                                                                                  FILED
                                                                             Jan 16 2018, 9:06 am

                                                                                  CLERK
                                                                              Indiana Supreme Court
                                                                                 Court of Appeals
                                                                                   and Tax Court




ATTORNEYS FOR APPELLANT                                    ATTORNEYS FOR APPELLEES
Matthew J. Schad                                           John B. Drummy
Schad & Schad, P.C.                                        Crystal G. Rowe
New Albany, Indiana                                        J. Todd Spurgeon
                                                           Kightlinger & Gray, LLP
Roger L. Pardieck                                          Indianapolis, Indiana
Karen M. Davis
The Pardieck Law Firm
Seymour, Indiana



                                            IN THE
    COURT OF APPEALS OF INDIANA

Kimberly S. Earl, Individually                             January 16, 2018
and as Personal Representative                             Court of Appeals Case No.
of the Estate of Jerry L. Earl,                            36A01-1703-CT-542
Appellant-Plaintiff,                                       Appeal from the Jackson Superior
                                                           Court
        v.                                                 The Honorable Bruce Markel, III,
                                                           Judge
State Farm Mutual Automobile                               Trial Court Cause No.
Insurance Company, State Farm                              36D01-1411-CT-36
Fire and Casualty Company, and
Sarah Smith Vinnedge,
Appellees-Defendants



May, Judge.




Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018                        Page 1 of 23
[1]   Kimberly Earl, (“Kimberly”), individually, and as the personal representative of

      the Estate of Jerry L. Earl (collectively, “Earl”) appeals the grant of summary

      judgment in favor of State Farm Mutual Automobile Insurance Company

      (“State Farm Mutual”), State Farm Fire and Casualty Company (“State Farm

      Fire”), and Sarah Smith Vinnedge (“Vinnedge”) (collectively, “Defendants”).

      Earl argues the trial court erred when it granted summary judgment in favor of

      Defendants.


[2]   The parties present multiple issues for our review, which we consolidate and

      restate as:


              1. Whether the trial court erred when it granted summary
                 judgment for the Defendants based on the trial court’s
                 conclusion Earl’s claims were impermissible collateral attacks
                 on an earlier judgment;

              2. Whether the trial court erred when it granted summary
                 judgment for the Defendants based on the trial court’s
                 conclusion Earl was unjustified in her reliance on State Farm
                 Mutual’s representations regarding insurance coverage in the
                 earlier litigation; and

              3. Whether the trial court erred when it granted summary
                 judgment for the Defendants regarding Earl’s bad faith claim.

      We reverse and remand.




      Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018   Page 2 of 23
                             Facts and Procedural History                                1




[3]   On September 3, 2008, Jerry Earl (“Jerry”) sustained injuries in a motorcycle

      crash involving a hit-and-run semi driver. At the time, Kimberly and Jerry Earl

      (“the Earls”) had an Uninsured Motorist (“UM”) policy with available

      coverage of $250,000 with State Farm Mutual and a Personal Liability

      Umbrella Policy (“PLUP”), including available coverage for damage done by

      an uninsured motorist of $2,000,000, with State Farm Fire. State Farm Mutual

      offered $40,000 to settle the claim, which the Earls rejected.


[4]   On August 10, 2010, the Earls filed a claim against State Farm Mutual for UM

      coverage benefits for damages Jerry incurred as part of the motorcycle accident,

      and loss of services, society, and companionship for Kimberly (“UM

      Litigation”). On January 19, 2011, the Earls served their interrogatories upon

      State Farm Mutual, with a question stating:


              Describe any policy or policies of liability insurance or any
              indemnification or insurance agreement in effect which covered
              or may cover any person or vehicle in connection with the wreck,
              please state as to each policy:

                       (a)      The name and address of the insurer;

                       (b)      The names and addresses of the insureds;




      1
        We held oral argument on this matter on November 17, 2017, at the French Lick Resort and Conference
      Center as part of the Defense Trial Counsel of Indiana’s Annual Conference and Meeting. We thank both
      Conference Center staff and DTCI representatives for their willingness to host the oral argument, and we
      thank counsel for their able presentations.

      Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018                     Page 3 of 23
                       (c)      Other persons covered by the policy;

                       (d)      The number of the policy;

                       (e)      The effective dates thereof;

                       (f)      The amount of coverage;

                       (g)      The limits of liability.

      (App. Vol. V at 7.) Vinnedge, as a representative of State Farm Mutual,

      answered the interrogatories. Her answer included information about only the

      $250,000 UM policy with State Farm Mutual.


[5]   On November 27, 2012, the jury returned a verdict of $175,000 for the Estate of

      Jerry Earl 2 and $75,000 for Kimberly individually. On November 28, State

      Farm Mutual directed its counsel to divulge information regarding the PLUP

      policy with UM coverage to Earl’s counsel. On December 3, 2012, State Farm

      Mutual’s counsel provided Earl’s counsel a copy of the PLUP policy, which

      provided for an additional $2,000,000 in UM coverage.


[6]   On January 10, 2013, Earl filed a motion to correct error, requesting the trial

      court modify the jury’s verdict regarding damages awarded to Earl based on

      State Farm Mutual’s “conduct in failing to produce the [PLUP] or information

      about the policy in discovery and allowing the case to go to the jury after the

      jury had been given incomplete information about the policy limits.” (App.




      2
       Jerry Earl passed away from causes unrelated to this case on January 4, 2012, and his Estate, with Kimberly
      Earl as personal representative, replaced him as a party in the UM Litigation.

      Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018                     Page 4 of 23
      Vol. III at 15.) Earl also requested attorney’s fees and litigation expenses,

      alleging State Farm Mutual violated discovery rules.


[7]   On January 28, 2013, State Farm Mutual responded to Earl’s motion, arguing a

      new trial was warranted because the trial court erred when it allowed evidence

      of the UM policy limits before the jury. In addition, State Farm Mutual

      indicated:


              A new trial is the [sic] also the appropriate relief available to
              Plaintiff as a result of State Farm’s belated disclosure of the
              [PLUP]. A new trial would not be necessary due to the belated
              disclosure of the [PLUP] if the underlying [UM] policy and its
              limit of $250,000 had not been admitted into evidence before the
              jury. Because of the admission of that evidence, however, it is
              possible that the jury capped its award at the policy limit.
              Because it is possible that Plaintiff was prejudiced as a result of
              the belated disclosure of the [PLUP], a new trial is warranted.
              Plaintiff’s request, however, that the court increase the jury’s
              award to a total sum of $2,250,000 (the combined limits of the
              policies) is clearly inappropriate under Indiana law because the
              evidence before the jury supported a range of verdicts.

      (Id. at 106-7.) State Farm Mutual opposed Earl’s request for attorney’s fees and

      litigation expenses.


[8]   In its Statement of Facts in its motion in opposition of Earl’s motion to correct

      error, State Farm Mutual conceded


              that during its handling of the claim prior to the initiation of the
              present litigation it would have been appropriate for it to have
              confirmed with Plaintiff or her counsel the existence of the
              [PLUP] and the uninsured motorist coverage available under that
              policy. State Farm also readily concedes that its response to
      Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018   Page 5 of 23
                Plaintiff’s request for production and its answers to Plaintiff’s
                interrogatories prepared by its counsel and, in the instance of the
                answers to interrogatories, signed by claim representative Sarah
                Smith [Vinnedge], were incomplete and should have referenced
                the [PLUP], even though State Farm never evaluated the claim
                as having a value remotely approaching the limit of the
                underlying policy.

       (Id. at 107-8.) 3


[9]    On March 23, 2013, Earl moved to withdraw her motion to correct error

       stating:


                There are good grounds for Plaintiff’s motion, but upon further
                review, Plaintiff feels the appropriate action to take in these
                unusual circumstances is to pursue other remedies against State
                Farm Mutual Automobile Insurance Company so that further
                discovery may be conducted and so that she may be more fully
                compensated for State Farm’s conduct.

       (Id. at 126.) The trial court granted Earl’s request to withdraw the motion to

       correct error.


[10]   State Farm Mutual subsequently appealed the trial court’s decision to allow

       evidence of the UM policy limits before the jury. Our Indiana Supreme Court

       affirmed the trial court, holding “[a]lthough the probative value of the Earls’

       $250,000 coverage limit with State Farm is admittedly low, we cannot say the




       3
         In their appellate brief, Defendants characterize this non-disclosure as “alleged.” (Br. of Appellee at 8.) As
       the record indicates in multiple places that Defendants admitted they did not disclose the existence of the
       PLUP to Earl, we consider this a mischaracterization of the record, and we admonish counsel to avoid such
       mischaracterizations in the future.

       Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018                          Page 6 of 23
       trial court abused its discretion in finding that probative value was not

       outweighed by substantial prejudice.” State Farm Mut. Auto. Ins. Co. v. Earl, 33

       N.E.3d 337, 344 (Ind. 2015). The Court stated in a footnote:


               Unbeknownst to the Earls until after the jury trial, they were also
               covered by a separate [PLUP] that carried an endorsement for
               uninsured motorist coverage with a limit of $2 million. Kimberly
               moved to correct error, requesting the verdict be increased and
               she be awarded attorneys’ fees and expenses because “if the jury
               had known about the [PLUP], it may have rendered a larger
               verdict.” But before the trial court could rule on her motion,
               Kimberly withdrew it, saying she felt “the appropriate action to
               take in these unusual circumstances is to pursue other remedies”
               against State Farm. We need not address the [PLUP], however,
               as our analysis is limited to the narrow question presented before
               us: whether the trial court abused its discretion in admitting the
               $250,000 coverage limit.

       Id. at 339 n.2 (internal citations to the record omitted).


[11]   On November 26, 2014, Earl filed a complaint against Defendants alleging

       fraud, constructive fraud, bad faith, and breach of contract (“Fraud

       Litigation”). Earl requested


               damages for Kimberly S. Earl’s emotional distress, attorney fees,
               and for punitive damages against State Farm Mutual Automobile
               Insurance Company, State Farm Fire & Casualty Company and
               Sarah Smith Vinnedge to punish and make example of their
               conduct, for the costs of suit incurred herein and for such other
               relief as the Court may deem just and proper.

       (App. Vol. II at 62.)




       Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018   Page 7 of 23
[12]   On December 20, 2016, Defendants filed a motion for summary judgment,

       arguing Earl’s claims were an “impermissible collateral attack on the judgment

       entered in the earlier lawsuit.” (Id. at 26) (original formatting omitted).

       Additionally, Defendants asserted Earl “could not reasonably rely on

       representations of the coverages included in the PLUP,” (id. at 32) (original

       formatting omitted), and thus summary judgment was proper on the fraud and

       constructive fraud counts. Finally, Defendants incorporated their earlier

       contentions with assertions of waiver to support their motion for summary

       judgment on the bad faith and breach of contract claims.


[13]   The trial court held a hearing on summary judgment on February 15, 2017. On

       February 17, 2017, the trial court granted summary judgment in favor of

       Defendants, finding all claims were impermissible attacks on the UM

       Litigation; Earl’s fraud and constructive fraud claims were unsuccessful

       because, as a matter of law, Earl could not reasonably rely on Defendants’

       representations; Earl’s bad faith claim was unsuccessful because, as a matter of

       law, Earl could not reasonably rely on Defendants’ representations and “the

       undisputed facts establish that no other conduct of the Defendants constituted

       conscious wrongdoing,” (id. at 14); and Earl’s breach of contract claim was

       waived during the course of discovery.



                                   Discussion and Decision



       Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018   Page 8 of 23
                       1. Summary Judgment Standard of Review
[14]   We review summary judgment de novo, applying the same standard as the trial

       court. Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). Drawing all

       reasonable inferences in favor of the non-moving party, we will find summary

       judgment appropriate if the designated evidence shows there is no genuine issue

       as to any material fact and the moving party is entitled to judgment as a matter

       of law. Id. A fact is material if its resolution would affect the outcome of the

       case, and an issue is genuine if a trier of fact is required to resolve the parties’

       differing accounts of the truth, or if the undisputed material facts support

       conflicting reasonable inferences. Id.


[15]   The initial burden is on the summary judgment movant to demonstrate there is

       no genuine issue of fact as to a determinative issue, at which point the burden

       shifts to the non-movant to come forward with evidence showing there is an

       issue for the trier of fact. Id. While the non-moving party has the burden on

       appeal of persuading us summary judgment was erroneous, we carefully assess

       the trial court’s decision to ensure the non-movant was not improperly denied

       his day in court. Id. Summary judgment is not a summary trial, and it is not

       appropriate just because the non-movant appears unlikely to prevail at trial. Id.

       at 1003-04. We “consciously err[ ] on the side of letting marginal cases proceed

       to trial on the merits, rather than risk short-circuiting meritorious claims.” Id.

       at 1004.




       Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018   Page 9 of 23
              2. Impermissible Collateral Attack on Prior Judgment
[16]   The trial court granted summary judgment in favor of Defendants based in part

       on its conclusion that Earl’s claims of fraud, constructive fraud, and bad faith

       were impermissible collateral attacks on the judgment in the UM Litigation. A

       collateral attack is “a judicial proceeding pursued to avoid, defeat, evade or

       deny the validity and effect of a valid judgment or decree.” In re Chapman, 466

       N.E.2d 777, 780 (Ind. Ct. App. 1984), reh’g denied, trans. denied. Earl argues the

       trial court erred when it granted summary judgment in favor of Defendants on

       that ground because the Fraud Litigation is not a collateral attack 4 on the

       judgment from the UM Litigation.


[17]   Earl’s complaint in the UM Litigation was based on Jerry’s accident and State

       Farm Mutual’s payment for the injuries he incurred, as well as for Kimberly’s

       “loss of services, society and companionship of her husband.” (App. Vol. II at




       4
         The parties disagree regarding the analysis we are to undertake in this case, specifically regarding whether
       the issues in the Fraud Litigation are precluded by the proceedings in the UM Litigation. Earl’s arguments
       are based on the doctrine of res judicata, and Defendants base their arguments on the rule against collateral
       attacks. Indiana cases use those two concepts interchangeably. See, e.g., $100 v. State, 822 N.E.2d 1001, 1007
       n.7 (Ind. Ct. App. 2005) (noting if Ellenstein were to argue, as part of her forfeiture action, that her guilty
       plea was invalid, such argument would be barred as a collateral attack on her conviction), trans. denied. There
       does not seem to be, nor do the parties cite, any Indiana precedent that compares and contrasts “collateral
       attack” with the principles of res judicata. In fact, there are many cases that intermingle the use of the term
       “collateral attack” with the principles of res judicata. See, e.g., Indiana Dep’t of Envtl. Mgmt. v. Conrad, 614
       N.E.2d 916, 922-3 (Ind. 1993) (categorizing collateral attack and res judicata separately, but discussing
       collateral estoppel, or issue preclusion, as part of the collateral attack analysis); and see Higgason v. Stogsdill,
       818 N.E.2d 486, 491-2 (Ind. Ct. App. 2004) (discussing issue preclusion as a “collateral attack” on a federal
       court ruling), trans. denied.
       Defendants would like us to treat collateral attack as “a separate doctrine with separate elements.” (Br. of
       Appellee at 28.) Defendants do not cite an Indiana case for this premise. Thus, we will follow the well-
       established precedent and address both interchangeably, as to foreclose future confusion in this case.

       Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018                           Page 10 of 23
       3.) In Earl’s prayer for damages as part of the UM Litigation, Earl requested “a

       judgment against the Defendant that will fully and fairly compensate them for

       their injuries and damages, cost of this action, pre-judgment interest and for all

       other relief necessary and proper in the premises.” (Id.) As noted in the facts,

       the jury returned a judgment in favor of the Earl Estate and Kimberly for

       $175,000, and $75,000 respectively, and the trial court entered an order

       accordingly.


[18]   Earl’s complaint in the Fraud Litigation alleged State Farm Mutual, State Farm

       Fire, and Vinnedge were liable to Earl for damages stemming from fraud,

       constructive fraud, and bad faith. For these torts, Earl requested damages


               incurred by Plaintiff due to [Defendants’] fraud, including
               damages for Kimberly S. Earl’s emotional distress, attorney fees,
               and for punitive damages against [Defendants] to punish and
               make example of their conduct, for the costs of suit incurred
               herein and for such other relief as the Court may deem just and
               proper.

       (Id. at 62 (fraud)). (See also id. at 63-4 (constructive fraud)); and see id. at 65 (bad

       faith)).


[19]   The UM Litigation was a contract action against State Farm Mutual. See

       Clevenger v. Progressive Northwestern Ins. Co., 838 N.E.2d 1111, 1114 (Ind. Ct.

       App. 2005) (interpretation of insurance policy is governed by the same rules of

       construction as other contracts). As our Indiana Supreme Court stated in its

       review of State Farm Mutual’s appeal of the UM Litigation decision:



       Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018   Page 11 of 23
               Suits to recover pursuant to uninsured or underinsured motorist
               provisions have been recognized as involving issues of both
               contract law and tort law. Malott v. State Farm Mut. Auto. Ins. Co.,
               798 N.E.2d 924, 926 (Ind. Ct. App. 2003). The underlying cause
               of action is based on the contractual relationship between the
               insured and the insurer, although the parties may principally
               litigate the measure of damages relying upon tort principles. Id.;
               Brown-Day [v. Allstate Ins. Co.], 915 N.E.2d [548,] 552 [(Ind. Ct.
               App. 2009)] (“The cause of action to be tried before the jury is a
               first party claim for contract enforcement against [insurer],
               seeking underinsured motorist benefits.”); Allstate Ins. Co. v.
               Hammond, 759 N.E.2d 1162, 1166 (Ind. Ct. App. 2001) (finding
               even though the trial focused entirely on the nature and extent of
               the plaintiff’s damages, the “action was effectively one alleging
               breach of contract by [insurer] in failing to pay uninsured
               motorist benefits”).

               Here, the Earls presented an underlying breach of contract claim
               in their complaint, alleging, “in consideration of the premiums
               stated therein, [State Farm] issued an insurance policy” that “was
               in full force and effect on [the day of the accident],” and State
               Farm was “liable under the terms and conditions of the contract
               for insurance.” App. at 21-22. And the case was tried as such. In
               his opening statement, the Earls’ lawyer described the suit as “a
               dispute over a contract between the Earls and State Farm.” Tr. at
               81.

       Earl, 33 N.E.3d at 341.


[20]   By contrast, the Fraud Litigation is a claim against State Farm Mutual and two

       other related defendants, State Farm Fire and Vinnedge, for the common law

       torts of fraud, constructive fraud, and bad faith. The elements of common-law

       fraud are:




       Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018   Page 12 of 23
        (1) a material misrepresentation of past or existing fact which (2)
        was untrue, (3) was made with knowledge of or in reckless
        ignorance of its falsity, (4) was made with the intent to deceive,
        (5) was rightfully relied upon by the complaining party, and (6)
        which proximately caused the injury or damage complained of.

Lawyers Title Ins. Corp. v. Pokraka, 595 N.E.2d 244, 249 (Ind. 1992), reh’g denied.

The elements of common-law constructive fraud are:


        i) a duty owing by the party to be charged to the complaining
        party due to their relationship; (ii) violation of that duty by the
        making of deceptive material misrepresentations of past or
        existing facts or remaining silent when a duty to speak exists; (iii)
        reliance thereon by the complaining party; (iv) injury to the
        complaining party as a proximate result thereof; and (v) the
        gaining of an advantage by the party to be charged at the expense
        of the complaining party.

Rice v. Strunk, 670 N.E.2d 1280, 1284 (Ind. 1996). Regarding actions involving

insurance companies, the obligation of good faith and fair dealing includes the

agreement to refrain from: “(1) making an unfounded refusal to pay policy

proceeds; (2) causing an unfounded delay in making payment; (3) deceiving the

insured; and (4) exercising any unfair advantage to pressure an insured into a

settlement of his claim.” Erie Ins. Co. v. Hickman by Smith, 622 N.E.2d 515, 519

(Ind. 1993). Additionally, proving bad faith amounts to showing more than

bad judgment or negligence: “it implies the conscious doing of wrong because

of dishonest purpose or moral obliquity. . . . [I]t contemplates a state of mind

affirmatively operating with furtive design or ill will.” Oxendine v. Public Serv.

Co., 423 N.E.2d 612, 620 (Ind. Ct. App. 1980).



Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018   Page 13 of 23
[21]   While the Fraud Litigation requires consideration of facts relevant to both

       cases, specifically Defendants’ behavior during the UM Litigation prompted by

       Jerry’s accident, there is no overlap in claims or of requested damages between

       these two actions. Further, Earl’s complaint in the Fraud Litigation does not

       ask the trial court to avoid, defeat, evade or deny the validity and effect of the

       judgment in the UM Litigation. Thus, the Fraud Litigation was not an

       impermissible collateral attack on the UM Litigation. See In re Chapman, 466

       N.E.2d at 780 (a collateral attack is “a judicial proceeding pursued to avoid,

       defeat, evade or deny the validity and effect of a valid judgment or decree”). 5


                       3. Reliance on Defendants’ Representations
[22]   As noted supra, common-law fraud requires


                (1) a material misrepresentation of past or existing fact which (2)
                was untrue, (3) was made with knowledge of or in reckless
                ignorance of its falsity, (4) was made with the intent to deceive,
                (5) was rightfully relied upon by the complaining party, and (6)
                which proximately caused the injury or damage complained of.




       5
         Further, claim preclusion and issue preclusion under the doctrine of res judicata do not apply. Res judicata
       serves to prevent repetitious litigation of disputes that are essentially the same. Dawson v. Estate of Ott, 796
       N.E.2d 1190, 1195 (Ind. Ct. App. 2003). Claim preclusion applies when a final judgment on the merits has
       been rendered and acts to bar a subsequent action on the same claim between the same parties. Id. Issue
       preclusion, also called collateral estoppel, “bars the subsequent litigation of a fact or issue that was
       necessarily adjudicated in a former lawsuit if the same fact or issue is presented in the subsequent lawsuit.”
       Afolabi v. Atlantic Mort. & Inv. Corp., 849 N.E.2d 1170, 1175 (Ind. Ct. App. 2006). As noted in our discussion
       supra, the claims, issues, and material facts in the UM Litigation and the Fraud Litigation are not the same.

       Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018                         Page 14 of 23
       Pokraka, 595 N.E.2d at 249. Here, the issue is whether Earl “rightfully relied

       upon” the information Defendants provided regarding the Earls’ insurance

       coverage.


[23]   When considering the reasonableness of a party’s reliance, we consider the fact

       of reliance and the right of reliance. Roberts v. Agricredit Acceptance Corp., 764

       N.E.2d 776, 777 (Ind. Ct. App. 2002). Regarding the fact of reliance, we have

       held


               [w]hen both parties are dealing at arm’s length and one party, in
               spite of the facts well known to him, deliberately ignores such
               facts and chooses to believe statements to the contrary, he closes
               his eyes to the truth and deliberately takes a chance. It then
               cannot be said that he was injured in law. All that can be said is
               that he gambled and lost.

       Plymale v. Upright, 419 N.E.2d 756, 761 (Ind. Ct. App. 1981). The right of

       reliance


               is more difficult to determine for the reason it is tightly bound up
               with the duty of a representee to be diligent in safeguarding his
               interests. The legal obligation that a person exercise the common
               sense and judgment of which he is possessed is a practical
               limitation on the actionability of various representations. In the
               course of daily interaction and business dealing the average
               person encounters a barrage of opinions, advice, advertisements,
               estimates, and even “guestimates.” He simply cannot believe, or
               rely upon, everything he is told. . . . However, it is also settled
               that where persons stand mentally on equal footing, and in no
               fiduciary relation, the law will not protect one who fails to
               exercise common sense and judgment.

       Id. at 762.

       Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018   Page 15 of 23
[24]   Earl argues she “had every right to rely on State Farm’s fraudulent

       misrepresentation of complex insurance coverage.” (Br. of Appellant at 34)

       (original formatting omitted). Additionally, she argues summary judgment was

       improper because the issue of reliance is a question for the jury. We agree.


[25]   In Plohg v. NN Investors Life Ins. Co. Inc., 583 N.E.2d 1233 (Ind. Ct. App. 1992),

       trans. denied, our court stated, regarding reasonable reliance upon the

       representation of an insurance agent even when the insured has a copy of the

       policy:


               The remaining question is whether in the exercise of reasonable
               care they were entitled to rely upon them. The traditional rule
               has been that reliance is not justified where the injured party has
               a written instrument available and fails or neglects to read it. On
               the other hand, we have come to recognize that in the modern
               world ordinary, i.e. reasonable, care does not necessarily require
               a person to read something as complex as today’s insurance
               policies. Rather, whether a party’s reliance upon an agent’s
               representations is reasonable even though he failed to exercise
               the opportunity to read the policy is a question of fact for the
               factfinder.

       Plohg, 583 N.E.2d at 1237 (internal citations omitted).

[26]   The holding in Plohg relied heavily on the decision in Medtech Corp. v. Indiana

       Ins. Co., 555 N.E.2d 844 (Ind. Ct. App. 1990), trans. denied, in which our court

       noted, “[g]iven the complexity of today’s insurance contracts we cannot say as

       a matter of law, that such reliance [on the statements of the agent] was

       unjustified.” Id. at 850. In a footnote, the court quoted a portion of the

       concurrence in the denial of transfer in an earlier related opinion:


       Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018   Page 16 of 23
               An insurance contract is a detailed and complex instrument,
               drafted by expert legal counsel, standardized and presented in
               mass-produced form and delivered to the applicant for
               acceptance, normally without benefit of legal counsel on his part.
               It has been called a ‘contract of adhesion’ for the reason that the
               insured is expected to ‘adhere’ to it as it is, with little or no choice
               as to its terms. The Delivery of a Life Insurance Policy, 33
               Harvard Law Review, 198.

               Coupled with this situation is the recognized fact that rarely, if
               ever, does an insured read his insurance contract, although the
               law has said, with reference to contracts generally, that a party is
               bound by what the instrument says though ignorant of its terms.
               In fact, realistically, even if the insured had the inclination to
               attempt to read the policy, I doubt that he would gain much more
               knowledge than he previously had because of the technical
               language he would encounter. I doubt that most lawyers or even
               judges who say one is presumed to have read his insurance policy
               ever read them.

       Vernon Fire & Casualty Ins. Co. v. Thatcher, 152 Ind. App. 692, 285 N.E.2d 660

       (1972), reh’g denied, trans. denied.


[27]   Defendants argue Plohg and Medtech are inapposite because “this case does not

       involve the interpretation of complex insurance provisions[.]” (Br. of Appellee

       at 51.) Further, Defendants argue Earl had sufficient notice of the terms of the

       PLUP policy and how it might apply to Jerry’s accident because this

       information was reflected on many pages of the policy documents including the

       declarations page, which is found on the first page of the policy. (See id. at 52-3)

       (giving examples of the many ways Defendants argue Earl had notice of the

       policy terms through the policy documents). To support their argument,



       Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018   Page 17 of 23
       Defendants rely on Wiggam v. Assoc. Fin. Serv. of Indiana, Inc., 677 N.E.2d 87

       (Ind. Ct. App. 1997), trans. denied.


[28]   Wiggam involved disability insurance available for a loan, which would make

       payments on the loan if Wiggam were disabled and unable to pay. Wiggam

       elected to receive this insurance on a loan he took out in 1986, but did not do so

       with the loan he took out in 1988, although he thought he did. Wiggam was

       permanently disabled in 1992, and sought to apply the benefit from his

       disability insurance policy for the loans in 1986 and 1988. Associates denied

       his claim for the 1988 loan because Wiggam had not signed the portion of the

       loan application indicating he wanted disability insurance for the 1988 loan.


[29]   Wiggam sued Associates, claiming the Associates agent who helped him with

       the 1988 loan told him he would have disability insurance as part of the 1988

       loan. Associates filed for summary judgment, arguing the loan application

       plainly indicated Wiggam had not signed the area that stated he wanted the

       disability insurance. In interpreting Medtech, the court held:


               Appellants contend that the holding in Medtech is not applicable
               here because this case does not involve the terms of a complex
               insurance contract. Rather, it is argued, this court is faced, as
               were the Wiggams, with what is described as a short, simple and
               unambiguous loan application form. We agree with the
               Wiggams that when an insurance agent makes oral
               representations about the content or effect of a complex
               insurance policy which actually contradict the express terms of
               the policy, an insured’s reasonable reliance upon those
               representations may override the insured’s obligation to read and
               be familiar with the terms of the policy. However, an

       Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018   Page 18 of 23
               examination of the reasoning set forth in Medtech persuades us
               that the holding in that case should not be extended to the
               present situation.

               The Court of Appeals in Medtech explained that its holding was
               justified by the nature and complexity of insurance contracts. . . .
               [T]he exception described in Medtech simply has no application
               here. This case does not involve the terms of a complex
               insurance policy. Rather, it involves a few clear terms in a two-
               page application for insurance. Nor is this a contract of adhesion
               under which one must accept the terms of a pre-printed insurance
               policy as they are written or decline coverage altogether. It is
               clear from the face of the loan application that, while the
               Wiggams may not have had any meaningful choice as to the
               terms of the Credit Life or Credit Disability policies, they were
               free to choose whether or not their loan would be covered by
               either of these policies.

       Id. at 90-1. Defendants argue the same simplicity exists in the documents of the

       PLUP.


[30]   We cannot agree, as the language in the PLUP is more complex than the two-

       page loan document in Wiggam. As we explain in our analysis of Earl’s bad

       faith argument infra., even within State Farm there existed confusion regarding

       the coverage available. We therefore decline to follow Wiggam and conclude

       there is a question of fact regarding whether Earl’s reliance on Defendants’

       representations of her insurance coverage was reasonable. See Plohg, 583

       N.E.2d at 1237 (“whether a party’s reliance upon an agent’s representations is

       reasonable even though he failed to exercise the opportunity to read the policy

       is a question of fact for the factfinder”).



       Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018   Page 19 of 23
                                                 4. Bad Faith
[31]   Insurers are obligated to exercise good faith in determining the payment of an

       insured’s claim. Erie Ins. Co., 622 N.E.2d at 518-9.


               The obligation of good faith and fair dealing with respect to the
               discharge of the insurer’s contractual obligation includes the
               obligation to refrain from (1) making an unfounded refusal to pay
               policy proceeds; (2) causing an unfounded delay in making
               payment; (3) deceiving the insured; and (4) exercising any unfair
               advantage to pressure an insured into a settlement of his claim.

       Id. at 519. Earl argues summary judgment was improper because “State Farm’s

       deceit and moral obliquity in hiding the PLUP present a prima facie case of bad

       faith for a jury.” (Br. of Appellant at 39) (internal formatting omitted).


[32]   Earl outlines what she argues is a “deceptive fact pattern” in a table in her brief.

       (Br. of Appellant at 41.) For example, on October 16, 2008, State Farm first

       noted the possible applicability of the PLUP to Earl’s claim. (App. Vol. IV at

       142.) On October 24, 2009, State Farm’s Claim Notes indicate State Farm did

       “not appear to have PLUP exposure,” (id. at 128), based on Vinnedge’s “range

       of value” of the claim. (Id.) The entry also stated, “we need to contact the atty

       [sic] and explain the coverages available, including the PLUP (make sure it

       carries Uninsured Motorist first). Given the atty’s [sic] assessment of claim

       exceeding $250,000, let’s get the PLUP open.” (Id.) On October 27, 2009,

       State Farm opened a PLUP claim for Jerry’s accident, but it closed the claim on

       June 7, 2010.




       Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018   Page 20 of 23
[33]   As noted in the facts, on February 18, 2011, Vinnedge answered the Earls’

       interrogatories regarding policy coverage and did not disclose the existence of

       the PLUP. On November 26, 2012, the jury trial in the UM Litigation began.

       On November 27, 2012, at 9:42 a.m., State Farm’s Claim Notes indicate the

       jury started deliberations. At 10:02 a.m. that day, an entry indicates, “I saw

       where there is a PLUP that they may need to know this info. [sic] I called &

       spoke with several [State Farm] reps - finally spoke with Kent . . . He said Jerry

       Earl was rated on this [PLUP] for 1 mill [sic] under the 041.” (Id. at 45.)


[34]   A subsequent entry confirmed the existence of the PLUP, and the fact it had a

       limit of $2 million. At 11:02 a.m. on November 27, 2012, the notes indicate the

       jury came back with its verdict. Between November 27, 2012, and November

       30, 2012, there are ten entries regarding the disclosure of the PLUP, some of

       which are partially redacted in the record. Earl’s counsel learned of the PLUP

       on December 3, 2012. There are multiple instances in State Farm’s Claim

       Notes indicating the Earls had PLUP coverage for Jerry’s accident.


[35]   At the very least, the above-described chain of events creates a question of

       material fact whether State Farm acted in bad faith. Thus, the trial court erred

       when it granted summary judgment in favor of Defendants on this issue. 6 See



       6
           Defendants argue Earl has waived this argument because she

                  did not designate as an error either the trial court’s entry of summary judgment as to that
                  part of the claim for bad faith based on conduct other than the non-disclosure of the
                  PLUP or the entry of summary judgment for State Farm Fire on [the breach of contract
                  claim]. Nor did she cite to any evidence in the record which she contends creates an
                  issue of material fact regarding those claims.

       Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018                          Page 21 of 23
       Hughley, 15 N.E.3d at 1003 (summary judgment inappropriate if there exists an

       issue of material fact or if the undisputed facts support conflicting reasonably

       inferences).



                                                   Conclusion
[36]   We conclude the trial court erred when it granted summary judgment in favor

       of Defendants. The claims in Earl’s Fraud Litigation were not impermissible

       collateral attacks on the judgment in the UM Litigation. Further, the issue

       whether Earl unreasonably relied on Defendants’ representations is a question

       of fact to be decided by the factfinder. Finally, Earl has demonstrated a genuine

       issue of material fact regarding whether Defendants acted in bad faith in

       handling her claim, and thus, summary judgment is inappropriate.

       Accordingly, we reverse the trial court’s decision and remand for proceedings

       consistent with this opinion.


[37]   Reversed and remanded.




       (Br. of Appellee at 21.) See Anderson v. Four Seasons Equestrian Center, Inc., 852 N.E.2d 576, 581 n.7 (Ind. Ct.
       App. 2006) (arguments not presented before the trial court cannot be presented for the first time on appeal),
       trans. denied; and see Cox v. Ubik, 424 N.E.2d 127, 131 n.3 (Ind. Ct. App. 1981) (party waives any issue not
       raised and argued in its appellate brief). However, the same facts support Earl’s fraud claims and Earl’s bad
       faith claim. Thus Earl was not required to assert additional facts supporting the bad faith claim.
       Additionally, Earl did not provide argument regarding her breach of contract claim that was part of the
       Fraud Litigation because she did not appeal that portion of the order, as conceded by both parties during oral
       argument. We again admonish Defendants’ counsel from mischaracterizing the record and arguments before
       us.

       Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018                         Page 22 of 23
Baker, J., and Najam, J., concur.




Court of Appeals of Indiana | Opinion 36A01-1703-CT-542 | January 16, 2018   Page 23 of 23
