AMERICAN FAMILY MUTUAL INSURANCE COMPANY v. BETTS et al

Filing 77

ORDER granting 66 Motion to enter summary judgment on remaining issues. Signed by Judge Tanya Walton Pratt on 12/10/2013 (copies sent to Colin Betts, Jill Betts and Joseph Weidhaas) (CBU)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
AMERICAN FAMILY MUTUAL
INSURANCE COMPANY,
Plaintiff,
v.
COLIN M. BETTS, JILL BETTS, and USAA,
Defendants.

)
)
)
)
)
)
)
)
)
)

Case No. 1:10-cv-00571-TWP-DKL

ENTRY ON MOTION TO ENTER SUMMARY JUDGMENT
American Family Mutual Insurance Company (“American Family”) initiated this action
by filing a Complaint for Declaratory Judgment. American Family filed its initial Motion for
Summary Judgment (Dkt. 57) on November 30, 2011, wherein it requested the Court grant
summary judgment because: (1) under the policy there was an exclusion for liability coverage as
to Defendant Jill Betts’s claims against Defendant Colin Betts; (2) uninsured motorist coverage
did not apply to Jill Betts; and (3) Colin Betts breached his duties under the policy therefore
coverage did not apply. The Court granted that unopposed motion (Dkt. 64) and entered final
judgment (Dkt. 65) on June 22, 2012. However, the Court addressed only one of the issues
raised, finding that American Family’s automobile insurance policy excluded liability coverage
for Colin Betts for the claims asserted against him by his wife, Jill Betts. The Court previously
reopened this case and denied Jill Betts’s Motion to Set Aside Summary Judgment (Dkt. 75).
This matter is now before the Court on Plaintiff’s Motion to Enter Summary Judgment on
Remaining Issues (Dkt. 66). For the reasons stated below, the Court GRANTS summary
judgment on the two outstanding issues.

I. BACKGROUND
On October 22, 2007, Colin Betts was the driver of an automobile owned by non-party
Andrew Betts. Colin Betts’s wife, Jill Betts, was the passenger when they were involved in an
accident with another vehicle. At the time of the accident, American Family had issued an
automobile policy of insurance which contained certain terms, conditions, exclusions and other
provisions. Andrew, Colin and Jill Betts are all residents of the State of Indiana and the policy
was contracted and issued to Andrew Betts in the State of Indiana. The accident, however,
occurred in Cole, Oklahoma. Nearly two years after the accident, on October 21, 2009, Jill Betts
sued her husband in Oklahoma state court for negligence, seeking damages for bodily injuries.
Colin Betts answered the complaint, pro se, and did not advise American Family of the lawsuit
filed by his wife before he filed a response with the court. The Oklahoma court later denied
American Family’s motion for dismiss for lack of jurisdiction, in part because Colin Betts’s pro
se response acted as a waiver of the jurisdictional objections.
On May 7, 2010, American Family filed a complaint in this Court for declaratory
judgment against Defendants Colin Betts, Jill Betts, and foreign corporation USAA (collectively,
“Defendants”). As noted above, American Family filed for summary judgment which the Court
granted and entered final judgment on the unopposed motion.

Jill Betts subsequently filed an

uninsured motorist coverage claim against American Family.
II. LEGAL STANDARD
Federal Rule of Civil Procedure 56 provides that summary judgment is appropriate if “the
pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.” Hemsworth v. Quotesmith.Com, Inc., 476

2

F.3d 487, 489-90 (7th Cir. 2007). In ruling on a motion for summary judgment, the court
reviews “the record in the light most favorable to the nonmoving party and draw[s] all
reasonable inferences in that party’s favor.” Zerante v. DeLuca, 555 F.3d 582, 584 (7th Cir.
2009) (citation omitted). However, “[a] party who bears the burden of proof on a particular issue
may not rest on its pleadings, but must affirmatively demonstrate, by specific factual allegations,
that there is a genuine issue of material fact that requires trial.” Hemsworth, 476 F.3d at 490
(citation omitted). “In much the same way that a court is not required to scour the record in
search of evidence to defeat a motion for summary judgment, nor is it permitted to conduct a
paper trial on the merits of a claim.” Ritchie v. Glidden Co., 242 F.3d 713, 723 (7th Cir. 2001)
(citation and internal quotations omitted). Finally, “neither the mere existence of some alleged
factual dispute between the parties nor the existence of some metaphysical doubt as to the
material facts is sufficient to defeat a motion for summary judgment.” Chiaramonte v. Fashion
Bed Grp., Inc., 129 F.3d 391, 395 (7th Cir. 1997) (citations and internal quotations omitted).
III. DISCUSSION
American Family seeks summary judgment on the bases that uninsured motorist coverage
did not apply to Jill Betts and that Colin Betts breached his duties under the policy such that no
coverage exists. The Court will address each issue in turn.
A.

Uninsured Motorist Coverage
The policy of insurance issued by American Family and applicable in this case had the

following uninsured motorist coverage:
2. Uninsured Motorist – Bodily Injury and Property Damage Coverage.
Under this coverage we will pay compensatory damages an insured person is
legally entitled to recover from the owner or operator of an uninsured motor
vehicle because of:
a. Bodily injury to an insured person; and

3

b. Property damage. But, we will only pay for property damage if the
name and address of the owner or operator of the uninsured motor
vehicle is provided to us.
The bodily injury or property damage must be caused by accident and arise out
of the use of the uninsured motor vehicle.
Dkt. 59-1 at 8 (emphasis in original). An uninsured motor vehicle was defined as:
a. Not insured by a liability bond or policy at the time of the accident.
b. Insured at the time of the accident by a liability bond or policy with liability
limits below the minimum required by the financial responsibility law of the state
in which your insured car is principally garaged.
c. A hit-and-run vehicle whose operator or owner is unknown and which causes
bodily injury to you or a relative. Physical contact with a hit-and-run motor
vehicle is required.
d. Self-insured or insured by a bodily injury liability bond or policy at the time of
the accident but the self-insurer or company denies coverage or is or becomes
insolvent within two years after the accident.
Uninsured motor vehicle, however, does not mean a vehicle:
a. Owned by or furnished or available for the regular use of you or a relative.
b. Owned or operated by a self-insurer as considered by any financial
responsibility law, motor carrier law, or similar law.
c. Owned or operated by a governmental unit or agency.
Dkt. 59-1 at 8 (emphasis in original).
American Family contends the plain terms of the definition of “uninsured motor vehicle”
establish there is no uninsured motorist coverage in this case, because the vehicle was insured
with American Family by a relative of Colin Betts, the driver. Further, as his wife, Jill Betts is a
relative of Colin Betts and there is no dispute that at the time of the accident, they lived in the
same household. The Court agrees that the policy unambiguously excludes coverage under these
facts. Indiana courts have upheld this result as consistent with Indiana’s public policy. Recently,
in Greenfield v. Allstate Personal Property, 806 N.E.2d 856, 861 (Ind. Ct. App. 2004), the court
confirmed that the household exclusion for uninsured motorist coverage was not contrary to
public policy (citing Transamerica Ins. Co. v. Henry, 563 N.E.2d 1265, 1269 (Ind. 1990)).
Additionally, the Indiana Court of Appeals has stated, “[i]nsurance companies are free to limit

4

their liability, so long as they do so in a manner consistent with public policy as reflected by case
or statutory law.” Ghea v. Founders Ins. Co., 854 N.E.2d 419, 423 (Ind. Ct. App. 2006).
Therefore, the Court finds the uninsured motorist coverage does not apply. American Family’s
motion is GRANTED.
B.

Cooperation Clause
The insurance policy at issue included a cooperation clause requiring the insureds to

comply with certain duties. Those duties were:
OTHER DUTIES
Each person claiming any coverage of this policy must also:
1. Assist us in any claim or suits.
2. Promptly send us any legal papers received relating to any claim or suit.
Dkt. 59-1 at 5 (emphasis in original). The policy also included the following condition as a
general provision:
11. Cooperation. Any person claiming any coverage of this policy must
cooperate with us in performing all acts required by this policy.
Dkt. 59-1 at 11 (emphasis in original).
American Family contends that Colin Betts breached the policy’s cooperation clause,
thereby releasing American Family from defending Colin Betts in the Oklahoma action. After
Jill Betts filed her original action in Oklahoma against Colin Betts, he filed on October 21, 2009,
a pro se response, in which he admitted to the jurisdiction of Oklahoma. On January 25, 2010,
counsel for Colin Betts filed a Special Appearance and Motion to Dismiss the lawsuit on the
basis of lack of jurisdiction over Colin Betts in Oklahoma. The motion was denied, in part
because Colin Betts’s response acted as a waiver of jurisdictional objections. While it is unclear
if American Family alleges specifically that Colin Betts failed to forward the complaint and

5

associated documents to American Family in violation of this specific duty in the policy1, the
Court does find that Colin Betts’s response signifies a failure to cooperate as required by the
insurance policy.
A cooperation clause is one “requiring that the insured assist the insurer in investigating
and defending a claim.” Morris v. Economy Fire & Cas. Co., 848 N.E.2d 663, 666 (Ind. 2006)
(quoting Black’s Law Dictionary 359 (8th ed. 2004)). “An insurance company must show actual
prejudice from an insured’s noncompliance with the policy’s cooperation clause before it can
avoid liability under the policy.” Miller v. Dilts, 463 N.E.2d 257, 265 (Ind. 1984). Here,
American Family has shown actual prejudice. Oklahoma law permits the claim of a wife against
her husband and excludes household exclusions from insurance contracts. In Indiana, however,
as the Court found in its Entry granting summary judgment, household exclusions are valid and
would bar this claim. Because Colin Betts filed a pro se response and thus waived jurisdictional
objections, American Family lost its opportunity to dismiss the Oklahoma action on those
grounds. Thus, American Family is subject to a potential liability claim in Oklahoma it would
not face in Indiana. Therefore, American Family has suffered actual prejudice and its motion is
GRANTED.
IV. CONCLUSION
Accordingly, American Family’s Motion to Enter Summary Judgment on Remaining
Issues (Dkt. 66) is GRANTED. The Court finds, as it did in its previous judgment, that
American Family has no duty to indemnify or defend any of the entities involved; no obligation

1

In Indiana, although determining a dispute “regarding alleged breaches of an insured’s duty under a separate
‘cooperation clause’ may necessitate consideration of resulting prejudice to the insurance company, such prejudice
is not a necessary consideration in determining the enforceability of other insurance policy provisions.” Id. In other
words, all that is required is a showing of a material breach. Employers Mut. Cas. Co. v. Skoutaris, 453 F.3d 915,
924 (7th Cir. 2006) (citing Morris, 848 N.E.2d at 666).

6

to compromise or settle any claims at issue; and no obligation to pay or satisfy any judgment that
may be rendered against Defendant Colin Betts related to the accident at issue.

SO ORDERED.
12/10/2013
Date: ______________

________________________
Hon. Tanya Walton Pratt, Judge
United States District Court
Southern District of Indiana

DISTRIBUTION:
Colin M. Betts
2417 West Bethel Avenue, Apt. 15
Muncie, Indiana 47304
Jill Betts
2417 West Bethel Avenue, Apt. 15
Muncie, Indiana 47304
Joseph M. Weidhaas
JOHNSON, VORHEES & MARTUCCI
510 West 6th Street
Joplin, Missouri 64801
Robert Scott O’Dell
O’DELL & ASSOCIATES, P.C.
[e-mail]

7