Medtech Corp. v. Indiana Ins. Co., 73A01-8912-CV-530

• Decision Date: 20 June 1990
• Docket Number: No. 73A01-8912-CV-530,73A01-8912-CV-530
• Citation: 555 N.E.2d 844
• Parties: MEDTECH CORPORATION, Biotechnics Corporation, Appellants-Plaintiffs, v. INDIANA INSURANCE COMPANY, and Joe Ferree Agency, Inc., and Thomas A. Shearer, Appellees-Defendants.
• Court: Indiana Appellate Court

Page 844

555 N.E.2d 844

MEDTECH CORPORATION, Biotechnics Corporation, Appellants-Plaintiffs, v. INDIANA INSURANCE COMPANY, and Joe Ferree Agency, Inc., and Thomas A. Shearer, Appellees-Defendants.

No. 73A01-8912-CV-530.

Court of Appeals of Indiana,

First District.

June 20, 1990.

Robert M. Baker, III, Frederick D. Emhardt, Miller, Faires, Hebert, Woddell & Baker, Indianapolis, for appellants-plaintiffs.

Richard E. Aikman, Jr., William J. Hamilton, Stewart & Irwin, Indianapolis, for appellees-defendants.

RATLIFF, Chief Judge.

STATEMENT OF THE CASE

Medtech Corporation (Medtech) and Biotechnic (Biotechnic) Corporation appeal the trial court's grant of summary judgment in favor of the Joe Ferree Agency, Inc. (Ferree) and Thomas A. Shearer (Shearer) on Medtech and Biotechnic's complaint alleging the wrongful denial of an insurance claim. We reverse and remand for proceedings consistent with this opinion.

FACTS

In 1983, Chris and Michael Groninger, presidents of Biotechnic and Medtech, respectively, contacted Shearer of the Joe Ferree Agency in order to obtain insurance for the two corporations. Prior to joining Ferree's Agency, Shearer had been a Initially the roofing company's insurance carrier indicated that it would pay the claim presented by Medtech and Biotechnic. However, after extended negotiations aggravated by Medtech and Biotechnic's difficulty in ascertaining the value of their destroyed inventory, the roofer's insurance company refused to pay the claim. In August of 1986, Medtech and Biotechnic sought to recover the amount of their loss from Indiana Insurance and thus contacted Shearer. Shearer called Indiana Insurance which indicated that it would deny the corporations' claims because Medtech and Biotechnic did not file a sworn proof of loss within sixty (60) days and did not bring suit against Indiana Insurance within one (1) year of the date of the loss as required under the policy.

long-time employee of the Indiana Insurance Company (Indiana Insurance). On October 6, 1983, through the efforts of Shearer, Indiana Insurance issued to Medtech and Biotechnic an insurance policy which covered the corporations' inventory, equipment, and supplies and which provided liability coverage. On November 27, 1983, while the roof of the building being leased by Medtech and Biotechnic was undergoing repairs, rain cascaded through the roof and damaged the corporations' inventory, equipment, and supplies. Shortly after this incident Michael Groninger reported the loss to Shearer. On November 28, 1983 Shearer prepared a property loss notice and forwarded the document to Indiana Insurance. The document was designated "For Reporting Purposes Only" by Shearer. Chris Groninger stated that Shearer told her that if Indiana Insurance needed further information, the company would ask for it. Chris also stated that Shearer assured her that the property loss notice would preserve Medtech and Biotechnic's claims under the insurance policy, and that the notice would protect Medtech and Biotechnic if the roofing company failed to compensate the corporations for the damage incurred.

Following the denial of their claim, Medtech and Biotechnic filed a complaint against Indiana Insurance, the Ferree Agency, and Shearer on December 3, 1986. On August 4, 1988, Indiana Insurance moved for summary judgment, and on November 2, 1988, Ferree and Shearer also moved for summary judgment. On November 17, 1988, a hearing was held on the motions, and on March 22, 1989, the trial court entered summary judgment in favor of Indiana Insurance, the Ferree Agency, and Shearer on counts II through V of the corporations' complaint. Because the Ferree Agency and Shearer were not named in count I of the complaint, the trial court's entry of summary judgment effectively ended the litigation against those parties. On April 11, 1989, on its own motion the trial court made final its order with respect to the Ferree Agency and Shearer. From this order, Medtech and Biotechnic now appeal.

ISSUES

Given Shearer's assurances that the losses suffered by Medtech and Biotechnic were covered under their policy with Indiana Insurance, and that Shearer would take the necessary steps for processing the corporations' claims under the policy, whether or not the trial court's entry of summary judgment in favor of Shearer and the Ferree Agency was erroneous based on:

1. the doctrine of promissory estoppel;

2. the tort of actual or constructive fraud; or

3. the principles of agency.

DISCUSSION AND DECISION

We note that this is an appeal from the grant of summary judgment in favor of Shearer and the Ferree Agency. When presented with a challenge to the trial court's ruling on a motion for summary judgment our standard of review is well settled: "We consider the contents of the pleadings, affidavits, answers to interrogatories, responses to requests for admissions, and depositions in a light most favorable to the non-moving party to determine whether any genuine question of fact exists, and whether the moving party is entitled to summary judgment as a matter of law." Franklin Bank & Trust Co. v. Mithoefer (1990), Ind.App., 552 N.E.2d 39, 41; Watson Rural Water Co. v. Indiana Cities Water Corp. (1989), Ind.App., 540 N.E.2d 131, 132 trans. denied.

Issue One

We first address whether or not application of the doctrine of promissory estoppel to the present case requires that we reverse the trial court's entry of summary judgment in favor of the Ferree Agency and Shearer. Assuming, without deciding, that affirmative relief is appropriately gained by arguing the doctrine of promissory estoppel, we hold that summary judgment in favor of Shearer and the Ferree Agency was improper on this count of Medtech and Biotechnic's complaint. The corporations correctly note that "the doctrine of promissory estoppel applies where there is a promise upon which the promisor could reasonably expect to induce action or forbearance of a definite and substantial character which does in fact induce such action or forbearance and injustice can only be avoided by enforcement of the promise." Appellants' Brief at 13; see Woodall v. Citizens Banking Co. (1987), Ind.App., 507 N.E.2d 999, 1000, trans. denied; Security Bank & Trust Co. v. Bogard (1986), Ind.App., 494 N.E.2d 965, 968; Tipton County Farm Bureau Co-op v. Hoover (1985), Ind.App., 475 N.E.2d 38, 41, trans. denied. "A promise is a voluntary commitment or undertaking by the party making it (the promisor) addressed to another party (the promisee) that the promisor will perform some action or refrain from some action in the future." Woodall, 507 N.E.2d at 1000, quoting J. Murray, Murray on Contracts, 2-3 (2d Ed.1974). Although no special form of words is necessary to create a promise, the mere expression of an intention is not a promise. Security Bank, 494 N.E.2d at 968-69. Nor does a prediction, opinion, or prophecy constitute a promise. Id.

Shearer and the Ferree Agency argue that the representations made by Shearer at most amount to Shearer's opinion as to what was necessary to preserve the corporations' claims, or Shearer's predictions concerning the outcome of the corporations' claims, rather than promises that the actions taken would definitely preserve such claims. However, Medtech and Biotechnic note that Shearer prepared a property loss notice on behalf of the corporations. Also, while aware of Medtech's and Biotechnic's desire to preserve their claims against Indiana Insurance and having worked for Indiana Insurance for a number of years, Shearer assured Chris Groninger that forwarding the notice to the insurance company would have this effect, and that if the insurance company needed more information it would ask for it. Medtech and Biotechnic assert, and we agree, that these assurances constituted promises upon which the corporations relied in not pursuing an immediate claim against Indiana Insurance.

Because we hold that Shearer's statements constituted promises, rather than opinions, Medtech and Biotechnic could have recovered against Shearer and the Ferree Agency based on the doctrine of promissory estoppel and the trial court erred in entering summary judgment in favor of Shearer and the Ferree Agency regarding this theory of recovery.

Issue Two

Medtech and Biotechnic next contend that the trial court erred in granting summary judgment in favor of Shearer and the Ferree Agency on counts III and IV of the corporations' complaint which were based on actual and constructive fraud. The essential elements of actual fraud are a material representation of past or existing facts, which representation is false, made with knowledge or reckless ignorance of its falsity, which causes reliance to the detriment of the person relying on the representation. First National Bank v. Acra (1984), Ind.App., 462 N.E.2d 1345, 1348.

Medtech and Biotechnic argue that Shearer's assurances constituted representations of fact upon which the corporations justifiably relied. In support of this contention Medtech and Biotechnic cite the case of Vernon Fire and Casualty Insurance Co. v. Thatcher (1972), 152 Ind.App. 692, 285 N.E.2d 660, trans. denied. In Vernon, the court of appeals rejected a sufficiency challenge to the trial court's determination that an insurance agent's specific assurance that certain losses were covered under the insured's policy constituted a representation of fact. Id. at 707, 285 N.E.2d at 669. In so doing, Judge White noted:

"We recognize ... that the legal effect of a contract, or of a particular provision of a contract, can often be a matter of uncertainty. In such cases one may in all honesty, candor, and sincerity, state his opinion predicting the ultimate interpretation without thereby making a statement of fact. But what may subjectively be merely an opinion can, nevertheless, be stated as a present existing fact. If the statement thus made as a representation is not true but is justifiably relied on as being...