Fireman's Fund Insurance Company v. Matthew W. Ackerman

FILED
Jul 14 2016, 8:52 am

CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court

ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Jeffrey B. Fecht Lane C. Siesky
Riley Bennett & Egloff, LLP Siesky & Viehe, PC
Indianapolis, Indiana Evansville, Indiana

ATTORNEYS OF APPELLEE
(INTERVENOR), American
Casualty Company/American
Equity Risk Service

Laurie Goetz Kemp
Crystal G. Rowe
Kightlinger & Gray, LLP
New Albany, Indiana

IN THE
COURT OF APPEALS OF INDIANA

Fireman’s Fund Insurance July 14, 2016
Company, Court of Appeals Cause No.
Appellant-Third Party Defendant, 82A01-1509-CT-1350
Appeal from the Vanderburgh
v. Circuit Court
The Honorable David D. Kiely,
Matthew W. Ackerman, Judge
Appellee-Third Party Plaintiff, Trial Court Cause No.
82C01-0911-CT-450
and,

American Casualty Company,

Court of Appeals of Indiana | Opinion 82A01-1509-CT-1350 | July 14, 2016 Page 1 of 15
 American Equity Risk Service,

Appellee-Intervenor Defendant.

Barnes, Judge.

Case Summary
[1] Fireman’s Fund Insurance Company (“Fireman’s Fund”) appeals the trial

court’s denial of its motion for summary judgment regarding a claim by

Matthew W. Ackerman. We reverse and remand.

Issue
[2] Fireman’s Fund raises one issue, which we restate as whether the trial court

properly denied its motion for summary judgment regarding underinsured

motorist coverage.

Facts
[3] On January 8, 2009, Ackerman was injured in a motor vehicle accident

allegedly caused by Janet Sipes. Ackerman sustained severe injuries in the

accident, including the amputation of a leg. At the time of the accident,

Ackerman was working for Evansville Marine Service, Inc. (“Evansville

Marine”). Evansville Marine had uninsured/underinsured motorist
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 (“UM/UIM”) coverage with American Casualty Company of Reading, PA, a

subsidiary of CNA (“CNA”), an excess or umbrella policy with Fireman’s

Fund, and workers’ compensation benefits with American Casualty

Company/American Equity Risk Service (“AER”). Fireman’s Fund first

issued an excess liability policy to Evansville Marine in March 2004. Beginning

in September 2004, the policy was issued or renewed each year effective

September 16th.

[4] Ackerman received the $100,000 policy limits of Sipes’s policy with State Farm

Insurance, and the $1,000,000 policy limits (minus an offset of $100,000 for the

amount paid by State Farm) of Evansville Marine’s CNA Policy. Ackerman

claims that his damages exceed the amount he has been paid, and this litigation

concerns whether the Fireman’s Fund policy provides additional UM/UIM

coverage.

[5] In November 2009, Sipes filed a complaint against Ackerman, and Ackerman

filed a counterclaim against Sipes. AER then filed a motion to intervene related

to payments it made to Ackerman under the workers’ compensation policy, and

the trial court granted the motion. In October 2011, Ackerman filed a motion

for leave to file a third-party complaint against Fireman’s Fund, which the trial

court also granted. Ackerman claimed that he was entitled to UM/UIM

coverage under the Fireman’s Fund policy.

[6] Fireman’s Fund filed a motion for summary judgment. Fireman’s Fund argued

that the policy did not provide UM/UIM coverage and that UM/UIM

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 coverage could not be imputed to the policy. Ackerman and AER filed

responses to Fireman’s Fund’s motion for summary judgment. The trial court

denied Fireman’s Fund’s motion for summary judgment. However, pursuant

to Fireman’s Fund’s request, the trial court certified the order for interlocutory

appeal. We accepted Fireman’s Fund’s interlocutory appeal pursuant to

Indiana Appellate Rule 14(B).

Analysis
[7] Fireman’s Fund argues that the trial court erred by denying its motion for

summary judgment. An appellate court reviewing summary judgment analyzes

the issues in the same way as would a trial court. Pfenning v. Lineman, 947

N.E.2d 392, 396 (Ind. 2011). A party seeking summary judgment must

establish that “the designated evidentiary matter shows that there is no genuine

issue as to any material fact and that the moving party is entitled to a judgment

as a matter of law.” Ind. Trial Rule 56(C). The party moving for summary

judgment bears the initial burden of establishing its entitlement to summary

judgment. Pfenning, 947 N.E.2d at 396-97. “Only then does the burden fall

upon the non-moving party to set forth specific facts demonstrating a genuine

issue for trial.” Id. at 397. The reviewing court must construe the evidence in

favor of the non-movant, and resolve all doubts against the moving party. Id.

[8] Fireman’s Fund argues that its policy issued to Evansville Marine did not

contain UM/UIM coverage and that it is entitled to summary judgment.

Ackerman and AER argue that UM/UIM coverage was imputed to the policy.

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 “Insurance contracts ‘are governed by the same rules of construction as other

contracts.’” Justice v. Am. Family Mut. Ins. Co., 4 N.E.3d 1171, 1175 (Ind. 2014)

(quoting Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664, 667 (Ind. 1997)).

The interpretation of an insurance contract is a question of law, and we address

it de novo. Id. Similarly, “the interpretation of a statute is a question of law,”

and we consider it de novo. Id.

[9] The analysis of this issue requires a review of UM/UIM coverage in Indiana,

see Indiana Code Chapter 27-7-5. “The statute was originally enacted in 1965,

see 1965 Ind. Acts. ch. 138, § 1, and it required insurers to offer uninsured

motorist coverage in an amount equal to the statutory minimum financial

responsibility requirements.” Justice, 4 N.E.3d at 1178. “In 1982, the General

Assembly amended it, see P.L. 166-1982, § 1, 1982 Ind. Acts 1237, to require

‘that insurers not merely offer but provide uninsured motorist coverage in an

amount equal to the minimum financial responsibility requirements (but not

exceeding the bodily injury and property damage limits) of the insured’s

policy.’” Id. (quoting United Nat. Ins. Co. v. DePrizio, 705 N.E.2d 455, 460 (Ind.

1999)). In 1987, the General Assembly amended the statute again, see P.L. 391-

1987, § 1, 1987 Ind. Acts 3558; this amendment further “broadened the scope of

the statute by requiring insurers to provide underinsured motorist coverage in

addition to uninsured motorist coverage . . . in limits equal to the limits of

liability specified in the bodily injury and property damage provisions of an

insured’s policy.” Id.

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[10] In 1995, the General Assembly enacted Indiana Code Section 27-7-5-2 to

require insurance companies to provide UM/UIM coverage in all existing or

newly-issued automobile policies up to the policy limits. Liberty Mut. Fire Ins.

Co. v. Beatty, 870 N.E.2d 546, 549 (Ind. Ct. App. 2007). “The effect of the

legislation granted implied UM/UIM coverage to all existing automobile

policies that did not expressly provide UM/UIM coverage.” Id. “Insurers

could only avoid the coverage by obtaining a written rejection from their

insured.” Id.

[11] Then, in 1999, our supreme court decided DePrizio, which concerned whether a

commercial umbrella or excess liability insurance policy, like the policy at issue

here, was required to provide UM/UIM coverage. DePrizio, 705 N.E.2d at 457.

The court noted that the UM/UIM coverage statute “is a mandatory coverage,

full-recovery, remedial statute.” Id. at 460. Its provisions were to be

“considered a part of every automobile liability policy the same as if written

therein.” Id. Moreover, “[e]ven where a given policy fails to provide such

uninsured motorist coverage, the insured is entitled to its benefits unless

expressly waived in the manner provided by law.” Id. Our supreme court

concluded that, “absent an explicit statutory exemption to the contrary[,] an

umbrella liability policy that does not provide for uninsured/underinsured

motorist coverage by its own terms, yet provides coverage for liability arising

from the ownership maintenance or use of motor vehicles, is an ‘automobile

liability policy or motor vehicle liability policy’ within the meaning of Indiana

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 Code 27-7-5-2(a).” Id. at 464. “As such, the statute requires such a policy to

provide uninsured and underinsured motorist coverage.” Id.

[12] In apparent response to DePrizio, effective July 1, 2005, the legislature enacted

Indiana Code Section 27-7-5-1.5, which applied to commercial vehicle policies

and provided: “(b) This chapter does not require an insurer to make available

uninsured motorist or underinsured motorist coverage described in [Indiana

Code Section 27-7-5-2] in connection with the issuance of a . . . (2) commercial

umbrella or excess liability policy[.]”1 At the time that the 2008 policy was

issued and the time of the accident, Indiana Code Section 27-7-5-2 provided:

(a) The insurer shall make available, in each automobile
liability or motor vehicle liability policy of insurance
which is delivered or issued for delivery in this state with
respect to any motor vehicle registered or principally
garaged in this state, insuring against loss resulting from
liability imposed by law for bodily injury or death suffered
by any person and for injury to or destruction of property
to others arising from the ownership, maintenance, or use
of a motor vehicle, or in a supplement to such a policy, the
following types of coverage:

(1) in limits for bodily injury or death and for injury to
or destruction of property not less than those set
forth in IC 9-25-4-5 under policy provisions
approved by the commissioner of insurance, for the
protection of persons insured under the policy who
are legally entitled to recover damages from owners

1
In 2009, the legislature repealed Indiana Code Section 27-7-5-1.5, effective January 1, 2010.

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 or operators of uninsured or underinsured motor
vehicles because of bodily injury, sickness or
disease, including death, and for the protection of
persons insured under the policy who are legally
entitled to recover damages from owners or
operators of uninsured motor vehicles for injury to
or destruction of property resulting therefrom; or

(2) in limits for bodily injury or death not less than
those set forth in IC 9-25-4-5 under policy
provisions approved by the commissioner of
insurance, for the protection of persons insured
under the policy provisions who are legally entitled
to recover damages from owners or operators of
uninsured or underinsured motor vehicles because
of bodily injury, sickness or disease, including death
resulting therefrom.

The uninsured and underinsured motorist coverages must
be provided by insurers for either a single premium or for
separate premiums, in limits at least equal to the limits of
liability specified in the bodily injury liability provisions of
an insured’s policy, unless such coverages have been
rejected in writing by the insured. However, underinsured
motorist coverage must be made available in limits of not
less than fifty thousand dollars ($50,000). At the insurer’s
option, the bodily injury liability provisions of the
insured’s policy may be required to be equal to the
insured’s underinsured motorist coverage. Insurers may
not sell or provide underinsured motorist coverage in an
amount less than fifty thousand dollars ($50,000). Insurers
must make underinsured motorist coverage available to all
existing policyholders on the date of the first renewal of
existing policies that occurs on or after January 1, 1995,
and on any policies newly issued or delivered on or after
January 1, 1995. Uninsured motorist coverage or

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 underinsured motorist coverage may be offered by an
insurer in an amount exceeding the limits of liability
specified in the bodily injury and property damage liability
provisions of the insured’s policy.

(b) Any named insured of an automobile or motor vehicle
liability policy has the right, on behalf of all other named
insureds and all other insureds, in writing, to:

(1) reject both the uninsured motorist coverage and the
underinsured motorist coverage provided for in this
section; or

(2) reject either the uninsured motorist coverage alone
or the underinsured motorist coverage alone, if the
insurer provides the coverage not rejected separately
from the coverage rejected.

No insured may have uninsured motorist property damage
liability insurance coverage under this section unless the
insured also has uninsured motorist bodily injury liability
insurance coverage under this section. Following rejection
of either or both uninsured motorist coverage or
underinsured motorist coverage, unless later requested in
writing, the insurer need not offer uninsured motorist
coverage or underinsured motorist coverage in or
supplemental to a renewal or replacement policy issued to
the same insured by the same insurer or a subsidiary or an
affiliate of the originally issuing insurer. Renewals of
policies issued or delivered in this state which have
undergone interim policy endorsement or amendment do
not constitute newly issued or delivered policies for which
the insurer is required to provide the coverages described
in this section.

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[13] The parties do not dispute that, as a result of DePrizio, the Fireman’s Fund

policies provided UIM protection at least until the first renewal of the policy

after Indiana Code Section 27-7-5-1.5 went into effect in 2005. This dispute

centers on the effect of Indiana Code Sections 27-7-5-1.5 and 27-7-5-2 on the

policy. The accident occurred in January 2009, and the Fireman’s Fund policy

at issue was effective September 16, 2008, to September 16, 2009 (“2008

Policy”). The language of the 2008 Policy expressly did not provide UIM

coverage. The question here is whether Fireman’s Fund was still required to

provide UIM coverage at the time this policy was issued or whether Indiana

Code Section 27-7-5-1.5 had eliminated that coverage.

[14] Fireman’s Fund argues that Indiana Code Section 27-7-5-1.5(b) applied to the

renewal of the policy in September 2008 to eliminate the UIM coverage

previously required by DePrizio. Ackerman counters that the use of the word

“issuance” in the statute means that the statute only applied to newly-issued

policies, not renewal policies. According to Ackerman, because Indiana Code

Section 27-7-5-1.5(b) is inapplicable, Fireman’s Fund was required to obtain a

written rejection of UIM coverage pursuant to Indiana Code Section 27-7-5-2.

Ackerman also argues that the adoption of Indiana Code Section 27-7-5-1.5(b)

“did not obviate the language of I.C. 27-7-5-2(b), which then required (and still

yet requires) an insurer to obtain a written rejection of UM and/or UIM

coverage by the named insured in order to avoid providing such coverage to its

insured in a future policy year.” Appellee’s Br. p. 16.

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[15] The federal district court addressed this same issue in Hall v. Travelers Property

Cas. Co. of America, No. 3:08-CV-0007RLYWGH, 2009 WL 1148231 (S.D. Ind.

2009). There, the district court held:

Plaintiffs argue that the amended statute applies only to the
issuance of “new” policies and not, as in this case, to the issuance
of “renewal” policies. The plain language of the statute does not
limit its application to newly issued policies. Rather, it applies to
the “issuance” of any policy, whether entirely new or a renewal
following a previous policy.

The plain meaning of the statute must be read in light of Indiana
Code § 27-7-6-3, which defines a renewal policy as the “issuance”
of a replacement policy. See Little v. Progressive Ins., 783 N.E.2d
307, 314 (Ind. Ct. App. 2003) (citing Inman v. Farm Bureau Ins.,
584 N.E.2d 567, 569 (Ind. Ct. App. 1992)).

Further, Indiana Code § 27-7-5-1.5 must be read in light of the
mandatory IUM statute, Indiana Code § 27-7-5-2. That statutory
section begins by defining its application to every auto liability
policy delivered or issued for delivery in Indiana. Ind. Code §
27-7-5-2(a). The section goes on to make clear that this universe
of policies that are “issued” in Indiana includes both “first
renewal of existing policies” after the effective date, as well as
“newly issued” policies. See Ind. Code § 27-7-5-2(a)(2) (“Insurers
must make underinsured motorist coverage available to all
existing policyholders on the date of the first renewal of existing
policies . . . and on any policies newly issued . . . .”).

The legislative intent must be presumed to be the same with
respect to Indiana Code § 27-7-5-1.5, Inman, supra., especially
because the word “issuance” in the statute is just another form of
the word “issued” in Indiana Code § 27-7-5-2. “Webster’s Third
New International Dictionary defines ‘issuance’ as the noun form

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 of ‘issue.’” Mining Energy, Inc. v. Dir. OWCP, 391 F.3d 571, 575
(4th Cir. 2004); see also In re Auto. Prof’ls, Inc., 370 B.R. 161, 171
(Bankr. N.D. Ill. 2007) (“‘Issued,’ as used in reference to the
issuance of an insurance policy, means when the policy is made
and delivered, and is in full effect and operation.”).

Thus, the meaning of policies that are “issued” in Indiana Code §
27-7-5-2, i.e., both “first issued” policies and “renewals,” applies
equally to Indiana Code § 27-7-5-1.5, which refers to the
“issuance” of policies. Accordingly, the court finds that Illinois
National was not required to provide underinsured motorist
coverage in its renewal policy issued to Gohmann after the
amended statute took effect.

Hall, 2009 WL 1148231, at *8-9.

[16] Ackerman argues that Hall is not controlling because Indiana Code Section 27-

7-6-3, upon which the district court relied, is not relevant or applicable to the

UM/UIM statutes or commercial policies. Consequently, Ackerman contends

that any reliance on Hall is misplaced. Fireman’s Fund argues that Hall is

“directly on point with the issues in this matter.” Appellant’s Br. p. 15.

[17] We agree with Fireman’s Fund and find Hall to be persuasive. Although

DePrizio had previously required commercial umbrella or excess liability

policies to provide UM/UIM coverage, the 2005 enactment of Indiana Code

Section 27-7-5-1.5 eliminated that requirement. The statute provided:

“[Indiana Code Chapter 27-7-5] does not require an insurer to make available

uninsured motorist or underinsured motorist coverage described in [Indiana

Code Section 27-7-5-2] in connection with the issuance of a . . . (2) commercial

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 umbrella or excess liability policy.” The term “issuance” is not explicitly

limited to newly-issued policies and encompasses renewal policies. The

legislature has shown that it was capable of differentiating between newly-

issued or delivered policies and renewal policies, as it did in Indiana Code

Section 27-7-5-2, but it did not do so in Indiana Code Section 27-7-5-1.5. As in

Hall, we conclude that Indiana Code Section 27-7-5-1.5(b) applied to both

newly-issued policies and renewal policies. Regardless of whether the 2008

policy was a renewal or a newly issued policy, Fireman’s Fund was not

required to include UM/UIM coverage in the policy. Both Ackerman and

AER assert that a genuine issue of material fact exists as to whether the 2008

policy was a newly issued or renewal policy, but we conclude that fact is not

material.

[18] Ackerman also argues that, even if Indiana Code Section 27-7-5-1.5(b) applies,

Fireman’s Fund was still required to obtain a written rejection of the UM/UIM

coverage from the insured. However, Indiana Code Section 27-7-5-1.5(b)

specifically stated that the insurer was not required to provide such coverage. It

would be inconsistent to require an insurer to obtain a written rejection of

coverage that it was not required to offer at all. Consequently, Ackerman’s

argument fails.

[19] Finally, Ackerman and AER argue that a change in UM/UIM coverage as a

result of Indiana Code Section 27-7-5-1.5 was a material change that required

the provision of consideration. In support of his argument, Ackerman relies on

Liberty Mut. Fire Ins. Co. v. Beatty, 870 N.E.2d 546 (Ind. Ct. App. 2007). There,

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 during the umbrella policy’s term, the insurer sent the insured a form for the

written rejection of UM/UIM coverage, which the insured signed and returned.

The insured was later injured in an accident with an uninsured motorist, and

the insurer denied coverage. The issue on appeal was whether the document

signed by the insured was an effective rejection of UM/UIM coverage. We

held that the rejection form was ambiguous and did not remove UM/UIM

coverage. We held:

Had Liberty Mutual desired to exclude any and all UM/UIM
coverage based on the DePrizio decision, it should have either: 1)
secured the written waiver of coverage required under the statute
and included the waiver within the policy prior to the
commencement of coverage; or 2) if Liberty Mutual wanted to
remove UM/UIM coverage during the policy’s term, it should
have proposed a modification to such effect and offered to reduce
the premium to reflect the removed coverage. In either case, it
would be clear that the existence or nonexistence of UM/UIM
coverage was a negotiated term of the policy.

Beatty, 870 N.E.2d at 551.

[20] Ackerman relies on Beatty for the proposition that Fireman’s Fund was required

to give consideration for the change in UIM coverage after the 2005 statute was

enacted. However, Beatty is distinguishable. Beatty dealt with a change in

coverage during a policy’s term. Also, Beatty concerned an ambiguous

UM/UIM rejection form sent by the insurer, whereas here, the removal of

UM/UIM coverage took place as the result of a clear statutory enactment.

Ackerman cites no authority for the proposition that Fireman’s Fund was

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 required to offer consideration for the change in UIM coverage when the policy

was renewed.

[21] We conclude that, given Indiana Code Section 27-7-5-1.5(b), Fireman’s Fund

was not required to provide UM/UIM coverage in the 2008 Evansville Marine

policy. Fireman’s Fund was entitled to judgment as a matter of law and there

were no genuine issues of material fact. The trial court erred by denying

Fireman’s Fund’s motion for summary judgment.

Conclusion
[22] The trial court erred by denying Fireman’s Fund’s motion for summary

judgment regarding the UM/UIM coverage issue. We reverse and remand.

[23] Reversed and remanded.

Vaidik, C.J., and Mathias, J., concur.

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