Milbank Insurance Company v. Indiana Insurance Company
2016 Ind. App. LEXIS 240
| Ind. Ct. App. | 2016Background
- Milbank insured a vehicle owned by Paul Chandler; Chandler left the car with Michigan City Area Schools (the School) for repair in a vocational auto class where student Sydney Mireles (a required participant receiving course credit) operated the car and injured teacher Leon Klosowski.
- The School had a commercial auto policy with Indiana Insurance; Mireles had separate coverage with Geico. Geico was defending Mireles in the underlying tort suit.
- Milbank filed a declaratory judgment action seeking a ruling that Indiana Insurance’s policy was primary and Milbank’s policy was excess; Indiana Insurance counterclaimed that Mireles was not covered by its policy at all.
- The trial court granted Indiana Insurance’s summary judgment motion and denied Milbank’s, effectively determining Milbank’s policy was primary; Milbank filed a late notice of appeal and then a post-judgment “motion to clarify,” which the court granted, after which Milbank filed this appeal.
- The Court of Appeals held Milbank’s direct appeal was untimely (Milbank failed to file the notice of appeal within 30 days of the August 28, 2015 final judgment and its motion to clarify did not revive the appeal clock), but the panel addressed the merits and affirmed the trial court’s summary judgment result.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Milbank’s Other Insurance clause makes Milbank excess to Indiana Insurance | Milbank: Indiana Insurance admitted Mireles was an insured; thus Milbank’s policy is excess under its Other Insurance clause (school is in repair business) | Indiana Ins.: Mireles is not an insured under the School’s policy (not a borrower or volunteer), so Milbank is primary | Held: Mireles is not an insured under Indiana Insurance; Milbank is primary |
| Whether Mireles qualifies as an insured because vehicle was under School’s control during repairs | Milbank: School was repairing the car as part of its business, so Mireles (using car with permission) falls under the exception that would make Indiana Insurance primary | Indiana Ins.: Chandler was a bailor; School was a bailee, not a borrower/owner/hirer; mere repair does not make the School a borrower, so exception does not apply | Held: School did not borrow the car (bailment), so the ownership/hire/borrow requirement is not met; Mireles not insured on that basis |
| Whether Mireles is an insured as a “volunteer worker” under Indiana Insurance endorsement | Milbank: endorsement could make Mireles an insured even though car not owned/hired/borrowed | Indiana Ins.: volunteer-worker requires donation of services (no remuneration); Mireles received course credit and participation was mandatory, so not a volunteer | Held: Mireles was not a volunteer worker (received credit; participation mandatory); endorsement does not apply |
| Whether Indiana Insurance’s reservation-of-rights letter admitted coverage and estops it from denying coverage | Milbank: the letter’s language (“we believe she is an insured”) is an admission and undermines Indiana Insurance’s later denial | Indiana Ins.: letter was equivocal and expressly reserved rights and the right to amend position; it does not bind the insurer on coverage interpretation | Held: reservation letter is equivocal and preserving defenses; not an admission of coverage or bad faith |
Key Cases Cited
- WellPoint, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 29 N.E.3d 716 (Ind. 2015) (insurance contracts interpreted like other contracts; construe policy as whole)
- Dunn v. Meridian Mut. Ins. Co., 836 N.E.2d 249 (Ind. 2005) (give clear policy language its ordinary meaning)
- Protective Ins. Co. v. Coca-Cola Bottling Co., 423 N.E.2d 656 (Ind. Ct. App. 1981) (distinguishing borrower vs. user/bailee; borrowing requires possession/dominion and not merely performing repairs)
- Pitman v. Pitman, 717 N.E.2d 627 (Ind. Ct. App. 1999) (bailment defined as entrustment for a specific purpose with duty to return)
- Hedrick v. Gilbert, 17 N.E.3d 321 (Ind. Ct. App. 2014) (treatment of a "motion to clarify" as a motion to correct error for timeliness analysis)
- Waas v. Ill. Farmers Ins. Co., 722 N.E.2d 861 (Ind. Ct. App. 2000) (after final judgment, trial court’s continuing jurisdiction is limited)
- Erie Ins. Co. v. Hickman, 622 N.E.2d 515 (Ind. 1993) (recognition of insurer’s duty of good faith to its insured; cited as inapplicable here)