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ONB Insurance Group, Inc. v. Estate of Megel

Court of Appeals of Indiana

July 25, 2018

ONB Insurance Group, Inc., d/b/a Old National Insurance, and Joseph E. Kenworthy, Appellants-Defendants,
v.
The Estate of Joann Marie Megel, Deceased; the Estate of Edward J. Megel, Deceased; Darcy Megel; Nicholas Megel; Christina Megel; and Amy Jones, Appellees-Plaintiffs

          Appeal from the Jennings Circuit Court The Honorable Jon W. Webster, Judge Trial Court Cause No. 40C01-1105-CT-110 40C01-1205-CT-16

          ATTORNEYS FOR APPELLANTS Andrew J. Detherage Christian P. Jones Andrea S. Warren Barnes & Thornburg LLP Indianapolis, Indiana

          ATTORNEY FOR APPELLEES Scott A. Faultless Craig Kelley & Faultless LLC Indianapolis, Indiana

          May, Judge.

         [¶1] In this interlocutory appeal, ONB Insurance Group, Inc., d/b/a Old National Insurance, and Joseph E. Kenworthy (collectively, "ONI") appeal the trial court's denial of their motion for partial summary judgment in favor of The Estate of Joann Marie Megel, Deceased; the Estate of Edward J. Megel, Deceased; Darcy Megel; Nicholas Megel; Christina Megel; (collectively, "the Megel Parties" and Amy Jones ("Jones") (collectively, "the Accident Parties"). ONI presents multiple issues for our review, which we restate as:

1. Whether, as a matter of law, the Accident Parties can establish ONI owed them a common law duty;
2. Whether, as a matter of law, ONI assumed a duty to the Accident Parties; and
3. Whether ONI conspired with or aided and abetted an insured's violation of the terms of the Federal Motor Carrier Safety Regulations ("FMCSR").

         We reverse and remand.

         Facts and Procedural History[1]

         Background Facts

         [¶2] ONI is "an independent insurance broker that seeks insurance quotes from multiple brokers and insurance companies." (App. Vol. XVIII at 126.) Kenworthy works as an agent for ONI. One of the insurance companies ONI worked with to procure insurance was Occidental Fire and Casualty Company of North Carolina ("Occidental"). ONI uses American Underwriting Services ("AUS")[2] and Creative Underwriters ("CU") to write insurance quotes.

         [¶3] William Hackney ("Hackney") was the owner of Hackney Trucking ("HT"), formed in 2004. Hackney and ONI began their relationship in 2008, when Hackney owned HT. On August 18, 2010, Hackney sold all of HT's assets to C&K Transport, Inc. ("C&K"), which is also owned by Hackney. C&K and HT had the same phone number, email, bank account, and business location. C&K utilized HT's assets including trucks, equipment, and employees, and C&K's earnings were used to pay HT's outstanding debts.

         [¶4] To obtain federal operating authority for C&K, Hackney was required to submit a number of forms. In their brief, the Accident Parties delineated the required forms that are relevant to this case:

1) OP-1: application for motor carrier authority, 49 CFR 365.105(a), and mandating financial responsibility the applicant "must maintain and have on file with the FMCSA" of liability insurance in a minimum amount of $750, 000;
2) BMC-91X: part of the application, 49 CFR 365.109 & 385.305(b)(3) & (c), and mandating financial responsibility for bodily injury be filed with the FMCSA; 49 CFR 365.109(5)(i); and
3) BMC[-]34: part of the application, 49 CFR 365.109 & 385.305(b)(3) & (c), and mandating financial responsibility for cargo liability be filed with the FMCSA; 49 CFR 365.109(5)(iii).

(Br. of Appellees at 48) (grammatical errors in original) (citations to the record omitted).

         [¶5] On August 16, 2010, Stacy Hicks of GL Authority[3] helped Hackney complete and submit the OP-1. As part of the OP-1, Hackney was asked, "Do you have now, or have you ever had, any relationship with any other FMCSA Regulated entity within the past 3 years?" (App. Vol. XIV at 70.) Hackney answered, "No." (Id.) On August 30, 2010, Carla Carson, a representatives from ONI, emailed the AUS underwriter and requested Occidental, who was to provide insurance for C&K, to file a BMC-91X form with the FMCSA, which would provide the FMCSA with information regarding C&K's liability insurance coverage. The FMCSA accepted all relevant forms on August 30, 2010, and C&K obtained its operating authority the same day.

         Facts of Incident Prompting Litigation

         [¶6] On February 25, 2011, C&K driver Kenneth Kelley stopped at a weigh station in Lima, Ohio. At the weigh station, he discovered the truck ("C&K Truck") was overweight and the brakes were not working properly. Kelley parked the C&K Truck. The next morning, Kelley heard air coming from the brake area and called Hackney, who asked Kelley to drive the C&K Truck from Lima, Ohio, to Mitchell, Indiana, on a route that did not have any weigh stations. Kelley refused.

         [¶7] On February 26, 2011, Hackney drove to Ohio. He did not perform any repairs on the truck before driving it back to Mitchell, Indiana, and he drove the C&K Truck on the route with no weigh stations. Around 8:00 p.m. that day, Edward Megel was driving on U.S. 50 with his wife, JoAnn Megel, and his granddaughter, Darcy Megel. Edward was waiting to make a left turn when Amy Jones approached him as part of oncoming traffic. Hackney saw Edward's vehicle and realized he might not be able to stop. Hackney, driving the C&K Truck, collided with Edward's and Jones' vehicles. Edward and Darcy sustained injuries from the crash. JoAnn died on March 11, 2011, from injuries sustained in the collision. Jones was also injured. It is undisputed by the parties that the C&K Truck driven by Hackney was at fault for the accident.

         Procedural History of Current Matter

         [¶8] On May 23, 2011, the Megel Parties filed an action for damages against multiple parties, including Occidental, stemming from the accident. On May 18, 2012, Jones filed a separate action for damages against the same parties stemming from the accident. ONI was not an original party to either action. On January 3, 2012, Occidental filed third-party claims in both actions against ONI, alleging ONI made misrepresentations to Occidental that purportedly induced Occidental to issue an insurance policy to C&K. In February 2013, both the Megel Parties and Jones amended their complaints to include ONI as a defendant.

         [¶9] On December 8, 2014, ONI filed a motion for summary judgment with regard to Occidental's third-party defendant claims against ONI, arguing Occidental could not sue ONI, as C&K's insurance agent, for alleged misrepresentations on C&K's application for insurance. Additionally, the motion argued Occidental's claim that ONI conspired with C&K to fraudulently procure insurance failed as a matter of law because "an agent cannot conspire with a principal . . . [and] civil conspiracy allegations require an underlying tort, and there is no underlying misrepresentation claim here." (App. Vol. VI at 238.) On August 17, 2016, the trial court granted ONI's motion for summary judgment as to Occidental's third-party claims against ONI, stating, "As a matter of law, the Court grants summary judgment for ONI/ONB and Kenworthy on these claims" under the heading, "II. Common Law, Statutory and Actual Fraud/Misrepresentation Claims of Occidental." (App. Vol. XVII at 194.)[4]

         [¶10] On December 8, 2014, ONI filed a motion for summary judgment against the Megel Parties, alleging their claims failed as a matter of law. On January 21, 2015, ONI filed a motion for summary judgment against Jones, alleging her claims failed as a matter of law. On August 17, 2016, the trial court denied both of ONI's motions for summary judgment.[5] The trial court certified its decision for interlocutory appeal, but our court declined to accept jurisdiction over the matter.

         [¶11] On December 19, 2016, ONI filed renewed motions for summary judgment against the Megel Parties and Jones. The renewed motions were based on the Indiana Supreme Court's holding in Goodwin v. Yeakle's Sports Bar and Grill, Inc., 62 N.E.3d 384 (Ind. 2016). The Goodwin court stated, regarding a trial court's analysis of foreseeability of an injury for purposes of allocating duty, that the "court is tasked with engaging in a general analysis of the broad type of plaintiff and harm involved without regard to the facts of the actual occurrence." Id. at 394. Based thereon, ONI argued the evidentiary material designated as part of Accident Parties' responses to ONI's earlier motion for summary judgment

focused on the actual facts of the transactions and events that Plaintiffs contend led to the accident at issue. Under Indiana law as articulated by Goodwin, Plaintiffs' argument was wrong as a matter of law, and the extensive evidentiary material Plaintiffs relied upon to oppose summary judgment was immaterial and irrelevant on summary judgment.

(App. Vol. XVIII at 59.) In response, the Accident Parties filed a motion opposing ONI's renewed motion for summary judgment and argued a duty of care existed under Goodwin, ONI assumed a duty, ONI owed a statutory duty of care, ...


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