                                                                            Sep 18 2015, 9:26 am




      ATTORNEYS FOR APPELLANT                                    ATTORNEY FOR APPELLEE ROGER
      Ryan Duffin                                                W. HOKE, PERSONAL
      Lori A. Coates                                             REPRESENTATIVE OF THE ESTATE
      Duffin & Hash LLP                                          OF BRIAN HOKE, DECEASED
      Indianapolis, Indiana
                                                                 R.T. Green
                                                                 Blackburn & Green
                                                                 Indianapolis, Indiana



                                                  IN THE
          COURT OF APPEALS OF INDIANA

      Founders Insurance Company,                               September 18, 2015

      Appellant-Plaintiff,                                      Court of Appeals Case No.
                                                                49A02-1501-PL-8
              v.
                                                                Appeal from the Marion Superior
      Mark May, Pamela Coomer,                                  Court
                                                                The Honorable Thomas J. Carroll,
      and Roger W. Hoke as the                                  Judge
      Personal Representative of the
                                                                Cause No. 49D06-1302-PL-7690
      Estate of Brian Hoke, deceased,
      Appellees-Defendants,




      Robb, Judge.



                                 Case Summary and Issue
[1]   Pamela Coomer, driving a vehicle owned by Mark May and insured by

      Founders Insurance Company (“Founders”), was involved in an accident that

      Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015                   Page 1 of 21
      ultimately resulted in the death of Brian Hoke. Coomer did not have a valid

      driver’s license nor May’s permission to drive the vehicle. Founders filed a

      complaint seeking a declaratory judgment that it had no duty to defend or

      provide coverage for the accident pursuant to the terms of the insurance

      contract and sought summary judgment. The trial court granted summary

      judgment to Founders as to May and Coomer, but denied summary judgment

      as to Roger Hoke as the Personal Representative of the Estate of Brian Hoke,

      Deceased (“Hoke’s Estate”). Founders now appeals, raising the sole issue of

      whether the trial court erred in denying summary judgment as to Hoke’s Estate.

      We conclude the exclusions in the insurance contract relevant to this situation

      are clear and unambiguous and do not violate public policy; therefore, the

      exclusions are enforceable. Founders is entitled to summary judgment as to all

      parties, and the trial court’s order denying summary judgment as to Hoke’s

      Estate is reversed.



                             Facts and Procedural History
[2]   In 2012, May and Coomer were involved in “a serious relationship.” Appendix

      of Appellee at 1. May owned a pickup truck which Coomer would drive

      “[m]aybe once a month[,]” id. at 5, although her driver’s license was suspended,

      id. at 6-7. May knew that Coomer sometimes drove the truck because usually

      when she did so, she was acting as a designated driver for him. In general,

      however, May “doesn’t really like anybody to drive his truck.” Id. at 7.




      Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015   Page 2 of 21
[3]   On November 10, 2012, Coomer took May’s truck to visit her children. May

      was not with her, and she did not have his permission to drive the truck that

      day. When returning home, she struck Hoke, who was riding a bicycle. Hoke

      did not have an automobile and did not have automobile insurance. He died

      on November 27, 2012, from injuries he sustained in the collision. May’s truck

      was insured on November 10, 2012, by Founders under a policy that provided,

      in relevant part:

              Part A – Liability Coverage
              Insuring Agreement
              A. We will pay damages for “bodily injury” or “property damage” for
              which any “insured” becomes legally responsible because of an auto
              accident. . . . We will settle or defend, as we consider appropriate, any
              claim or suit asking for these damages. . . . We have no duty to defend
              any suit or settle any claim for “bodily injury” or “property damage”
              not covered under this policy.
              B. “Insured” as used in this Part means:
              ...
              2. Any person using “your covered auto”.
              ***
              Exclusions
              A. We do not provide Liability Coverage for any “insured”:
              ...
              8. Using a vehicle without a reasonable belief that that “insured” is
              entitled to do so.
      Appellant’s Appendix at 12-13. In addition, an Amendatory Endorsement

      modifying Part F – General Provisions of the policy provided:

              No coverage is afforded under any Part of this policy if, at the time of
              the accident, “your covered auto” . . . is being operated by a person
              who is not a licensed driver, or is without a valid driver’s license,
              whose driver’s license is revoked or suspended, or whose driver’s
              license has been expired for more than 30 days, or is not legally
              entitled to drive under Indiana law.

      Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015         Page 3 of 21
      Id. at 27.


[4]   Hoke’s Estate filed a wrongful death suit against May and Coomer in July

      2013. Founders filed a complaint for declaratory judgment against May,

      Coomer, and Hoke’s Estate, seeking a declaration that it had no obligation to

      provide coverage benefits under the policy because Coomer did not have a valid

      driver’s license at the time of the accident nor did she have a reasonable belief

      that she was entitled to use the truck on that date. In May 2014, Founders filed

      a motion for summary judgment “as the evidence in this matter establishes that

      Founders owes no duty to provide a defense or indemnification” to May or

      Coomer. Id. at 32. It does not appear that May or Coomer answered the

      complaint or filed a response to the motion for summary judgment. Hoke’s

      Estate, however, filed a response in opposition to summary judgment, asserting

      that Founders should not be permitted to deny insurance coverage as to Hoke’s

      Estate, “an innocent, injured party” who “will be without any source of

      compensation for losses suffered in the November 10, 2012 incident . . . .” Id.

      at 104.


[5]   On November 3, 2014, the trial court entered a summary ruling on Founders’

      motion for summary judgment as to May and Coomer, finding that there is no

      genuine issue of fact and Founders is entitled to summary judgment against

      May and Coomer. However, the trial court’s order also stated that “all issues

      remain or survive as to the remaining Defendant, [Hoke’s Estate].” Id. at 107.

      Founders then sought and was granted permission to pursue this interlocutory

      appeal of the trial court’s order with regard to the ruling as to Hoke’s Estate.

      Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015   Page 4 of 21
                                  Discussion and Decision
                                      I. Standard of Review
[6]   When we review a trial court’s ruling on summary judgment, we apply the

      same standard as the trial court. Manley v. Sherer, 992 N.E.2d 670, 673 (Ind.

      2013). Summary judgment is appropriate where there is no genuine issue of

      material fact and the moving party is entitled to judgment as a matter of law.

      Ind. Trial Rule 56(C). The appellant has the burden of persuading us that the

      summary judgment ruling was erroneous. Amaya v. Brater, 981 N.E.2d 1235,

      1239 (Ind. Ct. App. 2013), trans. denied. Where the facts material to the

      proceedings are not in dispute, this court determines whether the trial court

      correctly applied the law to the facts. Johnson v. Hoosier Enters. III, Inc., 815

      N.E.2d 542, 548 (Ind. Ct. App. 2004), trans. denied. A case such as this one,

      involving the interpretation of an insurance contract, is particularly appropriate

      for summary judgment because the interpretation of a contract is a question of

      law. Burkett v. Am. Family Ins. Grp., 737 N.E.2d 447, 452 (Ind. Ct. App. 2000).


         II. Denial of Summary Judgment as to Hoke’s Estate
[7]   The particular facts of this case present an issue of first impression in Indiana:

      Does an insurer which has no duty to provide coverage benefits to its insured

      pursuant to the plain terms of the insurance contract nonetheless have to pay

      damages to an injured third party who has no independent source of insurance?

      Founders contends that it does not have to pay those damages because it

      reasonably limited its liability by the terms of its insurance contract to exclude

      Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015   Page 5 of 21
      coverage in these circumstances. Hoke’s Estate argues that permitting

      Founders to deny coverage in this instance would contravene the public policy

      underlying Indiana’s Financial Responsibility Act to provide “persons who

      suffer loss due to the tragedy of automobile accidents . . . a source and means of

      recovery.” Brief of Appellee at 3. Hoke’s Estate contends that the result it

      seeks is “consistent with the result reached by appellate courts in other

      compulsory insurance law jurisdictions,” id. at 6, and is supported by the

      reasoning of Indiana decisions on similar issues.


                          A. Overview of Statutes and Caselaw
[8]   Historically, Indiana required proof of financial responsibility for automobile

      owners only after the occurrence of an accident. Although the primary purpose

      of the then-Safety-Responsibility and Driver Improvement Act was “to facilitate

      loss recovery by auto accident victims,” the statute was not a compulsory

      insurance statute because means of proving financial responsibility other than

      insurance were allowed. See Allstate Ins. Co. v. Boles, 481 N.E.2d 1096, 1101

      (Ind. 1985). When the statute was amended in 1983 to require proof of

      financial responsibility when registering a car, Ind. Code § 9-18-2-11, the law

      still permitted proof of responsibility through bond, deposit of funds or

      securities, and self-insurance in addition to traditional insurance, Ind. Code ch.

      9-25-4. Thus, Indiana remains a “compulsory financial responsibility state.”

      Transamerica Ins. Co. v. Henry, 563 N.E.2d 1265, 1267-68 (Ind. 1990).

      “Indiana’s current financial responsibility scheme, like the prior one,

      demonstrates a policy to protect automobile owners . . . from damages which

      Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015   Page 6 of 21
      might be inflicted on them by other cars out on the road.” Id. at 1268. To this

      end, insurers must offer uninsured and underinsured motorist coverage in every

      insurance contract. See Ind. Code § 27-7-5-2. “The purpose of uninsured

      motorists insurance is to place the insured in substantially the same position as if

      the other party had complied with the minimum requirements of the insurance

      statutes.” Smith v. Allstate Ins. Co., 681 N.E.2d 220, 222 (Ind. Ct. App. 1997)

      (emphasis added). “The purpose of our financial responsibility statute is to

      compel . . . other motorists to make provisions for our protection.”

      Transamerica Ins. Co., 563 N.E.2d at 1268. But the statutes do not “constitute a

      social policy to guarantee compensation to all victims of motor vehicle

      accidents.” Id.


[9]   The out-of-jurisdiction cases cited by Hoke’s Estate are not particularly

      instructive to this case. Hoke’s Estate cites Woody v. Georgia Farm Bureau Mut.

      Ins. Co., 551 S.E.2d 836 (Ga. Ct. App. 2001), and Adams v. Thomas, 729 So.2d

      1041 (La. 1999), both of which addressed policy provisions excluding

      unlicensed drivers from coverage. In Woody, a split Georgia Court of Appeals

      held that the unlicensed driver exclusion, although unambiguous and generally

      enforceable, was unenforceable in that particular case because the injured third

      party did not have uninsured motorist protection of his own. If the exclusion

      were enforced, the injured party would not have access to insurance funds.

      Relying on Georgia Supreme Court precedent in Cotton States Mut. Ins. Co. v.

      Neese, 329 S.E.2d 136 (Ga. 1985), the Woody court held such a result would be

      in contravention of the public policy served by Georgia’s compulsory insurance

      Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015   Page 7 of 21
       law. 551 S.E.2d at 837. In Neese, the Georgia Supreme Court noted that the

       state’s Motor Vehicle Accident Reparations Act (or “no fault act”)—which

       provided insurance coverage in virtually all circumstances to an injured

       victim—was enacted simultaneously with the law making motor vehicle

       liability insurance compulsory. 329 S.E.2d at 138-39. The Neese court held

       these laws “established the public policy that innocent persons who are injured

       should have an adequate resource for the recovery of their damages[,]” and

       required viewing the effect of an exclusion from the viewpoint of the victim. Id.

       at 141 (quotation omitted). Because our supreme court has expressly stated our

       financial responsibility statute is not a compulsory insurance statute and does

       not represent a policy of providing compensation to all victims of motor vehicle

       accidents, Woody and Neese are inapposite.


[10]   In Adams, the Louisiana Supreme Court noted that the state legislature had

       specifically stated the public policy behind its compulsory insurance law: “all

       liability policies . . . are executed for the benefit of all injured persons and their

       survivors or heirs to whom the insured is liable . . . .” 729 So.2d at 1043. The

       court further noted that the determination of “what is an acceptable exclusion

       in an insurance policy is up to the legislature . . . .” Id. at 1044. Therefore, the

       court held that a policy that excludes an unlicensed driver from coverage

       without an express legislative directive is “an impermissible restriction on the

       intent and purpose of the legislature’s statutory scheme enacted to ensure that

       all Louisiana motorists have available to them automobile liability insurance

       coverage.” Id. at 1044-45. Thus, Adams is distinguishable in several respects:


       Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015    Page 8 of 21
       in Indiana, enforceable exclusions do not have to be legislated; we have no

       specific statement of legislative intent as to the policy behind our statutes; and

       as with Woody, we do not have a compulsory insurance statute but a

       compulsory financial responsibility law which our courts have stated does not

       represent a policy of compensating all accident victims.


[11]   Likewise, the Indiana cases cited by Hoke’s Estate are not directly applicable.

       Hoke’s Estate asserts that in Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664

       (Ind. 1997), Federal Kemper Ins. Co. v. Brown, 674 N.E.2d 1030 (Ind. Ct. App.

       1997), Motorists Mut. Ins. Co. v. Morris, 654 N.E.2d 861 (Ind. Ct. App. 1995), and

       Am. Underwriters Grp. v. Williamson, 496 N.E.2d 807 (Ind. Ct. App. 1986), our

       courts “have engaged in an analysis similar to that utilized in Woody and Adams

       and reached similar results.” Br. of Appellee at 8. With respect to Williamson,

       Morris, and Brown, we note that the insurance company at issue was attempting

       to rescind its insurance contract altogether due to misrepresentations made by

       the insured when applying for the insurance. See, e.g., Williamson, 496 N.E.2d

       at 810-11 (stating, based on a survey of cases from New York, Michigan, and

       Georgia, that “it appears to have been universally held that an insurer cannot

       on the ground of fraud or misrepresentation retrospectively avoid coverage

       under a compulsory or financial responsibility law so as to escape liability to a

       third party[,]” and overruling Automobile Underwriters, Inc. v. Stover, 148 Ind.

       App. 555, 268 N.E.2d 114 (1971), which had established the right to rescind in

       Indiana prior to the Financial Responsibility Act), disapproved by Guzorek, 690

       N.E.2d at 672 (“Williamson is disapproved to the extent it holds that the liability

       Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015   Page 9 of 21
       insurer can never rescind due to material misrepresentations.”). That is not the

       situation we have here, where Founders seeks to enforce its insurance contract.


[12]   As for our supreme court’s decision in Guzorek, we note that it, too, was decided

       in the context of whether a contract for insurance could be rescinded due to a

       misrepresentation. We also note that it cast doubt upon the continued viability

       of Williamson, Morris, and Brown. 690 N.E.2d at 672. It further declined to pass

       on the question presented here as one not presented by the facts of that case:

       “We leave for another day whether a liability insurer can deny coverage when

       the third party does not have protection against uninsured motorists. This issue

       is not settled under current precedent but is neither presented under these facts

       nor argued by the parties.” Id.


                                   B. Insurance Law in Indiana
[13]   Without any case law directly on point, we turn to the basic principles of

       contract law. An insurance policy is a contract, and in reviewing the policy, we

       construe it as we would any other contract—to give effect to the parties’

       intentions at the time the contract was made. Puente v. Beneficial Mortg. Co. of

       Indiana, 9 N.E.3d 208, 217 (Ind. Ct. App. 2014). The freedom to contract is “a

       bedrock principle of Indiana law,” id. at 218, and “the freedom of the parties to

       exclude risks from an insurance contract is well established,” United Farm

       Bureau Mut. Ins. Co. v. Hanley, 172 Ind. App. 329, 338, 360 N.E.2d 247, 252

       (1977). “Generally, insurers are free to limit liability in any manner not

       inconsistent with public policy, and an unambiguous exclusionary clause is


       Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015   Page 10 of 21
       ordinarily entitled to enforcement.” Williams v. Safe Auto Ins. Co., 980 N.E.2d

       326, 330 (Ind. Ct. App. 2012) (quoting Am. Family Life Assurance Co. v. Russell,

       700 N.E.2d 1174, 1177 (Ind. Ct. App. 1998), trans. denied). “Whenever a court

       considers invalidating a contract on public policy grounds, it must always

       weigh in the balance the parties’ freedom to contract.” Boles, 481 N.E.2d at

       1101. “Only in cases which are substantially free from doubt will we exercise

       our power to declare a contract void as contravening public policy.” Lexington

       Ins. Co. v. Am. Healthcare Providers, 621 N.E.2d 332, 338 (Ind. Ct. App. 1993),

       trans. denied.


[14]   In general, an attempt to dilute or diminish uninsured or underinsured motorist

       protection is contrary to public policy. See Am. Family Mut. Ins. Co. v. Federated

       Mut. Ins. Co., 775 N.E.2d 1198, 1207 (Ind. Ct. App. 2002) (“Any insurance

       language that dilutes statutory protection is contrary to public policy.”).

       However, the exclusions upon which Founders would deny coverage in this

       case do not dilute or diminish the uninsured or underinsured coverage

       contained therein. Indiana Code section 27-7-5-2(a) mandates that insurance

       companies offer uninsured and underinsured motorist protection “for the

       protection of persons insured under the policy . . . .” 1 The uninsured and

       underinsured provisions in May’s policy were for his own protection if an insured




       1
        The statute requires an insurance company to offer uninsured and underinsured coverage, Ind. Code § 27-7-
       5-2(a), but the named insured may reject in writing both or either uninsured and underinsured coverage, Ind.
       Code § 27-7-5-2(b).



       Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015                     Page 11 of 21
       under his policy were to be in an accident with an uninsured or underinsured

       motorist. Hoke was not uninsured or underinsured in the sense used by

       Indiana Code section 27-7-5-2 mandating such coverage in insurance contracts

       because as a non-motorist, he was not subject to financial responsibility

       requirements at all. The exclusions at issue do not dilute or diminish May’s

       uninsured or underinsured motorist protection because May was not entitled to

       recover under those provisions. Likewise, Hoke’s Estate is not entitled to

       recover under those provisions because Hoke was not an insured under May’s

       policy.


[15]   Here, the insurance contract excluded liability coverage for someone using the

       vehicle without a reasonable belief that he or she is entitled to do so.

       Appellant’s App. at 13. The insurance contract further included the condition

       that no coverage would be afforded under the contract if the vehicle is being

       operated by a person who is an unlicensed driver for any reason. Id. at 30.

       These are clear and unambiguous provisions of the insurance contract

       reasonably limiting Founders’ risk to liability for the conduct of an insured who

       should and legally could be driving the vehicle. Because of the difference

       between a compulsory insurance statute and our compulsory financial

       responsibility statute, if May did not want to be subject to the exclusions at issue, 2



       2
        These exclusions were plainly stated in the policy of insurance and were not buried in fine print or
       otherwise hidden. May knew that Coomer occasionally drove his vehicle; he presumably knew she did not
       have a valid license; and he had also expressed to her he did not want her to drive his vehicle when he was
       not present. See App. of Appellee at 44-46.



       Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015                      Page 12 of 21
       he did not have to purchase a policy of insurance. Instead, he could have

       posted a bond in the same minimum coverage amount he had insured himself

       for through Founders and he would have been subject to no such restrictions.

       The dissent does not believe the distinction between compulsory insurance and

       compulsory financial responsibility statutes is significant. Not only has our

       supreme court clearly stated that there is a legal distinction, see Transamerica Ins.

       Co., 563 N.E.2d at 1267-68, but in this case there is also a factual distinction. In

       a compulsory insurance state, it would be theoretically possible for an insured

       to comparison shop for a policy of insurance without some or all of these

       exclusions, but it is more of an improbable possibility than a likelihood that the

       insured could find one. In a financial responsibility state such as Indiana, it is a

       very real possibility to demonstrate financial responsibility under one’s own

       terms rather than under the terms imposed by an insurance company.


[16]   There is nothing inherent in the exclusions in the Founders insurance contract

       that make them against public policy, it is only the particular circumstances of

       this case that make enforcing them seem unjust. However, it is neither logical

       nor consistent with the law of contracts that the enforceability of a contract of

       insurance depends upon the status of the person with whom the insured is

       involved in a collision. To hold otherwise would mean the same conduct under

       the same contract of insurance could have drastically different results. If

       Coomer had hit a motorist with uninsured/underinsured motorist protection

       and the injured party’s insurer would have covered the damages per its own

       contract of insurance, Founders would have been able to rely upon the


       Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015   Page 13 of 21
       exclusions in its contract. See Guzorek, 690 N.E.2d at 672 (“There is no injustice

       in placing the loss with the third party’s insurer . . ., who has presumably been

       compensated through its premiums for accepting the risk of an uninsured

       tortfeasor.”). If Coomer had hit a motorist without insurance or one who had

       rejected uninsured and/or underinsured motorist protection, see Ind. Code § 27-

       7-5-2(b), then the injured party had accepted the risk of not having that

       coverage, and Founders should have been able to rely upon the exclusions of its

       contract. However, because Coomer was involved in a collision with a non-

       motorist who was not subject to financial responsibility requirements at all, the

       trial court determined that Founders was not able to enforce the clear and

       unambiguous exclusions in its contract.3


[17]   As between an insurer who contracted to provide coverage only under certain

       circumstances and an insured who has an alternative if he wishes coverage in

       all circumstances, why should the insurer be liable in contravention of the

       express terms of the insurance contract? May knew he did not have insurance

       coverage if the driver of his truck was unlicensed or was operating it without a




       3
         The trial court’s determination raises several practical questions, such as, if Founders has no duty to defend
       or indemnify May or Coomer, from where does a duty to Hoke’s Estate arise? How exactly would the action
       proceed if Founders has no duty to defend May or Coomer? Does Founders appear in Hoke’s Estate’s
       lawsuit against May and Coomer and defend itself? Does Hoke’s Estate institute a direct action against
       Founders if it should succeed in its lawsuit against May and Coomer? Could Founders assert the terms of the
       contract of insurance as a defense in any such action? What would be the limits of Founders’ liability to
       Hoke’s Estate if the contract is unenforceable as to May or Coomer? If the exclusionary provisions of the
       contract are unenforceable, are the limits provisions nonetheless enforceable, and would that be a matter of
       judicially picking and choosing which provisions of the contract may be enforced and which may not?
       Because of our resolution of this case, however, we need not answer these questions.



       Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015                        Page 14 of 21
       reasonable belief in the right to do so. If Founders cannot rely on the clear and

       unambiguous terms of its contract for insurance here, could it ever rely on any

       provision of its contract? Determining an insurer’s liability only after an

       accident occurs and the status of the victim is ascertained creates the possibility

       of disparate treatment of similarly situated insurers. The uncertainty

       occasioned by the inability of an insurer to rely on reasonable limits to its

       liability would most likely be passed along to the insured in the form of higher

       premiums to cover the unknown risk or the constriction of insurance coverage

       in general.


[18]   We have great sympathy for the Hokes and their loss. However, “a third

       party’s right to recover through liability insurance is not absolute.” Guzorek,

       690 N.E.2d at 672. The dissent would base its decision on the public policy

       “that persons who suffer loss due to the tragedy of automobile accidents shall

       have a source and means of recovery,” see slip op. at 19-20 (quoting Williamson,

       496 N.E.2d at 810), and require Founders to be that source for Hoke’s Estate.

       However, the source and means of recovery is grounded in the insurance

       contract itself. The general policy of making insurance available to compensate

       for losses arising from motor vehicle collisions does not trump the long-standing

       precedent allowing an insurer to reasonably limit its liability, nor should the

       recompense of one victim take precedence over the importance of providing

       affordable insurance to all motorists. Founders limited its risk to permissive,

       licensed drivers of this vehicle and fixed its premiums on that basis. There is no

       public policy against such limitations, there is simply the unfortunate reality


       Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015   Page 15 of 21
       that this injured party has no access to insurance proceeds under these

       circumstances.

               Without minimizing the importance of the doctrine that contracts
               should not be enforced if they contravene public policy, many courts
               have cautioned against recklessness in condemning contracts as being
               in violation of public policy. Public policy, some courts have said, is a
               term of vague and uncertain meaning, which it pertains to the
               lawmaking power to define, and courts are apt to encroach upon the
               domain of that branch of the government if they characterize a
               transaction as invalid because it is contrary to public policy, unless the
               transaction contravenes some positive statute or some well-established
               rule of law.
       Schornick v. Butler, 205 Ind. 304, 185 N.E. 111, 113 (1933) (quoting Hogston v.

       Bell, 185 Ind. 536, 544, 112 N.E. 883, 885 (1916)). We cannot say this is a case

       in which we should refuse to enforce the insurance contract on public policy

       grounds. Though recovery may be more difficult, Hoke is not without a

       remedy as he may still seek damages from May and Coomer.



                                                Conclusion
[19]   Founders is entitled to judgment as a matter of law on its complaint for

       declaratory judgment in all respects. The trial court’s summary judgment order

       denying summary judgment as to Hoke’s Estate is therefore reversed.


[20]   Reversed.


       Mathias, J., concurs.


       May, J., dissents with opinion.

       Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015      Page 16 of 21
                                                   IN THE
           COURT OF APPEALS OF INDIANA

       Founders Insurance Company,                                Court of Appeals Case No.
                                                                  49A02-1501-PL-8
       Appellant-Plaintiff,

              v.

       Mark May, Pamela Coomer, and
       Roger W. Hoke as the Personal
       Representative of the Estate of
       Brian Hoke, deceased,
       Appellees-Defendants,




       May, Judge, dissenting.

[21]   Summary judgment as to Hoke was properly denied. I acknowledge the

       majority’s concern that “[d]etermining an insurer’s liability only after an

       accident occurs and the status of the victim is ascertained creates the possibility

       of disparate treatment of similarly situated insurers.” (Slip op. at 14.) But the

       result the majority reaches in its effort to avoid “disparate treatment of similarly

       situated insurers” gives rise to a far greater concern – disparate treatment of

       innocent persons who are accident victims. As the majority result has the effect

       of depriving pedestrians, bicyclists, and other non-drivers of recovery that

       would remain available to motorists involved in traffic accidents, I must

       respectfully dissent.

       Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015             Page 17 of 21
[22]   I agree with the majority that the particular facts of this case present an issue of

       first impression in Indiana. But the majority’s narrow characterization of

       Indiana’s public policy is not required by our Indiana Supreme Court’s

       precedent and would lead to harsh and unfair outcomes, because it would result

       in protection for drivers injured in motor vehicle accidents but would leave no

       remedy for pedestrians, bicyclists, or other persons who need not or cannot

       prove financial responsibility.


[23]   Specifically, I would decline to hold, as the majority appears to, that the well-

       established and almost universally-recognized public policy to protect innocent

       victims from financial loss by reason of the acts of irresponsible operators of

       motor vehicles applies only in “compulsory insurance” states but not in

       “compulsory financial responsibility” states like Indiana. 4 That surely is not a




       4
         I do not find the distinction between “compulsory financial responsibility” and “compulsory insurance” so
       significant that it should serve to deprive innocent non-driver victims of motor vehicle accidents of a
       mechanism for recovery that is available to drivers. Courts have often used the terms interchangeably, e.g.,
       Dunn v. Safeco Ins. Co. of Am., 798 P.2d 955, 958 (Kan. Ct. App. 1990): “[r]egardless of the reasoning used, all
       courts that have considered the question as it pertains to an innocent third party have held that an insurer
       cannot, on the ground of fraud or misrepresentation, retrospectively avoid coverage under a compulsory
       insurance or financial responsibility law so as to escape liability to an innocent third party.” (Emphasis added.)

       The majority suggests “if May did not want to be subject to the exclusions at issue, he did not have to
       purchase a policy of insurance. Instead, he could have posted a bond in the same minimum coverage
       amount he had insured himself for through Founders and he would have been subject to no such
       restrictions.” (Slip op. at 13) (footnote omitted). It is a long-standing public policy that persons who suffer
       loss from automobile accidents should have a source and means of recovery. I would not place outside the
       scope of that policy those Hoosiers affluent enough to satisfy financial responsibility requirements without
       buying insurance. An innocent victim’s ability to recover should not depend on an automobile owner’s
       income level.




       Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015                          Page 18 of 21
       result our legislature intended would flow from the compulsory financial

       responsibility statutes.


[24]   I am fully cognizant of the importance of public policy generally favoring the

       enforcement of contracts, and I acknowledge our Supreme Court’s statement on

       which the majority relies as its articulation of our public policy that “Indiana’s

       current financial responsibility scheme, like the prior one, demonstrates a policy

       to protect automobile owners . . . from damages which [sic] might be inflicted on

       them by other cars out on the road.” Transamerica Ins. Co. v. Henry, 563 N.E.2d

       1265, 1268 (Ind. 1990) (emphasis added). That was an appropriate statement of

       policy in Henry, where tortfeasor and victim were both drivers, and I do not

       suggest automobile owners are undeserving of protection.


[25]   But I would not attribute to our legislature a public policy that protects only

       accident victims who happen to be automobile owners or drivers, and leaves to

       fend for themselves pedestrians, bicyclists, and other non-drivers who need not

       or cannot prove financial responsibility or who are otherwise not subject to the

       financial responsibility laws. As the majority correctly notes, our Indiana

       Supreme Court has not foreclosed a policy that would place non-drivers on an

       equal footing: “[w]e leave for another day whether a liability insurer can deny

       coverage when the third party does not have protection against uninsured

       motorists.” Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664, 672 (Ind. 1997).


[26]   I believe a more useful statement of our public policy in this case is that “it is

       the policy of this state that persons who suffer loss due to the tragedy of


       Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015   Page 19 of 21
       automobile accidents shall have a source and means of recovery.” Am.

       Underwriters Grp., Inc. v. Williamson, 496 N.E.2d 807, 810 (Ind. Ct. App. 1986),

       (disapproved on other grounds by Guzorek). This policy typically guides courts in

       other jurisdictions who face fact situations like ours, and I believe that analysis

       strikes a better balance between protection of insured motorists and that of

       accident victims who are not motorists.


[27]   In McCarthy v. Motor Vehicle Acc. Indemnification Corp., 224 N.Y.S.2d 909, 921

       (App. Div. 1962), aff'd, 188 N.E.2d 405 (N.Y. 1963), the Appellate Division

       surveyed the law in this area:

               Many states have recognized the need to protect innocent victims from
               financial loss by reason of the acts of irresponsible operators of motor
               vehicles. Recent legislation has been enacted in several jurisdictions to
               remedy such situations and to fill the gaps which have existed.
               Despite differences in the various statutes a common thread runs
               through all of them -- that the perspective from which the problem
               must be considered is the interests of the victim and not the actor.
               Thus in Hartford Acc. & Indem. Co. v. Wolbarst, 95 N.H. 40, 43, 57 A.2d
               151, 153, where the collision was deliberately or intentionally caused,
               the court stated as follows: “The purpose of the New Hampshire
               Financial Responsibility Act was fundamentally to provide
               compensation for innocent persons who might be injured through
               faulty operation of motor vehicles.” In re Opinion of the Justices, 81
               N.H. 566, 129 A. 117, 39 A.L.R. 1023. “Financial responsibility
               statutes have been passed in many states, and are in the process of
               preparation in still others, to secure the solvency of operators upon the
               highways of those states, and to guarantee their ability to discharge
               judgments arising out of accidents in which they might be involved * *
               *. The beneficiaries of such an act and of such a policy, when issued,
               are the members of the general public who may be injured in
               automobile accidents by such person; and the policies are generally
               construed with great liberality to accomplish their purpose.” 7
               Appleman, Insurance Law and Practice, § 4295 [62, 63].

       Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015     Page 20 of 21
[28]   It further noted liability insurance is coming to be regarded more as a device for

       providing funds to meet the needs of injured persons and less as a device for the

       protection of the insured. Id. at 922. Statutory recognition of this trend is

       manifested in financial responsibility laws, the purpose of which is to indemnify

       innocent third persons and to protect the general public from financially

       irresponsible motorists. Id. Since the basic purpose of the financial

       responsibility laws is not to afford financial protection to the insured, but rather

       to compensate his innocent victim, there is no reason why the victim’s rights

       should depend upon the motivation of the insured’s conduct. Id. Nor are the

       victim’s rights against the insurer derived through the insured. Id.


[29]   Today we address the question our Supreme Court explicitly left unresolved in

       Guzorek: whether a liability insurer can deny coverage when the third party

       does not have protection against uninsured motorists. I agree with the courts of

       other states that the perspective from which the financial responsibility question

       must be considered is the interest of the victim and not the actor, and that the

       purpose of the financial responsibility laws is to indemnify innocent third

       persons and to protect the general public from financially irresponsible motorists.


[30]   I cannot join the majority opinion to the extent it would, in order to protect

       insurance companies from perceived “disparate treatment,” deprive non-

       motorist accident victims of recovery that is available to accident victims who

       are motorists, and I must therefore respectfully dissent.




       Court of Appeals of Indiana | Opinion 49A02-1501-PL-8 | September 18, 2015   Page 21 of 21
