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Justice v. American Family Mutual Insurance Co.

Supreme Court of Indiana

March 13, 2014

HOWARD JUSTICE, Appellant (Plaintiff below),
v.
AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Appellee (Defendant below)

Page 1172

Appeal from the Marion Superior Court, No. 49D05-1001-PL-1701. The Honorable Robyn L. Moberly, Judge. On Petition to Transfer from the Indiana Court of Appeals, No. 49A02-1112-PL-1078.

ATTORNEYS FOR APPELLANT: Ryan O. Farner, Indianapolis, Indiana.

ATTORNEYS FOR APPELLEE; Rick D. Meils, John W. Mervilde, Indianapolis, Indiana.

Massa, Justice. Rucker, David, and Rush, JJ., concur. Dickson, C.J., concurs with Parts B and C but, contrary to Part A.

OPINION

Page 1173

Massa, Justice.

This case raises a question of contract interpretation: in an insurance policy, does the phrase " limits of liability of this coverage" refer to the policy limit or to the insured's total damages? We believe it is the former, but because this particular set-off would reduce the policy limit below the statutory minimum, we reverse the trial court.

Facts and Procedural History

Kathleen Wagner, an underinsured motorist, collided with an IndyGo city bus driven by Howard Justice. To compensate him for the damages he sustained as a result of the accident, Justice received $77,469.56 in workers' compensation from IndyGo's insurer, GAB Robbins. That workers' compensation award comprised $51,829.81 paid to Justice's medical providers, $18,939.75 for his lost wages and temporary disability, and $6,700 for his permanent partial impairment. Pursuant to those payments, GAB Robbins asserted a lien in the amount of $77,469.56 against Justice's bodily injury claim. Justice settled this lien for $5,511.06, bringing his net workers' compensation to $71,958.50. Justice also received $25,000 from Wagner's insurer, bringing his total recovery to $96,958.50.

At the time of the accident, Justice carried an underinsured motorist policy issued by American Family Mutual Insurance

Page 1174

Company that provided coverage up to $50,000 per person and $100,000 per accident. The underinsured motorist endorsement provided:

We will pay compensatory damages for bodily injury which an insured person is legally entitled to recover from the owner or operator of an underinsured motor vehicle. The bodily injury must be sustained by an insured person and must be caused by accident and arise out of the use of the underinsured motor vehicle.
. . .
EXCLUSIONS
. . .
Underinsured Motorists Coverage shall not apply to the benefit of any insurer or self-insurer under any workers' compensation or disability benefits law or any similar law.
LIMITS OF LIABILITY
The limits of liability of this coverage as shown in the declarations apply, subject to the following:
1. The limit for each person is the maximum for all damages sustained by all persons as the result of bodily injury to one person in any one accident.
2. Subject to the limit for each person, the limit for each accident is the maximum for bodily injury sustained by two or more persons in any one accident.
We will pay no more than these maximums no matter how many vehicles are described in the declarations, insured persons, claims, claimants or policies or vehicles are involved in the accident.
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 ...

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