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Arroyo v. Geico Casualty Co.

United States District Court, N.D. Indiana, Hammond Division

January 29, 2019

LOUIS A. ARROYO, and VERONICA GUERRA, Plaintiffs,
v.
GEICO CASUALTY COMPANY, Defendant.

          OPINION AND ORDER

          JAMES T. MOODY, UNITED STATES DISTRICT JUDGE

         I. BACKGROUND

         Sylvia Arroyo and Louis W. Arroyo were customers of defendant Geico Casualty Company in 2015. The policy, effective August 12, 2015, listed them as “Named Insured[s], ” and their son, Louis A. Arroyo (one of the plaintiffs in this case, herein referred to as “Louis A.”), was listed as an “Additional Driver.” (DE # 34-3 at 185.)

         Louis A.'s son, Mario, was killed in an car accident involving an underinsured motorist on November 8, 2015. When Louis A. sought to recover underinsured motorist benefits under the aforementioned policy, Geico informed him that, because he was not a “Named Insured, ” he did not satisfy the definition of “you, ” which was necessary under the terms of the policy to recover underinsured motorist benefits for the death of a relative. He and Mario's mother, Veronica Guerra, then filed suit against Geico for breach of contract (Count I) and breach of duty of good faith and fair dealing (Count II).

         Geico has moved for summary judgment on the claims (DE # 29), and plaintiffs have moved for partial summary judgment on Count I (DE # 31). The parties have also filed motions to strike evidence submitted in connection with the aforementioned motions for summary judgment, none of which have any real bearing on the court's decision and all of which are denied as moot.[1] (DE ## 37, 38, 45.) The remaining cross-motions for summary judgment are fully briefed and ripe for ruling.

         II. ANALYSIS

         Before the court are cross-motions for summary judgment. Summary judgment is governed by Federal Rule of Civil Procedure 56. “[S]ummary judgment is appropriate - in fact, is mandated - where there are no disputed issues of material fact and the movant must prevail as a matter of law.” Dempsey v. Atchison, Topeka, & Santa Fe Ry. Co., 16 F.3d 832, 836 (7th Cir. 1994) (citations and quotation marks omitted).

         Both motions seek a determination as a matter of law regarding plaintiffs' contractual rights under the policy, and Geico's motion challenges the merits of Count II. Though the parties have filed separate cross-motions for summary judgment, the issues addressed in the motions, responses, and replies largely overlap. It is wasteful and unnecessary to address each motion separately, and, in the context of this opinion, the court addresses the issues generally, with an eye to the ultimate question of whether either movant must prevail as a matter of law.

         Despite the overlap of issues, the parties in this case wish to argue about separate preliminary matters. Geico would like for the court to focus on the language contained in the policy documents that were in effect at the time of Mario's accident. Plaintiffs, however, seek to direct the court's attention to what they argue was a change made to the policy without proper notice. The court begins with plaintiffs' argument, as it determines which version of the contractual language governs the remainder of the discussion. Next, the court will address plaintiffs' substantive rights under the contract (Count I), and finally the court will address Count II.

         1. Which Contractual Language Controls?

         Plaintiffs argue that the definition of the terms “you and your” in the relevant policy was changed, without proper notice, in a way that affected plaintiffs' rights under the contract. Plaintiffs argue that Geico was required to explicitly notify plaintiffs of this change, and failed to do so. The court assumes, without deciding, that under Indiana law, insurers owe a duty to notify insureds of material policy changes. See Lexington Ins. Co. v. Am. Healthcare Providers, 621 N.E.2d 332, 340 (Ind.Ct.App. 1993) (assuming in arguendo application of the general rule). Nevertheless, plaintiffs' argument is meritless, as explained below.

         Plaintiffs' argument requires a somewhat lengthy recitation of factual details, but such is necessary to understand the flaw in the argument. The court begins with the policy language in effect prior to the August 12, 2015, renewal period. There is no dispute that prior to August 12, 2015, the base policy governing the rights of the parties in this case defined “you and your” as “the policyholder named in the declarations or his or her spouse if a resident of the same household.” (See, e.g., DE # 34-3 at 23.) There is also no dispute that in the policy renewal documents for the coverage period beginning August 12, 2015, Geico altered the definition of the terms “you and your” to “the named insured shown in the declarations or his or her spouse if a resident of the same household.” (DE # 34-3 at 193.) This change was communicated in the policy renewal documents included in a letter to Sylvia and Louis W. Arroyo on July 9, 2015, on a page entitled “Automobile Policy Amendment.” (DE # 34-3 at 193.) This page described various changes to certain line items in the base policy; the relevant line item was enumerated “13, ” and corresponded to the definition of “you and your, ” line item “13, ” in the base policy. (Id.) However, this change is not the one that plaintiffs take issue with[2] - that comes later.

         As explained above, the amended definition of “you and your” went into effect on August 12, 2015. Mario's accident occurred on November 8, 2015. It is undisputed that, on or about December 9, 2015, Sylvia and Louis W. Arroyo requested a copy of their policy, and Geico attempted to oblige. Geico admits it sent a copy that included the base policy language but failed to include the page of amendments. Accordingly, the copy received by Sylvia and Louis W. Arroyo on or about December 9, 2015, contains only the base policy definition of “you and your.“ According to plaintiffs, the December 9, 2015, mailing changed the definition of “you and your” back to the base policy definition. But, confusingly, this is not the change plaintiffs object to, either.

         Plaintiffs appear to consider the base policy language favorable to them, and so despite interpreting this incomplete copy of the policy as a “change, ” they have not objected to the lack of formal ...


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