Allstate Ins. Co. v. Boles

• Decision Date: 23 August 1985
• Docket Number: No. 585S198,585S198
• Citation: 481 N.E.2d 1096
• Parties: ALLSTATE INSURANCE COMPANY, Plaintiff-Appellee, v. Cathy BOLES and Wilbur Boles, Defendants-Appellants.
• Court: Indiana Supreme Court

Page 1096

481 N.E.2d 1096

ALLSTATE INSURANCE COMPANY, Plaintiff-Appellee, v. Cathy BOLES and Wilbur Boles, Defendants-Appellants.

No. 585S198.

Supreme Court of Indiana.

Aug. 23, 1985.

John F. Townsend, Jr., Townsend, Hovde, Townsend & Montross, Indianapolis, for defendants-appellants.

John W. Hammel, Yarling, Robinson, Hammel & Lamb, Indianapolis, for plaintiff-appellee.

PIVARNIK, Justice.

This cause comes to us on a certification of a question of state law from the United States Court of Appeals for the Seventh Circuit. This Court has jurisdiction to answer said certified question pursuant to Ind.R.App.P. 15(O).

Defendants-Appellants Wilbur Boles and Cathy Boles were married on December 10, 1972, and have resided together as husband and wife since that date. From September, 1981 until August, 1983 the defendants resided together near the City of Indianapolis, Indiana.

Plaintiff-Appellee, Allstate Insurance Company, issued Allstate Automobile Policy number 12913540 to Wilbur Boles, effective from August 10, 1981, through February 10, 1982. On November 12, 1981, Wilbur Boles, while operating his automobile covered in the Allstate policy, struck a pine tree lying in the road. Cathy Boles, a passenger at the time, suffered injuries to her person as a result of the collision.

On May 17, 1983, Cathy Boles filed a Complaint for Damages in the Marion Superior Court, Civil Division. In her complaint, she claimed permanent injuries, loss of income, and medical expenses, totalling fifty thousand ($50,000) dollars in damages.

On June 21, 1983, Allstate commenced a declaratory judgment action in the United States District Court for the Southern District of Indiana. An amended complaint was filed on June 24, 1983, in which Allstate sought five declarations. Allstate sought, first, a declaration that the Policy does not provide any coverage for any claims of Cathy Boles against Wilbur Boles arising out of the November 12th accident. Second, Allstate sought a declaration that the Policy does not provide any coverage based upon its uninsured motorist provisions for claims for injuries and losses arising out of the accident. Allstate also sought a declaration that it is not obligated under the Policy to defend, assist in defending or expend any money in defending Mr. Boles against the claims by Mrs. Boles arising out of the accident. The fourth declaration Allstate sought was that it is under no duty to compromise, settle or expend any money in attempting to compromise or to settle any claims asserted by Mrs. Boles against Mr. Boles arising out of the accident. Finally, Allstate sought a declaration that it is under no duty to pay or satisfy any judgment involving any claim asserted by Mrs. Boles against Mr. Boles for damages arising out of the accident.

On November 16, 1983, Allstate moved for summary judgment, by asserting the Policy exclusion against coverage for injuries sustained by persons related to the insured by blood, marriage, or adoption, residing in his household. 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 the original).

Allstate further asserted that Mrs. Boles' claims were not covered by the uninsured motorist provision of the Policy. In response, Mrs. Boles conceded that Mr. Boles was not an uninsured motorist, and did not contend that the uninsured motorist provisions of the Policy were involved in this action. However, Mrs. Boles asserted that the household exclusion provision of the Policy is against the public policy of the State of Indiana.

On July 5, 1984, the district court granted summary judgment for Allstate on all the issues of the amended complaint. Allstate Insurance Co. v. Boles, 587 F.Supp. 807 (S.D.Ind.1984). Mrs. Boles appealed the decision, renewing her argument that the household exclusion provision of the Policy is contrary to the public policy of the State of Indiana, as evidenced by statute and case law. The Seventh Circuit Court of Appeals found that there were no clear controlling precedents in the decisions of the Supreme Court of Indiana, nor any controlling statutes determining whether a household exclusion provision, at least when applied to preclude liability coverage of injuries sustained by the spouse of the insured, is contrary to the public policy of Indiana. Accordingly, the Seventh Circuit Court of Appeals certified the following question to this Court:

"Is a household exclusion provision of an automobile liability insurance policy contrary to the public policy of Indiana, as expressed in statute or case law, when applied to preclude liability coverage of injuries sustained by the spouse of the insured?"

This Court is of the opinion that the insurance policy provision commonly referred to as the "household exclusion clause" does not contravene any public policy of Indiana, explicitly or implicitly expressed in case or statutory law. Accordingly, the household exclusion clause in insurance contracts are valid and enforceable such that it may preclude liability coverage of injuries sustained by the spouse of an insured.

Insurance companies are free to limit their liability in a manner not inconsistent with public policy as reflected by case or statutory law. Evans v. Nat'l Life Acc. Ins. Co., (1984) Ind.App., 467 N.E.2d 1216, reh. denied. If a plainly expressed exception, exclusion or limitation in an insurance policy is not contrary to public policy, it is entitled to construction and enforcement as expressed. Id. The insured parties, involved in the suit which has given rise to the certification of the question now before us, argue the household exclusion clause contravenes public policy expressed, implicitly or explicitly, in Brooks v. Robinson, (1972) 259 Ind. 16, 284 N.E.2d 794 and three motor vehicle statutes. The motor vehicle statutes are as follows: the Uninsured Motorists Coverage Statute, Ind.Code Sec. 27-7-5-2, et seq. (Burns Supp.1985); Liability Insurance Policies--Prohibitions--Exclusions from coverage as between spouses, Ind.Code Sec. 27-1-13-7 (Burns Supp.1985); and the Safety--Responsibility and Driver Improvement Act., Ind.Code Sec. 9-2-1-1, et seq. (Burns Repl.1980). However, as will be seen, the household exclusion clause does not contravene any public policy underlying the above stated law.

In Brooks v. Robinson, supra, this Court abrogated the common law doctrine of interspousal immunity in tort actions. Our rationale for doing so was that the public policy supporting interspousal immunity was no longer sound. In Brooks, we reviewed the two facets of public policy for which the doctrine of interspousal immunity was created. The first public policy concern was that tort actions between husband and wife would tend to disrupt the peace and harmony of the marriage; the second concern was that such actions would tend to promote fraud, collusion and trivial litigation. In rejecting both concerns as no longer overriding societal concerns to justify the retention of interspousal immunity, we noted the law had evolved to permit spouses to sue one another in actions of ejectment, partition and contract. We determined an action in tort would disrupt the tranquility of the marital state to no greater degree than these other actions giving recognition to the overriding need for courts to consider spouses' rights. We also found that the argument that abrogation of interspousal immunity would promote fraud, collusion and trivial litigation was no longer sound policy for closing the courtroom doors to spouses and leaving "the injured to suffer his loss and the wrongdoer to escape his liability." Id. at 21, 284 N.E.2d at 796. We concluded as follows:

"To adopt such a view requires the blanket assumption that our court system is so ill-fitted to deal with such litigation that the only reasonable alternative to allowing husband-wife tort litigation is to summarily deny all relief to this class of litigants. It should be noted that this 'reasonable alternative' is absolutely contrary to the spirit of our legal system--namely, an injured party may seek redress for his injuries in our courts."

Id. at 21, 284 N.E.2d at 796-797.

However, our holding in Brooks dealt strictly with the right or ability of one spouse to sue the other in tort. It did not, in any manner, deal with the ability of a successful spouse to satisfy a judgment. We are now confronted with whether the right of a spouse to sue another spouse in tort should supercede the latter spouse's right to freely contract with an insurance company. We think not and agree with the following rationale stated by the Idaho Supreme Court in Porter v. Farmers Insurance Co., (1981) 102 Idaho 132, 627 P.2d 311, when that Court was confronted with this same issue:

"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."

We finalized our opinion in Brooks by stating the abrogation of interspousal immunity reflects the letter and spirit of Article 1 Sec. 12 of the Constitution of Indiana which provides:

"All courts shall be open; and every man, for injury done to him in his person, property, or reputation, shall have remedy by due course of law. Justice shall be administered freely, and without purchase; completely, and without denial; speedily, and without delay."

In Brooks we first...