                                                                      Aug 04 2015, 8:16 am




      ATTORNEY FOR APPELLANT                                     ATTORNEYS FOR APPELLEE
      Kevin W. Marshall                                          Anthony F. Tavitas
      Hobart, Indiana                                            Adam Tavitas
                                                                 Munster, Indiana



                                                  IN THE
          COURT OF APPEALS OF INDIANA

      Richard Zeller, Jr.,                                       August 4, 2015

      Appellant-Plaintiff,                                       Court of Appeals Case No.
                                                                 64A05-1502-CT-84
              v.                                                 Appeal from the Porter Superior
                                                                 Court

      AAA Insurance Company,                                     The Honorable Roger V. Bradford,
      Appellee-Defendant                                         Judge

                                                                 Case No. 64D01-1209-CT-9848




      Crone, Judge.


                                              Case Summary
[1]   Richard Zeller, Jr., purchased a homeowners insurance policy from AAA

      Insurance Company (“AAA”) that provided for reinstatement of the policy if

      the policyholder paid a premium installment after the cancellation date.

      Pursuant to the policy, the reinstatement would be void and the policy would

      remain cancelled if (1) the premium payment was not honored for any reason

      Court of Appeals of Indiana | Opinion 64A05-1502-CT-84 | August 4, 2015                      Page 1 of 8
      or (2) a claim under the policy arose from an event that occurred between the

      cancellation date and the date that AAA received the payment. Zeller failed to

      pay a premium installment by the cancellation date but mailed a payment that

      AAA later accepted. Two days after AAA accepted payment, Zeller’s garage

      was damaged by fire. He submitted a claim to AAA, which denied coverage on

      the basis that the policy was “not in force” on the day of the fire. Appellant’s

      App. at 82. Zeller filed a complaint against AAA alleging breach of contract

      and bad faith and requesting compensatory and punitive damages. After a

      bench trial, the trial court ruled against Zeller on the basis that there was no

      evidence that AAA reinstated the policy.


[2]   On appeal, Zeller argues that the trial court’s ruling is erroneous because the

      policy was reinstated when AAA accepted his payment. We agree. Therefore,

      we reverse and remand for further proceedings.


                                  Facts and Procedural History
[3]   The relevant facts are undisputed. In 2006, Zeller purchased a homeowners

      insurance policy from AAA. The latest version of the policy reads in pertinent

      part as follows:

              2. CANCELLATION AND CONDITIONAL REINSTATEMENT

              ….

              a. If you fail to pay any installment when due, we will cancel the
              policy. Notice will be mailed at least 10 days prior to the effective date
              of the cancellation.



      Court of Appeals of Indiana | Opinion 64A05-1502-CT-84 | August 4, 2015          Page 2 of 8
              Conditional Reinstatement – if you make adequate payment after the
              due date and we reinstate the policy, there will be no coverage during
              the period of time between the date the policy cancelled and the date
              and time we received the payment. However, reinstatement of the
              policy is conditioned upon the following and any Notice of
              Reinstatement is void if:

              (1) any form of premium payment is not honored for any reason; or

              (2) there is a claim under the policy arising from an event that occurred
              between the policy cancellation date and the date and time we received
              your payment to reinstate the policy.

              If the reinstatement is void for either of these reasons, the policy
              remains cancelled as of the date and time indicated on the Notice of
              Cancellation, and we will not be liable for any claims or damages after
              that date and time.
      Id. at 64 (emphases omitted).


[4]   AAA sent Zeller a Confirmation of Policy Expiration form dated November 17,

      2011, that reads in relevant part as follows:

              REASON FOR THIS NOTICE:

              This is to confirm that your policy expired on Nov 10, 2011 because
              we did not receive the renewal payment requested in the Renewal
              Notice sent to you previously. You may still renew your policy
              effective Nov 10, 2011 with no loss of coverage if we receive your
              payment of $231.68 by the close of business on Nov 30, 2011. If we do
              not receive your payment by that date, the expiration of your policy
              will remain in effect and no further coverage will be provided.

              IMPORTANT A check or credit/debit card which is not honored for any
              reason will not constitute a payment and will not extend coverage beyond any
              date when coverage would have otherwise terminated for lack of payment.




      Court of Appeals of Indiana | Opinion 64A05-1502-CT-84 | August 4, 2015                Page 3 of 8
      Id. at 77. On November 25, Zeller mailed AAA a payment stub with his credit

      card information. A payment to AAA for $231.68 was posted to Zeller’s credit

      card account on December 7.


[5]   Two days later, Zeller’s garage caught fire, resulting in over $80,000 in alleged

      damages. Zeller submitted a claim to AAA, which denied coverage on the

      basis that the policy was “not in force at the time of loss.” Id. at 82. Later that

      month, AAA attempted to return Zeller’s premium in the form of a check with

      the notation, “THIS CHECK IS ISSUED FOR THE FOLLOWING

      REASON – POLICY CANCELLED[.]” Id. at 81. Zeller did not cash the

      check.


[6]   In September 2012, Zeller filed a complaint against AAA alleging breach of

      contract and bad faith and requesting compensatory and punitive damages. In

      January 2015, after a bench trial, 1 the trial court issued a judgment that reads in

      relevant part as follows:

               The insurance premium at issue in this cause was due from [Zeller] on
               November 10, 2011. That payment was not made and [AAA] sent a
               cancellation notice to [Zeller] stating that there would be no loss of
               coverage if [AAA] received payment by November 30, 2011.

               [Zeller] sent the payment stub attached to the cancellation notice to
               [AAA] along with his credit card information on November 25, 2011,
               which happened to be the Friday the day after Thanksgiving. The




      1
        Zeller included a portion of the trial transcript in his appellant’s appendix in contravention of Indiana
      Appellate Rule 50(F), which states, “Because the Transcript is transmitted to the Court on Appeal pursuant
      to Rule 12(B), parties should not reproduce any portion of the Transcript in the Appendix.”

      Court of Appeals of Indiana | Opinion 64A05-1502-CT-84 | August 4, 2015                           Page 4 of 8
              credit card payment was posted to [Zeller’s] credit card account on
              December 7, 2011. The issue, then, is when was payment “received”.
              The Court concludes that payment was received the day it was posted
              to [Zeller’s] credit card account, i.e. December 7, 2011. That is seven
              days after the November 30, 2011, deadline to keep the policy in effect.

              Additionally, the insurance policy, in the terms of the policy in effect,
              at page 26, says that if the insured makes adequate payment after the
              due date and the insurance company reinstates the policy, then there
              will be no loss of coverage. There has been no evidence presented that
              the insurance company reinstated the policy.

              Based on both of the above, the Court concludes that the insurance
              policy in question was not in effect on December 8 [sic], 2011, the date
              of loss at issue here, and orders judgment entered in favor of [AAA]
              and against [Zeller] on [Zeller’s] Complaint.
[7]   Id. at 127-28 (citations to exhibits omitted). Zeller filed a motion to correct

      error, which the trial court denied. This appeal followed.


                                      Discussion and Decision
[8]   Zeller argues that the trial court erred in concluding that the insurance policy

      was not in effect on the date of the fire. “Because the pertinent facts are

      undisputed and this case only involves the interpretation of insurance policy

      contract language, it represents a question of law and we review it de novo.”

      Robinson v. Erie Ins. Exch., 9 N.E.3d 673, 675 (Ind. 2014).

              [P]rovisions of insurance contracts are subject to the same rules of
              construction as other contracts. We interpret an insurance policy with
              the goal of ascertaining and enforcing the parties’ intent as revealed by
              the insurance contract. In accomplishing that goal we must construe
              the insurance policy as a whole, rather than considering individual
              words, phrases, or paragraphs. If the contract language is clear and
              unambiguous, it should be given its plain and ordinary meaning.


      Court of Appeals of Indiana | Opinion 64A05-1502-CT-84 | August 4, 2015             Page 5 of 8
       Wright v. Am. States Ins. Co., 765 N.E.2d 690, 692-93 (Ind. Ct. App. 2002)

       (citations omitted). “We must interpret the language of an insurance policy so

       as not to render any words, phrases, or terms ineffective or meaningless.” Vann

       v. United Family Mut. Ins. Co., 790 N.E.2d 497, 502 (Ind. Ct. App. 2003), trans.

       denied.


[9]    “Policy terms are interpreted from the perspective of an ordinary policyholder

       of average intelligence.” Wright, 765 N.E.2d at 693. “The power to interpret

       insurance policies does not extend to changing their terms.” Keckler v. Meridian

       Sec. Ins. Co., 967 N.E.2d 18, 28 (Ind. Ct. App. 2012), trans. denied. “Insurance

       policies are contracts between private parties; we cannot rewrite the policy nor

       make a new or different policy, but must enforce the terms of the policy as

       agreed upon by the parties.” Terre Haute First Nat’l Bank v. Pac. Empl. Ins. Co.,

       634 N.E.2d 1336, 1339 (Ind. Ct. App. 1993). “Any doubts as to coverage shall

       be construed against the insurer as the contract drafter.” Vann, 790 N.E.2d at

       502.


[10]   Zeller contends that the trial court erred in concluding that the policy was not in

       effect on the date of the fire, noting that AAA accepted his premium payment

       and that his claim arose from an event that occurred after AAA received the

       payment. 2 He further contends that the policy was reinstated when AAA

       accepted the payment. We agree with both contentions. The policy does not



       2
         The parties do not challenge the trial court’s conclusion that AAA received the payment when it was posted
       to Zeller’s credit card account.

       Court of Appeals of Indiana | Opinion 64A05-1502-CT-84 | August 4, 2015                          Page 6 of 8
       make reinstatement contingent upon the sending or receiving of a Notice of

       Reinstatement or any other externality; it merely specifies the two conditions

       under which a reinstatement may be voided, neither of which applies here.

       Zeller’s tender of the payment was an offer for AAA to reinstate the policy, and

       AAA accepted the offer by accepting the payment. “[O]nce [an offer] is

       accepted, a contract is formed.” Bain v. Bd. of Trs. of Starke Mem. Hosp., 550

       N.E.2d 106, 110 (Ind. Ct. App. 1990).


[11]   AAA points to the Confirmation of Policy Expiration form, which states, “If

       we do not receive your payment by [November 30], the expiration of your

       policy will remain in effect and no further coverage will be provided.”

       Appellant’s App. at 77. But that form is not a part of or incorporated by

       reference into the insurance contract between AAA and Zeller, and the contract

       does not set a deadline for making (or accepting) payments for reinstatement. 3

       AAA also points to the following policy provision:

               Policy Expiration. If we offer to renew or continue this policy, and
               you or your representative do not accept our offer, this policy will
               automatically expire at the end of the current policy period. Failure to
               pay the required renewal continuation premium when due shall mean
               that you have not accepted our offer. Any form of premium payment
               which is not honored for any reason will not constitute payment, and




       3
        At trial, AAA claims representative Julie Cruz acknowledged that the insurance policy, and “nothing else,”
       controls “the relationship between the insured and the insurance company.” Tr. at 84. Cruz testified that
       AAA’s “policy or procedure for accepting payments after [the] 20-day grace period ends” is to “accept [the
       payment] but then rewrite the policy,” which was not done in this case. Id. at 80-81. This procedure is not
       mentioned in the insurance policy, however.

       Court of Appeals of Indiana | Opinion 64A05-1502-CT-84 | August 4, 2015                         Page 7 of 8
               will not continue coverage beyond any date when such coverage
               would otherwise terminate for lack of payment.
       Id. at 65 (emphases omitted). As stated above, we must read the policy as a

       whole and so as not to render any terms meaningless; consequently, we must

       harmonize this provision with the conditional restatement provision, which

       specifically allows for reinstatement of a cancelled policy upon receipt of

       adequate payment.


[12]   Finally, AAA urges us not to accept Zeller’s argument, “which is that [his] late

       payment automatically entitled him to reinstated coverage. If that were the

       case, then, … this would be an insurance-at-will state because the insured could

       independently reinstate his coverage without regard for payment deadlines, late

       payment requirements, or cancellation notices.” Appellee’s Br. at 8. We find

       no cause for alarm here. AAA could have protected itself by drafting more

       specific deadlines and requirements for reinstatement in its policy or by refusing

       to accept Zeller’s payment, which it had every right to do. AAA did neither of

       these things, however, so we must reverse the trial court’s judgment in its favor.

       We remand for the trial court to consider Zeller’s bad faith claim and his

       request for compensatory and punitive damages, which are issues that the court

       did not address in its judgment.


[13]   Reversed and remanded.


       May, J., and Bradford, J., concur.




       Court of Appeals of Indiana | Opinion 64A05-1502-CT-84 | August 4, 2015   Page 8 of 8
