Wagner v. Yates

• Decision Date: 03 September 2009
• Docket Number: No. 22S01-0808-CV-475.,22S01-0808-CV-475.
• Citation: 912 N.E.2d 805
• Parties: Brenda S. WAGNER and Darren M. Wagner, Appellants (Plaintiffs below), v. Bobbi J. YATES, et al., Appellee (Defendant below).
• Court: Indiana Supreme Court

912 N.E.2d 805

Brenda S. WAGNER and Darren M. Wagner, Appellants (Plaintiffs below), v. Bobbi J. YATES, et al., Appellee (Defendant below).

No. 22S01-0808-CV-475.

Supreme Court of Indiana.

September 3, 2009.

Stephen T. Naville, Gregory M. Reger, Lorch & Naville, LLC, New Albany, IN, Attorneys for Appellants.

Sandra L. Heeke, George A. Budd, V, Waters, Tyler, Scott, Hoffman & Doane, LLC, New Albany, IN, Attorneys for Appellee.

On Petition To Transfer from the Indiana Court of Appeals, No. 22A01-0710-CV-474

RUCKER, Justice.

Interpreting an insurance policy as including set-off and anti-stacking provisions, the trial court granted summary judgment in favor of Insurer. Concluding both provisions are ambiguous, we strictly construe the policy against the Insurer and reverse the judgment of the trial court.

Facts and Procedural History

This is an appeal from the grant of summary judgment. The following facts are not in dispute. Brenda Wagner sued Bobbi Yates for injuries she received in an automobile collision while driving a vehicle owned by her employer. Wagner's husband joined the action on a loss of consortium claim. At the time of the collision Wagner maintained an auto insurance policy with American Family Insurance; Yates maintained an auto liability policy with Allstate Insurance Company; and the company car Wagner drove was insured by her employer through a policy with State Farm.

Wagner initially sued only Yates. However, seeking underinsured motorist (UIM) coverage Wagner later amended her complaint to include American Family and State Farm. Both the American Family policy and the State Farm policy provided $100,000 per person in UIM coverage.

Allstate settled with Wagner for policy limits in the amount of $50,000. And Yates was dismissed from this action. The parties agree that under the terms of Allstate's liability policy Allstate was responsible for the first $50,000. The parties also agree that if applicable State Farm will be liable for the next $50,000. American Family is of the view that because of anti-stacking and set-off provisions in the Wagner insurance policy, it has no liability. In essence American Family contends that Wagner is entitled to a total recovery of $100,000. And because (i) Allstate has already settled for $50,000, and (ii) State Farm would be responsible for the next $50,000, if any, American Family's exposure is zero. On this basis American Family moved for summary judgment.

Wagner contested this claim and filed a cross-motion for summary judgment. The trial court agreed with American Family and granted summary judgment in its favor. On appeal Wagner conceded that an insurer may limit its exposure by including an "anti-stacking" provision in its insurance policy; but Wagner argued that a plain reading of American Family's policy shows that no such provision is included. Wagner also contended that based on the language of the policy, American Family was not entitled to set off any amounts that may be paid by State Farm. Concluding that American Family may set off payments made by State Farm, the Court of Appeals affirmed the judgment of the trial court. It did not address the anti-stacking claim. Wagner v. Yates, 884 N.E.2d 331 (Ind.Ct.App.2008). Having previously granted transfer we now reverse the trial court's judgment.

Standard of Review

When reviewing the grant of a summary judgment motion, we apply the same standard applicable to the trial court. Summary judgment is proper only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). We do not weigh the evidence, but will consider the facts in the light most favorable to the non-moving party. Freidline v. Shelby Ins. Co., 774 N.E.2d 37, 39 (Ind.2002). We must reverse the grant of a summary judgment motion if the record discloses an incorrect application of the law to those facts. Ayres v. Indian Heights Volunteer Fire Dep't, Inc., 493 N.E.2d 1229, 1234 (Ind. 1986). 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. Morris v. Econ. Fire & Cas. Co., 848 N.E.2d 663, 665-66 (Ind.2006).

Discussion

I.

In the case before us no dispute of material facts exists. Rather, this matter involves the question of whether American Family is entitled to summary judgment as a matter of law based upon a clause in its insurance policy which, according to American Family, allows it to set off payments made by State Farm. The clause at issue provides:

The limits of liability of this coverage will be reduced by:

1. A payment made or amount payable by or on behalf of any person or organization which may be legally liable, or under any collectible auto liability insurance, for loss caused by an underinsured motor vehicle.

Appellant's App. at 65. American Family cites authority for the general proposition that "language requiring setoffs has been and should be enforced." Appellee's Br. at 10. See, e.g., Hardiman v. Governmental Interinsurance Exch., 588 N.E.2d 1331, 1334 (Ind.Ct.App.1992) (enforcing a set-off provision in an action against automobile insurer to recover underinsured motorist benefits despite receipt of worker's compensation where relevant provision of insurance policy declared, "Any amount payable under this policy shall be reduced by (a) All sums payable under any worker's compensation, disability, or similar law...."); Castillo v. Prudential Prop. & Cas. Ins. Co., 834 N.E.2d 204, 207 (Ind.Ct. App.2005) (enforcing a set-off clause against an insured who received a settlement amount from the tortfeasor's liability insurer, which provided that "[p]ayments will be reduced by any amount payable by persons responsible for the accident ... [and] will also be reduced by any amount payable under this policy or by other sources"). We have no quarrel with this general proposition. The problem in this case however is whether the language of the policy accomplishes the desired result.

There is no dispute here that the amounts Allstate paid to Wagner were on behalf of a person—purported tortfeasor Yates—who "may be legally liable" for "loss caused by an underinsured motor vehicle." Thus American Family's liability is reduced by the $50,000 Allstate paid to Wagner. At stake however is whether any sums that may be payable to Wagner by State Farm are similarly treated. American Family argues that a UIM provider "effectively stand[s] in the shoes of a tortfeasor during evaluation of coverage." Appellee's Br. in Resp. to Pet. to Trans. at 6. But the Court of Appeals rejected a similar argument in Progressive Ins. Co., Inc. v. Bullock, 841 N.E.2d 238 (Ind.Ct. App.2006), trans. denied. The summarized facts in Progressive are these. Misty Bullock and her children were passengers in a car driven by Teresa Jones. They were injured when struck by a car that Rosie Kemp was driving. The following insurance was in play: Kemp was insured by Indiana Insurance Company in the amount of $25,000 per person and $50,000 per accident; Jones had UIM coverage with Farm Bureau Insurance Company in the amount of $50,000 per person and $100,000 per accident; and Bullock had UIM coverage with Progressive Insurance Company in the amount of $50,000 per person and $50,000 per accident.

Under terms of an agreement with Kemp, Indiana Insurance, Jones, and Farm Bureau, Bullock released the children's claims against those parties in exchange for $24,500 from Indiana Insurance and $80,500 from Farm Bureau. This left only the issue of Progressive's liability to Bullock. Progressive argued that after set-offs of payments made by Farm Bureau and Indiana Insurance Progressive owed no obligation under its policy. In relevant part the policy declared:

The Limits of Liability under [the UIM provision] shall be reduced by all sums ... paid because of bodily injury or property damage by or on behalf of any person or organizations who may be legally responsible ....

Id. at 241 (emphasis and alterations in original). The Court of Appeals agreed that Progressive was entitled to a set-off for the $14,500 paid by Indiana Insurance. However, the court rejected Progressive's argument that "Farm Bureau effectively stands in the shoes of the tortfeasor" and thus Progressive was entitled to set off the payment made by Farm Bureau. Id. at 242. The court elaborated:

To the extent ... Progressive is arguing that Farm Bureau is legally responsible for Kemp's negligence simply because Farm Bureau provided UIM coverage to Jones, this argument ... fails. The underlying purpose of UIM coverage is to give the insured the recovery he or she would have received if the underinsured motorist had maintained an adequate policy. Progressive provides us with no authority that UIM coverage is intended to make a UIM insurance provider directly liable for the negligent acts of the tortfeasor.

Id. (internal citations and quotations omitted). We agree with the Court of Appeals' assessment. And as applied in this case we construe the phrase in American Family's policy, "payment made or amount payable by or on behalf of any person or organization which may be legally liable" as referring to payments by or on behalf of those directly liable for causing the injuries. This phrase does not require reduction from amounts payable for sums from State Farm's UIM coverage. Accord Am. Econ. Ins. Co. v. Motorists Mut. Ins. Co., 605 N.E.2d 162, 165 n. 5 (Ind.1992) (construing similar provision and declaring the "reduction would not include underinsured motorists coverage payments made by [a third party's insurance carrier]").

American Family counters that aside from the "legally liable" phrase, it is nonetheless entitled to set off the amounts paid by State Farm under the second phrase: "under any collectible auto liability insurance." American Family argues, and the Court of Appeals agreed, that "a...