Leist v. Auto Owners Ins. Co.

• Decision Date: 06 June 1974
• Docket Number: No. 2--173A21,2--173A21
• Citation: 160 Ind.App. 322,311 N.E.2d 828
• Parties: Frank LEIST, Appellant (Defendant below), v. AUTO OWNERS INSURANCE COMPANY, Appellee (Plaintiff below).
• Court: Indiana Appellate Court

Page 828

311 N.E.2d 828

160 Ind.App. 322

Frank LEIST, Appellant (Defendant below), v. AUTO OWNERS INSURANCE COMPANY, Appellee (Plaintiff below).

No. 2--173A21.

Court of Appeals of Indiana, Second District.

June 6, 1974.

Wade R. Bosley, Marion, for appellant.

Albert C. Harker, Kiley, Osborn, Kiley, Harker & Rogers, Marion, for appellee.

BUCHANAN, Judge.

CASE SUMMARY

Defendant-Appellant Frank Leist (Leist) appeals from a trial court injunction granted to Plaintiff-Appellee Auto-Owners Insurance Company (Auto-Owners) enjoining him from pursuing an action before the American Arbitration Association to determine his personal injury damages pursuant to an uninsured motorist provision in an automobile fleet insurance policy owned by Leist's employer, the Town of Jonesboro, Indiana (Employer Town).

We reverse with instructions.

FACTS

The parties stipulated the facts, the most pertinent of which are: ¹

On December 26, 1969, Leist, in his capacity as Town Marshal, was operating a Town of Jonesboro automobile in which he was seriously injured in a collision with an automobile operated by an uninsured motorist.

Auto-Owners had previously issued to Employer Town both a workmen's compensation insurance policy and a fleet automobile liability policy and paid Leist workmen's compensation benefits of $11,976.12.

Pursuant to the provisions of Employer Town's liability policy, Leist then filed a Demand for Arbitration before the American Arbitration Association, seeking an award of damages for his injuries allegedly caused by the uninsured motorist's negligence. The policy contained this provision (in part) relating to uninsured motorist coverage:

'2. LIMITS OF LIABILITY. . . . Any loss payable under the terms of Coverage D to or for any person shall be reduced by (c) the amount paid and the present value of all amounts payable to him under any workmen's compensation law, disability benefits law or any similar law, . . ..'

(Hereinafter referred to as the Set Off Clause.)

Before his Demand could be determined, Auto-Owners filed a Complaint against Leist for declaratory judgment and injunction restraining him from pursuing arbitration.

After considering the written stipulations and briefs submitted by the parties, the trial court, on August 18, 1972, permanently enjoined Leist from seeking determination of damages by arbitration, supporting this decision with Conclusions of Law. Those bearing on the issues are:

'3. That by operation of law the uninsured motorists provision of the fleet automobile liability insurance policy #480202 09087485 owned by the Town of Jonesboro, Indiana, were in full force and effect on December 26, 1969.

'4. That the defendant is entitled to recover from the plaintiff the sum of $10,000.00 under the uninsured motorist provisions of the fleet automobile liability insurance policy #480202 09087485 owned by the Town of Jonesboro, Indiana.

'5. That the plaintiff has a right of subrogation to recover the $11,976.12 workmen's compensation benefits paid to the defendant under workmen's compensation insurance policy #441702 09091528 owned by the Town of Jonesboro, Indiana.

'6. That the plaintiff is entitled to deduct the $11,976.12 workmen's compensation benefits it paid to the defendant under the workmen's compensation insurance policy $441702 09091528 owned by the Town of Jonesboro, Indiana, in payment to said defendant of the $10,000.00 proceeds due him pursuant to the uninsured motorist provisions of the fleet automobile liability insurance policy #480202 09087485 owned by the Town of Jonesboro, Indiana.

'7. That further proceedings in the defendant's demand for arbitration before the American Arbitration Association will be useless.

'8. That the defendant take nothing under the uninsured motorist provisions of the fleet automobile liability insurance policy #480202 0908745 owned by the Town of Jonesboro, Indiana.

'9. That the defendant should be permanently restrained and enjoined from further action in his demand for arbitration against the plaintiff.' (Emphasis supplied.)

Leist's Motion to Correct Errors recited as error that:

'1. The decision of the trial court to allow Auto-Owners to be subrogated to the Ten thousand dollars ($10,000.00) awarded under the uninsured motorist provision of the fleet liability policy is a decision that is contrary to law.'

Attached to the Motion to Correct Errors, however, is a Memorandum which expanded on the sole error stated in the Motion itself.

ISSUES

ISSUE ONE. Did Leist change his theory of the case upon appeal and was his Motion to Correct Errors sufficiently specific to preserve his allegation of trial court error?

ISSUE TWO. May Auto-Owners use the Set Off Clause in the automobile insurance policy to reduce sums payable thereunder by the amount of workmen's compensation benefits received by Leist?

ISSUE THREE. Does Auto-Owners have a right to be subrogated to any amounts due Leist from the uninsured motorist proceeds?

As to ISSUE ONE, Auto-Owners contends that Leist changed his 'theory of the case' from one of illegality of the Set Off Clause in the automobile liability insurance policy to whether or not Auto-Owners, as the workmen's compensation carrier, could be subrogated to the proceeds payable to Leist under the uninsured motorist coverage . . . and thereby waived consideration of this latter issue on appeal.

Further, Auto-Owners contends that Leist waived the issue regarding the Set Off Clause in Employer Town's automobile insurance policy because it was not preserved in his Motion to Correct Errors as required by Rule TR. 59(B) and (G).

In response, Leist contends that he did not change his theory on appeal because he argued the subrogation issue at trial in his trial brief as did Auto-Owners and the trial court found subrogation to be an issue in the case by entering a Conclusion of Law thereon.

Leist points to certain language in his Memorandum in Support of the Motion to Correct Errors as being sufficient to preserve the issue of legality of the Set Off Clause.

As to ISSUE TWO, Leist argues that Auto-Owners, as the automobile liability insurer, cannot reduce or limit its uninsured motorist coverage by the device of a Set Off Clause, because to do so is in derogation of the Indiana Uninsured Motorist Statute.

Auto-Owners' response is that the purpose of such a clause is to avoid double recovery and that the uninsured motorist endorsement effectively places the insured in an equivalent position to that which he would have occupied had the tortfeasor been insured with the minimum automobile liability insurance coverage.

As to ISSUE THREE, Leist contends that Auto-Owners, as the workmen's compensation carrier, has no subrogation rights to proceeds payable to him pursuant to the uninsured motorist endorsement. His right to these proceeds is a contractual right, and not a tort right, and, as such, gives the workmen's compensation carrier no subrogation rights because such carrier claims have been limited to tort actions against third party tortfeasors, or their insurers.

In response, Auto-Owners contends that the exercise of its subrogation rights is not limited to tort actions. Auto-Owners further argues that the Indiana Workmen's Compensation Act, IC 1971, 22--3--2--1, Ind.Ann.Stat. § 40--1201 (Burns' Supp.1973) specifically entitles the carrier subrogation rights to amounts recovered by the injured employee regardless of their source.

DECISION

ISSUE ONE.

CONCLUSION--Leist did not change his 'theory of the case' on appeal and the Memorandum in Support of the Motion to Correct Errors was sufficiently specific to preserve the issue of the legality of the Set Off Clause.

Cases prior to adoption of the Indiana Rules of Procedure (effective January 1, 1970) had adopted the principle that an appellant may not approach the case upon a theory different from the one relied upon at trial (Stazinski v. New York Central R.R. Co., (1966) 140 Ind.App. 234, 220 N.E.2d 537; Wilson v. Dexter, (1963) 135 Ind.App. 247, 192 N.E.2d 469). However, there is nothing in these cases that prevents a defendant-appellant, such as Leist, from arguing on appeal an issue treated at trial by both parties and upon which the trial court entered a Conclusion of Law.

It is likely these cases are obsolete. Justice Hunter, commenting on the 'new' procedural rules in Ayr-Way Stores, Inc. v. Chitwood, (1973) Ind., 300 N.E.2d 335, 338, referred to comments in a previous case:

"This new code, as regards the pleadings in a civil action, closely parallels the 'notice pleading' enunciated in the Federal Rules of Civil Procedure and currently used by the federal district courts. It must be presumed that the trend and expressed legislative intent is one of simplifying the procedure of pleading." (Original emphasis.) (Quoting from Morrison's Southern Plaza Corp., et al. v. Southern Plaza, Inc., (1969) 252 Ind. 109, at 121, 246 N.E.2d 191, at 198.)

Recently, ² and more specifically, Judge Sullivan quoted approvingly from Bielat v. Folta, (1967) 141 Ind.App. 452, 454, 229 N.E.2d 474, 475, this language:

"Appellees' argument and decisions relied on relating to a departure from the 'theory of the case' have no application here. The rule that parties will be held to trial court theories by the appellate tribunal does not mean that no new position may be taken, or that new arguments may not be adduced; all that it means is that substantive questions independent in character and not within the issues or not presented to the trial court shall not be first made upon appeal. Questions within the issues and before the trial court are before the appellee (sic) court, and new arguments and authorities may with strict priority be brought forward." (Emphasis supplied.) 307 N.E.2d at 905.

Although Auto-Owners, as Plaintiff below, did not include the issue of subrogation in its Complaint, it nevertheless argued the issue in its trial brief as did Leist. The subrogation and Set Off...