American Family Life Assur. Co. v. Russell

Decision Date26 October 1998
Docket NumberNo. 84A05-9711-CV-494,84A05-9711-CV-494
Citation700 N.E.2d 1174
PartiesAMERICAN FAMILY LIFE ASSURANCE COMPANY, Appellant-Defendant, v. Mary RUSSELL, Appellee-Plaintiff.
CourtIndiana Appellate Court
OPINION

DARDEN, Judge.

STATEMENT OF THE CASE

Mary Russell filed a breach of contract action against American Family Life Assurance Company ("AFLAC"), seeking benefits under an accidental death insurance policy and punitive damages. AFLAC appeals from an order of the trial court (1) denying its motion for summary judgment on Russell's breach of contract claim, and (2) entering judgment in favor of Russell. Russell cross appeals the trial court's entry of partial summary judgment in favor of AFLAC on her request for punitive damages.

We affirm.

ISSUES

I. Whether the trial court properly denied AFLAC's motion for summary judgment and entered summary judgment in favor of Russell upon Russell's claim for accidental death benefits.

II. Whether a genuine issue of material fact exists precluding partial summary judgment on Russell's claim for punitive damages.

STATEMENT OF THE FACTS

On June 25, 1996, at approximately 4:30 a.m., Charles Simmons was struck by a train approximately 500 feet north of 16th and Ash Streets in Terre Haute, Indiana. Apparently, no witnesses were at the scene to observe the train strike Simmons. 1

A Terre Haute police officer arrived at the scene shortly after the accident and noticed a strong odor of an alcoholic beverage from Simmons' breath. Simmons was transported to Union Hospital where he was pronounced dead shortly after 6:00 A.M. According to the death certificate issued by the Vigo County Health Department, the injury occurred when Simmons passed out on railroad tracks and was struck by the train. 2 Simmons' blood alcohol content was determined to be .326. The Vigo County coroner opined that the immediate cause of death as "blunt force trauma, head and chest." (R. 75). The coroner also found that acute ethanol intoxication was a condition contributing to Simmons' death.

At the time of the accident, Simmons owned an accidental death insurance policy issued by AFLAC which named his sister, Mary Russell, as the sole beneficiary. The policy provided benefits in the amount of $12,000 for accidental death arising from accidents other than common carrier and motorized vehicle accidents. The policy issued to Simmons contained the following exclusion:

We will not pay benefits for an accident that is caused by or occurs as a result of a covered person:

* * * * *

Participating in any activity or event, including the operation of a vehicle, while intoxicated (Intoxicated means that condition as defined by the law of the jurisdiction in which the accident occurred)....

(R. 16).

Russell filed her claim with AFLAC seeking benefits under the policy. In response, AFLAC issued a letter to Russell denying coverage based on the aforementioned exclusionary provision of the policy. Russell then instituted this action against AFLAC to recover the accidental death benefits. Russell also sought punitive damages, alleging that AFLAC's "conduct in denying her claim was in bad faith since no just cause existed to deny said claim." (R. 5).

AFLAC filed a motion for summary judgment claiming that it was entitled to judgment as a matter of law under the exclusion provision of the policy and that Russell was not entitled to punitive damages. After a hearing, the trial court denied AFLAC's summary judgment motion and entered partial summary judgment in favor of Russell on Russell's breach of contract claim. However, the trial court entered partial summary judgment for AFLAC on Russell's claim for punitive damages. Both parties appeal.

DECISION
Standard of Review

The standard of review of a summary judgment is well-established. While the party losing in the trial court must persuade this court that the trial court's decision was erroneous, this court applies the same standard as does the trial court. USA Life One Ins. Co. v. Nuckolls, 682 N.E.2d 534, 537 (Ind.1997). We do not weigh the evidence designated by the parties; instead, we liberally construe the evidence in the light most favorable to the non-moving party. Id. Summary judgment is appropriate only if the pleadings and evidence show both the absence of a genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C); Butler v. City of Indianapolis, 668 N.E.2d 1227, 1228 (Ind.1996). Where material facts conflict, or undisputed facts lead to conflicting material inferences, summary judgment is inappropriate. Id.

I. American Family's Appeal--Accidental Death Policy Benefits

AFLAC contends that the undisputed facts preclude Russell from receiving any benefits under the accidental death benefits policy owned by Simmons, and, therefore, the trial court erred by denying AFLAC's motion for summary judgment and entering partial summary judgment for Russell. Specifically, AFLAC contends that because it is undisputed that Simmons was intoxicated at the time of his death, his death falls within the plain language of the policy exclusion, which provides in pertinent part:

We will not pay benefits for an accident that is caused by or occurs as a result of a covered person:

* * * * *

Participating in any activity or event, including the operation of a vehicle, while ... intoxicated....

(R. 16).

Under Indiana law, a contract for insurance is subject to the same rules of interpretation as other contracts. Nuckolls, 682 N.E.2d at 537-38. The interpretation is primarily a question of law for the court, Tate v. Secura Ins., 587 N.E.2d 665, 668 (Ind.1992), and it is therefore a question which is particularly well-suited for disposition by summary judgment. Stevenson v. Hamilton Mut. Ins. Co., 672 N.E.2d 467, 471 (Ind.Ct.App.1996), trans. denied. Although ambiguities are construed in favor of the insured, clear and unambiguous policy language must be given its plain and ordinary meaning. Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664, 667 (Ind.1997). Failure to define terms in an insurance policy does not necessarily make it ambiguous. Id. Rather, an ambiguity exists where the provision is susceptible to more than one reasonable interpretation. Id.

Generally, insurers are free to limit liability in any manner not inconsistent with public policy, and an unambiguous exclusionary clause is ordinarily entitled to enforcement. Erie Ins. Co. v. Adams, 674 N.E.2d 1039, 1041 (Ind.Ct.App.1997), trans. denied. However, exceptions, limitations and exclusions must be plainly expressed in the policy. Id. The exclusionary clause must clearly and unmistakably bring within its scope the particular act or omission that will bring the exclusion into play, and any doubts to the coverage under the policy shall be construed against the insurer to further the policy's basic purpose of indemnity. Id.; see also Nuckolls, 682 N.E.2d at 538. This strict construction against the insurer is "driven by the fact that the insurer drafts the policy and foists its terms upon the customer." Stevenson, 672 N.E.2d at 471 (citation omitted).

In the present case, both parties agree that the language in the exclusion provision is clear and unambiguous, but dispute the applicability of the provision to the undisputed facts. AFLAC contends that the exclusion is applicable "because Simmons was legally intoxicated at the time of his accidental death." Appellant's Brief, p. 4. AFLAC argues that its evident intention was "to protect itself from accidental death claims resulting from a covered person's own reckless acts" and "to nullify benefits when an insured's accidental death was related to voluntary intoxication." Id., at 8, 9.

As AFLAC acknowledges, however, the exclusion provision only applies if 1) Simmons' death resulted from or was caused by, 2) participating in an activity or event, and 3) while intoxicated as defined by Indiana law. AFLAC's interpretation renders the requirements that the insured's death be caused by or the result of "participating in an activity or event" virtually meaningless. This court cannot ignore the plain words of an insurance contract, Farthing v. Life Ins. Co. of N. America, 500 N.E.2d 767, 772 (Ind.Ct.App.1986), and we will make all attempts to construe the language in a contract so as not to render any words, phrases, or terms ineffective or meaningless. Bicknell Minerals, Inc. v. Tilly, 570 N.E.2d 1307, 1316 (Ind.Ct.App.1991). Participate means "to take part" or "to have a part or share in something." Webster's Ninth New Collegiate Dictionary 858 (1989). An activity is the state or condition of being active. Id. at 54. An event is defined as an "occurrence" or "something that happens." Id. at 430. Accordingly, the exclusion provision applies only if the insured was taking part in some action or occurrence while legally intoxicated which caused or resulted in his death. We find that AFLAC has not shown that the exclusionary provision at issue clearly and unmistakably bring within its scope the factual circumstances of this case.

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