Frye et al v. Nationwide Mutual Insurance Company et al

Filing 88

OPINION AND ORDER: DENYING 48 MOTION for Partial Summary Judgment filed by Plaintiffs; DENYING 50 MOTION for Partial Summary Judgment ALTERNATIVE MOTION filed by Plaintiffs; GRANTING 72 Supplemental MOTION for Summary Judgment filed by Nationwide Mutual Insurance Company; GRANTING 74 STIPULATION to Dismiss Breach of Duty of Good Faith Claim Against Nationwide filed by Nationwide Mutual Insurance Company; GRANTING 86 STIPULATION to Dismiss filed by Auto-Owners Insurance Co. Defendant Nationwide Mutual Insurance Company is DISMISSED from this case. Signed by Judge Rudy Lozano on 2/4/15. (jld)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION

)
)
)
)
)
)
)
)
)
)
)

DEE FRYE, et al.,
Plaintiffs,
vs.
AUTO-OWNERS INSURANCE
CO., et al.,
Defendants.

NO. 3:13–CV-113

OPINION AND ORDER
This matter is before the Court on the: (1) Motion for
Partial Summary Judgment Against Defendants, filed by Plaintiffs
Dee Frye and Lanhui Frye, on October 11, 2013 (DE# 48); (2)
Plaintiffs’

Alternative

Motion

for

Partial

Summary

Judgment,

filed by Plaintiffs Dee Frye and Lanhui Frye on October 11, 2013
(DE# 50); (3) Supplemental Motion for Summary Judgment filed by
Defendant Nationwide Mutual Insurance Company on May 29, 2014
(DE# 72); (4) Partial Stipulation of Dismissal, filed jointly by
Plaintiffs Dee Frye and Lanhui Frye and Defendant Nationwide
Mutual

Insurance

Company

on

June

2,

2014

(DE#

74);

and

(5)

Partial Stipulation of Dismissal, filed jointly by Plaintiffs
Dee Frye and Lanhui Frye and Defendant Auto-Owners Insurance
‐1‐ 

Company on October 30, 2014 (DE# 86).

For the reasons set forth

below, the Motion for Partial Summary Judgment (DE# 48) and the
Alternative Motion for Partial Summary Judgment (DE# 50) are
DENIED.

The Supplemental Motion for Summary Judgment (DE# 72)

and the Partial Stipulation of Dismissals (DE## 74 & 86) are
GRANTED.

Defendant

Nationwide

Mutual

Insurance

Company

is

hereby DISMISSED from this case.

FACTS
For the purposes of these motions for summary judgment, the
facts below are undisputed:
Plaintiff Dee Frye (“Frye”) was involved in a car accident
in LaPorte County, Indiana, on January 27, 2011, in which he was
seriously injured.

(Comp., DE# 80-1, ¶¶ 6-9; Aff. of Dee Frye

(“Frye Aff.”), DE# 80-19, ¶¶ 5-7.)

The accident was caused by

the negligence of Myron Dampier (“Dampier”), the driver of the
other vehicle.

(Frye Aff. ¶ 6.)

As a result of the accident,

Frye sustained serious permanent injuries and damages.

(Id. ¶¶

8, 10.)
At the time of the accident, Dampier was insured by Farmers
Insurance (“Farmers”).

(See Comp. ¶ 10; DE## 80-6 – 80-11.)

Frye was driving a vehicle owned by Arthur and Mary Webber (“the
Webbers”).

(See Comp. ¶ 5; Frye Aff. ¶ 10; DE# 80-2.)

The

Webbers’ vehicle was insured by an insurance policy (“Nationwide
‐2‐ 

Policy”)

issued

(“Nationwide”).
DE# 80-2.)

by

Nationwide

Mutual

Insurance

Company

(Comp. ¶ 5; Frye Aff. ¶ 10; Nationwide Policy,

The accident occurred while Frye was driving that

vehicle in the scope of his employment with Tri City Data &
Electronic, Inc. (“Tri City”).

(Comp. ¶ 6; Frye Aff. ¶ 10.)

Through Tri City, Frye was covered by a commercial automobile
insurance policy (“Auto-Owners Policy”) issued by an affiliate
of Auto-Owners Insurance Company (“Auto-Owners”).
Auto-Owners

Policy,

DE#

80-3.)

Tri

City

also

(Comp. ¶ 4;
provided

a

commercial umbrella policy issued by Auto-Owners that extended
coverage to Frye (“Auto-Owners Umbrella Policy”).

(Comp. ¶ 4;

Auto-Owners Umbrella Policy, DE# 80-4.)1
At issue here are the terms of the Nationwide Policy and
the Auto-Owners Policy.

Nationwide Policy:
The

Nationwide

Policy

includes

underinsured motorist (“UIM”) coverage.

an

endorsement

(DE# 80-2 at 2-6.)

for
It

defines an underinsured motor vehicle as “one for which there is
bodily injury liability bonds or insurance at the time of the

1

  Auto-Owners’ response brief repeatedly notes that this Court has not yet
decided whether UIM coverage is available to Plaintiffs under the Auto-Owners
Policy.
(See DE# 62.)
Auto-Owners offers no facts to suggest that the
policy does not provide UIM coverage to Frye. As such, for the purposes of
these motions, the Court will consider the fact that the Auto-Owners Policy
provides coverage to Frye to be undisputed.
See N.D. Ind. Local R. 56
(e)(2).

‐3‐ 

accident

in

at

responsibility

least
laws

the

where

amounts
your

required

auto

is

by

the

financial

principally

garaged.

Their total amount, however, is less than the limits of this
coverage.”
Policy’s
person.

(Id.

at

Declarations

3

(emphasis

provides

omitted).)

UIM

coverage

The
of

Nationwide

$100,000

per

(Id. at 14.)

Under

the

UIM

endorsement,

Nationwide

agrees

to

pay

compensatory damages for an insured’s bodily injury caused by
the

driver

or

owner

of

an

underinsured

motor

vehicle

and

compensatory damages due by law to other persons who suffer
bodily injury while occupying “your auto.”

(Id. at 3.)

The

provision entitled, “LIMITS AND CONDITIONS OF PAYMENT, AMOUNTS
PAYABLE FOR UNDERINSURED MOTORISTS LOSSES,” states in part:
We agree to pay losses up to the limits stated in the
policy Declarations.
The following applies to these
limits:
. . .
6.
The maximum amount payable for bodily injury is
the lesser of:
a)

the difference between:
(1)

(2)

b)

the amount paid in damages to the
insured by or for any person or
organization who may be liable for
the insured’s bodily injury; and
the
per-person
limit
of
underinsured motorists coverage;
or

the difference between:
‐4‐ 

(1)

the
total
amount
of
damages
incurred by the insured; and

(2)

the amount paid by or for any
person or organization liable for
the insured’s bodily injury.

(Id. at 5-6 (emphasis omitted).)
The

Nationwide

Policy’s

UIM

endorsement

also

addresses

“Other Insurance”:
1.

If there is other insurance for bodily injury
suffered by an insured while occupying a motor
vehicle other than your auto, our coverage is
excess over any other collectible:
a)
insurance;
b)
self insurance;
c)
proceeds for a governmental entity; or
d)
sources of recovery.
However, this insurance will apply only in the
amount by which the limit of coverage under this
policy exceeds the total amount collectible from
all of the above noted recovery sources.

2.

Except as stated above, if there is other
insurance similar to this coverage under any
other policy, we will be liable for only our
share of the loss.
Our share is our proportion
of the total insurance limits for the loss.

. . .
(Id. at 6 (emphasis omitted).)

Auto-Owners Policy:
Tri City’s Auto-Owners Policy extends liability coverage
“to any automobile . . . while operated in your business.”
80-3

at

46.)

Its

Declarations

‐5‐ 

provides

UIM

coverage

(DE#
of

$1

million per person.

(See DE# 80-3 at 5-7.)

The Auto-Owners

Policy sets forth the following relevant provisions regarding
UIM coverage:
2.

COVERAGE
a.

We will pay compensatory damages, including but
not limited to loss of consortium, [that] any
person is legally entitled to recover from the
owner or operator of an . . . underinsured
automobile2 because of bodily injury sustained
by an injured person while occupying an
automobile that is covered by SECTION II –
LIABILITY COVERAGE of the policy.

. . .
3.
EXCLUSIONS
The insurance provided by this endorsement does
not apply:
. . .
d.

to directly or indirectly benefit an insurer or
self-insurer under any workers compensation law
or disability benefits law.

. . .
4.
LIMIT OF LIABILITY
We will pay damages for bodily injury or property
damage as follows:
. . .
e.

The amount we pay will be reduced by any
amounts paid or payable for the same bodily
injury:
(1)
under
SECTION
II
–
LIABILITY
COVERAGE of the policy;
(2)
under any workers compensation or
similar law; or

2

  The Auto-Owners Policy defines an underinsured automobile as “an automobile
to which a bodily injury liability bond or liability insurance policy applies
at the time of the occurrence; (a) in at least the minimum amounts required
by the Financial Responsibility Law in the state where your automobile is
normally garaged; but (b) provides limits of liability less than those stated
in the Declarations for Underinsured Motorist Coverage.”
(DE# 80-3 at 49

(emphasis omitted).)

‐6‐ 

(3)
by or on behalf of any person or
organization
who
may
be
legally
responsible for the bodily injury.
5.

OTHER . . . UNDERINSURED MOTORIST COVERAGE
If there is other . . . Underinsured Motorist
Coverage which applies, we will pay our share of
the damages. Our share will be the ratio of our
limit of liability to the total of all limits
which apply.
Total damages payable for one
occurrence shall be considered not to exceed the
limit of liability of the applicable policy that
has the highest limit of liability.
The coverage extended to automobiles you do not
own will be excess over any other coverage
available to you.3

(DE# 80-3 at 49-52 (emphases omitted).)

Pre-suit Communications with Insurers
In 2011, Farmers made an offer to Frye of its applicable
per person policy limit of $100,000, and Frye accepted.
¶ 10; Frye Aff. ¶ 9; see also DE# 80-6 at 1.)

(Comp.

Prior to and

following the acceptance, counsel for Dee Frye and his wife,
Lanhui

Frye

(collectively,

“Plaintiffs”),

corresponded

with

Nationwide and Auto-Owners regarding Plaintiffs’ position on the
application

and

availability

respective insurance policies.

of

UIM

coverage

under

(DE## 80-6 - 80-17.)

their

In those

communications, Plaintiffs stressed their belief that Nationwide
and

Auto-Owners

would

be

responsible

for

sharing

the

first

3

 The Auto-Owners Policy defines “you” as “the first named insured shown in the
Declarations,” which is Tri City. (DE# 80-3 at 26 (emphasis omitted); see
id. at 4.) 

‐7‐ 

$100,000 of coverage on a pro rata basis, asserting that Frye
had primary coverage under both the Auto-Owners policy for one
million, and the Nationwide Policy for $100,000.

(See, e.g.,

DE## 80-6, 80-7.)

Nationwide responded that its review had

determined

UIM

that

no

coverage

was

available

limits match those of the tort-feasor carrier.”

“because

our

(DE# 80-12.)

Ultimately, no agreement could be reached between Plaintiffs and
either insurer.
On January 7, 2013, Plaintiffs filed a complaint against
Auto-Owners
Court

of

and

the

Nationwide

State

of

in

the

Indiana.

St.

Joseph

County

(DE#

1-1.)

The

Circuit

complaint

alleges that Plaintiffs are entitled to recover UIM coverage
from each of the Defendants for all damages resulting from the
car accident, up to the limits of coverage, and that Nationwide
and Auto-Owners breached their duties of good faith by failing
to respond to and/or denying Plaintiffs’ claims.
15.)

(Comp. ¶¶ 13-

Plaintiffs further seek a declaration that the Nationwide

Policy and the Auto-Owners Policy do not apply to directly or
indirectly benefit any insurer under any worker’s compensation
law and that the policies provide for a pro rata payment by
Nationwide and Auto-Owners under the primary limits of coverage.
(Id. ¶¶ 2, 3.)
million dollars.

Plaintiffs allege that their damages exceed two
(DE# 73-3 at 6.)

‐8‐ 

On
federal

February

8,

2013,

court.

(DE#

1.)

answered the complaint.
Nationwide
parties

filed

fully

a

Nationwide

the

action

Auto-Owners

Both

removed

and

Nationwide

(DE## 12, 13.)

motion

briefed.

for

On August 16, 2013,

summary

(DE#

32.)

to

judgment,
On

which

October

11,

the
2013,

Plaintiffs filed a partial summary judgment motion against all
defendants,
judgment.

and

an

alternative

(DE## 48, 50.)

motion

for

partial

summary

On November 8, 2013, Nationwide filed

its response to Plaintiffs’ partial summary judgment motion, and
Auto-Owners filed its response to both of Plaintiffs’ partial
summary judgment motions.

(DE## 60, 62.)

Plaintiffs did not

submit reply briefs to either partial summary judgment motion.
On

March

Nationwide’s

31,

2014,

summary

the

Court

judgment

denied

motion

as

without

premature

prejudice
because

it

would have required Plaintiffs to respond to arguments regarding
their breach of duty of good faith claims without an opportunity
to conduct discovery in support of their position.

(DE# 67 at

10-11.)
On May 29, 2014, Nationwide filed its supplemental motion
for

summary

judgment.

(DE#

72.)

response to this motion on July 1, 2014.

Plaintiffs
(DE# 79.)

filed

their

On July 15,

2014, Nationwide filed a reply brief in support of its motion.
(DE# 83.)

Since the instant motions were filed, the parties

have stipulated to the dismissal of Plaintiffs’ claims of breach
‐9‐ 

of duty of good faith against both Nationwide and Auto-Owners.
(DE## 74 & 86.)

SUMMARY JUDGMENT STANDARD
Summary judgment must be granted when “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”

Fed. R. Civ. P. 56(a).

A genuine

issue of material fact exists when “the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct.
2505, 91 L. Ed. 2d 202 (1986).

Not every dispute between the

parties makes summary judgment inappropriate; “[o]nly disputes
over facts that might affect the outcome of the suit under the
governing

law

judgment.”

will

Id.

To

properly

preclude

determine

the

entry

a

genuine

whether

of

summary

dispute

of

material fact exists, the Court must construe all facts in the
light

most

reasonable

favorable

to

the

non-moving

inferences

in

that

party's

party

favor.

Atterholt, 606 F.3d 355, 358 (7th Cir. 2010).

and

draw

See

Ogden

all
v.

A party opposing

a properly supported summary judgment motion may not rely on
allegations in his own pleading, but rather must “marshal and
present the court with the evidence [he] contends will prove
[his] case.”

Goodman v. Nat'l Sec. Agency, Inc., 621 F.3d 651,

654 (7th Cir. 2010).

“[I]nferences relying on mere speculation
‐10‐ 

or conjecture will not suffice.”

Stephens v. Erickson, 569 F.3d

779, 786 (7th Cir. 2009) (citation omitted).

If the non-moving

party fails to establish the existence of an essential element
on which he bears the burden of proof at trial, summary judgment
is proper.

See Massey v. Johnson, 457 F.3d 711, 716 (7th Cir.

2006).

DISCUSSION
For the purpose of these motions, no dispute of material
fact exists.

Rather, the motions raise issues of insurance

contract interpretation.

Nationwide’s summary judgment motion

argues that the Nationwide Policy allows a setoff of Farmers’
$100,000
zero.

payment,

thereby

(DE## 72, 73.)

reducing

Nationwide’s

liability

to

Plaintiffs oppose this motion, and move

for summary judgment, arguing that the Nationwide Policy and the
Auto-Owners

Policy

provide

for

pro

rata

sharing

of

coverage limits allegedly available to Plaintiffs.
79.)

Plaintiffs

also

seek

a

determination

the

UIM

(DE## 48,

that

any

such

benefits will not be subject to worker’s compensation liens.
(DE#

48.)

Plaintiffs
million

In
argue

dollars

Plaintiffs’ claim.

their

alternative

summary

that

Auto-Owners

must

of

UIM

benefits,

(DE# 50.)

‐11‐ 

judgment

make

without

any

motion,

available
setoffs,

one
to

In Indiana,4 “[t]he interpretation of an insurance policy is
primarily a question of law for the court, and it is therefore a
question
Wagner

which

v.

is

particularly

Yates,

omitted).

912

N.E.2d

suited

805,

808

for

summary

(Ind.

judgment.”

2009)

(citation

Insurance policies are analyzed “using the same rules

of interpretation applied to other contracts.”

Auto–Owners Inc.

Co. v. Benko, 964 N.E.2d 886, 890 (Ind. Ct. App. 2012) (citation
omitted).

Courts “interpret an insurance policy with the goal

of ascertaining and enforcing the parties’ intent as revealed by
the insurance contract.”

Westfield Cos. v. Knapp, 804 N.E.2d

1270, 1274 (Ind. Ct. App. 2004) (citation omitted).

“[C]lear

and unambiguous language in an insurance policy should be given
its plain and ordinary meaning, even if those terms limit an
insurer’s liability.”

Everett Cash Mut. Ins. Co. v. Taylor, 926

N.E.2d 1008, 1012 (Ind. 2010) (citation omitted).

“Where an

ambiguity exists, that is, where reasonably intelligent people
may interpret the policy’s language differently, Indiana courts
construe

insurance

policies

strictly

against

the

Auto-Owners, 964 N.E.2d at 890 (citation omitted).
ambiguity

is

not

controversy

exists

contrary

that

affirmatively

to

and

one

asserted

by

established

party

asserts

the

opposing

an

insurer.”

However, “an

simply

because

interpretation

party.”

Beam

v.

4

 Where, as here, “neither party raises a conflict of law issue in a diversity
case, the federal court simply applies the law of the state in which the
federal court sits.” Citadel Group Ltd. v. Washington Reg’l Med. Ctr., 692
F.3d 580, 587 n.1 (7th Cir. 2012) (quotation omitted). 

‐12‐ 

Wausau Ins. Co.,
omitted).

765 N.E.2d 524, 528 (Ind. 2002) (quotation

Ultimately, “[t]he meaning of an insurance contract

can only be gleaned from a consideration of all its provisions,
not

from

an

analysis

of

individual

words

or

phrases.

[The

Court] must accept an interpretation of the contract language
that

harmonizes

the

provisions

rather

than

the

one

supports a conflicting version of the provisions.”

which

Adkins v.

Vigilant Ins. Co., 927 N.E.2d 385, 389 (Ind. Ct. App. 2010)
(citations omitted); see Masten v. AMCO Ins. Co., 953 N.E.2d
566, 569 (Ind. Ct. App. 2011).
When

interpreting

UIM

policy

provisions,

the

Court

is

mindful of the general objectives of Indiana’s UIM legislation.
See Masten, 953 N.E.2d at 570.
“a

mandatory

coverage,

Indiana Code section 27-7-5-2 is

full-recovery,

remedial

statute,”

and

“its provisions are to be considered a part of every automobile
liability policy the same as if written therein.”
Ins.

Co.

v.

DePrizio,

(quotations omitted).
“is

to

give

the

705

N.E.2d

455,

460

United Nat.
(Ind.

1999)

The underlying purpose of UIM coverage

insured

the

recovery

he

or

she

would

have

received if the underinsured motorist had maintained an adequate
policy of liability insurance.”
N.E.2d 535, 540 (Ind. 2002).
will

not

necessarily

assure

Corr v. Am. Family Ins., 767

However, “a full-recovery statute
full

‐13‐ 

indemnification

for

all

potential damage to all potential insureds[.]”

Id.

The intent

of the legislature is to:
give insureds the opportunity for full compensation
for injuries inflicted by financially irresponsible
motorists. Due to the remedial nature of this type of
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

(internal

quotation

and

citation

omitted).

Nationwide’s Supplemental Motion for Summary Judgment
In its Supplemental Motion for Summary Judgment, Nationwide
argues that the terms of the Nationwide Policy entitle it to set
off Farmers’ $100,000 payment from the $100,000 UIM per person
limits available under the policy, thereby reducing Nationwide’s
liability to zero.
Nationwide

Policy

Nationwide relies upon a provision in the
that

specifically

limits

payment

for

losses (“UIM Limitation Provision”):
The maximum amount payable for bodily injury is the
lesser of:
a) the difference between:
(1)

the amount paid in damages to the
insured by or for any person or
organization who may be liable for the
insured’s bodily injury; and

(2)

the per-person limit
motorists coverage; or

‐14‐ 

of

underinsured

UIM

b) the difference between:
(1)

(2)

(DE#

the total amount of damages incurred by
the insured; and
the amount paid by or for any person or
organization liable for the insured’s
bodily injury.

80-2

at

5-6

(emphasis

omitted).)

The

parties

do

not

dispute that Farmers paid Frye $100,000 for his injuries, or
that the Nationwide Policy provides UIM coverage of $100,000 per
person.

Applying these facts to the UIM Limitation Provision,

Nationwide asserts that the maximum amount payable is the lesser
of: the difference between the amount paid in damages by Farmers
($100,000),

and

the

per-person

limit

of

its

UIM

coverage

($100,000), which is zero; or the difference between the amount
of

damages

incurred

by

the

insured

(allegedly

more

than

$2

million), and the amount paid by Farmers ($100,000), which is
$1.9

million.

Because

zero

is

less

than

$1.9

million,

Nationwide contends that it owes Plaintiffs nothing.
Nationwide

relies

on

Castillo

v.

Prudential

Property

&

Casualty Insurance Co., 834 N.E.2d 204 (Ind. Ct. App. 2005), to
support its position.

In that case, Castillo was injured in a

car hit-and-run accident while he was a passenger in a vehicle
driven by Moreno.
Prudential.
separately

Id.
sued

Id. at 205.
Castillo
Prudential

Moreno’s vehicle was insured by
sued

Moreno

for

uninsured

‐15‐ 

for

negligence
motorist

and

(“UM”)

coverage.

Id.

Castillo settled with Moreno for Prudential’s

policy limit of $50,000 and pursued his suit against Prudential
for an additional $50,000 of UM coverage.

Id.

The Prudential

policy stated that UM payments “will be reduced by any amount
payable by persons responsible for the accident.

Payments under

this part will also be reduced by any amount payable under this
policy or by other sources.”
Appeals

found

that

this

Id. at 207.

clause

The Indiana Court of

“clearly

and

unambiguously

reduced this amount by ‘any amount payable under this policy,’
i.e., the $50,000.00 settlement already tendered.”
court

held

that,

pursuant

to

this

clause,

Id.

Prudential

The
was

entitled to set off the $50,000 settlement from its UM coverage
limit of $50,000, for a further recovery of zero.

Id. at 207.

Citing

Limitations

Castillo,

Nationwide

argues

that

the

UIM

Provision entitles it to set off Farmers’ $100,000 payment from
the Nationwide Policy’s UIM coverage limit.
Plaintiffs
interpretation

do
of

the

not
UIM

take

issue

Limitations

with

Provision

Nationwide’s
or

Castillo.

Rather, they argue that the Nationwide Policy is ambiguous as to
whether the UIM Limitations Provision applies when its “other
insurance” provision comes into play.

(DE# 79 at 22-24.)

The

“other insurance” provision states in part that “if there is
other insurance similar to this coverage under any other policy,
we [Nationwide] will be liable for only our share of the loss.
‐16‐ 

Our share is our proportion of the total insurance limits for
the

loss.”

Plaintiffs

(DE#
assert

80-2
the

at

6

(“Other

Auto-Owners

Insurance

Policy

and

Provision”).)

the

Nationwide

Policy provide similar primary UIM coverage, thus triggering the
Other Insurance Provision.

(See DE# 79 at 1-2.)

They argue

that because the phrase “our share is our proportion of the
total insurance limits for the loss” is ambiguous, it must be
construed against Nationwide.

(Id. at 23.)

As such, the UIM

Limitations Provision should be disregarded entirely, precluding
any setoff of the $100,000 payment from Farmers.

(Id. at 22.)

In reply, Nationwide asserts that its “share of the loss”
is

zero

because

Plaintiffs

received

from

Farmers

the

entire

amount of UIM coverage available under the Nationwide Policy.
(DE# 83 at 7.)

Nationwide further argues that making it liable

for a proportionate share of insurance limits relative to AutoOwners’ limits would “render[] set-offs immaterial” - a result
not

contemplated

legislature.

by

the

contracting

parties

or

Indiana’s

(Id.)

While not addressed by any party, the Court notes that
Nationwide’s UIM Limitations Provision is nearly identical to
the limitations on coverage codified in Indiana Code section 277-5-5(c).5

The Indiana Court of Appeals considered the language

5

 Section 27-7-5-5(c) states:

‐17‐ 

of Section 27-7-5-5(c) in Kinslow v. Geico Insurance Co., 858
N.E.2d 109 (Ind. Ct. App. 2006).

In that case, Mr. and Mrs.

Kinslow were injured (fatally and seriously, respectively) in a
multiple-vehicle
scene.

accident,

Id. at 110.

after

which

one

vehicle

fled

the

Mrs. Kinslow (“Kinslow”) settled with one

tortfeasor’s insurer and sued her insurer, Geico, for recovery
of UM benefits under two Geico insurance policies.

Id.

Geico

refused to pay, arguing that any UM benefits owed under its
policies

were

completely

offset

by

the

settlement

Kinslow had received from the tortfeasor’s insurer.

payment
Id.

The

court noted that “the statutes governing UM/UIM insurance are
considered a part of every automobile liability policy the same
as if written therein.”
that

Section

Id. at 114 (citation omitted).

27-7-5-5(c)

“establish[es]

maximum

and

It held
minimum

parameters for the amount of a recovery a plaintiff is entitled
to as a result of a UM or UIM claim,” and that the language of

The maximum amount payable for bodily injury under uninsured or
underinsured motorist coverage is the lesser of:
(1)
the difference between:
(A) the amount paid in damages to the insured
by or for any person or organization who may be
liable for the insured’s bodily injury; and
(B) the per person limit of uninsured or
underinsured motorist coverage provided in the
insured’s policy; or
(2)
the difference between:
(A) the total amount of damages incurred by the
insured; and
(B) the amount paid by or for any person or
organization liable for the insured’s bodily
injury.
Ind. Code § 27-7-5-5(c) (emphasis denotes language not found in Nationwide’s
UIM Limitations Provision).

‐18‐ 

Section 27-7-5-5(c) “is clear and unambiguous and is not open to
interpretation.”
7-5-5(c),

Id. (citation omitted).

the

court

found

recoverable was zero.

Id.

that

the

Applying Section 27maximum

UM

coverage

The court refused to interpret the

policies in the manner suggested by Kinslow, explaining that
“allowing Kinslow to recover anything under either Geico policy
would

contravene

clear

and

unambiguous

statutory

language.”

Id.; see also Edwards v. Vernon Fire & Cas. Ins. Co., 571 N.E.2d
1306, 1308 (Ind. Ct. App. 1991) (applying Section 27-7-5-5(c) to
find plaintiff “cannot recover because his policy has [a UIM]
coverage limit of $25,000 and he has received $25,000 from the
tortfeasor’s insurance company”).
Based
Limitations

on

this

Court’s

Provision

and

independent

Kinslow’s

review

validation

of

of

the

the

UIM

nearly

identical language of Section 27-7-5-5(c), the Court finds the
language

of

unambiguous.

the

UIM

Limitations

Provision

to

be

clear

and

“[W]here an insurer crafts a policy using clear

and unambiguous language that comports with public objectives
expressed in state statute, we apply that plain language, even
if the result is to limit the insurer’s liability.”
Am.

Family

Mut.

Ins.

(citation omitted).

Co.,

4

N.E.3d

1171,

1774

Justice v.
(Ind.

2014)

Applying the UIM Limitations Provision to

the undisputed facts, the difference between the amount paid by
Farmers ($100,000) and the per person limit for UIM coverage
‐19‐ 

under

the

Nationwide

Policy

($100,000)

is

zero,

and

the

difference between Plaintiffs’ alleged damages ($2 million) and
the amount paid by Farmers ($100,000) is $1.9 million.
less than $1.9 million.

Zero is

Thus, the UIM Limitations Provision

dictates that the maximum amount payable under the Nationwide
Policy is zero.

See Castillo, 834 N.E.2d at 207; Kinslow, 858

N.E.2d at 114.
Contrary

to

Plaintiffs’

assertions,

this

outcome

is

not

altered by the Nationwide Policy’s Other Insurance Provision.
Plaintiffs assert that because the Auto-Owners Policy qualifies
as “other insurance similar to this coverage,” and Nationwide’s
“share of the loss” is allegedly ambiguous, the Court should
disregard the UIM Limitations Provision entirely.

Plaintiffs’

interpretation of the Nationwide Policy supports a conflicting
version of its provisions, rather than harmonizing them.

Cf.

Adkins, 927 N.E.2d at 389 (courts “must accept an interpretation
of the contract language that harmonizes the provisions rather
than

the

one

which

supports

a

conflicting

version

of

the

provisions.”).
The

Court

finds

that

Policy can be harmonized.

the

provisions

of

the

Nationwide

According to the Other Insurance

Provision, Nationwide’s “share of the loss” is its proportion of
“the

total

insurance

limits

for

the

loss,”

which

Plaintiffs

concede is the $100,000 UIM coverage limit stated in the policy
‐20‐ 

Declarations.

(See

DE#

79

at

22-23.)

The

UIM

Limitations

Provision is found in the “Limits and Conditions of Payment,
Amounts Payable for [UIM] Losses” provision, which begins, “[w]e
agree

to

pay

losses

Declarations.

up

to

the

limits

in

the

policy

The following applies to these limits: . . . 6.

[the UIM Limitations Provision].”
added).)

stated

Reading

these

(DE# 80-2 at 5-6 (emphasis

provisions

together,

the

“total

insurance limits for the loss” (i.e., the $100,000 UIM coverage
limit) is subject to the UIM Limitations Provision.

Thus, the

UIM Limitations Provision limits the amount payable to insureds,
even when “other insurance” applies.
Motorists Mut. Ins. Co.,
(instructing

that

Cf. Am. Econ. Ins. Co. v.

605 N.E.2d 162, 164-65 (Ind. 1992)

insureds

had

recourse

against

primary

and

excess insurers for UIM coverage limits, less amounts previously
paid on the tortfeasor’s behalf).

Given the undisputed facts

presented here, the UIM Limitations Provision dictates that the
maximum

amount

payable

is

zero,

even

if

“other

insurance”

applies.
This

interpretation

harmonizes

provisions

that

contracted for by the parties to the Nationwide Policy.

were
See

Westfield Cos., 804 N.E.2d at 1274 (courts must interpret an
insurance policy with the goal of ascertaining and enforcing the
parties’ intent as revealed by the insurance contract as whole).
Moreover, this interpretation does not violate the underlying
‐21‐ 

purpose of Indiana’s UIM statute, which defines an uninsured
motor vehicle as:

“an insured motor vehicle where the limits of

coverage available for payment to the insured under all bodily
injury liability policies covering persons liable to the insured
are less than the limits for the insured's underinsured motorist
coverage at the time of the accident. . . .”
5-4(b) (emphasis added).

Ind. Code § 27-7-

Here, the statutory aim of Section 27-

7-5-4(b) is satisfied because Plaintiffs received $100,000 from
Farmers,

the

Nationwide

same

coverage

limit

provided

See

Policy.

UIM

Lakes

Grange

Mut.

v.

under

Cas.

Co.,

the
964

N.E.2d 796, 803 (Ind. 2012) (citation omitted) (“[T]he proper
comparison in determining whether the tortfeasor’s vehicle was
underinsured

was

a

comparison

of

what

received and the UIM policy limit.”).

the

claimant

actually

The Nationwide Policy

thus comports with the Section 27-7-5-4(b) and does not violate
its intent.
For

these

reasons,

the

Court

GRANTS

Nationwide’s

Supplemental Motion for Summary Judgment.

Plaintiffs’ Motion for Partial Summary Judgment
In their Motion for Partial Summary Judgment, Plaintiffs
argue that the “other insurance” provisions contained in the
Nationwide Policy and Auto-Owners Policy can be read in harmony
to

provide

for

pro

rata

sharing
‐22‐ 

of

the

contribution

of

UIM

benefits.
liability

Because
is

the

zero,

Court

has

Plaintiffs’

determined

motion

as

Nationwide’s

it

relates

to

Nationwide is denied.6
Plaintiffs also argue that any UIM benefits available under
the

Auto-Owners

Policy

compensation lien.
“no

workers

compensation
coverage.”

are

not

subject

(DE# 49 at 5-7.)

compensation
carrier

would

(DE# 62 at 2.)

lien
be

to

any

worker’s

Auto-Owners concedes that

identified
enforceable

by

the

against

workers

the

[UIM]

Both Plaintiffs and Auto-Owners cite

Walkup v. Wabash Nat. Corp., 702 N.E.2d 713 (Ind. 1998), as
dispositive of this issue.

In Walkup, Walkup was injured in a

6

  Even if Nationwide’s liability had not been zeroed out, the Court has
its doubts about Plaintiffs’ pro rata argument.
Under Indiana Code section
27-8-9-7 (“Owner’s Statute”), where a vehicle owner’s insurance coverage is
considered primary, the owner’s coverage limit must be exhausted before
recovery under any other vehicle insurance coverage. See Ind. Code § 27-8-97(b) & (c).
This statute “provide[s] statutory tiebreakers for determining
the priority of insurance coverage in circumstances where the priority of
coverage might not otherwise be immediately clear.” Old Republic Ins. Co. v.
RLI Ins. Co., 887 N.E.2d 1003, 1010 (Ind. Ct. App. 2008) (citation omitted).
The Owner’s Statute “was clearly intended to resolve coverage disputes caused
by competing primary insurers’ ‘other insurance clauses.’” Monroe Guar. Ins.
Co. v. Langreck, 816 N.E.2d 485, 498-99 (Ind. Ct. App. 2004).
Plaintiffs and Nationwide do not dispute that Nationwide insured the
vehicle owner and that the Nationwide Policy and the Auto-Owners Policy both
provided primary coverage. (See DE## 80-6, 80-7; DE# 83 at 6.) Given these
facts, the Owner’s Statute appears to apply here.
Plaintiffs contend that the Owner’s Statute does not apply because
Nationwide’s and Auto-Owner’s “other insurance” provisions can be read in
harmony to provide UIM benefits on a pro rata basis.
However, the cases
cited by Plaintiffs in support of this proposition involve insurers affording
different levels of coverage.
See id. (involving a primary insurer and an
excess insurer); Old Republic, 887 N.E.2d at 1012 (same); Citizens Ins. Co.
v. Ganschow, 859 N.E.2d 786, 792 (Ind. App. Ct. 2007) (same); Cincinnati Ins.
Co. v. Am. Alternative Ins. Corp., 886 N.E.2d 326, 333 (Ind. Ct. App. 2007)
(same). In several cases, the courts declined to apply statutory tiebreakers
because of the insurers’ different coverage levels. See, e.g., Monroe Guar.,
816 N.E.2d at 498; Old Republic, 887 N.E.2d at 1012. Because Nationwide is
dismissed from this case on other grounds, the Court need not delve further
into, or decide, this issue.

‐23‐ 

motor

vehicle

employment.

accident

while

Id. at 713.

driving

in

the

course

of

his

Walkup’s employer sued to enforce a

lien for worker’s compensation benefits after Walkup settled his
claims with a UM insurer.

Id. at 714.

The Supreme Court of

Indiana found that the insurance policy at issue included an
exclusion for costs covered by worker’s compensation benefits,
and thus, Walkup’s settlement with the insurer did not include
such costs.

Id. at 715.

The employer’s lien was ineffective

because no proceeds were left after the exclusion that could be
identified with the lien.

Id.

Similar to the insurance policy in Walkup, the Auto-Owners
Policy states that UIM coverage does not apply “to directly or
indirectly benefit an insurer or self-insurer under any workers
compensation law or disability benefits law.”

(DE# 80-3 at 50.)

However, unlike Walkup, Plaintiffs do not allege that any party
holds, or has attempted to enforce, any worker’s compensation
lien requiring the application of this policy provision.
Given
regarding

the
a

lack

of

worker’s

allegations
compensation

of

an

lien,

actual

controversy

Plaintiffs’

motion

appears to be an invitation for an advisory opinion, which this
Court

cannot

provide.

“[D]istrict

judges

can’t

suspend

the

application of Article III or grant themselves the power to
issue advisory opinions one case at a time, and litigants can’t
stipulate to the enlargement of federal jurisdiction.
‐24‐ 

A case or

controversy must be present at every moment of the litigation.”
U.S. v. Accra Pac, Inc., 173 F.3d 630, 633 (7th Cir. 1999); see
Coffman v. Breeze Corp., 323 U.S. 316, 324, 65 S. Ct. 298, 89 L.
Ed. 264 (1945) (declaratory judgment procedure “may not be made
the medium for securing an advisory opinion in a controversy
which has not arisen.” (citations omitted)).

Therefore, the

Court DENIES Plaintiffs’ Motion for Partial Summary Judgment.

Plaintiffs’ Alternative Motion for Partial Summary Judgment
Plaintiffs
from

this

argue

action,

it

that

if

should

the

Court

“declar[e]

dismisses
that

the

Nationwide
entire

one

million dollar policy limits of Auto[-]Owners’ policy is excess
coverage

available

to

the

Plaintiffs

limits of Nationwide’s policy.”

beyond

the

$100,000.00

(DE# 51 at 3.)

Plaintiffs

claim that they have a combined amount of $2.1 million in UIM
benefits ($100,000 under the Nationwide Policy, $1 million under
the Auto-Owners Policy, and $1 million under the Auto-Owners
Umbrella Policy) and that the $100,000 paid by Farmers reduces
their total UIM benefits to $2 million.

(Id. at 4.)

Citing no

case law, statute, or policy provision, Plaintiffs assert that
“if the Court determines that Nationwide gets the entire setoff,

then

Auto[-]Owners

without any set-off.”

will

be

(Id.)

‐25‐ 

required

to

cover

entirely

Auto-Owners

responds

that

if

the

Auto-Owners

Policy

is

found to afford coverage to Plaintiffs for this loss, it should
be allowed to set off the $100,000 amount paid by Farmers.
62 at 4-5.)

(DE#

Auto-Owners points to a provision in the Auto-

Owners Policy that states, “[t]he amount we pay will be reduced
by any amounts paid or payable for the same bodily injury . . .
under any worker’s compensation or similar law; or . . . by or
on

behalf

of

any

person

or

organization

responsible for the bodily injury.”

who

may

(Id. at 3-4.)

be

legally

Plaintiffs

do not reply to this argument.
Indiana

courts

have

enforced

connection with UIM coverage.

setoff

provisions

in

See, e.g., Hardiman v. Govt’l

Interins. Exch., 588 N.E.2d 1331, 1334 (Ind. Ct. App. 1992); see
also Wagner, 912 N.E.2d at 808-09 (“hav[ing] no quarrel” with
the general proposition that policy language requiring setoffs
has

been

and

should

be

enforced).

Here,

Plaintiffs

do

not

explain why the Court should disregard the setoff provision in
the Auto-Owners Policy.
reasonable

inferences

Construing the facts and drawing all

in

the

light

most

favorable

to

Auto-

Owners, the Court finds that Plaintiffs are not entitled to
judgment

as

a

matter

of

law

on

this

issue.

Therefore,

Plaintiffs’ Alternative Motion for Partial Summary Judgment is
DENIED.

‐26‐ 

CONCLUSION
For the reasons set forth above, the Motion for Partial
Summary Judgment (DE# 48) and the Alternative Motion for Partial
Summary Judgment (DE# 50) are DENIED.

The Supplemental Motion

for Summary Judgment (DE# 72) and the Partial Stipulation of
Dismissals (DE## 74 & 86) are GRANTED.

Defendant Nationwide

Mutual Insurance Company is hereby DISMISSED from this case.

DATED:

February 4, 2015

/s/ RUDY LOZANO, Judge
United States District Court

‐27‐