FILED Mar 01 2019, 8:22 am
CLERK Indiana Supreme Court Court of Appeals and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEES Dale W. Eikenberry Cary J. Solida Elizabeth S. Schmitt State Farm Litigation Counsel Wooden McLaughlin LLP Indianapolis, Indiana Indianapolis, Indiana
IN THE COURT OF APPEALS OF INDIANA
Indiana Farmers Mutual March 1, 2019 Insurance Company, Court of Appeals Case No. Appellant-Plaintiff, 18A-CT-2043 Appeal from the Tippecanoe v. Superior Court The Honorable Randy J. Williams, John Weaver, Sunday Vanzile, Judge Bryan Vanzile, and State Farm Trial Court Cause No. Mutual Automobile Insurance 79D01-1708-CT-127 Company, Appellees-Defendants.
Bradford, Judge.
Court of Appeals of Indiana | Opinion 18A-CT-2043 | March 1, 2019 Page 1 of 8 Case Summary [1] In August of 2015, John Weaver was driving a vehicle which he owned and
which was insured by Indiana Farmers Mutual Insurance Company (“Indiana
Farmers”) when he lost control and drove it into the home of Bryan and
Sunday Vanzile (“the Vanziles”). Indiana Farmers sought a declaratory
judgment that it had no duty to provide coverage to Weaver, who was driving
with a suspended driver’s license, pursuant to the terms of the insurance
contract (“ the Policy”), specifically under the exclusions provision
(“Entitlement Exclusion”). In 2018, State Farm Mutual Automobile Insurance
Company (“State Farm”), joined by the Vanziles (collectively “Appellees”),
moved for summary judgment, and Indiana Farmers moved for summary
judgment as well. The trial court entered summary judgment in favor of the
Appellees and denied Indiana Farmers’s motion. Indiana Farmers contends
that the trial court erred in denying its cross-motion for summary judgment
because the Entitlement Exclusion excluded Weaver from coverage while
driving with a suspended driver’s license. Because we disagree, we affirm.
Facts and Procedural History [2] On August 29, 2015, Weaver lost control of his vehicle and drove into the
residence of the Vanziles, causing bodily injury and property damage. Weaver’s
driver’s license was suspended at the time. Weaver’s vehicle had been insured
since March 11, 2015, by Indiana Farmers under the Policy, which provided, in
relevant part:
Court of Appeals of Indiana | Opinion 18A-CT-2043 | March 1, 2019 Page 2 of 8 Part A – Liability Coverage
Insuring Agreement A. We will pay damages for “bodily injury” or “property damage” for which any “insured” becomes legally responsible because of an auto accident[…]We will settle or defend, as we consider appropriate, any claim or suit asking for these damages[…]We have no duty to defend any suit or settle any claim for “bodily injury” or “property damage” not covered under this policy. B. “Insured” as used in this Part means: 1. You or any “family member” for the ownership, maintenance or use of any auto or “trailer”. 2. Any person using “your covered auto”.
[….]
Exclusions A. We do not provide Liability Coverage for any “insured”: [….] 8. Using a vehicle without a reasonable belief that that “insured” is entitled to do so. This Exclusion […] does not apply to a “family member” using “your covered auto” which is owned by you.
Appellant’s App. Vol. II p. 103–04.
[3] On June 21, 2017, the Vanziles sued Weaver for the recovery of damages. On
August 3, 2017, Indiana Farmers filed for declaratory judgment seeking a
determination that the Policy did not provide Weaver with coverage on the day
of the accident because he was excluded under the Entitlement Exclusion due
to his suspended driver’s license. State Farm moved to intervene, a motion
which was granted by the trial court, and both State Farm and the Vanziles filed
Court of Appeals of Indiana | Opinion 18A-CT-2043 | March 1, 2019 Page 3 of 8 answers denying Indiana Farmers’ allegation of no coverage. On January 22,
2018, State Farm moved for summary judgment, a motion which was joined by
the Vanziles. On February 20, 2018, Indiana Farmers cross-moved for
summary judgment. The trial court held a hearing on the summary judgment
motions and ordered summary judgment in favor of State Farm and the
Vanziles on July 26, 2018.1
Discussion and Decision
[4] Indiana Farmers contends that the trial court erred by granting summary
judgment in favor of the Appellees and denying its cross-motion for summary
judgment. Specifically, Indiana Farmers contends that without a valid driver’s
license, Weaver was using his vehicle without a reasonable belief that he was
entitled to do so, which resulted in him being excluded from coverage pursuant
to the Entitlement Exclusion of the Policy. We review an order granting
summary judgment de novo, applying the same standard as the trial court. Miller
v. Rosehill Hotels, LLC, 45 N.E.3d 15, 18 (Ind. Ct. App. 2015). Summary
judgment is appropriate where the designated evidence demonstrates that there
is no genuine issue of material fact and the moving party is entitled to judgment
as a matter of law. Ind. Trial Rule 56(C). The moving party bears the initial
burden of making a prima facie case that there is no genuine issue of material
1 Although Weaver did not appear or join the summary judgment motion, the trial court included Weaver in the order, granting summary judgment in favor of him as well.
Court of Appeals of Indiana | Opinion 18A-CT-2043 | March 1, 2019 Page 4 of 8 fact and that it is entitled to judgment as a matter of law. Manley v. Sherer, 992
N.E.2d 670, 673 (Ind. 2013) (internal quotations omitted). If the moving party
fails to make a prima facie case, summary judgment is improper; however, if it
succeeds, then the nonmoving party must present evidence establishing a
genuine issue of material fact. Miller, 45 N.E.3d at 18–19. Our review is limited
to the designated evidence that was before the trial court but is neither
constrained by the claims and arguments made to the trial court nor the
rationale of the trial court’s ruling. Manley, 992 N.E.2d at 673. The
interpretation of an insurance policy presents a question of law which is
appropriate for summary judgment. Am. Family Ins. Co. v. Globe Am. Cas. Co.,
774 N.E.2d 932, 935 (Ind. Ct. App. 2002), trans. denied.
[5] While there is case law that has addressed entitlement exclusions in relation to
a driver given permissive use of a vehicle from the policy holder, we have not
yet had the opportunity to address entitlement exclusions in relation to the
policy holder’s own use of a vehicle. We direct our focus to the basic principles
of contract law to address this issue.
An insurance policy is a contract, and in reviewing the policy, we construe it as we would any other contract—to give effect to the parties’ intentions at the time the contract was made. The freedom to contract is a bedrock principle of Indiana law, and the freedom of the parties to exclude risks from an insurance contract is well established[.] Generally, insurers are free to limit liability in any manner not inconsistent with public policy, and an unambiguous exclusionary clause is ordinarily entitled to enforcement.
Court of Appeals of Indiana | Opinion 18A-CT-2043 | March 1, 2019 Page 5 of 8 Founders Ins. Co. v.
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FILED Mar 01 2019, 8:22 am
CLERK Indiana Supreme Court Court of Appeals and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEES Dale W. Eikenberry Cary J. Solida Elizabeth S. Schmitt State Farm Litigation Counsel Wooden McLaughlin LLP Indianapolis, Indiana Indianapolis, Indiana
IN THE COURT OF APPEALS OF INDIANA
Indiana Farmers Mutual March 1, 2019 Insurance Company, Court of Appeals Case No. Appellant-Plaintiff, 18A-CT-2043 Appeal from the Tippecanoe v. Superior Court The Honorable Randy J. Williams, John Weaver, Sunday Vanzile, Judge Bryan Vanzile, and State Farm Trial Court Cause No. Mutual Automobile Insurance 79D01-1708-CT-127 Company, Appellees-Defendants.
Bradford, Judge.
Court of Appeals of Indiana | Opinion 18A-CT-2043 | March 1, 2019 Page 1 of 8 Case Summary [1] In August of 2015, John Weaver was driving a vehicle which he owned and
which was insured by Indiana Farmers Mutual Insurance Company (“Indiana
Farmers”) when he lost control and drove it into the home of Bryan and
Sunday Vanzile (“the Vanziles”). Indiana Farmers sought a declaratory
judgment that it had no duty to provide coverage to Weaver, who was driving
with a suspended driver’s license, pursuant to the terms of the insurance
contract (“ the Policy”), specifically under the exclusions provision
(“Entitlement Exclusion”). In 2018, State Farm Mutual Automobile Insurance
Company (“State Farm”), joined by the Vanziles (collectively “Appellees”),
moved for summary judgment, and Indiana Farmers moved for summary
judgment as well. The trial court entered summary judgment in favor of the
Appellees and denied Indiana Farmers’s motion. Indiana Farmers contends
that the trial court erred in denying its cross-motion for summary judgment
because the Entitlement Exclusion excluded Weaver from coverage while
driving with a suspended driver’s license. Because we disagree, we affirm.
Facts and Procedural History [2] On August 29, 2015, Weaver lost control of his vehicle and drove into the
residence of the Vanziles, causing bodily injury and property damage. Weaver’s
driver’s license was suspended at the time. Weaver’s vehicle had been insured
since March 11, 2015, by Indiana Farmers under the Policy, which provided, in
relevant part:
Court of Appeals of Indiana | Opinion 18A-CT-2043 | March 1, 2019 Page 2 of 8 Part A – Liability Coverage
Insuring Agreement A. We will pay damages for “bodily injury” or “property damage” for which any “insured” becomes legally responsible because of an auto accident[…]We will settle or defend, as we consider appropriate, any claim or suit asking for these damages[…]We have no duty to defend any suit or settle any claim for “bodily injury” or “property damage” not covered under this policy. B. “Insured” as used in this Part means: 1. You or any “family member” for the ownership, maintenance or use of any auto or “trailer”. 2. Any person using “your covered auto”.
[….]
Exclusions A. We do not provide Liability Coverage for any “insured”: [….] 8. Using a vehicle without a reasonable belief that that “insured” is entitled to do so. This Exclusion […] does not apply to a “family member” using “your covered auto” which is owned by you.
Appellant’s App. Vol. II p. 103–04.
[3] On June 21, 2017, the Vanziles sued Weaver for the recovery of damages. On
August 3, 2017, Indiana Farmers filed for declaratory judgment seeking a
determination that the Policy did not provide Weaver with coverage on the day
of the accident because he was excluded under the Entitlement Exclusion due
to his suspended driver’s license. State Farm moved to intervene, a motion
which was granted by the trial court, and both State Farm and the Vanziles filed
Court of Appeals of Indiana | Opinion 18A-CT-2043 | March 1, 2019 Page 3 of 8 answers denying Indiana Farmers’ allegation of no coverage. On January 22,
2018, State Farm moved for summary judgment, a motion which was joined by
the Vanziles. On February 20, 2018, Indiana Farmers cross-moved for
summary judgment. The trial court held a hearing on the summary judgment
motions and ordered summary judgment in favor of State Farm and the
Vanziles on July 26, 2018.1
Discussion and Decision
[4] Indiana Farmers contends that the trial court erred by granting summary
judgment in favor of the Appellees and denying its cross-motion for summary
judgment. Specifically, Indiana Farmers contends that without a valid driver’s
license, Weaver was using his vehicle without a reasonable belief that he was
entitled to do so, which resulted in him being excluded from coverage pursuant
to the Entitlement Exclusion of the Policy. We review an order granting
summary judgment de novo, applying the same standard as the trial court. Miller
v. Rosehill Hotels, LLC, 45 N.E.3d 15, 18 (Ind. Ct. App. 2015). Summary
judgment is appropriate where the designated evidence demonstrates that there
is no genuine issue of material fact and the moving party is entitled to judgment
as a matter of law. Ind. Trial Rule 56(C). The moving party bears the initial
burden of making a prima facie case that there is no genuine issue of material
1 Although Weaver did not appear or join the summary judgment motion, the trial court included Weaver in the order, granting summary judgment in favor of him as well.
Court of Appeals of Indiana | Opinion 18A-CT-2043 | March 1, 2019 Page 4 of 8 fact and that it is entitled to judgment as a matter of law. Manley v. Sherer, 992
N.E.2d 670, 673 (Ind. 2013) (internal quotations omitted). If the moving party
fails to make a prima facie case, summary judgment is improper; however, if it
succeeds, then the nonmoving party must present evidence establishing a
genuine issue of material fact. Miller, 45 N.E.3d at 18–19. Our review is limited
to the designated evidence that was before the trial court but is neither
constrained by the claims and arguments made to the trial court nor the
rationale of the trial court’s ruling. Manley, 992 N.E.2d at 673. The
interpretation of an insurance policy presents a question of law which is
appropriate for summary judgment. Am. Family Ins. Co. v. Globe Am. Cas. Co.,
774 N.E.2d 932, 935 (Ind. Ct. App. 2002), trans. denied.
[5] While there is case law that has addressed entitlement exclusions in relation to
a driver given permissive use of a vehicle from the policy holder, we have not
yet had the opportunity to address entitlement exclusions in relation to the
policy holder’s own use of a vehicle. We direct our focus to the basic principles
of contract law to address this issue.
An insurance policy is a contract, and in reviewing the policy, we construe it as we would any other contract—to give effect to the parties’ intentions at the time the contract was made. The freedom to contract is a bedrock principle of Indiana law, and the freedom of the parties to exclude risks from an insurance contract is well established[.] Generally, insurers are free to limit liability in any manner not inconsistent with public policy, and an unambiguous exclusionary clause is ordinarily entitled to enforcement.
Court of Appeals of Indiana | Opinion 18A-CT-2043 | March 1, 2019 Page 5 of 8 Founders Ins. Co. v. May, 44 N.E.3d 56, 61–62 (Ind. Ct. App. 2015) (internal
quotations and citations omitted, brackets added), trans. denied. When the
language of an insurance policy is clear and unambiguous, we give the words
their plain and ordinary meaning. Buckeye State Mut. Ins. Co. v. Carfield, 914
N.E.2d 315, 318 (Ind. Ct. App. 2009), trans. denied. Where an ambiguity exists,
however, we construe a policy provision strictly against the insurer. Bradshaw v.
Chandler, 916 N.E.2d 163, 166 (Ind. 2009). A provision is ambiguous if it is
susceptible to more than one interpretation and reasonable persons would differ
as to its meaning. Buckeye State, 914 N.E.2d at 218. “Strict construction against
the insurer derives from the disparity in bargaining power characteristics of
parties to insurance contracts.” Bradshaw, 916 N.E.2d at 166. We interpret
policy terms from the perspective of the ordinary policyholder of average
intelligence. Burkett v. Am. Family Ins. Group, 737 N.E.2d 447, 452 (Ind. Ct.
App. 2000).
[6] Turning to the Policy, we conclude that the term “using” is ambiguous because
its meaning is susceptible to differing interpretations by reasonable persons.
Indiana Farmers contends that “using” should be interpreted as synonymous
with “operating”; however, we conclude that the terms are not synonymous.
While “operating” is one way of “using” a vehicle, it is not the only way. A
person could use a vehicle for storage, to salvage spare parts from, or to display
at a classic car show, none of which would require the person to operate the
vehicle. Indiana Farmers could have drafted the Policy in a way that clearly
defined “using” or included “operating”, just as insurance companies and the
Court of Appeals of Indiana | Opinion 18A-CT-2043 | March 1, 2019 Page 6 of 8 General Assembly have done. See Founders Ins. Co. v. Munoz, 930 N.E.2d 999,
1002 (Ill. 2010) (finding that the insurance policy excluded any person
“operating an automobile without a reasonable belief that he or she is entitled to
do so”) (emphasis added); see also Ind. Code § 27-1-13-7(b)(3) (statutorily
mandating that insurance companies “insur[e] the owner against liability for
damages…resulting from negligence in the operation of the motor vehicle…by
any person legally using or operating the motor vehicle with permission,
expressed or implied of the owner) (emphasis added). Moreover, reasonable
minds may differ as to whether “using” one’s own vehicle under this exclusion
is dictated upon one’s driver’s license status. Indiana Farmers could have
drafted a provision that specifically excluded drivers from coverage who used
the vehicle without a valid driver’s license. See Founders Ins. Co., 44 N.E.3d at 58
(noting that a policy provision specifically excluded a driver from coverage if he
is “not a licensed driver, or is without a valid driver’s license, [or his] driver’s
license is revoked or suspended”). Indiana Farmers’s failure to add further
clarification leaves the term “using” ambiguous, and we must construe such
ambiguities against the insurer. Therefore, Weaver had a reasonable belief that
he was entitled to use his vehicle pursuant to the language of the Policy.
[7] The judgment of the trial court is affirmed.
Bailey, J., concurs.
Brown, J., concurs with opinion.
Court of Appeals of Indiana | Opinion 18A-CT-2043 | March 1, 2019 Page 7 of 8 Indiana Farmers Mutual Court of Appeals Case No. Insurance Company, 18A-CT-2043 Appellant-Plaintiff,
v.
John Weaver, Sunday Vanzile, Bryan Vanzile, and State Farm Mutual Automobile Insurance Company, Appellees-Defendants.
Brown, Judge, concurring.
[8] I concur with the majority opinion that the term “using” is not synonymous
with “operating” and would note that had Indiana Farmers wanted to dispel
any uncertainty regarding the impact of an individual’s driver’s license status on
coverage, it could have referred in certain provisions to “legally” using a
vehicle; that is, Indiana Farmers could have drafted the Policy in a way that
clearly defined and used “legally using.” Further, in light of the fact that the
Policy leaves “entitled” undefined and uses elsewhere the phrase “legally
entitled,” see, e.g., Appellant’s Appendix Volume II at 106 (“We will pay
compensatory damages which an ‘insured’ is legally entitled to recover . . . .”), I
find that reasonable persons could interpret subsection A(8) to refer to
permission. For these reasons I concur with the majority opinion.
Court of Appeals of Indiana | Opinion 18A-CT-2043 | March 1, 2019 Page 8 of 8