Lakes v. Grange Mut. Cas. Co.

• Decision Date: 05 June 2012
• Docket Number: No. 89S05–1109–CT–531.,89S05–1109–CT–531.
• Parties: Hannah LAKES, Appellant (Plaintiff below), v. GRANGE MUTUAL CASUALTY COMPANY, Appellee (Defendant below).
• Court: Indiana Supreme Court

964 N.E.2d 796

Hannah LAKES, Appellant (Plaintiff below),

v.GRANGE MUTUAL CASUALTY COMPANY, Appellee (Defendant below).

No. 89S05–1109–CT–531.

Supreme Court of Indiana.

March 20, 2012.As Corrected June 5, 2012.

David W. Craig, Scott A. Faultless, Indianapolis, IN, Attorneys for Appellant.

Carolyn M. Trier, Fort Wayne, IN, Attorney for Appellee.

On Petition to Transfer from the Indiana Court of Appeals, No. 89A05–1009–CT–549

SULLIVAN, Justice.

Several family members were injured in a car accident and divided the benefits paid by the tortfeasor's insurer. One family member—Hannah Lakes—also sought to recover under the underinsured motorist endorsement of an insurance policy that applied to all the family members involved in the accident. We reaffirm our decision in Corr v. American Family Insurance, 767 N.E.2d 535 (Ind.2002), and hold that the tortfeasor's vehicle was underinsured because the amount actually paid to Hannah Lakes was less than the per-person limit of liability of the underinsurance endorsement.

Background

This case arose from an automobile accident that occurred on the evening of September 10, 2004, at the intersection of Creek Road and Pottershop Road in Wayne County, Indiana. Anitra Lakes was driving eastbound on Pottershop Road with her mother, LuAnn Lakes, and her then-twelve-year-old sister, Hannah Lakes, as passengers. James Isaacs, the tortfeasor, was driving southbound on Creek Road with his passenger, Dustin Gavin, when he failed to stop at a stop sign and entered the intersection, striking Anitra's vehicle. Everyone involved in the accident sustained “incapacitating” injuries, but Gavin's and LuAnn's injuries were so severe that they had to be airlifted to a hospital in Dayton, Ohio.

At the time of the accident the tortfeasor was insured by Viking Insurance under a policy with bodily injury liability limits of $25,000 per person and $50,000 per accident. Anitra had an insurance policy issued by Grange Mutual Casualty Company that included underinsured motorist (“UIM”) coverage with limits of $50,000 per person and $50,000 per accident. Additionally, Jerry Lakes, LuAnn's husband and Anitra's and Hannah's father, had an insurance policy issued by Grange that included UIM coverage with limits of $100,000 per person and $300,000 per accident.

On January 6, 2005, Hannah, Anitra, LuAnn, and Jerry¹ filed a complaint in Wayne Superior Court against the tortfeasor and against Grange for UIM coverage. Viking paid its per-accident policy limit of $50,000, which was divided among Hannah, Anitra, LuAnn, Jerry, and Dustin Gavin. Hannah's share was $5,100, which did not compensate her for her injuries. After Viking paid its policy limits, the tortfeasor was dismissed from the cause with prejudice upon a joint stipulation by the parties.

On February 16, 2010,² Grange filed a motion for summary judgment and designation of evidence, arguing that the tortfeasor's vehicle was not an underinsured vehicle as a matter of law because the per-accident limit of his policy was equal to the UIM per-accident limit of Anitra's policy. It also argued that Jerry's policy excluded UIM coverage under these facts.

On May 5, 2010, prior to responding to Grange's motion, Anitra, LuAnn, and Jerry voluntarily moved to dismiss their claims with prejudice, leaving Hannah as the only plaintiff claiming UIM coverage under Anitra's policy. The next day, the trial court granted this motion and dismissed all plaintiffs except Hannah. On the same day, Hannah filed her objection to summary judgment, her brief in opposition, and her designation of evidence.

The trial court granted Grange's motion for summary judgment. First, it held that the tortfeasor's vehicle was not underinsured because the per-accident limit of his policy ($50,000) was equal to the per-accident limit of Anitra's UIM coverage ($50,000). It reasoned that a comparison of the policies' per-accident limits was required because multiple insureds under Anitra's policy had been injured; it did not matter, according to the court, that only one insured was seeking UIM coverage. Second, it held that Hannah could not recover under Jerry's policy because that policy excluded coverage “for property damage or bodily injury sustained by any person while occupying any motor vehicle owned by Mr. Lakes or any family member which [was] not insured for coverage under Jerry's Policy.” Appellant's App. 16.

On appeal, Hannah abandoned her claim under Jerry's policy and sought UIM benefits only under Anitra's policy. The Court of Appeals reversed, holding that the tortfeasor's vehicle was underinsured and that Hannah was entitled to recover up to $44,900 in UIM benefits under Anitra's policy. Lakes v. Grange Mut. Cas. Co., 944 N.E.2d 509, 516, 519 (Ind.Ct.App.2011).

Grange sought, and we granted, transfer, Lakes v. Grange Mut. Cas. Co., 962 N.E.2d 643 (Ind.2011) (table), thereby vacating the opinion of the Court of Appeals, Ind. Appellate Rule 58(A).

Discussion

Hannah contends that the trial court erred in granting summary judgment in Grange's favor. She raises two issues on appeal: First, she claims that the tortfeasor's vehicle was an underinsured motor vehicle under Indiana Code section 27–7–5–4(b). Second, she claims that Indiana Code section 27–7–5–2 requires Grange to provide UIM coverage of $50,000 per person.

I

The central issue in this case is whether the tortfeasor's vehicle was an underinsured motor vehicle. The UIM statute defines an “underinsured motor vehicle” as follows:

For the purpose of this chapter, the term underinsured motor vehicle, subject to the terms and conditions of such coverage, includes an insured motor vehicle where the limits of coverage available for payment to the insured under all bodily injury liability policies covering persons liable to the insured are less than the limits for the insured's underinsured motorist coverage at the time of the accident, but does not include an uninsured motor vehicle as defined in subsection (a).

Ind.Code § 27–7–5–4(b) (2004) (emphasis added). This statute has been the focus of several decisions, and the parties argue that different cases support their respective positions. Therefore, a brief examination of the case law is helpful.

A

The Court of Appeals first confronted this issue in Allstate Insurance Co. v. Sanders, 644 N.E.2d 884 (Ind.Ct.App.1994). In that case, Phillip and Robert Sanders had been injured in an auto accident. The tortfeasor's insurance policy provided bodily injury liability coverage of $50,000 per person and $100,000 per accident, and the tortfeasor's insurer paid the $100,000 policy limit to Phillip and Robert, each of whom received $50,000. The Sanders brothers had been driving a company vehicle insured by Allstate, and that policy provided UIM coverage with a single limit of $100,000 per accident. Because each brother received only $50,000 from the tortfeasor's insurer, they sought to recover UIM benefits under the Allstate policy. Id. at 885.

On appeal from the trial court's denial of Allstate's motion for summary judgment, the court relied on Leetz v. Amica Mutual Insurance Co., 839 P.2d 511 (Colo.App.1992), which interpreted Colorado's UIM statute, to hold that courts should compare the per-accident limits of the tortfeasor's liability insurance to the per-accident limits of the UIM coverage to determine whether a vehicle is underinsured. Sanders, 644 N.E.2d at 886–87. The court reasoned that our Legislature “did not intend to require insurers to provide full indemnification to victims of underinsured motorists under all circumstances.” Id. at 887. Rather, the court explained, “the statute's focus is on placing the insured in the position he would have occupied if the tortfeasor had liability coverage equal to his underinsured motorist limits.” Id. Because the per-accident limits of the tortfeasor's policy ($100,000) were identical to the per-accident limits of the brothers' UIM coverage ($100,000), the court held that the tortfeasor's vehicle was not underinsured. Id.

Several years later, another panel of the Court of Appeals and this Court cast doubt on the reasoning in Sanders. See Corr v. Am. Family Ins., 767 N.E.2d 535 (Ind.2002); Corr v. Schultz, 743 N.E.2d 1194 (Ind.Ct.App.2001) (Kirsch, J.), vacated, 767 N.E.2d 541 (Ind.2002). Janel Corr had been one of four occupants in a van being driven by Balderas when he lost control and crashed off of the Indiana Toll Road; Janel died as a result of her injuries. Corr, 767 N.E.2d at 536–37. Balderas's father, the owner of the van, and his mother each had insurance policies with bodily injury liability limits of $100,000 per person and $300,000 per accident. Each of those insurance companies tendered the per-accident limit of $300,000 to the trial court, for a total of $600,000, and filed an action to determine the proper allocation of benefits. After mediation, James Corr and Pamela Corr, Janel's divorced parents, each received $57,500. James and Pamela each had their own policies with American Family Insurance (“AFI”). James's policy provided UIM coverage of $250,000 per person and $500,000 per accident (but there was a dispute about whether it had been negligently lowered to $100,000/ $300,000 by his insurance agent, Schultz). Pamela's policy provided UIM coverage of $100,000 per person and $300,000 per accident. AFI denied James's claim for UIM benefits and then James sued AFI; Pamela was joined as a plaintiff by agreement. Id. at 537. James Corr also sued Schultz, his insurance agent, for negligence in reducing his UIM coverage without permission. Id. at 537 n. 1. Both trial courts granted summary judgment against the Corrs, finding that Balderas's van had not been underinsured. Id.

On transfer, AFI relied on Sanders and argued that Indiana Code section 27–7–5–4(b) required a comparison of the $600,000 per-accident limit of the tortfeasors' policies to the per-accident limits of James's and Pamela's UIM coverage. Corr, ...