T.R. Bulger, Inc. and Thomas R. Bulger v. Indiana Insurance Company (mem. dec.)

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D), this Mar 09 2015, 9:21 am
Memorandum Decision shall not be regarded as
precedent or cited before any court except for the
purpose of establishing the defense of res judicata,
collateral estoppel, or the law of the case.

ATTORNEY FOR APPELLANTS ATTORNEYS FOR APPELLEE
Mark L. Phillips Michael D. Sears
La Porte, Indiana Jacquelyn S. Pillar King
Crist, Sears & Zic, LLP
Munster, Indiana

IN THE
COURT OF APPEALS OF INDIANA

T.R. Bulger, Inc. and March 9, 2015
Thomas R. Bulger, Court of Appeals Case No.
Appellants-Defendant, 46A03-1405-PL-188
v. Appeal from the La Porte
Superior Court 3
Indiana Insurance Company, Honorable Jennifer Koethe,
Judge
Appellee-Plaintiff Cause No. 46D03-0709-PL-
388

Friedlander, Judge.

[1] Thomas R. Bulger is the president and owner of T.R. Bulger, Inc. (henceforth,

unless otherwise noted, we will collectively refer to Thomas Bulger and his

company as “Bulger”). Bulger was in the business of providing heating and air

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 conditioning services. Between 1999 and 2001, Bulger provided such services

at the beach home of Rhys and Sally Mussman. Disputes arose between Bulger

and the Mussmans regarding the quality of Bulger’s work. This led to the filing

of various lawsuits and a demand for arbitration. At all relevant times, Bulger

was insured by Indiana Insurance Company (IIC) under two policies of

insurance, one a Comprehensive Contractors Policy, and the other a

Commercial Umbrella Liability Policy (collectively, the IIC policies). Bulger

claimed that from April 2001 to April 2002, it incurred expenses of almost

$65,000 in assisting counsel with the defense of the Mussman litigation. Bulger

further claimed that pursuant to the IIC policies, it was entitled to

reimbursement of those expenses. IIC denied liability under the policies and

Bulger sued. The trial court ultimately granted summary judgment in IIC’s

favor and Bulger appeals, presenting the following restated issues for review:

1. Did the trial court err in granting summary judgment in favor of
IIC with respect to Bulger’s claim for reimbursement under the IIC
insurance policies?
2. Did the trial court abuse its discretion in ruling that Bulger’s motion
in limine was moot?
3. Did the trial court err in denying Bulger’s motion to strike the
affidavit of Lyle Hardman?
[2] We reverse and remand.

[3] At all times relevant to this lawsuit, Bulger was insured by IIC under two policies

of insurance. In 2001 the Mussmans sued Bulger for what the Mussmans

claimed was defective work performed at their beach home. IIC provided

Bulger with a legal defense, and attorney Lyle Hardman of the law firm of

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Hunt, Suedhoff and Kalamaros, LLP was ultimately selected to defend the

action. To assist him in defending the Mussmans’ lawsuits, Hardman requested

information and materials from Bulger. In turn, Bulger recorded the time its

employees spent in complying with these requests and generated invoices

purportedly reflecting the cost to Bulger (hourly rate1 multiplied by the hours

spent gathering the relevant materials and information). Bulger forwarded

these invoices to Hardman. Sometimes they were sent at the time they were

generated, and sometimes they would be forwarded after several had

accumulated. Bulger claimed that from April 2001 to April 2002, it incurred

$64,620.35 in expenses in assisting Hardman with the defense of the Mussman

lawsuit. According to Bulger, these expenses represent manpower (e.g., wages

paid to employees for copying, obtaining documents, stapling, responding to

discovery, deposition preparation, and depositions), office supplies, and

postage. Bulger claimed that under the IIC policies, it was entitled to

reimbursement of these expenses. The claim for reimbursement is premised

upon the following supplementary payments provision of both policies:

1. We will pay, with respect to any claim we investigate or settle, or
any “suit” against an insured we defend:
* * * * *
d. All reasonable expenses incurred by the insured at our
request to assist us in the investigation or defense of the claim
or “suit”, including actual loss of earnings up to $250 a day
because of time off from work.

1
Thomas Bulger acknowledged that the hourly rate reflected on the invoices was the rate that would be billed
to a customer or client, and was more than the employee in question earned in wages or salary.

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 Appellant’s Appendix at 47, 229.

[4] The record is not clear as to precisely when and how it occurred, but at some

point Thomas Bulger learned that IIC might not pay the invoices. He did later

recall, however, that on or about April 30, 2002, Hardman informed him that

IIC was not going to reimburse Bulger for those expenses. According to

Thomas Bulger, Hardman stated: “[IIC] will pay somebody to come to your

office and make all these copies. They will bring their own printer, they will

bring their own paper, they will bring the boxes.” Id. at 760.

[5] When Bulger learned from Hardman that IIC would likely not pay the invoices,

Bulger attempted to contact IIC himself. According to Thomas Bulger, the

woman who answered his phone call to IIC “wouldn’t even talk to me.” Id. at

762. Thereafter, IIC refused to reimburse Bulger for the expenses allegedly

incurred in assisting Hardman with the defense of the Mussman lawsuit.

[6] On September 7, 2007, Bulger filed the present action, claiming that pursuant to

the IIC policies, IIC had a duty to reimburse Bulger for expenses incurred in

assisting with the defense of claims made by Mussman, and that IIC breached

this duty. Discovery ensued. More than six years later, on August 20, 2013,

counsel for Bulger requested the deposition of Sandy Bennett, a former

employee of IIC. On September 6, 2013, Bulger requested the deposition of

George Bedrava, also a former employee of IIC. On September 24, 2013, IIC’s

counsel informed Bulger that she had not been able to locate either person:

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 the last known location for Sandy Bennett was Northern Indiana
(perhaps Elkhart/South Bend/Osceola) and then (I think) she went to
Florida for winters. George Bedrava is also retired and may be in
Illinois. We have attempted to locate them, but have been
unsuccessful.
Frankly, the last time we spoke to Sandy Bennett was a couple of years
ago, and, at that time, she advised that she had no independent
recollection of this case. Even though we have not spoken to Bedrava,
as the manager at the time, he likely would have less knowledge than
Sandy.
Id. at 570.

[7] The following day, counsel for Bulger requested a Trial Rule 30(B)(6)

deposition. On October 3, 2013, Bulger’s counsel sent a T.R. 30(B)(6) Notice

of Deposition for October 15, 2013, which was four days before the close of

discovery. The Notice directed IIC to

designate one or more persons as duly authorized and consenting to
testify on its behalf regarding the following matters:
1. All communications between Indiana Insurance and T.R.
Bulger, Inc. and/or Thomas Bulger relating to the Mussman
litigation matters.
2. All communications between Hunt Suedoff [sic] law firm and
Indiana Insurance relating to Thomas Bulger and/or T.R.
Bulger, Inc. regarding the defense of the Bulger defendants.
3. All reasons why the claims of Thomas Bulger and/or T.R.
Bulger, Inc. for reimbursement of expenses incurred during the
defense of the Mussman litigation matters were denied and not
paid.
4. All facts upon which Indiana Insurance Company based its
denial of coverage for reimbursement of expenses incurred by
Thomas Bulger and/or T.R. Bulger, Inc. in the defense of the
Mussman litigation matters.
Id. at 163. After receiving this notice, IIC’s counsel responded as follows:

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 Please note that neither Ms. Bennett nor Mr. Bedrava are “lost.” As I
previously advised you, we believe that Ms. Bennett is in the
Elkhart/Osceola area, and Mr. Bedrava is in Illinois. Clearly, the fact
that we do not have current contact information for these former
employees does not render them “unavailable.”
Notwithstanding, please allow this correspondence to serve as Indiana
Insurance Company’s response to the Rule 30(B)(6) Notice, as you
referenced in your letter. As to areas (1) and (2), Indiana Insurance
Company is unable to produce witnesses that can testify as to these
matters. Again, any such information would be contained in the
documents you have already received. As to areas (3) and (4), Indiana
Insurance Company’s position as to the claimed expenses is that the
Policy at issue does not provide for reimbursement of these expenses.
Further, your contention that Indiana Insurance Company has been
aware of this request for “many years” is simply incorrect. Your client
has never produced any information as to what these alleged
“expenses” relate to and, in fact, testified that the expenses represent
his employees’ wages in “assisting” with the defense of the litigation.
He has no additional information as to these claimed expenses. This is
simply insufficient to put Indiana on notice of anything, as your
client’s evidence is speculative, at best.
Id. at 165. Bulger responded that if someone from IIC did not appear for the

deposition, Bulger would file a motion in limine to prevent IIC “from

introducing any evidence at trial on the areas if [sic] inquiry noted on the

deposition notice.” Id. at 166. On October 14, 2013, counsel for Bulger

advised that Bulger would be moving forward with the deposition. The

deposition was scheduled the next day, on October 15, 2013. No one from IIC

appeared for deposition.

[8] On November 5, 2013, Bulger filed its motion in limine seeking to prohibit IIC

from presenting any evidence regarding the areas of inquiry listed in the T.R.

30(B)(6)Notice of Deposition. On November 18, 2013, Bulger filed a motion

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 for summary judgment. On December 16, 2013, IIC filed a response to

Bulger’s motion for summary judgment, as well as a summary judgment

motion of its own. Among the materials designated by IIC was the affidavit of

Hardman, which included the following pertinent statements:

2. I, along with the firm of Hunt, Suedhoff, Kalamaros, LLP,
represented T.R. Bulger, Inc. and Thomas R. Bulger (collectively
“Bulger”) in an action entitled Rhys Mussman, Sally Mussman and Royal
Developments, Ltd. v. T.R. Bulger, Inc. and Thomas R. Bulger, Cause No.
46C01–0103–CP–00092 (“underlying proceeding”).
3. The firm was contacted by Indiana Insurance Company to defend
Bulger in the underlying proceeding on March 12, 2001. The first
contact made with Bulger by my firm was on March 15, 2001.
4. While representing Bulger, I did not request that he incur any
expenses to assist me with the defense of the underlying litigation.
5. While representing Bulger, Mr. Bulger did inquire about whether
his time and the time of his staff spent on issues raised by the litigation
were reimbursable under his insurance policy. He also inquired as to
whether copying costs were reimbursable under his policy.
6. I informed Mr. Bulger that he should read his policy and raise those
issues with Indiana Insurance. I do not recall discussing Bulger’s
inquiries with anyone at Indiana Insurance.
7. I have no knowledge of any expenses Bulger is not claiming he
incurred in assisting me with the defense of the underlying litigation.
Id. at 750-51. On December 30, 2013, Bulger filed a motion to strike

Hardman’s affidavit. On March 20, 2014, the court conducted a hearing on all

pending motions and took the matter under advisement.

[9] On May 1, 2014, the court denied Bulger’s motion for summary judgment,

granted IIC’s motion for summary judgment, and denied Bulger’s motion to

strike the Hardman affidavit. The court explained in pertinent part:

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 While no Indiana case has interpreted the policy provision at issue,
other jurisdictions have found that the “reasonable expenses incurred
at our request” can only mean that the insurer will be liable for
authorized expenses over which it had control.
* * * * *
The policies at issue also contain a voluntary payments clause, which
provides that the insured will not incur any expense without prior
approval except at his own cost. Indiana law provides that an insurer
is not liable when an insured breaches a voluntary payment clause by
not obtaining the insurer’s consent prior to incurring the expense.
Here, there is no evidence that Defendant requested that Plaintiffs
incurred [sic] the expenses claimed and, further, Bulger has admitted
through his testimony that he did not request consent from the
Defendant prior to incurring the expenses. Attorney Hardman also
testified in his affidavit that he did not request that Plaintiffs incur any
expenses. In light of this evidence and applicable and persuasive law,
the Court finds that [IIC] has not breached the policies at issue.
Plaintiffs further claim that the Defendant’s failure to speak with
Bulger or to attend a Rule 30(B)(6) deposition now requires that this
Court deem [IIC’s] claims waived or barred by estoppel. There is no
evidence of express waiver. The issue is, therefore, whether estoppel
or implied waiver may apply. However, Bulger cannot demonstrate
prejudice, as his claimed expenses have remained unchanged since
April 2002, so these theories are inapplicable.
Id. at 13-14 (internal citations to authority omitted).

1.

[10] Bulger contends the trial court erred in granting summary judgment in favor of

IIC with respect to Bulger’s claim for reimbursement under the IIC policies.

Summary judgment is appropriate where the moving party shows there are no

genuine issues of material fact with respect to a particular issue or claim. Ind. Trial

Rule 56(C); Bleeke v. Lemmon, 6 N.E.3d 907 (Ind. 2014). We review a summary

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 judgment order de novo. Hughley v. State, 15 N.E.3d 1000 (Ind. 2014).

Considering only the facts supported by evidence designated to the trial court by the

parties, we must determine whether there is a “genuine issue as to any material fact”

and whether “the moving party is entitled to a judgment as a matter of law.” T.R.

56(C); see also TP Orthodontics, Inc. v. Kesling, 15 N.E.3d 985 (Ind. 2014). Where

the moving party designates material demonstrating there are no genuine issues of

material fact with respect to a particular issue or claim, the burden shifts to the non-

moving party to come forward with designated evidence showing the existence of a

genuine issue of material fact. Bleeke v. Lemmon, 6 N.E.3d 907. Upon review, we

will accept as true those facts alleged by the nonmoving party. Sees v. Bank One,

Indiana, N.A., 839 N.E.2d 154 (Ind. 2005). “All designated evidence and

reasonable inferences must be construed in favor of the non-moving party, and

doubts resolved against the moving party.” Bleeke v. Lemmon, 6 N.E.3d at 917.

The appellant bears the burden of demonstrating that the grant of summary

judgment was erroneous. Hughley v. State, 15 N.E.3d 1000. Finally, we will

affirm a grant of summary judgment on any theory supported by the record.

Holiday Hospitality Franchising, Inc. v. AMCO Ins. Co., 983 N.E.2d 574 (Ind.

2013).

[11] “The construction of a contract is particularly well-suited for de novo appellate

review, because it generally presents questions purely of law.” Id. at 577.

When reviewing an insurance policy, we use the same rules of interpretation

that are applied to other contracts. Justice v. Am. Family Mut. Ins. Co., 4 N.E.3d

1171 (Ind. 2014). Prominent among these rules is that clear and unambiguous

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 language is given its ordinary meaning. Holiday Hospitality Franchising, Inc. v.

AMCO, Ins Co., 983 N.E.2d 574. An insurance policy is ambiguous where a

provision is susceptible to more than one interpretation and reasonable persons

would differ as to its meaning. Justice v. Am. Family Mut. Ins. Co., 4 N.E.3d

1171. The mere fact that parties favor different interpretations does not

necessarily mean that the language in question is ambiguous. Id.

“Additionally, the power to interpret contracts does not extend to changing

their terms, and we will not give insurance policies an unreasonable

construction to provide added coverage.” Liberty Mut. Ins. Co. v. Mich. Mut. Ins.

Co., 891 N.E.2d 99, 101-02 (Ind. Ct. App. 2008) (quoting American Family Ins.

Co. v. Globe Am. Cas. Co. 774 N.E.2d 932, 935 (Ind. Ct. App. 2002), trans.

denied).

[12] In order to prevail, Bulger must prove that IIC breached its duties under the

insurance policy. The provision in question provides that, with respect to any

claim against an insured that it investigates or settles, or any lawsuit against one

of its insured that IIC defends, IIC will pay “[a]ll reasonable expenses incurred

by the insured at our request[.]” Appellant’s Appendix at 47, 229. Bulger

contends that the criteria set out in this provision were satisfied and therefore

that IIC was obligated to pay the expenses incurred by Bulger in assisting

Attorney Hardman in defending the Mussman lawsuit. As reflected in the

language of the provision, the two criteria are that the expenses must be

“reasonable”, and that they were incurred at IIC’s request. IIC contends that

neither condition was met, while Bulger contends that both were. We begin

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 with the claim that the expenses incurred by Bulger were “at IIC’s request”

within the meaning of the IIC policies.

[13] We can find no Indiana case that interprets this provision. We note, however,

that in Mikel v. Am. Ambassador Cas. Co., 644 N.E.2d 168 (Ind. Ct. App. 1994),

trans. denied, this court addressed the meaning of “request” in an insurance

policy. In that case, the provision in question provided: “in addition to our

limit of liability, we will pay on behalf of a covered person: … 5. Other

reasonable expenses incurred at our request.” Id. at 170. The court determined

that “request” in that context meant “to ask for, not to compel through legal

action.” Id. (quoting Gohn v. Akron School, 562 N.E.2d 1291, 1292 (Ind. Ct.

App. 1990)). This definition does little to resolve the current dilemma. The

Mikel court determined that the insurer did not ask the insured to incur attorney

fees when it denied coverage. Further, the court concluded that although the

insured’s only recourse after the insurer denied coverage was to file suit, the

denial of coverage was not tantamount to a request that the insured incur

attorney fees. Mikel v. Am. Ambassador Cas. Co., 644 N.E.2d 168. In other

words, the court was not inclined to view a decision on the part of the insurer

that would lead inevitably to the expenditure of attorney fees on the part of the

insured as constituting a request that the insured incur such fees. Bulger

contends that IIC chose Hardman’s law firm to represent Bulger, and that in so

doing, that attorney – Hardman – became the agents of IIC. Therefore, the

argument goes, when Hardman requested documents or information from

Bulger or Bulger personnel, it was the same as IIC requesting it.

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[14] As indicated, no Indiana case has yet decided the meaning of this provision, or

of a provision substantially similar to it. Our research reveals, however, that

courts in at least two other states have decided the question, and the decisions

arguably fall on either side of the issue. In Florida Ins. Guar. Ass’n, Inc. v. All The

Way With Bill Vernay, Inc., 864 So. 2d 1126 (Fla. Dist. Ct. App. 2003), an

insured brought an action against its liability insurer to recover attorney fees

and costs incurred after the insurer allegedly breached the duty to defend. In

conjunction with this action, the insured filed a declaratory judgment action

seeking a ruling that the insurer had a duty to defend. During the pendency of

these actions, the insurer was declared insolvent and Florida Insurance

Guaranty Association, Inc. (FIGA) was statutorily substituted as its successor

in interest in the declaratory judgment action. The trial court conducted a

hearing regarding the insured’s assertion that the insurer was obligated to pay,

as damages, the insured’s attorney fees and costs incurred in defending the

underlying action. The trial court found in favor of the insured and FIGA

appealed.

[15] Upon appeal, the appellate court agreed as an initial matter that the insurer was

legally responsible for attorney fees and costs that the insured incurred in

defending the underlying action by the third party. The court further

determined, however, that the award of attorney fees and costs “is not ‘within

the coverage’ of the policy.” Id. In so holding, the court noted that “the only

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 possible source of coverage [was] the ‘supplemental payments’ provision of [the

insured’s] policies with [the insurer].” Id. The court described those provisions

as follows: “[T]he provisions provide that [the insurer] will pay all reasonable

expenses incurred by the insured at [the insurer’s request]”. Id. (emphasis in

original). This provision is substantially similar to the provision in the IIC

policies at issue in the present case. The appellate court analyzed the liability of

the original insurer, as well as FIGA, under this provision, as follows:

In addition, the provisions provide that Reliance will pay all
reasonable expenses incurred by the insured at Reliance’s request. This
court has held that this latter portion of the supplementary payments
provision means that the insurer will pay for “expenses that it had
authorized and over which it had control.” Steele v. Kinsey, 801 So.2d
297, 299 (Fla. 2d DCA 2001). Thus, if the insurer has not expressly
authorized the insured to incur the expense, the expense is not covered
under the policy. Id. “The words at issue here, ‘reasonable expenses
incurred at our request,’ can only mean that the insurer must request
the product or service that incurs the expense.” Id. at 300.
Florida Ins. Guar. Ass’n, Inc. v. All The Way With Bill Vernay, Inc., 864 So. 2d at

1130 (emphasis in original).

[16] For our purposes, the import of the court’s treatment of this provision,

according to IIC, is its determination that “reasonable expenses incurred at our

request” is interpreted to require explicit authorization for expenses over which

the insurer had control. IIC contends that this holding dovetails with this

court’s holding in Mikel, which focused upon the meaning of the term “request”

under a supplemental payments provision in an insurance policy. The issue in

Mikel was framed thus: “[W]hether an insured is entitled to recover attorney’s

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 fees incurred in a declaratory judgment action brought by the insured to

establish coverage where (1) the insured prevails in the coverage dispute and (2)

the policy states that the insurer will pay all reasonable expenses “incurred at

our request.” Id. at 169. With respect to the second question, the court

concluded that the insured is entitled to recover attorney fees under this

provision only in cases where it could prove that the insurer denied coverage in

bad faith. In so holding, the court determined that “request” in this context

means “to ask for, not to compel through legal action.” Id. at 170 (quoting

Gohn v. Akron School, 562 N.E.2d at 1292). The court concluded that American

Ambassador did not request that Mikel file his declaratory judgment action,

and “it follows that American Amassador did not request that he incur

attorney’s fees in prosecuting the action.” Id. 172.

[17] Synthesizing the holdings in Mikel and Florida Ins. Guar. Ass’n, Inc. v. All The

Way With Bill Vernay, Inc., IIC contends that, as was the case with the insurers

in Mikel and Florida Ins. Guar. Ass’n, Inc. v. All The Way With Bill Vernay, Inc.,

IIC did not affirmatively request that Bulger incur expenses as a direct result of

assisting with defending the underlying Mussman lawsuit. Accordingly, it

asserts that the trial court did not err in granting summary judgment in IIC’s

favor. We reject this argument and the reasoning upon which it is based, and

adopt instead the reasoning espoused in Regis Radio Corp. v. Am. Emp. Ins. Co.,

30 Misc. 2d 341, 343, 214 N.Y.S.2d 976 (Sup. Ct. 1961) when confronted with a

similar policy provision and substantially the same issue.

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[18] In Regis Radio Corp. v. Am. Emp. Ins. Co., the insured sought to recover from the

insurer expenses allegedly incurred in connection with the defense of an action

for copyright infringement and unfair competition instituted against the insured

by Warner Brothers Pictures, Inc. Briefly, Warner Bros. instituted an action

against the insured for alleged copyright infringement and unfair competition

arising from broadcast of the “Adventures of Sam Spade” programs. Pursuant

to a policy of insurance, the insurer undertook the defense of this action and

retained a California law firm to represent the insured. The insured contended

that at the request of this California firm, it incurred traveling and other

expenses in the amount of almost $8000 in connection with the defense of the

Warner Brothers action. The insured sought reimbursement under a policy

provision that stated: “The Insured shall cooperate with the Company and,

upon the Company’s request shall attend hearings and trials and shall assist in

effecting settlements, securing and giving evidence, obtaining the attendance of

witnesses and in the conduct of suits; and the Company shall reimburse the Insured

for expenses, … incurred at the Company’s request.” Id. at 979 (emphasis in

original). The insurer denied liability under the provision in question,

contending that the California firm “had no authority to empower [the insured]

to incur expenses in connection with such lawsuit.” Id. at 978. The court

rejected this argument on two bases. First, the court noted that, generally,

“unless specifically ordered to the contrary by the person retaining him … an

attorney charged with the legal and moral duty to prosecute or defend an action

to the best of his ability has the implied power and authority to make and

authorize such reasonable expenditures as the diligent prosecution or defense of
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 the lawsuit may require.” Id. at 978 (emphasis in original). Second, in addition

to this implied power, specific provisions of the insurance policy required the

insured to cooperate with the insurer and its designated counsel in defense of

the Warner Brothers lawsuit.

[19] Essentially, the court reasoned that the insured had a duty to cooperate with the

insurer in defending against lawsuits implicating the insurance policy. Such

duty included the duty to cooperate with counsel appointed by the insurer to

defend the action. Thus, the expenses incurred by the insured at the behest of

the insurer-appointed counsel were incurred “at the Company’s request”,

within the meaning of the policy provision in question. Id. In effect, the court

held that under these circumstances, the insurer-appointed attorney has the

implied power to authorize, on behalf of the insurer, requests that the insured

incur reimbursable expenditures.

[20] In the present case, the IIC policies required Bulger to “cooperate with [IIC] in

the investigation or settlement of the claim or defense against the ‘suit’[.]”

Appellant’s Appendix at 49, 231. The Mussman litigation was such a lawsuit,

thus triggering Bulger’s duty to assist. IIC appointed Hardman as legal counsel

to defend against the Mussmans’ lawsuit. Hardman requested information and

materials from Bulger for use in defending against the Mussman litigation.

Bulger complied with those requests, presumably incurring expenses in doing

so. We are persuaded by the reasoning in Regis Radio Corp. v. Am. Emp. Ins. Co.

that under these circumstances, IIC impliedly authorized the requests made of

Bulger by Hardman, within the meaning of the policy provisions in question.

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 Therefore, the trial court erred in holding that Bulger was not entitled to

reimbursement on grounds that the activities giving rise to the reimbursement

expenses did not come at IIC’s request.

[21] Having determined that the trial court erred in holding that IIC did not

“request” the expenses incurred by Bulger within the meaning of the insurance

policies, we note that there was a second condition for reimbursement stated in

the policy, i.e., that the reimbursable expenses must be “reasonable.” To that

end, IIC contends that Bulger failed to establish via the evidence designated in

conjunction with its motion for summary judgment that the expenses it claims

are reimbursable were, in fact, reasonable. Because this issue will arise upon

remand, we pause here to make a few observations about this condition of

coverage. An insurer has a right to challenge the nature and reasonableness of

defense expenses that the insured claims to have incurred. Emp’rs Ins. of Wausau

v. Recticel Foam Corp., 716 N.E.2d 1015 (Ind. Ct. App. 1999), trans. denied.

Moreover, the insured bears the burden of proof in establishing that it has

satisfied the conditions that render it entitled to coverage under an insurance

policy. See PSI Energy, Inc. v. Home Ins. Co., 801 N.E.2d 705, 727 (Ind. Ct. App.

2004), trans. denied.

[22] As indicated previously, Bulger presented invoices to Hardman that ostensibly

were generated as a result of efforts expended by Bulger to comply with the

requests of Hardman (and thus IIC) for information and materials related to the

Mussman lawsuit. Those invoices represented the only documentary evidence

detailing the grounds for Bulger’s request for reimbursement. At a deposition,

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Thomas Bulger was questioned about the services reflected on those invoices.

The following excerpt is representative of his explanation of those records:

Q. And based on [one of the invoices that Bulger submitted], what
services were performed that were performed at the request of Lyle
Hardman and his firm?
A. I can’t tell you what services. I can only tell you man hours, and
anything that is billed on here would be the person. If it’s man hours,
it would be the person’s name, the pay period that they put their hours
down, and how many hours it was.
Q. Okay.
A. I can’t tell you what they did. I don’t remember what they did.
Q. So that whole group exhibit, because I mean we’re talking at
least what, 40 something pages?
A. It’s every person that ever worked on that job for every hour they
ever worked, and every nut and bolt that went into the job, that’s
correct.
Q. And here’s my question, Mr. Bulger. Those backup documents
are only going to tell you the person that performed the work and the
amount of hours that they allege that they performed –
A. Uh-huh.
Q. – in responding to Lyle’s request or his firm’s request and the
amount that you pay them, correct?
A. Yeah. It’s going to capture all of the T.R. Bulger expenses
assigned to that job number.
Q. But it’s not, for example, let’s say Susie Smith did some of the
work. It’s not going to say Susie Smith spent eight hours copying?
A. No. It will just say Susie Smith, eight hours. Not copying, that’s
correct.
Q. So those are the backup documents that you have; they delineate
the employee, the amount of hours the employee worked, and any sort
of expenses relative to copying or postage?
A. Yeah, whatever we find. I just can’t tell you what those items will
be until we see them.

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 Q. And then are the amounts represented on this invoice the amount
that you would bill a customer for the employee’s services, or the
amount you actually paid the employee for its services; do you see the
difference? And if you need to look through those backup documents
to –
A. No, it won’t tell me. I think that this is – I know that it covers
part of my cost. I don’t know if it picks up FUTA, SUTA, FICA and
all that. I don’t remember if it does.
Q. Okay.
A. But it will pick up their wage rate that we got built into the
program. Each employee that paid so much, and however that was
distributed on our accounting system.
Q. So, for example, if an employee made, and I’m going to throw
out a number, ten dollars an hour, and the employee worked forty
hours responding to a request it would be $400 represented on this
invoice is that what you’re telling me?
A. It could be more.
Appellant’s Appendix at 338. Thus, according to Thomas Bulger, the invoices

reflected the name of the person who performed the allegedly reimbursable

tasks, and the number of hours worked by that person in a given pay period. In

other words, he acknowledged that the invoices did not reflect what services

those employees allegedly performed. He also acknowledged that his records

did not reflect the specific requests made by Hardman to which the work

reflected on the invoices, such as they were, allegedly corresponded. Finally, he

acknowledged that he would have billed IIC at an hourly rate equivalent to that

employee’s labor rate with respect to the Mussman job. He further

acknowledged that this rate would be more than the hourly rate that Bulger

actually paid those employees.

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[23] Upon remand, the trial court will ultimately be required to determine whether

the amount requested by Bulger is reasonable and, if not, what a reasonable

amount would be. Our review of the evidence before the court at the summary

judgment stage on this question reflects that Bulger’s designated evidence failed

to adequately establish the reasonableness of the amount Bulger requested, at

least based upon that designated evidence. The lack of specificity concerning

the nature of the work reflected in those invoices is problematic. Also, it

appears that Bulger charged IIC an hourly rate for the employees’ time spent

allegedly complying with Hardman’s requests that exceeded the amount of

those employees’ actual pay. “[T]he measure of damages in a contract action is

limited to those actually suffered as a result of the breach which are reasonably

assumed to have been within the contemplation of the parties at the time the

contract was formed.” Erie Ins. Co. v. Hickman by Smith, 622 N.E.2d 515, 519

(Ind. 1993). It seems clear that this aspect of the measure of damages would

consist of what Bulger actually paid the employee in question for complying

with Hardman’s requests, not the hourly rate at which it would have billed that

employee’s time had the work been performed for the Mussmans in furtherance

of Bulger’s business. In the final analysis, these are evidentiary matters that the

parties will have the opportunity to develop more fully when this litigation

moves beyond the summary judgment phase.

2. & 3.

[24] Bulger’s second and third issues stem ultimately from IIC’s refusal to participate

in the T.R. 30(B)(6) deposition. Recall that Bulger sent IIC a request for

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 deposition pursuant to T.R. 30(B)(6). Pursuant to this request, Bulger directed

IIC to designate a person or persons authorized to testify on IIC’s behalf

regarding (1) communication between IIC and Bulger relating to the Mussman

litigation, (2) communication between IIC and Hardman’s law firm regarding

the legal defense of Bulger concerning the Mussman litigation, (3) the reasons

why Bulger’s claims for reimbursement were denied, and (4) the facts upon

which IIC based its denial of coverage for expenses for reimbursement

submitted by Bulger. As a result of IIC’s refusal to designate a person to

participate in the T.R. 30(B)(6) deposition, Bulger submitted a motion in

limine, seeking to prevent IIC from presenting evidence on the four subject

areas identified in the T.R. 30(B)(6) notice. As a second issue, Bulger appeals

the denial of that motion in limine.

[25] Also as a result of IIC’s refusal to participate in the T.R. 30(B)(6) deposition,

Bulger submitted a motion asking the court to strike an affidavit submitted by

Hardman in which Hardman averred that (1) he did not ask Bulger to incur

expenses to assist Hardman with the defense of the Mussman litigation, (2)

when asked by Bulger about whether certain expenses were reimbursable under

his insurance policy, Hardman informed Thomas Bulger that he should read his

policy and ask IIC, and (3) he had no knowledge of any expenses Bulger

ultimately claimed that he incurred in assisting Hardman with the defense of

the Mussman litigation. Again based upon IIC’s failure to participate in the

T.R. 30(B)(6) deposition, Bulger petitioned the trial court to strike the Hardman

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 affidavit. The third issue presented by Bulger is the trial court’s denial of the

motion to strike.

[26] These issues stem from IIC’s failure to participate in the T.R. 30(B)(6)

deposition, which in turn would have been relevant for the purpose of

determining whether Bulger was entitled to reimbursement under the IIC

insurance policies. More specifically, that deposition presumably would have

focused on the “request” element of the coverage question. Having determined

that IIC, through Hardman, did request Bulger’s assistance within the meaning

of the insurance policies, we need not address these issues. All that remains is

the reasonableness of the requested reimbursement.

[27] Judgment reversed, and cause remanded for further proceedings consistent with

this opinion.

Kirsch, J., and Crone, J., concur.

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