State Farm Mut. Auto. Ins. Co. v. McNeal

• Decision Date: 12 June 2007
• Docket Number: No. 3:06-CV-85-WGH-RLY.,3:06-CV-85-WGH-RLY.
• Citation: 491 F.Supp.2d 814
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff, v. Luther McNEAL, Monica McNeal, Kendall O'Donnell, Jennifer O'Donnell, Lisa O'Donnell, Drake O'Donnell, Tabitha Lowry, Tia O'Donnell, Breshauna Rivers, Carol O'Donnell, and Dorothy O'Donnell, Defendants.
• Court: U.S. District Court — Southern District of Indiana

491 F.Supp.2d 814

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff, v. Luther McNEAL, Monica McNeal, Kendall O'Donnell, Jennifer O'Donnell, Lisa O'Donnell, Drake O'Donnell, Tabitha Lowry, Tia O'Donnell, Breshauna Rivers, Carol O'Donnell, and Dorothy O'Donnell, Defendants.

No. 3:06-CV-85-WGH-RLY.

United States District Court, S.D. Indiana, Evansville Division.

June 12, 2007.

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Brent R. Weil, Kase Leigh McCoy, Kightlinger & Gray, Evansville, IN, for Plaintiff.

Jeffrey Ryan Kooi, Kooi Law Firm LLC, Stephen M. Wagner, Wagner Reese & Crossen LLP, Carmel, IN, for Defendants.

ENTRY ON PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT

HUSSMANN, United States Magistrate Judge.

Introduction

This matter is before the Honorable William G. Hussmann, Jr., United States Magistrate Judge, on Plaintiff's Motion for Partial Summary Judgment filed December 5, 2006. (Docket Nos. 38-39).¹ Defendants filed their responses on February 9, 2007. (Docket Nos. 43-44). Plaintiff filed its reply brief on March 2, 2007. (Docket No. 47).² The O'Donnell, Lowry and Rivers Defendants filed a Surreply on March 13, 2007. (Docket No. 49).³ These same Defendants also filed a Motion to Strike Plaintiffs' Notice of Additional Authority. (Docket No. 57).⁴

Background

This matter arises out of a motor vehicle accident which occurred on July 3, 2004, on Interstate 1-55 in Pemiscot County, Missouri. (Complaint ¶ 9). On July 3, 2004, at approximately 7:55 a.m., Defendants Kendall O'Donnell, Jennifer O'Donnell, Lisa O'Donnell, Drake O'Donnell, Tabitha Lowry, Tia O'Donnell, Breshauna Rivers, Carol O'Donnell and Dorothy O'Donnell were passengers in a 2002 green Ford E350 van, which was being operated by Defendant Monica McNeal, when the vehicle was involved in a motor vehicle accident which involved the van leaving the traveled portion of the highway, rolling' over, and causing injuries to Defendants who were each occupants of the van. (Id. ¶ 10). According to Defendants, the July 3, 2004 accident was caused, in part or in whole, due to the actions of an unknown motorist operating a "black car" that cut in front of the van⁵ and forced it off the traveled portion of the roadway and/or due to the actions of Monica McNeal. (Id. ¶ 11-12).

At the time of the incident described above, Defendants Kendall O'Donnell, Jennifer O'Donnell, Lisa O'Donnell, Drake O'Donnell, and Tabitha Lowry resided with Luther and Monica McNeal at 14 West Maryland Street in Evansville, Indiana, and were related to Luther and Monica McNeal by blood or marriage. (Id. ¶ 4).

The 2002 green Ford E350 van involved in the accident had been rented by the McNeals from Bruce Woodring Auto Leasing and Sales in Henderson, Kentucky, for the trip. (Id. ¶ 8).

On July 3, 2004, Defendants Luther and Monica McNeal had in effect a certain policy of automobile liability insurance issued by Plaintiff, State Farm Mutual Automobile Insurance Company, under Policy No. 48-1472-007-14, which insured a 1998 Chevrolet Venture van and provided liability insurance coverage limits of $50,000 per person and $100,000 per accident, medical payments coverage of $5,000 per person and uninsured/underinsured motor vehicle insurance in the amount of $50,000 per person/$100,000 per accident. (Id. ¶ 3). The Policy was issued by the State Farm Indiana Operations Center office in West Lafayette, Indiana, and was sent to Luther and Monica McNeal's residence located at 14 West Maryland Street in Evansville, Indiana. (Id. at Ex. A). The terms of the insurance policy were negotiated by the McNeals and the office of State Farm agent Vicki Brasel, located at 11 Vann Avenue in Evansville, Indiana. (Id.) Additionally, at the time of the alleged incident, the McNeals had in effect one other State Farm automobile insurance policy, insuring another automobile that they owned under Policy # 0772-214-14 which provided identical liability coverage and uninsured motorist coverage ($50,000 per person/$100,000 per accident) as was provided by Policy # 48-1472-007-14. (Id. at Count III and Ex. B).

As a result of the above-described incident, the Defendant driver, Monica McNeal, and the above-listed passengers/occupants of the 2002 green Ford E350 van, claimed to have suffered injuries of one type or another as a result of said incident. (Id. ¶ 13). Further, Plaintiff anticipates that Defendant Luther McNeal, as husband of Defendant Monica McNeal, may also claim to have suffered certain injuries in the form of loss of consortium or loss of services as a consequence of the motor vehicle accident on July 3, 2004. (Id. ¶ 14). Plaintiff has already received various claims and/or demands from representatives of Defendants for damages as a consequence of injuries they claim to have suffered in the July 3rd motor vehicle accident. (Id. ¶ 15).

Plaintiff brought this action alleging that it has "no obligation to defend or indemnify Monica McNeal for any claims of negligence or fault under the liability provisions of this State Farm policy for claims asserted by her and the injuries suffered by the Defendants, Kendall O'Donnell, Jennifer O'Donnell, Lisa O'Donnell, Drake O'Donnell, and Tabitha Lowry," pursuant to the policy's family exclusion. (Complaint at Count I, ¶ 4). Plaintiff also alleges that the State Farm policy does not provide for uninsured motorist coverage given the circumstances surrounding the automobile accident at issue in this suit. (Complaint at Count II, ¶¶ 3-4). Finally, Plaintiff alleges that the State Farm policy includes anti-stacking provisions, that Indiana law permits such provisions, and that the provisions should be enforced in this instance. (Complaint at Count III, ¶¶ 3-5).

In its Partial Motion for Summary Judgment, Plaintiff argues that Indiana law applies to this dispute, that the State Farm policy's family exclusion applies and relieves Plaintiff of any obligation with regard to injuries sustained by Defendants Kendall O'Donnell, Jennifer O'Donnell, Lisa O'Donnell, Drake O'Donnell, and Tabitha Lowry, and that the State Farm policy's anti-stacking and setoff/credit provisions also apply to this suit.

Analysis

The parties' cross-motions and briefs have asked the Court to interpret the policy provisions and render certain legal declarations which will govern the final resolution of the claims brought under the policies. The questions posed are as follows:

1. Shall the insurance policy be interpreted under Indiana or Missouri law?

2. Under the applicable state's law, does the "Out-of-State Coverage" provisions require the application of Missouri law to any claims?

3. Under the applicable state's law, does the "Resident Relative Exclusion" apply in this case?

4. If Defendants' vehicle was not "struck," would payments be required under the policy?

5. Do the anti-stacking provisions in the policy apply in this case?

6. Is State Farm entitled to an offset?

7. How does the doctrine of "dépe age" affect the outcome of this case?

Issue 1: Shall the insurance policy be interpreted under Indiana or Missouri law?

This is a suit based on the Court's diversity jurisdiction. While a federal court sitting in diversity jurisdiction shall apply its own procedural laws, it must apply the substantive laws of the state in which it sits. First Nat. Bank and Trust Corp. v. American Eurocopter Corp., 378 F.3d 682, 689 (7th Cir.2004). The Court must, therefore, apply Indiana substantive law. However, "[i]f the laws of more than one jurisdiction arguably are in issue, Erie also requires a federal court to apply [the forum] state's choice of law rules." Jean v. Dugan, 20 F.3d 255, 260-61 (7th Cir.1994). Thus, the Court must apply Indiana's choice of law rules.

In Indiana, choice of law rules in the area of contracts call for the Court to apply the law of the place with the "most intimate contacts" or "most significant relationship." NUCOR Corp. v. Aceros Y Maquilas de Occidente, S.A. de C. V., 28 F.3d 572, 581 (7th Cir.1994). The Supreme Court of Indiana, in W.H. Barber Co. v. Hughes, indicated that this test requires the Court to examine "all acts of the parties touching the transaction in relation to the several states involved," and follow "the law of that state with which the facts are in most intimate contact." W.H. Barber Co. v. Hughes, 223 Ind. 570, 63 N.E.2d 417, 423 (1945). In determining which state has the most intimate contacts, the list of factors that courts in Indiana are to consider include: (1) the place of contracting; (2) the place where contract negotiations occurred; (3) the place of performance; (4) the location of the subject matter of the contract; and (5) the location of the parties. Employers Ins. of Wausau v. Recticel Foam Corp., 716 N.E.2d 1015, 1024 (Ind.Ct.App.1999).

Defendants argue that Cox by Zick v. Nichols, 690 N.E.2d 750 (Ind.Ct.App.1998), should apply to the facts of this case, and they further argue that Cox requires a hybrid contract/tort choice of law analysis in cases involving disputes about uninsured motorist policies. However, we have examined Cox and its predecessor, Pennington v. American Family Ins. Group, 626 N.E.2d 461 (Ind.Ct.App.1993), and determined that those cases lead the Court to the conclusion that the proper choice of law analysis lies in contract.

In Cox, the Indiana Court of Appeals did not squarely address whether a contract or tort analysis should be applied in an uninsured motorist claim context. In that case, the Court held that the factors there present favored the application of Indiana law "under either the contract or the tort analysis." Cox, 690 N.E.2d at 752 (emphasis added). This Court cannot discern a clear holding that one or the other of the two possible analyses should apply. Because Cox did not clearly reverse or modify Pennington, this Court concludes that Pennington stands as the most recent holding addressing this issue in Indiana.

Pennington clearly announced that "Mil conflict of...