MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be                                              FILED
regarded as precedent or cited before any                                     Feb 19 2020, 9:24 am
court except for the purpose of establishing
                                                                                   CLERK
the defense of res judicata, collateral                                        Indiana Supreme Court
                                                                                  Court of Appeals
estoppel, or the law of the case.                                                   and Tax Court




ATTORNEYS FOR APPELLANT                                     ATTORNEY FOR APPELLEE
HISCOX INSURANCE COMPANY, INC.                              MIDWAY AUCTION COMPANY
Logan C. Hughes                                             A/K/A GILBERT AND
Robert G. Sylvester                                         ASSOCIATES, LLC
Reminger Co., L.P.A.                                        Glen E. Koch, II
Indianapolis, Indiana                                       Boren, Oliver & Coffey, LLP
                                                            Martinsville, Indiana


                                             IN THE
     COURT OF APPEALS OF INDIANA

Hiscox Insurance Company, Inc.,                             February 19, 2020
Appellant-Defendant, Counter-Plaintiff/
Cross-Claimant,                                             Court of Appeals Case No.
       v.                                                   19A-CT-1512
                      1                                     Appeal from the Morgan Superior
Sandra Sanford and Midway                                   Court
Auction Company a/k/a Gilbert                               The Honorable Sara A. Dungan,
and Associates, LLC,                                        Judge
Appellee-Plaintiff, Counter-Defendant,                      Trial Court Cause No.
Appellee-Defendant/Cross-Defendant.                         55D03-1802-CT-261

Barnes, Senior Judge.




1
  Sandford is represented by counsel in the trial court. Sanford’s counsel has entered an appearance in this
interlocutory appeal but has not filed a brief with this Court. However, under Indiana Appellate Rule 17(A)
“A party of record in the trial court or Administrative Agency shall be a party on appeal.”

Court of Appeals of Indiana | Memorandum Decision 19A-CT-1512 | February 19, 2020                      Page 1 of 16
                                      Statement of the Case
[1]   Hiscox Insurance Company, Inc. (“Hiscox”) brings this interlocutory appeal

      from the trial court’s order denying its motion for summary judgment on a

      policy coverage issue, contending that the trial court erred by failing to find that

      Hiscox is entitled to judgment as a matter of law. We affirm.


                                                     Issue
[2]   Hiscox presents the following issue which we restate as the following question:


              Did the trial court err by failing to find that Hiscox properly
              cancelled the insurance policy issued to Gilbert and Associates,
              LLC (“Gilbert”) for non-payment of a premium, thus entitling
              Hiscox to judgment as a matter of law?

                               Facts and Procedural History
[3]   Sandra Sanford (“Sanford”) filed a personal injury complaint alleging that she

      was injured on the premises of Midway Auction Company, owned and

      operated by Gilbert. Sanford’s injuries were alleged to have occurred on

      January 1, 2018, and her complaint was filed on February 16, 2018, contending

      that the injuries were suffered because of alleged negligence on the part of

      Gilbert. Gilbert then turned to Hiscox seeking coverage for Sanford’s claim

      under an insurance policy issued by Hiscox. Hiscox denied coverage alleging

      that the policy was cancelled for non-payment of the monthly premiums several

      months prior to Sanford’s alleged injury.




      Court of Appeals of Indiana | Memorandum Decision 19A-CT-1512 | February 19, 2020   Page 2 of 16
[4]   Next, on March 19, 2018, Sanford filed an amended complaint for damages

      seeking a declaratory judgment that Hiscox’s insurance policy was effective on

      the date of her alleged injury. On January 23, 2019, Hiscox filed its motion for

      summary judgment seeking a declaratory judgment that Hiscox properly

      cancelled its insurance policy for Gilbert’s non-payment of insurance premiums

      such that the injuries alleged in Sanford’s complaint were not covered.


[5]   On May 15, 2019, the trial court entered its order denying Hiscox’s motion for

      summary judgment. On June 14, 2019, Hiscox filed a motion to certify for

      interlocutory appeal the trial court’s decision on summary judgment, and the

      trial court granted Hiscox’s motion. This Court granted Hiscox’s request to

      accept the permissive interlocutory appeal.


[6]   The pertinent facts developed through the argument on summary judgment are

      as follows. Hiscox markets and sells insurance products, including general

      liability insurance, professional liability insurance and a business owners policy

      which is combined property and liability coverage for small business owners in

      the United States. Those policies are sold directly to consumers on-line via the

      corporate website and through a call center. Insurance premiums are collected

      by credit or debit card, and insureds are given the option of paying premiums in

      a lump sum or monthly installments. Policy documents are transmitted to

      policyholders by email at the time of purchase.


[7]   On May 25, 2017, Carl Gilbert (“Carl”), who owned Gilbert, contacted Hiscox

      and entered into a contract for a business owners policy No. UDC-1984671-


      Court of Appeals of Indiana | Memorandum Decision 19A-CT-1512 | February 19, 2020   Page 3 of 16
       BOP-17 (“the Policy”). During a phone call to Hiscox’s call center, Carl

       provided his name, telephone number, mailing address, email address, and

       debit card information linked to an account issued by Citizens Bank, to make

       automatic, monthly payments. Carl was the only individual with access to that

       bank account.


[8]    The correct mailing address for Gilbert is as follows:


               Gilbert and Associates, LLC
               554 W. State Rd. 42
               Mooresville, IN 46158

       The address entered into the Hiscox database was as follows:


               Gilbert and Associates, LLC
               554 W. State Rd. 42
               42
               Mooresville, IN 46158

       Appellant’s App. Vol. II, pp. 153, 167.


[9]    The incorrect address is found in four separate places in the Policy. Id. at 39,

       114, 116. In the application summary, the address for Gilbert is listed twice

       with the additional “42” on a separate line. Id. at 114, 116. That same address

       appears twice in the “Businessowners Insurance Declarations” portion of the

       Policy. Id. at 39.


[10]   The “Your Insurance documents” section of the Policy includes two provisions

       reading as follows:



       Court of Appeals of Indiana | Memorandum Decision 19A-CT-1512 | February 19, 2020   Page 4 of 16
               Enclosed you will find the policy documents that make up your
               insurance contract with us.

               Please read through all of these documents. If you have any
               questions or need to update any of your information please call
               us at 888-202-3007 (Mon-Fri, 8am-10pm EST).

               ***
               Application Summary

               This is a summary of the information that you provided to us as
               part of your application. Please review this document and let us
               know if any of the information is incorrect.


       Id. at 37.


[11]   Hiscox received two subsequent payments from Gilbert on July 26, 2017 and

       August 28, 2017 but received no additional premium payments for the Policy.

       Sometime around September 15, 2017, the debit card number associated with

       Gilbert’s account with Citizens Bank changed. Although automatic payments

       for other Gilbert’s contractual obligations continued after the card number

       changed, no payments were made for the Policy after September 2017, and

       Hiscox did not receive a payment due in September 2017. Gilbert’s bank

       statement did not include a record of payment for the insurance premium in

       September.


[12]   When an insured fails to pay its premium, Hiscox will cancel the policy

       pursuant to the terms of cancellation set forth in the Policy, which provides in

       pertinent part as follows:


       Court of Appeals of Indiana | Memorandum Decision 19A-CT-1512 | February 19, 2020   Page 5 of 16
               III–COMMON POLICY CONDITIONS (APPLICABLE TO
               SECTION I–PROPERTY AND SECTION II–LIABILITY)

               A. Cancellation

               ***

               2. We may cancel this policy by mailing or delivering to the first
               Named Insured written notice of cancellation at least:

               ***

               b. 10 days before the effective date of cancellation if we cancel
               for nonpayment of premium.

               3. We will mail or deliver our notice to the first Named Insured’s
               last mailing address known to us.

               ***

               6. If notice is mailed, proof of mailing will be sufficient proof of
               notice.

       Id. at 88-89.


[13]   Hiscox’s normal business practice in Indiana for cancelling policies for

       nonpayment of a premium is to mail a notice of cancellation to the last known

       address of the named insured at least ten days prior to the effective date of the

       cancellation. Hiscox’s normal business practice also includes obtaining a

       certificate of mailing from the United States Postal Service verifying the date

       the notice of cancellation was transmitted to the named insured at the address

       in the Policy. The address listed on the certificate of mailing was as follows:


               Gilbert and Associates, LLC
               554 W State Rd 42 42
               Mooresville, IN 46158
       Court of Appeals of Indiana | Memorandum Decision 19A-CT-1512 | February 19, 2020   Page 6 of 16
       Appellant’s App. Vol. II, p. 166.


[14]   On October 11, 2017, Hiscox prepared a notice of cancellation of the Policy to

       Gilbert at the address with the additional “42” on a separate line as appeared in

       the Policy and informed Gilbert that the Policy would be cancelled on October

       26, 2017 at 12:01 a.m. local time. Id. at 34, 120. The notice also indicated that

       if the premium due was received prior to the cancellation date, the Policy

       would remain in effect. Id. The certificate of mailing issued by the United

       States Postal Service, however, confirmed the mailing of the notice on October

       11, 2017, but at the address with the additional “42” appearing on the same line

       instead of a separate line. Id. at 120.


[15]   Hiscox claimed that it also took the additional step, not required by contract, of

       leaving a voicemail message to Gilbert from Hiscox’s call center informing

       Gilbert of the unpaid premium. Hiscox further claimed it did not receive

       payment of the outstanding premium and did not receive a response from

       Gilbert after the notice was mailed. Hiscox stated the Policy was cancelled by

       means of a cancellation endorsement on October 26, 2017. Hiscox further

       stated that the endorsement was transmitted to Gilbert via email.


[16]   Carl filed an affidavit in opposition to Hiscox’s motion. He denied receiving

       the notice of cancellation via U.S. Mail or receiving the voicemail message

       from Hiscox’s call center. Id. at 53-54. Further, he averred that when he made

       the claim with Hiscox an agent told him over the phone that Hiscox’s system

       had a problem delivering email to Gmail accounts. Id. at 153. Carl further


       Court of Appeals of Indiana | Memorandum Decision 19A-CT-1512 | February 19, 2020   Page 7 of 16
       stated that he had a Gmail address, and that he had never received an email

       notifying him that he was delinquent in paying the premiums or that the Policy

       was going to be cancelled. Id. at 154. Additionally, he stated that it was a

       Hiscox agent who had entered the address into their database and that he never

       had access to or manipulated Hiscox’s databases. Id. at 153-54.


[17]   After hearing arguments and considering the designated materials, the trial

       court entered its order denying Hiscox’s motion for summary judgment.


                                    Discussion and Decision
[18]   Hiscox appeals from the denial of its motion for summary judgment. Our well-

       settled standard of review is as follows:


               We review summary judgment de novo, applying the same
               standard as the trial court: Drawing all reasonable inferences in
               favor of . . . the non-moving parties, summary judgment is
               appropriate if the designated evidentiary matter shows that there
               is no genuine issue as to any material fact and that the moving
               party is entitled to judgment as a matter of law. 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.


               The initial burden is on the summary-judgment movant to
               demonstrate the absence of any genuine issue of fact as to a
               determinative issue, at which point the burden shifts to the non-
               movant to come forward with contrary evidence showing an
               issue for the trier of fact. And although the non-moving party
               has the burden of persuading us that the grant of summary
               judgment was erroneous, we carefully assess the trial court’s

       Court of Appeals of Indiana | Memorandum Decision 19A-CT-1512 | February 19, 2020   Page 8 of 16
                 decision to ensure that he was not improperly denied his day in
                 court.


                 ***
                 Summary judgment is a desirable tool to allow the trial court to
                 dispose of cases where only legal issues exist. But it is also a
                 blunt . . . instrument, by which the non-prevailing party is
                 prevented from having his day in court. We have therefore
                 cautioned that summary judgment is not a summary trial, and
                 the Court of Appeals has often rightly observed that it is not
                 appropriate merely because the non-movant appears unlikely to
                 prevail at trial. In essence, Indiana consciously errs on the side
                 of letting marginal cases proceed to trial on the merits, rather
                 than risk short-circuiting meritorious claims.


       Hughley v. State, 15 N.E.3d 1000, 1003-04 (Ind. 2014) (internal quotations,

       citations, and parentheticals omitted).


[19]   “It has long been held in Indiana that insurance policies are governed by the

       law of contracts.” Pekin Ins. Co. v. Wheeler, 493 N.E.2d 172, 174 (Ind. Ct. App.

       1986). “[T]he term ‘cancellation’ refers to the termination of a policy at the end

       of the policy period.” Am. Family Mut. Ins. Co. v. Ramsey, 425 N.E.2d 243, 244

       (Ind. Ct. App. 1981). “As a general rule, once a valid contract of insurance has

       been effectuated, the right of either party to cancel it at pleasure can accrue in

       only three ways: by a concurrent agreement, by a reservation in the policy, by

       statute.” Cook v. Mich. Mut. Liab. Co., 289 N.E.2d 754, 758 (Ind. Ct. App. 1972)

       (quoting Bushnell v. Krafft, 183 N.E.2d 340, 343 (Ind. Ct. App. 1962)), trans.

       denied.



       Court of Appeals of Indiana | Memorandum Decision 19A-CT-1512 | February 19, 2020   Page 9 of 16
[20]   Where the right to cancel exists only by contract, a cancellation clause is a

       condition requiring strict compliance to make an attempted cancellation valid.

       Hibler v. Conseco, Inc., 744 N.E.2d 1012, 1018 (Ind. Ct. App. 2001) (citing 3

       ERIC M. HOLMES, HOLMES’ APPLEMAN ON INSURANCE 2D § 16.7 at

       354 (2d ed.1998)). In Moore v. Vernon Fire & Cas. Ins. Co., 234 N.E.2d 661, 663

       (Ind. Ct. App. 1968), the Court at that time held that strict compliance with the

       terms of the policy was not necessary, that is, where the notice of cancellation

       stated an effective date less than ten days from the mailing of the notice, the

       notice was sufficient to cancel the policy ten days after the mailing of the notice.

       The Court further held that the notice was sufficient to inform the insured of the

       insurer’s intentions to cancel the policy and to provide the insured with more

       time than required in the policy to obtain other insurance.


[21]   Several cases from this jurisdiction and others have analyzed a variety of

       aspects of cancellation of insurance policies. We recite them here to thoroughly

       explain our decision.


[22]   Starting first with cases involving the law in Indiana, the Seventh Circuit Court

       of Appeals, in State Farm Mut. Auto. Ins. Co. v. Perrin, 331 F.2d 565, 568 (7th Cir.

       1964), observed that the majority view among states was that these cancellation

       clauses similar to the one at issue here were not ambiguous and that proof of

       depositing in the mail was sufficient to constitute notice regardless of the

       insured’s lack of actual receipt.




       Court of Appeals of Indiana | Memorandum Decision 19A-CT-1512 | February 19, 2020   Page 10 of 16
[23]   In deciding that case, the Seventh Circuit quoted from Cnty. of Williamson v.

       Standard Accident Ins. Co., 32 Ill. App. 2d 363, 365, 178 N.E.2d 149, 150 (Ill. Ct.

       App. 1961), because the court found no Indiana cases yet addressing the issue.

       In that case, the insurer denied a claim, contending that the policy had been

       cancelled pursuant to a clause providing that mailing of notice shall be

       sufficient proof of notice. The address on the policy was incorrect but was

       mailed to the incorrect address as shown on the policy and was never actually

       received by the insured. The court noted that the insured had the policy in its

       possession for seven months prior to cancellation, and that the insured did not

       object to the correctness of the address reflected in the policy. The court cited

       to several cases, which follow, in support of its decision.


[24]   In Raiken v. Commercial Cas. Ins. Co., 135 A. 479, 480 (N.J. 1926). The New

       Jersey Supreme Court was asked to decide whether a notice of cancellation

       mailed to the address, which was incorrect, but listed in the policy, and

       returned to the insurer, constituted a valid cancellation of the policy. Despite

       evidence showing that the insurer was aware of the correct address of the

       insured, but had not corrected the policy to reflect such, the insurer had

       followed the terms of the policy and the cancellation was valid.


[25]   Next, in Duff v. Secured Fire & Marine Ins. Co., 227 S.W.2d 257 (Tex. Civ. App.

       1949), a notice of cancellation was held to be valid because the address listed in

       the policy was the only post office in Texas with that specific address. Evidence

       that the address did not completely match that as listed in the policy because it

       failed to include “El Paso” did not render the cancellation ineffective. The

       Court of Appeals of Indiana | Memorandum Decision 19A-CT-1512 | February 19, 2020   Page 11 of 16
       parties had contracted for delivery of the notice to the post office and not the

       individual insured. Evidence that the insured did not receive the notice did not

       invalidate the cancellation.


[26]   In contrast, in Irving v. Sunset Mut. Life Ins. Co., 4 Cal. App. 455, 41 P.2d 194,

       196 (Cal. App. 1935), a case in which the insured notified the insurer of a

       mistake in address, but the agent failed to make a correction, proof of mailing

       was ineffective to constitute notice of cancellation. The mistake was made by

       an agent of the insurer and the policy was not corrected. Such prevented the

       insurer from asserting a defense against coverage under the policy.


[27]   In Boyle v. Inter Ins. Exch. of Chi. Motor Club, 82 N.E.2d 179, 180 (Ill. Ct. App.

       1948), the court held that a complete defense was shown by the insurer. The

       cancellation clause is the same as that in the present appeal and in the other

       cases. The evidence in Boyle showed that the notice of cancellation was mailed

       to the insured by the insurer to the address, albeit the incorrect address, but the

       one set forth in the policy.


[28]   Later, returning to Indiana cases, in Farber v. Great Am. Ins. Co., 406 F.2d 1228,

       1229 (7th Cir. 1969), the Seventh Circuit Court of Appeals applied Indiana law

       to resolve a dispute involving two attacks on the cancellation clause of the

       insurance policy. The insured attacked the effectiveness of the cancellation

       because it was mailed less than the 10 days before cancellation. The insured

       also attacked the validity of the cancellation on the grounds that the notice was

       never actually received in the mail. The Seventh Circuit cited Moore, 234


       Court of Appeals of Indiana | Memorandum Decision 19A-CT-1512 | February 19, 2020   Page 12 of 16
       N.E.2d at 663, to hold that, under the cancellation clause at issue, mailing of

       notice, not actual receipt, was sufficient to comply with the terms of the

       insurance contract. The cancellation was, therefore, valid and became effective

       ten days from the date of its mailing.


[29]   United Farm Bureau Mut. Ins. Co. v. Adams, 251 N.E.2d 696, 700 (Ind. Ct. App.

       1969), involves a declaratory judgment action. The insureds were involved in a

       collision and sought coverage from their insurer. The insurer denied coverage,

       claiming that the policy had been cancelled by mailing notice prior to the

       accident due to the insured’s failure to pay premiums. The policy contained the

       same cancellation clause as the one involved in the present case, including the

       provision that mailing of notice shall be sufficient proof of notice. The insured

       claimed that no notice of cancellation was received. Because of language in the

       policy, the issue of receipt of the notice was factually irrelevant, but the issue of

       proof upon mailing was a live issue. There were enough gaps in the evidence to

       find that there was insufficient proof of mailing.


[30]   In Conrad v. Universal Fire & Cas. Ins. Co., 686 N.E.2d 840 (Ind. 1997), our

       Supreme Court addressed an appeal involving the mailing by an insurer of a

       cancellation notice by certified mail return receipt requested. The address used

       for mailing was the correct address as it appeared in the policy. The policy

       neither required nor prohibited the use of certified mail return receipt requested

       as the method of mailing. The language in the policy included the provision

       that “proof of mailing shall be sufficient proof of notice.” Id. at 841. The Court

       held that proof of mailing did not create an irrebuttable presumption of notice,

       Court of Appeals of Indiana | Memorandum Decision 19A-CT-1512 | February 19, 2020   Page 13 of 16
       where the notice was returned to the insurer marked “unclaimed.” Summary

       judgment in favor of the insurer was reversed. In the present case, there was no

       certified mail issue, therefore, there was no return of the notice showing the

       mailing was “unclaimed.”


[31]   Although there are many other cases from other jurisdictions addressing the

       issue, the above is a sufficient sampling of decisions regarding challenges to

       cancellation notices and the addresses to which they are sent. Further, we note

       it appears that compliance with Indiana statutes pertaining to cancellation of

       policies is not at issue in the present case. See Ind. Code §§ 27-1-31-2, 2.5

       (1988).


[32]   Turning to the present appeal, we conclude that the trial court correctly denied

       Hiscox’s motion for summary judgment. The incorrect address in the policy

       appears in the document providing a notice of cancellation. However, the

       certificate of mailing stamped by the United States Postal Service shows that the

       notice was mailed to an address different from the one appearing in the Policy,

       but also incorrect. The additional “42” did not appear on a separate line as it

       does in the Policy. As in Adams, 251 N.E.2d 696, the issue of receipt of the

       notice is factually irrelevant. However, the issue of proof of mailing presents a

       genuine issue of material fact including, but not limited to, who was responsible

       for the error in entering Gilbert’s address into the Hiscox database, and what

       happens when a means of delivery used by the parties to the contract, such as

       electronically by email, fails or has intermittent delivery issues.



       Court of Appeals of Indiana | Memorandum Decision 19A-CT-1512 | February 19, 2020   Page 14 of 16
[33]   The following language from Adams, concerning public policy considerations,

       albeit regarding motor vehicle liability insurance, seems relevant here. The

       following quote is worth considering.

               However, before moving to that task, we are moved to remark that
               the method in which this question is brought before the court is very
               appropriate in light of the important policy considerations inherent
               in the situation. Notice of motor vehicle liability insurance
               cancellation touches an area of public interest far beyond the scope
               of the relationship of the parties before us. The dangers of driving
               uninsured vehicles are obvious. Not only may one be subjected to
               the risk of a large financial liability at the hands of a negligently
               injured person, but the opportunity for that other injured party to
               gain a reasonable amount of damages for his injury is considerably
               lessened. It is for the benefit of every driver and passenger on our
               roads today, as well as ourselves, that we carry liability insurance.
               When this protection is being cancelled, public policy demands a
               strict compliance with the procedure involved so that the insured, or
               former insured, may be given reasonable opportunity to make other
               insurance arrangements before his old coverage is denied.


       145 Ind. App. at 519-20, 251 N.E.2d at 698.


[34]   As industries evolve to take advantage of advancements in technology,

       adjustments have been made to the means of acquiring insurance. We must be

       mindful to strike a balance between the competing interests of lowering the cost

       of overhead and generating more business volume against providing liability

       coverage at a reduced rate while providing coverage to protect those whose risk

       is contemplated by the insurance.


[35]   As stated in Hibler, “Where the right to cancel exists only by contract, a

       cancellation clause is a condition requiring strict compliance to make an
       Court of Appeals of Indiana | Memorandum Decision 19A-CT-1512 | February 19, 2020   Page 15 of 16
       attempted cancellation valid.” 744 N.E.2d at 1018. Hiscox claims that it

       mailed the notice to the address provided in the Policy and that it was Gilbert’s

       contractual duty to read the contract in its entirety and notify Hiscox of any

       inaccuracies. Gilbert argues that it was never in charge of nor had access to the

       Hiscox database and provided the agent at the call center with the correct

       information. Hiscox supports its argument in part by the certificate of mailing,

       which visibly shows an incorrect address not appearing in the Policy. Yet, the

       Policy provides that proof of mailing is sufficient proof of notice. Resolution of

       this issue requires a trier of fact where the parties’ accounts of the truth differ, or

       the undisputed material facts support conflicting reasonable inferences. See

       Hughley, 15 N.E.3d at 1003. Such is the case here.


[36]   Viewing the evidence most favorable to Gilbert, the non-moving party, we

       conclude, as did the trial court, that there exists a genuine issue of material fact

       such that summary judgment in favor of Hiscox is inappropriate.


                                                Conclusion
[37]   In light of the foregoing, we affirm the trial court’s denial of Hiscox’s motion

       for summary judgment.


[38]   Affirmed.


       Mathias, J., and Pyle, J., concur.




       Court of Appeals of Indiana | Memorandum Decision 19A-CT-1512 | February 19, 2020   Page 16 of 16
