United States District Court, N.D. Indiana, Hammond Division
OPINION AND ORDER
P. Rodovich United States Magistrate Judge
matter is before the court on the Motion for Partial Summary
Judgment [DE 13] filed by the defendant, State Farm Mutual
Insurance Company, on November 16, 2018. For the following
reasons, the motion is GRANTED.
matter arises out of a motor vehicle accident that occurred
on August 17, 2016. The plaintiff, Nicole Schweihs, has
alleged that she was a passenger in a vehicle being driven by
Dylan Sherman. Dylan attempted to make a left turn onto Stone
Avenue in Portage, Indiana, when another motorist, Anthony
Ditola, proceeded through the intersection and the two
vehicles collided. The accident resulted in Schweihs
allegedly sustaining serious injuries. Ditola was insured by
a policy of insurance issued by Progressive Insurance
Company. Progressive paid Schweihs the policy liability limit
of $25, 000.00 in full settlement of her claim against
time of the accident, Dylan and Schweihs were dating and
lived together at Robert Sherman's home. Robert Sherman
was Dylan's father. Dylan was insured under a policy of
insurance issued by the defendant, State Farm Mutual
Insurance, to Robert Sherman. The policy provided for
underinsured motorist coverage with limits of $100, 000.00.
has brought claims against State Farm for breach of contract
and bad faith for State Farm's failure to pay
underinsured motorist benefits under the policy. State Farm
has moved for partial summary judgment on Schweihs' bad
faith claim only. State Farm asserts that Schweihs was not
the named insured on the policy nor was she in privity of
contract with State Farm, and there is no evidence that she
paid any of the policy premiums. Therefore, State Farm has
argued that Schweihs lacks standing to sue State Farm for bad
filed a response in opposition to State Farm's motion on
December 12, 2018. Schweihs has argued that a genuine of
material fact exists because she is an “insured”
as defined under State Farm's policy. State Farm filed a
reply on January 10, 2019.
to Federal Rule of Civil Procedure 56(a), summary judgment is
proper only if it is demonstrated that “there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Celotex
Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548,
91 L.Ed.2d 265 (1986); Garofalo v. Vill. of Hazel
Crest, 754 F.3d 428, 430 (7th Cir. 2014); Kidwell v.
Eisenhauer, 679 F.3d 957, 964 (7th Cir. 2012);
Stephens v. Erickson, 569 F.3d 779, 786 (7th Cir.
2009). A fact is material if it is outcome determinative
under applicable law. The burden is upon the moving party to
establish that no material facts are in genuine dispute, and
any doubt as to the existence of a genuine issue must be
resolved against the moving party. Adickes v. S.H. Kress
& Co., 398 U.S. 144, 160, 90 S.Ct. 1598, 1610, 26
L.Ed.2d 142, 155 (1970); Stephens, 569 F.3d at 786.
When the movant has met its burden, the opposing party cannot
rely solely on the allegations in their pleadings but must
“point to evidence that can be put in admissible form
at trial, and that, if believed by the fact-finder, could
support judgment in his favor.” Marr v. Bank of
America, N.A., 662 F.3d 963, 966 (7th Cir. 2011);
see also Steen v. Myers, 486 F.3d 1017, 1022 (7th
Cir. 2007) (quoting Hammel v. Eau Galle Cheese
Factory, 407 F.3d 852, 859 (7th Cir. 2005) (summary
judgment is “the put up or shut up moment in a lawsuit,
when a party must show what evidence it has that would
convince a trier of fact to accept its version of the
events.”)). The non-moving party cannot rely on
conclusory allegations. Smith v. Shawnee Library
System, 60 F.3d 317, 320 (7th Cir. 1995). Failure to
prove an essential element of the alleged activity will
render other facts immaterial. Celotex, 477 U.S. at
323; Filippo v. Lee Publications, Inc., 485
F.Supp.2d 969, 972 (N.D. Ind. 2007) (the non-moving party
“must do more than raise some metaphysical doubt as to
the material facts; he must come forward with specific facts
showing a genuine issue for trial.”).
viewing the facts presented on a motion for summary judgment,
a court must construe all facts in a light most favorable to
the non-moving party and draw all legitimate inferences in
favor of that party. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91
L.Ed.2d 202, 212 (1986); McDowell v. Vill. of
Lansing, 763 F.3d 762, 764, 765 (7th Cir. 2014). In
deciding a motion for summary judgment, the trial court must
determine whether the evidence presented by the party opposed
to the summary judgment is such that a reasonable jury might
find in favor of that party after a trial. Anderson,
477 U.S. at 248; Cung Hnin v. Toa, LLC, 751 F.3d
499, 504 (7th Cir. 2014); Wheeler v. Lawson, 539
F.3d 629, 634 (7th Cir. 2008).
federal court sitting in diversity applies the substantive
law of the forum state, so Indiana law applies here. Erie
R. Co. v. Tompkins, 304 U.S. 64 (1938); Ruiz v.
Blentech, 89 F.3d 320, 324 (7th Cir. 1996).
“Indiana law has long recognized that there is a legal
duty implied in all insurance contracts that the insurer deal
in good faith with its insured.” Erie Insurance Co.
v. Hickman, 622 N.E.2d 515 (Ind. 1993). While there is
no exhaustive or exclusive list of bad faith actions that an
insurer can take, the obligation of good faith and fair
dealing includes the obligation to refrain from: (1) making
an unfounded refusal to pay policy proceeds; (2) causing an
unfounded delay in making payment; (3) deceiving the insured;
and (4) exercising any unfair advantage to pressure an
insured into a settlement of her claim. Monroe Guar. Ins.
Co. v. Magwerks Corp., 829 N.E.2d 968, 976 (Ind. 2005)
(quoting Hickman, 622 N.E.2d at 519).
Farm has argued that Schweihs lacks standing to sue it for
bad faith because she was not a named insured on the policy.
The named insured was Robert Sherman. However, Schweihs
contends that she, as a passenger in Sherman's vehicle,
is defined as an “insured” under the policy and
is owed a duty of good faith. State Farm, in the instant
motion, is not disputing whether Schweihs is an
“insured” entitled to recover under the policy,
sue for breach of contract under the policy, or assert
defenses under the policy. Rather, State Farm contends that
it does not owe a duty of good faith to Schweihs because she
was not a party to the contract.
was not the named insured on the policy nor was she in
privity of contract with State Farm. Instead, she is a
third-party beneficiary of the insurance contract between
Robert Sherman and State Farm. This gives her standing to sue
to enforce the contract, but under Indiana law,
“third-party beneficiaries cannot sue an insurer in
tort for bad faith.” Samaron Corp. v. United of
Omaha Life Ins. Co., 2014 WL 4906314, at *14 (N.D. Ind.
2014) (citing Cain v. Griffin, 849 N.E.2d 507, 514
(Ind. 2006)); Estate of Swan v. Westfield Ins. Co.,
2009 WL 3200298, at *4 (N.D. Ind. 2009) (“Indiana law
does not permit [a third party beneficiary] to bring a direct
action against [an insurance company] on his tort action of
bad faith dealing.”).
also has argued that she was owed a duty of good faith
because she had a special relationship with Robert Sherman,
the owner of the policy. However, it is her special
relationship with State Farm that is at issue. A
“special relationship” is one that exists between
the insurer and the insured, which at times is contractual
and arms-length but can also be fiduciary in nature.
Kimmel v. Western Reserve Life Assur. Co. of Ohio,627 F.3d 607, 612 (7th Cir. 2010). Schweihs has not pointed
to any evidence that she had the “special
relationship” necessary to establish a duty on the
insurer's part to act towards her in good faith.
Cain, 849 N.E.2d at 510; Martine ...