuries, loss of income, and medical expenses, and seeks damages in the amount of fifty thousand dollars ($50,000.00).

On June 21, 1983 the action before the Court was commenced with the filing of the plaintiff's, Allstate Insurance Company, complaint for declaratory relief. An amended complaint was filed by Allstate on June 24, 1983.

In the amended complaint the plaintiff seeks five declarations. First, a declaration that the Policy does not provide any coverage for any claims of Cathy L. Boles against Wilbur B. Boles arising out of the November 12, 1981 accident is sought. In addition, the plaintiff seeks a declaration that the policy does not provide any coverage for claims for injuries and losses based upon the Policy's uninsured motorist provisions which arise out of the November 12, 1981 accident. The plaintiff also seeks a declaration to the effect that it is not obligated under the Policy to defend, assist in defending, or to expend any money in defending Wilbur B. Boles against the claims by Cathy L. Boles which arise out of the November 12, 1981 accident. A declaration that Allstate is under no duty to compromise, settle, or expend any money in attempting to compromise or settle any claims arising out of the November 12, 1981 accident asserted by Cathy L. Boles against Wilbur B. Boles is also sought. Finally, Allstate seeks a declaration that it is under no duty to pay or satisfy any judgment rendered involving any claim for damages by Cathy L. Boles against Wilbur B. Boles arising out of the November 12, 1981 accident.

The motion now before the Court was filed on November 16, 1983. The movant, Allstate, asserts an exclusion against coverage for injuries sustained by persons related to the insured by blood, marriage, or adoption. It is further argued by the movant that Cathy L. Boles' claims are not covered by the uninsured motorists provision in the Policy.

Defendant Cathy L. Boles does not contend that this action involves the uninsured motorist provision of the Policy and concedes that Wilbur B. Boles is not an uninsured motorist. The defendant argues that the household exclusion provision of the Policy is against public policy in the State of Indiana.

The Court has jurisdiction over the subject matter of and the parties to this action pursuant to 28 U.S.C. Secs. 1332, 2201 and 2202.

Section I, Coverage AA of the Policy provides insurance coverage for liability for bodily injury arising out of the ownership, maintenance and use of an automobile. With respect to Coverage AA, the Policy clearly states as follows:

SECTION I
LIABILITY PROTECTION
Automobile Liability Insurance
COVERAGE AA — Bodily Injury
COVERAGE BB — Property Damage Exclusions — what this Section of the policy does not cover

This Section I does not apply to:

* * * * * *
7. bodily injury to any person who is related by blood, marriage, or adoption to an insured against whom claim is made if such person resides in the same household as such insured;
* * * * * *

(emphasis in original).

The common law doctrine of inter-spousal immunity in tort actions was abrogated in Indiana in 1972. Brooks v. Robinson, 259 Ind. 16, 284 N.E.2d 794 (1972). The Supreme Court of Indiana considered, inter alia, arguments to the effect that tort actions between spouses tended to disrupt the peace and harmony of the marriage and that inter-spousal tort actions would tend to promote fraud, collusion, and trivial litigation. Id. at 796-97. Both arguments were rejected, the latter for the reason that its adoption mandates the assumption that the court system is ill-equipped to deal with such litigation and would deny all relief to the class of litigants. It is the contention of Cathy L. Boles that to allow insurance policies to exclude coverage for spouses residing with the insured contravenes the public policy espoused in Brooks.

Among the Courts that have decided the issue at bar there is a difference of opinion as to whether insurance companies may limit the coverage offered so as to exclude coverage for spouses residing with the insured. Cathy L. Boles relies extensively upon Mutual of Enumclaw Insurance Co. v. Wiscomb, 25 Wash.App. 841, 611 P.2d 1304, aff'd, 95 Wash.2d 373, 622 P.2d 1234, and, 97 Wash.2d 203, 643 P.2d 441 (1982), wherein it was held that

the strong public policy enunciated in Freehe v. Freehe 81 Wash.2d 183, 500 P.2d 771 (1972) supra, and society's interest in permitting injured victims of automobile accidents to recover against the tort-feasor, even if the tort-feasor is a member of the family or household, dictates that the exclusion clause in question be declared null and void as contrary to public policy.

Id., 611 P.2d at 1308. Allstate's position is best supported by the Idaho Supreme Court in Porter v. Farmers Insurance Co., 102 Idaho 132, 627 P.2d 311 (1981), wherein it was held that

The right to sue a spouse for injuries caused by that spouse is an entirely separate matter from the contractual obligation of an insurance company to pay for those injuries. The fact that there is or is not an insurance policy in force covering an accident does not affect the right of one spouse to sue and obtain a judgment against the other spouse. Consequently we do not believe that the public policy expressed in the Yellowstone 97 Idaho 14, 539 P.2d 566 (1975) case as support for the abrogation of spousal immunity prohibits a contractual exclusion of spousal coverage in an insurance policy.

Id., 627 P.2d at 315. The Indiana Supreme Court has not addressed the validity of the insurance policy provision that is commonly referred to as the "household exclusion."

In Indiana, the law of contract is applied to the determination of insurance policy liabilities, with ambiguous or conflicting clauses being construed in favor of the insured. See, e.g., American Economy Insurance Co. v. Liggett, 426 N.E.2d 136 (Ind.App., 3d Dist.1981) (contract law applies); Utica Mutual Insurance Co. v. Ueding, 175 Ind.App. 60, 370 N.E.2d 373 (1977) (conflicting clauses construed favorably to insured); United Farm Bureau Insurance Co. v. Pierce, 152 Ind.App. 387, 283 N.E.2d 788 (1972) (ambiguous clause construed to favor insured). Although special rules of construction of insurance contracts have developed due to the disparity in bargaining power between insurers and insureds, see Taylor v. American Underwriters, Inc., 170 Ind.App. 148, 352 N.E.2d 86 (1976), if a contract is clear and unambiguous the language therein must be given its plain meaning. Vernon Fire & Casualty Insurance Co. v. American Underwriters, Inc., 171 Ind.App. 309, 356 N.E.2d 693 (1976). In particular, an insurance contract is not to be interpreted so as to remove from coverage a risk against which an insured intended to protect himself, unless the language of the policy clearly excludes coverage for such risk. American States Insurance Co. v. Aetna Life & Casualty Co., 177 Ind.App. 299, 379 N.E.2d 510 (1978). An insurer may, however, "determine by its contract what risks it is undertaking to insure, provided policy provisions do not violate statutory mandates or are not against public policy." Cincinnati Insurance Co. v. Mallon, 409 N.E.2d 1100, 1103 (Ind.App., 2d Dist.1980). Accord Asbury v. Indiana Union Mutual Insurance Co., 441 N.E.2d 232, 236-37 (Ind.App., 1st Dist.1982); American Economy Insurance Co. v. Liggett, 426 N.E.2d 136, 146 (Ind.App., 3d Dist.1981) (Staton, J., concurring). See also Jordan v. John Hancock Mutual Life Insurance Co., 222 F.2d 210 (7th Cir.1955); Gulf Insurance Co. v. Tilley, ...

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