Evanston Ins. Co. v. Samantha Meeks Family Practice, Inc.

• Decision Date: 27 August 2014
• Docket Number: No. 33A01–1401–PL–32.,33A01–1401–PL–32.
• Citation: 20 N.E.3d 222 (Table)
• Parties: EVANSTON INSURANCE COMPANY and Markel Corporation, Appellants–Plaintiffs/Counterclaim Defendants, v. SAMANTHA MEEKS FAMILY PRACTICE, INC., Samantha Meeks, Appellees–Defendants/Counterclaimants, and George Edwin Grant, Individually and as Personal Representative of the Estate of Angela Diane Grant, Appellee–Defendant.
• Court: Indiana Appellate Court

20 N.E.3d 222 (Table)

EVANSTON INSURANCE COMPANY and Markel Corporation, Appellants–Plaintiffs/Counterclaim Defendants

v.SAMANTHA MEEKS FAMILY PRACTICE, INC., Samantha Meeks, Appellees–Defendants/CounterclaimantsandGeorge Edwin Grant, Individually and as Personal Representative of the Estate of Angela Diane Grant, Appellee–Defendant.

No. 33A01–1401–PL–32.

Court of Appeals of Indiana.

Aug. 27, 2014.

J. Richard Moore, Carol A. Dillon, Bleeke Dillon Crandall, P.C., Indianapolis, IN, Attorneys for Appellants.

Jennifer L. Blackwell, Goodin Orzeske & Blackwell, P.C., Indianapolis, IN, Attorney for Appellees Samantha Meeks Family Practice, Inc., and Samantha Meeks.

MEMORANDUM DECISION—NOT FOR PUBLICATION

CRONE

, Judge.

Case Summary

Nurse practitioner Samantha Meeks obtained a series of three professional liability insurance policies for her family practice from Evanston Insurance Company (“Evanston”) that provided coverage for claims made during the policy period. Meeks financed the premium for the third policy through First Insurance Funding Corp. (“First”). Meeks signed a financing agreement, which incorrectly listed her address and provided that First could cancel the policy under a power of attorney if she failed to make a payment. Meeks made only two of the ten required monthly payments to First. Two months after the second payment, an insurance wholesaler forwarded to Evanston a notice of cancellation of insurance coverage from First on Meeks's behalf. The notice listed Meeks's prior policy number and incorrect address but listed the correct effective date of the policy. Pursuant to the notice, Evanston cancelled Meeks's current policy. First sent Meeks a notice of cancellation, but it was mailed to the incorrect address listed on the finance agreement, and Meeks never received it.

More than ten months after the policy period ended, a proposed professional negligence complaint against Meeks was filed with the Indiana Department of Insurance. Meeks sought a legal defense and indemnity from Evanston. Evanston denied coverage and filed a declaratory judgment action seeking a determination of no coverage. Meeks and her practice filed a counterclaim against Evanston and Markel Corporation (“Markel”), Evanston's corporate parent, seeking a determination that Evanston owed a duty to defend and indemnify them against the negligence claim. The parties filed cross-motions for summary judgment, and the trial court ruled against Evanston and Markel and in favor of Meeks and her practice, finding that the policy was in effect when the claim was made.

On appeal, Evanston and Markel (“Appellants”) contend that the trial court erred in denying their summary judgment motion, asserting that Meeks and her practice (“Appellees”) are not entitled to coverage because the claim was filed after the policy period ended. Appellees argue that they are entitled to summary judgment for three reasons: (1) because the policy was not properly cancelled; (2) because Appellants did not give Meeks a notice of renewal; and (3) because Appellants improperly refused to offer Meeks extended coverage. We conclude that Appellees are not entitled to summary judgment because: (1) Evanston was not a party to the finance agreement, and therefore any dispute regarding the propriety of the policy cancellation is between Meeks and First; (2) Appellants were not required to give Meeks a notice of renewal; and (3) Appellants did not refuse to offer Meeks extended coverage. Because it is undisputed that the claim was filed after the policy period ended, we conclude that Appellants are entitled to summary judgment. Therefore, we reverse and remand with instructions to deny Appellees' summary judgment motion and grant Appellants' summary judgment motion.

Facts and Procedural History

The relevant facts are undisputed. Meeks is a nurse practitioner who owns and operates Samantha Meeks Family Practice, Inc. (“SMFP”), located at 3221 S. Memorial Drive in New Castle. Meeks obtained professional liability coverage through Diederich Insurance Agency (“Diederich”). Beginning in November 2007, SMFP and Meeks were insured under a series of three policies issued by Evanston. All three policies were “claims made” policies.¹

The policy period of the third policy (“the Policy”), which is the subject of this dispute, was from November 26, 2009, to November 26, 2010. The Policy number was SM–869402, and coverage was retroactive to November 28, 2007. The Policy listed SMFP as the named insured, correctly showed SMFP's address as 3221 S. Memorial Drive, and read in pertinent part as follows:

Claims Made Coverage: The coverage afforded by this policy is limited to liability for only those Claims that are first made against the Insured during the Policy Period or the Extended Reporting Period, if exercised, and reported in writing to the Company pursuant to the terms herein.

....

EXTENDED REPORTING PERIOD

A. If the Named Insured nonrenews this policy or cancels this policy ... or if the Company nonrenews this policy or cancels this policy ... for reasons other than nonpayment of premium or Deductible or non-compliance with the terms and conditions of this policy, then the Named Insured shall have the right upon payment of an additional premium ... to extend the coverage granted under this policy....

B. As a condition precedent to the right to purchase the Extended Reporting Period, the Named Insured must have paid: (1) all Deductibles when due; (2) all premiums due for the Policy Period; and (3) all premium [sic] due on any other policy(ies) issued by the Company or any of its affiliated companies in an uninterrupted series of policies of which this policy is a renewal or replacement must have been paid.

The right to purchase the Extended Reporting Period shall terminate unless a written notice ... is received by the Company within thirty (30) days after the effective date of cancellation or nonrenewal together with payment of the additional deposit premium for the Extended Reporting Period. If such written notice of election and payment of additional premium are not so received by the Company, there shall be no right to purchase the Extended Reporting Period at a later date.

....

OTHER CONDITIONS

A. Cancellation: This policy may be cancelled by the Named Insured on behalf of all insureds by mailing to the Company written notice as stated in Item 13. of the Declarations ^{[ 2 ]} stating when thereafter such cancellation shall be effective. If cancelled by the Named Insured, the earned premium shall be computed at the customary short rate. Payment or tender of unearned premium shall not be a condition precedent to the effectiveness of cancellation, but such payment shall be made as soon as practicable.

This policy may be cancelled by the Company or by its underwriting manager, on behalf of the Company, by mailing to the Named Insured, at the address stated in Item 2. of the Declarations, written notice stating when, not less than thirty (30) days thereafter, such cancellation shall be effective. However, if the policy is cancelled because the Named Insured has failed to pay a premium or Deductible when due, including premium due on any other policy(ies) issued by the Company or any of its affiliated companies in an uninterrupted series of policies of which this policy is a renewal or replacement, this policy may be cancelled by the Company or by its underwriting manager, on behalf of the Company, by mailing a written notice of cancellation to the Named Insured stating when, not less than ten (10) days thereafter, such cancellation shall be effective.

Appellants' App. at 24, 37–38.

Meeks financed the Policy's premium through First. In December 2009, Meeks and Diederich's president/CEO signed a finance agreement, which incorrectly listed SMFP's address as 3222 S. Memorial Drive. The agreement recorded a cash down payment and an unpaid premium balance, which was to be paid in ten monthly installments of $515.29. The agreement stated in pertinent part,

RIGHT TO CANCEL. If insured does not make a payment when it is due, or if insured is otherwise in default under this agreement, [First] may cancel the policies and act in insured's place with regard to the policies, including endorsing any check or draft issued in the insured's name for funds assigned to [First] as security herein. This right given by insured to [First] constitutes a “Power of Attorney”. Before [First] cancels the policies, [First] will provide notice to the insured, as required by law. Insured agrees that this right to cancel which insured has granted to [First] cannot be revoked, and that [First's] right to cancel will terminate only after all of insured's indebtedness under this agreement is paid in full.

Id. at 45.

First's payment records indicate that Meeks made payments of $541 .05 in January and February of 2010 but no payments thereafter. Id . at 63. The record reflects that the payments included Meeks's monthly obligation of $515.29 plus a late charge of $25.76. Id. at 63. The $541.05 figure corresponds with past-due amounts printed on three “notice of intent to cancel” forms from First addressed to Meeks at 3222 S. Memorial Drive, id. at 71–73, which indicates that Meeks either received those forms in the mail despite the incorrect address or was otherwise informed about the proper payment amount. Meeks's February check is in the record before us and bears SMFP's correct address, i.e., 3221 S. Memorial Drive. Id. at 55.

On April 8, 2010, insurance wholesaler AVRECO forwarded to Evanston via email a notice of cancellation of insurance coverage from First on Meeks's behalf. The notice states that the cancellation was effective March 22, 2010, as to policy number SM–862088 with an effective date of November 26, 2009. Id. at 75. (SM–862088 was the number of Meeks's prior policy with Evanston, effective November 26, 2008, to November 26, 2009.) The notice also bears Evanston's name and address,³ Diederich's name and address, and Meeks's name...