                                                       Mar 06 2013, 8:26 am
FOR PUBLICATION



ATTORNEY FOR APPELLANTS:                      ATTORNEY FOR APPELLEES:

DAVID P. MURPHY                               ROBERT S. O’DELL
David P. Murphy & Associates, P.C.            O’Dell & Associates, P.C.
Greenfield, Indiana                           Carmel, Indiana




                            IN THE
                  COURT OF APPEALS OF INDIANA

CHRISTOPHER GROCE and TRACEY GROCE,
                                  )
Husband and Wife,                 )
                                  )
      Appellants-Plaintiffs,      )
                                  )
             vs.                  )                  No. 48A02-1208-CT-703
                                  )
AMERICAN FAMILY INSURANCE COMPANY )
and MICHAEL A. MEEK,              )
                                  )
      Appellees-Defendants.       )


                   APPEAL FROM THE MADISON CIRCUIT COURT
                       The Honorable Rudolph R. Pyle, III, Judge
                            Cause No. 48C01-0911-CT-967



                                     March 6, 2013


                            OPINION - FOR PUBLICATION


NAJAM, Judge
                              STATEMENT OF THE CASE

       Christopher Groce and Tracey Groce filed a complaint for damages against

American Family Mutual Insurance Company (“American Family”) and Michael Meek

alleging negligence and breach of contract. American Family and Meek moved for

summary judgment, which the trial court granted following a hearing. The Groces appeal

and present a single dispositive issue, namely, whether their claims are barred by the

applicable statute of limitations.

       We affirm.

                        FACTS AND PROCEDURAL HISTORY

       In 1997, the Groces purchased a residence in Henry County for $47,500. The

Groces procured homeowner’s insurance with a policy limit of $50,000 from Kevin

Michaels, an insurance agent with American Family. In August 2003, Meek replaced

Michaels as the Groces’ insurance agent with American Family. Also in August 2003,

Tracey advised Meek of the amount of the Groces’ mortgage on the residence, and Meek

obtained a new American Family homeowner’s policy for the Groces with policy limits

of $121,900.

       In November 2003, the Groces advised Meek that they had added a “24x32 story

frame addition” to the house, and Meek provided them with a quote to increase the

dwelling coverage to $140,000. Appellants’ App. at 7. In July or August 2005, in

conjunction with a refinance of their mortgage, the Groces’ mortgage company asked

Meek to increase the policy limits on the Groces’ policy to $176,000. Thereafter, the




                                          2
policy limits were ultimately increased to $200,900 pursuant to “inflation protection

coverage” under the policy. Appellants’ App. at 328.

       On October 21, 2007, a fire destroyed the Groces’ residence. Marc Patterson, a

claims adjustor for American Family, determined that “the amount to replace or repair the

residence would be $231,231.73” and that the “actual cash value of the damage to the

residence as provided by the terms of the policy of insurance was $156,527.82 after

subtracting the depreciation of $74,703.91.” Id. at 330. Thereafter, All Star Building

Corporation (“All Star”) provided an estimate to rebuild the house for $185,999.75. But

on January 3, 2008, All Star amended its estimate to account for extra costs associated

with bringing older parts of the house up to code and repairing a footer that had “eroded

over the years.” Id. at 332. The revised estimate to rebuild the Groces’ house was

increased by $39,246.15, for a total of $225,245.90.

       The Groces had requested, and Meek had promised, “replacement cost” coverage

for their dwelling. The American Family policy defined “replacement cost” in relevant

part as follows:

       Buildings which have a permanent foundation and roof will be settled at
       replacement cost without deduction for depreciation, subject to the
       following:
                                      ***
       (2) Replacement Cost.

              (a) If at the time of loss, the amount of insurance in this policy on
              the damaged building is 80% or more of the full replacement cost of
              the building immediately prior to the loss, and the building is
              repaired or replaced, we will pay the full cost to repair or replace the
              damaged building without deducting depreciation, but not exceeding
              the smallest of:



                                             3
                     i. the limit in this policy for the building, including any
                     additional amount of insurance as provided by the Inflation
                     Protection Coverage;
                     ii. the cost to replace the damaged building with like
                     construction for similar use on the same premises; or
                     iii. the amount actually and necessarily spent for repair or
                     replacement of the damaged building.

Id. at 71 (emphases added). Accordingly, American Family paid only up to the policy

limit of $200,900 (plus the cost of debris removal) towards rebuilding the Groces’ house.

The Groces were left to pay the difference out-of-pocket.

       On June 27, 2009, the Groces filed a complaint against American Family and

Meek alleging negligence for failure to obtain replacement cost coverage for their

dwelling and breach of contract for failure to pay the entire cost of the damage.

American Family and Meek filed a joint motion for summary judgment, which the trial

court granted following a hearing. This appeal ensued.

                               DISCUSSION AND DECISION

       The Groces contend that the trial court erred when it granted American Family and

Meek’s joint summary judgment motion. Our standard of review for summary judgment

appeals is well established:

       When reviewing a grant of summary judgment, our standard of review is
       the same as that of the trial court. Considering only those facts that the
       parties designated to the trial court, we must determine whether there is a
       “genuine issue as to any material fact” and whether “the moving party is
       entitled to a judgment as a matter of law.” In answering these questions,
       the reviewing court construes all factual inferences in the non-moving
       party’s favor and resolves all doubts as to the existence of a material issue
       against the moving party. The moving party bears the burden of making a
       prima facie showing that there are no genuine issues of material fact and
       that the movant is entitled to judgment as a matter of law; and once the
       movant satisfies the burden, the burden then shifts to the non-moving party


                                            4
      to designate and produce evidence of facts showing the existence of a
      genuine issue of material fact.

Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267, 1269-70 (Ind. 2009)

(citations omitted). The party appealing a summary judgment decision has the burden of

persuading this court that the grant or denial of summary judgment was erroneous.

Knoebel v. Clark County Superior Court No. 1, 901 N.E.2d 529, 531-32 (Ind. Ct. App.

2009). Where the facts are undisputed and the issue presented is a pure question of law,

we review the matter de novo. Crum v. City of Terre Haute ex rel. Dep’t of Redev., 812

N.E.2d 164, 166 (Ind. Ct. App. 2004). While we are not bound by the trial court’s

findings and conclusions and give them no deference, they aid our review by providing

the reasons for the trial court’s decision. See GDC Envtl. Servs. Inc. v. Ransbottom

Landfill, 740 N.E.2d 1254, 1257 (Ind. Ct. App. 2000).

      Here, in its memorandum in opposition to summary judgment, the Groces clarified

their negligence claims as follows:

      Plaintiffs contend this is a negligence case because[,] regardless of any
      limit of coverage, on August 18, 2003, Meek stated “I’m assuming you
      want replacement cost coverage . . . if anything ever happens—fire,
      tornado, wind [the residence] will be replaced 100%.” When [Tracey] said
      “yes” and he replied, “I’ll get this written up,” Meek created a non-
      delegable duty on his part to obtain “100% replacement cost coverage” on
      the Residence. Plaintiffs reasonably relied on Meek’s statements to
      determine how much insurance equaled “100% replacement cost coverage”
      because they were concerned about having enough insurance to rebuild
      their Residence and Meek was the insurance professional. Plaintiffs further
      contend that such a policy would have been in effect on the day of the fire
      but for the negligence of Michael Meek in (1) failing to determine the value
      of the Residence on August 18, 2003[,] and (2) failing to obtain “100%
      replacement cost coverage” in the last week in July or the first week in
      August 2007 when he was notified of the latest refinancing of Plaintiff’s
      mortgage. These allegations in the Complaint focus on Meek’s negligence


                                           5
      and the culpability of American Family as Meek’s principal at all times
      relevant to the case.

Appellants’ App. at 350-51.

      American Family and Meek argued, and the trial court found, that the Groces’

negligence claims were barred by the applicable two-year statute of limitations. See Ind.

Code § 34-11-2-4. As our supreme court explained in Filip v. Block, 879 N.E.2d 1076,

1082-84 (Ind. 2008):

      In general, “the cause of action of a tort claim accrues and the statute of
      limitations begins to run when the plaintiff knew or, in the exercise of
      ordinary diligence, could have discovered that an injury had been sustained
      as a result of the tortious act of another.” Wehling v. Citizens Nat’l Bank,
      586 N.E.2d 840, 843 (Ind. 1992). This rule also applies in the insurance
      context. Foster v. Auto–Owners Ins., Co., 703 N.E.2d 657, 659-60 (Ind.
      1998) (holding that insurance applicants are not “relieved from the duty of
      exercising the same ordinary care and prudence that is required in every
      other business transaction. It is the duty of every man to read what he
      signs.” (quoting Metro. Life Ins. Co. v. Alterovitz, 214 Ind. 186, 196, 14
      N.E.2d 570, 574 (1938))).

      A. Claims for Obtaining Inadequate Coverage

              The candidates for dates starting the limitations period are the date
      of coverage, the date of the loss, the date of denial of the claim, and the date
      the insured learns or should in the exercise of reasonable care have learned
      of coverage problems.
                                            ***
              The alleged negligence here was in failing to advise the Filips of the
      availability of some types of insurance, and in failing to secure adequate
      limits. We agree with the trial court that a claim against an agent for
      negligent procurement of the wrong coverage begins at the start of coverage
      if the breach was discoverable at that time through ordinary diligence.
                                            ***
              The trial court relied on Page v. Hines, 594 N.E.2d 485 (Ind. Ct.
      App. 1992), in determining that in this case the statute of limitations began
      to run at the time of coverage. The Pages asked Hines, their insurance
      agent, to procure a three-year policy for them with the same coverage as
      their last policy. Id. at 486. Although their prior policy contained
      employer liability coverage, their new policy did not. Id. The Pages sued
                                             6
        Hines for negligent procurement of insurance. Id. The court explained,
        “[t]he question to be resolved is when the Pages discovered, or reasonably
        should have discovered, Hines’s negligent failure to procure the insurance
        coverage they desired” from the start of coverage. Id. at 487. We agree
        that this is the correct inquiry to resolve the limitations period for a claim of
        negligent failure to procure the proper coverage.

                The Filips argue that their negligence claim accrued when the fire
        occurred. The Filips claim that “[i]t is strange logic to believe that the
        Filips could have filed a lawsuit against Block in the year 2000 or 2001. . . .
        Clearly, a cause of action filed prior to a loss is not ripe.” But insurance is
        about the shifting of risk. The Filips bore the risk of loss from the date the
        policy was issued, so their injury from the alleged negligence occurred at
        this point. Although the extent of damages was unknown within the statute
        of limitations, the full extent of damages need not be known to give rise to
        a cause of action. See Shideler v. Dwyer, 275 Ind. 270, 282, 417 N.E.2d
        281, 289 (1981) (“For a wrongful act to give rise to a cause of action and
        thus to commence the running of the statute of limitations, it is not
        necessary that the extent of the damage be known or ascertainable but only
        that damage has occurred.”)[.] Presumably, no litigation would have been
        necessary to correct their policy and pay the adjusted premium for the
        desired coverage before the fire, but if for any reason the coverage was no
        longer available the Filips could have asserted their negligence claim if they
        felt that necessary. Further, if we accept the Filips’ argument, then insureds
        become free riders, paying lower premiums, perhaps for many years, and
        then retaining the ability to claim the benefit of higher coverage if a loss is
        incurred.

                We do not hold, however, that the date of coverage is necessarily
        controlling in every case. The question in this case is at what point the
        Filips, in the exercise of ordinary diligence, could have discovered that they
        were underinsured. The Filips claim that their policy lacked coverage of
        nonbusiness personal property and business interruption, and that the
        building and business personal property coverage had inadequate limits.
        All of these alleged problems were ascertainable simply by reading the
        policy.[] As a result, the limitations period in this case began to run on or
        shortly after the activation of the policy with the exception discussed below
        for nonbusiness personal property.[1]


        1
           In Filip, the designated evidence “indicate[d] that both the Filips and [the insurance agent]
erroneously believed that the policy covered the Filips’ nonbusiness personal property.” 879 N.E.2d at
1085. Here, there is no designated evidence that Meek had any erroneous belief regarding the Groces’
coverage under the replacement cost provision of the policy. Accordingly, the exception described in
Filip does not apply here.
                                                   7
              The Filips contend that they relied on Block’s representations
      regarding the adequacy of the policy’s coverage. The Filips are correct that
      “reasonable reliance upon an agent’s representations can override an
      insured’s duty to read the policy.” Vill. Furniture, Inc. v. Assoc. Ins.
      Managers, Inc., 541 N.E.2d 306, 308 (Ind. Ct. App. 1989). In general, this
      exception negates an insured’s duty to read part of the policy if an agent
      insists that a particular hazard will be covered. Id. (“If the agent insists to
      the prospective purchaser that the policy will insure against a hazard . . .
      that the prospect is particularly concerned about, and the hazard
      materializes, the company may be estopped to plead the terms of the policy
      because the strength of the agent’s oral assurances lulled the prospect into
      not reading, or reading inattentively, dense and rebarbative policy
      language.” (quoting Burns v. Rockford Life Ins. Co., 740 F.2d 542, 544
      (7th Cir. 1984))).

              The question, then, is whether there is any evidence that Block made
      representations to the Filips, which, if true, would have covered their loss
      and also tolled the running of the limitations period. The designated
      evidence reveals that the Filips told Block they wanted the same insurance
      as Bailey, the former owner of the property, and they received a
      substantially similar policy. The designated evidence also reveals that the
      Filips called Block several times between 1999 and 2003 to make changes
      in the coverage. These changes included increasing the coverage on the
      building from $250,000 to $350,000, adding Bailey as an additional
      insured, and changing the spelling of the Filips’ names on the policy. The
      Filips, then, knew the policy well enough to make changes, but claim not to
      understand the commercial nature of the policy, the type of value coverage
      included, or the lack of business interruption coverage. Nothing in the
      designated evidence raises an issue of material fact, however, as to whether
      Block made representations regarding the inadequacy of the amount of
      business personal property coverage, whether the building coverage was
      replacement value or material value, or the lack of business interruption
      coverage. These shortcomings in their policy, which the Filips seek to
      attribute to Block’s negligence, were readily ascertainable from the policy
      itself. Accordingly, as to these three alleged omissions, the statute of
      limitations began to run two years after the start of coverage, in 1999, and
      bars those three parts of the Filips’ complaint, which was filed in 2003.

(Emphases added, footnote omitted).

      Here, the crux of the Groces’ argument on appeal is that, in 2003, Meek had

stated, “I’m assuming you want replacement cost coverage . . . if anything ever


                                            8
happens—fire, tornado, wind[—the residence] will be replaced 100%?” Appellants’

App. at 338. Tracey had replied in the affirmative. The Groces now claim that they “did

not know how much insurance coverage was required to provide ‘100% replacement cost

coverage’ and left that choice up to Meek.” Id. And they allege that Meek had “caused

the Plaintiffs to misunderstand the meaning of the term replacement cost coverage[.]” Id.

at 35-36. In essence, the Groces contend that, in relying on Meek’s statements, they had

no reason to discover that they were underinsured until the fire occurred.2

        But Meek did include replacement cost coverage in the Groces’ homeowner’s

policy as promised, up to the policy limit. To the extent that the Groces claim that Meek

misrepresented what replacement cost coverage was under their policy, they do not direct

us to any designated evidence in support of that contention. And, just like the plaintiffs

in Filip, the Groces made numerous changes to their homeowner’s policy over the years,

including requesting increases in the policy limits. In particular, between 2003 and

October 2007, the Groces “refinanced the mortgage indebtedness on the Residence

several times; [and] on each such occasion the amount of insurance provided by

American Family for loss due to fire increased.” Id. at 339. The Groces acknowledge

having received numerous copies of “many Declaration pages for insurance policies

written by American Family with steadily increasing amounts listed as insurance for loss

by fire.” Id. at 338. Thus, the Groces “knew the policy well enough to make changes,”


        2
            Replacement cost coverage does not mean, as the Groces suggest, whatever coverage may be
necessary to cover a loss when it occurs. It is a defined term under the policy. To the extent the Groces
assert that they could not have discovered that they were underinsured until the fire occurred, our supreme
court rejected that argument in Filip. As the court observed, if we accept the Groces’ argument, “then
insureds become free riders, paying lower premiums, perhaps for many years, and then retaining the
ability to claim the benefit of higher coverage if a loss is incurred.” Filip, 879 N.E.2d at 1983-84.
                                                    9
but claim not to have understood the replacement cost provision. See Filip, 879 N.E.2d

at 1084.

       We hold that the alleged inadequacy of the replacement cost coverage in the

Groces’ American Family policy was “readily ascertainable from the policy itself.” See

Filip, 879 N.E.2d at 1084. Accordingly, the statute of limitations began to run at the time

of coverage, in 2003, and bars the Groces’ negligence claims, which were first asserted in

2009. See id.

       Finally, we note that the Groces had asserted a breach of contract claim in their

complaint. And American Family and Meek designated evidence and made argument in

support of summary judgment on that claim.          However, in their memorandum in

opposition to summary judgment, the Groces expressly abandoned their breach of

contract claim. See Appellants’ App. at 350. And they make no argument on appeal

with regard to a breach of contract claim. Accordingly, we need not address whether

summary judgment was appropriate with respect to the Groces’ breach of contract claim

as alleged in their complaint.

       Affirmed.

FRIEDLANDER, J., and BRADFORD, J., concur.




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