Opinion
20A-CC-2020
04-20-2021
Lowell Lakin a/k/a L&P Body Shop, Appellant-Plaintiff, v. Auto-Owners Insurance Company and Property-Owners Insurance Company, Appellees-Defendants
Attorney for Appellant Kevin W. Marshall Attorneys for Appellees David L. Taylor Misti Presnell DeVore Jerry M. Padgett Taylor DeVore & Padgett, P.C.
Pursuant to Ind. Appellate Rule 65(D), this Memorandum Decision shall not be regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case.
Appeal from the Jasper Circuit Court Trial Court Cause No. 37C01-1504-CC-000258 The Honorable Daniel J. Molter, Special Judge.
Attorney for Appellant
Kevin W. Marshall
Attorneys for Appellees
David L. Taylor
Misti Presnell DeVore
Jerry M. Padgett
Taylor DeVore & Padgett, P.C.
MEMORANDUM DECISION
MAY, JUDGE.
[¶1] Lowell Lakin a/k/a L&P Body Shop appeals following the trial court's denial of his motion to correct error after the trial court granted judgment on the evidence to Auto-Owners Insurance Company and Property-Owners Insurance Company (collectively, "Insurers"). We affirm.
Facts and Procedural History
[¶2] In 1990, Lowell Lakin, the owner of L&P Body Shop, switched the body shop's property insurance policy from Ohio Casualty Company to Auto-Owners because Auto-Owners required a lower premium. Lakin's Auto-Owners insurance policy provided for actual cash value coverage, and Lakin annually renewed the body shop's insurance policy. In 2012, Lakin again switched the body shop's property insurance policy from Auto-Owners to Property-Owners because Property-Owners charged a lower premium. The Property-Owners policy covering the period from October 2013 to October 2014 explained, in part:
Actual cash value coverage is distinct from replacement cost coverage:
Insurance policies afford either replacement cost coverage or actual cash value coverage when an insured has incurred a property damage loss. Actual cash value is the value of the property in its depreciated condition. If the policy affords replacement cost coverage, the insured will, typically, be entitled to a payment representing the actual cash value of the loss and, if and when the insured replaces/repairs the property, an additional payment representing the cost of the replacement/repair to the extent that such cost exceeded the actual cash value payment.Replacement cost versus actual cash value, 3 Insurance Claims and Disputes § 11:35 (6th ed.) (internal footnotes omitted).
4. Loss Payment a. In the event of loss or damage covered by this Coverage Form, at our option, we will either:
(1) Pay the value of loss or damaged property;
(2) Pay the cost of repairing or replacing the lost or damaged property;
(3) Take all or any part of the property at an agreed or appraised value; or
(4) Repair, rebuild or replace the property with other property of like kind and quality.
b. We will give notice of our intentions within 30 days after we receive the sworn proof of loss.
c. We will not pay you more than your financial interest in the Covered Property.(Appellee's App. Vol. VIII at 133 (emphases in original).) The policy also listed replacement cost coverage as an available optional coverage, and it provided that optional coverages applied "[i]f shown in the Declarations[.]" (Id. at 137.) The declarations attached to front of Lakin's policy did not list replacement cost coverage as an applicable, additional optional coverage. An amendatory endorsement attached to the policy stated:
E. LOSS CONDITIONS is amended as follows. Under 4. Loss Payment, paragraph a. is deleted and replaced by the following only as it applies to Covered Property that is a building.
a. In the event that you:
(1) Repair or replace damaged Covered Property that is a building covered by this Coverage Form, we will pay the lessor of:
(a) The cost to repair or replace the damaged Covered Property with new property of similar quality and features decreased by the amount of depreciation applicable to the damaged Covered Property immediately prior to the loss; or
(b) The amount actually spent for necessary repairs of the damaged Covered Property less depreciation
not to exceed the Limit of Insurance applicable to the damaged Covered Property. You must notify us of your plans to repair or replace Covered Property that is a building within 180 days of the date of loss.
We will not pay:
(a) Until the lost or damaged property is actually repaired or replaced; and
(b) Unless the repairs or replacement are made as soon as reasonably possible after you notify us of your plans to repair or replace Covered Property that is a building.
(2) Do not repair or replace damaged Covered Property covered by this Coverage Form, we will, at our option:
(a) Pay the lesser of:
1) The cost to repair or replace the damaged Covered Property with new property of similar quality and features decreased by the amount of depreciation applicable to the damaged Covered Property immediately prior to the loss; or
2) The market value of the damaged Covered Property; or
(b) Take all or part of the damaged Covered Property at an agreed or appraised value not to exceed the Limit of Insurance applicable to the damaged Covered Property.
(3) In the event we pay for damaged Covered Property that is a building covered by this Coverage Form in accordance with Paragraph a. (2) immediately above, you may still make a claim under Paragraph a. (1) immediately above, if you notify us of your intent to do so within 180 days after the loss or damage.
Depreciation means a decrease in value because of age, wear or obsolescence.
All other policy terms and conditions apply.(Id. at 166) (emphases in original).
[¶3] On November 17, 2013, a tornado struck Rensselaer and caused extensive damage to several homes and businesses, including L&P Body Shop. The tornado leveled the body shop's storage building. It removed most of the body shop's roof, knocked down the shop's back wall, and damaged the garage's brick façade. The tornado also blew away equipment and personal property. Lakin examined the damage after the tornado and contacted his insurance agent, Alma Messman of M/W Insurance Agency.
[¶4] On December 18, 2013, Property-Owners paid Lakin $25,000.00. Property-Owners issued additional advance payments of $42,250.00 on February 25, 2014; $48,750.00 on April 2, 2014; $14,130.36 on May 1, 2014; and $4,732.60 on September 25, 2014. The memo line on each check noted that the payments were toward the actual cash value of the damaged property and compensation for debris removal. These payments totaled $134,862.96. $119,318.00 of that amount went toward compensation for the damaged buildings and $15,544.96 was meant to reimburse Lakin for the contents and personal property inside the body shop.
[¶5] Even though the insurance proceeds were not enough to allow Lakin to rebuild L&P Body Shop, he chose to rebuild the body shop and obtained loans to cover the shortfall. Lakin initiated suit against Auto-Owners Insurance Company on April 1, 2015, and he filed an amended complaint on July 16, 2019, adding Property-Owners Insurance Company as a defendant. Lakin alleged that the policy for L&P Body Shop at the time of loss provided replacement cost coverage, rather than actual cash value coverage, and the insurance companies failed to honor the contract.
Messman testified that Auto-Owners and Property-Owners were separate companies. However, the logo for Auto-Owners appeared on the checks issued to Lakin and the policy number did not change between Auto-Owners and Property-Owners. Therefore, for clarity, we refer to Auto-Owners and Property-Owners collectively as the "Insurers."
[¶6] The trial court held a jury trial on September 9 and 10, 2020. Both Messman and Lakin testified at trial. Messman explained that the property insurance policies Lakin carried for L&P Body Shop from 1990 through 2013 provided actual cash value coverage as opposed to replacement cost coverage. Messman explained that replacement cost coverage required the insured to pay a higher premium, and Lakin never asked her to change his coverage from actual cash value coverage to replacement cost coverage. Lakin, however, testified that he met with Messman in 1997 and modified the insurance policy to provide replacement cost coverage. He also explained that it was error for the declaration pages attached to each policy from 1998 through 2013 not to list replacement coverage as an applicable optional coverage.
[¶7] At the conclusion of Lakin's case-in-chief, Insurers moved for judgment on the evidence, and the trial court granted Insurers' motion. Lakin filed a motion to correct error on September 25, 2020, arguing, in part, that the evidence presented at trial demonstrated Lakin had replacement cost coverage. The trial court summarily denied Lakin's motion to correct error on October 6, 2020.
Discussion and Decision
[¶8] Lakin appeals following denial of the motion to correct error he filed after the trial court granted Insurers' motion for judgment on the evidence. We generally review a trial court's ruling on a motion to correct error for an abuse of discretion. Ind. Bureau of Motor Vehicles v. Watson, 70 N.E.3d 380, 384 (Ind.Ct.App. 2017). An abuse of discretion occurs if the trial court misinterpreted the law or if the court's ruling is against the facts and circumstances before it. Id. However, our review of the trial court's ruling on Lakin's motion to correct error necessarily involves review of the underlying order. See In re Paternity of H.H., 879 N.E.2d 1175, 1177 (Ind.Ct.App. 2008) (review of motion to correct error includes review of underlying order).
[¶9] Indiana Trial Rule 50(A) states:
Where all or some of the issues in a case tried before a jury or an advisory jury are not supported by sufficient evidence or a verdict thereon is clearly erroneous as contrary to the evidence because the evidence is insufficient to support it, the court shall withdraw such issues from the jury and enter judgment thereon or shall enter judgment thereon notwithstanding a verdict.
"The purpose of a party's motion for judgment on the evidence under Rule 50(A) is to test the sufficiency of the evidence presented by the non-movant. Purcell v. Old Nat. Bank, 972 N.E.2d 835, 839 (Ind. 2012). We apply the same standard as the trial court and evaluate the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in the non-movant's favor. Id. Judgment on the evidence is appropriate "where there is no substantial evidence supporting an essential issue in the case." Cavens v. Zaberdac, 849 N.E.2d 526, 529 (Ind. 2006). Consequently, "judgment on the evidence is proper if the inference intended to be proven by the evidence cannot logically be drawn from the evidence without undue speculation. But if there is evidence that would allow reasonable people to differ as to the result, then judgment on the evidence is improper." Drendall Law Office, P.C. v. Mundia, 136 N.E.3d 293, 304 (Ind.Ct.App. 2019), trans. denied.
[¶10] Lakin's claim at trial was that in 1997 he modified L&P Body Shop's insurance policy to provide replacement cost coverage rather than actual cost coverage, and therefore, Insurers breached the contract by underpaying. Insurers argue that the insurance policy did not provide replacement cost coverage, and therefore, Lakin was not entitled to any additional compensation beyond the actual cash value of the property at the time of loss. "Insurance policies are governed by the same rules of construction as other contracts. As with other contracts, the interpretation of an insurance policy is a question of law." Briles v. Wausau Ins. Co., 858 N.E.2d 208, 213 (Ind.Ct.App. 2006) (internal citation omitted). Thus, we employ a de novo standard of review. Barker v. Price, 48 N.E.3d 367, 370 (Ind.Ct.App. 2015).
[¶11] "We review the contract as a whole, attempting to ascertain the parties' intent and making every attempt to construe the contract's language 'so as not to render any words, phrases, or terms ineffective or meaningless.'" Id. (quoting Four Seasons Mfg., Inc. v. 1001 Coliseum, LLC, 870 N.E.2d 494, 501 (Ind.Ct.App. 2007)). Generally, we will apply the terms of a contract as written and do not rely on parol or extrinsic evidence. Id. at 370-71. The exception to this rule is if extrinsic evidence is necessary to interpret an ambiguous term. Panther Brands, LLC v. Indy Racing League, LLC, 126 N.E.3d 898, 905 (Ind.Ct.App. 2019), reh'g denied, trans. denied. To succeed on a breach of contract claim, the plaintiff must prove "the existence of a contract, the defendant's breach thereof, and damages." Berkel & Co. Contractors, Inc. v. Palm & Assocs., Inc., 814 N.E.2d 649, 655 (Ind.Ct.App. 2004).
[¶12] On cross-examination, the insurers questioned Lakin about the insurance payments he received:
[Defense Counsel:] Okay. 'Cause what happened here is before you repaired the property, Auto-Owners went ahead and paid you money for your buildings on an actual cash value basis, right?
[Lakin:] Well, I don't-I don't believe it was an actual cash value basis.
Q. Oh, well, I don't want you to ar-I don't want to argue with you about that. I'll just use different language. Before you started to re-build, Auto-Owners paid you $119,000.00 for the building?
A. I would assume that's right, yes.
Q. Those are the payments we went through earlier?
A. Yeah.
* * * * *
Q. And my client paid you the market value of the property at the time of the loss? That's what they said they did? Right?
A. I don't remember hearing that before, but-
Q. Okay. Well, they hired a real estate appraiser company out of LaPorte to come down and do an appraisal-
A. Yeah.
Q. -and-and then they sent you those checks for $42,000 and $48,000 and they said here's how we got there, and sent Mr. Haley's letters too, but it's also in the checks. Basically, we exercised (2) [of the loss conditions amendatory endorsement], the market value to pay you about $119,000.00?
A. Yes.
Q. And we had the right to do that under the terms and conditions of this contract, right? Right?
A. Yes.(Tr. Vol. II at 200, 202.) Thus, the Insurers paid Lakin the actual cash value of L&P Body Shop at the time of loss, and Lakin acknowledges that he received the actual cash value for the buildings destroyed by the November 2013 tornado.
[¶13] The policy explained that in the event of loss, Insurers possessed the option to pay the market value of the damaged property. (See Appellee's App. Vol. VIII at 166 ("we will, at our option: (a) Pay the lesser of . . . 2) The market value of the damaged Covered Property").) Additional coverages were available, and if an insured sought additional, optional coverage, that coverage was listed in the policy declarations. For instance, L&P Body Shop's declaration listed "Inflation Guard Factor" as an optional coverage. (Appellee's App. Vol. VIII at 123-5.) However, L&P Body Shop's policy declaration did not list replacement cost coverage as an applicable optional coverage.
[¶14] Messman testified that Lakin was primarily concerned with keeping his premiums low, and she explained that replacement cost coverage required the insured to pay higher premiums. While Lakin testified that he asked Messman to update the insurance policy to provide replacement cost coverage in 1997, Lakin acknowledged that none of the polices issued from 1997 until the date of loss listed replacement cost coverage as an optional coverage. He explained, "I guess it's my fault, but I don't read 'em, I trust my agent to do what I instruct them to do." (Tr. Vol. II at 174.)
[¶15] Lakin is bound by the terms of the 2013-14 insurance policy covering the body shop, and his failure to read the policy is not an excuse. See NationsCredit Commercial Corp. v. Grauel Enters., Inc., 703 N.E.2d 1072, 1079 (Ind.Ct.App. 1998) ("Moreover, one is bound to know the contents of the contract which he signs."), reh'g denied, trans. denied. Thus, Insurers fully performed on the contract because Lakin was entitled to only actual cash value compensation under the plain language of the policy. Lakin failed to put forth substantial evidence to demonstrate Insurers breached the contract, and therefore, Insurers were entitled to judgment on the evidence. See Gerdon Auto Sales, Inc. v. John Jones Chrysler Dodge Jeep Ram, 98 N.E.3d 73, 82 (Ind.Ct.App. 2018) (holding buyer did not breach contract), trans. denied.
Similarly, any claim by Lakin that the insurers acted in bad faith fails. An insurer fails to discharge its contractual duties in good faith by: "(1) making an unfounded refusal to pay policy proceeds; (2) causing an unfounded delay in making payment; (3) deceiving the insured; [or] (4) exercising any unfair advantage to pressure an insured into a settlement of his claim." Allstate Ins. Co. v. Fields, 885 N.E.2d 728, 732 (Ind.Ct.App. 2008), reh'g denied, trans. denied. The insurers did not act in bad faith because they promptly and fully performed their obligations under the contract. See Masonic Temple Ass'n of Crawfordsville v. Ind. Farmers Mut. Ins. Co., 779 N.E.2d 21, 30 (Ind.Ct.App. 2002) (holding insurer did not breach duty of good faith when it had rational basis for denying claim pursuant to the insurance policy's terms), reh'g denied, trans. denied.
Conclusion
[¶16] Under the plain language of the policy in effect at the time of loss, Lakin was entitled to only actual cash value compensation, and Insurers fulfilled this obligation by paying Lakin actual cash value. Therefore, Insurers were entitled to judgment on the evidence because Lakin failed to put forth substantial evidence that the policy in effect at the time of loss provided for replacement cost coverage. Accordingly, we affirm the trial court.
[¶17] Affirmed.
Kirsch, J., and Bradford, C.J., concur.