MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be                                         FILED
regarded as precedent or cited before any                                Sep 12 2019, 9:22 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




ATTORNEY FOR APPELLANT                                   ATTORNEY FOR APPELLEE
Alan D. Naggatz                                          Josef Musser
Law Office of Alan D. Naggatz                            Spitzer Herriman Stephenson
Valparaiso, Indiana                                      Holderead Conner & Persinger,
                                                         LLP
                                                         Marion, Indiana


                                           IN THE
    COURT OF APPEALS OF INDIANA

Penny Denecho, Edward                                    September 12, 2019
Denecho, and Darlene Johnson,                            Court of Appeals Case No.
Appellants-Defendants,                                   18A-CT-2900
                                                         Appeal from the Madison Circuit
        v.                                               Court
                                                         The Honorable G. George Pancol,
Indiana Farm Bureau Insurance                            Judge
Company,                                                 Trial Court Cause No.
Appellee-Plaintiff                                       48C02-1404-CT-48




Crone, Judge.




Court of Appeals of Indiana | Memorandum Decision 18A-CT-2900 | September 12, 2019                Page 1 of 10
                                               Case Summary
[1]   Penny Denecho and Edward Denecho (“the Denechos”) appeal the trial court’s

      entry of summary judgment in favor of Indiana Farm Bureau Insurance

      Company (“Farm Bureau”). The sole restated issue presented for our review is

      whether the Denechos breached the terms of their insurance policy when they

      settled with a tortfeasor without proper notice to or consent of Farm Bureau,

      thus destroying their right of action under the policy as a matter of law.

      Concluding that Farm Bureau is entitled to summary judgment, we affirm.


                                   Facts and Procedural History
[2]   On April 9, 2012, Penny Denecho was driving a vehicle owned by Darlene

      Johnson when she and Ryan Inglis were involved in an accident on State Road

      9 in Madison County. At the time of the accident, Inglis had an automobile

      insurance policy with Allstate that had per person/per incident coverage limits

      of $50,000/$100,000. Johnson1 had an automobile insurance policy with Farm

      Bureau (“the Farm Bureau Policy”) which provided Penny, as the operator of

      Johnson’s vehicle, with uninsured or underinsured motorist (“UIM”) coverage

      with per person/per incident coverage limits of $100,000/$300,000.


[3]   On April 9, 2014, the Denechos filed an amended complaint against Inglis and

      Farm Bureau. The Denechos alleged that they suffered injuries, losses, and




      1
       Darlene Johnson is not a party to this appeal. However, pursuant to Indiana Appellate Rule 17(A), a party
      of record in the trial court shall be a party on appeal, and therefore we have included Johnson in the case
      caption.

      Court of Appeals of Indiana | Memorandum Decision 18A-CT-2900 | September 12, 2019              Page 2 of 10
      damages2 as a direct and proximate result of the negligent, reckless, or careless

      maintenance by Inglis of his vehicle. The Denechos further alleged that

      because Inglis may have been underinsured at the time of the accident, Farm

      Bureau had contracted to provide UIM benefits to the Denechos pursuant to

      the Farm Bureau Policy.


[4]   On July 28, 2016, the Denechos’ attorney purportedly sent a letter to Farm

      Bureau stating:


                 I received a tender of policy limits from Allstate on behalf of
                 Defendant Inglis in the above matter. This is notice requesting
                 consent-to-settle, to the extent necessary under the Plaintiff’s
                 policy. Also advise if your client will be tendering the policy
                 limits seeking or waiving subrogation against the tortfeasor.

                 Please respond with your position within 30 days. If you have
                 questions or concerns please contact me.


      Appellants’ App. Vol. 2 at 89. Five days later, on August 2, 2016, the

      Denechos executed a settlement agreement with Inglis and signed a written

      release of “any and all claims” against Inglis in exchange for the payment by

      Allstate of policy limits of $50,000 of its coverage of Inglis. Id. at 86. The

      release further provided:


                 I further understand that as I may or shall have incurred, directly
                 or indirectly, in connection with or for damages arising out of the
                 accident to each person or organization, release and discharge of



      2
          Edward’s claim was for loss of consortium.

      Court of Appeals of Indiana | Memorandum Decision 18A-CT-2900 | September 12, 2019   Page 3 of 10
                 liability herein, and to any other person or organization, is
                 expressly reserved to each of them, such liability not being
                 waived, agreed upon, discharged nor settled by the release,
                 including but not limited to underinsured claim(s).


      Id.3 (emphasis added). Allstate issued a $50,000 check to the Denechos on

      August 9, 2016.


[5]   Farm Bureau subsequently requested that the Denechos dismiss their UIM

      claim against it on the basis that they breached the terms of the Farm Bureau

      Policy by settling their claims with Inglis without proper notice to or consent of

      Farm Bureau, and therefore Farm Bureau was discharged from any obligation

      to provide UIM coverage. The Denechos did not respond to Farm Bureau’s

      request. Thereafter, Farm Bureau filed a motion for summary judgment and

      designation of evidence requesting a determination, as a matter of law, that the

      Denechos had breached the Farm Bureau Policy and had lost their right of

      action against Farm Bureau. The Denechos filed a brief and designation of

      evidence in opposition to summary judgment.4 Following a hearing, the trial

      court entered summary judgment in favor of Farm Bureau. This appeal ensued.




      3
          The italicized language was handwritten on the typed release.
      4
        Farm Bureau filed a summary judgment reply brief the day before the scheduled hearing. The Denechos’
      counsel made an oral motion to strike the reply brief due to the late filing and alleged hearsay contained in
      the attachments to the brief; however, it does not appear that the trial court ruled on that oral motion.
      Nevertheless, we need not address the Denechos’ argument on appeal that the trial court erred in failing to
      strike the reply brief or attachments, as neither was necessary for or relied upon by this Court in our de novo
      review.

      Court of Appeals of Indiana | Memorandum Decision 18A-CT-2900 | September 12, 2019                 Page 4 of 10
                                     Discussion and Decision
[6]   When reviewing the grant of summary judgment, our standard of review is the

      same as that of the trial court. FLM, LLC v. Cincinnati Ins. Co., 973 N.E.2d

      1167, 1173 (Ind. Ct. App. 2012) trans. denied (2013). We stand in the shoes of

      the trial court and apply a de novo standard of review. Id. Summary judgment

      is appropriate only where the designated evidence shows there are no genuine

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

      of law. Ind. Trial Rule 56(C). A trial court’s grant of summary judgment is

      clothed with a presumption of validity, and the party who lost in the trial court

      has the burden of demonstrating that the grant was erroneous. Henderson v. Reid

      Hosp. & Healthcare Servs., 17 N.E.3d 311, 315 (Ind. Ct. App. 2014), trans. denied

      (2015). We will affirm upon any theory or basis supported by the designated

      materials. Id.


[7]   The provisions of an insurance contract are subject to the same rules of

      construction as are other contracts. Holiday Hosp. Franchising, Inc. v. AMCO Ins.

      Co., 983 N.E.2d 574, 577 (Ind. 2013). Clear and unambiguous policy language

      is given its ordinary meaning. Id. The construction of an insurance contract

      generally presents purely a question of law, and therefore it is particularly well

      suited for de novo appellate review. Id.


[8]   The relevant language of the Farm Bureau Policy regarding its subrogation

      rights and the insured’s obligation to protect those rights provides:




      Court of Appeals of Indiana | Memorandum Decision 18A-CT-2900 | September 12, 2019   Page 5 of 10
              If we make any payment, we are entitled to recover what we paid
              from other parties.

              Any person or for whom we make payment must assign to us
              their rights of recovery against any other party. This person must
              do everything necessary to secure these rights and must do nothing
              after a loss that would jeopardize them.


      Appellants’ App. Vol. 2 at 39 (emphasis added). In support of summary

      judgment, Farm Bureau maintains that the Denechos did in fact do something

      after the accident to jeopardize Farm Bureau’s rights of recovery against Inglis;

      specifically, they settled with and executed a release of all claims against Inglis

      without proper notice to or consent of Farm Bureau. Therefore, Farm Bureau

      contends, the Denechos forfeited UIM benefits as a matter of law. We agree.


[9]   Indiana law is clear that when an insured settles a claim with the tortfeasor

      without the insurer’s consent, the insured breaches the insurance policy’s

      provisions requiring protection of the insurer’s subrogation rights and forfeits

      any claim for underinsured motorist benefits under the policy. Cincinnati Ins. Co.

      v. Adkins, 935 N.E.2d 190, 193 (Ind. Ct. App. 2010) (citing Tate v. Secura Ins.,

      587 N.E.2d 665, 670 (Ind. 1992)). Stated another way,


              [A]n insured who destroys the insurer’s contractual subrogation
              rights breaches the insurance contract and, as a result,
              extinguishes his right of action on the policy. An insured
              destroys the insurer’s contractual subrogation right by releasing
              the tortfeasor prior to settling with the insurer because it is that
              very settlement which enables the insurer to protect its
              subrogation right by giving notice thereof to the tortfeasor.


      Court of Appeals of Indiana | Memorandum Decision 18A-CT-2900 | September 12, 2019   Page 6 of 10
       Tate, 587 N.E.2d at 670 (quoting Allstate Ins. Co. v. Meek, 489 N.E.2d 530, 533

       (Ind. Ct. App. 1986)).


[10]   Moreover, Indiana Code Section 27-7-5-6 provides in relevant part:


               (a) The policy or endorsement affording the [UIM] coverage
               specified in this chapter may also provide that payment to any
               person of sums as damages under such coverage shall operate to
               subrogate the insurer to any cause of action in tort which such
               person may have against any other person or organization legally
               responsible for the bodily injury or death, or property damage,
               because of which such payment is made. The insurer shall be
               subrogated, to the extent of such payment, to the proceeds of any
               settlement or judgment that may later result from the exercise of
               any rights of recovery of such person against any person or
               organization legally responsible for said bodily injury or death, or
               property damage, for which payment is made by the insurer.
               Such insurer may enforce such rights in its own name or in the
               name of the person to whom payment has been made, as in their
               interest may appear, by proper action in any court of competent
               jurisdiction.

               (b) An insurer providing underinsured motorist coverage does
               not have a right of subrogation against an underinsured motorist
               if:

               (1) the insurer has been provided with a written notice that:

               (A) informs the insurer of the existence of a bona fide offer of
               agreement or settlement between its insured and the
               underinsured motorist; and

               (B) includes a certification of the liability coverage limits of the
               underinsured motorist; and

               (2) the insurer fails to advance payment to the insured in an
       Court of Appeals of Indiana | Memorandum Decision 18A-CT-2900 | September 12, 2019   Page 7 of 10
                amount equal to the amount provided for in the offer of
                agreement or settlement within thirty (30) days after the insurer
                receives the notice described in subdivision (1).

                However, an insurer that, under the circumstances described in
                subdivision (1), advances payment to the insured in an amount
                equal to the amount provided for in the offer of agreement or
                settlement, has full rights of subrogation as provided in its policy
                or endorsement affording the underinsured motorist coverage.


       Accordingly, our legislature has provided that in the case of a settlement offer

       from an underinsured motorist, an insured protects her insurer’s subrogation

       rights by providing written notice that informs the insurer of the offer and

       includes a certification of the coverage limits of the underinsured motorist. The

       insurer then has thirty days after the receipt of that notice to advance payment

       to the insured in an amount equal to the settlement offer.5 If the insurer then

       fails to advance such payment within the thirty-day period, the insurer forfeits

       its right of subrogation against the underinsured motorist.


[11]   The undisputed facts demonstrate that the Denechos executed their settlement

       and release of all claims against Inglis without Farm Bureau’s consent a mere

       five days after they sent a letter notifying Farm Bureau about the offer.6 In




       5
        Pursuant to the Farm Bureau Policy language, the Denechos’ obligation to do nothing to jeopardize Farm
       Bureau’s subrogation rights, such as notifying Farm Bureau and obtaining its consent before settling with
       Inglis, arose at the time of the accident. See Adkins, 935 N.E.2d at 193 (noting that the insured’s contractual
       obligation to do nothing to impair the insurer’s subrogation rights arises at the time of the “loss” or accident
       and not at some later date after the insurer has made payment).
       6
         While not necessary to our resolution in this case, the purported notice sent to Farm Bureau by counsel for
       the Denechos was deficient as it did not include a certification of liability coverage limits as required by

       Court of Appeals of Indiana | Memorandum Decision 18A-CT-2900 | September 12, 2019                   Page 8 of 10
       doing so, the Denechos unquestionably denied Farm Bureau the opportunity to

       advance payment in an amount equal to the amount provided for in the offer in

       order to maintain its full rights of subrogation. See Ind. Code § 27-7-5-6(b)(2).

       As in Adkins, this was a clear breach of the insurance policy’s provisions

       requiring protection of the insurer’s subrogation rights. Adkins, 935 N.E.2d at

       193.


[12]   The Denechos attempt to distinguish this case from Adkins by asserting that,

       unlike the “general release” executed in Adkins, the language of the release here

       did not jeopardize Farm Bureau’s subrogation rights because the release

       specifically provided that the Denechos “retained the right to pursue [their]

       UIM claim against Farm Bureau.” Appellants’ Reply Br. at 6. In making this

       argument, the Denechos conflate two distinct things. Namely, they conflate

       their rights as to Farm Bureau with Farm Bureau’s rights as to Inglis. The only

       right of action the language of the current release attempted to protect was the

       Denechos’ right of action against Farm Bureau. The Denechos have

       unequivocally released any and all rights of action against Inglis, which would

       include Farm Bureau’s subrogation rights.7




       Indiana Code Section 27-7-5-6(b)(1)(B). In fact, the letter did not even mention the amount of the settlement
       offer.
       7
        The Denechos argue that Farm Bureau has not shown that its subrogation rights have actually been
       impaired, and they suggest that “Allstate could very likely” honor a subrogation claim if Farm Bureau simply
       makes such a claim. Appellants’ Br. at 28. This is a curious position considering that Allstate filed, on
       Inglis’s behalf, a motion to enforce settlement agreement and for dismissal with prejudice, which the trial
       court granted. Appellants’ App. at 6. As Inglis is no longer a party to the litigation, we fail to see how Farm
       Bureau could attempt to enforce these alleged “reserved” subrogation rights. Id.

       Court of Appeals of Indiana | Memorandum Decision 18A-CT-2900 | September 12, 2019                Page 9 of 10
[13]   Again, it is well settled that “where the insured releases his right of action

       against the wrongdoer before settlement with the insurer, the release destroys by

       operation of law his right of action on the policy.” Consol. Ins. Co. v. Nat’l Water

       Servs., LLC, 994 N.E.2d 1192, 1199 (Ind. Ct. App. 2013) (citing Auto Owners’,

       etc., Exchange v. Edwards, 82 Ind. App. 558, 136 N.E. 577 (1922)); Hockelberg v.

       Farm Bureau Ins. Co., 407 N.E.2d 1160, 1161 (Ind. Ct. App. 1980). As it is

       undisputed that the Denechos released their claims against Inglis before

       settlement with Farm Bureau, the release destroyed the Denechos’ right of

       action against Farm Bureau by operation of law. Having foreclosed Farm

       Bureau’s subrogation rights, the Denechos breached their insurance contract

       and are now precluded as a matter of law from maintaining an action against

       Farm Bureau for UIM benefits. The trial court’s entry of summary judgment in

       favor of Farm Bureau is affirmed.


[14]   Affirmed.


       Vaidik, C.J., and Altice, J., concur.




       Court of Appeals of Indiana | Memorandum Decision 18A-CT-2900 | September 12, 2019   Page 10 of 10
