Dunaway v. Allstate Ins. Co.

• Decision Date: 12 August 2004
• Docket Number: No. 88A01-0404-CV-151.,88A01-0404-CV-151.
• Citation: 813 N.E.2d 376
• Parties: Donnie Ray DUNAWAY, Jr. and Lisa Carol Dunaway, Appellants, v. ALLSTATE INSURANCE COMPANY, Appellee.
• Court: Indiana Appellate Court

813 N.E.2d 376

Donnie Ray DUNAWAY, Jr. and Lisa Carol Dunaway, Appellants, v. ALLSTATE INSURANCE COMPANY, Appellee.

No. 88A01-0404-CV-151.

Court of Appeals of Indiana.

August 12, 2004.

David E. Mosley, Mosley, Bertrand, Jacobs & McCall, Jeffersonville, IN, Attorney for Appellants.

Randall A. Lakey, Smith & Wade, Carmel, IN, Attorney for Appellee.

OPINION

NAJAM, Judge.

STATEMENT OF THE CASE

Donnie and Lisa Dunaway ("the Dunaways") appeal the trial court's entry of summary judgment in favor of Allstate Insurance Company ("Allstate") and present the following issues for review:

1. Whether the trial court properly granted summary judgment in Allstate's favor on the Dunaways' breach of contract claim based on the policy's one-year limitations clause.

2. Whether the one-year limitations clause bars the Dunaways' claims for breach of the duty of good faith and unjust enrichment.

We affirm in part, reverse in part, and remand.

FACTS AND PROCEDURAL HISTORY

On March 23, 2001, a fire destroyed the Dunaways' home, along with all of their personal effects in the home. The Dunaways had a homeowners' insurance policy with Allstate, which provided in relevant part:

Section I Conditions

* * *

3. What You Must Do After a Loss

In the event of a loss to any property that may be covered by this policy, you must:

* * *

g) within 60 days after the loss, give us a signed, sworn proof of the loss.

* * *

4. Our Settlement Options

In the event of a covered loss, we have the option to:

a) repair, rebuild or replace all or any part of the damaged, destroyed or stolen property with property of like kind and quality within a reasonable time; or

b) pay for all or any part of the damaged, destroyed or stolen property as described in Condition 5 "How We Pay For A Loss."

Within 30 days after we receive your signed, sworn proof of loss we will notify you of the option or options we intend to exercise.

* * *

12. Suit Against Us

No suit or action may be brought against us unless there has been full compliance with all policy terms. Any suit or action must be brought within one year after the inception of loss or damage.

Appellant's App. at 89-90, 93 (emphasis omitted).

The Dunaways promptly notified Allstate of their loss. On March 28, 2001, Allstate mailed a proof of loss form to the Dunaways. On May 9, 2001, Allstate's legal counsel sent the Dunaways a letter which informed them in relevant part that: (1) Allstate had not made a determination regarding whether it is required to provide coverage for the claim; (2) a full and complete investigation of the claim was necessary; (3) Allstate wanted to conduct examinations of the Dunaways under oath; and (4) the Dunaways needed to submit their proof of loss form before the examinations. That letter also provided: "By conducting further investigation including the examinations under oath, [Allstate] is not waiving any of the rights available to it under the policy of insurance issued to you. It shall reserve all of its rights and defenses and insist upon full and complete compliance with all of the terms and policy provisions." Appellant's App. at 199-200. Allstate conducted examinations of the Dunaways in June 2001 and, with Allstate's agreement, the Dunaways submitted their proof of loss form to Allstate on August 15, 2001, which was more than sixty days after their loss.

On August 24, 2001, the Dunaways' legal counsel sent a letter to Allstate demanding payment of their claim by September 15, 2001. Allstate responded, in part, that it would attempt to complete its investigation as soon as possible. On November 9, 2001, almost ninety days after the Dunaways had submitted their proof of loss form, Allstate sent the Dunaways a letter denying their claim. That letter set forth the limitations clause of the policy, which, again, provided: "No suit or action may be brought against [Allstate] unless there has been full compliance with all policy terms. Any suit or action must be brought within one year after the inception of loss or damage." Appellant's App. at 172. Also on November 9, Allstate sent the Dunaways a separate letter informing them that Allstate would pay no further living expenses on the Dunaways' behalf after December 30, 2001.

Next, the Dunaways' counsel requested a copy of the insurance policy, which Allstate provided. The Dunaways filed their Complaint against Allstate on August 9, 2002. Allstate filed its Answer in October 2002. In November 2002, Allstate filed its motion for summary judgment. The Dunaways responded to Allstate's motion and filed designations in opposition to the motion. Allstate filed its reply, and the Dunaways filed a sur-reply. In January 2004, the trial court heard argument, and on February 9, 2004, the court granted Allstate's motion. The Dunaways filed a motion to correct error, which the court denied. The Dunaways now appeal.

DISCUSSION AND DECISION

Standard of Review

As we stated in Brady v. Allstate Indem. Co., 788 N.E.2d 916, 919 (Ind.Ct.App.2003):

The purpose of summary judgment is to terminate litigation about which there can be no material factual dispute and which can be resolved as a matter of law. A trial court's grant of summary judgment is clothed with a presumption of validity on appeal, and the appellant bears the burden of demonstrating that the trial court erred. Nevertheless, the record must be carefully scrutinized to ensure that the [nonmoving] party was not improperly denied a day in court. In determining the propriety of summary judgment, we apply the same standard as the trial court. Under Indiana law, the party moving for summary judgment must demonstrate the absence of any genuine issue of material fact and only then is the nonmovant required to come forward with contrary evidence. The court must accept as true those facts alleged by the nonmoving party, construe the evidence in favor of the nonmoving party, and resolve all doubts against the moving party.... If the trial court's grant of summary judgment can be sustained on any theory or basis in the record, we affirm.

(Citations and quotations omitted).

Issue One: Waiver of One-Year Limitations Clause

The Dunaways first assert that the trial court improperly granted Allstate's motion for summary judgment because: (1) Allstate waived reliance on the limitations clause which required the Dunaways to bring suit within one year of the loss; and (2) in the alternative, there is a genuine issue of material fact whether Allstate waived the limitations clause. As we explained in Summers v. Auto-Owners Ins. Co., 719 N.E.2d 412, 414-15 (Ind.Ct.App.1999):

"It is well-established in Indiana that, while not favored,... contractual limitations shortening the time to commence suit are valid, at least so long as a reasonable time is afforded." The "purpose of such provisions concerns not a specific date following the loss but unreasonable delay in proceeding to enforce or pursue the claim." That is, these limitations protect insurers from policy holders who voice no claim until the year has long since expired, promote early notification while evidence is available, and provide carriers with a basis for forming business judgments concerning claim reserves and premium rates. Such limitations provisions may be waived either expressly or impliedly. "`A waiver or estoppel may result from [the] acts of [an] insurer causing [the] insured or claimant under the policy to delay in bringing suit until after the time provided for in the policy.'" We have described our analysis of implied waivers as follows:

Contractual limitation periods may be waived by an insurer if its conduct is sufficient to create a reasonable belief on the part of the insured that strict compliance with the policy provision will not be required. The focus of our inquiry then is upon the relationship between the parties, seeking to determine "whether anything has been done ... which would cause the insured to reasonably believe the limitation period will not be insisted upon." If such a belief has been fostered by the insurer, it may no longer raise the limitation period as a defense. "To hold otherwise, ... would be to allow the insurer to lull an insured into not pressing his rights and then deny liability on the basis of the limitation period."

(Citations and emphasis omitted); see also Huff v. Travelers Indem. Co., 266 Ind. 414, 363 N.E.2d 985, 991 (1977)

.

Our review of applicable case law shows that whether an insurer has waived reliance on a limitations provision is usually a question of fact. For example, in Huff, 363 N.E.2d at 992, the insured suffered a loss in February 1970 and reported that loss to his local agent. Id. Thereafter, the insurer investigated and negotiated with the insured regarding the claim well beyond the one-year limitations provision contained in the policy. Id. The insurer eventually denied the claim, and the insured sued, arguing that the insurer had impliedly waived reliance on the limitations provision. A jury returned a verdict in favor of the insured, but the trial court granted the insurer's motion for judgment notwithstanding the verdict. Id. at 988. Our supreme court held that the trial court erred and explained as follows:

One could reasonably conclude that verified proofs of loss were not being insisted upon and that resort to legal proceedings would not be necessary to collect on the claim. Once notice was given [by the insured] and no objection was raised to the mode of documentation and liability was not denied until long after the twelve-month period, then the insurer has waived his right to insist on either provision. To hold otherwise would be to allow the insurer to lull an insured into not pressing his rights and to then deny liability on the basis of the limitation period.

Id. (emphasis added). Thus, although Huff was not a summary judgment case, the court determined that the jury, not the trial court, should decide whether the insurer had waived reliance on the...