Anderson Mattress Co., Inc. v. First State Ins. Co.

• Decision Date: 19 July 1993
• Docket Number: No. 30A05-9205-CV-159,30A05-9205-CV-159
• Citation: Anderson Mattress Co., Inc. v. First State Ins. Co., 617 N.E.2d 932 (Ind. App. 1993)
• Parties: ANDERSON MATTRESS COMPANY, INC., Appellant-Plaintiff, v. FIRST STATE INSURANCE COMPANY, Defendant-Appellee Cross-Appellant, v. J.W.F. INSURANCE COMPANIES, INC. d/b/a J.W. Flynn Company, Swett & Crawford, Inc. and Cameron & Colby Company, Inc., Appellees-Defendants.
• Court: Indiana Appellate Court

Page 932

617 N.E.2d 932

ANDERSON MATTRESS COMPANY, INC., Appellant-Plaintiff, v. FIRST STATE INSURANCE COMPANY, Defendant-Appellee Cross-Appellant, v. J.W.F. INSURANCE COMPANIES, INC. d/b/a J.W. Flynn Company,

Swett & Crawford, Inc. and Cameron & Colby

Company, Inc., Appellees-Defendants.

No. 30A05-9205-CV-159.

Court of Appeals of Indiana Fifth District.

July 19, 1993.

Transfer Denied Oct. 12, 1993.

Stephen E. Arthur, V. Samuel Laurin III, Bose McKinney & Evans, Indianapolis, for appellant-plaintiff.

Robert M. Baker, Johnson Smith Densborn, Wright & Heath, Indianapolis, for appellee-defendant Swett & Crawford, Inc.

Michael E. Brown, Jeffrey A. Doty, Kightlinger & Gray, Indianapolis, for appellee-defendant, J.W.F. Insurance Companies, Inc. d/b/a J.W. Flynn Co.

James A. Goodin, Patrick L. Miller, Goodin & Kraege, Indianapolis, for defendant-appellee-cross-appellant, First State Ins. Co.

SHARPNACK, Chief Judge.

The plaintiff, Anderson Mattress Co. (Anderson), filed this action and first sought a declaratory judgment establishing that the policy of insurance which Anderson had procured from defendant First State Insurance Co. (First State) was a blanket coverage policy and not a scheduled coverage policy as asserted by First State. The complaint also alleged in the alternative that defendant J.W.F. Insurance Co., doing business as J.W. Flynn Co., (Flynn) negligently failed to procure blanket insurance for Anderson. Flynn filed an answer in which it named Swett & Crawford, Inc. (Swett) and Cameron & Colby Co. (Cameron) as nonparty defendants. Anderson then amended its complaint to add Swett and Cameron as named defendants and alleged that they also breached a duty to procure blanket coverage for Anderson.

First State, Flynn, and Swett all filed motions for summary judgment. First State's motion contended that it had not breached the contract of insurance because the contract provided scheduled coverage. Flynn's motion contended that it had not breached a duty to procure the correct coverage for Anderson because the policy issued by First State was for blanket coverage as Anderson had requested. Swett's motion agreed with Flynn's that the policy was blanket and that, as a consequence, Swett had breached no duty to Anderson.

The trial court entered judgment on behalf of Flynn and Swett on their respective motions but denied First State judgment on its motion. The court's rulings on the motions made it clear that the court found that the policy issued by First State provided Anderson with blanket coverage.

We reverse the denial of First State's motion for summary judgment and entries of summary judgment in favor of Flynn and Swett and remand this case for further proceedings.

The parties have raised a variety of issues, which we consolidate and restate as follows:

I Was the policy issued by First State a blanket or a specific coverage policy?

II If the policy issued by First State was a specific coverage policy, did Swett breach any duty which it may have owed to Anderson?

III Did Anderson waive its right to appeal the summary judgment in favor of Flynn by failing to make an argument in its initial brief?

IV Does First State have standing to appeal the entry of judgment in favor of Flynn?

V Did Anderson waive any claim against Swett for failing to procure blanket coverage by accepting a policy which Anderson knew or had reason to know was for specific coverage?

VI Was Anderson estopped to claim that Swett violated a duty to procure for it a blanket policy because Anderson accepted a policy that it knew or had reason to know was for specific coverage?

FACTS

Anderson manufactured mattresses at a facility located in the city of Anderson. In 1989 Flynn presented Anderson with a proposal to procure insurance on behalf of Anderson. The proposal stated that Flynn would solicit quotes for blanket coverage. On the basis of this proposal, Flynn prepared an application for insurance for Anderson. The application requested blanket coverage for the Anderson buildings and their contents as well as blanket coverage for loss of business income.

The insurers with which Flynn normally dealt were not willing to insure a mattress factory, ¹ so Flynn had to seek insurers outside its normal market. Flynn retained Swett to seek out an insurer that would be willing to cover the Anderson mattress works.

Swett sought quotes from several carriers using the application that Flynn had prepared earlier. First State responded to the application which Flynn had prepared and Swett had forwarded by submitting a quote to Swett. ² Swett apparently believed that First State was quoting blanket coverage because First State never informed Swett that First State had rejected blanket coverage and was quoting a rate for specific coverage.

Eventually the brokers obtained a policy from First State which was effective from March 1, 1989, through March 1, 1990. After Anderson received the policy, one of its employees called Flynn to make sure that the policy was for blanket coverage. Flynn's representative assured Anderson's employee that the policy provided blanket coverage.

When the time for renewal came, Flynn sent another application to Swett requesting blanket coverage and presented Anderson with a proposal that stated that the brokers would be seeking blanket coverage on Anderson's behalf. Swett again obtained a quote for coverage from First State. Swett maintains that First State never informed it that First State was quoting specific and not blanket coverage.

First State issued a renewal policy that contained provisions substantially similar to those contained in the first policy. When Anderson received the policy in late May or early June of 1990, one of Anderson's representatives called Flynn to confirm that the policy provided blanket coverage. Once again, Flynn's agent stated that the policy provided blanket coverage.

A fire destroyed much of the Anderson factory and attendant facilities on June 8, 1990. The fire also caused a substantial interruption in Anderson's business. Anderson filed a claim with First State seeking payment under the policy. Anderson, assuming that its claim would be adjusted on the basis of blanket coverage, expected to receive $1,865,407.74. First State adjusted the policy on a specific basis, however, and limited the recovery for each scheduled piece of property to the value assigned on the schedule. In accordance with this manner of adjustment, First State paid Anderson $1,329,611.11, some $535,796.63 less than Anderson would have received had the claim been adjusted on the basis of blanket coverage.

ISSUE I

This case stands in an odd posture. Anderson, which at least nominally is the appellant, offers no argument on what is the core issue in this case--whether the policy provided by First State provided blanket or specific coverage. Because the resolution of the remaining issues largely depends on the resolution of this issue, we address the contentions of the parties that do offer argument on this issue first.

First State argues that the trial court erroneously entered summary judgment in favor of Anderson because the insurance agreement between the parties unambiguously provided for specific coverage. In support of this argument, First State quotes 15 Couch on Insurance 2d Sec. 54:83 for the proposition that a schedule of property values in an insurance policy renders the policy coverage specific and not blanket:

"A distinction must be made between a policy which speaks in terms of a lump-sum obligation or value of the property and one which separately schedules different items of property. In the latter case, each separately treated item of property is in effect covered by a separate contract of insurance and the amount recoverable with respect to a loss affecting such property is determined independently of other items of property."

In addition, First State asserts that Indiana precedent comports with this view, citing Vernon Fire and Casualty Co. v. Sharp (1976), 264 Ind. 599, 349 N.E.2d 173.

In Vernon, the insured procured two fire insurance policies, each of which was to insure a prorated share of any fire loss that might occur at Sharp's business. Each of the policies contained a schedule of values for individual items of real and personal property belonging to the business. A fire damaged Sharp's business and caused itemized losses in the amount of $94,108.09. This figure was derived by adding together the losses on each item of property that was damaged by the fire. However, although the total loss was within the total value of the policies, losses on some of the individual pieces of property exceeded the value assigned them in the policy schedules while other pieces of scheduled property suffered no damage. As a consequence, the total value of the loss sustained exceeded the total stated value of those pieces of property which were damaged or destroyed.

The insurer refused to pay the entire amount to which Sharp would have been entitled under blanket coverage, and Sharp filed suit. The trial court awarded Sharp compensatory and punitive damages. The compensatory damage award was supportable only if the policies provided blanket coverage.

The supreme court opinion was authored in part by Justice Hunter and in part by Justice Prentice. Justice Prentice, who authored that portion of the opinion which dealt with the question of whether the policies provided blanket or specific coverage, wrote for the court that, because they separately scheduled values for individual pieces of property, the policies provided specific, and not blanket, coverage:

"However, these were not 'blanket' policies but were 'scheduled' policies, i.e. the property insured was separately scheduled and valued in the contracts. The liability of the insurers under such policies is limited as to each scheduled item, and a portion applying to one item but unused may not be transferred to another item which was...