ILNews

Court reverses insurer's summary judgment

Jennifer Nelson
January 1, 2007
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The Indiana Court of Appeals today reversed a summary judgment award in favor of an auto insurance company, holding that an uninsured-motorist claim was not barred by state statute and language of the insurance policy.

In Mary Lou Smith, et al. v. Auto-Owners Insurance Co., No. 84A01-0611-CV-516, the appellate court had to decide whether Smith's claim for uninsured motorist coverage against her policyholder, Auto-Owners, was allowed based on her policy and Indiana Code 27-7-5-4.

Smith and several family members were involved in a car accident caused by Nellie Rogers in February 1999. The Smiths filed a personal injury action against Rogers in February 2001. Just a few days before the trial was set to start in 2004, Rogers' attorney told the Smiths' attorney that Rogers' insurance company, Highlands Insurance Co., had filed for receivership in Texas. That same day, the Smiths' attorney sent a letter to Auto-Owners to inform the company the Smiths would be making an uninsured-motorist claim. Later, the Smiths added Auto-Owners as a defendant in their personal-injury action.

Auto-Owners filed a complaint for declaratory judgment, arguing Indiana statutes and the terms of the Smiths insurance policy prevented them from making an uninsured motorist claim more than two years after an accident. The trial court granted summary judgment in favor of Auto-Owners.

At issue in this case is the interpretation and application of the insurance policy and definition of insolvency regarding uninsured-motorist claims as defined by Indiana Code, wrote Judge James Kirsch. He and Judge Margret Robb overturned the trial court grant of summary judgment.

Indiana Code 27-7-5-4 says uninsured motorist coverage under an insurer's insolvency protection applies only when the tortfeasor's insurer becomes insolvent within two years after the accident. The Smiths' insurance policy with Auto-Owners also says they must file an uninsured-motorist claim within two years from the date that the cause of action accrued. However, in the Smith's case, the cause of action for the claim is the insolvency of Rogers' insurer.

Before discovering Highland had become insolvent, the Smiths would not have been able to bring a claim for uninsured motorist with Auto-Owners, wrote Judge Kirsch. The statute of limitations for IC 27-7-5-4 runs from the date of the accident or the date of the insurer's insolvency, whichever is later. For someone to claim uninsured-motorist coverage due to insolvency of the tortfeasor's insurer, the cause of action is not complete until there is an accident, the tortfeasor's insurer becomes insolvent, and the injured party learns of the insolvency. Judge Kirsch wrote the claim does not need to be filed within two years of the accident but within two years after learning the tortfeasor's insurer became insolvent. Even though Highland was placed in receivership in November 2003, the Smiths didn't learn about until just before their trial in March 2004.

Because questions of fact exist as to when the insolvency of Highland occurred and if the Smiths then filed their claim in a timely manner, summary judgment in favor of Auto-Owners is reversed.

Judge Michael Barnes dissented from the majority because he believed the plaintiffs do not present a question of fact regarding the potential date of Highland's insolvency and the plain language of IC 27-7-5-4 bars the plaintiffs' suit. Indiana Code would require the Smiths to present evidence that as of February 2001, Highland was unable to pay its obligations or its liabilities exceeded its assets at the time. The Smiths rely on receivership documents, which did not come out until four years after the date of the accident and those documents show Highland was not experiencing financial difficulties until after the two years as is required by Indiana Statute and Auto-Owner's policy.
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  1. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

  2. As a lawyer who grew up in Fort Wayne (but went to a real law school), it is not that hard to find a mentor in the legal community without your school's assistance. One does not need to pay tens of thousands of dollars to go to an unaccredited legal diploma mill to get a mentor. Having a mentor means precisely nothing if you cannot get a job upon graduation, and considering that the legal job market is utterly terrible, these students from Indiana Tech are going to be adrift after graduation.

  3. 700,000 to 800,000 Americans are arrested for marijuana possession each year in the US. Do we need a new justice center if we decriminalize marijuana by having the City Council enact a $100 fine for marijuana possession and have the money go towards road repair?

  4. I am sorry to hear this.

  5. I tried a case in Judge Barker's court many years ago and I recall it vividly as a highlight of my career. I don't get in federal court very often but found myself back there again last Summer. We had both aged a bit but I must say she was just as I had remembered her. Authoritative, organized and yes, human ...with a good sense of humor. I also appreciated that even though we were dealing with difficult criminal cases, she treated my clients with dignity and understanding. My clients certainly respected her. Thanks for this nice article. Congratulations to Judge Barker for reaching another milestone in a remarkable career.

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