Wert v. Meridian Sec. Ins. Co.

• Decision Date: 16 January 2014
• Docket Number: No. 15A01–1306–CT–252.,15A01–1306–CT–252.
• Parties: Darliss WERT and Gary Wert, Appellants/Plaintiffs, v. MERIDIAN SECURITY INSURANCE COMPANY, Appellee/Defendant.
• Court: Indiana Appellate Court

997 N.E.2d 1167

Darliss WERT and Gary Wert, Appellants/Plaintiffs,

v.MERIDIAN SECURITY INSURANCE COMPANY, Appellee/Defendant.

No. 15A01–1306–CT–252.

Court of Appeals of Indiana.

Nov. 14, 2013.

Rehearing Denied Jan. 16, 2014.

David W. Craig, Scott A. Faultless, Craig Kelley & Faultless LLC, Indianapolis, IN, Attorneys for Appellants.

Andrew T. Glier, State Auto Insurance House Counsel, Carmel, IN, Attorney for Appellee.

OPINION

VAIDIK, Judge.

Case Summary

Gary and Darliss Wert (collectively “the Werts”) were involved in a car accident with Barbara Offill. After settling with Offill for $100,000, the limit of her liability insurance, the Werts sued their insurance company, Meridian Security Insurance Company (“Meridian”) ¹, for an underinsured-motorist claim more than two years after the accident. Meridian filed a motion for summary judgment, claiming that the contract barred the Werts from filing a lawsuit against them more than two years after the accident. The Werts appeal from the trial court's order granting summary judgment to Meridian. They argue that the contract is ambiguous because the two-year contractual limitation provision conflicts with another provision in the contract requiring full compliance with the contract. To comply with the full-compliance provision of the contract, the Werts were required to settle or obtain a judgment before filing a lawsuit against Meridian. Finding that these provisions, when read together, make it unclear when the Werts should have filed a lawsuit to preserve their underinsured-motorist claim and may completely foreclose their ability to file a lawsuit, we reverse.

Facts and Procedural History

Meridian issued a car insurance policy to Gary, effective from December 20, 2008 to June 20, 2009. Appellants' App. p. 27. On January 16, 2009, Darliss was injured in a car accident caused by Offill's negligent driving. In February 2009, the Werts' attorney, Deborah McKenery notified Meridian that the Werts might file an underinsured-motorist claim under their policy. In March 2010, after learning that Offill had only $100,000 of liability insurance, McKenery informed Meridian that the Werts had an underinsured-motorist claim and told Meridian that she was ordering records and reports to submit to the insurance company. Id. at 98.

In December 2010, Offill's insurance company, Auto–Owners Insurance Company (“Auto–Owners”), offered the Werts $100,000, the full amount of Offill's insurance policy. Auto–Owners also included proof-of-insurance coverage because Auto–Owners knew the Werts would be making an underinsured-motorist claim against Meridian. In exchange for Auto–Owner's extension of the full amount of coverage, Auto–Owners requested that McKenery obtain a waiver of subrogation rights from Meridian for Darliss's medical payments and underinsured-motorist claims. McKenery then submitted to Meridian a demand of $400,000 for underinsured bodily injury benefits.

In January 2011, a Meridian representative, Brandi Giger, directly informed Darliss that Meridian was processing their insurance claim and that Meridian required Medicare information, which Darliss later provided. The next day, Giger sent McKenery a letter stating that McKenery must either “reach a settlement agreement with us or file a lawsuit against our insured.” Id. at 109. McKenery thought the letter was erroneously sent because she knew she could not file a lawsuit against her own client. Id. at 91. Instead, she believed that the letter was intended to confirm the conversation she had the previous day with the Meridian representative of the need to file suit to protect the Werts' third-party claim from being barred by the statute of limitation. Id.

The same day, McKenery filed a lawsuit in Dearborn Superior Court against Offill to prevent the Werts' claim from being time-barred by the statute of limitation. Id. at 136–338. A few days later, Meridian informed McKenery that it was waiving its subrogation rights against Auto–Owners and authorized the Werts to accept the $100,000 offer to resolve their third-party tort claim against Offill. Id. at 110.

On January 18, 2011, McKenery sent a letter to Auto–Owners confirming that Meridian was waiving its subrogation rights. She enclosed a copy of the lawsuit filed against Offill and requested the $100,000 settlement check. Id. at 139. McKenery also sent this letter to Giger, who was assisting with the underinsured-motorist claim. According to McKenery, the settlement money from Auto–Owners was not available to the Werts until early February 2011. Id. at 92. In February 2011, McKenery gave Meridian a copy of the release executed by the Werts, and McKenery filed a motion to dismiss the lawsuit against Offill the next day. Id. at 92, 112, 142–43.

In March 2011, Penni Nixon, another representative at Meridian, informed McKenery that she was assigned to review the Werts' underinsured-motorist claim and would contact her once she finished reviewing the claim. Id. at 113. In June 2011, McKenery told Nixon that she was getting an update from Darliss's doctor and would like to settle the case.

In August 2011, Meridian set its reserves on the Werts' underinsured-motorist claim. Id. at 133. McKenery gave Meridian more medical information in support of their claim in both August and November. In November, McKenery also told Meridian that she wanted to resolve the Werts' underinsured-motorist claim either through settlement, mediation, or arbitration. Id. at 119. In December 2011, Meridian offered $5000 to McKenery to settle the Werts' underinsured-motorist claim. Id. at 134.

On February 24, 2012, more than two years after the date of the accident, the Werts filed a complaint in Dearborn Superior Court seeking underinsured-motorist benefits under Meridian's policy. Id. at 5–10. Meridian filed its answer and affirmative defenses in May 2012. Id. at 11–16. The same day, Meridian also filed a motion for summary judgment, arguing that it was entitled to summary judgment because the claim was filed after the expiration of the contractual limitation period. Id. at 17–18. In May 2013, the trial court granted Meridian's motion for summary judgment. Id. at 4.

The Werts now appeal.

Discussion and Decision

The Werts claim that the contractual limitation provision is ambiguous, Meridian is estopped from asserting the contractual limitation provision, and the contractual limitation provision is unenforceable. We consider only the ambiguity of the contractual limitation provision because we find it dispositive.

When reviewing summary judgment, we apply the same standard of review as the trial court. Presbytery of Ohio Valley, Inc. v. OPC, Inc., 973 N.E.2d 1099, 1110 (Ind.2012). Summary judgment is appropriatewhere the designated evidence “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.” Ind. Trial Rule 56(C). When a party appeals the denial of summary judgment, the appealing party “carries the burden of persuading this court that the trial court's decision was erroneous.” Ill. Bulk Carrier, Inc. v. Jackson, 908 N.E.2d 248, 253 (Ind.Ct.App.2009), trans. denied. If the issue presented is purely a question of law, the Court's review is de novo. Buchanan v. HSBC Mortg. Servs., Inc., 993 N.E.2d 275, 278 (Ind.Ct.App.2013).

In general, “[i]nsurance policies are governed by the same rules of construction as other contracts....” Peabody Energy Corp. v. Roark, 973 N.E.2d 636, 640 (Ind.Ct.App.2012), aff'd on reh'g,978 N.E.2d 503 (Ind.Ct.App.2012), trans. denied. However, because of the disparity in bargaining power between insurance companies and insureds, courts have developed distinct rules for those contracts. Auto–Owners Ins. Co. v. Harvey, 842 N.E.2d 1279, 1283 (Ind.2006). When interpreting an insurance contract, “if an insurance contract is clear and unambiguous, the language therein must be given its plain and ordinary meaning.” Castillo v. Prudential Prop. and Cas. Ins. Co., 834 N.E.2d 204, 206 (Ind.Ct.App.2005). The mere fact that a controversy exists and the insured asserts an interpretation contrary to that asserted by the insurer is insufficient to establish an ambiguity. Shelter Ins. Co. v. Woolems, 759 N.E.2d 1151, 1155 (Ind.Ct.App.2001), trans. denied.

If an ambiguity exists, “insurance policies are to be construed strictly against the insurer and the policy language is viewed from the standpoint of the insured.” Id. This is especially important “where the language in question purports to exclude coverage.” State Auto. Mut. Ins. Co. v. Flexdar, Inc., 964 N.E.2d 845, 848 (Ind.2012). Insurers may limit coverage, “but such limitations must be clearly expressed to be enforceable.” Id.

This Court “must accept an interpretation of the contract language that harmonizes the provisions rather than one which supports a conflicting version of the provisions.” Castillo, 834 N.E.2d at 206 (citing Burkett v. Am. Family Ins. Grp., 737 N.E.2d 447, 452 (Ind.Ct.App.2000)). A court should construe the language of an insurance policy so as not to render any words, phrases, or terms ineffective or meaningless. FLM, LLC v. Cincinnati Ins. Co., 973 N.E.2d 1167, 1174 (Ind.Ct.App.2012), trans. denied.

The Werts argue that the contractual limitation provision is ambiguous when read with the full-compliance provision of the contract. Relevant portions of the contract state:

PART F—GENERAL PROVISIONS

* * *

LEGAL ACTION AGAINST US

No legal action may be brought against us until there has been full compliance with the terms of this policy.

Appellants' App. p. 46.

AMENDMENT OF POLICY PROVISIONS

The Provision or Condition titled Legal Action Against Us is amended by the addition of the following:

Under Uninsured or Underinsured Motorist Coverage of this policy, if provided, no legal action or arbitration proceeding may be brought against us unless the action or proceeding is begun within two years of the date of the accident.

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