                                                                                    FILED
                                                                               Sep 25 2017, 10:52 am

                                                                                    CLERK
                                                                                Indiana Supreme Court
                                                                                   Court of Appeals
                                                                                     and Tax Court




ATTORNEYS FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
John H. Halstead                                           Douglas E. Sakaguchi
Ryan D. O’Day                                              James P. Barth
Kightlinger & Gray, LLP                                    Pfeifer, Morgan & Stesiak
Merrillville, Indiana                                      South Bend, Indiana
                                                           ATTORNEYS FOR AMICUS CURIAE
                                                           INDIANA TRIAL LAWYERS
                                                           ASSOCIATION
                                                           William E. Winingham
                                                           Jonathon B. Noyes
                                                           Wilson Kehoe Winingham LLC
                                                           Indianapolis, Indiana



                                            IN THE
    COURT OF APPEALS OF INDIANA

Indiana Insurance Guaranty                                 September 25, 2017
Association,                                               Court of Appeals Case No.
Appellant-Defendant,                                       71A03-1703-CT-610
                                                           Interlocutory Appeal from the St.
        v.                                                 Joseph Superior Court
                                                           The Honorable Jenny Pitts Manier,
Carlos A. Smith,                                           Judge
Appellee-Plaintiff                                         Trial Court Cause No.
                                                           71D05-1603-CT-170



Baker, Judge.


Court of Appeals of Indiana | Opinion 71A03-1703-CT-610 | September 25, 2017                            Page 1 of 12
[1]   Two motorists were involved in a car accident. During the subsequent legal

      proceedings, the Indiana Insurance Guaranty Association (IIGA) intervened as

      the real party in interest, and the trial court substituted the IIGA for the original

      insurance company defendant. The IIGA filed a motion to dismiss, arguing

      that the tortfeasor’s insurance company’s denial of coverage did not render him

      uninsured such that the other motorist seeking damages could not recover

      under his own insurance policy’s provision on uninsured automobiles. The

      IIGA brings this interlocutory appeal following the trial court’s denial of its

      motion. Finding no error with the trial court’s denial of the motion to dismiss,

      we affirm.


                                                      Facts
[2]   On August 18, 2015, Carlos Smith and Martin Torres were involved in a car

      accident in South Bend. At the time of the accident, Smith was insured by

      Affirmative Casualty Insurance Company (Affirmative) and Torres was insured

      by ACCC Insurance Company (ACCC). On November 10, 2015, ACCC

      denied coverage to Torres based on his lack of cooperation with the accident

      investigation.


[3]   On March 29, 2016, Smith filed a complaint against Torres and Affirmative,

      alleging that Torres negligently caused Smith’s injuries and that Torres was

      uninsured at the time of the accident based on ACCC’s denial of coverage. He

      also alleged that, under the uninsured motorist provision of his own insurance

      policy, Affirmative was liable for the damages he suffered as a result of an


      Court of Appeals of Indiana | Opinion 71A03-1703-CT-610 | September 25, 2017   Page 2 of 12
      accident with an uninsured driver. The Affirmative policy defines an

      “uninsured automobile” as:


               1. an automobile or trailer with respect to the ownership,
               maintenance or use of which there is, in at least the amount
               specified by the financial responsibility law of the state in which
               the insured automobile is principally garaged, no bodily injury
               liability bond or insurance policy applicable at the time of the
               accident with respect to any person or organization legally
               responsible for the use of such automobile . . . .


                                                            ***


               3. an automobile with respect to which there is a bodily injury
               liability insurance policy applicable at the time of the accident
               but the Company writing the same is or becomes insolvent
               subsequent to the date of an accident.


      Appellant’s App. Vol. II p. 44.


[4]   Five days before Smith filed his complaint, an order of liquidation was entered

      against Affirmative. The IIGA was subsequently deemed the insolvent insurer

      under Indiana Code section 27-6-8-7(a)(2).1 The IIGA intervened in the case as

      the real party in interest, and the trial court substituted the IIGA for Affirmative

      as the defendant.




      1
        This statute provides that the IIGA shall “[b]e deemed the insurer to the extent of its obligation on the
      covered claims as limited by this chapter and to this extent shall have all rights, duties, and obligations of the
      insolvent insurer as if the insurer had not become insolvent . . . .” I.C. § 27-6-8-7(a)(2).

      Court of Appeals of Indiana | Opinion 71A03-1703-CT-610 | September 25, 2017                          Page 3 of 12
[5]   On December 7, 2016, the IIGA filed a motion to dismiss, arguing that

      ACCC’s denial of coverage did not render Torres uninsured under Indiana law

      or the Affirmative policy. A hearing took place on January 11, 2017, and that

      same day, the trial court denied the IIGA’s motion. The IIGA now appeals.


                                    Discussion and Decision
[6]   The IIGA argues that the trial court erred in denying its motion to dismiss.

      Specifically, it argues that Torres was not uninsured, and that as a result, Smith

      did not have an actionable claim against Affirmative from which he could

      recover damages.


[7]   A motion to dismiss under Trial Rule 12(B)(6) “tests the legal sufficiency of a

      complaint: that is, whether the allegations in the complaint establish any set of

      circumstances under which a plaintiff would be entitled to relief.” Lockhart v.

      State, 38 N.E.3d 215, 217 (Ind. Ct. App. 2015) (internal quotations omitted).

      We apply a de novo standard of review to a trial court’s ruling on a Trial Rule

      12(B)(6) motion to dismiss. Id.


[8]   Statutory interpretation is a function for the courts, and our goal in statutory

      interpretation is to determine, give effect to, and implement the intent of the

      legislature as expressed in the plain language of its statutes. Clark Cnty. Drainage

      Bd. v. Isgrigg, 966 N.E.2d 678, 680 (Ind. Ct. App. 2012). “The Court presumes

      that the legislature intended for the statutory language to be applied in a logical

      manner consistent with the statute’s underlying policy and goals.” Nicoson v.



      Court of Appeals of Indiana | Opinion 71A03-1703-CT-610 | September 25, 2017   Page 4 of 12
       State, 938 N.E.2d 660, 663 (Ind. 2010). We review matters of statutory

       interpretation de novo because they present pure questions of law. Id.


[9]    When construing the meaning of a contract, our primary task is to determine

       and effectuate the intent of the parties. Ryan v. Lawyers Title Ins. Corp., 959

       N.E.2d 870, 875 (Ind. Ct. App. 2011). We must determine whether the

       language of the contract is ambiguous. Id. The unambiguous language of a

       contract is conclusive upon the parties to the contract and upon the courts. Id.

       We must accept an interpretation of the contract that harmonizes its provisions.

       Id.


[10]   Indiana Code section 27-7-5-4(a) defines “uninsured motorist vehicle” as

       follows:


               For the purpose of this chapter, the term uninsured motor
               vehicle, subject to the terms and conditions of such coverage,
               means a motor vehicle without liability insurance or a motor
               vehicle not otherwise in compliance with the financial
               responsibility requirements of IC 9-25 [governing minimum
               amounts of financial responsibility] or any similar requirements
               applicable under the law of another state . . . .


[11]   The Affirmative policy defined an “uninsured automobile” as


               1. an automobile or trailer with respect to the ownership,
               maintenance or use of which there is, in at least the amount
               specified by the financial responsibility law of the state in which
               the insured automobile is principally garaged, no bodily injury
               liability bond or insurance policy applicable at the time of the
               accident with respect to any person or organization legally
               responsible for the use of such automobile[.]
       Court of Appeals of Indiana | Opinion 71A03-1703-CT-610 | September 25, 2017   Page 5 of 12
                                                         ***


                  3. an automobile with respect to which there is a bodily injury
                  liability insurance policy applicable at the time of the accident but the
                  Company writing the same is or becomes insolvent subsequent to
                  the date of an accident.


       Appellant’s App. Vol. II p. 44 (emphasis added). The Affirmative policy lists

       five exclusions to the definition of uninsured automobile, none of which involve

       a vehicle that was denied coverage.


[12]   Whether Torres’s vehicle is considered an uninsured motor vehicle under the

       law is a matter of first impression. Our General Assembly enacted a statute

       governing uninsured motorist vehicle coverage2 because it wanted to ensure that

       motorists have insurance coverage in case of accidents and collisions. Indeed,

       our General Assembly considers uninsured motorist coverage so important that

       it requires all insurance companies selling insurance in our state to provide it to

       every motorist who purchases a motor vehicle insurance liability policy. I.C. §

       27-7-5-2(a). The statute governing uninsured motorist vehicle coverage

       “provides broad protection to insureds injured in accidents with financially

       irresponsible motorists.” United Nat’l. Ins. Co. v. DePrizio, 705 N.E.2d 455, 464

       (Ind. 1999). “Because the statute is remedial, it is to be liberally construed.”

       Corr v. Am. Family Ins., 767 N.E.2d 535, 540 (Ind. 2002).




       2
           Ind. Code ch. 27-7-5 et. seq.


       Court of Appeals of Indiana | Opinion 71A03-1703-CT-610 | September 25, 2017       Page 6 of 12
[13]   A tortfeasor vehicle that had its coverage denied falls within the category of

       “motor vehicle[s] not otherwise in compliance with the financial responsibility

       requirements,” I.C. § 27-7-5-4(a), because a denial of coverage necessarily

       means that, although the tortfeasor vehicle technically has insurance, the

       tortfeasor is without insurance that can actually cover the damages. In other

       words, following a denial of coverage, a tortfeasor vehicle cannot be in

       compliance with our statutory financial responsibility requirements. We

       therefore interpret the statute’s definition of “uninsured motor vehicle” to

       include motor vehicles that had liability insurance at the time of an accident but

       that were later denied coverage.


[14]   To interpret the statute otherwise would be contrary to public policy. First,

       motorists buy insurance and pay insurance premiums precisely to have

       coverage when they need it, including when they are involved in accidents with

       tortfeasors who do not have vehicle insurance. To deny motorists uninsured

       motorist coverage would allow insurance companies to play a game of

       “gotcha” with policy owners that would defeat the purpose of buying insurance

       in the first place—insurance companies would reap the benefit of motorists

       buying their policies while motorists would reap none.


[15]   Second, if a tortfeasor does not have vehicle insurance, then a motorist with

       insurance should be able to recover damages under his own insurance policy’s

       provision on uninsured motorists. But under the circumstances with which we

       are presented here, denying coverage to a motorist under his own insurance

       policy because a tortfeasor’s insurance company denied coverage to the

       Court of Appeals of Indiana | Opinion 71A03-1703-CT-610 | September 25, 2017   Page 7 of 12
       tortfeasor would preclude the motorist from recovering any damages at all from

       the accident. In short, denying a motorist coverage under his own policy’s

       provision on uninsured motorists puts him in a worse position than he would be

       in if the tortfeasor had no vehicle insurance. This result would defeat our

       General Assembly’s goal of ensuring coverage for motorists.


[16]   In addition to finding that Torres’s vehicle is an uninsured motor vehicle under

       the law, we find that it falls within Affirmative’s definition of uninsured

       automobile. Although Torres technically had vehicle insurance at the time of

       the August 18, 2015, accident, ACCC denied him coverage for that accident.

       As a result, Torres did not have vehicle insurance from which Smith could

       benefit. Therefore, Torres’s vehicle fits squarely into Affirmative’s definition of

       an uninsured automobile as an automobile for which there is “no bodily injury

       liability bond or insurance policy applicable at the time of the accident with respect

       to any person or organization legally responsible for the use of such

       automobile[.]” Appellant’s App. Vol. II p. 44 (emphasis added). Torres did not

       have insurance that could be applied to the damages from the accident; his

       vehicle was, therefore, an uninsured automobile.


[17]   We conclude that, as a matter of law and public policy, a vehicle that has

       liability insurance but was denied coverage meets the statutory definition of

       uninsured motor vehicle. We also conclude that Torres’s vehicle meets

       Affirmative’s definition of uninsured automobile. Accordingly, Smith alleged

       in his complaint a set of circumstances under which he would be entitled to

       relief. The trial court did not err in denying the IIGA’s motion to dismiss.

       Court of Appeals of Indiana | Opinion 71A03-1703-CT-610 | September 25, 2017   Page 8 of 12
[18]   The judgment of the trial court is affirmed.


       Mathias, J., concurs.
       Altice, J., concurs in result with a separate opinion.




       Court of Appeals of Indiana | Opinion 71A03-1703-CT-610 | September 25, 2017   Page 9 of 12
                                                   IN THE
           COURT OF APPEALS OF INDIANA

       Indiana Insurance Guaranty                                 Court of Appeals Case No.
       Association,                                               71A03-1703-CT-610

       Appellant-Defendant,

               v.

       Carlos A. Smith,
       Appellee-Plaintiff



       Altice, Judge, concurring in result.


[19]   I concur with the decision to affirm the trial court’s judgment denying IIGA’s

       motion to dismiss, but I write separately because my reasoning differs

       somewhat from that of the majority.


[20]   “It is well settled that where there is ambiguity, insurance policies are to be

       construed strictly against the insurer and the policy language is viewed from the

       standpoint of the insured.” State Auto. Mut. Ins. Co. v. Flexdar, Inc., 964 N.E.2d

       845, 848 (Ind. 2012) (quoting Allstate Ins. Co. v. Dana Corp., 759 N.E.2d 1049,

       1056 (Ind. 2001)). I would find the language of the Affirmative policy’s

       definition of “uninsured automobile” to be ambiguous with respect to whether


       Court of Appeals of Indiana | Opinion 71A03-1703-CT-610 | September 25, 2017           Page 10 of 12
       it includes an automobile that was insured at the time of the accident, but

       coverage was subsequently disclaimed due to the tortfeasor’s breach of his or

       her insurance contract.


[21]   Although the Indiana appellate courts have not addressed this question before,

       in Vanguard Ins. Co. v. Polchlopek, 222 N.E.2d 383, 384-386 (N.Y. 1966), the

       New York Court of Appeals found materially identical policy language to be

       ambiguous under the same circumstances presented here. Specifically, the

       court found that the phrase “applicable at the time of the accident” required

       construction when an insurance company had disclaimed liability subsequent to

       the accident. Id. at 386. The court reasoned that the phrase should be

       construed in light of the purpose of the clause in which it was found, which was

       undoubtedly to protect motorists against damages inflicted by a financially

       irresponsible party. The court held that, “[b]earing that purpose in mind, it

       does not seem unreasonable to hold that an insurance policy which is

       disclaimed subsequent to an accident is not a policy applicable at the time of the

       accident.” Id. After all, the court reasoned, the tortfeasor was just as

       financially irresponsible as a result of his insurer’s disclaimer of coverage as he

       would have been if he had never obtained coverage in the first place. The court

       noted further that the policy did not contain an exclusion for vehicles upon

       which there had been a disclaimer of coverage, and “[i]f it was the insurer’s

       intent to exclude from the definition of an uninsured auto those autos upon

       which a disclaimer of coverage is made subsequent to an accident, this intent




       Court of Appeals of Indiana | Opinion 71A03-1703-CT-610 | September 25, 2017   Page 11 of 12
       should have been explicitly written into the exclusionary clause of the policy

       which negatively defined an uninsured auto[.]” Id.


[22]   Although it is true that not every court considering the issue before us has

       reached the same result, see, e.g., Dreher v. Aetna Cas. & Sur. Co., 226 N.E.2d 287,

       288-89 (Ill. App. Ct. 1967) (finding a materially identical definition of

       “uninsured automobile” to unambiguously exclude automobiles for which

       coverage is subsequently denied due to the insured’s refusal to cooperate or the

       insurer’s insolvency), I find the reasoning of Vanguard persuasive and fully

       applicable to the case before us. I would find the Affirmative policy’s definition

       of “uninsured automobile” to be ambiguous, and consequently construe it in

       Smith’s favor. Because I believe the policy provides coverage in this situation, I

       find it unnecessary to consider whether such coverage is mandated by statute.




       Court of Appeals of Indiana | Opinion 71A03-1703-CT-610 | September 25, 2017   Page 12 of 12
