Milwaukee Guardian Ins., Inc. v. Reichhart

• Decision Date: 03 July 1985
• Docket Number: No. 3-1284A349,3-1284A349
• Citation: 479 N.E.2d 1340
• Parties: MILWAUKEE GUARDIAN INSURANCE, INC., Appellant (Defendant Below), v. Donald L. REICHHART, Appellee (Plaintiff Below).
• Court: Indiana Appellate Court

Page 1340

479 N.E.2d 1340

MILWAUKEE GUARDIAN INSURANCE, INC., Appellant (Defendant Below), v.Donald L. REICHHART, Appellee (Plaintiff Below).

No. 3-1284A349.

Court of Appeals of Indiana Third District.

July 3, 1985.

Donald R. Clifford, Donald R. Clifford, P.C., Fort Wayne, for appellant.

Warren W. Wyneken, Wyneken & Kern, Fort Wayne, for appellee.

HOFFMAN, Judge.

Milwaukee Guardian Insurance, Inc.(Milwaukee) appeals an adverse judgment entered in favor of Donald L. Reichhart(Reichhart) awarding him damages incurred in defense of a lawsuit filed by John and Connie Kennerk(Kennerk).

The evidence submitted herein shows that Reichhart was joined as a party to the Kennerk lawsuit in February, 1982.Reichhart was alleged to have been negligent in clearing a drainage ditch to permit the natural flow of water over the Kennerk land.After receiving a copy of the complaint and summons, in late March, 1982, Reichhart retained attorney, Warren W. Wyneken, to represent him.Wyneken conducted an investigation into the allegations against Reichhart and prepared for and successfully defended Reichhart at trial.

During the course of the Kennerk trial, Reichhart was alerted by a neighbor that his homeowners insurance policy might provide coverage for the acts complained of in the Kennerk suit.Reichhart contacted his insurance agent, Lynn Wegmann, and provided Wyneken with a copy of his insurance policy.The policy was determined to provide coverage for Reichhart's acts.Milwaukee, however, denied liability because of Reichhart's failure to notify the company of the Kennerk claim and suit until after the trial was concluded, approximately eleven months after suit had been filed.¹

Reichhart filed suit against Milwaukee to recover expenses and attorney's fees incurred in retaining Wyneken to defend him in the Kennerk suit.Trial was held in August, 1984, and findings of fact and conclusions of law were entered in favor of Reichhart.

The issue dispositive of this appeal is whether an insured may recover, under a contract of insurance, expenses and attorney's fees incurred in defense of a lawsuit where his insurance company was not provided with notice of the suit until after trial was concluded on the merits of the action.

At issue herein are various provisions in Reichhart's homeowners insurance policy respecting notice of a claim and the voluntary retention of an attorney by an insured.Pursuant to Section II of the policy, if there is an accident or occurrence, an insured is required to:

"a.give written notice to [Milwaukee] or [its] agent as soon as practicable, which sets forth:

(1) the identity of the policy and insured;

(2) reasonably available information on the time, place and circumstances of the accident or occurrence; and

(3) names and addresses of any claimants and available witnesses;

b. forward to [Milwaukee] every notice, demand, summons or other process relating to the accident or occurrence[.]"Milwaukee Insurance Policy, Section II-3.

The policy further states that:

"e.the insured shall not, except at the insured's own cost, voluntarily make any payment, assume any obligation or incur any expense other than for first aid to others at the time of the bodily injury."Milwaukee Insurance Policy, Section II-3(e).

As a prerequisite to bringing an action for proceeds under the policy, an insured must comply with all provisions of the contract, including the notice provision above.Milwaukee Insurance Policy, Section II-6.

As a general rule, if provisions in an insurance contract are ambiguous, the contract will be construed in favor of the insured.Taylor et al. v. Amer. Underwriters(1976), 170 Ind.App. 148, 352 N.E.2d 86.Ambiguity is said to exist when a contract is susceptible to more than one interpretation and reasonably intelligent men would honestly differ as to its meaning.Northland Ins. Co. v. Crites (1981), Ind.App., 419 N.E.2d 164.If a contract is not ambiguous, it will be given its plain and ordinary meaning.Miller v. Dilts (1984), Ind., 463 N.E.2d 257.

Reichhart does not appear to argue that the contract provisions are ambiguous and even concedes that he voluntarily employed Wyneken to defend him in the Kennerk lawsuit.It is clear that written notice of the suit was not forwarded to Milwaukee until eleven months after suit was filed and after the trial was completed.Reichhart asserts, however, that due to the nature of the Kennerk claim, he was unaware that his homeowners insurance might provide liability coverage and a legal defense for the Kennerk suit and therefore he should not be required to fulfill the contract provisions respecting notice.Additionally, Reichhart argues that because of Wyneken's skillful handling of the Kennerk case and his success at trial, Milwaukee was not prejudiced by his delay in giving notice.

Although Reichhart asserts that the nature of the Kennerk action did not alert him to the possibility of insurance coverage, the record clearly shows that after he received notice of the suit, Reichhart made no inquiry as to whether he might be insured, either of Wyneken, of his insurance agent, or of Milwaukee.Reichhart was knowledgeable in matters of insurance and had carried Milwaukee Guardian Insurance, both personal and business, through the Wegmann agency for twenty years.He and his family had submitted various claims for insurance prior to the Kennerk suit.Reichhart testified that Wegmann was an accessible insurance agent and Reichhart was normally in contact with Wegmann every two or three months.During the pendency of the Kennerk suit, Reichhart met with Wegmann to discuss and renew his homeowners insurance.At that meeting Reichhart made no mention of the pending Kennerk suit.Reichhart had the opportunity to inquire as to possible insurance coverage but failed to do so.

The trial judge, in his findings of fact, correctly notes that a presumption of prejudice arises from Reichhart's delay in notifying Milwaukee.In the case of Miller v. Dilts, supra, Ind., 463 N.E.2d 257, the Supreme Court of Indiana recently discussed the importance of giving notice of a claim to an insurance company to enable it to prepare the defense of a lawsuit.In ruling against three insureds for failure to give timely notice of a claim, the Court in Miller states:

" '[n]otice is a threshold requirement which must be met before an insurer is even aware that a controversy or matter exists which requires the cooperation of the insured.'The notice requirement is 'material, and of the essence of the contract.'London Guarantee, supra,...