Golden v. State Farm Mutual Automobile Insurance
745 F.3d 252
7th Cir.2014Background
- Cindy Golden purchased and renewed a State Farm auto policy that promised to "pay attorney fees for attorneys chosen by us to defend an insured who is sued."
- Golden was later sued; State Farm assigned an in-house attorney (Patrick J. Murphy) who disclosed his employment and ethical obligations in a letter to Golden.
- Golden does not allege inadequate representation or that she objected to house counsel; she alleges State Farm should have disclosed at policy issuance that it might use house counsel.
- She sued on theories of breach of fiduciary/special duties, breach of good faith and fair dealing, and unjust enrichment; district court dismissed under Rule 12(b)(6).
- The Seventh Circuit reviewed de novo, examined Indiana precedent (notably Cincinnati Ins. Co. v. Wills), and affirmed dismissal and denial of certification to the Indiana Supreme Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Indiana law requires insurers to disclose at policy issuance that "counsel of our choice" may be house counsel | Golden: Policy language was insufficient; insurer owed duty to disclose use of in-house counsel upfront | State Farm: No such disclosure duty exists under Indiana law; policy language and later disclosure suffice | No duty exists as a matter of state law; dismissal affirmed |
| Whether failure to disclose house-counsel practice breaches duty of good faith and fair dealing | Golden: Nondisclosure is misleading and breaches implied duty of good faith | State Farm: No obligation to disclose at issuance; no facts of bad faith alleged | Claim fails; no plausible breach of good faith pleaded |
| Whether unjust enrichment claim can proceed despite an express contract | Golden: State Farm delivered a cheaper/different product than promised, so unjustly enriched | State Farm: Express contract governs; unjust enrichment barred; no detrimental benefit alleged | Unjust enrichment barred by contract and insufficiently pleaded |
| Whether to certify the disclosure question to the Indiana Supreme Court | Golden: State law unsettled; certification appropriate | State Farm: Precedent and Wills make outcome clear; certification unnecessary | Certification denied; not genuinely uncertain or a matter for certification |
Key Cases Cited
- Cincinnati Ins. Co. v. Wills, 717 N.E.2d 151 (Ind. 1999) (house-counsel use not per se unauthorized practice or inherent conflict; disclosure level is for insurance commissioner)
- Erie Ins. Co. v. Hickman, 622 N.E.2d 515 (Ind. 1993) (recognizes insurer's implied duty of good faith to insured)
- Zoeller v. E. Chi. Second Century Inc., 904 N.E.2d 213 (Ind. 2009) (existence of express contract bars unjust enrichment recovery)
- Landers v. Wabash Ctr., Inc., 983 N.E.2d 1169 (Ind. App. 2013) (elements of unjust enrichment require measurable benefit and detriment)