Bush v. State Farm Mut. Auto. Ins. Co.

905 N.E.2d 1003

Maggie BUSH and Leonard Bush, Appellants (Plaintiffs below), v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee (Defendant below).

No. 71S03-0810-CV-558.

Supreme Court of Indiana.

May 13, 2009.

Edmond W. Foley, South Bend, IN, Attorney for Appellants.

Michael P. Blaize, Crown Point, IN, Karl L. Mulvaney, Nana Quay-Smith, Indianapolis, IN, Attorneys for Appellee.

John C. Trimble, Richard K. Shoultz, Indianapolis, IN, Attorneys for Amici Curiae Insurance Institute of Indiana, Inc. and National Association of Mutual Insurance Companies.

On Petition to Transfer from the Indiana Court of Appeals, No. 71A03-0706-CV-286

BOEHM, Justice.

We hold that an uninsured motorist policy restricting coverage to bodily injury or death sustained by an insured does not violate Indiana's uninsured motorist statute.

Facts and Procedural History

On March 10, 2004, fifty-six-year-old Leonard Bush, Jr. ("Leonard") was killed as a passenger in a single-vehicle accident. The accident was caused by the negligence of the driver, who was uninsured. Leonard also had no insurance covering the accident or the vehicle.

Leonard's parents, Leonard Bush, Sr. and Maggie Bush ("the Bushes"), were not involved in the accident. The Bushes were insured under an automobile policy issued by State Farm Mutual Automobile Insurance Company that provided uninsured motorist coverage. The policy provided:

We will pay damages for bodily injury and property damage an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle. The bodily injury must be sustained by an insured. The bodily injury or property damage must be caused by accident arising out of the operation, maintenance or use of an uninsured motor vehicle.

State Farm defined "insured" for purposes of its uninsured motorist coverage to include the Bushes and their "relatives," defined as persons related by blood, marriage, or adoption who "reside primarily" with them. Leonard did not reside with his parents at the time of the accident and therefore was not an "insured" under the Bushes' policy.

The Bushes sued State Farm, claiming that they sustained damages arising out of the conduct of an uninsured motorist, and State Farm's failure to provide uninsured motorist benefits was a breach of the insurance contract. The complaint did not set out whether the claim was asserted under the Adult Wrongful Death Statute, Ind.Code § 34-23-1-2 (2004), or under some other theory.¹ State Farm counterclaimed, seeking a declaratory judgment that its policy provided no coverage for Leonard's death because no "insured" sustained "bodily injury."

Both parties moved for summary judgment on the issue of the Bushes' right to recover under the State Farm policy. The Bushes argued that State Farm's requirement that an insured sustain bodily injury violated Indiana's uninsured motorist statute, Indiana Code section 27-7-5-2. State Farm responded that its requirement was a permissible limitation of coverage that had implicitly been approved by Indiana courts. The trial court granted summary judgment to State Farm, concluding that Leonard was not covered by the policy because he did not meet the policy's definition of "relative," and therefore was not an "insured." The trial court did not address the Bushes' contention that State Farm's policy, as construed by State Farm, violated the uninsured motorist statute.

The Court of Appeals reversed, holding that State Farm's exclusion of coverage for Leonard violated Indiana's uninsured motorist statute. Bush v. State Farm Mut. Auto. Ins. Co., 882 N.E.2d 821, 822 (Ind. Ct.App.2008), reh'g denied. The Court of Appeals reasoned that the Bushes were insureds who were legally entitled to recover damages for their son's death. Id. at 825. Judge Barnes dissented, concluding that Armstrong v. Federated Mutual Insurance Co., 785 N.E.2d 284 (Ind.Ct. App.2003), trans. denied., controlled this case and approved State Farm's limitation of coverage to bodily injury sustained by an insured. Bush, 882 N.E.2d at 825-26. We granted transfer.

Standard of Review

We review an appeal from a summary judgment order de novo. Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528, 531 (Ind.2006). Summary judgment is appropriate when the evidence shows no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C).

Uninsured Motorist Coverage

Indiana courts have long held that a provision in an automobile liability policy is unenforceable if it is inconsistent with Indiana's uninsured motorist statute. State Farm Mut. Auto. Ins. Co. v. Jakupko, 881 N.E.2d 654, 661 (Ind.2008) (quoting Patton v. Safeco Ins. Co. of Am., 148 Ind. App. 548, 555, 267 N.E.2d 859, 862 (1971)). The issue before us, one of first impression in Indiana, is whether State Farm's uninsured motorist policy, by requiring that bodily injury² be sustained by an insured, violates Indiana's uninsured motorist statute and is therefore unenforceable.

Indiana Code section 27-7-5-2 requires an automobile liability policy subject to the Indiana statute to make coverage available

in limits for bodily injury or death ... not less than those set forth in IC 9-25-4-5 ... for the protection of persons insured under the policy who are legally entitled to recover damages from owners or operators of uninsured or underinsured motor vehicles because of bodily injury, sickness or disease, including death....

The statute itself makes clear that it contemplates uninsured motorist coverage only for the "insured's" bodily injury. Section 27-7-5-5(c) defines the "maximum amount payable for bodily injury under uninsured or underinsured motorist coverage" by reference to "the insured's bodily injury." State Farm's policy is therefore consistent with the uninsured motorist statute by requiring that the insured sustain bodily injury to trigger uninsured motorist coverage.

The Bushes argue that State Farm's definition of "bodily injury" is ambiguous and could be construed as including emotional distress sustained by persons who do not sustain bodily injury. If this were a viable claim, the Bushes could assert it in their individual capacities. But this contention is foreclosed by Jakupko, which interpreted the same definition of bodily injury to include emotional distress only if it arises from a bodily touching. 881 N.E.2d at 658.

Earlier cases from the Court of Appeals also support the validity of State Farm's requirement that the bodily injury be sustained by an insured. For example, in Ivey v. Massachusetts Bay Insurance Co., a husband brought an action to recover damages for the wrongful death of his wife, from whom he was separated. 569 N.E.2d 692, 693 (Ind.Ct.App.1991). The husband did not argue that the wife was an insured under the policy, but instead argued that Indiana's uninsured motorist statute required coverage for her death. Id. at 694. The Court of Appeals disposed of the case by concluding that the husband

failed to preserve a wrongful death claim, because no personal representative has been appointed within two years. Hence, the underlying right of action is no longer available, and [the husband] is no longer legally entitled to recover damages from the uninsured motorist. Therefore, [the husband] does not meet the insurance statute or policy requirement that he be legally entitled to recover from the uninsured motorist.

Id. at 694-95 (footnote omitted). The Court of Appeals also noted that the husband had not sustained any bodily injury. Id. at 695. Other jurisdictions have cited Ivey for the proposition that Indiana's uninsured motorist statute requires that the insured have sustained bodily injury. E.g., Butterfield v. Norfolk & Dedham Mut. Fire Ins. Co., 860 A.2d 861, 863 n. 2 (Me.2004). Although Ivey answered this question only in dicta, that language has been in place for over fifteen years.

Similarly, in Armstrong v. Federated Mutual Insurance Co., the Court of Appeals held that parents could not recover under their underinsured motorist policy for the death of their nineteen-year-old daughter. 785 N.E.2d 284, 293 (Ind.Ct. App.2003), trans. denied. The parents argued that their loss of love and companionship was a "bodily injury" compensable under the policy. The Court of Appeals noted that "even if it were considered a bodily injury, the [parents] could not thereby recover under Federated's policy because they suffered no physical impact." Id. Although Armstrong did not consider whether Federated's policy violated Indiana's uninsured motorist statute, Armstrong has been the law for over five years with no legislative response.

The Bushes point to the language in subsection 27-7-5-2(a) preceding subsections (a)(1) and (2). Section 2(a) provides

The insurer shall make available, in each automobile liability or motor vehicle liability policy ... insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person ... arising from the ownership, maintenance, or use of a motor vehicle, or in a supplement to such a policy, the following types of coverage [described in subsections (a)(1) and (2)]....

The Bushes point out that this language refers to bodily injury suffered by "any person," which includes Leonard's death. This language describes those automobile liability policies that are required to make available uninsured motorist coverage. It provides that if the Bushes are insured against liability for their injuring "any person," uninsured motorist coverage must be offered. But the "any person" language does not relate to or describe in any way the scope of the uninsured motorist coverage.

Our holding is also consistent with the public policy underlying the uninsured motorist statute. The Bushes cite United National Insurance Co. v. DePrizio, in which we explained that

"[u]ninsured motorists coverage" is designed to close the gaps inherent in motor vehicle...