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STRAUSER v. WESTFIELD INSURANCE
Court of Appeals of Indiana.
2005 WL 129698
May 25, 2005
Summary of Case
Strauser was injured when his vehicle collided with a horse that had escaped from a pasture owned by Yoder whose homeowners policy was with Westfield. Westfield had denied coverage of the relevant pasture so Yoder assigned his claim to Strauser who eventually sues Westfield. and the insurance agent. This court holds that Strauser should have brought this suit much earlier calculating time from the denial of coverage. Recovery is barred by the statute of limitations.
Text of Opinion
SULLIVAN, Judge.
Appellant, Elaine (Bontrager) Strauser, as
the assignee of the Estate of Marvin Yoder, challenges the trial
court's grant of summary judgment in favor of Appellees, Fred Teall and
F.M. Teall Insurance and Financial Services (collectively "Teall").
Upon appeal, Strauser presents two issues for our review, which we
consolidate and restate as whether the trial court properly determined
that Strauser's claims were barred by the applicable statute of
limitations.
We affirm.
The relevant facts are undisputed. On
September 18, 1991, Strauser was injured in an automobile accident at
the intersection of State Road 15 and County Road 18 in Elkhart County.
Two
horses owned
by Cletus Peterson escaped from a pasture owned by Yoder and were hit
by Strauser's vehicle. At the time of the accident, Yoder had a
homeowner's insurance policy with Westfield Insurance Company
("Westfield"), which had been purchased through Teall in 1985. The
policy provided coverage of Yoder's residence and provided additional
coverage of vacant land owned by Yoder.
On August 6, 1992, Strauser filed suit
against Yoder and Peterson for negligently maintaining the property and
allowing the
horses to
get loose. Initially, Westfield hired an attorney to represent Yoder
pursuant to a reservation of rights. After further investigation,
however, Westfield made the determination that its policy did not cover
the claim against Yoder and withdrew its defense.
Thereafter, on August 31, 1995, Yoder's
attorney executed an assignment of rights in which Yoder assigned to
Strauser, "any and all claims Marvin Yoder may have against Fred Teall,
his insurance agency, or any of [h]is or his insurance agency's
successors or assigns for the error made in not insuring the parcel of
Marvin Yoder's property used as pasture on County Road 18, North of
Goshen, Indiana, in 1985." Appellant's App. at 46.
Over five years later, on May 22, 2001, the
Elkhart Superior Court entered an order granting judgment against the
Estate of Marvin Yoder and Peterson and in favor of Strauser in the
amount of $350,000. On September 25, 2002, Strauser filed suit against
Teall and Westfield. In her complaint, Strauser alleged that
Westfield's reason for denying Yoder coverage was "not valid and ...
not proper." Appellant's App. at 19. The complaint also alleged that
Yoder, at all relevant times, believed that his pasture land was
covered by the policy. The complaint then set forth three main claims
as follows:
"I. CLAIMS AS TO [TEALL]
12. [Teall] owed a contractual duty to
Marvin Yoder to provide insurance for Mr. Yoder's pasture land from
which the
horses
escaped.
13. [Teall] breached [his] contractual duty
to Yoder by failing to arrange proper coverage.
14. The Estate of Marvin Yoder has suffered
monetary damages as a result of this breach.
15. By virtue of the assignment of rights,
[Strauser] states a cause of action for any lack of insurance coverage
against [Teall].
II. BREACH OF CONTRACT AS TO [TEALL]
* * *
17. Yoder executed an insurance application
in which [Teall] w[as] obligated to provide coverage for, inter alia,
the pasture land from which the horses escaped, causing the accident with [Strauser].
18. [Teall] breached said contract by
failing to provide coverage for said property.
19. The Estate of Marvin Yoder has suffered
damages as a result of said breach. 20. By virtue of the assignment of
rights, [Strauser] states a cause of action for breach of contract
against [Teall]." Appellant's App. at 20-21.
On May 7, 2003, Westfield filed a motion for
summary judgment, and the following day, Teall filed his motion for
summary judgment. Strauser responded to the motions on August 8, 2003.
The trial court held a hearing on the matter on September 5, 2003. On
March 19, 2004, the trial court granted summary judgment in favor of
Teall and Westfield, concluding that Strauser's claims were barred by
the applicable statute of limitations.
Our standard of review of trial court
rulings on summary judgment is well settled:
"Summary judgment is appropriate only where
no genuine issues of material fact exist, and the moving party is
entitled to judgment as a matter of law. Genuine issues of material
fact exist where facts concerning an issue which would dispose of the
litigation are in dispute. The moving party has the initial burden of
demonstrating, prima facie, the absence of genuine issues of material
fact. If the moving party does so, the burden then falls upon the
non-moving party to identify a factual dispute which would preclude
summary judgment. Upon appeal of a grant of summary judgment, we apply
the same standard as the trial court, resolving any factual disputes or
conflicting inferences in favor of the non-moving party. We consider
only those portions of the record specifically designated to the trial
court. Upon appeal, the non-moving party bears the burden of persuasion
and must specifically point to the disputed material facts and the
designated evidence pertaining thereto. We will liberally construe the
designated evidence in favor of the non-movant, so that he is not
improperly denied his day in court. Nevertheless, we will not become an
advocate for a party, and the trial court's entry of summary judgment
will be affirmed if it may be sustained upon any theory or basis found
in the evidentiary material designated to the trial court."
Meisenhelder
v. Zipp Express, Inc., 788 N.E.2d 924, 926-27 (Ind.Ct.App.2003) (citations omitted).
The trial court here entered specific
findings and conclusions. Although such findings and conclusions offer
insight into the trial court's rationale and facilitate our review,
they do not alter our standard of review and are not binding upon this
court.
Jones
v. W. Reserve Group/Lightning Rod Mut. Ins. Co., 699 N.E.2d 711,
714 (Ind.Ct.App.1998), trans. denied.
Strauser claims that the trial court erred
in that it improperly concluded that her claims accrued on the date
that Westfield denied coverage to Yoder and are therefore barred by the
applicable statute of limitations. The first question is therefore
which statute of limitations is applicable in the present case. Teall
argues upon appeal that the two-year statute of limitations governing
tort actions should apply instead of the ten-year statute of
limitations governing actions based upon written contracts. Strauser
counters that the latter should apply.
Teall cites the case of
Butler
v. Williams, 527 N.E.2d 231 (Ind.Ct.App.1988),
trans. denied, wherein the plaintiffs, the Williamses, were
injured in an automobile accident with a man who had become intoxicated
while a patron at a tavern owned by the Morgans. Defendant Butler, an
insurance agent, had procured an insurance policy for the tavern
through Hawkeye-Security Insurance Company, but the policy expressly
excluded coverage for liability incurred as a result of serving
alcoholic beverages. When the Williamses sued the Morgans, Hawkeye
Insurance notified them that their policy did not cover the claim
against them. Thereafter, the Morgans executed an assignment of claims
wherein they assigned to the Williamses any claims they had against
their insurance carrier for failing to recommend insurance coverage for
alcohol-related liability. After judgment was entered against the
Morgans, the Williamses, by way of the assignment, brought suit against
the agent Butler, another agent, and Hawkeye Insurance.
Upon interlocutory appeal, the question
presented was whether the claims were barred by the statute of
limitations. The Williamses argued that the two-year statute of
limitations for tort actions was inapplicable to their claim because
their complaint alleged a breach of contract. The court disagreed,
noting that the Williamses had "not provided us with any details about
the nature of the contract they claim was breached by the appellants."
Id.
at 233. The court further noted that the
nature or substance of the cause of action determines which limitations
period applies and held:
"We cannot agree with the appellees in the
case at bar, that the statute of limitations for contract actions
should apply. The nature or substance of the cause of action is
negligence in failing to obtain a particular type of insurance
coverage. Thus, the two (2) year statute of limitations applies."
Id.
at 233-34.
Teall now argues that Strauser's cause of
action, like the Williamses' claims in
Butler, are truly claims of negligence in failing to
provide the type of insurance coverage desired.
We conclude such claims are time-barred
regardless of which statute of limitations is applicable because, as
explained infra, more than ten years has elapsed since the
cause of action accrued. When a cause of action accrues is generally a
question of law for the courts to determine.
Meisenhelder,
788 N.E.2d at 927.
A cause of action brought by an assignee of another's claims accrues at
the same time that the assignor's claims accrued.
Butler,
527 N.E.2d at 234. In determining when
either a claim of breach of a written contract or tort claim accrues,
Indiana follows the "discovery rule." In other words, a cause of action
for either tort or written contracts begins to run when a party knows,
or in the exercise of ordinary diligence could discover, that the
contract has been breached or that an injury had been sustained as a
result of the tortious act of another. See
Meisenhelder,
788 N.E.2d at 928, 930.
Strauser argues that Yoder's claim against
Teall did not accrue until May 22, 2001, when judgment was entered
against Yoder; only then, Strauser argues, did Yoder have the right to
seek a declaration of coverage against Westfield under the terms of his
policy. The court in
Butler rejected a similar argument. In
Butler, the plaintiffs argued
that the claim they were asserting accrued when the owners of the
tavern had judgment entered against them. The court held that for a
cause of action to accrue, it is not necessary that the extent of the
damage be known or ascertainable, but only that damage has occurred.
527
N.E.2d at 234. The court further held:
"the latest date on which the Morgans' cause
of action against their insurer and insurance company could have
accrued was January 11, 1984, when Hawkeye [Insurance Company] notified
the Morgans that their insurance policy did not cover the Williamses'
accident. Clearly, on that date the Morgans knew about the Williamses'
claim and were made aware that their insurance policy did not include
dram shop liability coverage. Because the cause of action accrued more
than two (2) years before the Williamses filed their suit against
Hawkeye and Butler, the claim is barred by the statute of
limitations...."
Id.
Applying such reasoning to the present case,
we conclude that Strauser's cause of action accrued on June 4, 1992,
when Westfield denied Yoder's claim. Strauser did not file suit against
Teall until September 25, 2002, more than ten years later. Thus, under
either statute of limitations, Strauser's cause of action is time
barred.
Strauser posits, however, that her claims
against Teall may only succeed if Westfield's denial of Yoder's claim
was proper. According to Strauser, if the denial of coverage was
improper, then Westfield, not Teall, would be liable; but if
Westfield's denial was proper, then Teall, not Westfield, would be
liable for failing to procure the proper coverage. Thus, Strauser
argues that her claims against Teall are mutually exclusive with her
claim against Westfield. She further argues that, pursuant to the terms
of the Westfield policy, Yoder had no right to sue Westfield until such
time as his liability had been reduced to judgment. Specifically, she
refers to the following language in the policy:
"No one will have the right to join us as a
party to any action against an insured. Also, no action with
respect to Coverage E can be brought against us until the obligation of
the insured has been determined by final judgment or agreement
signed by us." Appellant's App. at 45.
Again, a similar argument was rejected in
Butler. There, the Williamses claimed that the
"no-action" clause in the Morgans' insurance policy prohibited them
from bringing suit against Hawkeye Insurance until a judgment had been
rendered in the case against the Morgans. The court held that the
Williamses' claim against Hawkeye Insurance was not based upon a breach
of the existing insurance contract, but was instead a suit alleging
negligence for failure to provide a different type of policy.
527
N.E.2d at 234. Therefore, "[t]he clause
did not bar the Williamses' negligence claim, nor did it suspend the
running of the statute of limitations until after judgment had been
entered in the Morgans' suit."
Id.
Further, in
Smithers
v. Mettert, 513 N.E.2d 660, 664 (Ind.Ct.App.1987),
trans. denied, it was held that an insurer's refusal to defend
an insured against suit bars the subsequent invocation of a "no-action"
clause as a defense. This is especially true when the insurer had
notice of the suit and could have taken measures to contest it. See
id. Here, Westfield had notice of the suit. Indeed,
Westfield initially provided a defense for Yoder under a reservation of
rights but later denied coverage after further investigating the claim.
Thus, the "no-action" clause of the Westfield policy did not prevent
Yoder from filing suit against Westfield when Westfield denied his
claim, and Yoder could have filed suit against both Teall and Westfield
when Westfield denied his claim on June 4, 1992. As noted, Strauser, as
Yoder's assignee, did not file suit until September 25, 2002, over ten
years later. Therefore, either a breach of written contract claim or a
negligence claim against Teall is barred by the applicable statutes of
limitation. The trial court did not err in granting summary judgment in
favor of Teall.
The judgment of the trial court is affirmed.