97 N.E.3d 272
Ind. Ct. App.2018Background
- On Aug. 22, 2014, vehicles driven by Bermudez, Dulworth, and Charity Cherneski were involved in a rear-end collision; Cherneski struck Dulworth from behind.
- On Aug. 1, 2016, Dulworth settled his bodily-injury claim with Cherneski and her insurer, Founders, for $25,000 and executed a broad Release that discharged Cherneski, Founders, and “all other persons, firms, corporations, associations or partnerships” for claims arising from the Aug. 22, 2014 accident.
- After that settlement, Dulworth sued Bermudez (alleging she made an unwarranted stop) and sought underinsured motorist (UIM) benefits from Progressive (policy limits $100,000/$300,000).
- Progressive’s policy required exhaustion of all applicable liability limits by payment of judgment or settlement and required notice of any bona fide settlement offer.
- The trial court granted summary judgment for Bermudez and Progressive, concluding the Release unambiguously released third parties (including Bermudez) and, independently, Dulworth breached his UIM policy conditions (no exhaustion/notice), so he could not recover UIM benefits.
- The Court of Appeals affirmed the summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Release executed with Cherneski releases nonparty Bermudez | The Release is ambiguous or should be read to release only Cherneski and Founders; Dulworth’s affidavit shows he did not intend to release Bermudez | The Release’s plain language releases “all other persons” without limitation, so Bermudez is released | Release is unambiguous and releases third parties; Bermudez is released |
| Whether Dulworth may pursue UIM benefits from Progressive | Progressive’s subrogation/coverage obligations never triggered because Dulworth had no duty to notify and did not exhaust liability limits | Policy requires exhaustion by payment of judgment/settlement and notice of any bona fide settlement; Dulworth failed both prerelease | Independent of the release, Dulworth breached policy conditions (no exhaustion/notice); UIM claim barred |
Key Cases Cited
- Bank One, Nat. Ass’n. v. Surber, 899 N.E.2d 693 (Ind. Ct. App.) (contradictory release language created ambiguity; limited third-party release)
- Evan v. Poe & Associates, Inc., 873 N.E.2d 92 (Ind. Ct. App.) (unambiguous broad release of “all other persons” releases nonparties)
- Huffman v. Monroe County Community School Corp., 588 N.E.2d 1264 (Ind.) (release interpreted under contract principles; parol evidence may be used only where ambiguous)
- OEC-Diasonics, Inc. v. Major, 674 N.E.2d 1312 (Ind.) (third-party enforcement requires clear intent in instrument to benefit third party)
- Dobson v. Citizen Gas & Coke Util., 634 N.E.2d 1343 (Ind. Ct. App.) (language releasing “all persons” is effective absent contradictory terms)
- Stemm v. Estate of Dunlap, 717 N.E.2d 971 (Ind. Ct. App.) (similar treatment of broadly worded releases)
- Kirtley v. McClelland, 562 N.E.2d 27 (Ind. Ct. App.) (third-party rights under contract when intent to benefit appears)
- Hockelberg v. Farm Bureau Ins. Co., 407 N.E.2d 1160 (Ind. Ct. App.) (release executed before insurer’s settlement can extinguish insured’s policy rights)