Troxell v. American States Ins. Co.

• Decision Date: 21 July 1992
• Docket Number: No. 49A05-9107-CV-00225,49A05-9107-CV-00225
• Citation: 596 N.E.2d 921
• Parties: Jane TROXELL, et al., Appellants-Plaintiffs, v. AMERICAN STATES INSURANCE COMPANY, et al., Appellees-Defendants.
• Court: Indiana Appellate Court

Page 921

596 N.E.2d 921

Jane TROXELL, et al., Appellants-Plaintiffs, v. AMERICAN STATES INSURANCE COMPANY, et al., Appellees-Defendants.

No. 49A05-9107-CV-00225.

Court of Appeals of Indiana Fifth District.

July 21, 1992.

Candace W. Trivedi, Indianapolis, for appellants-plaintiffs.

Danford R. Due, Catharine H. Stewart, Stewart Due Miller & Pugh, Indianapolis, for appellees-defendants.

SHARPNACK, Judge.

Jane and David Troxell ("Troxells") appeal the grant of summary judgment in favor of American States Insurance Co. ("American States") and Art Smith on the Troxells' multiple count complaint against American States, Smith and other defendants. We affirm.

The Troxells raise two restated issues for review:

Whether a genuine issue of material fact exists with regard to whether American States waived the one-year contractual limit on the time in which to bring suit under the policy.

Whether the Troxells pleaded grounds for recovery sounding in tort to which the contractual limitation does not apply.

In 1982 Thomas and Yvonne Holliday purchased from the French Insurance Agency ("French") a fire insurance policy on a house. The policy was written by American States. The Hollidays were the named insureds and Magna Mortgage ("Magna") was named as the mortgagee. The Troxells purchased the property, subject to the mortgage, in May of 1983. Thereafter, the Troxells made payments to the Magna Mortgage company which included premiums for the insurance policy. The Hollidays, however, continued as the named insureds.

On July 13, 1987, the house was damaged by fire. Jane Troxell reported the loss to Art Smith, an adjuster for American States. Magna also submitted a sworn statement in proof of loss and American States paid Magna the full amount of its claim. American States subsequently employed Herbert Miller & Associates to perform a cause and origin analysis of the fire. Following Herbert Miller's investigation (on behalf of Herbert Miller & Associates), Jane Troxell was indicted on charges of arson arising out of the fire in question. Herbert Miller was subpoenaed and testified as a prosecution witness. Troxell was acquitted.

On July 12, 1989, the Troxells filed suit against American States, Smith (both individually and as an agent/employee of American States), French, and Herbert Miller & Associates. The first count of the complaint alleged that American States, through its agent, Art Smith, in bad faith, breached the insurance contract under which the Troxells had an equitable interest. The second count alleged that Art Smith breached his duty to represent the Troxells' interests by his bad faith failure to negotiate a settlement. The third count alleged that Herbert Miller, as an agent for American States, negligently conducted his investigation, and that he negligently and willfully testified against Jane Troxell. The third count also alleged that American States condoned and participated in the negligent manner in which Miller investigated fires.

On January 14, 1991, American States and Smith filed a motion for summary judgment accompanied by a memorandum in support, a copy of the insurance policy, the affidavit of Lowell D. French, and Herbert Miller & Associates' answers to interrogatories. The insurance policy contained the following provision upon which American States and Smith relied:

"SUIT AGAINST US. No action shall be brought unless there has been compliance with the policy provisions and the action is started within one year after the loss."

(Record, p. 160.)

The trial court set a hearing for March 22, 1991. On March 20, 1991, the Troxells filed their response together with their individual affidavits. At the hearing, counsel for American States and Smith made a motion to strike the Troxells' response and affidavits as untimely filed, and the trial court granted the motion. The trial court granted the motion for summary judgment on March 27. The Troxells then filed a motion to reconsider both the striking of their response and affidavits and the grant of summary judgment, which motion the trial court denied.

The Troxells first claim that the trial court erred in granting summary judgment as to count I of their complaint because there was a factual issue as to whether American States had waived the one-year limitation clause. The Troxells concede that such limitation clauses are enforceable, but they argue that those clauses are not favored by sound public policy and are therefore easily waived. We agree with both propositions. In Schafer v. Buckeye Union Insurance Co. (1979), 178 Ind.App. 70, 381 N.E.2d 519 the court held that, while not favored, contractual limitations shortening the time in which an action may be commenced are valid, provided a reasonable time is afforded. 178 Ind.App. at 74, 381 N.E.2d at 522, citing Huff v. Travelers Indemnity Co. (1977), 266 Ind. 414, 363 N.E.2d 985. However, due to significant policy concerns potentially abridged by that type of contractual limitation, such clauses may be easily waived. Id. The Schafer court reversed a summary judgment for the insurer due to the existence of a factual issue as to whether the insurer, by its conduct, impliedly waived a contractual limitation similar to the one before us. 178 Ind.App. at 76, 381 N.E.2d at 523.

In the present case, however, the trial court correctly granted summary judgment because the Troxells did not demonstrate the existence of an issue of material fact with regard to waiver. When we review a trial court's entry of summary judgment, we are bound by the same standard as the trial court: we must consider all of the pleadings, affidavits, depositions, admissions, answers to interrogatories, and, where applicable, testimony in the light most favorable to the nonmoving party in order to determine whether a genuine issue of material fact remains for resolution by the trier of fact. Ayres v. Indian Heights Volunteer Fire Dept., Inc. (1986), Ind., 493 N.E.2d 1229, 1234. A genuine issue of material fact exists where facts concerning an issue that would dispose of the litigation are in dispute or where the undisputed facts are capable of supporting conflicting inferences on such an issue. If we have any doubts concerning the existence of a genuine issue of material fact, we must resolve those doubts in favor of the nonmoving party, and we must reverse the entry of summary judgment. Woodward Insurance, Inc. v. White (1982), Ind., 437 N.E.2d 59, 62. However, if no genuine issue of material fact exists, and if the moving party is entitled to judgment as a matter of law, we must affirm the entry of summary judgment. Id. The moving party bears the burden of showing the absence of a factual issue and that he is entitled to judgment as a matter of law. Norman v. Turkey Run Community School Corp. (1980), 274 Ind. 310, 312, 411 N.E.2d 614, 615. Once the moving party has met his burden, the opposing party may not rest on its pleadings, but must demonstrate the existence of a genuine issue for trial. Kahf v. Charleston South Apartments (1984), Ind.App., 461 N.E.2d 723, 729, trans. denied.

American States and Smith met their burden on summary judgment by introducing the insurance policy containing the limitation provision. The limitation, without more, entitled them to judgment as a matter of law. The Troxells could no longer rest upon their pleadings; rather, they were required to introduce evidence that, if believed, would entitle them to recover, such as proof of conduct by Art Smith sufficient to create an implied waiver of the contractual limitation. Unfortunately, the Troxells did not file a timely response to the motion for summary judgment and they do not now challenge the trial court order that struck their response and affidavits. Therefore, we hold that no issue of material fact exists with regard to American States' and Smith's liability under the insurance policy.

The Troxells next claim that, even if American States and Smith were entitled to summary judgment with regard to their claim on the insurance policy, the limitation clause does not bar them from pursuing other theories of recovery alleged in their complaint. The Troxells contend that their complaint contained allegations of fraud, willful negligence and negligence on behalf of American States and Smith.

We agree with the...