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Erie Indemnity Co. v. Estate of Harris

Court of Appeals of Indiana

July 31, 2017

Erie Indemnity Company, as the Attorney-In-Fact for the Subscribers at Erie Insurance Exchange, Appellant-Defendant/Counterclaimant,
The Estate of Brian L. Harris, By Its Special Representative, Laura Harris, and Anna Marie Harris, Spouse of Brian L. Harris, Deceased, Appellees-Plaintiffs/Counterdefendants.

         Appeal from the LaPorte Superior Court The Honorable Richard R. Stalbrink, Jr., Judge Trial Court Cause No. 46D02-1511-CT-2015

          ATTORNEYS FOR APPELLANT Mark R. Smith Donna H. Fisher Smith Fisher Maas Howard & Lloyd P.C. Indianapolis, Indiana

          ATTORNEY FOR AMICUS CURIAE INSURANCE INSTITUTE OF INDIANA, INC. Bryan H. Babb Bose McKinney & Evans LLP Indianapolis, Indiana

          ATTORNEYS FOR APPELLEES Michael J. Anderson Scott M. Keller Tracey S. Schafer Anderson, Agostino & Keller, P.C. South Bend, Indiana

          Kirsch, Judge.

         [¶1] Erie Indemnity Company, as the Attorney-In-Fact for the Subscribers at Erie Insurance Exchange (together, "Erie"), [1] appeals the trial court's summary judgment decision in favor of the widow and estate of Brian L. Harris. On appeal, Erie raises the following restated issue: Whether the trial court erred as a matter of law by finding that the uninsured motorist insurance issued to Brian L. Harris's ("Brian") employer, as part of its commercial auto fleet policy that covered Brian's take-home car, provided coverage when Brian, while off duty and cutting his own lawn on a riding mower, was struck and killed by a car driven by an uninsured motorist.

         [¶2] We affirm.

         Facts and Procedural History[2]

         [¶3] On August 6, 2010, Brian was on a riding lawnmower, cutting grass at his Goshen, Indiana home, when, while close to the road, he was struck and killed by Noel M. Sparks ("Sparks"), who was driving a 1974 Chevy truck ("Chevy"). Sparks had borrowed the Chevy with the permission of its owners, Brent and Jamie Stouder (together, "the Stouders"). At the time of the accident, Sparks was driving on a suspended license and was under the influence of illegal drugs. Because Sparks was operating the vehicle as an unlicensed driver, the Stouders' insurance on the Chevy did not apply to the accident; accordingly, Sparks was deemed to be an uninsured motorist.

         [¶4] Brian, who was the husband of Anna Marie Harris ("Anna Marie"), [3] had worked since January 1993 for Formco Inc. ("Formco"), a plastic design and manufacturing company in Elkhart County. During his employment, Brian drove a company-owned vehicle as his primary transportation for both business and personal uses. In August 2010, Brian's vehicle was a 2004 Toyota pickup truck ("Toyota").[4]

         [¶5] In December 1993, Formco submitted an application to Erie requesting Commercial Non-Fleet/Fleet Auto coverage. In Section 10 of that application, Formco was required to list: (1) the vehicles for which coverage was requested; and (2) each driver's name and license number exactly "as it appears on the driver's license." Appellant's App. Vol. 2 at 139. Brian's name was submitted as one of only three named drivers in a policy that covered eleven vehicles. The other drivers listed were David Slagel, President of Formco, and Jean Woodworth, whose position was not provided. On December 11, 1993, Erie issued a Commercial Auto Policy to Formco as the sole "Named Insured, " designating the autos that were covered, but mentioning nothing about individual drivers.[5] That policy was renewed each year, and vehicles were added and deleted as needed. The policy that was in effect at the time of the accident was the sixteenth renewal ("the Policy") and covered the term from December 11, 2009 to December 11, 2010. The Policy included an Uninsured/Underinsured Motorist Coverage Endorsement - Indiana ("UM Endorsement"), [6] which supplied coverage limits of $1, 000, 000 per accident, and listed the Toyota as one of Formco's scheduled vehicles. Brian paid no premiums and was not a named insured under the Policy. Norman C. Flick, the Section Supervisor, Commercial Property and Casualty Underwriting, for the Commercial Lines and Reinsurance Division of Erie Insurance Exchange, submitted an affidavit, as designated evidence, stating, "Brian was not listed as a 'named insured' or an 'additional insured' in any of the renewals' Declarations Pages; nor was Brian's name listed anywhere in the renewals' Declarations Pages. Rather, Brian was identified in [Erie]'s underwriting records as a 'scheduled driver' under the Policy." Appellant's App. Vol. 3 at 80; Appellant's App. Vol. 4. at 44.

         [¶6] Following Brian's death, his estate submitted a claim to Erie seeking damages for bodily injury under the Policy's UM coverage. Erie denied that claim by letter dated September 6, 2010. In that denial letter, Erie asserted that UM coverage was unavailable because: (1) Brian did not meet the definition of a named insured "you, " as defined in the Policy; and (2) Brian was not using or occupying an auto insured by the Policy at the time of the accident.

         [¶7] Brian's estate and Anna Marie (together "the Estate") filed a Complaint for Damages and Declaratory Judgment in Elkhart Superior Court (Case No. 20D03-1107-CT-11) ("Complaint") on July 8, 2011.[7] The Complaint set forth the following counts: Count I alleged negligent operation of a motor vehicle by Sparks; Count II alleged negligent entrustment by the Stouders of their Chevy to Sparks; and Count III sought declaratory judgment to determine whether the Policy's UM insurance covered the damages that the Estate had suffered from the August 6, 2010 motor vehicle accident. In addition to its answer, Erie filed a counterclaim against the Estate.[8]

         [¶8] Erie also filed a motion for summary judgment as to Count III, seeking declaratory judgment that the Policy did not provide UM coverage[9] and its designation of evidence. Following full briefing, the trial court held a hearing on the parties' cross-motions for summary judgment and, on April 11, 2016, issued its interlocutory order denying Erie's motion for summary judgment and granting the Estate's cross-motion for summary judgment ("SJ Order"). In the SJ Order, the trial court addressed the liability issues and determined that the Estate was entitled to recover for Brian's accident under the Policy's UM Endorsement; however, the trial court did not address the damages issue. In an Agreed Entry, dated May 12, 2016, the parties stipulated "as to the damage issues, "[10] but only "pursuant to a full and complete reservation of their respective appellate rights in connection with the appeal of the liability issues determined by the Court's [SJ Order.]" Appellant's App. Vol. 4 at 184. Erie now appeals.[11]

         Discussion and Decision

         Standard of Review

         [¶9] On appeal from a grant of summary judgment, our standard of review is the same as that of the trial court. FLM, LLC v. Cincinnati Ins. Co., 973 N.E.2d 1167, 1173 (Ind.Ct.App. 2012), trans. denied. We stand in the shoes of the trial court and apply a de novo standard of review. Id. Our review of a summary judgment motion is limited to those materials designated to the trial court, and summary judgment is appropriate only where the designated evidence shows there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C), (H); FLM, 973 N.E.2d at 1173. We view the pleadings and designated materials in the light most favorable to the non-moving party. FLM, 973 N.E.2d at 1173. Additionally, all facts and reasonable inferences from those facts are construed in favor of the nonmoving party. Id.

         [¶10] A trial court's grant of summary judgment is clothed with a presumption of validity, and the party who lost in the trial court has the burden of demonstrating that the grant of summary judgment was erroneous. Id. Where a trial court enters specific findings and conclusions, they offer insight into the rationale for the trial court's judgment and facilitate appellate review, but are not binding upon this court. Id. We will affirm upon any theory or basis supported by the designated materials. Id. Here, the parties filed cross-motions for summary judgment, however, that does not alter our standard of review. Id. at 1173-74. "Instead, we must consider each motion separately to determine whether the moving party is entitled to judgment as a matter of law." Id. at 1174.

         [¶11] At issue in this case is whether a term of the Policy, regarding whether Brian is protected by the Policy's UM coverage, is ambiguous. Insurance policies are governed by the same rules of construction as other contracts, and their interpretation is a question of law. Bradshaw v. Chandler, 916 N.E.2d 163, 166 (Ind. 2009). "When interpreting an insurance policy, our goal is to ascertain and enforce the parties' intent as manifested in the insurance contract. We construe the insurance policy as a whole and consider all of the provisions of the contract and not just the individual words, phrases or paragraphs." Buckeye State Mut. Ins. Co. v. Carfield, 914 N.E.2d 315, 318 (Ind.Ct.App. 2009), trans. denied. Further, we "seek to harmonize the provisions, rather than leave them in conflict." Erie Ins. Exch. v. Sams, 20 N.E.3d 182, 188 (Ind.Ct.App. 2014), trans. denied. "[W]here, as here, we interpret an endorsement to an insurance policy, the endorsement 'must be read together, construed, and reconciled with the policy to give effect to the whole.'" Masten v. AMCO Ins. Co., 953 N.E.2d 566, 569 (Ind.Ct.App. 2011) (quoting Stevenson v. Hamilton Mut. Ins. Co., 672 N.E.2d 467, 473 (Ind.Ct.App. 1996), trans. denied), trans. denied. "We construe the policy and relevant endorsements from the perspective of 'an ordinary policyholder of average intelligence, ' and if 'reasonably intelligent people may interpret the policy's language differently, ' the policy is ambiguous." Id. (quoting Bradshaw, 916 N.E.2d at 166). "If there is an ambiguity, we construe the policy strictly against the insurer." Milbank Ins. Co. v. Indiana Ins. Co., 56 N.E.3d 1222, 1229 (Ind.Ct.App. 2016).

         [¶12] Pursuant to Indiana Code section 27-7-5-2, insurance companies must provide UM coverage in all existing or newly issued automobile policies up to the policy limits, unless such coverage is rejected in writing. Liberty Mut. Fire Ins. Co. v. Beatty, 870 N.E.2d 546, 549 ...

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