Admiral Insurance Company v. Joseph Banasiak
72 N.E.3d 491
| Ind. Ct. App. | 2017Background
- Admiral issued a claims-made professional liability policy to Dr. Habib T. Zadeh covering 9/21/2008–9/21/2009 with a retroactive date of 9/21/2005; Zadeh cancelled the policy effective 7/15/2009 and purchased an extended reporting period through 7/15/2010.
- Jennifer Muehlman filed a malpractice complaint against “John Doe, M.D.” on 10/6/2008 (later identified as Dr. Zadeh); the Indiana Department of Insurance (DOI) acknowledged receipt and sent notice to Zadeh, but there is no DOI record that it sent Admiral notice of the complaint.
- A default judgment was entered against Zadeh in October 2010; counsel for Zadeh notified Admiral of the claim in an October 25, 2011 letter; Admiral denied coverage in November 2011 as untimely under the claims-made policy and for lack of cooperation.
- The Estate (personal representative of Zadeh) sued for declaratory judgment asserting Admiral was required to defend/indemnify because the cancellation was not effective as to claimants under Ind. Code § 34-18-13-4 and because Admiral failed to notify the DOI.
- The trial court denied Admiral’s summary judgment, struck parts of a DOI affidavit in/out, and entered declaratory relief holding the policy remained effective as to Muehlman because Admiral did not comply with the statute’s notice-to-commissioner requirement.
- The Court of Appeals reversed, holding (as a matter of law) that the claims-made policy’s notice requirement was not satisfied and that § 34-18-13-4 did not require coverage where the policy was in effect when the complaint was filed and later expired before Admiral received notice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Admiral’s motion for summary judgment should be denied because DOI failed to notify Admiral so cancellation was ineffective under Ind. Code § 34-18-13-4 | Estate: DOI practice is to forward complaints to carriers; DOI had no record of Admiral notice so cancellation was not effective and coverage must apply to Muehlman | Admiral: Policy is claims-made; timely written notice to insurer was contractually required and was not provided within the policy/extended reporting period; § 34-18-13-4 does not nullify insured’s notice/cooperation duties | Held for Admiral: notice to Admiral was untimely under the claims-made policy; § 34-18-13-4 does not extend coverage here because the policy was in effect when complaint was filed and later expired before insurer received notice |
| Whether Admiral was estopped or otherwise barred from denying coverage due to failing to notify DOI of cancellation | Estate: Admiral’s failure to send cancellation to DOI (required by statute) prevents cancellation as to claimants, so Admiral can’t avoid coverage | Admiral: Even if cancellation notice to DOI was defective, statute’s protection addresses cancellation, not the insured’s contractual notice/cooperation obligations; claimant protection does not render insurer’s notice duties unenforceable | Held: Statute protects against certain cancellations not properly reported, but does not negate the claims-made notice requirements applicable here; estoppel argument rejected |
| Whether the trial court properly treated the Wilkins (DOI) affidavit and whether material facts existed about DOI forwarding practices | Estate: Wilkins affidavit shows DOI routinely forwards letters to carriers, creating issue whether Admiral received notice | Admiral: Wilkins lacked personal knowledge of DOI practices in 2008; portions of affidavit should be struck | Held: Court correctly granted partial motion to strike (struck Wilkins’ statements about DOI practices in 2008) but allowed affidavit statements identifying Zadeh as a qualified provider and DOI’s lack of a record of Admiral notice; factual record still showed Admiral lacked timely notice |
| Whether Admiral was prejudiced by lack of notice so as to justify denial of coverage | Admiral: Prejudice exists—default judgment entered, limited ability to defend or obtain insured cooperation (insurer had no chance to participate) | Estate: Prejudice not required if statutory protections apply; also argued possible notice from DOI created fact question | Held: Court of Appeals accepted that lack of timely notice under claims-made policy defeats coverage regardless of prejudice; statutory argument failed to create material fact preventing summary judgment |
Key Cases Cited
- Hughley v. State, 15 N.E.3d 1000 (Ind. 2014) (standard of review for summary judgment)
- Manley v. Sherer, 992 N.E.2d 670 (Ind. 2013) (moving party’s burden on summary judgment)
- Mangold ex rel. Mangold v. Ind. Dep’t of Natural Res., 756 N.E.2d 970 (Ind. 2001) (review limited to materials designated to trial court)
- Catt v. Bd. of Comm’rs of Knox Cty., 779 N.E.2d 1 (Ind. 2002) (affirming on any grounds supported by Trial Rule 56 materials)
- Young v. Hood’s Gardens, Inc., 24 N.E.3d 421 (Ind. 2015) (statutory interpretation principles)
- Ashby v. Bar Plan Mut. Ins. Co., 949 N.E.2d 307 (Ind. 2011) (notice provision in claims-made policy limits insurer’s obligation)
- Paint Shuttle, Inc. v. Cont’l Cas. Co., 733 N.E.2d 513 (Ind. Ct. App. 2000) (notice provision in claims-made policy defines insurer’s obligation)