Allstate Ins. Co. v. Tozer, 1:02-CV-1189-TAB-JDT.

• Decision Date: 23 December 2003
• Docket Number: No. 1:02-CV-1189-TAB-JDT.,1:02-CV-1189-TAB-JDT.
• Citation: 298 F.Supp.2d 765
• Parties: ALLSTATE INSURANCE COMPANY, Plaintiff, v. John TOZER, Georgette Tozer, Lindsay C. Tozer, and Eric Keltner and Andrea Keltner, Individually and as Guardians/Next of Friends of Kristina Keltner and Nicholas Keltner, Minors, Defendants.
• Court: U.S. District Court — Southern District of Indiana

298 F.Supp.2d 765

ALLSTATE INSURANCE COMPANY, Plaintiff, v. John TOZER, Georgette Tozer, Lindsay C. Tozer, and Eric Keltner and Andrea Keltner, Individually and as Guardians/Next of Friends of Kristina Keltner and Nicholas Keltner, Minors, Defendants.

No. 1:02-CV-1189-TAB-JDT.

United States District Court, S.D. Indiana, Indianapolis Division.

December 23, 2003.

Richard C. Samek, Larry L. Barnard, Miller Carson Boxberger & Murphy LLP, Fort Wayne, IN, for plaintiff.

John S. Mercer, Jennifer Renee Fitzwater, Wood, Tuohy, Gleason, Mercer & Herrin, Indianapolis, IN, Nicholas Calvin Deets, F. Boyd Hovde, Hovde Law Firm, Indianapolis, IN, for defendants.

ENTRY ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

BAKER, United States Magistrate Judge.

I. Introduction.

Allstate Insurance Company ("Allstate") brought this declaratory judgment action to determine the rights and obligations of the parties under an automobile insurance policy issued by Allstate to Defendants John and Georgette Tozer, under which Lindsay C. Tozer (collectively, "the Tozers") was an insured person. Allstate and Defendants Eric Keltner and Andrea Keltner, individually and as guardians/next of friends of Kristina Keltner and Nicholas Keltner (collectively, "the Keltners") have filed cross-motions for summary judgment.¹ Allstate seeks a declaration that Nicholas and Kristina Keltner's claims for emotional distress are not covered by the policy because the policy limits have been paid under the "each person" limit of liability for the wrongful death of Kyle Keltner. Conversely, the Keltners seek a declaration that the claims of Kristina and Nicholas are separate "bodily injuries" from those of Kyle Keltner and, therefore, not subject to Kyle Keltner's "each person" limit.² For the reasons stated below, Allstate's motion for summary judgment is DENIED and the Keltners' motion for summary judgment is GRANTED.

II. Summary Judgment Standard and Applicable Law.

Summary judgment is proper "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show 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." Fed. R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "These same Rule 56 standards apply to cross-motions for summary judgment." TIG Ins. Co. v. Smith, 243 F.Supp.2d 782, 784 (N.D.Ill.2003), citing International Brotherhood of Electrical Workers, Local 176 v. Balmoral Racing Club, Inc., 293 F.3d 402, 404 (7th Cir.2002). "With cross-motions, [the Court's] review of the record requires that [the Court] construe all inferences in favor of the party against whom the motion under consideration is made." O'Regan v. Arbitration Forums, Inc., 246 F.3d 975, 983 (7th Cir.2001), quoting Hendricks-Robinson v. Excel Corp., 154 F.3d 685, 692 (7th Cir.1998). See also Eaton v. Onan Corp., 117 F.Supp.2d 812, 818 (S.D.Ind. 2000).

As this matter comes before the Court pursuant to diversity jurisdiction, the Court "must apply the law of the state as it believes the highest court of the state would apply it if the issue were presently before that tribunal." State Farm Mut. Auto. Ins. Co. v. Pate, 275 F.3d 666, 669 (7th Cir.2001). Because neither party raised a conflict of law issue, the applicable law is that of Indiana, the state where this Court sits. Indiana Ins. Co. v. Pana Community Unit School Dist. No. 8, 314 F.3d 895, 900 (7th Cir.2002). "Under Indiana law, the interpretation of an insurance contract is a matter of law for the courts to determine." Schenkel & Shultz, Inc. v. Homestead Ins. Co., 119 F.3d 548, 550 (7th Cir.1997), citing Tate v. Secura Ins., 587 N.E.2d 665, 668 (Ind.1992). Therefore, summary judgment is particularly appropriate. American Family Mut. Ins. Co. v. Hall, 764 N.E.2d 780, 784 (Ind. Ct.App.2002). "Although ambiguities are construed in favor of the insured, clear and unambiguous policy language must be given its ordinary meaning." Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664, 667 (Ind.1997).

III. Background.

On January 31, 2001, Allstate had in effect an automobile insurance policy, number 032740469 (the "Policy"), issued to Defendants John and Georgette Tozer. The Policy named Lindsay Tozer as an insured person. The Policy's declarations page provided for automobile liability insurance, bodily injury coverage of $100,000 for each person and $300,000 for each occurrence. Additionally, the Policy defined "bodily injury" as "physical harm to the body, sickness, disease or death ...." [Compl., Ex. A, Policy, p. 3]. With respect to limits of liability, the Automobile Liability Insurance Bodily Injury Liability-Coverage AA of the Policy provided:

The limits shown on the Policy Declarations are the maximum we will pay for any single accident involving an insured auto. The limit stated for each person for bodily injury is our total limit of liability for all damages because of bodily injury sustained by one person, including all damages sustained by anyone else as a result of that bodily injury. Subject to the limit for each person, the limits stated for each action is our total limit of liability for all damages for bodily injury.

[Compl., Ex. A., Policy, p. 8].

On January 3, 2001, Lindsay Tozer was operating an automobile insured under the Policy. Kyle Keltner and Defendants Kristina and Nicholas Keltner were passengers in the vehicle operated by Lindsay Tozer. The vehicle struck a telephone pole and, as a result of the collision, Kyle Keltner sustained personal injuries and subsequently died at the hospital. Allstate settled the Kyle Keltner's wrongful death claim on or about September 10, 2001 for $1,100,000.00.³ This settlement and release did not specifically release the claims of Nicholas and Kristina Keltner against Lindsay Tozer.

On February 22, 2002, Nicholas and Kristina Keltner, by their parents and next friends Eric and Andrea Keltner, filed a complaint in the Hamilton Superior Court against Defendant Lindsay Tozer relating to the accident which occurred on January 3, 2001. Allstate retained Smith, Maley and Douglas ("the Firm") to defend Lindsay Tozer in this action and the Firm entered its appearance on March 21, 2002. Thereafter, Allstate filed the instant action for declaratory judgment on July 31, 2002. Allstate did not send Lindsay Tozer a reservation of rights letter prior to filing the declaratory judgment action.

IV. Discussion.

Allstate claims that it is entitled to declaratory judgment on two distinct grounds. First, Allstate claims that, under the Policy, the emotional distress claims of Nicholas and Kristina Keltner fall under the "each person" Policy limit for the death of Kyle Keltner. In other words, Nicholas and Kristina Keltner's claims are not covered by the Policy because the Policy limits have been reached with respect to their claims through the settlement of Kyle Keltner's wrongful death claim. Second, Allstate claims that it "has not waived and is not estopped from asserting that the emotional distress claims of Kristina and Nicholas Keltner as a result of seeing the death of their brother are included within the single limit of liability for bodily injury for that death as a result of Allstate's defense of [that claim] without a reservation of rights." [Docket No. 31, p. 1]. Because the Court resolves the first issue in favor of the Defendants, the Court need not address the second.

Whether emotional distress claims like those of Kristina and Nicholas Keltner's fall under the "each person" liability limit of the decedent is one of first impression; no Indiana court has addressed this particular issue.⁴ The parties correctly note that those jurisdictions that have addressed similar questions are split, forming two camps with diametrically opposed conclusions. One camp, favoring Allstate's position, concludes that under similar policies, damages for emotional distress are included within the per person limit of liability of the decedent or physically injured person. See Farm Bureau Ins. Co. of Nebraska v. Martinsen, 265 Neb. 770, 659 N.W.2d 823, 827-28 (2003) (finding that "a `bodily injury' that could give rise to a separate per-person claim must be a physical, as opposed to a purely emotional, injury."); Bentley v. Progressive Ins. Co., 2002 WL 31681997, *4-7 (Ohio Ct.App. 2002) (emotional injuries do not constitute "bodily injury" and even if they did, policy limited coverage to per-person limit); Mullen v. Walczak, 262 Wis.2d 708, 664 N.W.2d 76, 81 (2003) ("Under the terms of the policy, any damages sustained by all persons as the result of [the decedent's] death are covered by her `per person' limit. Consequently, the emotional distress suffered by [the insured], solely as the result of witnessing his wife's death, must be compensated out of her `per person' limit, not [the insured's]."); Allstate Ins. Co. v. Clohessy, 32 F.Supp.2d 1333 (M.D.Fla.1998) (emotional distress is not a "bodily injury"); Estate of Gocha v. Shimon, 215 Wis.2d 586, 573 N.W.2d 218, 221 (1997) (bystander emotional distress is not "bodily injury" under the policy); McNeill v. Metropolitan Property & Liability Ins. Co., 420 Mass. 587, 650 N.E.2d 793, 795 (1995) ("plaintiff's emotional distress claim `is a by-product of and entirely dependent upon the bodily injury to his daughter'" and therefore subject to "per person" limit. Also finding that "emotional distress is not a bodily injury."); First Ins. Co. Of Hawai'i, Ltd., v. Lawrence, 77 Hawai`i 2, 881 P.2d 489, 495-504 (1994) (non-witness emotional distress claims are derivative and, therefore, included within the "each person" liability limit); Bowman v. Holcomb, 83 Ohio App.3d 216, 614 N.E.2d 838, 840-41 (1992) (emotional distress is not "bodily injury").

Conversely, the opposite camp, favoring the Defendants' position, concludes that emotional distress claims like those of the...