Stewart v. Walker

• Decision Date: 19 August 1992
• Docket Number: No. 43A05-9109-CV-299,43A05-9109-CV-299
• Citation: 597 N.E.2d 368
• Parties: Beve STEWART, Appellant-Plaintiff, v. James A. WALKER, Hawkeye Security, and Nationwide Mutual Insurance, Appellees-Defendants.
• Court: Indiana Appellate Court

Page 368

597 N.E.2d 368

Beve STEWART, Appellant-Plaintiff, v. James A. WALKER, Hawkeye Security, and Nationwide Mutual Insurance, Appellees-Defendants.

No. 43A05-9109-CV-299.

Court of Appeals of Indiana,

Fifth District.

Aug. 19, 1992.

Rehearing Denied Oct. 16, 1992.

Robert W. Miller, Miller & Miller, Elkhart, for appellant-plaintiff.

James F. Groves, Hardig, Lee & Groves, Robert J. Palmer, Arthur A. May, May, Oberfell & Lorber, South Bend, for appellees-defendants.

BARTEAU, Judge.

In a collision between the vehicles of BeCraft and uninsured motorist Walker, BeCraft's passenger, plaintiff-appellant Beve Stewart, was injured. That was on May 8, 1987. On May 4, 1989 Stewart filed a complaint in Elkhart Superior Court against Walker. On June 30, 1989 that Thereafter, Stewart sought satisfaction of judgment from defendants-appellees Nationwide Mutual Insurance Company and Hawkeye Security. Stewart held a policy with $100,000 worth of uninsured motorist insurance from Hawkeye. BeCraft had $25,000 worth from Nationwide. After both insurers refused to pay, Stewart filed for a declaratory judgment as to their obligations. On motion by Nationwide, the case was venued to Kosciusko County.

court, the Honorable Stephen Platt, entered a default judgment against Walker and simultaneously awarded Stewart $80,000 in damages.

The parties filed affidavits, memoranda, and stipulations, including that Walker was at fault for the collision, that the Nationwide coverage was primary, and that Nationwide had made medical payments for Stewart. Each then moved for summary judgment. Stewart contended the insurers were bound by the default judgment. Hawkeye argued that although it had received from Stewart a copy of the complaint filed against Walker, Stewart failed to advise it when service of process was made on Walker, thereby depriving Hawkeye of its rightful opportunity to intervene in Stewart's suit against Walker, and that Stewart's stating in the letter accompanying the copy of the complaint "as this matter proceeds, I will keep you advised at all times" created a promissory estoppel. Nationwide raised three defenses from the terms of the insurance policy it sold to BeCraft, arguing that Stewart: (1) obtained the judgment against Walker without Nationwide's consent; (2) did not meet the policy's time limit for filing suit against Nationwide; and, (3) did not send Nationwide a copy of the summons and complaint filed against Stewart.

The Kosciusko court found there was no genuine issue of fact, and rejected Nationwide's argument that Stewart had not brought his action against it within the time limit set out in its policy. The remainder of the lower court's order is less clear to us. Although it is certain that the upshot was to set the case for trial on the amount of Stewart's damages, we are unsure about the trial court's reasoning. Although the order was not phrased in terms of granting or denying any of the three motions for summary judgment, it seems best interpreted as having denied all three. ¹

However, our difficulty in discerning the trial court's theory poses no difficulty, because "on appellate review the trial court's judgment will be affirmed if sustainable on

                any theory or basis found in the record."  Havert v. Caldwell (1983), Ind., 452 N.E.2d 154, 157, reh'g denied.   That doctrine applies in summary judgment cases.  Id.  This case presents no question of fact;  therefore our task is to determine whether the trial court correctly applied the law to the undisputed facts.  See Connell v. American Underwriters, Inc.  (1983), Ind.App., 453 N.E.2d 1028, 1029, trans. denied. 2
                

HAWKEYE

A. OPPORTUNITY TO INTERVENE

Where a plaintiff with uninsured motorist coverage sues an uninsured motorist without naming the insurer as a party defendant, Indiana law allows the insurer to intervene to protect its interests, because the judicial economy in avoiding multiple lawsuits outweighs the conflict of interest created by such intervention. Vernon Fire and Casualty Ins. Co. v. Matney (1976), 170 Ind.App. 45, 47-52, 351 N.E.2d 60, 63-65; see also Indiana Ins. Co. v. Noble (1970), 148 Ind.App. 297, 265 N.E.2d 419, trans. denied; but cf. Snodgrass v. Baize (1980), Ind.App., 405 N.E.2d 48, reh'g denied 409 N.E.2d 645. The dispute between Hawkeye and Stewart is whether Hawkeye had adequate and timely notice of Stewart's suit against Walker such that Hawkeye could have intervened.

Matney, citing Noble, sets out four procedural options for a plaintiff suing an uninsured motorist:

1. Sue the insurer directly without joining the motorist as a party defendant.

2. Sue the insurer and the motorist as party defendants.

3. Sue the motorist alone but give notice of the suit to the insurer.

4. Sue the motorist alone but give no notice to the insurer.

Under options one or two, the insurance company is bound by the outcome; that is "axiomatic." Matney, 170 Ind.App. at 49, 351 N.E.2d at 63. Under option four, the insurance company plainly is not bound. Id.

Under option three, the plaintiff in an ordinary case "gives preliminary and adequate notice of the filing and pendency of such action to the insurance company so that they [may] take appropriate action including intervention." Id. (emphasis added). Appropriate action for an intervening insurer includes seeking a declaratory judgment to evaluate defenses derived from the terms of the policy, or retaining counsel for the uninsured driver in the underlying tort action, or both. See, e.g., Liberty Mut. Ins. Co. v. Metzler (1992), Ind.App., 586 N.E.2d 897, 902, trans. pending; see also Note, Insurer Intervention in Uninsured Motorist Cases, 55 Ind.L.J. 717 (1979). If, having received notice, the insurance carrier desires to raise the defenses available to the uninsured motorist, the carrier must intervene in the plaintiff's action against that motorist. Failure to do so will bind the insurer to a judgment against the motorist. Matney, 170 Ind.App. at 55, 351 N.E.2d at 67. However, failure to intervene will not deprive the insurer of defenses based in the contract of insurance. Id.

Hawkeye neither intervened in Stewart's action against Walker nor raised any contractual defenses. Therefore, Hawkeye is bound by the default judgment, including the amount of damages, provided it had a realistic opportunity to intervene therein The arguments revolve around the statement in Matney that a non-intervening insurer will be bound by a judgment against an uninsured motorist if it had notice of the "filing and pendency" of the complaint. Hawkeye argues that "filing and pendency" means more than mere notice that a lawsuit has been filed; rather, it must include notice that service of process has been made on the uninsured motorist. Pointing out that although it received a copy of the complaint in Stewart's suit against Walker, it did not receive a copy of the summons served on Walker, Hawkeye asserts it is not bound by the default judgment.

or, unless it can prevail on its secondary theory of promissory estoppel.

Stewart's argument focuses on Hawkeye's answer to Stewart's action for declaratory judgment. Hawkeye "admit[ted] that it was advised of a filing and pendency of the underlying lawsuit, but denie[s] that it was given any notice of the hearing on damages." Stewart views that as conclusive of whether Hawkeye received such notice as to bind it to the default judgment pursuant to Matney.

Hawkeye quotes Waugh v. Kelley (1990), Ind.App., 555 N.E.2d 857, 859 for the idea that the weight of an admission "depends upon its character, [and] the circumstances under which it was made...." Hawkeye characterizes its admission of notice of filing and pendency of Stewart's lawsuit against Walker as "a poor choice of words" but argues that because Stewart failed to advise it that service had been made on Walker, and because it received no notice of the hearing on damages, it did not have notice of the suit's "pendency."

First, we are of the opinion that Hawkeye has lost this argument through its admission. Calling it a poor choice of words does not change its import. Moreover, Hawkeye has not explained the circumstances under which the admission was made, or why the admission should not be deemed conclusive.

Second, we are of the opinion that Hawkeye is bound by the default judgment independently of its admission of notice of "filing and pendency." To have the case turn on whether Hawkeye received a copy of the summons served on Walker seems unduly formalistic. Insofar as service of alias summons requires nothing more than leaving a copy of the summons and complaint at the defendant's dwelling place along with mailing a copy to the defendant's last known address, Ind.Trial Rule 4.1(A)(3) and (B), the substantively important inquiry is whether the insurer has received written notice that a suit has been filed, not notice that service has been made. When an insured sues a purportedly uninsured motorist, the presumably sophisticated insurer should recognize the possibility that the defendant will turn out judgment proof, and that therefore a judgment against the motorist is likely to yield a demand for payment under the policy. In this context, receiving a copy of a complaint filed by its insured against a purportedly uninsured motorist, early enough to allow intervention, suffices to inform the insurer that its interests may be in jeopardy, and therefore providing an instigation for it, as expressed by the court below, "to come out of the woodwork" and enter its appearance in the trial court. We think it significant that T.R. 3 links the commencement of an action to the filing of the complaint, not to service of it on the defendant. Similarly, it is the filing of the complaint, rather than service of it, that tolls a statute of limitations. See Geiger and Peters, Inc. v. American Fletcher Nat'l Bank & Trust Co. (1981), Ind.App., 428 N.E.2d 1279. Moreover, once an insurer enters its appearance, it...