FILED
Jun 19 2018, 2:21 pm
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
IN THE
Indiana Supreme Court
Supreme Court Case No. 18S-CT-114
Erie Indemnity Company, as Attorney-in-Fact for the
Subscribers at Erie Insurance Exchange,
Appellant (Defendant)
–v–
Estate of Brian L. Harris, by Its Special Representative,
Laura Harris, and Anna Marie Harris,
Spouse of Brian L. Harris, Deceased,
Appellees (Plaintiffs)
Argued: February 21, 2018 | Decided: June 19, 2018
Appeal from the LaPorte Superior Court 2
No. 46D02-1511-CT-2015
The Honorable Richard R. Stalbrink, Jr., Special Judge
On Petition to Transfer from the Indiana Court of Appeals,
No. 46A03-1606-CT-1261
Opinion by Justice Goff
Chief Justice Rush and Justices David, Massa, and Slaughter concur.
Goff, Justice.
This case arises from a tragic accident where an uninsured driver under
the influence of methamphetamine struck and killed Brian Harris who
was mowing his home’s lawn near the roadside. Harris’s estate sought
uninsured motorist benefits under his employer’s commercial auto policy,
claiming he qualified for coverage under the policy term “others we
protect.” The insurance company denied the claim, finding Harris was not
entitled to coverage under the policy, and the parties litigated the matter
to our courthouse door.
Ostensibly, the issue before us remains whether the policy term “others
we protect” included Harris. But unpacking this broader issue reveals a
narrower, threshold one—whether “others we protect” is ambiguous and
amenable to judicial interpretation. Harris’s estate urges that because the
term “others we protect” is susceptible to multiple reasonable
interpretations it represents an ambiguous term in need of judicial
construction and must be construed in the estate’s favor. Meanwhile, the
insurance company insists that, because a separate policy section entitled
OTHERS WE PROTECT explains who qualifies as “others we protect,”
the term is unambiguous and impervious to judicial construction. We
agree with the insurance company and, therefore, reverse the trial court’s
judgment.
Factual and Procedural History
On December 11, 1993, Erie Insurance Exchange (“Erie”) issued a
Pioneer Commercial Auto Policy No. Q12 1130119 F7 (the “Policy”) to
Formco, Inc. (“Formco”), a plastics design and manufacturing company in
Elkhart County, Indiana. The Declarations Page listed Formco as the only
Named Insured and no other Additional Insureds. Formco renewed the
Policy every year from 1994 through 2010, each year keeping itself as the
lone Named Insured. From 2005 through 2010, the Policy’s “Autos
Covered” section listed a 2004 Toyota pickup truck (VIN #
5TBBT44134S450733) as a scheduled vehicle. Formco owned the truck and
allowed its longtime employee Brian Harris to drive it as his primary
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vehicle for personal and business transportation. Like prior iterations, the
2010 Policy included an Uninsured/Underinsured Motorists Coverage
Endorsement—Indiana (the “UM Endorsement”) that afforded coverage
for bodily injury and property damage resulting from an accident with an
uninsured motorist.
In the UM Endorsement, Erie promised:
We will pay damages for bodily injury and property damage
that the law entitles you or your legal representative to recover
from the owner or operator of an uninsured motor vehicle . . . .
Damages must result from a motor vehicle accident arising out
of the ownership or use of the uninsured motor vehicle . . . as a
motor vehicle and involve . . . bodily injury to you or others we
protect.
Appellant’s App. Vol. II, p. 118. Just underneath this promise followed the
section entitled OTHERS WE PROTECT, which listed 4 categories of
potential claimants for uninsured motorist benefits. Id. The Policy with
this UM Endorsement was in effect on August 6, 2010, when tragedy
befell Formco employee Brian Harris.
On that summer evening, while operating his personal riding
lawnmower at his private residence, Harris was struck and killed by an
uninsured motorist. His estate (the “Estate”) submitted claims for
uninsured motorist bodily injury (“UMBI”) and MedPay benefits under
the Policy, and Erie subsequently denied those claims. The Estate sued
Erie seeking, in part, a declaratory judgment entitling it to UMBI coverage
benefits for the accident that killed Harris and damages up to the Policy
limits. 1
1The Estate also sued the truck’s driver (Noel M. Sparks) along with the truck’s owners (Brent
and Jamie Stouder), claiming Sparks negligently drove the truck and the Stouders negligently
entrusted their truck to Sparks. When Sparks and the Stouders failed to appear or otherwise
respond to the complaint, the trial court entered default judgment against them and awarded
the Estate damages in the amount of $4,643,295.00 along with costs.
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Erie eventually moved for summary judgment, arguing, as a matter of
law, the Policy did not provide UMBI coverage to the Estate for Harris’s
death because he did not qualify as “you,” “others we protect,” “anyone
we protect,” or “persons we protect” under the Policy, including the UM
Endorsement. The Estate countered with a cross-motion for summary
judgment, arguing, as a matter of law, “Harris qualified as ‘others we
protect’ under the ‘OUR PROMISE’ section of the UM[] Endorsement
when he was struck and killed by an uninsured motorist.”
The trial court determined the case turned upon whether the phrase
“others we protect” as used in the OUR PROMISE section included
Harris. The court found the phrase ambiguous and construed it in the
Estate’s favor to include Harris. Since the court concluded there were no
genuine issues of material fact, it granted summary judgment to the
Estate.
Erie appealed, and the Court of Appeals affirmed the trial court’s
judgment. Erie Indem. Co. v. Estate of Harris, 80 N.E.3d 923 (Ind. Ct. App.
2017). Like the trial court below, the Court of Appeals found “others we
protect” ambiguous and construed it in the Estate’s favor to include
Harris. Id. at 930–31. Erie then petitioned for transfer, which we granted,
thereby vacating the Court of Appeals opinion. See Ind. Appellate Rule
58(A). We now reverse and remand with instructions to enter summary
judgment for Erie.
Standard of Review
This Court reviews summary judgments de novo, applying the same
standard as the trial court. SCI Propane, LLC v. Frederick, 39 N.E.3d 675, 677
(Ind. 2015). Summary judgment is appropriate only when the designated
evidence shows there is no genuine issue of material fact and the moving
party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). See
Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). Parties filing cross-
motions for summary judgment neither alters this standard nor changes
our analysis—“we consider each motion separately to determine whether
the moving party is entitled to judgment as a matter of law.” SCI Propane,
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LLC, 39 N.E.3d at 677. Matters involving disputed insurance policy terms
present legal questions and are particularly apt for summary judgment.
Wagner v. Yates, 912 N.E.2d 805, 808 (Ind. 2009).
Discussion and Decision
This matter involves whether Formco’s commercial auto policy
provides coverage for Harris’s death in a motor vehicle accident involving
an uninsured motorist, when Harris was not occupying a scheduled
vehicle. The parties agree this case presents no genuine issue of material
fact, and presents only one legal question, that is, the meaning of one term
in the Policy’s UM Endorsement—“others we protect.”
The UM Endorsement provides in relevant part:
OUR PROMISE
We will pay damages for bodily injury and property damage
that the law entitles you or your legal representative to recover
from the owner or operator of an uninsured motor vehicle or
underinsured motor vehicle.
Damages must result from a motor vehicle accident arising out
of the ownership or use of the uninsured motor vehicle or
underinsured motor vehicle and involve:
1. [B]odily injury to you or others we protect. Bodily injury
means physical harm, sickness, disease or resultant death to
a person;
***
OTHERS WE PROTECT
1. Any relative, if you are an individual.
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2. Anyone else, while occupying any owned auto we insure other
than one being used without the permission of the owner.
3. Anyone else who is entitled to recover damages because of
bodily injury to any person protected by this coverage.
4. If you are an individual, anyone else while occupying a non-
owned auto we insure other than:
a. [O]ne you are using that is owned by another resident of
your household.
b. [O]ne furnished or available for the regular use of you
and any resident of your household.
c. [O]ne being operated by anyone other than you or a
relative.
Exhibit A, Appellant’s App. Vol. II, p. 63.
We must first note that words and phrases appearing in bold type
throughout the Policy and UM Endorsement are defined terms, informing
the reader those words and phrases have special meaning. Besides
appearing in bold type, defined terms are also included in DEFINTIONS
sections throughout the Policy and endorsements. See, e.g., Exhibit 1,
Appellant’s App. Vol. II, p. 93 (“Throughout your policy and its
endorsement forms, the following words have a special meaning when
they appear in bold type[.]”). We are obliged to give defined terms their
special meanings.
The parties acknowledge that to receive UMBI benefits Harris must
qualify as either “you” or “others we protect.” And both parties agree
Harris did not qualify as “you” since he did not meet that definition—he
was not Formco.
So this case narrows to one dispositive legal question: whether Harris
qualified as “others we protect” in the Policy’s UM Endorsement. On this
question the parties disagree and present us with two opposing
interpretations for “others we protect.” In simplest terms, the Estate’s
offered meaning includes Harris while Erie’s does not. But before we can
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interpret the policy and thereby endorse either party’s proposed meaning,
there is a necessary threshold inquiry: whether “others we protect” is an
ambiguous term amenable to judicial construction.
I. Indiana law instructs that courts may construe
only ambiguous policy terms and provisions.
Insurance policies are contracts “subject to the same rules of judicial
construction as other contracts.” State Farm Mut. Auto. Ins. Co. v.
Jakubowicz, 56 N.E.3d 617, 619 (Ind. 2016). When confronted with a dispute
over the meaning of insurance policy terms, Indiana courts afford clear
and unambiguous policy language its plain, ordinary meaning. Holiday
Hosp. Franchising, Inc. v. AMCO Ins. Co., 983 N.E.2d 574, 577 (Ind. 2013). By
contrast, courts may construe—or ascribe meaning to—ambiguous policy
terms only. Id.
Our first task, therefore, is to determine whether the policy term at
issue is ambiguous. We have said “that failure to define a term in an
insurance policy does not necessarily make it ambiguous” and thus
subject to judicial construction. Wagner, 912 N.E.2d at 810. As we see it,
failing to define a policy term merely means it has no exclusive special
meaning, and the courts can interpret it.
But, in that vein, we caution that parties to an insurance contract may
not invite judicial construction by creating ambiguity. They may not make
a term ambiguous by simply offering different policy interpretations. Cf.
Puryear v. Progressive N. Ins. Co., 790 N.E.2d 138, 141 (Ind. Ct. App. 2003).
In other words, ambiguity does not arise from mere disagreement over a
policy term’s meaning—that is, where “one party asserts an interpretation
contrary to that asserted by the opposing party.” Wagner, 912 N.E.2d at
810. Rather, insurance policy provisions are ambiguous only if they are
“susceptible to more than one reasonable interpretation.” Holiday Hosp.
Franchising, Inc., 938 N.E.2d at 578 (emphasis added).
When evaluating alleged ambiguities—whether there exist two
reasonable interpretations for one policy term—courts read insurance
policies “from the perspective of . . . ordinary policyholder[s] of average
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intelligence.” Allgood v. Meridian Sec. Ins. Co., 836 N.E.2d 243, 246–47 (Ind.
2005). If reasonably intelligent policyholders would honestly disagree on
the policy language’s meaning, then we will find the term ambiguous and
subject to judicial construction. Id. at 247. Conversely, if reasonably
intelligent policyholders could not legitimately disagree as to what the
policy language means, we deem the term unambiguous and apply its
plain ordinary meaning.
With these considerations in mind, we turn now to the instant Policy
and UM Endorsement.
II. The policy term “others we protect” is
susceptible to only one reasonable
interpretation, so it is not ambiguous and not
subject to judicial construction.
As for the Policy here, the parties present two differing interpretations
for “others we protect.” On one hand, Erie insists “others we protect”
carries the meaning outlined in the OTHERS WE PROTECT section
directly beneath the OUR PROMISE section, therefore making the phrase
unambiguous and impervious to judicial construction. At first blush, this
interpretation seems reasonable.
On the other hand, the Estate reasons that “others we protect” includes
“individuals such as Mr. Harris who were specifically listed in the Erie
Policy for purposes of protection and coverage.” While this proposed
interpretation appears initially to be a reasonable one, it simply is not
reasonable because it requires OTHERS WE PROTECT to mean
something different from “others we protect.” To be sure, this proposed
interpretation depends upon the premise that the separate OTHERS WE
PROTECT section cannot and does not define the phrase “others we
protect” in the OUR PROMISE section because “others we protect” does
not meet the criteria for defined terms—it is not bolded and does not
appear in a DEFINITIONS section. The Estate’s interpretation, therefore,
imputes a separate meaning to OTHERS WE PROTECT, specifically that
the separate section identifies remote claimants who might be entitled to
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UMBI benefits even though they are neither “you” (i.e., Formco) nor
“others we protect” (i.e., listed drivers like Harris).
Faced with these competing proposed interpretations, we must assess
whether both are reasonable from the standpoint of an ordinary
policyholder before diving into judicial construction. We consider each
interpretation in turn.
A. It is reasonable to conclude that OTHERS WE
PROTECT gives meaning to “others we protect.”
Erie proposes that the separate OTHERS WE PROTECT section gives
meaning to “others we protect” used in the OUR PROMISE section. We
find this interpretation reasonable, if not inevitable. The phrase “others we
protect” appears only once in the UM Endorsement and is immediately
followed by a section titled with the same three words—OTHERS WE
PROTECT. We think it eminently reasonable for two phrases consisting of
identical words and located near one another to share the same meaning.
While it is not a “definition” per se, the proximity and similarity between
the phrases make it is reasonable to understand that the OTHERS WE
PROTECT section serves as an explanatory list outlining who can be
included in “others we protect.” In other words, the section gives meaning
to the corresponding phrase. Erie could have (and probably should have)
removed any doubt as to the phrase’s meaning by making “others we
protect” a defined term rather than a standalone section. But for whatever
reason, it did not and invited this litigation. Erie’s drafting miscues
notwithstanding, we still think it obvious that OTHERS WE PROTECT
gives meaning to “others we protect.” And more importantly, we believe
ordinary policyholders, looking at the four corners of the Policy, would
agree that “others we protect” means OTHERS WE PROTECT. We
therefore find Erie’s proffered interpretation a reasonable one.
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B. The Estate’s proposed interpretation for “others we
protect” is unreasonable.
As for the Estate’s twofold view that the phrase “others we protect”
includes scheduled drivers like Harris while OTHERS WE PROTECT
identifies additional remote claimants that are neither “you” nor “others
we protect,” we find that proposed interpretation unreasonable on two
fronts.
First, the Policy language in no way indicates that “others we protect”
applies to scheduled drivers who would be eligible for coverage. Contrary
to the Estate’s claims, neither the Declarations pages, nor the Policy, nor
the UM Endorsement expressly list Harris as a “Named Insured,”
“Additional Insured,” or even a protected or covered driver. Exhibit 22,
Appellant’s App. Vol. III, pp. 39–75. Although Formco’s initial application
for a commercial auto policy included Harris’s name as a “driver,” Exhibit
C, Appellant’s App. Vol. II, p. 70, and Erie’s subsequent underwriting
documents listed Harris as a scheduled driver, Appellant’s App. Vol. III,
pp. 77-80, ¶¶ 9–29, those documents do not transform a listed driver into
an insured or a person covered or protected under the UM Endorsement.
Cf. Little v. Progressive Ins., 783 N.E.2d 307, 311 (Ind. Ct. App. 2003)
(citation omitted) (quoting Couch on Insurance for the maxim that the
“regular use of the vehicle, despite additional premiums charged for such
use, is not given the status of a named insured where such a person is not
so named in the policy”); Puryear, 790 N.E.2d at 140–41 (quoting
Millspaugh v. Ross, 645 N.E.2d 14, 16–17 (Ind. Ct. App. 1994)) (“That [the
plaintiff] is listed as the principal driver, while relevant for other
purposes, including the amount of premiums to be paid, does not
transform him into a person qualified for compensation under the
uninsured motorist provision of the policy.”). To arrive at the Estate’s
strained interpretation, a policyholder must read additional outside
information into the Policy and UM Endorsement and then draw
conclusions based on that very information. That strikes us as
unreasonable. We do not believe an ordinary policyholder would take that
approach.
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Second, the Estate’s proposed interpretation necessarily creates no
fewer than three categories of claimants who could obtain UMBI benefits
under the UM Endorsement: “you,” “others we protect,” and “OTHERS
WE PROTECT.” We see immediately that this view produces two
categories that have the same name but different meanings. For example,
the phrase “others we protect” would seemingly include any person
identified in an application or underwriting documents while OTHERS
WE PROTECT would include even more remote, additional people who
could be covered depending on the situation or their relationship to
“you.” We do not believe an ordinary policyholder would understand the
same phrase to have these different meanings, especially when there exists
a self-contained explanation on the same page of the endorsement. As we
see it, and as an ordinary policyholder would likely see it, the Estate’s
proposed interpretation injects needless conflict and confusion into the
policy concerning two closely related if not identical terms—i.e., “others
we protect” versus OTHERS WE PROTECT. Consequently, we conclude
that the Estate’s interpretation of “others we protect” is unreasonable.
Since we have not been presented with two reasonable interpretations
of “others we protect,” as a matter of law, we cannot say the phrase is
ambiguous, and we cannot judicially construe it. Instead, we move
forward in our analysis by giving “others we protect” its plain meaning as
found in the OTHERS WE PROTECT explanatory section.
III. Under these facts and circumstances, the Estate
cannot receive UMBI benefits based on
Harris’s death.
As we said before, the parties agreed that Harris could receive UMBI
benefits under the UM Endorsement only if he qualified as “others we
protect.” The OTHERS WE PROTECT section outlines four types of
claimants who might qualify as “others we protect”; they include:
1. Any relative, if you are an individual.
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2. Anyone else, while occupying any owned auto we insure other
than one being used without the permission of the owner.
3. Anyone else who is entitled to recover damages because of
bodily injury to any person protected by this coverage.
4. If you are an individual, anyone else while occupying a non-
owned auto we insure other than:
a. [O]ne you are using that is owned by another resident of
your household.
b. [O]ne furnished or available for the regular use of you
and any resident of your household.
c. [O]ne being operated by anyone other than you or a
relative.
Appellant’s App. Vol. II, p. 118. Since “you” is not an individual but
Formco, Harris cannot meet either number one or number four. Next,
Harris does not qualify under number two because, at the time of the
accident, he was not occupying an auto Formco owned and Erie insured;
rather, he was occupying his personal riding lawnmower. Finally, Harris
does not qualify under number three because he is not entitled to recover
benefits based on bodily injury to someone else. Applying these
categories, we cannot say Harris qualified as “others we protect” under
the UM Endorsement.
Conclusion
Brian Harris died in a tragic, senseless accident, and his Estate
understandably sought UMBI compensation from Erie to fill the resulting
financial void. But despite the sympathy we have for the Estate and
despite Erie’s unartful policy drafting—we simply cannot say that “others
we protect” is an ambiguous term amenable to judicial interpretation. The
UM Endorsement itself explains to policyholders who may qualify as
“others we protect” by including an illustrative list in a prominently
displayed, stand-alone section entitled OTHERS WE PROTECT. And so
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we believe ordinary policyholders could not honestly disagree as to the
term’s meaning. They would agree that the OTHERS WE PROTECT
section gives meaning to “others we protect,” rather than creating a third
group of remote claimants.
Because we find the disputed policy term “others we protect”
unambiguous, we cannot construe it and must give it the plain meaning
found within the UM Endorsement. Accordingly, as a matter of law, Brian
Harris did not qualify as “others we protect” under the UM Endorsement
in his employer’s commercial auto policy when he was tragically struck
and killed by an uninsured motorist. We hold the trial court erred in
finding otherwise and in granting summary judgment to the Estate. We
therefore reverse the trial court’s judgment and remand with instructions
to enter summary judgment for Erie.
Rush, C.J., and David, Massa, and Slaughter, JJ., concur.
ATTORNEY FOR APPELLANT
Mark R. Smith
Smith Fisher Maas Howard & Lloyd, P.C.
Indianapolis, Indiana
ATTORNEYS FOR APPELLEES
Scott M. Keller
Michael J. Anderson
Tracey S. Schafer
Anderson, Agostino & Keller, P.C.
South Bend, Indiana
ATTORNEY FOR AMICUS CURIAE INSURANCE INSTITUTE OF
INDIANA, INC.
Bryan H. Babb
Bose McKinney & Evans LLP
Indianapolis, Indiana
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