ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE:
MICHAEL J. ANDERSON ROBERT J. KONOPA
Anderson, Agostino & Keller, PC CLAIRE KONOPA AIGOTTI
South Bend, Indiana Konopa, Reagan & Kenyon, P.C.
South Bend, Indiana
COURT OF APPEALS OF INDIANA
GLENN BRADY, )
vs. ) No. 71A03-0206-CV-181
ALLSTATE INDEMNITY COMPANY, )
APPEAL FROM THE ST. JOSEPH SUPERIOR COURT
The Honorable R. W. Chamblee, Jr., Judge
Cause No. 71D04-9807-CP-844
May 27, 2003
OPINION - FOR PUBLICATION
Glenn Brady appeals the trial courts grant of partial summary judgment in favor
of Allstate Indemnity Company (Allstate). On appeal, Brady raises three issues for
which we consolidate and restate as: whether the trial court
erred in granting summary judgment on Bradys claims of bad faith and punitive
damages because it found that there is no genuine issue of material fact
as to whether Allstate breached its duty to deal with Brady in good
FACTS AND PROCEDURAL HISTORY
On September 12, 1997, Brady was a passenger in a vehicle driven by
Lisa Barley that was hit by a vehicle driven by Nathaniel Crain.
Brady sustained injuries to his arm and shoulder blade. Allstate insured Crain,
whose policy allowed payment for bodily injury up to his $25,000 policy limit.
Coincidentally, Allstate also insured Brady as a named insured under a policy
issued to Barley (Bradys policy). Bradys policy provided for underinsured motorist (UIM)
coverage that entitled Brady to submit a UIM claim up to a $50,000
policy limit, less any underlying policy payments.
Under the terms of his policy, Brady could pursue a UIM claim only
after being paid the $25,000 policy limit of Crains underlying policy. Chris
Good was Allstates representative for Crains underlying coverage, and James Yoder was Allstates
representative for Bradys UIM claim. Philip Marco was Allstates Claims Supervisor and
the person to whom both Good and Yoder reported.
Brady negotiated his underlying claim with Good while keeping Yoder apprised of his
progress. Allstate questioned the extent of Bradys injuries on the underlying claim,
but did not dispute that he incurred $7,307 in medical expenses and $9,480
in lost wages.
Appellants Appendix at 139. Ultimately, Allstate tendered to
Brady the $25,000 limit from Crains policy, but refused to pay anything on
Bradys UIM claim. On July 6, 1998, Brady filed a complaint alleging
that Allstate breached both the insurance contract and its duty of good faith
toward Brady by failing to pay the UIM claim. The complaint prayed
for the cost of the action, compensatory damages, and punitive damages for Allstates
breach of its duty of good faith.
On January 31, 2001, Allstate filed a motion for partial summary judgment on
the breach of good faith and punitive damages claims. In support of
this motion, Allstate designated evidence including pleadings, a copy of Bradys insurance policy,
portions of Bradys deposition, and Marcos affidavit. In response to Allstates motion
for partial summary judgment, Bradys designated evidence included his complaint, Allstates answer to
the complaint, portions of Bradys deposition, Bradys affidavit, and the affidavit of expert
witness James Ludlow.
The designated facts most favorable to Brady as the nonmoving party reveal that
his injuries initially prevented him from working. Brady reported this loss of
income to Good, and, less than two weeks after the accident, Allstate paid
him for two weeks of lost wages. This payment was an advance
on the settlement of the underlying claim. On October 10, 1997, Brady
spoke with Good about additional payment for lost wages and was informed that
Good could not process the request without medical verification of the injuries and
a disability statement regarding Bradys inability to work. Bradys treating physician, Dr.
Charles Ware, submitted the requested verification of injuries and Allstate advanced Brady two
more weeks of lost wages. Thereafter, Dr. Ware sent Good a confirmation
that Brady was unable to work until further notice. During the next
two months, Brady requested and Allstate paid five separate advances for additional lost
wages, which collectively totaled $5,310.
On January 26, 1998, Brady sent a letter to Good in which he:
(1) complimented Good for his consummate professionalism in the way in which he
ha[d] been handling the case; (2) explained that his damages would far exceed
$50,000; and (3) requested payment of both the $25,000 limit under Crains Allstate
policy and $25,000 in UIM payments under his own policy, the difference between
the $50,000 limit and Crains $25,000 limit. Bradys Deposition at 113; Appellants
Appendix at 59. Brady also sent a copy of this letter to
Yoder. On February 3, 1998, Good informed Brady by telephone that the claim
would be evaluated once pertinent medical records were received. Good also indicated
that, although he would evaluate Bradys case, he could not guarantee that Brady
had a [UIM] limits case. Appellants Appendix at 100. After learning
that Brady was pursuing a UIM claim, Good attempted to settle the underlying
Crain case for less than $25,000 on at least three separate occasions.
These offers failed to include fourteen medical bills that Brady had previously submitted.
At the end of February or the beginning of March 1998, Brady contacted
his physical therapist and instructed her not to release medical records to Allstate
until Brady spoke to his attorney, Michael Anderson. On March 6, 1998,
Good called Brady and informed him of the need for an independent medical
examination. Brady refused the medical examination claiming that it violated his civil
rights. Brady further asserted that, based on Allstates refusal between January and
March of 1998 to pay the policy limits requested, he planned to file
a bad faith claim against both Allstate and Good.
On March 16, 1998, Marco spoke with Anderson and advised him that Allstate
would pay the policy limits on the policy covering Nathanial Crain (after adjusting
for prepayments) to avoid needless litigation, but no additional evaluation could be made
until an independent medical examination was performed and complete records received. Appellants
Appendix at 73. On May 13, 1998, Dr. Jonathan Javors conducted an
independent medical examination on Brady and concluded that he had not fractured his
shoulder blade in the accident. Appellants Appendix at 61. Allstate determined
that Bradys injuries did not exceed the $25,000 paid under Crains policy and
denied his UIM claim.
Ludlow, a former claims adjuster for Allstate, reviewed Bradys file and opined that
his claim was clearly in excess of [$25,000] based on a review of
the type of injuries he received which included a possible fracture of his
clavicle/scapula, some disability as a result of damages to his ulna nerve, lost
wages and medical expenses which totaled in excess of [$14,000].
at 145. Ludlow further averred that Good and Yoder had several conversations
about proposed payments of the underlying and UIM claims, that Good and Crain
reported to Marco, and that Marco was responsible for payments made under both
Following a hearing, the trial court granted Allstates motion for partial summary judgment
on Bradys claim of bad faith and request for punitive damages. Noting
that there was no just reason for delay, the trial court entered a
final judgment with respect to its order. See Ind. Trial Rule 56(C).
Brady now appeals.
DISCUSSION AND DECISION
The purpose of summary judgment is to terminate litigation about which there can
be no material factual dispute and which can be resolved as a matter
of law. Holt v. Quality Motor Sales, Inc., 776 N.E.2d 361, 364
(Ind. Ct. App. 2002), trans. denied (quoting Harris v. Traini, 759 N.E.2d 215,
220 (Ind. Ct. App. 2001), trans. denied (2002)). A trial courts grant
of summary judgment is clothed with a presumption of validity on appeal, and
the appellant bears the burden of demonstrating that the trial court erred.
Nevertheless, the record must be carefully scrutinized to ensure that the plaintiff was
not improperly denied a day in court. Id. at 364-65 (quoting Lutz
v. Fortune, 758 N.E.2d 77, 81 (Ind. Ct. App. 2001) (citation omitted), trans.
In determining the propriety of summary judgment, we apply the same standard as
the trial court.
Id. at 365 (quoting Harris, 759 N.E.2d at 220).
Under Indiana law, the party moving for summary judgment must demonstrate the
absence of any genuine issue of material fact and only then is the
nonmovant required to come forward with contrary evidence. Shambaugh & Son, Inc.
v. Carlisle, 763 N.E.2d 459, 461 (Ind. 2002); Jarboe v. Landmark Cmty. Newspapers,
Inc., 644 N.E.2d 118, 123 (Ind. 1994); Munsell v. Hambright, 776 N.E.2d 1272,
1278 (Ind. Ct. App. 2002), trans. denied (2003); Farm Bureau Ins. Co. v.
Allstate Ins. Co., 765 N.E.2d 651, 654 (Ind. Ct. App. 2002), affd on
rehg, 770 N.E.2d 859, 860, trans. denied. The court must accept as
true those facts alleged by the nonmoving party, construe the evidence in favor
of the nonmovant, and resolve all doubts against the moving party. Masonic
Temple Assn of Crawfordsville v. Indiana Farmers Mut. Ins. Co., 779 N.E.2d 21,
25 (Ind. Ct. App. 2002).
Findings of fact and conclusions thereon made by the trial court offer valuable
insight into the rationale for the judgment and facilitate our review; nevertheless, they
are not binding on us.
Hoosier Ins. Co. v. Audiology Found. of
America, 745 N.E.2d 300, 305-306 (Ind. Ct. App. 2001), trans. denied; Interstate Cold
Storage, Inc. v. General Motors, Corp., 720 N.E.2d 727, 730 (Ind. Ct. App.
1999), trans. denied (2000). If the trial courts grant of summary judgment
can be sustained on any theory or basis in the record, we must
affirm. Farm Bureau Ins., 765 N.E.2d at 655; Interstate Cold Storage, 720
N.E.2d at 730.
Brady contends that the trial court erred when it granted Allstates motion for
summary judgment on Bradys bad faith and punitive damages claims. Brady argues
that the tactics used by Allstate to settle the underlying claim, i.e., offering
less than $25,000 to preclude Brady from filing a UIM claim and sharing
information between Good, Yoder, and Marco provide adequate evidence that Allstates refusal to
pay the UIM claim was done in bad faith and warrants punitive damages.
Brady concludes, therefore, that Allstate was not entitled to judgment as a
matter of law.
USA Life One Ins. Co. of Indiana v. Nuckolls, 682 N.E.2d 534,
541 (Ind. 1997), our supreme court explained as follows:
Under Indiana law, in order for a plaintiff to recover punitive damages from
a breach of contract claim, the plaintiff must plead and prove the existence
of an independent tort of the kind for which Indiana law recognizes that
punitive damages may be awarded.
Miller Brewing Co. v. Best Beers, 608
N.E.2d 975, 984 (Ind. 1993). An insurance company has a duty to
deal with its insured in good faith, and the breach of that duty
allows for a cause of action in tort. Erie Ins. Co. v.
Hickman, 622 N.E.2d 515, 519 (Ind. 1993). The erroneous denial of coverage
does not necessarily violate an insurance companys duty of good faith. Id.;
Nelson v. Jimison, 634 N.E.2d 509, 512 (Ind. Ct. App. 1994). Furthermore,
proof that a tort was committed does not necessarily establish the right to
punitive damages. Erie Ins., 622 N.E.2d at 520; Nelson, 634 N.E.2d at
512. Punitive damages may be awarded only if there is clear and
convincing evidence that defendant acted with malice, fraud, gross negligence, or oppressiveness which
was not the result of a mistake of fact or law, honest error
or judgment, overzealousness, mere negligence, or other human failing. [Erie Ins., 622
N.E.2d] at 520.
The analysis of Bradys claim is somewhat complicated by the fact that Allstate
is the insurer for both Brady and Crain. While Indiana law recognizes
a legal duty implied in all insurance contracts for an insurer to deal
in good faith with its insured,
Freidline v. Shelby Ins. Co., 774 N.E.2d
37, 40 (Ind. 2002) (citing Erie Ins., 622 N.E.2d at 518); Masonic Temple
Assn of Crawfordsville, 779 N.E.2d at 26, this duty of good faith does
not apply to an insurers dealings with a claimant in a third party
claim. Menefee v. Schurr, 751 N.E.2d 757, 760 (Ind. Ct. App. 2001),
trans. denied (2002); see Cromer v. Sefton, 471 N.E.2d 700, 703 (Ind. Ct.
App. 1984) ([T]here is no duty or fiduciary relation running from the insurer
to the injured plaintiff. The insurers only duty is to the insured
on its contract.). As such, Allstate owed Brady a duty of good
faith on the UIM claim, but had no such duty while negotiating the
underlying claim on Crains policy.
The trial court noted that Allstate established a lack of genuine issues of
material fact as to bad faith and punitive damages by showing that it
made periodic payments to Brady pursuant to the underlying claim and by showing
that delays in processing the claim, if any, were caused not by bad
faith but by Bradys refusal to submit to an independent medical examination.
The court also found that it could not speculate whether discussions between Yoder
and Good were indicative of dishonest purpose or ill will, and noted that
offers to settle the underlying claim for less than $25,000 merely revealed a
difference in opinion over the value of the claim.
On appeal, Brady highlights the previously designated facts that Allstate undervalued the Crain
claim and allowed communication among its claims adjusters as evidence that a genuine
issue of material fact as to bad faith precludes summary judgment. Brady
also asserts that Allstates knowledge that he was in a financially precarious situation
allowed it to try and pressure him into settling the underlying claim for
less than it was worth. Finally, Brady offers that Ludlow averred that
his claim was clearly in excess of Crains $25,000 policy limit.
Brief at 10; Appellants Appendix at 152.
Taking Bradys facts as true, his arguments are of no import. Both
parties and the trial court mistakenly focused on actions taken by Allstate while
it was settling the underlying Crain claim. If Brady and Crain had
been covered by separate insurers, actions taken by Crains insurer in valuing and
settling the underlying claim could not have been used as evidence of bad
faith in a suit by Brady against his UIM insurer. Allstate owed
Brady no special duty in negotiating the underlying claim. Therefore, Allstates discussions
and attempts to settle the underlying claim for as little as possible, without
more, cannot be used as evidence of Allstates bad faith actions in refusing
to pay the UIM claim.
An insurance companys obligation of good faith and fair dealing includes the obligation
to refrain from[:] (1) making an unfounded refusal to pay policy proceeds; (2)
causing an unfounded delay in payment; (3) deceiving the insured; and (4) exercising
an unfair advantage to pressure an insured into settlement of his claim.
Masonic Temple Assn of Crawfordsville, 779 N.E.2d at 26 (citing Erie, 622 N.E.2d
at 519). Here, the parties should have focused on whether Allstate pressured
Brady to settle or made an unfounded refusal to pay the UIM claim.
By mistakenly focusing on the actions taken while settling the underlying claim, Allstate
failed to satisfy its
Jarboe burden of proving that there were no genuine
issues of material fact concerning the nonpayment of the UIM claim. Nevertheless,
we find that the following designated evidence supports granting partial summary judgment to
Allstate on the punitive damages and bad faith claims. Brady was injured
in an accident on September 12, 1997, was unable to attend work, and
incurred expenses totaling $16,787 -- $7,307 in medical expenses and $9,480 in lost
wages. Brady was initially satisfied with intermittent payments of medical bills and
lost wages, but in January of 1998 informed Good that he was requesting
the full payment of $50,000, $25,000 under Crains policy and $25,000 under his
own UIM coverage. Good responded that he could not guarantee that Brady
had a [UIM] limits case. Appellants Appendix at 100. Allstate indicated
that it would need to review Bradys medical records before settling his UIM
claim. Allstate also stated that Brady would have to submit to an
independent medical examination. Bradys insurance policy provided that an injured person may
be required to take medical examinations by physicians we choose, as often as
we reasonably require. Appellants Appendix at 79. Brady initially refused to
release his medical records and did not agree to an independent medical examination
until May 13, 1998. The examination revealed that Brady had not fractured
his shoulder blade. Allstate paid Brady $25,000, but refused to pay anything
under the UIM claim.
Bradys designated facts contain no evidence of medical bills or lost wages in
excess of $16,787. While Ludlow opined that Bradys claim was worth in
excess of $25,000, Brady was requesting $50,000 under the combined underlying and UIM
claims. A refusal to pay $50,000 when the claim is only alleged
to be in excess of $25,000 and actual losses are less than $17,000
is not sufficient evidence of bad faith to preclude summary judgment.
Likewise, Bradys claim of contact between Good, Yoder, and Marco, without more, does
not give rise to a finding of bad faith. A UIM insurer
is often kept apprised by its insured of amounts offered in the settlement
of an underlying claim and even has the right to intervene in a
tort action between its insured and the underinsured motorist, with the goal of
keeping the primary insurers settlement amount to a minimum. S
ee Johnston v.
State Farm Mut. Auto. Ins. Co., 667 N.E.2d 802, 803 (Ind. Ct. App.
1996), trans. denied (injured partys attorney kept UIM insurer apprised of the progress
of proceedings with the primary insurer); see also Westfield Ins. Co. v. Axsom,
684 N.E.2d 241, 245 (Ind. Ct. App. 1997) (holding that UIM insurer has
right to intervene in tort action by injured insured against tortfeasor underinsured motorist).
Brady even contributed to the sharing of knowledge by keeping in touch
with both Good and Yoder and by sending each a carbon copy of
Johnston, we addressed a summary judgment analysis with facts similar to those
before us today. Johnston was a passenger in a vehicle and was
injured when a vehicle driven by Kunkel collided with his car. State
Farm Mutual Automobile Insurance Company (State Farm) insured Johnston with a UIM policy
limit of $250,000. Kunkel was insured by Illinois Farmers Mutual Insurance Company
(Farmers) and had a policy limit of $50,000. Johnston made a claim
against Kunkel and also filed suit against him.
During negotiation of the underlying claim with Farmers, State Farm was kept apprised
of the proceedings and was informed that Johnston intended to file a UIM
claim. Johnston claimed medical expenses and lost wages in the amount of
$27,000. Although workers compensation had paid $16,000 of Johnstons expenses, he claimed
damages well in excess of $1,000,000 due to lost wages and chronic pain.
Farmers ultimately settled with Johnston for the policy limit of $50,000, but
State Farm offered only $25,000 of its potential $200,000 UIM limitthe $250,000 UIM
limit minus the $50,000 settlement.
After settling with Farmers, Johnston amended his complaint to add State Farm as
a defendant, and Kunkel was dismissed from the case. In his suit
against State Farm, Johnston alleged that his insurer was liable for punitive damages
for employing abusive and harassing tactics in denying and refusing to pay his
UIM claim. State Farm filed a motion for summary judgment on the
claims of bad faith and punitive damages, and the trial court granted the
In affirming the trial courts grant of summary judgment, we commented as follows:
Although technically a claim for breach of an insurance contract, Johnstons claim against
State Farm is, in essence, a claim for personal injuries including pain and
suffering. In personal injury actions, the trier of fact is not required
to award substantial damages for lost income, permanent impairment, or pain and suffering.
Such an award depends upon the evidence. Damages for pain and
suffering are of necessity a jury question which may not be reduced to
fixed rules and mathematical precision. Although the actual medical bills incurred may
constitute evidence of the reasonable value of the services provided, such bills are
not dispositive of the determination of the reasonable medical expenses to be awarded
to an injured plaintiff.
The properly designated evidence reveals nothing more than a good faith dispute regarding
the value of Johnstons UIM claim. The properly designated evidence regarding the
value of Johnstons personal injuries is not of such a quality that it
clearly demonstrates that Johnstons damages exceed the UIM policy limit of $250,000.00.
Therefore, the trial court properly determined that Johnstons claim for the tortious breach
of State Farms duty to exercise good faith could not survive summary judgment.
And, as the viability of Johnstons claim for punitive damages rests upon
the viability of his tort claim, the trial court correctly entered summary judgment
on this count as well. Johnston has failed to meet his burden
of demonstrating that the trial court erred in entering summary judgment against him.
Therefore, we find no error.
Johnston, 667 N.E.2d at 806.
Viewing the facts and inferences surrounding Bradys UIM claim in the light most
favorable to Brady, we find that the properly designated evidence reveals nothing more
than a good faith dispute regarding the value of Bradys UIM claim.
As we concluded in
Johnston, the evidence regarding the value of Bradys personal
injuries is not of such a quality that it clearly demonstrates that his
damages warrant payment by Allstate of the $25,000 UIM claim -- the $50,000
limit minus Crains settlement. Therefore, Bradys claim for the tortious breach of
Allstates duty to exercise good faith may not survive summary judgment. Since
the viability of Bradys claim for punitive damages rests upon the viability of
his tort claim, summary judgment is appropriate on this count as well.
Brady has failed to meet his burden of demonstrating that the trial court
erred in entering summary judgment against him. Therefore, we find no error.
SHARPNACK, J., concurs.
SULLIVAN, J., concurs with separate opinion.
COURT OF APPEALS OF INDIANA
GLENN BRADY, )
vs. ) No. 71A03-0206-CV-181
ALLSTATE INDEMNITY COMPANY, )
SULLIVAN, Judge, concurring
I concur and write separately merely to voice the opinion that this case
reflects the dilemma which is inherently present when the same insurance company has
two policiesone on the tortfeasor and one on the plaintiff for an underinsured
motorist claim. There is a tension which may arise in the handling
of the two separate claims when the settlement of one such claim negatively
impacts the insurers liability upon the second policy.
Even if there is no conflict of interest in the actual handling of
the two claims, an appearance of impropriety may surface. The subtleties of
the relationships among and between those involved is magnified when, as here, the
same claims supervisor has responsibility with regard to the two separate claims.
Be that as it may, I agree that, as a matter of law,
Allstate did not breach a duty of good faith dealing with Brady and
was therefore not liable for punitive damages.
Brady raised a fourth issue in his brief, but subsequently moved to
withdraw that issue on October 18, 2002.
Footnote: In the parties briefs, Crains name is spelled two different ways.
We have selected the spelling used in the complaint, which is also the
spelling most commonly found in the designated evidence.
Footnote: Although Ludlows opinion failed to specify whether claim referred to the
whole claim or just the UIM claim, he appears to have been valuing
the entire claim as being in excess of $25,000.
Footnote: We note that Allstate had already settled with Brady for Crains
policy limits. If it had not done so, Brady would have been
precluded from recovering under the UIM policy, and any claim for bad faith
in this action would necessarily involve analysis of the appropriateness of Allstates actions
in settling the Crain claim for less than policy limits.