Union Auto. Indem. Ass'n v. Shields

• Decision Date: 13 March 1996
• Docket Number: No. 95-1736,95-1736
• Citation: 79 F.3d 39
• Parties: UNION AUTOMOBILE INDEMNITY ASSOCIATION, Plaintiff-Appellee, v. Harry V. SHIELDS, as Natural Father and Custodial Parent of Dana Anne Shields, a Deceased Minor, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 39

79 F.3d 39

UNION AUTOMOBILE INDEMNITY ASSOCIATION, Plaintiff-Appellee, v. Harry V. SHIELDS, as Natural Father and Custodial Parent of Dana Anne Shields, a Deceased Minor, Defendant-Appellant.

No. 95-1736.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 22, 1995.

Decided March 13, 1996.

Appeal from the United States District Court for the Southern District of Indiana, Terre Haute Division, No. 93 C 124; John D. Tinder, Judge.

Craig M. McKee (argued), Wilkinson, Goelelr, Modesitt, Wilkinson & Drummy, Terre Haute, IN, for plaintiff-appellee.

Robert L. Wright (argued), Wright, Shagley & Lowery, Terre Haute, IN, for defendant-appellant.

Before POSNER, Chief Judge, and COFFEY and FLAUM, Circuit Judges.

COFFEY, Circuit Judge.

Harry V. Shields appeals the district court's grant of summary judgment in favor of Union Automobile Indemnity Association ("Union"). We affirm.

I. Background

On June 24, 1990 Christopher D. Williams lost control of the automobile he was driving in Coles County, Illinois, crossed the centerline of the road, and crashed into an oncoming vehicle, causing the death of Dana Anne Shields, a passenger in Williams's car. Dana was the minor daughter of Harry Shields, a resident of the State of Indiana.

On June 22, 1992 Harry Shields ("Shields") brought suit against Williams in Illinois state court, alleging the wrongful death of his daughter, Dana.

Shields had purchased insurance from Union through its agent, the Robert Wilson Insurance Agency. The language of the insurance policy included Dana as a "covered person" and provided coverage in the event of a loss caused by an uninsured or underinsured motorist. The policy contained the following "Time Limit on Legal Action and Arbitration":

No suit, action or arbitration proceeding for the recovery of any claim under this endorsement shall be sustainable in any court of law or equity unless a COVERED PERSON shall have complied with all the terms of this endorsement, nor unless commenced within two (2) years after the occurrence of loss.

Shields contends that soon after the accident he contacted his insurance agent, Pat Wilson, and informed her of his daughter's death and that his underinsured motorist coverage would be applicable to the situation. Subsequently, Shields received a letter from Union, notifying him that Union was canceling his insurance policy, effective July 6, 1991. Shields called Pat Wilson, the insurance agent, and asked why the policy was being canceled; she allegedly replied: "Because you are suing us."

In a letter dated February 11, 1993 (two years and eight months after the accident), Shields's counsel notified Union of the accident and informed the insurance carrier that Shields was involved in settlement negotiations with Williams's (the alleged tortfeasor) insurance company.

On July 15, 1993 Union filed a complaint for declaratory judgment in the Southern District of Indiana against Shields, asserting that Shields was barred from recovering any underinsured motorist coverage because he had not filed suit against Union within two years after his daughter's accident, as required by the policy. The district court granted summary judgment in favor of Union, finding that the insurance policy required Shields to commence suit against Union within two years after the accident, and Shields had not complied with this condition. Shields appeals.

II. Analysis

Jurisdiction in this case arises under the diversity statute, 28 U.S.C. § 1332(a)(1). The parties agree that the law of Indiana applies to this dispute regarding an insurance contract issued by Union (an Illinois corporation) to a resident of Indiana. See Wood v. Allstate, 21 F.3d 741 (7th Cir.1994).

"Indiana has long accepted the canon of construction under which ambiguous insurance policies are interpreted in the light most favorable to the insured." Wood, 21 F.3d at 744. Shields argues that he has satisfied the conditions of his insurance policy and the two-year limitation period is ambiguous and must be construed against Union, the insurer. We do not agree.

"Ind.Code § 34-1-2-2(6) requires an action upon a written contract be brought within ten years after the cause of action has accrued, but does not prohibit shorter contractual limitations periods." Meridian Mut. Ins. Co. v. Caveletto, 553 N.E.2d 1269, 1270 (Ind.App.1990). "A contractual limitation of actions provision which shortens the time within which plaintiffs must bring suit is valid and enforceable in Indiana if the parties mutually consented and agreed to the provision." Id. (citing C.A. Enterprises v. Employers Commercial Union, 176 Ind.App. 551, 376 N.E.2d 534, 535 (1978)). However, "contractual limitations of actions may be waived." Lumpkins v. Grange Mut. Companies, 553 N.E.2d 871, 873 (Ind.App.1990) (citation omitted). Under Indiana law, "a waiver or estoppel may result from acts of insurer causing insured or claimant under the policy to delay bringing suit until after the time provided for in the policy." Huff v. Travelers Indem. Co., 266 Ind. 414, 363 N.E.2d 985, 991 (1977) (citation omitted). "[A]n insured seeking to avoid an agreed-upon limitations period must demonstrate affirmative acts of the insurer which support a conclusion that the insurer waived the limitations." Lumpkins, 553 N.E.2d at 874.

Under a heading labelled "Time Limit on Legal Action and Arbitration," Shields's insurance policy is clear that no suit can be brought "for the recovery of any claim ... unless commenced within two (2) years after the occurrence of loss." By its very language, the limitation period is not satisfied by a claimant filing suit against a tortfeasor to establish liability (as Shields argues), but requires an insured commence suit "for the recovery of any claim" (i.e., commence a lawsuit against the insurance company) within two years. Shields did not initiate suit against Union within the two-year period and has pointed to no affirmative action on the part of Union that could be interpreted as amounting to a waiver of the two-year limitation. See Wood v. Allstate, 815 F.Supp. 1185, 1192 (N.D.Ind.1993) ("There is simply no evidence that [the insurer] ever expressly or impliedly related to [the insured] that it did not intend to rely on any of the policy provisions."), rev'd on other grounds, 21 F.3d 741 (7th Cir.1994). Thus, it is apparent from the briefs and record that Shields's suit against Union is barred by the contractual two-year limitation.

However, at oral argument, Shields's counsel directed us to Stewart v. Walker, 597 N.E.2d 368 (Ind.App.1992) (imposing an affirmative duty on insurance carriers to inform claimants of any time limitations in policy for uninsured motorist coverage), and argued that it was applicable to Shields's situation. Our review of the record reveals that Shields failed to present this theory, much less the case to the district court. Thus the issue is waived. See Border v. City of Crystal Lake, 75 F.3d 270, 274 (7th Cir. Jan.23, 1996); Stern v. United States Gypsum Inc., 547 F.2d 1329 (7th Cir.), cert. denied, 434 U.S. 975, 98 S.Ct. 533, 54 L.Ed.2d 467 (1977). However, because Stewart v. Walker presents important aspects of Indiana policy regarding time limitations in insurance policies, we will briefly address the case.

Stewart concerned an automobile collision in Indiana between an individual, BeCraft, and an uninsured motorist, Walker. A passenger...