Beam v. Wausau Ins. Co.

• Citation: 765 N.E.2d 524
• Decision Date: 12 February 2002
• Docket Number: No. 20S03-0202-CV-111.,20S03-0202-CV-111.
• Parties: Steven BEAM, Appellant, (Plaintiff Below), v. WAUSAU INSURANCE CO., Appellee (Defendant Below).
• Court: Supreme Court of Indiana

765 N.E.2d 524

Steven BEAM, Appellant, (Plaintiff Below), v. WAUSAU INSURANCE CO., Appellee (Defendant Below).

No. 20S03-0202-CV-111.

Supreme Court of Indiana.

February 12, 2002.

Edmond W. Foley, South Bend, IN, for Appellant.

Edward L. Murphy, Jr., Diana C. Bauer, Fort Wayne, IN, for Appellee.

ON PETITION TO TRANSFER

BOEHM, Justice.

This case addresses the proper setoff against a personal injury award for payments the claimant receives under worker's compensation. We hold that under the underinsured motorist policy involved here, the setoff is against the amount of damages, not against the policy limits, but where the amount recovered is reduced for the claimant's comparative fault, the reduction is by that percentage of duplicated elements of damage, not the gross sum of worker's compensation benefits to which the worker is entitled irrespective of fault.

Facts and Procedural Background

On August 20, 1993, Steven Beam was driving a semi tractor trailer on Interstate 90 outside Chicago. Beam was severely injured when he swerved the semi off the road to avoid colliding with Amanda Vongsomchith's stalled car in the right driving lane.

As a result of the accident, Beam received payments from various sources. Vongsomchith's liability insurer, Safeway Insurance Company, paid its policy limits of $20,000 to Beam. After deducting this $20,000, Beam's personal automobile insurer, United Farm Bureau Insurance Company, paid Beam $80,000 under his underinsured motorist ("UIM") coverage, which had a limit of $100,000. Beam was driving a vehicle owned by his employer, Fairmont Homes, Inc., in the course of his employment. Fairmont was self-insured for worker's compensation benefits up to $350,000. Fairmont paid Beam the entire amount of his medical expenses of $310,206.56 as a worker's compensation benefit. Finally, Fairmont's excess worker's compensation carrier, Wausau Insurance Company, made disability payments for temporary total disability, temporary partial disability, and permanent partial disability to Beam in the amount of $86,945.14.

In addition to the sources listed above, Fairmont had an automobile liability policy from Wausau that covered Fairmont and the occupants of its vehicles as the "insured," and provided UIM coverage of $1,000,000. Wausau denied UIM coverage to Beam, and Beam brought this suit against Wausau.

Wausau's policy contains the following provisions relevant to its UIM exposure to Beam:

A. COVERAGE

1. We will pay the sums the "insured" is legally entitled to recover as compensatory damages from the owner or driver of an "uninsured motor vehicle" or an "underinsured motor vehicle."

. . .

C. EXCLUSIONS

This insurance does not apply to: ...

2. The direct or indirect benefit of any insurer or self-insurer under any workers compensation, disability benefits or similar law.

. . .

D. LIMIT OF INSURANCE ...

2. The Limit of Insurance under this coverage shall be reduced by all sums paid or payable by or for anyone who is legally responsible, including all sums paid under the Coverage Form's LIABILITY COVERAGE.

3. Any amount payable for damages under this coverage shall be reduced by all sums paid or payable under any workers' compensation, disability benefits or similar law.

Before trial, the parties agreed that the jury would determine only liability and damages, and the propriety of any setoffs for amounts Beam received from other sources would be determined by the court. It was also stipulated that the jury verdict should be reduced by the $20,000 from Vongsomchith's liability insurer and the $80,000 from Beam's UIM policy. The jury allocated fault 55% to Vongsomchith and 45% to Beam, and awarded Beam $701,371 as net damages. The record does not explicitly indicate how the jury arrived at this figure or what it concluded the total damages to be. The trial court awarded setoffs against the jury verdict of $701,371 for (1) the amount Beam received from Vongsomchith's insurer ($20,000), (2) Beam's UIM coverage ($80,000), (3) the worker's compensation medical benefits from Fairmont ($310,206.56), and (4) the worker's compensation disability payment from Wausau ($86,945.14). The recovery was thus reduced to $204,219.30.

Beam appealed, claiming the trial court erred when it subtracted these amounts from his jury award of $701,371. The Court of Appeals rejected Beam's arguments and affirmed the trial court decision. Beam v. Wausau Ins. Co., 743 N.E.2d 1188 (Ind.Ct.App.2001).

In this appeal, Beam contends: (1) the Court of Appeals erred by not following a 1994 Court of Appeals case which held similar policy language to be ambiguous and therefore to be construed in favor of the insured; (2) the amount of worker's compensation subtracted from the jury award was incorrect because the jury award was reduced by Beam's 45% fault allocation; (3) the Court of Appeals erred in reviewing a point of law under a clearly erroneous standard rather than de novo; and (4) the Court of Appeals wrongly applied the invited error doctrine in addressing the appropriate method of calculating setoffs of the payments received from other insurance carriers.

I. Standard of Review

Beam argues that the Court of Appeals erred in reviewing the setoffs under the "clearly erroneous" standard set forth in Trial Rule 52(A). Beam contends that Rule 52(A) pertains to cases tried without a jury, and because this case was tried to a jury, Rule 52(A) has no applicability to this case. We disagree. Although the issues of liability and damages were tried to a jury, the issue involving reductions of the jury verdict was tried by the court without a jury. In coming to its decision, the trial court in this case made special findings of fact and conclusions of law. As to the findings of fact, the Court of Appeals properly applied a clearly erroneous standard. Conclusions of law, however, are reviewed de novo. Finally,

A "clearly erroneous" judgment can result from application of the wrong legal standard to properly-found facts, and in that situation we do not defer to the trial court. We are not bound by the trial court's characterization of its results as "findings of fact" or "conclusions of law." Rather, we look past these labels to the substance of the judgment and will review a legal conclusion as such even if the judgment wrongly classifies it as a finding of fact.

State v. Van Cleave, 674 N.E.2d 1293, 1296 (Ind.1996).

II. Wausau's Policy Language is Not Ambiguous

We address Beam's first argument to resolve the conflicting Court of Appeals' decisions reaching opposite conclusions as to whether the policy language in this case is ambiguous.

Although some "special rules of construction of insurance contracts have been developed due to the disparity in bargaining power between insurers and insured's, if a contract is clear and unambiguous, the language therein must be given its plain meaning." Allstate Ins. Co. v. Boles, 481 N.E.2d 1096, 1101 (Ind.1985). On the other hand, "`[w]here there is ambiguity, insurance policies are to be construed strictly against the insurer' and the policy language is viewed from the standpoint of the insured." Bosecker v. Westfield Ins. Co., 724 N.E.2d 241, 244 (Ind. 2000) (quoting Am. States Ins. Co. v. Kiger, 662 N.E.2d 945, 947 (Ind.1996)). A contract will be found to be ambiguous only if reasonable persons would differ as to the meaning of its terms. Ind.-Ky. Elec. Corp. v. Green, 476 N.E.2d 141, 145 (Ind.Ct.App.1985). In insurance policies, "an ambiguity is not affirmatively established simply because controversy exists and one party asserts an interpretation contrary to that asserted by the opposing party." Auto. Underwriters, Inc. v. Hitch, 169 Ind.App. 453, 457, 349 N.E.2d 271, 275 (1976).

The limitation under paragraph D.2 in Wausau's UIM coverage expressly reduces its limits by amounts from other sources. Paragraph 3 reduces "any amount payable for damages" by "sums paid or payable under any workers' compensation." Beam contends that the phrase "[a]ny amount payable for damages under this coverage" has two interpretations and can either be read to refer to a reduction from the total damages or from the policy limits. Based on this claimed ambiguity, Beam argues that this provision reduces Wausau's policy limit of $1,000,000, not Beam's damage award amount of $701,371, by the amount of his worker's compensation benefits. In 1992, this Court found similar policy language to be ambiguous and, as a result, construed it in favor of the insured. Tate v. Secura Ins., 587 N.E.2d 665 (Ind.1992).¹ In Tate, the total award was greater than the available insurance and the court construed the policy most favorably to the insured. As a result, the "amount payable" to be reduced was held to be the amount of the damages, not the policy limits. Id. at 667-68. That same year, this Court held similar, but distinguishable, policy language to be unambiguous and interpreted the language to refer to policy limits rather than total damages the insured incurred. Am. Econ. Ins. Co. v. Motorists Mut. Ins. Co., 605 N.E.2d 162 (Ind.1992).² Since these holdings, two lines of Court of Appeals' cases involving reduction policy language have evolved, although in many cases the policy language varies and in some instances the courts have found the peculiar language or other language of the policy relevant to the case. One line holds similar language ambiguous and, as a result, construes the policy language in favor of the insured.³ The other line of cases holds the language unambiguous, but the cases differ on whether the language provides for reductions from the total damages or the policy limit.⁴

Beam argues that the Court of Appeals erred when it declined to follow Transcon. Technical Serv., Inc. v. Allen, 642 N.E.2d 981 (Ind.Ct.App.1994),trans. denied. In Transcontinental, the plaintiff, Allen, was injured by an automobile in the course of his employment and incurred damages in excess of $500,000. Id....