American Economy Ins. Co. v. Motorists Mut. Ins. Co.

• Decision Date: 31 December 1992
• Docket Number: No. 47S05-9212-CV-1041,47S05-9212-CV-1041
• Citation: 605 N.E.2d 162
• Parties: AMERICAN ECONOMY INSURANCE COMPANY, Appellant, (Defendant, Cross-Claimant and Counterclaimant Below), v. MOTORISTS MUTUAL INSURANCE COMPANY, Appellant, (Defendant, Cross-Defendant Below), and Kimberly Natalie and Michael Natalie, Appellee, (Plaintiffs, Counterdefendants Below).
• Court: Indiana Supreme Court

Page 162

605 N.E.2d 162

AMERICAN ECONOMY INSURANCE COMPANY, Appellant, (Defendant, Cross-Claimant and Counterclaimant Below), v. MOTORISTS MUTUAL INSURANCE COMPANY, Appellant, (Defendant,

Cross-Defendant Below),

and

Kimberly Natalie and Michael Natalie, Appellee, (Plaintiffs,

Counterdefendants Below).

No. 47S05-9212-CV-1041.

Supreme Court of Indiana.

Dec. 31, 1992.

Danford R. Due, Charles F. Miller, Jr., Stewart Due Miller & Pugh, Indianapolis, for appellant, American Economy Ins. Co.

Don M. Robertson, James L. Whitlatch, Bunger Robertson Kelley & Steger, Bloomington, for appellant, Motorists Mut. Ins. Co.

Kenneth K. Nunn, Betsy Greene, Nunn, Kelley & Greene, Bloomington, for appellees Kimberly and Michael Natalie.

DICKSON, Justice.

In American Economy Ins. Co. v. Motorists Mutual Ins. Co. (1992), Ind.App., 593 N.E.2d 1242, the Court of Appeals reversed the trial court's declaratory judgment and sought to provide guidance on remand as to the application of our intervening decision in Tate v. Secura Insurance (1992), Ind., 587 N.E.2d 665. ¹ Appellant American Economy Insurance Co. (American) contends that the Court of Appeals misapplies Tate. We grant transfer.

The present case arose out of an automobile accident involving Kimberly Natalie, an insured of Motorists Mutual Insurance Co. (Motorists) who was driving a borrowed automobile insured by American. The other driver, allegedly at fault, was insured by Vernon Fire and Casualty Insurance Co. (Vernon) which paid Natalie its limits of liability coverage in the amount of $25,000. Natalie then filed suit against American for that portion of her injuries in excess of Vernon's payment, subsequently amending her complaint to add Motorists as a defendant.

At issue in Tate was imprecise language contained in an automobile insurance policy issued by Secura regarding reductions in amounts payable under its uninsured motorists coverage. Relevant portions of the Secura policy provided that "[a]mounts payable will be reduced by ... [a]mounts paid" to the insured or by or on behalf of the tortfeasor. We held in Tate that, because "amounts payable" was a phrase not clearly defined in the policy, Secura was bound by the plain and ordinary meaning of its words as viewed from the standpoint of the insured. As a result, we construed "amounts payable" to refer not to coverage limits, but to "such bodily injury damages as its insured is legally entitled to recover from the operator of an underinsured motor vehicle." Tate at 668.

Based upon our construction of Secura's policy terms, we found that it provided underinsured motorists coverage for bodily injury damages to the extent these damages exceed the tortfeasor's liability coverage, up to the limits of the insured's own underinsured motorists coverage. Id. at 669. In the case before us, however, the policy language utilized by American and Motorists is clearly distinguishable from that embodied in the Secura policy.

Unlike Secura, American provides an express limitation of its liability in its Uninsured Motorists Insurance Endorsement, Section E, OUR LIMIT OF LIABILITY: ²

2. Any amount payable under this insurance shall be reduced by:

... b. All sums paid by or for anyone who is legally responsible, including all sums paid under the policy's LIABILITY INSURANCE.

R. 78. ³

American contends that "amounts payable" refers to its uninsured motorists limits because its reduction clause, supra, is located within its limits of liability section. American further urges that "amounts payable" be construed as uninsured motorists limits because the limits of the liability section is found in the endorsement immediately following a policy section defining uninsured motorists limits as the limits shown in the Declarations portion of the policy. R. 76.

Similarly, in contrast to Secura, the Motorists policy also articulates a specific limitation of liability in a reduction clause of its Uninsured Motorists Coverage portion of a policy endorsement, LIMIT OF LIABILITY:

Any amounts otherwise payable for damages under this coverage shall be reduced by all sums:

1. Paid because of the bodily injury or property damage by or on behalf of persons or organizations who may be legally responsible.

R. 88. ⁴

Motorists, like American, contends that "amounts payable" means its uninsured motorists limits because its reduction clause is found within the LIMIT OF LIABILITY section. Motorists also argues that its LIMITS OF LIABILITY provision specifically underscores its definition of "amounts payable" as uninsured motorists limits through its statement that

The limit of liability shown in the Declarations for this coverage is our maximum limit of liability for all damages resulting from any one accident. This is the most we will pay....

Id.

We find that "amounts payable" under the Secura policy in Tate--the total bodily injury damages legally recoverable by the insured--differs significantly from the more clearly delineated provisions of American and Motorists which express "amounts payable" as a sum limited to uninsured motorists coverage...