Gibraltar Mut. Ins. Co. v. Hoosier Ins. Co.

• Decision Date: 11 December 1985
• Docket Number: No. 2-484-A-115,2-484-A-115
• Citation: 486 N.E.2d 548
• Parties: GIBRALTAR MUTUAL INSURANCE COMPANY, Appellant (Plaintiff Below), v. HOOSIER INSURANCE COMPANY and John V. Loudermilk, Appellees (Defendants Below).
• Court: Indiana Appellate Court

Page 548

486 N.E.2d 548

GIBRALTAR MUTUAL INSURANCE COMPANY, Appellant (Plaintiff Below), v. HOOSIER INSURANCE COMPANY and John V. Loudermilk, Appellees (Defendants Below).

No. 2-484-A-115.

Court of Appeals of Indiana Second District.

Dec. 11, 1985.

Charles S. Gleason, Gleason, Hay & Gleason, Indianapolis, for appellant.

Stephen M. Gentry, Frank J. Otte, Indianapolis, for appellees.

SULLIVAN, Judge.

Gibraltar Mutual Insurance Company ("Gibraltar") filed its complaint on August 13, 1982, alleging that Hoosier Insurance Company, through John V. Loudermilk ("Hoosier" and "Loudermilk", respectively), knowingly and maliciously disseminated false and derogatory information about Gibraltar. Hoosier and Loudermilk asserted affirmative defenses of truth and privilege to the charge of libel. After argument by the parties, the trial court granted summary judgment in favor of Hoosier and Loudermilk, without an accompanying statement of reasons. ¹

Gibraltar appeals and presents the following issues for review.

(1) Whether the trial court's grant of judgment to Hoosier and Loudermilk is contrary to law. ²

(2) Whether the trial judge was required to disqualify himself because of his pre-existing bias and prejudice against Gibraltar.

Our standard of review on appeal from summary judgment is well established. We ascertain

"whether the pleadings, affidavits, answers to interrogatories, responses to requests for admission, and depositions, when read in the light most favorable to the non-moving party, reveal any genuine issues of material fact, Henderlong Lumber Co., Inc. v. Zinn (4th Dist.1980) Ind.App., 406 N.E.2d 310, and if not, whether the trial court correctly applied the law. State ex rel. Van Buskirk v. Wayne Township (4th Dist.1981) Ind.App., 418 N.E.2d 234."

Shallenberger v. Scoggins-Tomlinson, Inc. (1982) 2d Dist.Ind.App., 439 N.E.2d 699, 703. A material fact is one which facilitates resolution of any of the issues involved. Brandon v. State (1976) 264 Ind. 177, 180, 340 N.E.2d 756, 758. "On the other hand, despite conflicting facts and inferences on some elements of a claim, summary judgment may be proper where there is no dispute or conflict regarding a fact that is dispositive of the litigation." Letson v. Lowmaster (1976) 3d Dist., 168 Ind.App. 159, 161, 341 N.E.2d 785, 787. Accord, Norman v. Turkey Run Community School Corp. (1980) 274 Ind. 310, 312, 411 N.E.2d 614, 615; Hayes v. Second National Bank of Richmond (1978) 1st Dist., 176 Ind.App. 299, 375 N.E.2d 647.

The operative facts are not in dispute: Hoosier, through Loudermilk, directed a letter to the Indiana Guaranty Association ³ with copies to Charles E. Evans, Gibraltar's president, and to W. Rudolph Steckler, Evans' counsel in a separate law suit. ⁴ With the letter, Loudermilk enclosed Gibraltar's financial statement which reflected a surplus of $55,034. The record reflects that the financial statement is a matter of public record and Gibraltar does not dispute the accuracy of the surplus amount. In the letter, Loudermilk also alleged that Gibraltar was not in compliance with Ind.Code 27-1-6-15 (Burns Code Ed.Supp.1985), which requires a surplus of $250,000, and exhorted the Guaranty Association to take corrective action to require Gibraltar either to augment its surplus to the statutory level or be precluded from writing insurance in Indiana. Finally, the letter stated that the Guaranty Association, of which both Gibraltar and Hoosier are members, had recently made substantial payments on behalf of insolvent member insurers. The letter formed the basis of Gibraltar's complaint against Hoosier and Loudermilk.

It is appropriate at this juncture to briefly describe the function of the Guaranty Association. The Guaranty Association was created for the purpose of protecting the policyholders of impaired or insolvent insurers. See generally I.C. 27-8-8-5 and Foremost Life Insurance Co. v. Department of Insurance (1980) 274 Ind. 181, 409 N.E.2d 1092. An insurer seeking to transact insurance in Indiana must become a member of the Guaranty Association. I.C. 27-8-8-3. Upon determination by the Commissioner of Insurance that an insurer is impaired or insolvent, ⁵ the Guaranty Association may, inter alia, (a) guarantee or reinsure covered policies of the impaired or insolvent insurer, (b) assume that insurer's contractual obligations, or (c) lend money to the insurer. I.C. 27-8-8-5. The cost of administering this protection is assessed against member insurers in proportionate shares. I.C. 27-8-8-6. Upon a majority vote of its board of directors, the Guaranty Association must notify the commissioner of potential impairments or insolvencies, and may request that the commissioner conduct an investigation of the insurer believed to be impaired or insolvent. I.C. 27-8-8-9(e), (f) and (g). The Guaranty Association has broad powers to implement its statutory duties and obligations, subject to the immediate supervision of the Commissioner of Insurance. We recognize that remedial authority with respect to inadequate surplus accounts is vested in the Department of Insurance. See I.C. 27-1-3-19 (Burns Code Ed.Supp.1985), which provides:

"Whenever it shall appear to the department ... (2) That the capital or the surplus fund of any such insurance company is impaired or has been reduced below the amount required by law ... the department is hereby authorized ... to require [the insurer] to restore any impairment of its capital or surplus fund[.]"

However, in light of the preceding discussion, we disagree with Gibraltar's assertion that only the Commissioner of Insurance may act in matters concerning Indiana insurers.

The questions before the trial court, and us, are whether Hoosier's letter was libelous and, if so, whether the publication of the letter exceeded the scope of any privilege. ⁶

Gibraltar advances alternative arguments in support of its contention that summary judgment was unwarranted. Gibraltar first argues that it is not subject to I.C. 27-1-6-15, supra, and that Loudermilk's letter was a false and malicious attempt to coerce settlement of the separate litigation hereinbefore mentioned. Gibraltar also argues that even if the contents of the letter are true, dissemination of information concerning an insurer's financial condition is malum prohibitum ⁷ and contrary to expressed principles of public policy.

Indiana Code 27-1-6-15, supra, establishes certain financial requirements for mutual insurance companies, such as Gibraltar. That portion of the statute which is in dispute was amended in 1977 to increase the surplus requirement:

"(a) Except as provided in subsection (b) a domestic mutual company that organized before July 1, 1977, must maintain a surplus of not less than two hundred fifty thousand dollars [$250,000]. This subsection does not apply to a company that is organized under I.C. 27-5." ⁸

Gibraltar contends this section is unconstitutional, citing IND. CONST. art. I, Sec. 24, "No ex post facto law, or law impairing the obligation of contracts, shall ever be passed." In support of its contention, Gibraltar merely asserts that application of I.C. 27-1-6-15 would impair Gibraltar's charter and "cause a demise of the operation of the business." Appellant's Brief at 17. Gibraltar has failed to support these bare assertions by any semblance of argument or relevant authority, and thus has failed to convince us of any merit in the assertion. See Ogle v. St. John's Hickey Memorial Hospital (1985) 2d Dist. Ind.App., 473 N.E.2d 1055, 1057, n. 2; Ind.Rules of Procedure, Appellate Rule 8.3(A)(7).

In any event, Gibraltar's argument is spurious. It seeks, through convoluted reasoning, to have this court declare I.C. 27-1-6-15 unconstitutional and thereby provide a basis for Gibraltar's cause of action. Gibraltar's argument is but an improper collateral attack upon a part of the General Assembly's regulatory scheme concerning the insurance business, a subject which Gibraltar itself concedes is properly within the exercise of a state's police power. Vernon Fire & Casualty Insurance Co. v. Sharp (1976) 264 Ind. 599, 349 N.E.2d 173. Department of Insurance v. Schoonover (1947) 225 Ind. 187, 72 N.E.2d 747. Such attack on the constitutionality of I.C. 27-1-6-15 is ancillary to Gibraltar's libel action and is also untimely because the issue before us does not involve a particular statute as specifically applied to Gibraltar. See Ruge v. Kovach (1984) Ind., 467 N.E.2d 673, 675.

The statute, on its face, requires Gibraltar, a domestic mutual company organized before 1977, to maintain a surplus of $250,000. It is not disputed that Gibraltar's surplus, as of December 31, 1981, was $55,034. Hoosier's letter to the Guaranty Association, written August 10, 1982, concerned Gibraltar's 1981 year-end surplus. It follows, therefore, that Hoosier's letter was not false when it alleged that Gibraltar was not in compliance with the statutory surplus requirement. Truth is a defense to an action for defamation. Seenig v. Wood (1976) 2d Dist., 169 Ind.App. 413, 440, 349 N.E.2d 235, 251.

Gibraltar argues, however, that I.C. 27-4-1-1 et seq. (Burns Code Ed.Supp.1985), Indiana's unfair competition act regulating the insurance business, and its underlying public policy have by implication eliminated truth as a defense to libel. There are two aspects to Gibraltar's argument. Gibraltar first asserts that the statute prohibits dissemination of any statement impugning the financial condition of an insurer, and its prohibition applies regardless of the truth or falsity of the statement. Further, Gibraltar asserts that a statement or practice which violates the provisions of the statute gives rise to an independent action for libel, to which the defense of truth is inapplicable.

Gibraltar cites to no specific provision, and we have found none, which expressly eliminates truth as a defense to a charge of libel. Furthermore, Gibraltar's assertion that the statute effects...