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CoA: State had no authority to bring paternity action for stillborn baby

In what is an ultimately very sad case involving the stillborn birth of a baby to a barely teenage girl, the Court of Appeals found that neither the assignment of the matter to the State under Title IV-D of the Social Security Act or Indiana’s paternity statutes, provided an avenue for the State to bring an action to establish paternity. Here, the mother simply wanted to confirm who the father of her child was and was not seeking any other benefit or monetary amount.

Since Title IV-D’s purpose is to enforce support obligations and the paternity statutes are there to provide “proper care, maintenance, education, protection, support and opportunities” to the child, there was no interest or authority for the State to file an action for paternity. This did not mean, however, the mother could not do so on her own.

UIM policy could be set off by Worker’s Compensation recovery, but not below state minimum

The CoA’s opinion is filed in the ever-expanding catalog of cases relating to under-insured motorist (“UIM”) coverage.

The issue is relevant in light of the Indiana Supreme Court’s recent ruling in Justice v. Am. Family Mut. Ins. Co., 4 N.E.3d 1171, 2014 Ind. LEXIS 196 (Ind. 2014). In fact, the Court of Appeals relies on that decision in reaching its conclusion here.

In this case, the spectacularly surnamed Christine Anderson was in a motor vehicle accident during the course of her employment. The at-fault driver had $25,000 in coverage, which was paid in full, and Anderson received $81,166.15 in worker’s compensation (“WC”) benefits since she was on the job. She had at the time a UIM policy with limits of $100,000. Thus, she sought $75,000 for the remaining UIM coverage.

Indiana Insurance argued that the UIM policy limit was set off by the WC benefit since it exceeded the $75,000 in remianing UIM coverage. This would mean that coverage would be reduced from the policy limits rather than the total damages (e.g. if Anderson had $300,000 in damages, she argues that the amount she received in WC benefits should be deducted from the $300 number instead of the $75K in coverage).

The Court of Appeals sided with Indiana Insurance on this point, holding that policies generally provide for when a setoff is to be made against damages rather than limits of liability and the use of the word damages in other areas of the policy is evidence that the insurer did not intend for the setoff to apply to damages if another word is used.

Paragraph E mentions “element of loss” and does not mention damages. Further, the portion of the Policy addressing underinsured motorists coverage uses the term “damages” on other occasions. Also, similar to Am. Econ., Paragraph E falls under the section titled “LIMIT OF LIABILITY.”  Unlike Tate, the Policy defines an “[u]nderinsured motor vehicle” as one for which the sum of the limits of liability under all bodily injury liability bonds or policies applicable at the time of the accident is either: “1. Less than the limit of liability for this coverage; or 2. Reduced by payments to persons, other than ‘insureds’, injured in the accident to less than the limit of liability for this coverage.” Appellant’s Appendix at 163. Based upon Paragraph E, we cannot say that the trial court erred to the extent that it reduced the amount Anderson received from worker’s compensation from the Policy limit.

The Court of Appeals did however hold that under the recently published Justice case, the insurer could not apply WC benefits to reduce the UIM benefit below the state mandated minimum of $50,000.  In citing that case, the Court found the following language dispositive: “[i]f [the underinsured motorist] had carried the required amount of liability insurance, [the insured] would have received $50,000, and the purpose of our uninsured/underinsured motorist statute is to put him in that position.” 4 N.E.3d at 1179. Thus, no matter whatever the WC benefit Anderson received, she was entitled to $50,000 in UIM coverage.

Accordingly, the Court of Appeals upheld summary judgment by the trial court on the issue of the setoff but reversed summary judgment on the issue of the recoverable UIM benefit.

Bad faith finding reversed where there was no obligation to produce evidence detrimental to Plaintiff

At trial on a UIM claim, GEICO’s counsel found out days before the trial that one of the plaintiffs, a doctor, had been charged with obtaining controlled substances by fraud in Florida. The information was raised on cross examination of that plaintiff.  After a verdict for one of the other plaintiffs, plaintiffs moved for a finding of bad faith for not presenting the evidence before trial, pursuant to Ind. Code § 34-52-1-1. The trial court granted the motion and GEICO appealed.

The Court of Appeals reversed on the basis that there was no discovery request for the information compounded by the fact that the plaintiff doctor knew of the information and elected not to disclose it to his attorney.

Tax deed upheld where purchaser properly sent notices via certified mail

IN CoA reversed grant of summary judgment in favor of original homeowner and against tax deed purchaser. Purchaser of tax deed was required only to send notice via certified mail, not request a return green or follow up on service, to provide notice of redemption period and then to provide notice that redemption period has expired.  Such service was deemed constitutionally sufficient to provide notice.

Trial court may order installment payments of judgment in excess of 7 year term

In action to suspend driver’s licenses of two judgment defendants, trial court did not err in amending judgment to installment payments and reinstating driving privileges of said defendants under Ind. Code § 9-25-6-6. Trial court also had discretion to make the installment longer than 7 years even though statute permits suspension of driving privileges only within 7 years of failure to satisfy judgment. Statute was clear and unambiguous and did not set time limit on installment payments.

See McGee v. McGee, 998 N.E.2d 270, 271 (Ind. Ct. App. 2013) (“[I]t is as important to recognize what a statute does not say as it is to recognize what it does say.”). If we were to interpret the statute in the manner in which NIPSCO suggests, we would be adding a requirement to the statute that is not there. We cannot and will not do that. See id. at 272.


Indiana Department of Education removed TOPS from its list of approved SES providers. TOPS appealed the determination and the DOE sent a letter affirming the decision. The letter did not contain any factual findings regarding its decision, nor did it reference any other document that would contain such findings. TOPS then filed for judicial review and the DOE moved to dismiss, stating that the letter was a final order and thus TOPS was obligated to submit the entire agency file to the trial court for review. The trial court granted the motion and TOPS appealed.

While the CoA admonished TOPS for not attaching the entire file for judicial review, it was not fatal to TOPS’s case. In fact, TOPS’s oversight was minimal compared to the DOE’s. In a strange bout of “let’s hope no one notices,” the DOE attempted to argue on appeal that the order was not final but rather “purported” order, even though the basis for dismissal at the trial level was that the order was final, thereby necessitating TOPS to attach the entire record. The CoA caught the inconsistency and ruled that DOE did not argue this to the trial court and therefore could not raise the argument for the first time on appeal. The DOE had advanced the argument because a final order is indeed required to contain findings of fact.

Under AOPA, a final order by an administrative agency must present written findings of fact, including ‘findings of ultimate fact . . . accompanied by a concise statement of the underlying basic facts of record to support the findings’ as well as ‘conclusions of law for all aspects of the order.’ Pack v. Indiana Family & Soc. Servs. Admin., 935 N.E.2d 1218, 1222 (Ind. Ct. App. 2010) (quoting Ind. Code § 4-21.5-3- 27(b) & (c)).

Thus, the cause was remanded to the administrative level where the DOE will be given the opportunity to support its decision with findings of fact and conclusions of law.

IN CoA revisits and revises waiver of subrogation in AIA contracts

Not three months after the decision in Allen County Pub. Library v. Shambaugh & Son, L.P., 997 N.E.2d 48 (Ind. Ct. App. 2013) (published on Oct. 22, 2013 and authored by J. Barnes with Pyle and Crone concurring; reaffirmed on rehearing on 1-28-14), a different panel of the IN CoA revisits the waiver of subrogation clause in standard AIA contracts and comes to a far different conclusion.

To provide some background, since AIA contracts are rather standard nationwide, there has developed a majority and minority view on how to interpret the relevant provisions therein, including waiver of subrogation clauses. Indiana has long subscribed to the minority view. In Allen County Pub. Library, this view was reaffirmed and in the rehearing opinion, Judge Barnes opined that even if the majority view had applied, the result would have been the same. See Allen County Pub. Library v. Shambaugh & Son, L.P., 2014 Ind. App. LEXIS 26 (Ind. Ct. App. Jan. 28, 2014).

The contract language at issue in both cases is as follows:

Waivers of Subrogation. The Owner and Contractor waive all rights against each other and against the Construction Manager, Architect, Owner’s other Contractors and own forces described in Article 6, if any, and the subcontractors, sub-subcontractors, consultants, agents and employees of any of them, for damages caused by fire or other perils to the extent covered by property insurance obtained pursuant to this Paragraph 11.3 or other property insurance applicable to the Work, except such rights as the Owner and Contractor may have to the proceeds of such insurance held by the Owner as fiduciary . . . . (Sec. 11.3.7)

With respect to waiving subrogation, Indiana has used the “work v. non-work” approach. That is, this section “is limited to the work performed under the contract and, therefore, if a contractor causes damage to property other than the Work to be performed under the contract, the property owner (or its insurer through subrogation) may seek recovery from the contractor for that damage, regardless of whether the damage was covered by insurance.” Midwestern Indem. Co. v. Sys. Builders, Inc., 801 N.E.2d 661, 672-673 (Ind. Ct. App. 2004).

The majority view  as viewed by the Allen County Pub. Library decision considers “whether the insurance policy was broad enough to cover damages to work and non-work property and whether the policy paid for the damages. If the answer to both questions is yes, the waiver applies.” Allen County Pub. Library, 2014 Ind. App. LEXIS 26, 7 (Ind. Ct. App. Jan. 28, 2014) (citing Federal Ins. Co. v. Woodruff Const., 826 N.W.2d 516, 2012 WL 5954588, *2 (Iowa Ct. App. 2012)).

To put it in more simple terms, the minority view is that damage to property outside of the scope of “the work” is not subject to the standard AIA waiver of subrogation, regardless of whether the owner obtained insurance for all damage. The majority view is that if you have insurance on non-work items and that insurance pays, then the waiver applies to the extent insurance pays for it.

In Allen County Pub. Library, Judge Barnes noted in the rehearing opinion that the owner procured a “builder’s risk plus” policy which only provided for $5,000 in cleanup costs. The library did not therefore waive any claims for damages above and beyond what it received from insurance since the cases in the majority view allowed for recovery above what insurance provided. Thus, even applying the majority view, the AIA contract did not avail the contractor of the subrogation waiver protections.

By contrast, today’s opinion in Board of Commissioner of County of Jefferson v. Teton Corp., et al. rejects the minority view of  the AIA subrogation waiver provision as well as Judge Barnes’s interpretation of the majority view.

In this case, the owner opted to use its own existing liability policy instead of procuring a builder’s risk policy under the contract. Under those same terms, the owner was obligated to inform the contractor of its decision in writing, which the owner did not do. During the related renovations to the Jefferson County courthouse, a fire broke out and caused over $6,000,000 in damages, some of which was covered by the liability insurance and some of which fell to Jefferson County.

In adopting with the majority view, the Court focused on two sections of the AIA contract.

Section provides that “[i]f the Contractor is damaged by the failure or neglect of the Owner to purchase or maintain insurance as described above, without so notifying the Contractor, then the Owner shall bear all reasonable costs properly attributable thereto.”

Section 11.3.7 further provides that “[a] waiver of subrogation shall be effective as to a person or entity even though that person or entity would otherwise have a duty of indemnification, contractual or otherwise, did not pay the insurance premium directly or indirectly, and whether or not the person or entity had an insurable interest in the property damaged.

The Court read these provisions and the majority view to limit subrogation rights altogether, placing the entire onus on the Owner to obtain adequate insurance:

Section 11.3.1 of the AIA contract therefore requires owners to insure their interests in the construction project at least to the value of the underlying contract. The AIA contract expressly requires property owners to separately insure these interests and, in order to facilitate the completion of the project without delaying and debilitating litigation, to obtain an “all-risk” insurance policy that waives the carrier’s rights to be subrogated to any loss arising within the extremely broad coverage described in the contract. If the owner does not secure such insurance, then it still waives its subrogation rights for any loss described within the AIA contract that it sustains.

In so holding, the Court rejected the notion there could be any recovery above and beyond the insurance coverage secured by Jefferson County. The Court even noted that the recovery in Allen County Pub. Library should have been barred as the owner opted to insure its risk at  $5,000.

What does it mean? Two decisions reaching two very different conclusions as to what the “majority view” even means. Judge Barnes reaches the conclusion that losses beyond what was insured would still be recoverable under the majority view whereas today’s decision reads the AIA contract to put all of the risk, and the onus of obtaining adequate insurance, on the owner. Additionally, the Court’s opinion comes close to converting the waiver of subrogation section into a hold harmless agreement where the owner is left without any recourse to recover for property damage resulting from a contractor’s negligence. Obviously, there are several nuances to this issue. I would highly recommend reading the entire opinion as well as Judge Barnes’s concurring opinion referenced herein.

Stoffel v. JP Morgan Chase Bank NA, et al. (1-30-14)

IN CoA (Najam; Mathias and Brown concur). Foreclosure actions, evidence of costs

Where sheriff’s sale actually netted an amount in surplus of the agreed judgment of foreclosure, former homeowner’s motion to compel payment of surplus was treated as a Rule 13(M) motion for satisfaction of judgment or 60(B)(7) motion to vacate judgment based on satisfaction. As such, bank could not present inadmissible hearsay in affidavits and letters as evidence of costs. “Only the judgment creditor has the records that would prove or disprove the allegation that there is a surplus. When challenged, the judgment creditor must present admissible evidence to show the costs included in the winning bid.” The former homeowner was thus entitled to small surplus.

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