American Family Mut. Ins. Co. v. Dye

• Decision Date: 31 May 1994
• Docket Number: No. 22A05-9310-CV-383,22A05-9310-CV-383
• Citation: 634 N.E.2d 844
• Parties: AMERICAN FAMILY MUTUAL INSURANCE COMPANY and Ira B. Rockenbach, Appellants-Defendants, v. James E. DYE, Appellee-Plaintiff.
• Court: Indiana Appellate Court

Page 844

634 N.E.2d 844

AMERICAN FAMILY MUTUAL INSURANCE COMPANY and Ira B Rockenbach, Appellants-Defendants, v. James E. DYE, Appellee-Plaintiff.

No. 22A05-9310-CV-383.

Court of Appeals of Indiana First District.

May 31, 1994.

Rehearing Denied Aug. 12, 1994.

Transfer Denied Dec. 8, 1994.

Stephen Hensleigh Thomas, Statham, Johnson & McCray, Evansville, for appellants-defendants.

C. Gregory Fifer, Voelker Law Office, Jeffersonville, for appellee-plaintiff.

STATEMENT OF THE CASE

NAJAM, Judge.

American Family Mutual Insurance Company and Ira B. Rockenbach appeal from the denial of their cross-motions ¹ for summary judgment and from the partial summary judgment entered for the insured, James E. Dye, in Dye's complaint for declaratory relief, bad faith and breach of fiduciary duty. ² Dye's automobile policy with American Family did not provide underinsured motorist coverage. Dye sought a determination that American Family was required to make underinsured motorist coverage available to him at financial responsibility limits and alleged that Rockenbach, his American Family agent, breached a fiduciary duty to inform him of the availability of such coverage. The trial court granted Dye's partial motion for summary judgment and declared underinsured coverage in the policies, but the court denied both American Family and Rockenbach's cross motions.

We reverse.

ISSUES

1. Whether, as a matter of law, American Family was required to make underinsured motorist coverage available to Dye in his policy first issued before January 1, 1988.

2. Whether issues of material fact remain on Dye's claim for breach of fiduciary duty by American Family's agent, Rockenbach.

FACTS

Dye became an insured of American Family in 1983 when he first purchased motor vehicle insurance and other insurance through Ira B. Rockenbach, an American Family agent in Floyds Knobs, Indiana. Rockenbach handled all of Dye's insurance needs in the ensuing years. On August 10, 1991, Dye and his wife were traveling in Alabama when their vehicle was struck by an underinsured Alabama vehicle. Dye's wife was killed and he and his minor children were injured in the accident.

Dye collected the policy limits of $40,000.00 from the Alabama driver's insurer, and Dye then made a claim to recover underinsured motorist coverage under his automobile policy with American Family. American Family denied Dye's claim on the ground that the policy did not provide such coverage. Dye filed suit against American Family and Rockenbach (1) seeking a declaration that American Family owed him a duty to provide underinsured motorist coverage; (2) alleging that American Family denied his claim in bad faith; and (3) alleging that Rockenbach breached his fiduciary duty to Dye to inform him that such coverage was available.

DISCUSSION AND DECISION

Standard of Review

In reviewing the trial court's ruling on a motion for summary judgment, this court applies the same standard applicable in the trial court. See O'Donnell v. American Employers Insurance Co. (1993), Ind.App., 622 N.E.2d 570, 572, trans. denied. Summary judgment may be granted only where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). Cross motions for summary judgment do not alter the standard for granting summary judgment; rather, when reviewing cross motions, our inquiry remains whether a genuine issue of material fact exists which requires a trial on the merits. See State Board of Tax Commissioners v. New Energy Co. (1992), Ind.App., 585 N.E.2d 38, 39, trans. denied; Skaggs v. Merchants Retail Credit Association, Inc. (1988), Ind.App., 519 N.E.2d 202, 203.

Issue One: Policies First Issued Before January 1, 1988

This appeal concerns the application of Indiana's underinsured motorist statute, Indiana Code § 27-7-5-2, to those insureds whose policies were first issued before January 1, 1988, the effective date of the statute. The statute provides that for policies first issued after December 31, 1987, insurers "shall make available" to their insureds underinsured motorist coverage in limits equal to the insured's limits of liability coverage in the policy. IND.CODE § 27-7-5-2(a). Here, the trial court distinguished prior decisions of this court interpreting the application of the underinsured motorist statute to policies, such as Dye's, which were first issued before January 1, 1988. The trial court found that the underinsured motorist statute required American Family to make such coverage available to Dye and that, if the statute did not, it would violate both the Indiana and federal constitutional guarantees of equal protection of the laws by establishing arbitrary and unreasonable classifications among insured drivers.

American Family argues that our prior decisions, and the plain language of the underinsured motorist statute, control in the present case. Accordingly, American Family contends that it was not required to make underinsured motorist coverage available to Dye for his policy first issued prior to the effective date of the statute and that the statute does not violate equal protection.

Dye accurately characterizes this appeal as a request that we revisit the application of the underinsured motorist statute to policies first issued prior to 1988, see Brief of Appellee at 4, but we need not reconsider this issue, which has already been decided by our courts. In Millikan v. United States Fidelity and Guaranty Co. (1993), Ind.App., 619 N.E.2d 948, trans. denied, this court expressly held that an insurer was not required to offer underinsured motorist coverage to an insured whose policy was first issued prior to January 1, 1988. Id. at 951. The insurer in Millikan first issued the insured's automobile policies prior to 1985 and subsequently renewed those policies in September of 1988. Id. at 950-51. Therefore, we affirmed the trial court's entry of summary judgment for the insurer which had denied a request to declare underinsured motorist coverage in the policies. Id. at 951.

Dye does not dispute that his policy was first issued prior to 1988 and was merely renewed after the effective date of the underinsured motorist statute. See id. ("renewal policy" is replacement policy issued at end of a policy period and not first issuance of policy). Instead, Dye relies upon the dissenting opinion in Millikan which construed the statute to mean that insurers must offer underinsured motorist coverage to insureds "as soon as [their] policies came up for renewal" after December 31, 1987. Id. at 952.

However, we believe the statute is explicit and follow the majority view of this court that policies merely renewed after January 1, 1988, do not receive the benefit of the 1987 amendments to Indiana Code § 27-7-5-2, including the requirement that insurers make underinsured coverage available to insureds. See Millikan, 619 N.E.2d at 950-51 (renewal policy not entitled to underinsured coverage); Inman v. Farm Bureau Insurance (1992), Ind.App., 584 N.E.2d 567, 568-69, trans. denied (1987 amendments, which mandate increase in uninsured motorist coverage from financial responsibility limits to bodily injury limits of insured's liability coverage, did not apply to renewal policy); United Farm Bureau Mutual Insurance Co. v. Lowe (1991), Ind.App., 583 N.E.2d 164, 169, trans. denied (where policy first issued prior to 1987 amendments, insurer which gratuitously provided underinsured motorist coverage to insured at financial responsibility levels was not required to provide such coverage at policy's bodily injury limits). Thus, Dye was not entitled to underinsured motorist coverage in his policy first issued prior to January 1, 1988.

Dye also requests that we revisit whether the underinsured motorist statute violates the equal protection rights of insureds in Indiana. Again, this court has previously decided that question and has held that the statute does not violate equal protection. ³ See Lowe, 583 N.E.2d at 169 (statute does not divide insureds into arbitrary and unreasonable classes because insureds whose policies were first issued prior to 1987 amendments may request such underinsured coverage). Therefore, we conclude that the trial court erred when it found that American Family owed Dye a duty to provide him with underinsured coverage at financial responsibility limits and that the underinsured motorist statute violates Dye's right to equal protection.

Issue Two: Breach of Agent's Fiduciary Duty

Dye alleged in Count V of his complaint that American Family's agent, Ira B. Rockenbach, breached a fiduciary duty he owed Dye by not notifying him that his insurance coverage was inadequate. Dye maintains that genuine issues of material fact preclude summary judgment on this count. The trial court agreed and denied Rockenbach's cross motion for summary judgment on that claim.

However, in his cross-motion, Rockenbach moved for summary judgment and argued that because American Family was not required by law to offer underinsured motorist coverage to Dye, he also owed Dye no duty, as a matter of law, to "effect" such coverage. Brief of Appellants at 14. Rockenbach's argument assumes that any duty he owed to the insured, as an agent, is precisely coextensive with the duty American Family owed to the insured. We disagree.

We construe Count V of Dye's complaint as a claim for breach of fiduciary duty arising out of a negligent failure to advise. An insurance agent who undertakes to procure insurance for another is an agent of the insured and owes the insured a general duty to exercise reasonable care, skill and good faith diligence in obtaining insurance. Craven v. State Farm Mutual Automobile Insurance Co. (1992), Ind.App., 588 N.E.2d 1294, 1296. However, the agent's duty may extend to the provision of advice "only upon a showing of an intimate long term relationship between the parties or some other special...