City of Gary v. Allstate Ins. Co.

• Decision Date: 08 September 1992
• Docket Number: No. 04A03-9202-CV-31,04A03-9202-CV-31
• Citation: 598 N.E.2d 625
• Parties: CITY OF GARY and the City of Gary Police Department, Appellants-Third Party Defendants Below, Luis Deluna, Jr., Appellant-Plaintiff Below, v. ALLSTATE INSURANCE COMPANY, Appellee-Defendant-Third Party Plaintiff Below.
• Court: Indiana Appellate Court

Page 625

598 N.E.2d 625

CITY OF GARY and the City of Gary Police Department Appellants-Third Party Defendants Below Luis Deluna, Jr., Appellant-Plaintiff Below, v. ALLSTATE INSURANCE COMPANY, Appellee-Defendant-Third Party Plaintiff Below.

No. 04A03-9202-CV-31.

Court of Appeals of Indiana,

Third District.

Sept. 8, 1992.

Nathaniel Ruff, Lesniak & Ruff, East Chicago, for Luis Deluna, Jr.

Eric Oden Clark, Gary, for City of Gary and City of Gary Police Dept.

Robert D. Brown, Spangler, Jennings & Dougherty, P.C., Merrillville, for Allstate Ins. Co.

STATON, Judge.

In this consolidated appeal, the City of Gary and the Gary Police Department (City), along with Luis Deluna, Jr., appeal the trial court grant of summary judgment in favor of the defendant and third-party plaintiff Allstate Insurance Company (Allstate). The appellants contend that the grant of summary judgment was in error. Allstate claims that the appellants are collaterally estopped from challenging the summary judgment.

We reverse.

The material facts are not in dispute. On or about December 9, 1986, Deluna was operating a City-owned police car while in the course and scope of his employment as a Gary police officer when his car struck a vehicle driven by Hanford Reed. Deluna sustained personal injuries and sued Reed. When it was learned that Reed's insurance company became insolvent, Deluna added a second count to his complaint against Allstate under the uninsured motorist provisions of his own insurance policy. Allstate filed a third-party complaint against the City, alleging that, as the insurer of the police car, the City was primarily liable for uninsured motorist coverage. The trial court agreed, and granted Allstate's motion for summary judgment.

Standard of Review

On an appeal from the grant of summary judgment, we must determine whether the record reveals a genuine issue of material fact and whether the trial court correctly applied the law. Shuamber v. Henderson (1991), Ind., 579 N.E.2d 452, 454. Summary judgment will be affirmed if it is sustainable upon any theory supported by the record. Kolczynski v. Maxton Motors, Inc. (1989), Ind.App., 538 N.E.2d 275, 276, trans. denied.

I.

Before we address the appellants' contentions, we consider Allstate's claim that the appellants are collaterally estopped from relitigating the issue of whether the City is primarily liable for uninsured motorist coverage because a virtually identical issue was raised and resolved against the City in a separate, unrelated lawsuit. The other suit also involved a Gary police officer, Roger Smith, who sued the City for uninsured motorist coverage after being injured in an automobile accident while working. The City did not appeal the prior ruling, which was entered less than a month prior to the judgment in the present case. Allstate argues that issue preclusion is appropriate because Smith and Deluna, who are both Gary police officers, are in privity, and the remaining elements of collateral estoppel have been satisfied.

In an opinion recently issued by this court, Judge Hoffman examined the doctrine of collateral estoppel, or issue preclusion, and concluded that this branch of res judicata can bar the relitigation of an issue, even though privity of parties and mutuality of estoppel are absent. White v. Allstate Insurance Co. (1992), Ind.App., 591 N.E.2d 586. Despite the abandonment of the privity requirement, Judge Hoffman noted that issue preclusion would not bar the relitigation of an issue unless it was shown that the party against whom estoppel is asserted had a full and fair opportunity to litigate the issue previously. Id. at 590 (citing Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation (1971), 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788). To estop a party who has not been afforded a chance to present evidence and arguments on an issue would offend principles of due process. Blonder-Tongue, supra, at 329, 91 S.Ct. at 1443.

Assuming for the sake of argument that the City litigated this issue in the prior action brought by Officer Smith, ¹ we cannot agree that Deluna, injured in an entirely different accident, had the opportunity to present evidence and argument on the issue of which insurer is primarily liable for uninsured motorist coverage. Therefore, Deluna is not precluded from litigating this issue, and we will decide this appeal on the merits.

II.

Deluna first argues that the City, as a self-insurer, did not have a policy of insurance on his police vehicle, and therefore, was not obligated to provide uninsured motorist coverage. Allstate contends that the financial responsibility laws of this state, IND.CODE 9-1-4-3.5, 9-2-1-1 et seq. (1988) (repealed and recodified at IC 9-25-1-1 et seq. (Burns 1991)) require the City to maintain such coverage on its vehicles.

Under the uninsured motorist coverage statutes existing at the time of Deluna's accident,

(a) Each automobile liability or motor vehicle liability policy of insurance which is delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state, insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person and for injury to or destruction of property to others arising from the ownership, maintenance, or use of a motor vehicle, must provide coverage, either in the policy or in a supplement to it:

(1) in limits for bodily injury or death and for injury to or destruction of property set forth in [former] IC 9-2-1-15 under policy provisions approved by the commissioner of insurance, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, and for injury to or destruction of property resulting therefrom; or

(2) in limits for bodily injury or death set forth in [former] IC 9-2-1-15 under policy provisions approved by the commissioner of insurance, for the protection of persons insured under the policy provisions who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death resulting therefrom.

The uninsured coverage may be offered by insurers in limits higher than the limits of liability specified in the bodily injury and property damage liability provisions of an insured's policy.

IC 27-7-5-2 (1985).

When called upon to construe words in a single section of a statute, we must construe them with due regard for all other sections of the act and with regard for the legislative intent to carry out the purposes of the act. Griffith v. Jones (1991), Ind.App., 577 N.E.2d 258, 266. We further presume that the legislature intended its language to be applied in a logical manner consistent with the statute's underlying policy and goals. Id.

Deluna contends that a self-insurer such as the City does not have a "policy of insurance which is delivered or issued for delivery in this state." Technically, he is correct. A policy of insurance is

a contract of insurance or an agreement by which one party, for a consideration, promises to pay money or its equivalent or to do an act valuable to the insured upon the destruction, loss or injury of something in which the other party has a pecuniary interest, or in consideration of a price paid, adequate to the risk, becomes security to the other against loss by certain specified risks; to grant indemnity or security against loss for a consideration.

IC 27-1-2-3(a) (1988); Eakin v. Indiana Intergovernmental Risk Management Authority (1990), Ind.App., 557 N.E.2d 1095, trans. denied. On the other hand, self-insurance is not insurance at all, but "the retention of the risk of loss by the one upon whom it is directly imposed by law or contract." Eakin, supra, at 1098 (quoting American Nurses Association v. Passaic General Hospital (1984), 192 N.J.Super. 486, 491, 471 A.2d 66, 69, aff'd in part, 98 N.J. 83, 484 A.2d 670). See also Anderson v. Northwestern Bell Telephone Co. (1989), Minn.App., 443 N.W.2d 546 (an insurance "policy" is a contract between an insured and an insurer, while self-insurance is separate from and does not include traditional insurance contracts with insureds); Nassau Insurance Co. v. Guarascio (1981), 82 A.D.2d 505, 442 N.Y.S.2d 83 ("insurance" exists when a contractual relationship between insurer and insured shifts the risk of loss of the insured to the insurer; "self-insurance" is the assumption of risk of loss by one having an insurable interest); Southern Home Insurance Co. v. Burdette's Leasing Service, Inc. (1977), 268 S.C. 472, 234 S.E.2d 870 (a self-insurer is not an insurer at all, but rather, substitutes for an insurance policy). Nonetheless, as Allstate observes, there is substantial case law treating self-insurance as a policy for purposes of applying uninsured motorist coverage.

In the following cases, the courts concluded that self-insurers were obligated to provide uninsured motorist coverage as though they had offered a standard liability insurance policy: Hartford Insurance Co. v. Hertz Corp. (1991), 410 Mass. 279, 572 N.E.2d 1 (legislature did not intend the broad protection of uninsured motorist coverage to be denied those whose sole protection is in the form of a bond purchased by a self-insurer); Jones v. King (1989), La.App., 549 So.2d 350, writ. denied 552 So.2d 401 (rental company with certificate of self-insurance mandated by the state safety responsibility law to offer uninsured motorist coverage); Anderson, supra (court found no sound reason to treat self-insurer any differently from any other insurer in terms of its responsibilities, and concluded that a corporation's self-insurance plan provides uninsured motorist coverage); Twyman v. Robinson (1986), 255 Ga. 711, 342 S.E.2d 313 (holding that a certificate of self-insurance...