Elliott v. Allstate Ins. Co.

Decision Date09 January 2007
Docket NumberNo. 49A02-0604-CV-363.,49A02-0604-CV-363.
PartiesAustin J. ELLIOTT, b/n/f William K. Elliott, and Amber Elliott, b/n/f William K. Elliot, Appellants-Plaintiffs, v. ALLSTATE INSURANCE COMPANY, Appellee-Defendant.
CourtIndiana Appellate Court

Michael L. Hanley, Vernon J. Pertri & Associates, Indianapolis, IN, Attorney for Appellants.

Richard P. Samek, Larry L. Barnard, Carson Boxberger LLP, Fort Wayne, IN, Attorneys for Appellee.

OPINION

RILEY, Judge.

STATEMENT OF THE CASE

Appellants-Plaintiffs, Austin J. Elliott (Austin), b/n/f William Elliott, and Amber Elliott (Amber), b/n/f William Elliott (collectively, Appellants), appeal the trial court's grant of Partial Summary Judgment in favor of Appellee-Defendant, Allstate Insurance Company (Allstate), finding that Allstate was entitled to judgment as a matter of law because Appellants' negligent infliction of emotional distress claims, which arose from witnessing Amanda Elliott's (Amanda) injuries, are subject to the same "each person" limit of liability as Amanda's personal injury claim.

We reverse and remand for further proceedings.

ISSUE

Austin and Amber raise four issues on appeal which we consolidate and restate as the following single issue: Whether Allstate's policy for uninsured motorist coverage (UIM) confines Appellants' negligent infliction of emotional distress claim to a single "each person" limit of liability.

FACTS AND PROCEDURAL HISTORY1

On July 8, 2000, fifteen-year-old Amber and three-year-old Austin were passengers in a car driven by Amanda. Amanda is Amber's sister and Austin's mother. A vehicle driven by Andrea Carmona collided with Amanda's vehicle and Amanda, Amber, and Austin each sustained bodily injuries. Amanda suffered near fatal injuries resulting in severe brain damage which rendered her comatose for six weeks. Since regaining consciousness, Amanda requires permanent medical care as she is unable to take care of herself. After witnessing Amanda's injuries, Amber and Austin each suffered emotional distress with Austin also exhibiting physical manifestations of his emotional distress.

At the time of the collision, Allstate was Amanda's automobile insurance provider, which also included UIM coverage in the amount of $25,000 for "each person" and $50,000 for "each accident." (Appellant's App. p. 71). Because of these limits, Allstate settled Amanda's personal injury claim for $25,000. The policy's UIM provisions further provide in relevant part:

General Statement of Coverage.

If a premium is shown on the Policy Declarations for Uninsured Motorist Insurance, we will pay damages which an insured person is legally entitled to recover from the owner or operator of an uninsured auto because of:

1. bodily injury sustained by an insured person; or ...

* * *

Insured Person(s) means:

a) you and any resident relative

b) any person while in, on, getting into or out of, or getting on or off of an insured auto with your permission.

c) any other person who is legally entitled to recover because of bodily injury to you, a resident relative, or an occupant of your insured auto with your permission.

* * *

Bodily injury means physical harm to the body, sickness, disease, or death but does not include:

a) Any venereal disease;

b) Herpes;

c) Acquired Immune Deficiency Syndrome (AIDS);

d) AIDS Related Complex (ARC);

e) Human Immunodeficiency Virus (HIV); or any resulting symptom, effect, condition, disease, or illness related to a. through e. listed above.

* * *

Limits of Liability.

The coverage limit shown on the Policy Declarations for:

1. "each person" is the maximum that we will pay for damages arising out of bodily injury to one person in any one motor vehicle accident, including damages sustained by anyone else as a result of that bodily injury.

2. "each accident" is the maximum we will pay for damages arising out of all bodily injury in any one motor vehicle accident. This limit is subject to the limit for "each person."

(Appellants' App. pp. 13, 19, and 15).

On July 3, 2002, Appellants filed a Complaint against Allstate seeking damages for negligent infliction of emotional distress. On August 1, 2005, Allstate filed its Motion for Summary Judgment2 alleging that pursuant to the language of the policy, Austin's and Amber's individual claims for emotional distress are subject to, and included in, the "each person" limit of liability for Amanda's bodily injury claim. In response, Appellants filed their Designation of Matters Relied Upon in Opposition to [Allstate's] Motion for Partial Summary Judgment. On January 22, 2006, after a hearing, the trial court entered an Order in favor of Allstate, finding, in pertinent part:

1. Pursuant to the express language of the policy of insurance issued by Allstate to [Amanda], the uninsured motorist claims of negligent infliction of emotional distress asserted by [Amber] and [Austin] arising out of witnessing the personal injuries sustained by [Amanda] are subject to, and included in, the "per person" limit of liability for the uninsured motorist personal injury claim of [Amanda], which limits (i.e., $25,000.00) were exhausted with Allstate's payment of such liability limits to [Amanda] when her uninsured motorist personal injury claim was settled with Allstate. In finding as it does, the [c]ourt is impressed with, and specifically adopts and follows, the legal reasoning of the United States [s]eventh [c]ircuit [c]ourt of [a]ppeals, in Allstate Insurance Company v. Tozer, 392 F.3d 950 (7th Cir.2004), wherein the Seventh Circuit found, in a case involving identical policy language to the case at bar, that the bystander claims of emotional distress do not give rise to a "per person" limit of liability separate from personal injury claim of the injured party, in this case [Amanda].

(Appellants' App. p. 9).

Appellants now appeal. Additional facts will be provided as necessary.

DISCUSSION AND DECISION

Appellants contend that the trial court erred in granting summary judgment to Allstate. Specifically, Austin and Amber assert that the plain and ordinary meaning of "bodily injury," as included within the UIM coverage reasonably encompasses their claims for emotional distress. Furthermore, as they assert to have sustained bodily injury separate from Amanda's, Appellants allege that their compensation is not subject to the "each person" limitation. In response, Allstate maintains that Amber and Austin's emotional distress claims do not constitute bodily injury within the meaning of the policy because their claims are based upon witnessing Amanda's injuries and do not arise out of any bodily contact they experienced in the accident.

I. Standard of Review

Summary judgment is appropriate only when there are no genuine issues of material fact and the moving party is entitled to a judgment as a matter of law. Ind. Trial Rule 56(C). In reviewing a trial court's ruling on summary judgment, this court stands in the shoes of the trial court, applying the same standards in deciding whether to affirm or reverse summary judgment. AutoXchange.com, Inc. v. Dreyer and Reinbold, Inc., 816 N.E.2d 40, 47 (Ind.Ct.App.2004). Thus, on appeal, we must determine whether there is a genuine issue of material fact and whether the trial court has correctly applied the law. Id. In doing so, we consider all of the designated evidence in the light most favorable to the non-moving party. Id. The party appealing the grant of summary judgment has the burden of persuading this court that the trial court's ruling was improper. Id. Accordingly, the grant of summary judgment must be reversed if the record discloses an incorrect application of the law to the facts. See Ayres v. Indian Heights Volunteer Fire Dep't, Inc., 493 N.E.2d 1229, 1234 (Ind.1986).

We observe that in the present case, the trial court entered detailed and helpful findings of fact and conclusions of law in support of its judgment. Special findings are not required in summary judgment proceedings and are not binding on appeal. AutoXchange.com, 816 N.E.2d at 48. However, such findings offer this court valuable insight into the trial court's rationale for its judgment and facilitate appellate review. Id.

An insurance policy is a contract and, as such, is subject to the same rules of construction as other contracts. Dunn v. Meridian Mut. Ins. Co., 836 N.E.2d 249, 251 (Ind.2005). Interpretation of a contract is a pure question of law and is reviewed de novo. Id. If its terms are clear and unambiguous, courts must give those terms their clear and ordinary meaning. Id. When interpreting an insurance contract courts must look at the contract as a whole, and harmonize its provisions rather than place them in conflict. Id. at 252.

II. Development of Indiana's Case Law

The development of Indiana case law on the tort of negligent infliction of emotional distress has been vigorous, to say the least. Beginning with our supreme court's opinion in Shuamber v. Henderson, 579 N.E.2d 452 (Ind.1991), the extension of Shuamber's modified impact rule in Groves v. Taylor, 729 N.E.2d 569 (Ind.2000), and our recent decision in State Farm Mut. Auto. Ins. Co. v. Jakupko, 856 N.E.2d 778 (Ind.Ct.App.2006), claims for negligent infliction of emotional distress have obviously gained in importance and sophistication.

Traditionally, Indiana long maintained that damages for emotional distress could only be recovered when the injury was accompanied by a physical impact to the plaintiff. Historically referred to as the impact rule, it required proof of three elements: (1) an impact on the plaintiff; (2) which caused physical injury to the plaintiff; and (3) which injury, in turn, caused the emotional distress. Boston v. Chesapeake & O. Ry. Co., 223 Ind. 425, 61 N.E.2d 326, 327 (1945). Thus, the rule mandated that damages for emotional distress were recoverable only when the distress was accompanied by, and resulted from, a physical injury caused by an...

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