Schafer v. Buckeye Union Ins. Co.

• Decision Date: 19 October 1978
• Docket Number: No. 3-676A136,3-676A136
• Citation: 381 N.E.2d 519,178 Ind.App. 70
• Parties: Nelson SCHAFER, Julia Schafer and Robert Schafer, Plaintiffs-Appellants, v. BUCKEYE UNION INSURANCE COMPANY and Grain Dealers Mutual Insurance Company, Defendants-Appellees.
• Court: Indiana Appellate Court

Page 519

381 N.E.2d 519

178 Ind.App. 70

Nelson SCHAFER, Julia Schafer and Robert Schafer Plaintiffs-Appellants, v. BUCKEYE UNION INSURANCE COMPANY and Grain Dealers Mutual Insurance Company, Defendants-Appellees.

No. 3-676A136.

Court of Appeals of Indiana, Third District.

Oct. 19, 1978.

James M. Miller of Feeney & Stratigos, Voor, Jackson, McMichael & Allen, William E. Voor, Jr., South Bend, for plaintiffs-appellants.

James H. Pankow, South Bend, for defendants-appellees.

GARRARD, Presiding Judge.

On February 24, 1973, fire partially destroyed a storage building and its contents. The building was owned by Nelson and Julia Schafer and was insured by Grain Dealers Mutual Insurance Company. The building had been leased to Nelson's brother, Robert Schafer, who owned the contents. These were insured by Buckeye Union Insurance Company. Both insurance policies contained a contractual limitation against bringing suit on a claim more than twelve (12) months after occurrence of the loss. When Schafers commenced suit nearly two (2) years after the fire, the insurers raised this limitation as an affirmative defense. ¹ Subsequently, they moved for summary judgment on grounds the suits were barred by the limitation. This motion was granted and Schafers appeal. They claim there was a disputed issue of material fact concerning waiver of, or estoppel to assert, the one year limit.

I. Factual Background

By affidavit and stipulation various materials before the court on the motion for summary judgment established the following background. The loss occurred February 24, 1973, and suit was not commenced until February 19, 1975. Immediately after the loss the Schafers gave notice of their claim. This was followed shortly thereafter with an itemization of their claimed losses. They also executed insurance forms acknowledging that no representative was authorized to waive any of the provisions contained in the policy unless the waiver was specific and in writing.

In accord with the policy requirements the insurers requested to take depositions of the Schafers. These were scheduled for June 7, 1973. However, before this was accomplished Nelson and Julia Schafer accidentally received a copy of a letter from the claims adjustment service intended for Grain Dealers Mutual. In it the adjuster disclosed that as soon as the depositions were taken the proofs of loss which had been submitted were to be rejected. This resulted in argument and delay. On June 19th the insurers rejected the proofs of loss for "failure to comply with policy conditions" and because of the amount claimed. On September 12, 1973 the depositions were taken.

On September 26 Schafers offered a compromise settlement. The insurers counter-offered by letters dated October 16 and October 29. The last week of November Schafers made another settlement proposal. On December 3, 1973, counsel for the insurers responded. He reported transmitting information to the insurers, ² reiterated that the difference in position concerning the building loss centered on the extent of fire damage, and concluded by stating,

"In any event, I shall advise you of what I further hear with respect to your correspondence."

Thereafter correspondence continued concerning Schafers' requests for copies of their depositions, but no further mention of settlement was made prior to February 24, 1974. At no time did the insurers deny liability. The dispute centered, instead, upon the amount of loss. While some of the correspondence from the insurers closed with a general statement that the company did not thereby intend to waive any of its rights under the policy, at no time did the insurers expressly advise Schafers of the one year suit limitation or their intent to rely upon it.

II. Issues Raised by Pleadings

In support of their position the insurers first argue that summary judgment was proper because no issue of waiver or estoppel was before the court. They urge that waiver and estoppel are affirmative defenses and, as such, must be specially pleaded as required by TR 8(C). Since this was not done they contend Schafers were precluded from asserting waiver or estoppel to defeat summary judgment.

Admittedly, Schafers filed no reply to the defense of the one year limitation which the insurers pleaded affirmatively in their answer. However, we disagree with appellees as to the conclusion to be drawn therefrom.

The reason arises from the operative intent of the rules as controlling trial procedure in all civil actions rather than the phraseology of a particular section. ³ This intent was clearly manifested by the Civil Code Study Commission in its comments to TR 7(A) contrasting the operation of the rules to the prior operation of the Field Code:

"Code pleading emphasized the role of issue-formulation in the pleadings. Consequently, the parties were expected to distill the issues by countering and criticizing the written pleadings with motions and demurrers. The framers of the Field Code felt that a three step process would be necessary if the issues were to be defined. The new procedure emphasizes the notice function of pleading and Relieves it of issue formulation.

Under the new rules a case will be readied for trial by the following process: (1) The pleadings will identify the general character of the dispute; (2) discovery will develop the factual background of the dispute and the version of the facts relied upon by each party; (3) The pre-trial conference will frame the issues. The trial can then center on the True controversy between the parties instead of an artificial one produced by the pleadings." (Emphasis added)

1 Harvey, Indiana Practice 460.

Thus, the concept of the rules is to focus upon the pre-trial conference and order as the procedural device for formulating the real issues that should be submitted to trial. Accord, Colonial Mortgage Co. v. Windmiller (1978), Ind.App., 376 N.E.2d 529.

Since no pre-trial order had been entered in the present case, formulation of the issues had not Necessarily been completed.

Of course this lack of finality would not per se preclude a court from properly granting summary judgment. TR 56(C) and (E) clearly provide that summary judgment rulings depend upon the matters that are actually put before the court. See, e. g., Letson v. Lowmaster (1976), Ind.App., 341 N.E.2d 785. It does, however, permit the opponent of the summary judgment to raise matters which provide an actual defense. In other words, it precludes the Procedural bar urged by the insurers. If the pleadings, depositions, etc. disclosed a genuine issue of waiver or estoppel as asserted in opposition to the motion, then the court was required to consider those issues in determining whether summary judgment was proper.

III. The Claim of Waiver or Estoppel

The insurance contracts identically provided,

"No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twelve months next after inception of the loss."

The summary judgment was granted because of Schafers' failure to comply with the twelve month provision.

From the numerous decisions considering similar insurance policy limitations, we may readily discern three generalizations. It is well established in Indiana that, while not favored, such contractual limitations shortening the time to commence suit are valid, at least so long as a reasonable time is afforded. Huff v. Travelers Indemnity Co. (1977), Ind., 363 N.E.2d 985. However, as the Huff court pointed out, these limitations are "easily" waived. "Slight acts and circumstances may be sufficient . . . ." 363 N.E.2d at 992. Moreover, in treating the defenses of waiver and estoppel the decisions tend to fail to distinguish between them or to ignore the distinction. See, e. g., Huff, supra ; Anno., 29 A.L.R.2d 636. This no doubt...