Dоnald Snodgrass appeals from a negative order in a proceeding supplemental, wherein he sought to obtain proceeds under a homeowners liability insurance policy issued by Penn Mutual Insurance Company to the decedent, the judgment defendant’s predecessor. We affirm.
Plaintiff, by amended complaint, filed a personal injury action аgainst judgment defendant, Danny Baize as executor of the estate of Oscar Baize, alleging alternatively that the decedent shot plaintiff intentionally or negligently. 1 Judgment defendant did not deny the shooting, but, rather, alleged “affirmative defenses” of insanity, self-defense and “legally sufficient provocation”. The jury returned a verdict in plaintiff’s favor on the negligence count. Counsel for Penn Mutual Fire Insurance Company, the decedent’s insurer, appeared on behalf of Baize, but, upon perceiving a potential conflict of interest, though not conceding policy coverage, withdrew prior to trial. Baize’s personal attorney defended the original action and the insurance company pаid his fee.
Snodgrass then filed a motion for proceedings supplemental against Baize and
Plaintiff assigns numerous errors, but the format of his brief renders impоssible a clear understanding of his arguments. With great difficulty, we restate the issues we perceive to be before us:
(1) Are the parties to the proceeding supplemental bound by the jury verdict in the underlying lawsuit under the doctrines of res judicata, collateral estoppel, stare deci-sis, or equitable estoppel?
(2) Was the order in this proceeding contrary to law?
I.
As stated in
State v. Speidel
(2d Dist. 1979) Ind.App.,
Because collateral estoppel is facially applicable, we must consider the purpose of the doctrine. As stated in
Farm Bureau Mutual Automobile Insurance Co. v. Hammer
(4th Cir. 1949)
“The underlying purpose of the doctrine is to obviate the delay and expense of two trials upon the same issue — onе by the injured party against the indemnitee and the other by the indemnitee, or the injured party against the indemnitor. This is possible because it is assumed that the interests of the parties to the contract of indemnity in opposing the injured person’s claim are identical; and it is accomplished by giving the indemnitor an opportunity to appear in the first suit on behalf of thе indemnitee so that everything that can be offered in exculpation of the indemnitee by either party to the indemnity contract may be presented.”
See also Hoosier Casualty Co. v. Miers, supra,
In the instant case, the interests of the insured and the insurer were in partial conflict. The insured would benefit, to the extent of policy limits, from a finding of negligence which arguably was within the coverage of the policy. The insurer would favor a finding of an intentional tort which the policy did not cover.
See Farm Bureau Mutual Automobile Insurance Co. v. Hammer, supra.
In such a situation the insurer should not defend, but, rather, as here, should reimburse the insured’s personal counsel.
All-Star Insurance Corp. v. Steel Bar, Inc.
(N.D.Ind.1971)
“Where an action against the insured is ostensibly within the terms of the policy, the insurer, whether it assumes the defense or refuses to assume it, is bound by the result of that action as to all matters therein decided which are material to recovery by the insured in an action on the policy.” Id. at 448,197 N.E. at 77 .
Hammer
is the leading case in opposition to
Miller, supra. Centennial Insurance Co. v. Miller
(E.D.Cal.1967)
Furthermore, one Indiana case conflicts with the Massachusetts
Miller
decision insofar as the liability of an insurer who assumes the insured’s defense is concerned. In
State Farm Mutual Automobile Insurance Co. v. Phillips
(1936)
The complaint in the instant case was filed January 9, 1975. In a letter dated February 21, 1975, counsel for Penn Mutual addressed the insured’s personal attorney:
“As you are undoubtedly aware, the first paragraph of the complaint deals with alleged malicious assault and would clearly not be within any of the provisions of the policy coverage for either defense or payment. The second paragraph alleges negligence and would therefore be within the terms of the coverage as set forth in the allegations. However, as we understand the facts, the acts here were intentional, and it is my understanding that there is an exclusion in the poliсy for intentional acts.
Therefore we may have a situation in which the company is obligated to defend for the moment at least, but would not ultimately be obligated to pay any judgment that might be rendered if the facts disclose that the incident came within an exclusion of the coverage. Penn Mutual Fire has no intention of waiving any of the exclusions in its policy or any of the limitations that are contained in the policy, and therefore in our participation in the defense of this case we are doing so with that understanding. .
I am writing this letter to you rather than to the insured directly as we normally do because I understand that you are representing him in respect to all the matters pertaining to this lawsuit and have already entered your appearance for him in the case. In view of the fact that it is likely that there will not be any ultimate obligation on the carrier to pay any judgment, I feel that it is desirable for you to have a most substantial participation in all of the judgment decisions that are made in respect to the defense of this case. Subject to the abovе limitations, I am entering my appearance
This letter was followed by an additional letter dated December 9, 1975, which stated:
“In thinking over this particular lawsuit, it appears to us that there may be some conflicts between what the insurance carrier would want to have accomplished and what you might want to accomplish for the estate. From that stаndpoint, we are willing to recommend to the carrier that we be authorized to withdraw from the case entirely, and that you handle it on your own and that you be paid by the company a reasonable charge for the time that you spend on the case from this time forward. We would likewise want an agreement that if there should be a judgment against the estate on [the negligent injury count] that the estate would not consider this to be res judicata in any way, nor would it be treated as collateral estoppel or as anysort of a decision precluding complete review, and that the carrier would be permitted to defend any claim under proceedings supplemental or execution procеdures and would be entitled in that defense to litigate that question as to whether or not the plaintiff in the case was injured as the result of a negligent conduct or as the result of intentional conduct.”
The insured’s attorney assented to these terms.
Snodgrass cites
Cozzens v. Bazzini Building Co.
(E.D.Mich.1978)
The initial letter in the instant case, although somewhat tentative, was sufficient to inform the insured’s attorney of the insurer’s essential position. The second letter simply crystallized the matter. While a shorter interval between the two letters would have been preferable, the law firm’s аnd insurer’s actions were, in all other respects, a model to be followed in such situations.
See Maryland Casualty Co.
v.
Peppers
(1976)
Snodgrass also contends that Penn Mutual should be bound by equitable estoppel because it gave no notice of disclaimer or reservation of rights to him. Indiana requires оnly that such notice be given to the insured.
See State Farm Mutual Automobile Insurance Co. v. Phillips, supra,
Having determined that claim preclusion and collateral estoppel are inapplicable, we turn to the question whether the civil verdict should bind Penn Mutual on the theory of stare decisis. In support of his position Snodgrass cites
Vernon Fire & Casualty Insurance Co. v. Matney
(1st Dist. 1976) Ind.App.,
Snodgrass argues that Penn Mutual is estopped from asserting any policy defenses because the law firm that represented the insurance company in the garnishment action also entered an appearance and participated in the pre-trial defense of Baize. As authority for that proposition, Snodgrass relies on
Parsons v. Continental National American Group
(1976)
Prior to withdrawing as counsel, the law firm in the case at bar received a
Estoppel rests upon a detrimental change of position induced by the acts or conduct of the party estopped.
Hargis v. United Farm Bureau Mutual Insurance Co.
(1st Dist. 1979) Ind.App.,
We need not discuss another possible aspect of the statement made by the decedent to his insurer’s investigator, i. e., whether such statement is a privileged communication and therefore inadmissible. Such privilege would be personal to the decedent or his representative and may not be claimed by Snodgrass, the original claimant against decedent.
In re Estate of Beck v. Campbell
(1968)
We do not go so far as those Federal Courts which hold as did the U.S. District Court for the District of Columbia:
“[A] communication received by a liability insurance company from one of its insured concerning a matter covered by the insurance policy is not a privileged communication”. Gottlieb v. Bresler (1959)24 F.R.D. 371 , 372. See also Jackson v. Kroblin Refrigerated Xpress, Inc. (N.D.W.Va.) (1970)49 F.R.D. 134 .
There may be circumstаnces under which such communication should have the privilege protection. The policy considerations for recognition of the privilege are discussed eloquently and in depth in
State ex rel. Cain v. Barker
(Mo.1976)
There is a possible implication in Parsons, supra, that obtaining a statement from the insured tending to negative policy coverage estops the insurer from asserting that policy defense. Such implication is now rejected. To render such statement inadmissible upon grounds that it was obtained in breach of a fiduciary duty or that subsequent events render its use against the insured inequitable or unfair is quite a different thing than to say that the policy defense is lost. To so hold would be somewhat analogous to holding that because the State obtained an inculpatory statement, not only must the stаtement be excluded but all other evidence of guilt must also be excluded — and that the State must discharge the defendant from custody, without the possibility of refiling the charge.
In any event, to preclude a valid policy defense by doctrine of estoppel because insured made a statement to the insurer is unnecessary and unwarranted. It would compel the insurer to avoid interviewing the insured in the initial investigation stage, except as a last resort, in the fear that if the exclusion is found to exist through the insured’s own statement, the insurer forever loses the right to assert that defense.
If “estoppel” or “waiver”
(see Hargis v. United Farm Bureau Mutual Insurance Co., supra)
is applicable at all to such situations, it must be to statements obtained after discovery of the conflict of interest
and
without having advised the insured of such conflict. If the statement is obtained during the necessary initial investigation process and only thereafter is the conflict discovered, and the insured notified, then such statement may be used. Under such circumstances, the insurer acts wholly in good faith and should not be deprived of the opportunity to assеrt the truth — particularly when that truth may be obtainable
At one point in his brief, Snodgrass urges that Penn Mutual should have sought a declaratory judgment to determine its obligations. Although the dilemma and controversy posed might have been alleviated by suсh a suit, it has been held that a declaratory judgment is not appropriate if the question involved would be, as here, fully resolved in the tort action.
Brohawn v. Transamerica Insurance Co.
(1975)
For the reasons given above, Penn Mutual was entitled to litigate policy coverage at the proceeding supplemental hearing.
II.
Snodgrass asserts that none of the evidence upon which the trial court based its findings of fact was admissible. If any of the evidence was admissible and would support the findings, the judgment of the trial court must be affirmed.
In response to a request for admissions, the estate admitted that Oscar Baize had been convicted of aggravated assault and battery in connection with the occurrence. Snodgrass did not object at trial when the admission was offered into evidence. Although we note that a quite different question would have been presented had Snod-grass objected on the basis that a criminal conviction is inadmissible in a civil proceeding, no error has been preserved upon appeal, and the admission was proper to be considered by the trial court.
Charlie Stuart Oldsmobile Inc. v. Smith
(2nd Dist. 1977) Ind.App.,
Aggravated аssault and battery carries with it an element of “intentional” or “knowing” conduct as opposed to mere negligence. I.C. 35-13-3-1 (Burns Code Ed. 1975). 2 In this connection it must be observed that, at the proceeding supplemental hearing, Snodgrass had the burden of proving that the conduct was not intentional. Thus, the evidence, while not conclusive as a matter of law, is sufficient to suрport the ultimate conclusion of the trial court. Therefore, we will not consider the other evidence which Snodgrass contends was erroneously admitted. The decision of the trial court is affirmed.