Gary Hammerstone, Susan Hammerstone, Palmor Products, Inc., Northhampton Farm Bureau Cooperative Association, and Canns-Bilco Distributors, Inc. v. Indiana Insurance Company

FOR PUBLICATION

ATTORNEYS FOR APPELLANTS: ATTORNEY FOR APPELLEE:

KEVIN C. TYRA GINNY L. PETERSON
JERRY M. PADGETT Kightlinger & Gray, LLP
The Tyra Law Firm, P.C. Indianapolis, Indiana
Indianapolis, Indiana

Apr 08 2013, 9:29 am

IN THE
COURT OF APPEALS OF INDIANA
GARY HAMMERSTONE, SUSAN )
HAMMERSTONE, PALMOR PRODUCTS, INC., )
NORTHHAMPTON FARM BUREAU )
COOPERATIVE ASSOCIATION, and )
CANNS-BILCO DISTRIBUTORS, INC., )
)
Appellants-Defendants/Counterclaimants, )
)
vs. ) No. 06A04-1211-PL-595
)
INDIANA INSURANCE COMPANY, )
)
Appellee-Plaintiff/Counterclaim Defendant.1 )

APPEAL FROM THE BOONE SUPERIOR COURT
The Honorable Matthew C. Kincaid, Judge
Cause No. 06D01-1005-PL-259

April 8, 2013

OPINION - FOR PUBLICATION

KIRSCH, Judge

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We note that Mayberstein-Burnell Co., Inc., d/b/a MBAH Insurance (“MBAH”) was a third-
party defendant below and filed an answer to the third-party complaint filed by Palmor Products, Inc., but
there is no further record of their participation in the case below. MBAH was not listed in the summary
judgment order issued by the trial court and did not file an appellate brief with this court. However,
pursuant to Indiana Appellate Rule 17(A), a party of record in the trial court shall be a party on appeal.
 Gary Hammerstone (“Gary”), Susan Hammerstone (collectively “the

Hammerstones”), together with Palmor Products, Inc. (“Palmor”), Northhampton Farm

Bureau Cooperative Association (“Northhampton”), and Canns-Bilco Distribution, Inc.

(“CBD”) (collectively “the Appellants”) appeal the trial court’s order granting summary

judgment in favor of Indiana Insurance Company (“Indiana Insurance”) and denying

summary judgment in the favor of the Appellants. The Appellants raise the following

dispositive issue for our review: whether the trial court erred in granting summary

judgment in favor of Indiana Insurance because the umbrella policy was ambiguous due

to the fact that the declarations page stated that there was product liability coverage and

the policy denied coverage through a structural ambiguity in the language of the policy.

We reverse and remand.

FACTS AND PROCEDURAL HISTORY

Palmor is engaged in the business of designing and manufacturing a machine

called a Trac-Vac, which was sold to the general public for the purpose of vacuuming

mulched leaves, grass, sticks, and other yard debris, storing the mulched debris, and

removing the debris. CBD and Northhampton are engaged in the business of sales and

service of lawn and garden equipment. CBD is a distributor for Palmor, and

Northhampton is a customer of CBD. Northhampton purchased products, including the

Trac-Vac, manufactured by Palmor and distributed through CBD. There were no written

contracts or agreements between Palmor, CBD, and Northhampton.

In 2004, Gary purchased a Model 580 Trac-Vac lawn and leaf vacuum,

manufactured by Palmor from Northhampton in Pennsylvania. On November 2, 2009,

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Gary was using the Trac-Vac to clear and mulch leaves in his yard when he noticed that

the Trac-Vac was no longer suctioning the leaves into the trailer. Gary thought there was

a clog in the system and attempted to remove the inlet hose of the outtake/intake end

while the Trac-Vac was still running in order to determine where the clog was located.

As he was doing this, Gary severely injured his right hand and arm.

On December 10, 2009, the Hammerstones filed a complaint in Pennsylvania

against Palmor and Northhampton (“the Hammerstone Claim”); CBD was later joined as

a defendant in the complaint. In their complaint, the Hammerstones alleged that Palmor,

Northhampton, and CBD were each negligent when they designed, manufactured,

marketed, distributed, supplied, advertised, maintained, serviced, repaired, and sold the

Trac-Vac and that they failed to properly and adequately warn Gary of the hazards of the

Trac-Vac, failed to properly instruct Gary on the safe use of the Trac-Vac, failed to

adequately inspect the Trac-Vac for defective conditions, and failed to repair known

defective conditions with the Trac-Vac. The complaint also alleged that Palmor,

Northhampton, and CBD were negligent, careless, and engaged in gross negligence,

recklessness, malice, and conscious disregard or indifference to the high degree of risk

imposed by the Trac-Vac which constituted outrageous wanton and willful misconduct

entitling Gary to recover punitive damages in addition to compensatory damages. The

complaint also contained an allegation that Palmor, Northhampton, and CBD were

strictly liable because the Trac-Vac was inherently dangerous.

Consolidated Insurance Company (“Consolidated”) issued a general liability

policy to Palmor under policy number CBP9307708 effective April 1, 2009 to April 1,

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2010. Indiana Insurance issued an umbrella insurance policy to Palmor under policy

number CU8131861 effective April 1, 2009 to April 1, 2010 (“the Umbrella Policy”).

Northhampton and CBD were not named as additional insureds under the Umbrella

Policy. The Umbrella Policy contains the following pertinent language:

COMMERCIAL UMBRELLA LIABILITY COVERAGE FORM

….

SECTION I – COVERAGE

1. Insuring Agreement

a. We will pay on behalf of the insured those sums in excess of the
“retained limit” that the insured becomes legally obligated to pay as
damages because of “bodily injury” or “property damage” or
“personal and advertising injury” to which this insurance applies.
The amount we will pay is limited as described in SECTION III –
LIMITS OF INSURANCE. No other obligation or liability to pay
sums or perform acts or services is covered unless explicitly
provided for under paragraph 2. Defense and Expense of Claims
and Suits under SECTION 1 – COVERAGE.

….

2. Defense And Expenses Of Claims And Suits

a. Defense, Investigation, And Settlement

(1) We shall have the right and duty to defend the insured against
any claim or “suit” seeking damages to which this insurance
applies when:

(a) Such damages are not covered by “scheduled underlying
insurance” or “other underlying insurance”; or

(b) The applicable limits of liability of the “scheduled underlying
insurance” or “other underlying insurance” have been
exhausted by payment of judgments or settlements.

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 However, we will have no duty to defend the insured against any
“suit” seeking damages to which this insurance does not apply.

(2) When insurance is available to the insured under any “scheduled
underlying insurance” or “other underlying insurance,” we will
have the right and opportunity, although not the obligation, to
associate with the “underlying insurers” in the defense and
control of any claim or “suit” which, in our opinion, may create
liability under this Coverage Part.

(3) At our discretion, we may:

(a) Investigate any “occurrence,” “offense,” or claim; and

(b) Settle any claim or “suit” of which we assume charge of the
settlement of defense.

….

SECTION V – DEFINITIONS

….

20. “Products-completed operations hazard”:

a. Includes all “bodily injury” and “property damage” occurring
away from premises you own or rent and arising out of “your
product” or “your work” except:

(1) Products that are still in your physical possession; or

(2) Work that has not yet been completed or abandoned.
However, “your work” will be deemed completed at the
earliest of the following times:

(a) When all of the work called for in your contract has been
completed.

(b) When all of the work to be done at the job site has been
completed if your contract calls for work at more than one
job site.

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 (c) When that part of the work done at a job site has been put
to its intended use by any person or organization other
than another contractor or subcontractor working on the
same project.

Work that may need service, maintenance, correction, repair,
or replacement, but which is otherwise complete, will be
treated as completed.

….

28. “Your product”:

a. Means:

(1) Any goods or products, other than real property,
manufactured, sold, handled, distributed, or disposed of by:

(a) You;

….

(2) Containers (other than vehicles), material, parts, or equipment
furnished in connection with such goods or products.

b. Includes:

(1) Warranties or representations made at any time with respect
to the fitness, quality, durability, performance, or use of “your
product”; and

(2) The providing of or failure to provide warnings or
instructions.

PRODUCTS-COMPLETED OPERATIONS EXCLUSION

This endorsement modifies insurance provided under the following:

COMMERCIAL UMBRELLA LIABILITY COVERAGE PART

The following is added to paragraph 3. Exclusions under SECTION –
COVERAGE:

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 This insurance does not apply to:

“Bodily injury” or “property damage” included within the “products-
completed operations hazard.”

Appellants’ App. at 29-30, 50-53. The declarations page of the Umbrella Policy

identified the coverages provided by Indiana Insurance under the Umbrella Policy,

specifically stating that there was an occurrence limit of $2,000,000 for any one

occurrence or offense subject to the general aggregate and products-completed operations

aggregate limits. Id. at 17. It also stated that there were aggregate limits of $2,000,000

each for the general aggregate limit and for products-completed operations aggregate

limit. Id. Additionally, the declarations page listed the forms and endorsements that

were made a part of the policy, which included form number “14-95 -0204

EXCLUSION-PRODUCTS-COMPLETED OPERATIONS HAZARD.” Id.

Palmor notified Indiana Insurance and Consolidated of the Hammerstone Claim.

Consolidated, as the primary insurer, accepted the defense of Palmor, but Indiana

Insurance issued a notification reserving its right to deny coverage under the Umbrella

Policy due to the products-completed operations hazard that it stated was excluded under

the Umbrella Policy language. On December 17, 2009, Northhampton sent

correspondence to Palmor requesting that Palmor accept indemnity and defend against

the Hammerstone Claim on behalf of Northhampton. There was no evidence that CBD

formally requested a defense and indemnity from Palmor.

On May 3, 2010, Indiana Insurance and Consolidated filed a complaint in Boone

County, Indiana requesting declaratory judgment as to Palmor, Northhampton, and the

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Hammerstones. On September 24, 2010, Indiana Insurance and Consolidated filed a

motion for leave to file an amended complaint to add CBD as a defendant. On March 12,

2012, Indiana Insurance filed a motion for summary judgment against Palmor,

Northhampton, and CBD. On June 13, 2012, it filed a motion for summary judgment as

to the Hammerstones. All of the parties filed cross-motions for summary judgment

against Indiana Insurance. On October 22, 2012, the trial court granted Indiana

Insurance’s motion for summary judgment as to the Hammerstones, and on December 3,

2012, the trial court granted Indiana Insurance’s motion for summary judgment as to

Palmor, Northhampton, and CBD; the trial court also denied the Appellants’ cross-

motions for summary judgment. The Appellants now appeal.

DISCUSSION AND DECISION

On appeal from a grant of summary judgment, our standard of review is the same

as that of the trial court. Wilcox Mfg. Grp., Inc. v. Mktg. Servs. of Ind., Inc., 832 N.E.2d

559, 562 (Ind. Ct. App. 2005). We stand in the shoes of the trial court and apply a de

novo standard of review. Cox v. N. Ind. Pub. Serv. Co., 848 N.E.2d 690, 695 (Ind. Ct.

App. 2006). Our review of a summary judgment motion is limited to those materials

designated to the trial court. Ind. Trial Rule 56(H); Robson v. Tex. E. Corp., 833 N.E.2d

461, 466 (Ind. Ct. App. 2005), trans. denied. 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. T.R. 56(C). For summary

judgment purposes, a fact is “material” if it bears on the ultimate resolution of relevant

issues. Wilcox Mfg., 832 N.E.2d at 562. We view the pleadings and designated materials

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in the light most favorable to the non-moving party. Id. Additionally, all facts and

reasonable inferences from those facts are construed in favor of the nonmoving party.

Troxel Equip. Co. v. Limberlost Bancshares, 833 N.E.2d 36, 40 (Ind. Ct. App. 2005),

trans. denied.

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. Cox, 848 N.E.2d at 695-96. 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.

When a trial court grants summary judgment, we carefully scrutinize that determination

to ensure that a party was not improperly prevented from having his or her day in court.

Id.

In this case, the parties filed cross-motions for summary judgment. However, the

fact that cross-motions for summary judgment were made does not alter our standard of

review. Mahan v. Am. Standard Ins. Co., 862 N.E.2d 669, 676 (Ind. Ct. App. 2007),

trans. denied. “Instead, the reviewing court must consider each motion separately to

determine whether the moving party is entitled to judgment as a matter of law.” Id.

The Appellants argue that the trial court erred when it granted summary judgment

in favor of Indiana Insurance and denied their cross-motions for summary judgment.

They contend that it was error to find that the Umbrella Policy unambiguously denied

coverage because the Umbrella Policy was actually ambiguous as to the coverage sought

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here. The Appellants allege this ambiguity existed because the declarations page clearly

stated that the Umbrella Policy included coverage for products-completed operations

hazard, but that later the Umbrella Policy language stated that the insurance did not apply

to injuries and damages included within the products-completed operations hazard.

Because there is an ambiguity in the Umbrella Policy, the Appellants assert that it should

be construed against the insurer, Indiana Insurance, and that coverage should be found to

exist.

The interpretation of an insurance policy is primarily a question of law and,

therefore, is a question particularly suited for summary judgment. Id. (citing Lake States

Ins. Co. v. Tech Tools, Inc., 743 N.E.2d 314, 318 (Ind. Ct. App. 2001)). “Where there is

an ambiguity, policies are to be construed strictly against the insurer.” Lake States Ins.,

743 N.E.2d at 318. “An insurance contract is ambiguous when it is susceptible to more

than one interpretation and reasonably intelligent persons would honestly differ as to its

meaning.” Allstate Ins. Co. v. Bradtmueller, 715 N.E.2d 993, 997 (Ind. Ct. App. 1999),

trans. denied. An ambiguity does not exist, however, merely because the parties favor a

different interpretation. Mahan, 862 N.E.2d at 676. Where terms are unambiguous, they

should be given their plain and ordinary meaning. Id. (citing Farmers Ins. Exch. v.

Smith, 757 N.E.2d 145, 149 (Ind. Ct. App. 2001), trans. denied). A court should construe

the language of a contract so as not to render any words, phrases, or terms ineffective or

meaningless. Id.

Here, the declarations page of the Umbrella Policy, under the “Limits of

Insurance” section, stated that the aggregate limit for “Products-Completed Operations”

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was $2,000,000. Appellants’ App. at 17. The Umbrella Policy’s language defines

“Products-Completed Operations Hazard” as “bodily injury” and “property damage”

occurring away from the insured’s premises and arising out of “your product” or “your

work” subject to several limited exceptions that do not apply in the present case. Id. at

50-51. Included in the Umbrella Policy is an endorsement which changes the Umbrella

Policy, entitled the “Products-Completed Operations Exclusion.” Id. at 53. This

endorsement modifies the insurance coverage in the Umbrella Policy by stating, “This

insurance does not apply to: ‘Bodily injury’ or ‘property’ damage included within the

‘products-completed operations hazard.’” Id. Thus, the Umbrella Policy states that it

both provides $2,000,000 of coverage for products-completed operations and that the

insurance does not apply to products-completed operations hazard injuries. As a result,

the Umbrella Policy is inherently ambiguous.

Indiana Insurance argues that the declarations page actually clearly and

unambiguously states that the products-completed operations hazard is excluded from

coverage and that, therefore, the Appellants’ argument fails. However, we disagree. We

believe that this language stating that there is an exclusion for products-completed

operations hazard actually further demonstrates the inherent ambiguity in the Umbrella

Policy. When taking this language into consideration, the information found on the

declarations page both provides $2,000,000 of coverage for products-completed

operations and then states that such coverage is excluded. We find this to make the

Umbrella Policy inherently ambiguous.

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 Finding an ambiguity in the Umbrella Policy, we must construe the Umbrella

Policy strictly against the insurer. Lake States Ins., 743 N.E.2d at 318. Construing the

Umbrella Policy against Indiana Insurance, we conclude that there is coverage for Palmor

as to products-completed operations claims as a matter of law. Therefore, the trial court

erred in granting summary judgment in favor of Indiana Insurance and in denying the

Appellants’ motion for summary judgment. We reverse the trial court’s order and

remand for proceedings consistent with this opinion, including findings by the trial court

as to whether Northhampton and CBD qualify as indemnitees of Palmor under the

Umbrella Policy and whether Northhampton, CBD, and the Hammerstones have assignee

rights as part of the Hammerstone Claim.

Reversed and remanded.

VAIDIK, J., and PYLE, J., concur.

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