Buckeye State Mut. Ins. Co. v. Roe
| Decision Date | 18 December 2013 |
| Docket Number | No. 1:12-CV-411-PPS,1:12-CV-411-PPS |
| Parties | BUCKEYE STATE MUTUAL INSURANCE COMPANY, Plaintiff, v. PHIL ROE and JANET ROE, Defendants. |
| Court | U.S. District Court — Northern District of Indiana |
This case arises out of a terrible tragedy, but has since reduced to a single, narrow legal issue. Phil and Janet Roe lost their son Matthew in a car accident in 2011. In the aftermath of the accident, the Roes were able to collect benefits from all applicable insurance policies save one, an umbrella policy issued to them by Buckeye State Mutual Insurance. Buckeye acknowledges the Roes are entitled to coverage under the policy, but disagrees with the Roes about the amount of money the Roes are entitled to. The underinsured motorist provision of the Buckeye policy provides that Buckeye will pay damages that the Roes are "legally entitled to recover" from the uninsured driver [DE 22-4 at 22]. Buckeye filed this declaratory judgment action seeking a declaration that Indiana law governs the Roes' claim for benefits under the policy, or, in other words, that they only have to pay what the Roes are entitled to recover under Indiana law [DE 1]. The Roes filed a cross-claim seeking a declaration that Buckeye is required to pay the damages they are entitled to under Alabama law [DE 7]. Both parties have moved for summary judgment on their claims [DE 21; DE 23]. Because I agree with the Roes that Alabama law controls, Buckeye's motion for summary judgment [DE 21] is DENIED and the Roes' cross-motion for summary judgment [DE 23] is GRANTED.
The parties agree on all of the relevant facts [DE 23 at 1]. On March 26, 2011 Matthew Roe, the Roes' teenage son, was a passenger in a friend's car, returning home to Indiana from a spring break trip to Florida. While Matthew and his friends were traveling on I-65 through Alabama, another driver crossed the highway median, striking the car head-on and killing Matthew. The other driver, an Alabama resident, also died in the accident [DE 22 at 3].
At the time of the accident, the Roes were insured by Buckeye, an Ohio-based insurance company. The Roes had two policies with Buckeye, an automobile policy and an umbrella policy. The umbrella policy provides for $2 million in excess underinsured motorist coverage ("UIM") and is the policy at issue in this case [DE 22-4]. The Roes are Indiana residents, and the policy was issued to them in Indiana by an Indiana-based insurance agency [DE 22-2].
After the accident, the Roes brought a claim against the Alabama driver's insurer, which promptly paid out its limits of insurance [DE 22-2 at 2]. The Roes next sought UIM coverage under their Buckeye auto policy, and Buckeye paid its limits of insurance under that policy [Id.]. The Roes then sought the additional UIM coverage under the umbrella policy, and this lawsuit ensued [DE 1 at 3].
In their complaint for declaratory judgment, Buckeye acknowledges that the policy provides coverage for the Roes, but asserts that the parties disagree over how much the Roes are entitled to collect [DE 1 at 2-3]. The disagreement boils down to a question of the applicable state law. Here's what the relevant policy language provides:
"'[w]e' will pay, up to 'our' 'limit', all sums which an 'insured' is legally entitled to recover for 'bodily injury' under uninsured/underinsured motorists coverage, but only tothe extent that 'bodily injury' is covered by 'underlying uninsured/underinsured motorists coverage' at the time of the occurrence. . . "
Buckeye argues that Indiana's Child Wrongful Death Act governs the amount of money the Roes are "legally entitled to recover" for Matthew's death and seeks a declaration that Indiana law governs the claim for damages. This is a curious argument since the accident occurred in Alabama. There can be no question that had the driver of the other car been fully insured, the Roes could have brought an action against him in Alabama, and Alabama law would have certainly applied to that hypothetical lawsuit. It is for this reason that the Roes argue that Alabama's wrongful death law governs. The parties have reached an agreement whereby my decision - Indiana law versus Alabama law - will determine how much Buckeye pays out to the Roes to settle this claim.
The Declaratory Judgment Act states: "[i]n a case of actual controversy within its jurisdiction, ... any court of the United States ... may declare the rights and other legal relations of any interested party seeking such declaration." 28 U.S.C. § 2201(a). For purposes of determining whether a court should entertain a declaratory judgment action, an "actual controversy" exists when "the facts alleged under all circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant issuance of a declaratory judgment." Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941). In this case, the parties have shown that there is an actual controversy as the Roes have a pending claim for coverage under the policy. See, e.g., Northland Ins. Co. v. Gray, 240 F. Supp. 2d 846, 848 (N.D. Ind. 2003) Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c)(2); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Interpretation of an insurance policy is a question of law appropriate for summary judgment. National Athletics Sportswear, Inc. v. Westfield Ins. Co., 528 F.3d 508, 512 (7th Cir. 2008). Here there are no remaining factual issues. The sole issue to decide is the applicable substantive law.
Buckeye argues that this case essentially involves interpreting an insurance contract, so the court should apply contract choice-of-law rules. Under Indiana's contract choice-of-law rules, the law of the place where an insurance contract was executed controls. Pennington v. Continental Ins. Co., 626 N.E.2d 461, 465 (Ind. Ct. App. 1993). Here, that would be Indiana. On the other hand, the Roes argue that what they are "entitled to recover" depends on applicable tort law, not contract law. And there is a strong presumption that the law of the place where the tort occurred - Alabama in this case - controls. Hubbard Mfg. Co. v. Greeson, 515 N.E.2d 1071, 1073 (Ind. 1987).
Buckeye is correct that Indiana law governs the interpretation of the insurance contract, but here there is no need for interpretation. The contract provision at issue could not be any clearer: the policy's UIM endorsement obliges Buckeye to pay to the Roes all sums the Roes are "legally entitled to recover" for Matthew's death [DE 1 at 26]. If the parties had a dispute over the policy language, such as over whether the Roes qualified as "insureds" under the policy, then Indiana law would govern. But the parties agree on the interpretation of the relevant provision. They disagree on its application - on the actual amount of money the Roes are legally entitled torecover, and therefore the amount of money Buckeye is required to pay.
The amount the Roes are entitled to recover can only be determined by reference to the applicable tort law. In other words, the question is whether the Roes would be "legally entitled" to collect damages under Alabama law? The answer is unquestionably yes. As alluded to above, if the Roes had brought a lawsuit against the underinsured driver of the other car, they could have filed that lawsuit in Alabama, and in that hypothetical lawsuit, Alabama law would have applied. Consequently, the Roes are "legally entitled" to the damages that Alabama affords tort victims, not the more stingy damages that Indiana provides.
The parties have chosen to argue this case as if it was a choice of law issue. I'm not sure I agree with that. I view the matter as a straight-forward contract interpretation matter, and under the plain meaning of this insurance contract, the Roes would be entitled to recover damages under Alabama law. But even if I delve into the choice of law question, the Roes still prevail.
In a diversity case like this one, the forum state's choice of law rules determine the applicable law. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). So Indiana's choice of law rules apply to determine which state's law governs the...
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