Indiana Appellate Case Reporter | | |
James P. Barth, Esq.
Pfeifer Morgan & Stesiak
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Lindsay N. Popejoy
The Cline Law Firm, LLC
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October 7, 2022
Cases included in this issue are from June & July, 2022
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INDIANA SUPREME COURT
The Supreme Court says Governor is a person with standing to challenge General Assembly calling emergency sessions and that General Assembly can meet whenever they want so long as it is scheduled through the passage of law.
During the 2021 legislative session, in the midst of the COVID-19 pandemic, the Indiana House of Representatives introduced the bill that would become House Enrolled Act 1123 (“HEA-1123”). HEA-1123 authorizes the General Assembly to commence an “emergency session” if a small subset of legislators—eight members from each of the two chambers, known as the Legislative Council—adopts a resolution that finds the following:
(1) The governor has declared a state of emergency that the legislative council determines has a statewide impact.
(2) It is necessary for the general assembly to address the state of emergency with legislative action.
(3) It is necessary for the general assembly to convene an emergency session, in accordance with its authority to determine the length and frequency of legislative sessions under Article 4, Section 9 of the Constitution of the State of Indiana.
Pub. L. No. 64, § 4, 2021 Ind. Acts. 731, 733 (codified at Ind. Code § 2-2.1-1.2-7). The Legislature passed HEA-1123 on April 5.
Four days later, Governor Eric J. Holcomb vetoed the bill, writing that he “firmly believe[s] a central part of this bill is unconstitutional.” He went on to explain that, in his view, the law impermissibly gives the General Assembly “the ability to call itself into a special session, thereby usurping a power given exclusively to the governor under Article 4, Section 9 of the Indiana Constitution.” Soon after, the General Assembly overrode the Governor's veto. Due to an emergency being declared for HEA-1123, the law went into effect immediately.
Three days later, the Indiana Attorney General, appearing on behalf of both the Governor and the Legislative Parties, filed a motion to strike “the appearances and all filings by unauthorized attorneys purporting to represent the Governor of Indiana in this case.” The Attorney General claimed that his office is solely responsible for the state's legal representation and that he had not authorized anyone outside of his office to represent the Governor. In response, the Governor asserted he did not need the Attorney General's consent to hire outside counsel “when seeking to defend his ... constitutional rights and responsibilities.” After a hearing, the trial court denied the motion to strike, finding no legal authority preventing the Governor from hiring his own counsel under these circumstances.
The Governor argued the undisputed facts establish that HEA-1123 is unconstitutional and void as a matter of law since it “purports to grant the General Assembly, through its Legislative Council, a constitutional power exclusively granted to the governor.” The Legislative Parties agreed that the facts were undisputed but claimed that they were entitled to summary judgment because HEA-1123 is a lawful exercise of the General Assembly's constitutional authority to set its own meeting times. After a hearing, the trial court rejected the procedural arguments but found that HEA-1123 is constitutional. The Governor appealed and requested direct transfer to this Court under Appellate Rule 56(A). The Indiana Court of Appeals accepted the Governor's request.
Although legislative sessions are inherently a legislative-branch function, the second sentence of Article 4, Section 9— the special-session clause—gives the Governor the authority to “call a special session.” However, the last sentence, the length-and-frequency clause which was added by amendment in 1970, gives the General Assembly authority over the length and frequency of its sessions, so long as it exercises that authority “by law.”
Here, HEA-1123 permits the sixteen-member Legislative Council to set an emergency session after adopting a resolution at a time when the General Assembly is not in session. The Governor, finding no distinction between an emergency session and a special session and believing the authority to call a special session is vested solely in the executive branch, seeks a declaratory judgment that HEA-1123 is unconstitutional on several grounds. The Legislative Parties dispute those claims and also present several procedural reasons why the Governor should not be permitted to bring them in the first place.
The Court of Appeals holds that HEA-1123 violates Article 4, Section 9’s fixed-by-law requirement by authorizing an emergency session to be set through a simple resolution, rather than a properly enacted bill as our Constitution requires. The Court of Appeals also holds that HEA-1123 violates Article 3, Section 1’s distribution-of-powers mandate by allowing the setting of an emergency session to occur at a time when the General Assembly is not in session—authority conferred only upon the Governor. For these reasons, HEA-1123 is constitutionally infirm absent an amendment under Article 16. the General Assembly is not prohibited from setting additional sessions so long as it complies with Article 4, Section 9’s fixed-by-law requirements.
I. Under our Constitution, the General Assembly must set the length and frequency of sessions in a properly enacted law, and a law can be properly enacted only during session.
Changes from the 1816 Constitution to the 1851 Constitution resulted in moving the gubernatorial authority to call a special session from the executive-branch article to the legislative-branch article, rejecting proposals to increase the Governor's control over such sessions, and imposing significant restrictions on the length and frequency of sessions. Then, when the restrictions proved untenable, they were removed by constitutional amendment. Notably, the amendment's addition to Article 4, Section 9, specifying that the “length and frequency of the sessions of the General Assembly shall be fixed by law,” is unique—no other state constitution includes such broad language. That new clause, coupled with the removal of length-and-frequency restrictions, shows that the ratifiers broadened the General Assembly's authority to control the length and frequency of sessions, so long as it exercises that authority “by law.” This historical context provides the lens through which The Court of Appeals now address the Governor's arguments that HEA-1123 is unconstitutional.
Any session set by the General Assembly must be fixed through a properly enacted bill, not a simple resolution. Thus, when the General Assembly is not in session, it cannot set an additional session. Because HEA-1123 authorizes the Legislative Council to set an emergency session by resolution, the law violates Article 4, Section 9’s fixed-by-law requirement. Further, we agree with the Governor that HEA-1123, by allowing the Legislative Council to set an emergency session while the General Assembly is not in session, violates Article 3, Section 1’s distribution-of-powers mandate and impermissibly circumvents Article 16's requirements for amending the Constitution. However, we disagree with the Governor that the General Assembly lacks the constitutional authority to ever set additional sessions. As we explain below, the problem with HEA-1123 is not necessarily the what (setting an additional session) but the how (by simple resolution) and the when (outside of a session).
When the General Assembly is not in session, it cannot fix by law the frequency of an additional session— which is precisely what HEA-1123 permits. So, as to his claim that HEA-1123 violates Article 4, Section 9’s fixed-by-law requirement, the Governor has clearly overcome the law's presumption of constitutionality. He has also made that showing on other grounds.
Our distribution-of-powers provision mandates that no person, charged with official duties under one of the three branches of government, “shall exercise any of the functions of another, except as in this Constitution expressly provided.” Ind. Const. art. 3, § 1.
The Governor can neither control the agenda of a special session, Woessner v. Bullock, 176 Ind. 166, 93 N.E. 1057, 1058 (1911), nor set its duration, Ind. Const. art. 4, § 9. These are powers reserved to the General Assembly; powers that are “limited only by the express inhibitions of the Constitution,” State v. Morris, 199 Ind. 78, 155 N.E. 198, 202 (1927). And no constitutional provision expressly inhibits the Legislature from setting multiple sessions.
In short, the history and plain meaning of the length-and-frequency clause reveal that the gubernatorial special-session authority is an “expressly provided” Article 3 exception to a legislative-branch function. See Woessner, 93 N.E. at 1059 (observing that the Constitution “clothes” the Governor “with certain legislative power”). Thus, so long as the General Assembly sets the length and frequency of a session through a properly enacted bill (among other constitutional requirements), it has the constitutional authority to do so. Cf. Book v. State Off. Bldg. Comm'n, 238 Ind. 120, 149 N.E.2d 273, 296 (1958) (observing that Article 3, Section 1 “does not prohibit the Legislature from engaging in activities which are properly incidental and germane to its legislative powers”). HEA-1123, however, extends beyond that authority.
Though the Legislature can set additional sessions, to do so at a time when the General Assembly is not in session violates our Constitution's distribution-of-powers mandate. Article 4, Section 9’s length-and-frequency clause requires the General Assembly to exercise its authority over legislative sessions “by law” and, thus, only during a lawful session. This means that only the Governor has the constitutional authority to call a special session, i.e., one that is set at a time when the General Assembly is not in session. Therefore, by allowing the Legislative Council to set an emergency session at a time when the General Assembly is not convened, HEA-1123 infringes on a specific power given only to the Governor and is constitutionally infirm absent an amendment under Article 16. Thus, the Governor has clearly overcome the law's presumption of constitutionality on these grounds as well.
II. The Governor may pursue this action for declaratory and injunctive relief.
The Governor must make three showings: (1) he is a “person”; (2) his “rights, status, or other legal relations are affected by a statute”; and (3) he is questioning the construction or validity of that statute. Id.
Notably, though the Legislature did not define what it meant to be “affected by a statute” under the second requirement, we find it requires a plaintiff must have standing and that their claims must be ripe. See Zoercher v. Agler, 202 Ind. 214, 172 N.E. 186, 189 (1930). Standing asks whether a litigant is entitled to have a court decide the substantive issues of the claims presented, Solarize Ind., Inc. v. So. Ind. Gas & Elec. Co., 182 N.E.3d 212, 216 (Ind. 2022), while ripeness asks whether the claim is sufficiently developed to merit judicial review, Ind. Dep't of Env't Mgmt. v. Chem. Waste Mgmt., Inc., 643 N.E.2d 331, 336 (Ind. 1994). The Legislative Parties argue the Governor's claims do not—and cannot—satisfy these threshold requirements.
A “person” under the DJA is an entity with rights that can be directly and personally affected and which is acting on its own behalf. The Governor, state official or not, is a person vested with specific constitutional rights and powers including the authority to call a special session. Ind. Const. art. 4, § 9. Here, he is seeking on his own behalf a declaration on the constitutionality of a law that he alleges directly and personally infringes upon that authority. Cf. Clark Cnty. Drainage Bd. v. Isgrigg, 963 N.E.2d 9, 19–20 (Ind. Ct. App. 2012) (finding a county surveyor could seek declaratory relief after alleging the statutory rights and obligations assigned to him had been infringed based on the way a county board had managed recent projects). For these reasons, we hold that the Governor, in this instance, is a “person” under the DJA. However being a person who may seek declaratory relief is not enough; the Governor must also establish standing and that his claims are ripe for adjudication.
Standing requires litigants to demonstrate a sufficient injury before a court can decide the substantive issues of their claims. Solarize, 182 N.E.3d at 217. The Court of Appeals determines standing by looking at a lawsuit's allegations—not its outcome. Looking at the Governor's allegations—that HEA-1123 infringes on his constitutional authority to call a special session— The Court of Appeals finds he has satisfied the injury requirement. He alleges the injury is unique to him, arguing that it is his constitutional power, and his alone, being infringed. The allegations are also clear that HEA-1123 directly caused this injury. The Court of Appeals has previously recognized that an “infringement by the legislative branch of the government on the constitutional power of the executive would be repugnant to the doctrine of separation of powers.” State ex rel. Branigin v. Morgan Superior Ct., 249 Ind. 220, 231 N.E.2d 516, 519 (1967) (per curiam) (citing Tucker v. State, 218 Ind. 614, 35 N.E.2d 270 (1941)). It follows that an allegation of this type of injury—as the Governor has made here—satisfies our injury requirement. Cf. Romer v. Colo. Gen. Assembly, 810 P.2d 215, 220 (Colo. 1991) (“The governor has alleged a wrong that constitutes an injury in fact to the governor's legally protected interest in his constitutional power to veto provisions of an appropriations bill. Therefore, the governor has standing to bring this action.”). In short, the Governor has alleged a sufficient injury to establish standing.
In addition to requiring the person seeking declaratory relief to have standing, claims must also be ripe. See, e.g., Zoercher, 172 N.E. at 189. “[T]here must exist not merely a theoretical question or controversy but a real or actual controversy, or at least the ripening seeds of such a controversy.” Id. In other words, the issues in a case must be based on actual facts rather than abstract possibilities, and there must be an adequately developed record upon which we can decide those issues. Ind. Dep't of Env't Mgmt., 643 N.E.2d at 336. The Governor alleges the law is unconstitutional on its face, we need not consider specific facts about a particular situation in which an emergency session could be called. It is thus unnecessary to wait for the Legislative Council to call an emergency session or a law to be passed during that session. Neither occurrence would add anything to the record to help us address HEA-1123's constitutionality.
The Legislative Parties next argue that the Governor lacks the authority to bring this action without the consent of the Attorney General. Indiana law is clear that the Attorney General “shall prosecute and defend all suits instituted by or against the state of Indiana.” Ind. Code § 4-6-2-1(a). And it is also clear the Attorney General “shall have charge of and direct the prosecution of all civil actions that are brought in the name of the state of Indiana or any state agency.” Id. § -3-2(a). Further, “[n]o agency ... shall have any right to name, appoint, employ, or hire any attorney or special or general counsel to represent it or perform any legal service in [sic] behalf of the agency and the state without the written consent of the Attorney General.” Id. § -5-3(a). Though these statutes give the Attorney General exclusive power to both represent and direct litigation strategy for state agencies and the state, another statute—Indiana Code section 4-3-1-2— explicitly gives the Governor power to hire outside counsel irrespective of the Attorney General's consent.
Section 4-3-1-2 provides that “[t]he Governor may employ counsel to protect the interest of the state in any matter of litigation where the same is involved.” I.C. § 4-3-1-2. Acknowledging this statute, the Legislative Parties claim it was “impliedly repealed” by this Court in State ex rel. Sendak v. Marion Superior Ct., 268 Ind. 3, 373 N.E.2d 145 (1978). They are incorrect.
The Court of Appeals also emphasizes that the Court cannot and will not tell the Legislature that a statute has been impliedly repealed. Doing so would violate the most fundamental tenets of separation of powers. The legislative branch is responsible for enacting—and repealing—laws. See Ind. Const. art. 4, § 1. The judicial branch is responsible for interpreting those laws and applying their interpretations to the cases brought before it. See id. art. 7, § 1. As emphasized above, one branch cannot exercise the powers given to another except as permitted by our Constitution. Id. art. 3, § 1. Thus, if the Legislature no longer wants section 4-3-1-2 on the books, it needs to repeal the statute.
Accepting the Legislative Parties’ argument would render the governor-specific section 4-3-1-2 meaningless. It is well settled that we must presume the Legislature did not enact a useless provision. Robinson v. Wroblewski, 704 N.E.2d 467, 475 (Ind. 1998). The Court of Appeals therefore find that the Legislature did not intend to require the Governor to get written consent from the Attorney General before hiring outside counsel to protect the interests of the state in a suit, particularly in one he has initiated.
We also cannot ignore the separation-of-powers implications of what the Legislative Parties ask us to hold: requiring the Attorney General to consent to the Governor bringing this action would effectively give that office veto power over any suit by the Governor it doesn't agree with. The Attorney General's authority, statutorily granted by the General Assembly, simply cannot trump the Governor's implied power to litigate in executing his enumerated power under the take-care clause without violating our Constitution's careful distribution of powers. See Ind. Const. art. 3, § 1; id. art. 5, § 16; see also Dye v. State ex rel. Hale, 507 So. 2d 332, 338 (Miss. 1987) (en banc) (“We refuse to relegate to the Attorney General either the exclusive authority to bring a suit such as this or the discretion whether and how that authority should be exercised.”).
To summarize, while the Attorney General's office may direct litigation on behalf of state agencies and the state as a whole, it cannot prevent the Governor from bringing a suit and hiring outside counsel to do so. The Court of Appeals next addresses the Legislative Parties’ final two procedural arguments—that the legislative-immunity and political-question doctrines bar the Governor from bringing this suit.
The Legislative Parties finally assert that two defenses unique to the Legislature protect them from the Governor's suit: the legislative-immunity doctrine and the political-question doctrine. Though individual legislators are named in this suit, it does not seek to hold them personally liable for anything they said or did in session. The suit does not question the legislators’ motives or reasons for passing the statute. It does not reference what was said in passing the law. It does not mention who voted for it. Rather, it challenges only the constitutionality of an enacted law. Considering the Governor's constitutional requirement to “take care that the laws are faithfully executed,” Ind. Const. art. 5, § 16, such a challenge serves as an important check on the General Assembly's authority. The legislative-immunity doctrine is simply inapplicable here.
The political-question doctrine prevents courts from getting involved in the internal matters of the legislative branch. Berry v. Crawford, 990 N.E.2d 410, 417–18 (Ind. 2013). It raises a question of justiciability—whether The Court of Appeals should decline to hear a case due to “prudential concerns over the appropriateness of a case for adjudication.” Id. at 418. Specifically, “where a particular function has been expressly delegated to the legislature by our Constitution without any express constitutional limitation or qualification, disputes arising in the exercise of such functions are inappropriate for judicial resolution.” Id. at 421; see also State ex rel. Masariu v. Marion Superior Ct. No. 1, 621 N.E.2d 1097, 1098 (Ind. 1993).
Though the function at issue is an inherent legislative-branch function, it is not a solely legislative one. As discussed above, our Constitution also recognizes a role for the Governor in setting a special legislative session. Ind. Const. art. 4, § 9. Thus, setting legislative sessions is not a purely internal operation of the Legislature. Since the law involves questions that are not purely internal to the legislative branch, the political-question doctrine does not apply.
No duty to defend or indemnify where dramshop coverage was excluded in an Insurance Policy.
On July 5, 2015, William Spence (“Spence”) drank alcohol at Big Daddy's Show Club and drove away in his truck. Spence traveled northbound on Davis Street; when he reached the intersection, he failed to stop at the flashing lights and collided with the Eberts’ vehicle. At the time, he had a blood alcohol content of 0.195%. Police had removed Spence from Big Daddy's earlier in the night because “he got out of hand.”
The Eberts filed their lawsuit against Big Daddy's, Little Daddy's, and Parks (collectively, “Parks defendants”). In their second amended complaint, they claimed Big Daddy's violated Indiana's Dram Shop Act, Indiana Code section 7.1-5-10-15.5, by serving alcohol to Spence when it knew, or should have known, of his inebriation.
Illinois Casualty had issued separate and identical businessowners and liquor liability policies to each show club; each of these four policies were in effect on the night of the collision between Spence and the Eberts. Accordingly, Illinois Casualty initially agreed to defend the Parks Defendants.
However, on July 19, 2018, the insurance company filed a separate declaratory action seeking a judgment that it did not owe a duty to defend or indemnify the Parks defendants in the underlying lawsuit. As support, Illinois Casualty relied on language in its businessowners policies excluding coverage for claims of bodily injury for which an insured may be liable by reason of causing or contributing to the intoxication of any person or furnishing alcoholic beverages to a person under the influence of alcohol.
Illinois Casualty moved for summary judgment, which the trial court granted in its favor, finding the insurer did not owe the Parks defendants “any duty to defend or duty to indemnify with respect to the underlying lawsuit” under the liquor liability policy issued to Little Daddy's and the businessowners policies for both clubs. Parks Defendants’ App. Vol. III at 63. Nevertheless, the trial court concluded Illinois Casualty did owe a duty to defend or indemnify the Parks defendants under the Big Daddy's liquor liability policy.
The primary issue on appeal is whether the liquor liability exclusion set forth in Illinois Casualty's businessowners policies absolves the insurance company of a duty to defend or indemnify the Parks defendants against the claims in the underlying lawsuit.
First, The Court of Appeals determine whether the liquor liability exclusion is ambiguous. Second, in concluding that the exclusion is unambiguous, the Court analyzes whether it excludes coverage for the claims set forth in the Eberts’ second amended complaint.
The policy plainly and unambiguously excludes coverage for claims of bodily injury for which any insured may be liable by reason of causing or contributing to the intoxication of any person or furnishing alcohol to a person under the influence, even if the claims allege negligence or other wrongdoing in the supervision or monitoring of others by an insured or in failing to provide transportation to a person who might be under the influence of alcohol.
An insurer's duty to defend is broader than its duty to indemnify. Seymour Mfg. Co., v. Com. Union Ins. Co., 665 N.E.2d 891, 892 (Ind. 1996). Consequently, if an insurer does not have a duty to defend, then it does not have a duty to indemnify.
We find that the unambiguous language of the businessowners policy excludes coverage for the claims asserted in the Eberts’ second amended complaint. In doing so, the Court adopts and applies the efficient and predominant cause analysis set forth by our Court of Appeals.
In Count III, the Eberts claim Big Daddy's carelessly and negligently violated Indiana's Dram Shop Act by continuing to serve Spence alcohol when it knew, or should have known, he was inebriated, resulting in their injuries. However, this claim falls squarely within the language of the liquor liability exclusion. The Eberts claim Big Daddy's carelessly and negligently continued to serve Spence alcohol and failed to obtain alternative transportation for him when they knew, or should have known, of his inebriation and impairment. Yet, the policy expressly excludes from its coverage of bodily injuries for which any insured may be liable by reason of “contributing to the intoxication of any person” and “furnishing ... alcoholic beverages to a person ... under the influence of alcohol ... even if the claims allege negligence or wrongdoing in ... failing to provide transportation with respect to any person that may be under the influence of alcohol.” Id. Accordingly, such claims are expressly excluded by the businessowners policy issued to Big Daddy's.
The claims that the Parks defendants were negligent in allowing Spence to leave Big Daddy's in his vehicle and failing to call police “are so inextricably intertwined with the underlying negligence,” Ted's Tavern, Inc., 853 N.E.2d at 983, and could not have resulted in injury but for Spence's driving while intoxicated after Big Daddy's served him alcohol. See also Wiegand, 808 N.E.2d at 191. Plainly, the Eberts essentially claim the Parks defendants were negligent for failing to intervene. The Court of Appeals cannot ignore the circumstance necessitating intervention in the first place: the service of alcohol to an intoxicated Spence. Therefore, like the trial court, The Court of Appeals find that Spence's intoxication was the efficient and predominant cause of the Eberts’ injuries. See also Wright, 765 N.E.2d 690.
Further, in affirming the trial court, The Court of Appeals are not persuaded by the Eberts’ argument that summary judgment was improper on the issue of coverage under the Little Daddy’s businessowners policy.
The Court of Appeals finds that the efficient and predominant cause of the Eberts’ injuries was drunk driving precipitated by the negligent service of alcohol, and because the insurance policy excluded coverage for claims of bodily injury after causing or contributing to a person’s intoxication or furnishing alcohol to a person under the influence of alcohol, the policy excludes the Eberts’ claims from its coverage.
The Court of Appeals concludes that Illinois Casualty does not owe a duty to defend or indemnify the Parks defendants under the businessowners policies issued to either show club and the liquor liability policy issued to Little Daddy's. Accordingly, The Court of Appeals affirms the trial court's grant of summary judgment in Illinois Casualty's favor.
Supreme Court rejected the apex doctrine but set out a framework for examining whether there is good cause to limit or prevent a top-level official’s deposition.
Three lawsuits have been brought on behalf of former college football players Cullen Finnerty, Andrew Solonoski Jr., and Neal Anderson (the “Athletes”). Ultimately, all three men were diagnosed with chronic traumatic encephalopathy (CTE)—a neuro-degenerative disease linked to repetitive brain trauma. Finnerty, Anderson, and Solonoski passed away in 2013, 2018, and 2021, respectively. The Athletes’ legal representatives claim that despite being aware of the consequences of repetitive head trauma, the NCAA failed to implement reasonable concussion-management protocols to protect the Athletes. The trial court consolidated the three lawsuits for pretrial discovery purposes.
Near the beginning of the discovery phase, the Athletes issued deposition notices for three NCAA executives: Mark Emmert, President; Donald Remy, Chief Legal Officer and Chief Operating Officer; and Brian Hainline, Chief Medical Officer. The NCAA responded by filing a motion for a protective order to quash the depositions, relying in relevant part on the apex doctrine, which generally shields high-level executives from depositions unless the requesting party shows (1) the executive possesses unique or personal knowledge relevant to the issues being litigated and (2) the information cannot be obtained through a less intrusive discovery method.
The trial court issued an order granting in part and denying in part the NCAA's motion for a protective order. Specifically, the court imposed topical restrictions for the Emmert and Remy depositions but not for the Hainline deposition. About a month later, the NCAA filed a motion to certify the trial court's order for discretionary interlocutory appeal under Indiana Appellate Rule 14(B). Due to the fact that the court did not rule on that motion within thirty days, it was deemed denied. See Ind. Appellate Rule 14(B)(1)(e). A few weeks later, the trial court belatedly granted the NCAA's motion for certification. The NCAA, however, believing it was time barred, did not file a motion requesting the Court of Appeals to accept jurisdiction over the matter. The NCAA later filed a second motion for a protective order which, again, sought to quash the three depositions.
The trial court summarily denied the NCAA's second request for a protective order but certified that order for discretionary interlocutory appeal pursuant to Appellate Rule 14(B). On the NCAA's timely request, the Court of Appeals accepted jurisdiction over the matter. Nat'l Collegiate Athletic Ass'n v. Finnerty, 170 N.E.3d 1111, 1117 (Ind. Ct. App. 2021). The panel did not address the protective-order issue, however, because a majority held the NCAA had forfeited its right to appeal. Id. at 1120. Specifically, the majority concluded the NCAA's second motion for a protective order was “nothing more than a motion for the trial court to reconsider its earlier ruling seeking a renewed opportunity to” appeal the issue. Id. Thus, relying on Trial Rule 53.4(A), the majority held the trial court's order on that motion could not extend the time within which to seek a discretionary interlocutory appeal. Id. The NCAA petitioned for transfer, which we granted.
The Court of Appeals first addresses a threshold issue: whether the trial court's second order denying the NCAA's motion for a protective order can be certified for discretionary interlocutory review under Appellate Rule 14(B). The Athletes argue that the NCAA's second motion was nothing more than a reconsideration motion that cannot extend the time for seeking appellate review. The NCAA disagrees, contending that “no category of interlocutory orders is ineligible for Rule 14(B) certification.”
The Court of Appeals holds that Appellate Rule 14(B) broadly permits review of “other interlocutory orders,” including an order on a repetitive motion or a motion to reconsider. Such an appeal is proper so long as the trial court timely certifies the order, and the Court of Appeals accepts jurisdiction. Because the NCAA satisfied both conditions, this appeal is properly before the Court of Appeals. A trial court's order on a repetitive motion or a motion to reconsider is an “other interlocutory order” under Appellate Rule 14(B). A discretionary interlocutory appeal is proper so long as the party timely and successfully moves (1) the trial court to certify the order and (2) the Court of Appeals to accept jurisdiction over the appeal. On the grounds that the NCAA cleared both discretionary hurdles, we now turn to the merits: whether Indiana should adopt the apex-deposition rule.
The Court of Appeals next considered whether to adopt the apex doctrine. In recognition that executives who are at the “apex” of a corporation's hierarchy can be vulnerable to repetitive or harassing depositions, the apex doctrine—or apex-deposition rule—generally shields such officials from depositions unless the requesting party makes two showings. See, e.g., Crown Cent. Petroleum Corp. v. Garcia, 904 S.W.2d 125, 128 (Tex. 1995). First, it must show the official possesses superior or unique information relevant to the litigated issues; and second, it must show the information cannot be obtained by less intrusive discovery methods. See id. The NCAA urged the Court of Appeals to adopt the apex doctrine, while the Athletes maintained that our trial rules adequately address the doctrine's concerns. The apex doctrine generally prevents high-ranking public officials or corporate executives from being deposed unless the requesting party shows that the official or executive has unique, superior information that cannot be found through other discovery mechanisms. See, e.g., State ex rel. Ford Motor Co. v. Messina, 71 S.W.3d 602, 606 (Mo. 2002) (en banc). Though no Indiana appellate court has ever expressly mentioned the doctrine, our Court of Appeals has previously applied its principles in a case involving a high-ranking government official. See Hunt v. State, 546 N.E.2d 1249, 1252 (Ind. Ct. App. 1989).
At its core, the apex doctrine is intended “to balance the competing goals of limiting potential discovery abuse and ensuring litigants’ access to necessary information.” In re Amend. to Fla. Rule of Civ. Proc. 1.280, 324 So. 3d 459, 461 (Fla. 2021). A hallmark of this doctrine is its burden-shifting framework. When a high-ranking official files a motion for a protective order accompanied by an affidavit establishing a lack of relevant information, the burden is on the party requesting the deposition to show that the executive has “unique or superior personal knowledge of discoverable information.” Crown Cent., 904 S.W.2d at 128. If the requesting party fails to make this showing, the court grants the protective order and requires the party “to attempt to obtain the discovery through less intrusive methods.” Id. After making a good-faith effort to exhaust such methods, the requesting party can attempt to show (1) the executive's deposition is reasonably calculated to lead to the discovery of admissible evidence and (2) the less intrusive discovery methods were “unsatisfactory, insufficient or inadequate.” Id. If these showings are made, the court should then modify or vacate the protective order. Id. A recurring concern expressed by these state courts is the doctrine's presumption—in conflict with their respective discovery rules—that a high-ranking official should not be deposed unless the requesting party first establishes a necessity for the deposition. See, e.g., Buchanan,313 Ga. 811, 821, 874 S.E.2d 52. We share this concern; our trial rules allow for the deposition of anyone with discoverable information—high-level executive or otherwise—absent a showing of the requisite good cause. T.R. 26(B), (C), 30(A).
Though the Court of Appeals ultimately declined to adopt the apex doctrine, the Court established a legal framework that harmonizes its underlying principles with our existing discovery rules. When “good cause” is shown “to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense,” trial courts have discretion to limit or altogether quash a party's discovery request. T.R. 26(C). Importantly, however, the burden of establishing good cause lies with the party opposing discovery—not the party seeking it. See id. When a party seeks to limit or prohibit the deposition of a high-ranking official, our trial courts should use this framework to determine whether good cause exists for issuing a protective order. If the trial court finds good cause and the party seeking the deposition did not file a responsive motion, the court should issue a protective order either prohibiting the deposition or otherwise limiting it under Trial Rule 26(C). However, when the requesting party submits a responsive motion, the trial court must determine whether either of the executive's apex status or the good cause showing has been negated or rebutted.
A party seeking to depose a high-ranking official may file a responsive motion to negate or rebut either the official's apex status or the good cause showing. Whether the motion negates or rebuts the basis for a protective order will dictate how a trial court should proceed. A showing is “negated” when it is nullified or proven false through particularized factual support. See Negate, Black's Law Dictionary (11th ed. 2019). If the court determines the official's apex status is negated, then it must next consider whether the party requesting the protective order has established good cause without any consideration of circumstances relevant to high-ranking officials as identified above. If the good cause showing is negated—with or without a consideration of the circumstances—the court should let the deposition proceed.
In contrast, a showing is “rebutted” when it is disputed or opposed through particularized factual support. See Rebut, Black's Law Dictionary (11th ed. 2019). For example, if the apex official asserts a lack of knowledge related to the litigation's subject matter, the party seeking the deposition may counter this allegation with specific facts demonstrating that the official has relevant, personal knowledge. If an apex official alleges that the information sought is available through less intrusive discovery methods, the party seeking the deposition could show that alternative methods are unavailable, inadequate, or already exhausted. When confronted with a responsive motion that rebuts—rather than negates—the apex official's good cause showing, the court must use its discretionary authority to balance the parties’ needs and impose a protective order that (1) restricts the topical scope of the deposition or (2) requires the exhaustion of less intrusive discovery methods. See T.R. 26(B)(1), (C). Less intrusive methods may include deposing lower-level employees, deposing a corporate designee, or submitting to the corporation interrogatories and requests for production of documents. See T.R. 30, 33, 34. If the party seeking the deposition exhausts alternative methods to no avail, the court should modify the protective order upon the party establishing a specific, outstanding need for the deposition.
For interlocutory orders that do not fall under the other sections of Appellate Rule 14, Rule 14(B) neither limits the type of order a trial court may certify for discretionary review nor restricts the appellate court's discretion to accept jurisdiction over the appeal. Thus, even if the appealed order before us is on a repetitive motion or a motion to reconsider, the NCAA did not forfeit its opportunity to obtain discretionary review. In conducting that review, the Court of Appeals declined to adopt the apex doctrine and instead harmonize its principles with our trial rules in establishing a framework for trial courts to use to determine whether good cause exists to limit or prohibit the deposition of a high-ranking official. The Court of Appeals remand for proceedings consistent with this opinion.
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INDIANA COURT OF APPEALS
No abuse for admission of evidence or granting summary judgment. Prejudgment interest should have been from invoice for work not termination of prior sub-contractor.
On April 20, 2015, Five Star signed a subcontractor agreement (“Subcontractor Agreement”) with Pendleton Enterprises for roofing work as part of a construction project for Flint Hill Resources (“FHR”). The total subcontract price of $176,000 included an up front, initial payment of $88,000, with the remaining balance of $88,000 to be paid upon completion of the project. On August 24, 2015, Pendleton Enterprises sent an email to Five Star stating that it had twice shown up with the incorrect insulation material, not complied with safety rules and regulations regarding permits and documentation of training, and this had led “to FHR requiring more stipulations,” and it outlined expectations for future work on the roof.
On August 31, 2015, Pendleton Enterprises sent an email to Five Star claiming that Five Star was in breach of the Subcontractor Agreement, setting forth the basis for the claimed breach, and stating, “[a]s a result of the aforementioned breach of contract, it is determined that [Five Star] will be terminated as the subcontractor with the following terms to be met ….”
On January 7, 2016, Kevin Baird, on behalf of Five Star, sent the owner and president of Pendleton Enterprises, David Pendleton, (“Pendleton”) and Pendleton Enterprises’ counsel a letter alleging costs of $88,766 and loss of the “final payment not received due to not being allowed to complete the job” and stating “[w]e will accept the deposit as final payment for the costs incurred.” On September 9, 2016, Pendleton Enterprises filed a complaint against Five Star.
On August 31, 2020, Pendleton Enterprises filed a motion for summary judgment. On June 28, 2021, the court granted Pendleton Enterprises’ motion for summary judgment and found Pendleton Enterprises was entitled to damages of $121,992 plus prejudgment interest of $56,902.72 and reasonable attorney fees. It noted that “Five Star concedes it was in breach of the contract but contends it cured its breach,” “the Court can determine from the undisputed facts that Five Star’s not following the safety rules would result in it being disallowed from continuing to work on owner's site,” “the breach was material,” not complying with the safety provisions of the contract and then “demanding additional compensation to come into compliance constitute[d] thengoingg breach,” Five Star could not claim that Pendleton Enterprises’ notice to cure was defective because they were already in material breach, and regardless, that “notice of termination was correct under the contract.” On August 12, 2021, the court directed final judgment and “fees and expenses of $66,233.78 plus costs of $156.00 for a total judgment of $245,284.50.”
Five Star argues the trial court erred in: (A) improperly admitting evidence; (B) granting summary judgment to Pendleton Enterprises; (C) concluding that Five Star had neither a contractual nor common law right to set-off for its costs; and (D) granting and calculating prejudgment interest.
Five Star argues the trial court erred in denying its Motion to Strike and in considering designated evidence that was otherwise inadmissible. Five Star claims the court abused its discretion in admitting and considering the December 29, 2015 Settlement Letter in awarding attorney fees in violation of Ind. Evidence Rule 408.
The affidavit establishes that Pendleton based his opinions on personal knowledge, and he is competent to testify. Pendleton was able to observe the number of Five Star's workers and determine whether they complied with Pendleton Enterprises’ and FHR's safety requirements. The Court of Appeals cannot say the admission of the industrial hygienist's notes requires reversal.
Pendleton Enterprises moved to admit the Settlement Letter “not as evidence of what the value of the case is, but as proof of what [it was] willing to settle the case for before it went to suit and before that first mediation.” Even if the Settlement Letter were inadmissible as evidence of settlement negotiations, Five Star has not demonstrated prejudice. The court had determined Pendleton Enterprises was entitled to attorney fees prior to the hearing at which it determined the exact amount, and the court's final order did not indicate that the court relied on the Settlement Letter in determining the amount of Pendleton Enterprises’ attorney fees. We cannot say the admission of the Settlement Letter prejudiced Five Star or requires reversal.
Five Star claims that the trial court erred in granting summary judgment in favor of Pendleton Enterprises because questions of fact exist as to whether Five Star materially breached the contract, the court did not construe all facts and inferences in its favor, and the court incorrectly found that it conceded breach of the Subcontractor Agreement. Pendleton Enterprises responds that Five Star defaulted under the contract, it was entitled to terminate the contract, and there is no dispute of material fact regarding Five Star's breach.
The Indiana Supreme Court has held that “[w]hether a breach is material is generally a question of fact to be decided by the trier of fact.” State v. Int’l Bus. Machines Corp., 51 N.E.3d 150, 158 (Ind. 2016) (quoting Collins v. McKinney, 871 N.E.2d 363, 375 (Ind. Ct. App. 2007) (citing Goff v. Graham, 159 Ind. App. 324, 306 N.E.2d 758, 765 (1974))). The Court held that “[a] material breach is often described as one that goes to the ‘heart of the contract.’ ” Id. At 158-159 (citing Collins, 871 N.E.2d at 370). This Court has previously affirmed the entry of summary judgment where the designated evidence established a breach was material. See A House Mechanics, Inc., 124 N.E.3d at 1263 (affirming the entry of summary judgment and holding that noncompliance with applicable building codes, failing to cure, and the breakdown of the business relationship constituted material breaches as a matter of law).
Under the Restatement (Second) of Contracts, an injured party is not discharged from his or her duty to perform unless (1) the breach is material, and (2) it is too late for performance or an offer to perform to occur.
“When one party to a contract commits the first material breach of that contract, it cannot seek to enforce the provisions of the contract against the other party if that other party breaches the contract at a later date.” Coates v. Heat Wagons, Inc., 942 N.E.2d 905, 917 (Ind. Ct. App. 2011).
While Section 17.1 of the Subcontractor Agreement does not use the term “material,” the section provides for acts and omissions which the parties agreed constituted a breach of the agreement for purposes of terminating the contract.
The record reveals that Five Star did not designate evidence to contest many of Pendleton Enterprises’ claims, including that it ordered the wrong insulation on two occasions, it did not provide lead time when requested for the third order of insulation, its workers cut into the roof when Pendleton left to check an insulation delivery, it did not have enough workers on August 11, 2015, its workers cleaned up with kerosene and failed to use protective gloves, its workers failed to attend a safety meeting, it did not ultimately hire a fall-protection-competent person at a reasonable rate pursuant to Pendleton Enterprises’ request, it failed to comply with safety requirements prior to August 14, 2015, and it did not respond to or comply with the allegations in the August 24th email. Under these circumstances, The Court of Appeals conclude as a matter of law that Five Star's breaches were material and permitted Pendleton Enterprises to terminate the Subcontractor Agreement. See A House Mechanics, Inc., 124 N.E.3d at 1263 (concluding that breaches were material as a matter of law). Based on the designated evidence, The Court of Appeals finds the trial court did not err in granting Pendleton Enterprises’ motion for summary judgment.
Five Star claims the trial court erred in concluding it had no contractual right to set-off for its costs. Five Star further alleges that it has a common law right to set-off. The contract between FHR and Pendleton Enterprises provides: “Company may terminate any particular project at any time subject to payment of compensation (as detailed herein) for Work properly completed.” In his deposition, Baird, the man “designated as the point person for the company,” agreed that Five Star received $88,000 “up front” from Pendleton Enterprises. Under these circumstances, we cannot say the trial court erred in denying a contractual right to set-off.
To the extent Five Star asserts it has a right to set-off for its costs according to equity and Indiana's common law, we hold that Five Star has waived this issue. Here The Court of Appeals cannot say that clear equity requires a right to set-off for Five Star's alleged costs.
Five Star claims that Pendleton Enterprises should not recover prejudgment interest from August 31, 2015, the date of the notice of termination, because the damages were not fully accrued until February 9, 2016, and it argues the damages do not rest on a simple calculation and are not ascertainable. Sterling completed the roofing project by February 9, 2016, at which time it submitted an invoice for $209,992. Once Sterling completed the roofing project to FHR and Pendleton Enterprises’ satisfaction, submitted its invoice on February 9, 2016, and the cost expended to complete the roofing project could be determined, Pendleton Enterprises’ damages were due according to the Subcontractor Agreement.
A party may be responsible for spoliation by a third-party.
On December 1, 2012, Synergy hired Telamon to convert the software to a web-based application in order to comply with new governmental regulations. When a dispute arose over invoices related to the patch, Telamon canceled the parties’ contract. Synergy hired a company called Itransition, Inc. to finish the conversion. In May 2014, Debra Zandstra, the sole member of Synergy, instructed Joe Zhao, a Telamon representative, to send the source code for the software to Itransition. Zandstra specifically told Zhao not to send the source code to Synergy. Telamon sent the source code to Itransition per Synergy’s instructions. Telamon did not retain a copy of the source code. Synergy “ran out of money” to continue to pay Itransition to work on the software conversion, and Synergy went out of business.
Synergy filed a complaint against Telamon, which it later amended, alleging breach of contract and seeking compensatory and punitive damages. Telamon requested a copy of the version of the source code for the web-based software that Telamon had delivered to Itransition in 2014 (“as-delivered source code”). In 2018, during her deposition, Zandstra testified that the source code was located in Belarus. In July 2019, Telamon sent a nonparty request for production of documents to Itransition, including a request for “all versions of source code received by Itransition from Synergy or Telamon[.]”
After Telamon realized that Synergy had not retained a copy of the as-delivered source code, Telamon filed a “Motion for Sanctions Due to Spoliation of Evidence.” Telamon alleged that “Synergy’s conduct severely prejudices Telamon because the only objective contemporaneous evidence of the work Telamon performed for Synergy is the source code and that evidence no longer exists – nor can it be recreated.” The trial court granted Telamon’s motion and dismissed Synergy’s complaint.
A party raising a claim of spoliation must prove that (1) there was a duty to preserve the evidence, and (2) the alleged spoliator either negligently or intentionally destroyed, mutilated, altered, or concealed the evidence. Id. at 301. “The duty to preserve evidence occurs when a first-party claimant ‘knew, or at the very least, should have known, that litigation was possible, if not probable.’ ” Golden Corral Corp. v. Lenart, 127 N.E.3d 1205, 1217 (Ind. Ct. App. 2019) (quoting Aqua Env't Container Corp., 102 N.E.3d at 301), trans. denied. “Our Supreme Court has recognized that ‘[t]he intentional or negligent destruction or spoliation of evidence cannot be condoned and threatens the very integrity of our judicial system.’ ” Aqua Env't Container Corp., 102 N.E.3d at 302 (quoting Gribben v. Wal-Mart Stores, Inc., 824 N.E.2d 349, 354 (Ind. 2005)).
This Court has stated that a party with a duty to preserve evidence in the possession of a third party may bear responsibility for spoliation of evidence. Where Synergy directed Telamon to deliver the source code to Itransition, Synergy may not avoid its duty to preserve the evidence.
Synergy was on notice in August 2014 that it had a duty to preserve the as-delivered source code. Synergy ignores the evidence that it was negligent by omission when it failed to direct Itransition to preserve that code when litigation became likely.
The trial court acted within its broad discretion when it dismissed Synergy’s complaint. See Aqua Env’t Container Corp., 102 N.E.3d at 302. The trial court did not abuse its discretion when it dismissed Synergy’s complaint as a sanction for its spoliation of evidence.
Standard of Review for Comity is an Abuse of Discretion standard.
BFD Enterprises, LLC (“BFD”) appeals following the trial court's order dismissing its lawsuit against Jeff Koepnick and Shamarie Schauer stemming from an automobile accident that occurred in Indiana. BFD is a limited liability company incorporated in the Commonwealth of Kentucky. In August 2020, Koepnick was employed as a truck driver by BFD, and the company assigned him to drive a semi-tractor trailer with a load of aluminum ingots from Lewisport, Kentucky, to Kalamazoo, Michigan. Koepnick's wife, Schauer, accompanied Koepnick on this journey.
At approximately 7:00 a.m. on August 20, 2020, Koepnick drove the semi-truck into an overpass support pillar in Huntington County, Indiana. Koepnick died, and Schauer was thrown from the vehicle but survived. It was later determined Koepnick had a blood alcohol content of .168 at the time of the crash.
On December 11, 2020, BFD filed a complaint in state court in Huntington County, Indiana, against Koepnick and Schauer. The complaint sought to recover for damage done to the truck (“Indiana Lawsuit”). BFD alleged Schauer was liable pursuant to Indiana’s Dram Shop Act. On December 16, 2020, Schauer filed suit against BFD in a Hancock County, Kentucky, state court (“Kentucky Lawsuit”). Schauer alleged both that BFD was liable through the doctrine of respondeat superior for Koepnick’s negligence and that BFD negligently hired, retained, and supervised Koepnick.
Schauer was able to effectuate service on BFD shortly after filing the Kentucky Lawsuit. However, BFD struggled to effect service of the Indiana Lawsuit on Schauer.
On January 5, 2021, BFD filed a motion to dismiss the Kentucky Lawsuit on the basis of forum non conveniens. The Kentucky state court subsequently denied BFD’s motion to dismiss.
On February 17, 2021, BFD filed its first amended complaint in the Indiana Lawsuit. The amended complaint advanced the same allegations as the original complaint, but it also added a count seeking indemnification from Schauer and Koepnick for any claims Schauer may have against BFD because of the accident.
On March 19, 2021, Schauer filed a motion to dismiss BFD's complaint in the Indiana Lawsuit. Schauer argued the trial court should dismiss BFD's suit for two reasons:
(1) there is a danger of inconsistent judgments on the same factual questions regarding the Accident due to parallel litigation in the Kentucky Lawsuit, and the Court should therefore exercise its authority to dismiss the Indiana Lawsuit out of comity; and
(2) all parties in both lawsuits are Kentucky residents, and litigation regarding the Accident is proceeding in Kentucky, making Indiana an inconvenient forum.
BFD filed a response to Schauer's motion to dismiss arguing the suit should remain in Indiana because the Indiana Lawsuit was the first filed suit and Indiana provides a more convenient forum. The trial court held a hearing on the motion to dismiss on May 25, 2021. On August 23, 2021, the trial court dismissed the Indiana Lawsuit.
I. Comity
“Comity” refers to the principle that “an Indiana court has the discretion to dismiss a case as a matter of courtesy and convenience when there are pending proceedings in an out-of-state court[.]” Herren v. Dishman, 1 N.E.3d 697, 707 (Ind. Ct. App. 2013). Our recognition of comity is separate from our obligations under the full faith and credit clause of the United States Constitution. Angelopoulos v. Angelopoulos, 2 N.E.3d 688, 695 (Ind. Ct. App. 2013), trans. denied. Nonetheless, it is a practice rooted in “deference and good will” toward our sister states, intended “to promote uniformity of decision by discouraging repeated litigation of the same question.” Id.
In deciding whether to dismiss a lawsuit based on comity, the trial court may consider: “(1) whether the first filed suit has been proceeding normally, without delay, and (2) whether there is a danger the parties may be subjected to multiple or inconsistent judgments.” The Court of Appeals reviews a trial court’s decision to dismiss a suit based on comity for an abuse of discretion. Brightpoint, Inc. v. Pedersen, 930 N.E.2d 34, 39 (Ind. Ct. App. 2010), trans. Denied. An abuse of discretion occurs when the trial court’s decision is against the logic and effect of the facts and circumstances before it. Id.
BFD argues the trial court abused its discretion in dismissing the Indiana Lawsuit because it was the first-filed case. In support, BFD relies on George S. May Int'l Co. v. King, 629 N.E.2d 257 (Ind. Ct. App. 1994), reh'g denied, trans. denied. In that case, an international consulting firm, George S. May International Company (“May”), brought a breach of contract action in an Indiana state court against two former employees, Gary King and Preston Hacker. Id. at 259. BFD asserts May stands for the principle that a first-filed suit cannot be dismissed based on comity.
Even though the Indiana Lawsuit was filed five days before the Kentucky Lawsuit, the Kentucky Lawsuit is further along than the Indiana Lawsuit because of BFD’s delay in serving Schauer. The Indiana Lawsuit has not advanced past the pleadings stage, but the parties have already started discovery in the Kentucky Lawsuit. Even though the Indiana Lawsuit was the first-filed suit, the additional progress in the Kentucky Lawsuit as compared to the Indiana Lawsuit supports the trial court's decision to dismiss the Indiana Lawsuit.
In Vannatta v. Chandler, The Court of Appeals explained that “when faced with a challenge to a trial court's dismissal on the basis of T.R. 12(B)(8), the critical question before us is ‘whether the parties, subject matter, and remedies are either precisely or substantially the same.’ ” 810 N.E.2d 1108, 1111 (Ind. Ct. App. 2004) (quoting Davidson v. Perron, 716 N.E.2d 29, 35 (Ind. Ct. App. 1999), trans. denied). BFD argues dismissing the Indiana Lawsuit was error “because the actions do not involve the same parties, the same subject matter, or the same remedy.”
The presence of both BFD and Schauer in the Kentucky Lawsuit and the Indiana Lawsuit supports dismissing the Indiana Lawsuit pursuant to the principal of comity.
Koepnick’s employment relationship with BFD likely subjected him to personal jurisdiction in Kentucky. Litigation may concern the same subject matter for comity purposes even though the theories advanced by the parties do not completely overlap. Both the Kentucky Lawsuit and the Indiana Lawsuit concern who was responsible, and to what degree, for the August 20, 2020, semi-truck accident. Both BFD and Schauer are seeking money damages. Thus, the remedies sought in both the Indiana Lawsuit and the Kentucky Lawsuit are substantially similar. Comity’s “primary value is to promote uniformity of decision by discouraging repeated litigation of the same question.” Both BFD and Schauer blame the other for actions that resulted in the August 20, 2020, semi-truck accident. Therefore, the risk of inconsistent findings in allowing both the Kentucky Lawsuit and the Indiana Lawsuit to move forward is real, and dismissal of the Indiana Lawsuit on the basis of comity serves to alleviate that risk. In the two lawsuits, both BFD and Schauer seek monetary relief, and each one seeks the relief from the other. Thus, the parties and the remedies are the same in both the Indiana Lawsuit and the Kentucky Lawsuit. The August 20, 2020 truck accident plays a central role in both lawsuits as each case concerns who contributed to the accident and in what ways that party contributed. These facts also create a risk of inconsistent results if both lawsuits are allowed to move forward. Thus, the comity factors weigh in favor of dismissing the Indiana Lawsuit.
II. Trial Rule 4.4
Finally, BFD asserts the trial court also erred in ruling the case should be dismissed on forum non conveniens grounds pursuant to Trial Rule 4.4. The record supports the trial court's conclusion Kentucky is a more convenient forum than Indiana. The trial court found both Schauer and BFD are residents of Kentucky. Kentucky is also a convenient forum for BFD as evidenced by its specification of Kentucky as the preferred forum in the release of liability it requires all passengers to execute before accompanying the company's drivers on their trips. Consequently, we hold the trial court did not abuse its discretion when it dismissed the Indiana Lawsuit pursuant to Trial Rule 4.4(C).
Courts do not have to tolerate frivolous filings. An explanation of three strike rule and appropriate sanctions.
On October 1, 2018, the State charged Dunigan with one count of child molesting, a Level 1 felony. Dunigan chose to represent himself, and after a series of filings spanning many months, the trial court convicted Dunigan following a bench trial. On June 26, 2020, the trial court sentenced Dunigan to forty-two years in the Department of Correction. Since then, Dunigan has become “a prolific, abusive litigant.”
In the instant matter, Dunigan filed a complaint in the Tippecanoe Circuit Court seeking: (1) for “the State of Indiana [to] pay [Dunigan] $100,000,000 monetary compensation[;]” (2) the disbarment of the chief and deputy chief prosecutors; and (3) that his child molesting conviction be “overruled.” The trial court screened the complaint pursuant to Indiana Code Section 34-58-1-2.
As a blanket matter, we note that Dunigan’s briefing fails to provide cogent arguments or citations to proper authorities supporting his arguments. Thus, his claims are waived.
It is well known that a defendant may raise an objection to prosecutorial misconduct during the criminal trial phase and, indeed, must do so in order to preserve the issue for direct appeal. The Court of Appeals finds the record devoid of any evidence to suggest that Dunigan complied with the Tort Claims Act notice requirements. Accordingly, The Court of Appeal concludes that all of Dunigan's prosecutorial misconduct claims are without merit, and the trial court did not err in dismissing them pursuant to the screening statute.
With respect to State constitutional claims, The Court of Appeals are aware of no Indiana court recognizing a right to a private cause of action for monetary damages under the Indiana Constitution. Dunigan presents neither argument nor authority to the contrary. His claims, therefore, are not only meritless, they are waived.
“Complaints that are facially frivolous, e.g., those that reference little green men or a constitutional right to Rogaine, can still be summarily dismissed at the screening stage.” Smith v. Wrigley, 908 N.E.2d 354, 360 (Ind. Ct. App. 2009); see also Ashcroft v. Iqbal, 556 U.S. 662, 696, 129 S. Ct. 1937, 1959, 173 L.Ed.2d 868 (2009) (Souter, J. dissenting). Nevertheless, some litigants insist on flooding our judicial corridors, thereby harming Hoosiers who would otherwise be timely availing themselves of our courts. Sometimes, weeding out the obviously frivolous complaints will not be enough to remedy the issue.
The Court of Appeals also emphasizes that, given the rambling, labyrinthine nature of Dunigan’s pleadings, considerable judicial resources must be expended to even discern his claims, let alone determine whether they are facially frivolous. The courtroom doors are easily opened in Indiana by litigants of all types. However our open courts and the edifices in place to protect and promote them do not confer upon litigants a right to abuse our system of justice. Zavodnik, 17 N.E.3d at 264 (“There is no right to engage in abusive litigation ….”).
While The Court of Appeals commends our trial courts for patiently facilitating Dunigan's conduct thus far, in the interests of justice, the time has come to formally recognize that conduct for what it is: an abuse of our judicial system. The trial court did not err in dismissing Dunigan's claims. Dunigan is instructed to heed the sanctions imposed herein.
COVID Emergency Orders tolled Statute of Limitations for 151 days.
On August 19, 2019, Peggy Malanoski was driving a vehicle and was in a collision with a semi-tractor and trailer operated by Daugherty. On September 24, 2021, Malanoski filed a complaint against Daugherty and Braun. Malanoski alleged that Daugherty was an employee of Braun and working within the scope of his employment and his negligent conduct was a responsible cause of the collision and her harm.
On November 1, 2021, Braun and Daugherty filed a motion to dismiss. They argued the complaint alleged the accident occurred on August 19, 2019, and Malanoski failed to timely commence her lawsuit prior to the expiration of the two-year statute of limitations under Ind. Code § 34-11-2-4. Malanoski filed an objection to Braun and Daugherty's motion to dismiss. She argued “all statutes of limitation were tolled from March 16, 2020, through August 14, 2020, for a total of 151 days.”
She cited to an order by the Indiana Supreme Court on March 13, 2020, providing:
It appears from the petition that compliance with appropriate public-health practices will inhibit litigants’ and courts’ ability to comply with statutory deadlines and rules of procedure....
* * * * *
The Court authorizes the tolling, beginning March 16, 2020 and until April 6, 2020, of all laws, rules, and procedures setting time limits for speedy trials in criminal and juvenile proceedings, public health, and mental health matters; all judgments, support, and other orders; and in all other civil and criminal matters before the courts of Marion County.
Id. at 52-53. She cited a petition for additional relief filed by the Courts of Marion County on March 17, 2020. Malanoski further cited two orders by the Indiana Supreme Court issued on March 23, 2020.
On December 15, 2021, the court held a hearing. An entry in the chronological case summary on that date states: “Court having read the briefs of the parties and having heard oral argument as to the statute of limitations and potential tolling of that statute by Indiana Supreme Court orders having to do with COVID, and being duly advised, hereby DENIES [Braun and Daugherty's] Motion to Dismiss.” Id. at 7. At Braun and Daugherty's request, the trial court certified its order for interlocutory appeal and this Court accepted jurisdiction.
The Indiana Supreme Court's order issued at 2:12 p.m. on March 23, 2020, unambiguously “tolls all ... statutes of limitations” in all civil matters before Indiana's trial courts. Appellants’ Appendix Volume II at 91. Typically, when a statute of limitations is “tolled,” the “limitations period is suspended (stops running) ..., then starts running again when the tolling period ends, picking up where it left off.” See Artis v. Dist. of Columbia, ––– U.S. ––––, 138 S. Ct. 594, 601, 199 L.Ed.2d 473 (2018) (referring to tolling provision of federal Supplemental Jurisdiction statute, 28 U.S.C. § 1367(d)); see also Jordan v. Deery, 609 N.E.2d 1104, 1107-1108 (Ind. 1993) (describing effect of medical malpractice tolling statute); BLACK'S LAW DICTIONARY 1716 (10th ed. 2014) (defining “toll” as “to stop the running of; to abate <toll the limitations period>”). The Court's next three emergency orders (dated April 3, April 24, and May 13, 2020) specifically state that they are extending “[t]he effective date of all orders granting emergency relief to trial courts under Administrative Rule 17, ... including but not limited to” tolling of time limits. Appellants’ Appendix Volume II at 95, 101, 106 (emphasis added). To the extent that the tolling of statutes of limitations could be construed as something different from the tolling of time limits, the all-encompassing italicized phrase clearly extends the tolling of statutes of limitations through at least May 30, 2020. Accordingly, the limitations period for Malanoski's personal injury claim was tolled for over two months, and her complaint was timely filed.
This interpretation of the emergency orders is consistent with the plain language of the orders and also with the important policy considerations behind them. The national, state, and local executive-branch emergency orders issued in response to the COVID-19 pandemic severely restricted travel and in-person interactions, both of which are critical to the functioning of the judicial system in general and the attorney-client relationship in particular. Those restrictions undoubtedly had an adverse impact on the ability of clients, especially those of modest financial and technological means, to seek and consult with counsel, as well as on the ability of attorneys to investigate claims and draft appropriate pre-litigation correspondence and good-faith pleadings on behalf of their clients. The Indiana Supreme Court recognized as much in its first March 23, 2020 emergency order, see id. at 90 (observing orders declaring a public health emergency in Indiana and implementing statewide restrictions on travel and business operations and stating “[t]his emergency will impede litigants’ and courts’ ability to comply with statutory deadlines and rules of procedure”), and the Court took the corrective steps necessary to ensure that the wheels of justice would not run roughshod over the rights of injured Hoosiers. Malanoski filed her complaint before the expiration of the applicable limitations period as tolled by the Indiana Supreme Court's emergency orders, and her complaint was timely. For the foregoing reasons, the Court of Appeals affirmed the trial court’s ruling.
No abuse of discretion in denying motion to set aside default.
This Court has established distinct measures of damages for permanent damage to land and permanent damage to buildings. Gen. Outdoor Advert. Co. v. La Salle Realty Corp., 141 Ind.App. 247, 218 N.E.2d 141 (1966). When land is permanently damaged, the measure of damages is the pre-damage market value of the land minus the post-damage market value. Id. at 150. When a building is permanently damaged—that is, when the cost of repairing the building exceeds the building's pre-damage market value—the proper measure of damages is the full pre-damage market value, without subtracting the post-damage market value. Id. at 151. The distinction exists because land generally cannot be completely destroyed, while a building that is beyond repair should be treated as if it's been completely destroyed. Id. In this case, which involves permanent damage to a building, the trial court applied the measure of damages for permanent damage to land. That is, the court subtracted the post-damage market value of the building from the pre-damage market value instead of awarding the full pre-damage market value. For this reason and the others discussed below, The Court of Appeals reversed.
In June 2018, Julie and Mike Nordin bought a property on Lake Wawasee in Syracuse, within walking distance of their farm. They paid $277,000. There is a cottage on the property that was built in the 1920s (“the Cottage”). The Cottage was unoccupied and in need of work at the time of the purchase, but the parties disagree as to the extent of work needed. The Town of Syracuse (“the Town”) emphasizes that the 2017 county property-tax assessment for the Cottage (the structure alone, separate from the land) was only $14,700 and contends it was “an uninhabitable, dilapidated shell of a structure that needed an entirely new bathroom, new dry wall, new windows, new ceiling tiles, walls replaced, new plumbing, new faucets, a new stove, and a new foundation.”
A week after the Nordins bought the property, before they had done any work, the Town issued a work order to shut off the water at the Cottage because a deposit had not yet been paid. However the water was already off, so when a worker turned the valve, the water was turned on. The Cottage was flooded with 6,000 gallons of water. A claim representative for the Town's insurer estimated the repair cost to be $55,928.44, reduced to $43,062.26 for “Non-recoverable Depreciation.”
In October 2018, the Nordins’ attorney sent the repair estimate to the Kosciusko County Area Plan Commission. The Plan Commission responded with a letter explaining that the Nordins’ property lies within a “special flood hazard area” and that “substantially improved/damaged structures” located within such an area “must be reconstructed in compliance with the Kosciusko County Flood Control Ordinance.” The Plan Commission determined that “based on the assessed value of the structure, $14,300 and the value of damage you provided set by the insurance company of $43,000 it appears that the structure sustained substantial damage and is subject to bringing the home into compliance with the Kosciusko County Flood Control Ordinance.”
According to the Nordins (with no dispute from the Town), compliance with the Flood Control Ordinance would require elevating the “entire foundation” of the Cottage, meaning that “repair” of the existing structure is impossible—the only option is “a complete retrofit or rebuild.” As a result, the Nordins obtained two estimates for demolition of the Cottage and construction of a similar structure. One estimate was $255,000, and the second was $294,589.83. In addition, an appraiser estimated a replacement cost of $269,483.
The Nordins sued the Town for negligence, seeking damages for “damage to property, loss of use of property, and lost rental income.” The Town moved for summary judgment, acknowledging the Nordins are entitled to damages but arguing the damages are limited to the difference in the fair market value of the Cottage before and after the flooding. Relying on the Cottage's pre-flooding tax assessment of $14,700 and post-flooding tax assessment of $14,300, the Town proposed a damages award of $400. The Town asserted the Cottage was “significantly deteriorated” and “uninhabitable” before the flooding and therefore a larger damages award would be a “windfall” for the Nordins. The Town also argued that because the Cottage was uninhabitable even before the flooding, the Nordins cannot recover for loss of use or lost rental income. The trial court agreed with the Town on both issues and granted its motion, awarding the Nordins only $400 in damages.
I. Physical Damage
In General Outdoor, this Court distinguished between damage to land and damage to buildings. We explained that when land is “permanently” damaged, “the measure of damages is the market value of the real estate before the injury, less the market value after the injury[.]” Id. at 150. However when, as here, a building is “permanently” damaged—which occurs when the cost of repairing the building exceeds the market value of the building before the damage—the “proper measure of damages” is “the market value before the injury,” without subtracting the post-damage market value. The reason for the distinction is that land “can never be completely destroyed,” while a building that cannot be repaired should be treated as if it's been destroyed, even if it's still standing.
While the trial court properly relied on General Outdoor and correctly determined the pre-flooding market value of the Cottage, it did err in the respect noted at the outset: it should have awarded the Nordins the full pre-flooding market value of $14,700 rather than subtracting the post-flooding market value of $14,300. There is also one other error. The trial court's award of damages did not account for the cost of demolishing the Cottage, which must be done so that the Nordins can make full use of their property. Demolition costs were not at issue in General Outdoor, but the opinion made clear that such costs are a proper part of damages when a building cannot be repaired. 218 N.E.2d at 152. For these reasons, we reverse the award of only $400 for the physical damage to the Cottage and remand this matter to the trial court with instructions to address the two issues identified in this paragraph. The issue of the pre-flooding market value of the Cottage is settled; the Nordins are entitled to $14,700. Demolition costs are not settled. If the parties cannot reach a resolution, and if there is a genuine issue of material fact, that issue should proceed to trial.
II. Loss of Use
The Court of Appeals also reversed the trial court's entry of summary judgment on the issue of loss of use. 4 The court concluded that the Cottage was in a “primitive,” “unsafe,” and “un-useable” condition even before the flooding and that “[t]he necessary repairs clearly exceeded 50% of its fair market value prior to the incident [$14,700], or $7,350,” meaning the Nordins could not have used the Cottage without first “complying with the provisions of the Kosciusko County Flood Control Ordinance[.]” As discussed above, this would have required elevating the “entire foundation” and “a complete retrofit or rebuild” of the Cottage. In short, the trial court found, as a matter of law, the Cottage was just as useless before the flooding as it is now.
For two reasons, we disagree. First, there is a genuine issue of material fact as to what repairs, if any, were “necessary.” As the Nordins note, “The cottage was not condemned or deemed uninhabitable or anything of the sort that would require a certain level of repairs to make it ‘habitable,’ leaving the matter to personal preference.” Appellants’ Reply Br. p. 14. Also the Nordins insist they would have been happy in the Cottage with just a few “minor repairs.” A jury might not believe them, but their insistence is enough to avoid summary judgment. See Hughley, 15 N.E.3d at 1004-06 (holding that party's “perfunctory and self-serving” affidavit was sufficient to avoid summary judgment).
Second, even if more than just minor repairs were “necessary,” the Town has not directed the Court to any evidence definitively establishing that the repairs would have cost more than $7,350. The Town asserts that “the costs associated with repairing the [Cottage] would have exceeded half of the fair market value of the [Cottage],” Appellee's Br. p. 27, but it doesn't provide a dollar figure or any record citation to support that claim. In fact, the Town did not include a single citation to the record in the loss-of-use part of its argument, in violation of Appellate Rule 46(A)(8)(a) and (B) (requiring that each contention in the argument section of the appellee's brief be “supported by citations to ... the Appendix or parts of the Record on Appeal relied on”). All the Court had were the conclusory statements from the Town and the trial court, which cannot be the basis for summary judgment. See LaCava v. LaCava, 907 N.E.2d 154, 166 (Ind. Ct. App. 2009) (“Conclusory statements are generally disregarded in determining whether to grant or deny a motion for summary judgment.”). Therefore, on remand, the Nordins are entitled to a trial on their loss-of-use claim.
Reversed and remanded.
UIM policy limit cannot be reduced by Worker Compensation benefits paid.
On August 29, 2017, Kearschner, while in the course and scope of his employment with Wal-Mart (“Employer”), was involved in an automobile collision and injured his shoulder. This collision was caused by John Hall (“Tortfeasor”), who had an automobile insurance policy limit of $50,000. At the time of the collision, Kearschner had an automobile insurance policy with AFI (“the Policy”), which included bodily injury liability limits of $100,000 per person/$300,000 per occurrence and an underinsured motorist (“UIM”) endorsement with UIM limits of $100,000 per person/$300,000 per accident.
Following the collision, Kearschner filed a worker's compensation claim with Employer. In August 2019, Kearschner filed a complaint, and then an amended complaint, against Tortfeasor. Additionally, Kearschner named AFI as an additional defendant and sought to recover UIM benefits from AFI. Specifically, Kearschner sought judgment against AFI to recover his UIM coverage benefits “in excess of any insurance coverage of [Tortfeasor].”
In April 2021, AFI filed a motion for summary judgment. AFI argued that, pursuant to the unambiguous UIM Limit Reduction Provision in the Policy, it had “no duty to provide underinsured motorist coverage for [Kearschner's] August 29, 2017 collision given that [he] [had] recovered the statutory minimum coverage [as set out in INDIANA CODE § 27-7-5-2(a)] of $50,000 from the tortfeasor and a net $62,084.52 from workers’ compensation[.]” (App. Vol. 2 at 11). AFI asserted that because Kearschner's “Policy provide[d] for $100,000 underinsured motorist coverage per person, there [wa]s no underinsured motorist coverage available for [Kearschner] after the setoff for what the tortfeasor [had] paid and what workers’ compensation [had] paid.” (App. Vol. 2 at 16). In support of its argument, AFI relied on Justice v. Am. Fam. Mut. Ins. Co., 4 N.E.3d 1171 (Ind. 2014) and the mathematical formula contained in that opinion to argue that Kearschner's UIM liability limit had been reduced to zero. Following a hearing on AFI's motion, the trial court issued an order granting summary judgment to AFI and entered the judgment as a final judgment in AFI's favor. Kearschner now appeals.
Resolution of this summary judgment case on appeal involves the interpretation of a statute and an insurance contract. More specifically, this Court was called upon to interpret the UIM Statute and the UIM Limit Reduction Provision in the Policy between Kearschner and AFI. The interpretation of a statute and the interpretation of an insurance contract involve questions of law, which we review de novo, thereby making such interpretation appropriate for resolution on summary judgment.
The Policy provision at issue in this appeal is the UIM Limit Reduction Provision, which provides, in relevant part, as follows:
LIMITS OF LIABILITY
* * * * *
The limits of liability of this coverage will be reduced by:
1. A payment made or amount payable by or on behalf of any person or organization which may be legally liable, or under any collectible auto liability insurance, for loss caused by an accident with an underinsured motor vehicle.
2. A payment under the Liability coverage of this policy.
3. A payment made or amount payable because of bodily injury under any workers’ compensation or disability benefits law or any similar law.
While “[i]nsurance companies are free to limit their liability,” they must do so “in a manner consistent with public policy as reflected by case or statutory law.” Catanzarite v. Safeco Ins. Co. of Ind., 144 N.E.3d 778, 783 (Ind. Ct. App. 2020), trans. denied. See also Masten v. AMCO Ins. Co., 953 N.E.2d 566, 569 (Ind. Ct. App. 2011), trans. denied. “So long as the policy language comports with our state statutes, it will control, but if it is inconsistent with those statutes, it is unenforceable.” Justice, 4 N.E.3d at 1177 (cleaned up).
The UIM Statute is a “mandatory, full-recovery, remedial statute.” Justice, 4 N.E.3d at 1178 (cleaned up). Given the remedial nature of UIM coverage, “underinsured motorist legislation is to be liberally construed, and similar to all insurance statutes and policies, is to be read in a light most favorable to the insured.” Masten., 953 N.E.2d at 570. The UIM Statute “requires that insurers make underinsured motorist coverage available to those whom they insure[,]” and the statute is “considered part of every policy as if included therein.” Id.
In the UIM Statute, the legislature has set forth that an insurer must provide an automobile insurance policy that contains UIM coverage in a set minimum amount. This Court has explained that the UIM Statute “sets out two minimum coverage amounts.” Lee v. Liberty Mut. Fire Ins. Co., 121 N.E.3d 639, 648 (Ind. Ct. App. 2019), trans. denied. Specifically, “[t]he first minimum applies where the insured has not rejected in writing the amount of coverage that must be ‘in limits at least equal to the limits of liability specified in the bodily injury liability provisions[,]’ ” which would result in “the minimum coverage amount [being] the bodily injury amount.” Id. (quoting I.C. § 27-7-5-2(a)). “The second minimum applies where the insured rejects in writing UIM coverage equal to the bodily injury coverage[,]” which results in “the minimum coverage amount is $50,000[.]” Lee, 121 N.E.3d at 648.
Here, the application of the worker's compensation reduction in the UIM Limit Reduction Provision, which resulted in a reduction of Kearschner's UIM policy limit to zero, was contrary to the relevant part of the UIM Statute and, therefore, unenforceable. See id. The UIM Statute is unambiguous in its directive that an insurer must provide UIM coverage “in limits at least equal to the limits of liability specified in the bodily injury liability provisions of an insured's policy, unless such coverages have been rejected in writing by the insured.” See I.C. § 27-7-5-2(a).
It is undisputed that AFI provided Kearschner with an automobile insurance policy containing bodily injury liability limits of $100,000 per person and corresponding UIM limits of $100,000 per person. It is also undisputed that this case does not involve a written rejection of that $100,000 UIM coverage. From Kearschner's $100,000 UIM coverage in his Policy, Kearschner sought the availability of the remaining $50,000, which is the difference between his UIM policy liability limits of $100,000 and the $50,000 payment received from Tortfeasor's bodily injury liability policy.
The worker's compensation reduction in the UIM Limit Reduction Provision resulted in a reduction of Kearschner's UIM policy limit to zero and diminished the protection required by the UIM Statute. AFI's policy provision attempting to reduce Kearschner's UIM policy limit to zero based on the payment of any worker's compensation benefits provided less coverage than the UIM statute required and is inconsistent with the view that the UIM Statute is a full-recovery, remedial statute. Thus, the Court concluded that this specific policy provision is unlawful and unenforceable and that, depending on his damages, Kearschner is entitled to the difference between his UIM policy limit of $100,000 and the $50,000 he had received from Tortfeasor's insurer. See Justice, 4 N.E.3d at 1177-79. Accordingly, the Court reversed the trial court's order granting summary judgment to AFI and remand for further proceedings.
Medical Benefits payments cannot reduce UIM coverage limit.
In 2018, Morgan Miller crashed his car, severely injuring his passenger, Olivia Craighead. At the time, Craighead was covered by an auto policy issued by Erie Insurance Exchange, which provided her with $100,000.00 in uninsured/underinsured motorist (“UIM”) coverage and $5,000.00 in medical payments coverage (“MPC”). Miller's insurer, United Farm Family Mutual Insurance Company, tendered its liability limit of $50,000.00 and a $5,000.00 MPC payment, while Erie made a $5,000.00 MPC payment pursuant to Craighead's own coverage. While the parties agree that Erie's UIM obligation to Craighead was properly reduced to $50,000.00 by United Farm's liability payment of $50,000.00, Erie contended that the MPC payments from it and United Farm further reduced its UIM obligation to $40,000.00.
In June of 2020, Craighead sued Erie for breach of contract and for bad-faith denial of her claim for $10,000.00 in UIM coverage. Erie moved for summary judgment, arguing that a provision in its policy allowed it to reduce its UIM obligation by the amount of the MPC payments (“the Setoff Clause”) and that there existed no genuine issue of material fact regarding bad faith. The trial court granted partial summary judgment in favor of Craighead on the breach-of-contract claim, concluding that the Setoff Clause was unenforceable as written. The trial court also concluded that there existed a genuine issue of material fact on the bad-faith claim. Erie contends that the trial court erred in granting partial summary judgment in favor of Craighead and in denying its motion for partial summary judgment on the bad-faith claim.
I. Whether the Setoff Clause is Enforceable
The uninsured and underinsured motorist coverages must be provided by insurers [...] in limits at least equal to the limits of liability specified in the bodily injury liability provisions of an insured's policy unless such coverages have been rejected in writing by the insured. However, underinsured motorist coverage must be made available in limits of not less than fifty thousand dollars ($50,000). [....] Insurers may not sell or provide underinsured motorist coverage in an amount less than fifty thousand dollars ($50,000).
The parties agree that the Erie's $100,000.00 UIM obligation was properly reduced by the $50,000.00 liability payment from United Farm and that Craighead never executed a written rejection of UIM coverage. The only dispute is whether applying the Setoff Clause to further reduce the obligation by the $10,000.00 in MPC payments violates the provisions of Indiana's UIM statutes. Erie argues that only the first $50,000.00 of UIM cannot be set off, pointing to the language in Section 27-7-5-2(a) requiring that an insurer offer at least $50,000.00 in UIM coverage. Craighead and amicus curiae the Indiana Trial Lawyers Association counter that, while Section 27-7-5-2 requires that at least $50,000.00 be offered, it is the whole of the amount that is actually purchased that cannot be set off, which, in this case, was $100,000.00. In other words, the statutory minimum of $50,000.00 is the floor but not the ceiling, which is the amount of UIM purchased by the insured. Section 27-7-5-5(c) clearly provides that the starting point for calculating “[t]he maximum amount payable for bodily injury under uninsured or underinsured motorist coverage is [...] the per person limit of uninsured or underinsured motorist coverage provided in the insured's policy[,]” not the statutory minimum of UIM coverage. Moreover, “[a]s we interpret [a] statute, the Court ware mindful of both what it does say and what it does not say[,]” ESPN, 62 N.E.3d at 1196, and, as it happens, Section 27-7-5-2(a) says nothing about reductions to UIM obligations. The $50,000.00 amount mentioned in Section 27-7-5-2(a) is simply the minimum UIM coverage that must be offered and nothing more.
We acknowledge that, in Anderson, another panel of this court concluded that the insured, despite having $100,000.00 in UIM coverage, was entitled to only $50,000.00 in UIM coverage that could not be set off by a worker's compensation payment. 8 N.E.3d at 268. Anderson, however, also fails to mention Section 27-7-5-5(c). Whatever else they may stand for, Justice and Anderson do not account for Section 27-7-5-5(c), whose provisions are highly relevant to this analysis and therefore do not help Erie. Whatever the reasons for Section 27-7-5-5(c) ’s absence from the discussions in Justice and Anderson (presumably because the parties did not put it before the court), the statute is squarely before us in this case.
Having determined that Section 27-7-5-2(a) does not help Erie's case, we turn to the already-mentioned Section 27-7-5-5(c). The parties agree that the $50,000.00 in liability coverage Craighead received from United Farm reduced Erie's UIM obligation from $100,000.00 to $50,000.00. In other words, it is undisputed that the liability payment qualifies as an “amount paid in damages to the insured by or for any person or organization who may be liable for the insured's bodily injury[.]” This leaves us with the MPC payments. While the Setoff Clause specifically provides for the setoff of “auto medical payments provision in this or any other policy applicable to the loss[,]” Appellant's App. Vol. II p. 52, the Court nonetheless concluded that neither United Farm's nor Erie's MPC payments to Craighead can be set off.
An MPC payment, even by the liable party, does not qualify as an “amount paid in damages” pursuant to Section 27-7-5-5(c)(1)(A) because it is not made as amends for a wrong. Consequently, to the extent that the Setoff Clause allows Erie's UIM obligations to be reduced by “any auto medical payments provision in this or any other policy applicable to the loss[,]” Appellant's App. Vol. II p. 52, it violates the provisions of Section 27-7-5-5(c) and cannot be enforced as written. See Justice, 4 N.E.3d at 1177 (“So long as the policy language comports with our state statutes, it will control, but if it is inconsistent with those statutes, it is unenforceable.”) (citations omitted). This interpretation of Section 27-7-5-5(c) adheres to the well-settled principles that the UIM statutes must be read in a light most favorable to the insured and that statutes be construed so as to avoid rendering any language meaningless or superfluous. The Court concluded that the trial court properly entered summary judgment in favor of Craighead on the contract claim.
II. The Bad-Faith Claim
Erie contends that the trial court erred in declining to enter summary judgment in its favor on Craighead's allegation that it denied her $10,000.00 in UIM coverage in bad faith. Erie claims that it reasonably relied on the Setoff Clause and did not exercise an unfair advantage over Craighead when it declined to offered to release $40,000.00 in UIM coverage in exchange for a release of any claim on the remaining $10,000.00.
Craighead designated evidence in its response to Erie's motion for summary judgment that, for around a year, Erie refused to pay the undisputed portion of UIM without Craighead's release of any claim on the disputed portion. Indeed, the record contains designated evidence that Erie paid Craighead the undisputed $40,000.00 only after Craighead brought suit with a request for punitive damages. Craighead describes Erie's actions as “consciously forcing Craighead to give up her legal right to the $10,000 she believed was owed under the policy or forcing her to file suit and not receive the undisputed portion of her UIM claim” and characterizes the condition on payment as “unconscionable[.]”At the very least, we conclude that this designated evidence raises a genuine issue of material fact regarding whether Erie acted in good faith by conditioning the payment of undisputed funds on Craighead releasing all claims on the disputed funds. Therefore, the Court concluded that a genuine issue of material fact exists as to whether Erie acted in good faith at all times and in all respects, the Court affirmed the trial court's denial of Erie's motion for partial summary judgment on this point.
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