854 F. Supp. 2d 609
N.D. Ind.2012Background
- Dorothy was injured in an automobile accident in Virginia; Lisa (Dorothy’s driver) died in the crash; Dorothy was insured under Henry and Lisa policies issued by State Farm.
- Lisa Policy offered $50,000 liability limits to settle Dorothy’s claims; the release was never signed or returned.
- Statute of limitations for tort claims against Lisa expired July 14, 2008; no action was filed against Lisa before that date.
- State Farm closed the Lisa Policy claims after the limitations period, while separate communications continued regarding liens and settlement in the Henry Policy.
- Plaintiffs sought declaratory relief that Dorothy lacked UIM or UM coverage under the Henry Policy; Sellers counterclaimed for breach of contract, bad faith, and fiduciary duties.
- Sellers alleged interrelated navigation of settlements and liens; State Farm moved for summary judgment both as UIM/UM carrier for Sellers and as Lisa’s liability insurer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether UIM coverage under the Henry Policy is triggered | Sellers are entitled if Lisa was insolvent or exhausted policy limits | Coverage requires payment/availability of limits before exhaustion | Not triggered; no payment or available limits at time of claim |
| Whether equitable estoppel bars the exhaustion/coverage defense | State Farm’s conduct induced inaction | No deceptive conduct or promise to toll statute | Estoppel does not apply |
| Whether uninsured motorist coverage is available where Lisa’s policy was insured but its offer was withdrawn | Lisa remained insured; denial transformed vehicle to uninsured | Withdrawal of offer after SOL does not transform vehicle | Uninsured motorist coverage not available |
| Whether the Exhaustion Clause in the Henry Policy requires payment of judgments or settlements before UIM applies | Exhaustion of liability limits triggers UIM | Payment or availability must occur; no payment made | Exhaustion clause satisfied only by payment/availability; not met |
Key Cases Cited
- Cincinnati Ins. Co. v. Am. Alt-Ins. Corp., 866 N.E.2d 326 (Ind.Ct.App.2007) (construction of insurance contracts; plain meaning; coverage governs insured)
- United Nat. Ins. Co. v. DePrizio, 705 N.E.2d 455 (Ind.1999) (UIM statutes; remedial coverage; priority of recovery)
- Corr v. Am. Family Ins., 767 N.E.2d 535 (Ind.2002) (liberally construed UIM; available for payment)
- Danbeck v. American Family Mut. Ins. Co., 629 N.W.2d 150 (Wis.2001) (exhaustion/withdrawal of settlement offers; definition of payment)
- Harman v. State Farm Mut. Auto. Ins. Co., 434 S.E.2d 391 (W.Va.1993) (uninsured motorist denial after expiration; statute of limitations concerns)
- Brady v. Allstate Indem. Co., 788 N.E.2d 916 (Ind.Ct.App.2003) (duty of good faith; no third-party duty; focus on insured)
- Davis v. Shelter Ins. Companies, 957 N.E.2d 995 (Ind.Ct.App.2011) (two-part estoppel test; conduct and reasonable reliance)
- Sprowl v. Eddy, 547 N.E.2d 865 (Ind.Ct.App.1989) (mere willingness to negotiate insufficient for estoppel)
- Whitledge v. Jordan, 586 N.E.2d 884 (Ind.Ct.App.1992) (definition of uninsured motor vehicle under UIM statute)
- Leybman v. State Farm Mut. Auto. Ins. Co., 111 N.E.2d 763 (Ind.Ct.App.2002) (offer of policy limits; effect on UIM)
- Adkins v. Vigilant Ins. Co., 927 N.E.2d 385 (Ind.Ct.App.2010) (interpretation of insurance contracts; integration of provisions)