Utica Mut. Ins. Co. v. Precedent Companies

• Decision Date: 31 January 2003
• Docket Number: No. 49A04-0209-CV-416.,49A04-0209-CV-416.
• Citation: 782 N.E.2d 470
• Parties: UTICA MUTUAL INSURANCE COMPANY, Appellant-Defendant, v. PRECEDENT COMPANIES, LLC, Appellee-Plaintiff.
• Court: Indiana Appellate Court

782 N.E.2d 470

UTICA MUTUAL INSURANCE COMPANY, Appellant-Defendant, v. PRECEDENT COMPANIES, LLC, Appellee-Plaintiff.

No. 49A04-0209-CV-416.

Court of Appeals of Indiana.

January 31, 2003.

Charles W. Linder, Jr., Sharon L. Wright, Linder & Hollowell, Indianapolis, IN, Attorneys for Appellant.

Michael E. Brown, Eric D. Johnson, Ginny L. Peterson, Kightlinger & Gray, Indianapolis, IN, Attorneys for Appellee.

OPINION

NAJAM, Judge.

STATEMENT OF THE CASE

Utica Mutual Insurance Company ("Utica") appeals from the trial court's entry of summary judgment in favor of Precedent Companies, LLC ("Precedent").¹ Utica presents two issues on appeal, one of which we find dispositive: whether the trial court erred as a matter of law when it determined that the insurance policy Utica issued to Precedent covers Precedent's claimed loss.

We reverse and remand with instructions.²

FACTS AND PROCEDURAL HISTORY

On November 11, 1998, Precedent issued check number 41719 in the amount of $134,817.12 made payable to Fidelity Title Company ("Fidelity"). Precedent issued the check to fund a residential loan to Ross and Kelli Fazekas. On the bottom portion of the document containing the check, the following statement appeared:

DETACH AND RETAIN THIS STATEMENT

THE ATTACHED CHECK IS FUNDING TO CLOSE THE ABOVE-REFERENCED LOAN. IF NOT CORRECT, PLEASE NOTIFY US PROMPTLY. NO RECEIPT DESIRED. IF CIRCUMSTANCES PREVENT A SCHEDULED CLOSING FROM OCCURRING, PLEASE INVALIDATE THE ACCOMPANYING CHECK AND IMMEDIATELY RETURN IT TO THE PAYOR.

The Fazekas' loan did not close and was never funded. But on December 14, 1998, Fidelity deposited the check into its bank account. The check cleared Precedent's bank account on December 17, 1998.

On November 30, 1998, Precedent discovered that the Fazekas' loan had not closed, and on January 13, 1999, learned that Fidelity had deposited the check. Subsequently, Precedent learned that Fidelity's business had closed in December 1998.³

Utica had issued an insurance policy, Financial Institution Bond No. 2241480, to Precedent with effective dates of May 12, 1998 to May 12, 1999. In January 2001, Precedent filed a Complaint for damages under the policy with Utica. In particular, Precedent alleged that the following policy provisions provide coverage for its loss:

FIDELITY

(A) Loss resulting from dishonest or fraudulent acts committed by an Employee acting alone or in collusion with others. Such dishonest or fraudulent acts must be committed by the Employee with the manifest intent:

a) to cause the insured to sustain such loss; and

b) to obtain financial benefit for the Employee or another person or entity.

As used throughout this Insuring Agreement, financial benefit does not include any employee benefits earned in the normal course of employment, including: salaries, commissions, fees, bonuses, promotions, awards, profit sharing or pensions.

ON PREMISES

(1) Loss of Property resulting directly from

(a) robbery, burglary, misplacement, mysterious unexplainable disappearance and damage thereto or destruction thereof, or

(b) common-law or statutory larceny, committed by a person present in an office of the Insured covered by this bond while the Property is lodged or deposited within

(i) any of the Insured's offices covered under this bond, or

(ii) offices of any financial institutions, or

(iii) any premises where the Insured leases safe deposit boxes.

IN TRANSIT

(C) Loss of property resulting directly from robbery, common-law or statutory larceny, misplacement, mysterious unexplained disappearance, being lost or made away with, and damage thereto or destruction thereof, while the Property is in transit anywhere in the custody of

(a) a natural person acting as a messenger of the Insured (or another natural person acting as messenger or custodian during an emergency arising from the incapacity of the original messenger).

FORGERY OR ALTERATION

(D) Loss resulting from Forgery or alteration of, on, or in any Negotiable Instruments (except registered or bearer obligations) made or drawn by or drawn upon the Insured, or made or drawn by one acting as agent of the Insured; or purporting to have been made as herein before set forth;

A mechanically reproduced facsimile signature is treated the same as a handwritten signature.[⁴]

In September 2001, Utica filed a Motion for Judgment on the Pleadings, arguing that its policy does not cover Precedent's loss. In response, Precedent filed a Motion for Summary Judgment, and Utica eventually filed its Cross Motion for Summary Judgment. In July 2002, the trial court issued a general order granting Precedent's summary judgment motion and denying Utica's motion. After Utica filed a Motion to Correct Error, the court entered an Amended Entry on Summary Judgment, in which it reduced the amount of money judgment previously entered. This appeal ensued.

DISCUSSION AND DECISION

Standard of Review

When reviewing the grant or denial of summary judgment, we use the same standard used by the trial court. Allstate Ins. Co. v. Smith, 656 N.E.2d 1156, 1157 (Ind.Ct.App.1995). Summary judgment is appropriate only when the evidentiary matter designated by the parties shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Id.; Ind. Trial Rule 56(C). This court has observed that questions involving the interpretation of an insurance policy are generally questions of law and, thus, are particularly well suited for summary disposition. Union Sec. Life Ins. v. Acton, 703 N.E.2d 662, 664 (Ind.Ct.App.1998),trans. denied. In the context of cross-motions for summary judgment, the trial court must deal with each motion separately, construing the facts and inferences to be drawn therefrom in a light most favorable to the non-moving party. Allstate, 656 N.E.2d at 1157. If the facts are undisputed, our task is to determine the law applicable to those facts, and whether the trial court correctly applied it. Id.

Coverage Under the Policy

Utica asserts that the trial court erred as a matter of law when it granted summary judgment in favor of Precedent. Specifically, Utica contends that none of the four policy provisions Precedent relies upon provide coverage for its loss and, thus, that the court should have entered summary judgment in favor of Utica.

The interpretation of an insurance contract is primarily a question of law for the court. Tate v. Secura Ins., 587 N.E.2d 665, 668 (Ind.1992). And contracts for insurance are subject to the same rules of interpretation as are other contracts. Eli Lilly and Co. v. Home Ins. Co., 482 N.E.2d 467, 470 (Ind.1985). "In construing a written insurance contract, we may not extend insurance coverage beyond that provided in the contract, nor may we rewrite the clear and unambiguous language of an insurance contract." American States Ins. Co. v. Adair Indus., Inc., 576 N.E.2d 1272, 1273 (Ind.Ct.App.1991) (citation omitted). When interpreting an insurance policy, we give plain and ordinary meaning to language that is clear and unambiguous. Westfield Companies v. Rovan, Inc., 722 N.E.2d 851, 855 (Ind.Ct.App. 2000). The fact that the parties disagree on the interpretation of the contract does not by itself establish an ambiguity; instead, we will find a contract ambiguous only if it is susceptible to more than one interpretation and reasonable persons would honestly differ as to its meaning. American States Ins., 576 N.E.2d at 1274.

As we have stated, Precedent argued below, and the trial court agreed, that its loss is covered by at least one of the following policy provisions: (1) Fidelity; (2) On Premises; (3) In Transit; or (4) Forgery or Alteration. Utica contends that Precedent's loss does not fall within the plain meaning of the clear and unambiguous language of any of those provisions. We address the parties' claims in turn.⁵

A. Fidelity Provision

Utica first asserts that Precedent's loss is not covered under the fidelity provision of the policy, which provides coverage for "[l]oss resulting from dishonest or fraudulent acts committed by an Employee acting alone or in collusion with others." Utica contends, in part, that Fidelity was not Precedent's employee. We must agree.

The policy defines "employee" as:

(1) an officer or other employee of the Insured, while employed in, at or by any of the Insured's offices or premises covered hereunder, and a guest student pursuing studies or duties in any of said offices or premises;

(2) a person provided by an employment contractor to perform employee duties for the Insured ...;

(3) an employee of an institution merged or consolidated with the Insured ...;

(4) each natural person, partnership or corporation authorized by the Insured to perform services as data processor of checks or other accounting records of the Insured ...;

(5) [a]n attorney of the Insured while performing legal services for the Insured (6) [a]ny natural person who is a partial owner or partner of the Insured....

(Emphasis added). Precedent asserts that Fidelity falls within subsection (4) of the policy's definition of "employee" and alleges that Fidelity was "performing services to process the checks for the ultimate borrowers." Because the policy does not define the term "data processor," we look to that term's plain meaning. See Westfield Companies, 722 N.E.2d at 855

. The term "data processing" is defined as, "Conversion of data into a form that can be processed by computer; [t]he storing or processing of data by computer." THE AMERICAN HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE 475 (3d ed.1992). And "data processor" means, "A device, such as a calculator or computer, that performs operations on data; [a] person who processes data." Id.

Here, Precedent, a mortgage company, issued Fidelity, a title company, a check for the purpose of funding the Fazekas' residential loan. The instructions attached to the check state that the check was for the...