Sorrels v. Elliott et al
Filing
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MEMORANDUM OPINION AND ORDER: Esurance's Renewed 32 Motion for Summary Judgment is DENIED. Signed by Judge Danny C. Reeves on 12/7/2016. (STC)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION
(at Lexington)
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SHERRY SORRELS,
Plaintiff,
V.
SAMUEL A. ELLIOTT, et al.,
Defendants.
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Civil Action No. 5: 16-205-DCR
MEMORANDUM OPINION
AND ORDER
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This matter is pending for consideration of Defendant Esurance Insurance Company’s
(“Esurance”) Renewed Motion for Summary Judgment. [Record No. 32] This case arises out
of a motor vehicle accident in which Plaintiff Sherry Sorrels alleges that she sustained injuries
as a result of Defendant Samuel A. Elliott’s negligence. Esurance is named as a Defendant in
this action because Sorrels has an underinsured motorist policy with the company on which
she seeks to recover for her injuries. Esurance has filed a renewed motion for summary
judgment, arguing that Defendant Elliott’s vehicle is not underinsured under Indiana law. For
the reasons outlined below, Esurance’s motion will be denied.
I.
On May 24, 2014, Sorrels was involved in a motor vehicle accident that she alleges was
caused by Elliott’s negligence. Elliott has an insurance policy that provides bodily injury
liability coverage with a limit of $100,000 per person. [Record No. 9] Sorrels has an
Underinsured Motorist (UIM) policy with Esurance that has a liability limit of $50,000.
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[Record No. 8, Ex. 3] Under this policy, Sorrels is only eligible for coverage if Elliott’s vehicle
qualifies as an “underinsured motor vehicle.”
Esurance has already filed one motion for summary judgment [Record No. 8] in which
it argued that Sorrels is not entitled to coverage under the UIM policy because application of
an Indiana set-off provision reduced its liability on the policy to zero. Specifically, Esurance
argued that this statute required reducing the $50,000 liability limit on the UIM policy by the
$100,000 liability limit on Elliott’s liability policy. However, the statutory language does not
mention liability limits but, instead, limits set-offs to the total amount paid by or on behalf of
the Defendant. Because the amount of damages had not yet been determined and Sorrels had
not received any payment from Elliott, it cannot apply the statutory set-off. Thus, the Court
denied Esurance’s earlier motion as premature. [Record No. 21]
Unwilling to accept the Court’s determination, Esurance then filed a motion requesting
reconsideration of the decision regarding summary judgment. [Record No. 27] Esurance
contended that the statutory definition of an underinsured motor vehicle, provided in Indiana
Code § 27-7-5-4(b), should provide the formula for calculating a set-off under the Indiana setoff statute. However, Esurance did not cite to a case in which a court calculated a set-off in
any manner other than that provided by the statute itself, much less in accordance with the
statutory definition of an underinsured motor vehicle. Thus, the undersigned declined to alter
the earlier decision. [Record No. 28]
II.
As explained earlier, summary judgment is appropriate when “the movant shows that
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); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
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(1986); Chao v. Hall Holding Co., 285 F.3d 415, 424 (6th Cir. 2002). A dispute over a material
fact is not “genuine” unless “the evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one party must prevail as a matter of
law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). In deciding whether to
grant summary judgment, the Court views all the facts and inferences drawn from the evidence
in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986).
III
Perhaps it should come as no surprise that Esurance has filed a renewed motion for
summary judgment [Record No. 32], once again arguing that Sorrels is not entitled to recover
under her UIM policy. The company asserts that Elliott’s vehicle does not qualify as an
“underinsured motor vehicle” under Indiana law. Specifically, it contends that the relevant
statute requires a limits-to-limits comparison under which a tortfeasor’s vehicle is not
underinsured if the limits on his liability policy are not less than the limits on the
victim/insured’s UIM policy. Here, the bodily injury liability limit on Elliott’s policy is
$100,000 per person and Sorrels’s UIM liability limit is $50,000 per person. Because
$100,000 is not less than $50,000, Esurance argues that Elliott’s vehicle is not an underinsured
motor vehicle and Sorrels is not entitled to UIM coverage. However, according to decisions
interpreting this statute from Indiana’s highest court, the UIM policy limit should not be
compared with the tortfeasor’s liability limit but should instead be compared with information
that is not yet available in this case—the amount of any payments that the insured has received.
Accordingly, the renewed motion for summary judgment will be denied.
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In this diversity case, for the reasons stated in this Court’s decision on the first motion
for summary judgment, Indiana’s substantive state law applies. This Court must then apply
that law “in accordance with the controlling decisions of the state supreme court.” Allstate
Ins. Co. v. Thrifty Rent-A-Car Systems, Inc., 249 F.3d 450, 454 (6th Cir. 2001) (citations
omitted). Where the state’s highest court has not addressed a particular issue, federal courts
must “anticipate how the relevant state’s highest court would rule in the case,” based on the
controlling decisions of that court. Berrington v. Wal-Mart Stores, Inc., 696 F.3d 604, 607
(6th Cir. 2012). Further, in predicting how a state’s court would rule, “federal courts sitting in
diversity cases should be extremely cautious about adopting substantive innovation in state
law.” State Auto Prop. and Cas. Ins. Co. v. Hargis, 785 F.3d 189, 195 (6th Cir. 2015) (internal
quotation marks and citation omitted).
In this case, the issue is whether Indiana law permits a court to conclude that an
individual’s vehicle is underinsured based on a comparison of the liability limits of the parties’
policies, before liability has been determined, damages have been established, or the insured
has received payment from the alleged tortfeasor (or on his behalf). Indiana law provides that
an alleged tortfeasor’s vehicle is only subject to the terms of underinsured motorist coverage
if the vehicle qualifies as underinsured. Ind. Code § 27-7-5-4(b). An underinsured motor
vehicle is “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 . . .
.” Id. Under the facts of this case, the more specific issue is whether the liability limits of an
alleged tortfeasor’s liability policy are amounts “available for payment to the insured” that
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may be compared with the insured’s UIM limits, or whether “available” amounts are limited
to payments that the insured has received from or on behalf of the alleged tortfeasor.
Esurance argues that the liability limit of Elliott’s insurance qualifies as an “amount
available for payment to the insured” and that, as a result, Elliott’s vehicle was not
underinsured. This Court has not located an Indiana case in which the court directly addressed
the question of whether the “amount available for payment to the insured” may be determined
exclusively by reference to liability limits, before liability or damages have been established
and before the insured has received payment, and Esurance has not cited to one.1 Accordingly,
there are no cases directly on point that dictate the decision on this issue. However, the
Supreme Court of Indiana’s decisions interpreting the statutory definition of an underinsured
motor vehicle compel the conclusion that this determination should not be made by reference
to the liability limits of the alleged tortfeasor’s liability policy.
First, the phrasing used in the statute indicates that it does not contemplate a limits-tolimits comparison. In Corr v. Am. Fam. Ins., 767 N.E.2d 535, 540 (Ind. 2002), the Supreme
Court of Indiana held that the tortfeasor’s liability limit was not the appropriate amount to
compare with the insured’s UIM policy limit for purposes of determining whether the
tortfeasor’s vehicle was underinsured. The plaintiffs were in a group of multiple claimants
and received payment in an amount less than the liability limit on their UIM policy. Corr, 767
N.E.2d at 538. However, the tortfeasor’s liability limits were not less than the limits on the
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Esurance does cite a case in which the court concluded that a tortfeasor’s vehicle was
underinsured by comparing the liability limits of the parties’ policies. State Farm Auto Ins.
Co. v. Conway, 779 F. Supp. 963, 968 (S.D. Ind. 1991). However, the case was not decided
by an Indiana state court, and did not cite to an Indiana state court decision, so it does not
establish Indiana law on this issue. Moreover, it was decided over twenty years ago without
the benefit of recent Supreme Court of Indiana decisions interpreting the UIM statute.
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UIM policy. Id. As a result, the tortfeasor’s vehicle would only be underinsured under Indiana
law if the court compared the UIM limits with the amount of the payment that the plaintiffs
received, and the dispositive issue was whether the court should compare the UIM policy limits
to the tortfeasor’s policy limits or to the amount that the plaintiffs recovered. Id.
The court’s decision was influenced by the fact that the Indiana statute qualifies the
tortfeasor’s “limits of coverage” with the phrase “available for payment to the insured” rather
than directing courts to compare the tortfeasor’s limits with the insured’s UIM limits. Id. at
539.2 The court concluded that the statute’s use of the phrase “available for payment” indicates
that it “does not express [a] clear preference for limits-to-limits comparison.” Id. Instead, the
statute’s determination of whether a tortfeasor’s vehicle is underinsured turns on the meaning
of what amounts qualify as being “available for payment.” The court then examined the
meaning of “available for payment,” and concluded that this phrase means “money present or
ready for immediate use by the insured, not amounts potentially accessible.” Id. at 540. It
went on to conclude that the tortfeasor’s liability limit was not an amount that was “available
for payment” under the statute because that amount was “theoretically available”; instead, the
appropriate amount for comparison was the payment that the insured had received. Id.
In a more recent case, the court further clarified that a limits-to-limits comparison is
not the proper approach to determining whether a vehicle is underinsured under Indiana law.
In Lakes v. Grange Mut. Cas. Co., the court discussed the statutory definition of an
underinsured motor vehicle at length and ultimately held that “whether a vehicle is
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The statute defines an underinsured motor vehicle as “an insured vehicle where the
limits of coverage available for payment to the insured . . . are less than the limits for the
insured’s underinsured motorist coverage. . . .” Ind. Code § 27-7-5-4(b).
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underinsured depends, in all cases, on whether the amount received from the tortfeasor’s policy
is less than the per-person limits on UIM coverage.” 964 N.E.2d 796, 805 (Ind. 2012); see
also Frye v. Auto-Owners Ins. Co., No. 3: 12-CV-113, 2015 WL 470399, at *8 (N.D. Ind. Feb.
4, 2015) (quoting Lakes as standing for this proposition). The court was presented with the
question of whether the definition of an underinsured motor vehicle permitted a limits-to-limits
comparison, or whether it required that the UIM policy limit be compared with the amount that
the insured actually received. In evaluating this issue, the court explicitly stated that the statute
defining an underinsured motor vehicle “does not contemplate a limits-to-limits comparison.”
Lakes, 964 N.E.2d at 804 (citing Corr, 767 N.E.2d at 539). Accordingly, the court declined to
consider the tortfeasor’s liability limits and instead compared the amount of the payment that
the plaintiff had received with the limit of her UIM policy and concluded that the tortfeasor’s
vehicle was underinsured. Id.
Based on these decisions from Indiana’s highest court, Indiana law does not permit this
Court to determine whether Elliott’s vehicle was underinsured by conducting a limits-to-limits
comparison. In Lakes, Indiana’s highest court was clear that it is improper to conduct a limitsto-limits comparison in determining whether a vehicle is underinsured under Indiana law, and
that this determination can only be made by reference to payments that the insured has
received. At this stage of the litigation, Sorrels has yet to prove that Elliott was liable or
establish damages, or receive payment from Elliott compensating her for her injuries. As a
result, the liability limits on Elliott’s insurance policy represent an amount that is “potentially
accessible” and “theoretically available.” The court was clear in Corr that these amounts are
not “available for payment” within the meaning of Indiana’s definition of an underinsured
motor vehicle and cannot be used to evaluate whether a vehicle is underinsured. Likewise,
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under the holding in Lakes, the determination of whether Elliott’s vehicle was underinsured
cannot be made unless and until Sorrels has received payment from Elliott, thereby
establishing the amount that is “actually available” to her.
Esurance argues that Corr and Lakes are not controlling because they were decided in
multiple claimant cases where the plaintiff’s recovery was reduced because other tort victims
also recovered on the tortfeasor’s policy. While this is a distinction between those cases and
the present case, there is no indication that the court intended for the application of its general
statements regarding the meaning of the statute to be limited to the specific context presented
in those cases. Instead, the court broadly stated that the statute does not contemplate a limitsto-limits comparison and that the appropriate comparison is with payments actually received;
it did not include language qualifying those statements or limiting its application to multiple
claimant cases. Instead, the Lakes court stated that its holding applied “in all cases.” Absent
qualifying language, it would be inappropriate to conclude that the court’s use of general
language was intended for any purpose other than to apply generally. This is particularly true
in a diversity case such as this one where a federal court is limited to application of the
statements made by the state’s highest court—this Court cannot speculate that the court
intended to limit its holding to the circumstances before it absent a clear indication that this
was its intention. Rather, this Court is bound by the plain language of these decisions, and the
plain language does not permit a limits-to-limits comparison.
IV.
Under Indiana law, a vehicle is underinsured if the payments that the insured has
received are less than the limits of the insured’s UIM policy. This Court cannot determine
whether Elliott’s vehicle is underinsured unless and until Sorrels receives payment from Elliott
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or on his behalf. Because Sorrels has not received payment, it cannot be determined at this
time whether Elliott’s vehicle was underinsured. Accordingly, it is hereby
ORDERED that Esurance’s renewed motion for summary judgment [Record No. 32]
is DENIED.
This 7th day of December, 2016.
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