Sutton v. Littlepage
| Decision Date | 08 August 1996 |
| Docket Number | No. 82A04-9603-CV-97,82A04-9603-CV-97 |
| Parties | Gerald W. SUTTON, Lisa Sutton, Appellants-Plaintiffs, v. Wilma Faye LITTLEPAGE and Allstate Insurance Companies, Appellees-Defendants. |
| Court | Indiana Appellate Court |
Plaintiffs-Appellants Gerald W. and Lisa Sutton (collectively, the Suttons) appeal the trial court's grant of summary judgment in favor of Defendant-Appellee Allstate Insurance Company (Allstate).
We reverse.
The Suttons raise four issues for our review, which we consolidate and restate as:
1. Whether underinsurance policy limits should be reduced by the amount of payments from worker's compensation and the tortfeasor's insurer.
2. Whether a payment made pursuant to the underinsurance coverage indirectly benefitted the worker's compensation carrier.
3. Whether the Suttons unreasonably delayed giving notice of their claim.
On May 24, 1990, Gerald Sutton (hereinafter, Sutton) was operating a bus owned by the City of Evansville. The bus was struck by an automobile driven by Wilma Littlepage, and Sutton was seriously injured.
Because the accident occurred during the course of Sutton's employment with the City of Evansville, Sutton was eligible for worker's compensation benefits. He received benefits for his medical treatment and care in the sum of $54,678.31. He also received temporary total disability payments in the sum of $11,222.28.
On May 21, 1992, the Suttons filed suit against Littlepage, asserting a claim for Sutton's physical injuries and his wife's loss of services and consortium. In their complaint, they alleged that Littlepage's negligent operation of her automobile caused the injuries and attendant losses. The Suttons joined their insurer, Allstate, as a party to the suit. The complaint alleged that the Suttons were entitled to recover under the underinsurance coverage of their policy with Allstate.
Subsequent to the filing of the complaint, Littlepage's insurer, National Insurance Association (National), paid the policy liability limit of $25,000.00. Littlepage was then dismissed from the case.
Allstate filed a motion for summary judgment alleging that under the language of its insurance policy with the Suttons, the amounts paid by the worker's compensation carrier and National should be deducted from the $50,000.00 underinsurance policy limit. Allstate also alleged that payment of underinsurance benefits would violate the policy provision which prohibits payments that directly or indirectly benefit a worker's compensation carrier. Allstate further alleged that it was relieved of its obligation to pay underinsurance benefits by the Suttons' failure to give timely notice of their claim. Allstate did not dispute the Suttons' claim that their damages exceeded the amounts paid by worker's compensation and National.
The trial court granted summary judgment in Allstate's favor. In doing so, it found, as a matter of law, that the policy limits should be reduced by the amounts previously paid. It also found that payment by Allstate would indirectly benefit the worker's compensation carrier. It further found that the Suttons failed to timely notify Allstate of their claim, and that the presumption of prejudice arising from lack of timely notice was not rebutted. The Suttons now appeal.
When reviewing a trial court's ruling on a motion for summary judgment, this court applies the same standard as the trial court. American Family Mutual Insurance Co. v. Dye, 634 N.E.2d 844, 846 (Ind.Ct.App.1994), reh'g. denied, trans. denied. Summary judgment is appropriate when the evidentiary matter designated to the trial court shows no genuine issue of material fact exists, and the moving party is entitled to judgment as a matter of law. Ind.Trial Rule 56(C); Fawley v. Martin's Supermarkets Inc., 618 N.E.2d 10, 12 (Ind.Ct.App.1993), trans. denied. When the parties do not dispute the facts material to the claim, our task is to determine whether the trial court correctly applied the law to the facts. State ex rel. Ind. State Bd. of Dental Examiners v. Judd, 554 N.E.2d 829, 830 (Ind.Ct.App.1990).
The Suttons contend that the trial court erred in finding as a matter of law that the underinsurance policy limits should be reduced by the amount of the payments from the worker's compensation carrier and National. The Suttons argue that the insurance policy is ambiguous and should be strictly interpreted against Allstate.
The interpretation of an insurance policy is primarily a question of law for the court, and it is therefore a question which is particularly suited for summary judgment. Transcontinental Technical Services, Inc. v. Allen, 642 N.E.2d 981, 983 (Ind.Ct.App.1994), trans. denied. Where there is an ambiguity, policies are to be construed strictly against the insurer. 1 American States Insurance Co. v. Kiger, 662 N.E.2d 945, 947 (Ind.1996), reh'g. denied. This is particularly true where a policy excludes or limits coverage. Delaplane v. Francis, 636 N.E.2d 169, 171 (Ind.Ct.App.1994), trans. denied. Strict construction means that the insurer is bound by the plain and ordinary meaning of the words viewed from the standpoint of the insured. Tate v. Secura Insurance, 587 N.E.2d 665, 668 (Ind.1992). Strict construction against the insurer is "driven by the fact that the insurer drafts the policy and foists its terms upon the customer." Kiger, 662 N.E.2d at 947. "The insurance companies write the policies; we buy their forms or we do not buy insurance." Id. (quoting American Economy Insurance Co. v. Liggett, 426 N.E.2d 136, 142 (Ind.Ct.App.1981)).
Indiana courts have held that policies containing ambiguous reduction language should be interpreted to mean that total damages should be reduced by the amounts paid by other sources, while policies containing unambiguous language should be interpreted to mean that policy limits should be reduced by amounts paid by other sources. The onus is upon the insurer to write policies which unambiguously state that reductions are to be made from the policy limits.
In a number of cases, this court has found reduction language to be unambiguous. In Medley v. American Economy Insurance Co., 654 N.E.2d 313, 316 (Ind.Ct.App.1995), trans. denied, we held that reduction language stating that "[t]he limit of liability will be reduced by all sums paid" was unambiguous and should be interpreted to provide for reduction from policy limits. In Hardiman v. Governmental Interinsurance, 588 N.E.2d 1331, 1333 (Ind.Ct.App.1992), trans. denied, we held that language stating that "[a]ny amount payable under this insurance shall be reduced by [other payments]" was unambiguous. Similar language in Edwards v. Vernon Fire and Casualty Insurance Co., 571 N.E.2d 1306, 1307-8 (Ind.Ct.App.1991), stating that "[a]ny amounts otherwise payable for damages under this coverage shall be reduced by all sums," was unambiguous. Similarly, our supreme court has held that language providing for reduction of "any amount payable under this insurance" and "any amounts otherwise payable for damages under this coverage" was unambiguous. American Economy Insurance Co. v. Motorists Mutual, 605 N.E.2d 162, 164 (Ind.1992). 2
In other cases, our courts have found reduction language to be ambiguous. In Tate, our supreme court interpreted language which stated, under the heading of "Reductions in the amounts payable," that 587 N.E.2d at 667-68. The court held that the language was ambiguous as "amounts payable" could refer to either total damages or policy limits. Id. at 668. In Ansert v. Indiana Farmers Mutual Insurance Co., 659 N.E.2d 614, 621 (Ind.Ct.App.1995), reh'g. denied, this court relied on Tate in holding that language providing that "any amount payable shall be reduced by [other payments]" was ambiguous and should be interpreted to require reduction from total damages. In Delaplane we also relied on Tate to find similar language ambiguous.
In the present case, the policy language states that "subject to the above limits of liability, damages payable will be reduced by [other payments]." (R. 111-12). The "damages payable" language is not defined in the policy, and is ambiguous in the same manner as the "amounts payable" and "any amount payable" language found in Tate, Ansert, and Delaplane. Because the language is ambiguous, we will strictly interpret it against Allstate and in favor of the Suttons. Accordingly, the policy must be interpreted to provide that the total damages incurred by the Suttons, not the policy limits, shall be reduced by the amounts paid by National and the worker's compensation carrier.
Allstate contends that the presence of the "subject to the above limits of liability" language of the policy unambiguously provides that the policy limits are to be reduced. In essence, Allstate is contending that the policy language should be redacted to read that " the above limits of liability, will be reduced by [other payments]." However, the language does not so provide. In fact, the language makes a distinction between the phrases "limits of liability" and "damages payable," and can be reasonably interpreted to mean that the $50,000.00 limit of liability applies even if total damages after reduction exceed that amount. The language is ambiguous and must be interpreted in the Suttons' favor.
The policy between Allstate and the Suttons excluded coverage for damages if the payment would directly or...
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