State Farm Mut. Auto. Ins. Co. v. Gutierrez, 45A03-0408-CV-368.

Decision Date30 March 2006
Docket NumberNo. 45A03-0408-CV-368.,45A03-0408-CV-368.
Citation844 N.E.2d 572
PartiesSTATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and Michael Cancel, Appellants-Defendants, v. Francisco GUTIERREZ, Appellee-Plaintiff.
CourtIndiana Appellate Court

Karl L. Mulvaney, Nana Quay-Smith, Candace L. Sage, Bingham McHale, Indianapolis, Richard M. Davis, Jack A. Kramer, Kevin G. Kerr, Hoeppner Wagner & Evans, Valparaiso, Robert D. Brown, Spangler, Jennings & Dougherty, Merrillville, for Appellants.

Beth L. Brown, Timothy F. Kelly & Associates, Dyer, for Appellee.

OPINION

NAJAM, Judge.

STATEMENT OF THE CASE

Francisco Gutierrez filed a complaint alleging negligence against Michael Cancel and bad faith and breach of contract against State Farm Mutual Automobile Insurance Company ("State Farm"). A jury found in favor of Gutierrez and returned verdicts against Cancel in the amount of $160,000 and against State Farm in the amount of $17,221.31 for breach of contract, $350,000 for bad faith, and $500,000 in punitive damages. State Farm and Cancel appeal and present several issues for our review:

1. Whether the trial court abused its discretion when it denied Cancel's and State Farm's motions for bifurcation.

2. Whether the trial court erred when it denied State Farm's motions for judgment on the evidence regarding Gutierrez's bad faith and breach of contract claims.

3. Whether the trial court abused its discretion when it admitted certain exhibits and testimony into evidence at trial.

We affirm in part, reverse in part, and remand for a new trial on Gutierrez's negligence claim against Cancel.

FACTS AND PROCEDURAL HISTORY

On March 5, 2000, Cancel borrowed Gus Guerrero, Jr.'s pickup truck to transport a playhouse measuring approximately five feet by six feet and weighing between 400 and 900 pounds. Gutierrez, Floyd Turner, and some other men helped Cancel load the playhouse onto the truck and fasten it with a chain. Cancel then drove the truck toward his home, and Gutierrez and Turner accompanied him during the trip.

At some point, the playhouse fell off the truck and onto the roadway. Accordingly, Cancel stopped the truck on the shoulder of the road, and Gutierrez and Turner exited, intending to retrieve the playhouse and load it back onto the truck. But while Gutierrez was standing next to the truck, Cancel drove the vehicle in reverse and the passenger door, which had been left open, struck Gutierrez in the back and knocked him to the ground.1

Gutierrez sustained injuries, including an avulsion of the patellar tendon of the right knee, which required surgery. Following surgery, Gutierrez wore a cast on his right leg for one month. His physician prescribed physical therapy, but Gutierrez could not afford that treatment, since he lacked health insurance. During his rehabilitation, Gutierrez fell while he was at home and reinjured his right knee. His physician fitted him with a new cast, which he wore for almost two months. On August 20, 2000, his physician released him to return to regular activity. Gutierrez's physician ultimately gave him an impairment rating of 7.5% of the whole person.

On March 9, 2000, Cancel had reported the accident to Guerrero's insurance company, State Farm. Under the terms of the applicable State Farm policy, medical payments coverage is available to any person who sustains bodily injury "while occupying" the insured vehicle. Exhibit 1 at 7. The policy defines "occupying" as "in, on, entering or alighting from." Id. at 2.

State Farm's initial fact entry, dated March 9, 2000, reads: "CANCEL . . . ADVISED THEY WERE CARRY[ING] A SHED AROUND 400 POUNDS. IT CAME LOOSE AND FELL OFF THE TRUCK. PASS. GOT OUT OF THE TRUCK AND LEFT THE PASSENGER DOOR OPENED. DRIVER STARTED TO BACK-UP [WHEN] THE DOOR STRUCK HIM. PASSENGER WENT BY AMBULANCE TO ST. CATHERINE'S." Exhibit 2 at 15. On March 13, 2000, after talking to Cancel and Guerrero, State Farm claims adjustor Tonya Bolden made an entry stating that "[Gutierrez] was not in the [insured vehicle] at time of loss. [Medical payments coverage] not applicable for [Gutierrez]." Id. at 14. On March 15, 2000, after talking to Gutierrez on the telephone, Bolden made an entry stating that Gutierrez "was walking towards the dollhouse" and "was getting ready to turn around to . . . tell [Cancel] to take it easy with the [truck]" when he was struck by the door and knocked to the ground. Id. at 13.

In a letter to State Farm dated April 12, 2000, Gutierrez's attorney stated in relevant part:

Francisco Gutierrez was "occupying" the insured vehicle at the time of the accident and you are required to take into account the immediate relationship of our client [] to the insured truck within a reasonable geographic area. The shed/dollhouse was obstructing the middle of the one lane westbound lane of Michigan Avenue and had to be reloaded on the truck or moved from the center of the lane as it was a danger to any other vehicle proceeding westbound. The act of "alighting" is not completed where the actor is still engaged in the completion of those acts reasonably to be expected from one getting out of a truck in similar conditions. Francisco after getting out retrieved the chain and threw it back into the body of the truck and then was going to proceed to help with the shed/dollhouse and then get back into the truck when he was negligently struck by the permissive user[] while backing the truck and when he could not get far enough north of the path of the truck before it struck him.

All of the above occurred in an almost continuous time span from the moment our client got out of the truck to help with what had just occurred and my client's intention was to get back into the truck so that the shed could be delivered to Cancel's home.

Francisco Gutierrez was not a pedestrian, he was a passenger and/or occupant of the truck at all times in question under the case law.

State Farm is liable for all of his damages that have resulted from the accident and you are required to pay all of his medical bills under your medical pay coverage as well.

Id. at 51-52. In a second letter dated April 18, 2000, Gutierrez's attorney advised State Farm in relevant part:

Francisco Gutierrez was clearly alighting from your insured['s] truck when he was injured. Gutierrez had left Michael Cancel's truck to reload a shed that had fallen off the truck into the middle of Michigan Avenue. Gutierrez was at the rear of the truck, working to untangle a chain from around the rear axle, when Cancel backed into him. Gutierrez had been out of the truck only a few seconds, and had no warning that Cancel would back the truck into him, or opportunity to get out of the way.

Id. at 46.

After Gutierrez submitted a medical payments claim to State Farm, a Claim Committee, which included Bolden, Bolden's supervisor, and Kevin Letcher, reviewed the case and concluded that Gutierrez was not an "occupant" under the terms of the State Farm policy and denied the claim. In making that decision on May 12, 2000, the Committee considered the written opinion of an attorney, Michael Blaize, whom State Farm had retained to review Gutierrez's medical payments claim. Blaize opined in relevant part as follows:

I would estimate that the probability of receiving a favorable verdict in a Declaratory Judgment action is approximately 60%. The issue is one that is not completely clear and I would expect that most trial courts would not give the benefit of a doubt to State Farm on such an issue. That is not to say that an Appellate Court would view the case in that light. In my opinion, on appeal, the probability of success rises to approximately 75%. I believe an Appellate Court would see this case much like it did in the Miller v. Loman [518 N.E.2d 486 (Ind.Ct.App.1987)] case. The critical issue is the conduct of the claimant and his intent to simply exit or alight from the vehicle. If the court's focus is on the intent factor, our chances of success are good.

Unfortunately, three out of the four factors cited in Miller v. Loman are not favorable. Gutierrez did not travel a great distance away from the truck before he was hit. Likewise, the time which elapsed from the moment he exited the passenger side and when he was hit was brief. Finally, he did not reach a zone of safety before the accident occurred. If the court (either Trial or Appellate) seeks to de-emphasize the fourth factor (i.e., the intentions of the claimant) a finding of coverage could certainly be made. In my opinion, such an analysis would, however, depart from the holding in Miller v. Loman.

In my opinion, the proper result under current Indiana law is a finding that State Farm is not obligated to pay the medical expenses of Mr. Gutierrez because he was not occupying the truck at the time of the accident. Likewise, under Miller v. Loman, he was not alighting from the truck at the time of the accident. That particular result may not come easy. It may be worthwhile to give some consideration to conceding this battle in order to be better prepared to win the war. Gutierrez has a viable liability claim against Cancel, a permissive user. It may be much easier to settle his liability claim if he is afforded Medical Payments Coverage at this juncture. On the other hand, if we do not put up a fight at this fork in the road, the claimant may feel he has the upper hand when it comes to final settlement negotiations.

Exhibit 2A at 4-5 (emphases added).

Prior to trial, both Cancel and State Farm moved to bifurcate alleging that each would suffer prejudice if the liability issues were tried together with the bad faith and breach of contract issues and that the jury would be confused by the disparate issues and burdens of proof. The trial court denied Cancel's motion as untimely. And, several months later, the court also denied State Farm's motion, stating that it had considered "issues regarding judicial economy, prejudice to the...

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