Tate Farm Mut. Auto. Ins. Co. v. Sellers

• Citation: 854 F.Supp.2d 609
• Decision Date: 30 March 2012
• Docket Number: No. 3:10–CV–205.,3:10–CV–205.
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff, v. Henry and Dorothy SELLERS, Defendants. Henry and Dorothy Sellers, Counterclaimants, v. State Farm Mutual Automobile Insurance Company, Counterdefendant.
• Court: U.S. District Court — Northern District of Indiana

854 F.Supp.2d 609

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff,

v.Henry and Dorothy SELLERS, Defendants.

Henry and Dorothy Sellers, Counterclaimants,

v.State Farm Mutual Automobile Insurance Company, Counterdefendant.

No. 3:10–CV–205.

United States District Court,

N.D. Indiana,

South Bend Division.

March 30, 2012.

John B. Drummy, Mark D. Gerth, Kightlinger & Gray LLP, Indianapolis, IN, Michael H. Michmerhuizen, Thomas M. Kimbrough, Barrett & McNagny LLP, Fort Wayne, IN, for Plaintiff and Counter Defendant.

Michael P. Bishop, Cohen Garelick & Glazier, Indianapolis, IN, for Defendants and Counter Claimants.

OPINION AND ORDER

RUDY LOZANO, District Judge.

This matter is before the Court on: (1) State Farm's Motion for Summary Judgment, filed by Plaintiff/Counterdefendant, State Farm Mutual Automobile Insurance Company, on May 9, 2011 (DE # 20); and (2) the Motion for Summary Judgment on Behalf of State Farm in its Capacity as the Liability Insurer of Lisa Sellers, filed by Plaintiff/Counterdefendant, State Farm Mutual Automobile Insurance Company, on May 13, 2011 (DE # 24). For the reasons set forth below, State Farm's Motion for Summary Judgment, filed by Plaintiff/Counterdefendant, State Farm Mutual Automobile Insurance Company, on May 9, 2011 (DE # 20), is GRANTED IN FULL. The Motion for Summary Judgment on Behalf of State Farm in its Capacity as the Liability Insurer of Lisa Sellers, filed by Plaintiff/Counterdefendant, State Farm Mutual Automobile Insurance Company, on May 13, 2011 (DE # 24), is also GRANTED IN FULL. The Sellers' Counterclaims are DISMISSED WITH PREJUDICE in their entirety, and the clerk is ORDERED to close this case.

BACKGROUND

On May 21, 2010, State Farm Mutual Automobile Insurance Company (“State Farm”) filed a Complaint against Henry and Dorothy Sellers (the “Sellers”) related to an insurance policy issued to Henry Sellers (“Henry”) by State Farm. The coverage disputes in question arose after Dorothy Sellers (“Dorothy”) was severely injured in an automobile accident. At the time of the accident, Dorothy was a passenger in an automobile owned and driven by her daughter-in-law, Lisa Sellers (“Lisa”), who was killed in the accident. That automobile was insured by a separate State Farm policy issued to Lisa and her husband. The Complaint seeks a declaratory judgment that no coverage is available to Dorothy under either the underinsured or uninsured motorist coverage of the policy issued to Henry. The Sellers filed an Answer on July 28, 2010, arguing that State Farm should “take nothing by way of its Complaint for Declaratory Relief,” and asserting affirmative defenses of waiver, estoppel, and latches. In that same document, the Sellers also submitted a Counterclaim alleging breach of contract, tortious breach of the duty to act in good faith, and breach of fiduciary duty claims against State Farm. State Farm filed an Answer to the Counterclaim on July 30, 2010. Acting in its capacity as the underinsured/uninsured motorist carrier for the Sellers, State Farm filed a Motion for Summary Judgment on May 9, 2011. State Farm then filed a Separate Motion for Summary Judgment in its capacity as the liability insurer of Lisa on May 13, 2011. The Sellers filed a Response to both Motions on June 21, 2011, and State Farm filed Reply briefs on July 5, 2011. The issues in this case have been fully briefed and are ripe for adjudication.

DISCUSSION

The standards that generally govern summary judgment motions are familiar. Pursuant to Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment shall be granted “if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Nebraska v. Wyoming, 507 U.S. 584, 590, 113 S.Ct. 1689, 123 L.Ed.2d 317 (1993); Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In other words, the record must reveal that no reasonable jury could find for the nonmovant. Karazanos v. Navistar Int'l Transp. Corp., 948 F.2d 332, 335 (7th Cir.1991). See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In deciding a motion for summary judgment, a court must view all facts in the light most favorable to the nonmovant. Anderson, 477 U.S. at 255, 106 S.Ct. 2505;Trade Fin. Partners, LLC v. AAR Corp., 573 F.3d 401, 406 (7th Cir.2009). According to Rule 56:

A party asserting that a fact cannot be or is genuinely disputed must support the assertion by:

(A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or

(B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.

Fed.R.Civ.P. 56(c). Furthermore, “[i]f a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), the court may ... consider the fact undisputed for purposes of the motion [or] grant summary judgment if the motion and supporting materials—including the facts considered undisputed—show that the movant is entitled to it ...” Fed.R.Civ.P. 56(e)(2),(3). “Whether a fact is material depends on the substantive law underlying a particular claim and ‘only disputes over facts that might affect the outcome of the suit under governing law will properly preclude the entry of summary judgment.’ ” Walter v. Fiorenzo, 840 F.2d 427, 434 (7th Cir.1988) (citing Anderson, 477 U.S. at 248, 106 S.Ct. 2505).

Where a party bears the burden of proof on a particular issue, the party may not rest on its pleading, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine dispute requiring a trial. See Beard v. Whitley Cnty. REMC, 840 F.2d 405, 410 (7th Cir.1988); Hickey v. A.E. Staley Mfg., 995 F.2d 1385, 1391 (7th Cir.1993). Therefore, if a party fails to establish the existence of an essential element on which the party bears the burden of proof at trial, summary judgment will be appropriate. In this situation, there can be “no genuine dispute as to any material fact” because a complete failure of proof concerning an essential element of the nonmovants case necessarily renders all other facts immaterial. Celotex, 477 U.S. at 323, 106 S.Ct. 2548.

Facts

State Farm has provided a detailed statement of material facts in both of its motions; the Sellers have responded that they do not dispute these facts “[f]or the most part,” and they have specifically noted areas where genuine disputes remain. Keeping this in mind, the Court will set forth the facts as presented, acknowledging the disputes and citing specifically to the record when necessary.

On July 14, 2006, Dorothy was a passenger in a vehicle owned and operated by her daughter-in-law, Lisa, and they were involved in an automobile accident in Wytheville, Virginia. Lisa died in the accident, and Dorothy was severely injured. Lisa had an insurance policy through State Farm, Policy No. 0981–298–14A (the “Lisa Policy”), which covered the automobile involved in the accident. Dorothy was also insured through State Farm under a policy, Policy No. 0669–051–14A, issued to her husband, Henry (the “Henry Policy”).

The Lisa Policy had liability coverage limits of $50,000 per person/ $100,000 per accident and medical payments coverage with a limit of $5,000. The Henry Policy had liability coverage limits of $100,000 per person/$300,000 per accident, uninsured and underinsured motorist coverage with limits of the same amounts, and medical payments coverage with a limit of $25,000. Under each policy, claims arose related to the injuries Dorothy sustained in the accident; a claim for liability and medical coverage was opened under the Lisa Policy, and a claim for underinsured motorist and medical coverage was opened under the Henry Policy. State Farm representative Dan Miller (“Miller”) was assigned to the claims arising under the Lisa Policy, while State Farm representative Lisa Wellman (“Wellman”) was assigned to the claims arising under the Henry Policy. The claim files were maintained separately.

Activity related to the Lisa Policy

Shortly after the accident, Miller informed Dorothy of the medical payments coverage available under the Lisa Policy; the $5,000 limit of this coverage was subsequently exhausted, and Dorothy was so informed by letter. On October 24, 2006, State Farm, through Miller, offered Dorothy the liability coverage limit of $50,000 under the Lisa Policy; Miller informed Wellman, via a letter dated the same date, of the offer. On October 30, 2006, Miller spoke with Henry about the offer and how it related to the underinsured/uninsured motorist claims. He then sent Henry and Dorothy a letter stating the following:

As you know, State Farm is able to offer the liability coverage limit of $50,000 in settlement of Dorothy's medical claim. Enclosed is a release which will finalize the settlement. Please sign, date, and return the release in the envelope provided. We will send the check as soon as we receive the release.

(DE # 21–2, p. 39.) However, the Sellers never signed and returned the release. (DE # 21–1, p. 6; Bishop Dep. at 57.) Miller was later informed that the Sellers had enlisted the services of Attorney Gregory Schlax (“Attorney Schlax”). On December 28, 2006, Miller wrote Attorney Schlax a letter which included the following:

As you are aware, we have offered our liability coverage limit of $50,000 in settlement of Dorothy and Henry Sellers [sic] claim. Since that time, we have not received a response to the offer. If you would, please advise the status of the claim and your position regarding our offer.

(DE # 21–2, p....