RILEY, Judge.
Appellant-Third-Party Defendant and Counter/Cross-Claimant, The Bar Plan Mutual Insurance Company (Bar Plan), appeals the trial court's summary judgment in favor of Appellees-Third-Party Plaintiffs and Counter/Cross-Defendants, Likes Law Office, LLC; Kevin L. Likes, Esq. (Likes) and Rickey D. and Cheryl L. Whitaker (Whitaker), concluding that Likes made no material misrepresentation in his application for an insurance policy issued by the Bar Plan and was therefore entitled to coverage under the Bar Plan's policy.
We reverse.
The Bar Plan raises three issues on appeal, two of which we find dispositive and which we restate as follows:
On December 19, 2008, Whitaker filed suit against Travis Becker (Becker), seeking to recover damages for personal injuries. Whitaker alleged that on December 21, 2006, Becker was driving negligently, and rear-ended his vehicle as a result. On January 19, 2009, Becker's counsel sent Likes, Whitaker's counsel, a set of interrogatories and a request for production of documents and informed Likes that, pursuant to Indiana Trial Rule 33, a response was required by February 23, 2009. Likes neither responded nor requested an extension of time.
On three separate occasions, April 14, April 29, and May 12, 2009, Becker's counsel wrote to Likes, reminding him that his client's responses were overdue. The third letter implicitly warned Likes that Becker would involve the trial court if no response was received. Likes did not respond to any of these three letters.
On May 27, 2009, Becker filed a motion to compel discovery. The trial court granted the motion on June 1, 2009, ordering Likes to respond to Becker's discovery requests by June 16, 2009. On June 15, 2009, the day before the trial court's deadline, Likes finally served his client's sworn responses. On November 30, 2009, Becker filed a request for sanctions, claiming that dismissal of the cause was in order as Likes had provided false and misleading answers to the interrogatories and deliberately concealed certain evidence. Likes did not respond. After a hearing, the trial court granted Becker's motion, finding that Likes had supplied deceptive interrogatory answers and had done so in bad faith. Whitaker appealed. On March 29, 2011, we reversed the trial court and Becker pursued transfer to the supreme court on April 28, 2011. Likes responded to Becker's petition for transfer on May 17, 2011. On January 18, 2012, the Indiana Supreme Court reversed the court of appeals and affirmed the trial court's decision.
Likes was insured under several Lawyers' Professional Liability Insurance policies issued by the Bar Plan. The first policy entered into effect on December 1, 2009, and was renewed on a yearly basis. The policy at issue is a claims made policy, Policy No. 0010002-2011, effective from December 1, 2011, through December 1, 2012 (the Policy). The renewal application for this Policy was signed by Likes on November 14, 2011.
In its Exclusions section, the Policy provided, in pertinent part,
(Appellant's App. pp. 442-43).
On November 2, 2012, Whitaker filed a Complaint for damages for legal malpractice against Likes based on the dismissal of his negligence cause against Becker. On December 7, 2012, Likes notified the Bar Plan of Whitaker's Complaint. Thereafter, on December 19, 2012, the Bar Plan declined coverage and indemnification, stating, in pertinent part:
(Appellant's App. p. 425) (emphasis in original).
On March 4, 2013, Likes filed an Answer to Whitaker's Complaint, as well as a Third-Party Complaint, adding the Bar Plan as a Third-Party defendant. On May 9, 2013, the Bar Plan filed an Answer, Counter-Claim, and Cross-Claim. On May 9 and July 8, 2013, Whitaker responded to the Counter and Cross Claim.
On July 22, 2014, the Bar Plan filed its motion for summary judgment to which Likes filed an opposition, as well as his own cross-motion for summary judgment on October 22, 2014. On November 18, 2014, the Bar Plan responded to Likes' cross-motion for summary judgment and, on the same day, moved to strike inadmissible testimony of Likes' expert witness. Likes opposed the Bar Plan's motion to strike on December 31, 2014.
On January 7, 2015, the trial court heard arguments on the parties' respective motions for summary judgment and the Bar Plan's motion to strike. On February 2, 2015, the trial court issued its summary judgment in favor of Likes and denied the Bar Plan's summary judgment motion, and in the same order, granted in part and denied in part the Bar Plan's motion to strike.
The Bar Plan now appeals. Additional facts will be provided as necessary.
Summary judgment is appropriate only when there are no genuine issues of material fact and the moving party is entitled to a judgment as a matter of law. Ind. Trial Rule 56(C). "A fact is material if its resolution would affect the outcome of the case, and an issue is genuine if a trier of fact is required to resolve the parties' differing accounts of the truth..., or if the undisputed facts support conflicting reasonable inferences." Williams v. Tharp, 914 N.E.2d 756, 761 (Ind.2009).
In reviewing a trial court's ruling on summary judgment, this court stands in the shoes of the trial court, applying the same standards in deciding whether to affirm or reverse summary judgment. First Farmers Bank & Trust Co. v. Whorley, 891 N.E.2d 604, 607 (Ind.
We observe that, in the present case, the trial court entered findings of fact and conclusions of law in support of its Judgment. Special findings are not required in summary judgment proceedings and are not binding on appeal. Id. However, such findings offer this court valuable insight into the trial court's rationale for its decision and facilitate appellate review. Id.
The Bar Plan contends that Likes is not entitled to coverage under the Policy because Likes failed to properly notify the insurance carrier of his potential liability. Specifically, the Bar Plan argues that at the time Likes signed his renewal application of the Policy, he had knowledge or should reasonably have known that the trial court's dismissal of the underlying cause could give rise to Whitaker's legal malpractice claim.
An insurance policy is a contract, and as such is subject to the same rules of construction as other contracts. Dunn v. Meridian Mut. Ins. Co., 836 N.E.2d 249, 252 (Ind.2005). Interpretation and construction of contract provisions are questions of law. John M. Abbott, LLC v. Lake City Bank, 14 N.E.3d 53, 56 (Ind.Ct.App.2014). As such, cases involving contract interpretation are particularly appropriate for summary judgment. Id. 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." Fischer v. Heymann, 943 N.E.2d 896, 900 (Ind.Ct.App. 2011), trans. denied.
Where the terms of a contract are clear and unambiguous, we will apply the plain and ordinary meaning of the terms and enforce the contract according to its terms. Id. If necessary, the text of a disputed provision may be understood by referring to other provisions within the four corners of the document. Claire's Boutiques, Inc. v. Brownsburg Station Partners, LLC, 997 N.E.2d 1093, 1098 (Ind.Ct.App.2013). The four corners rule states that where the language of a contract is unambiguous, the parties' intent is to be determined by reviewing the language contained within the "four corners" of the contract, and "parol or extrinsic evidence is inadmissible to expand, vary, or explain the instrument unless there has been a showing of fraud, mistake, ambiguity, illegality, duress or undue influence." Adams v. Reinaker, 808 N.E.2d 192, 196 (Ind.Ct.App.2004). Extrinsic evidence cannot be used to create an ambiguity. Id.
Likes' Policy is a "claims made" policy. "A `claims made' policy links coverage to the claim and notice rather than to the injury." Paint Shuttle, Inc.
The Policy required Likes to notify the Bar Plan during the Policy period if, at some point during that Policy period, Likes, "becomes aware of a specific incident, act or omission while acting in a professional capacity providing Legal Services, which may give rise to a Claim[.]" (Appellant's App. p. 439). This notice requirement "is not simply the part of the insured's duty to cooperate, it defines the limits of the insurer's obligation." Paint Shuttle, Inc., 733 N.E.2d at 522. That is, "the notice requirement is `material, and of the essence of the contract.'" Id. at 520 (quoting London Guarantee & Accident Co. v. Siwy, 35 Ind.App. 340, 66 N.E. 481, 482 (1903)). This means that "[t]he duty to notify an insurance company of potential liability is a condition precedent to the company's liability to its insured." Id. (citing Shelter Mut. Ins. Co. v. Barron, 615 N.E.2d 503, 507 (Ind.Ct.App. 1993)). And "[w]hen the facts of the case are not in dispute, what constitutes proper notice is a question of law for the court to decide." Id.
The Bar Plan now argues that Likes did not properly notify it of his potential liability because Likes failed to advise it as soon as the law firm had a reasonable basis to believe that it had committed acts or omissions which could give rise to a malpractice claim, as required under the Policy. The Bar Plan asserts that, at the time of the renewal application for the Policy and prior to the Policy taking effect, Likes knew or reasonably should have known that it had committed such acts or omissions. "As an Indiana attorney doing appellate work, he knew the March 2011 favorable [c]ourt of [a]ppeals opinion was subject to a pending Petition to Transfer and thus, as a matter of law, was not a final decision upon which he could rely in November 2011 [at the time of the renewal application] to avoid revealing the situation regarding the dismissal." (Appellant's Br. p. 17). As such, the Bar Plan relies on the exclusionary language of the Policy to deny coverage to Likes.
In response, Likes contends that the Exclusion provision of the Policy is not applicable as "the undisputed evidence establishes that at the time Likes submitted his application for the 2011 Policy, this [c]ourt had handed down its opinion reversing the dismissal of Whitakers' personal injury claim. Accordingly, there was no known potential claim." (Appellee's Br. p. 6).
Thus, the proper question is whether, at the time of its application for renewal, Likes had knowledge or should have had reasonable knowledge of an act or omission on its part that might reasonably be expected to be the basis of a malpractice claim by Whitaker. Responding to this question affirmatively, the Bar Plan relies on Koransky, Bouwer & Poracky, P.C. v. Bar Plan Mut. Ins. Co., 712 F.3d 336 (7th Cir.2013).
Invoking the exclusionary language, the Seventh Circuit Court rephrased the issue before it as "whether in February and March 2007, prior to the 2007-08 policy's effective date, [Koransky] had knowledge of an act or omission on its part that might reasonably be expected to be the basis of a malpractice claim by Buyer." Id. at 343. Analyzing the facts, the Seventh Circuit Court concluded that "[a] reasonable attorney in [Koransky's] position would realize that his client might bring a malpractice claim against him because, as a result of the attorney's mistake, Seller was refusing to complete the negotiated sale." Id. at 343. Koransky objected and noted that
Id. at 343. The Seventh Circuit rejected the argument because "whether a court would eventually rule in favor of [Koransky's] former client is irrelevant. The question is whether [Koransky] had reason to believe that its acts or omissions may result in a claim for malpractice." Id. (emphasis in original). As the court agreed that it "may well be difficult to determine exactly when an act or omission `might reasonably be expected to be the basis' of a malpractice claim," the court opined that
Id. at 343-44.
While we agree with Koransky that reasonable minds could differ on the interpretation of the exclusionary provision language, as in Koransky, we conclude that the evidence clearly designates that Likes' omission to timely and correctly respond to interrogatories and the trial court's subsequent dismissal of the cause could reasonably be expected to trigger a malpractice claim. See Kessel v. State
However, all that changed on April 28, 2011, when Becker filed his petition for transfer to the supreme court. At that point, Likes was put on notice that Becker was pursuing an affirmance of the trial court's dismissal of his cause. Therefore, because of the severity of the trial court's remedy — dismissal of the cause — any reasonable attorney in Likes' position would realize that his client might pursue a potential legal malpractice claim against him should the supreme court affirm the trial court. Accordingly, when Likes signed his renewal application on November 14, 2011, Likes knew or reasonably should have known that the only thing standing between him and a probable malpractice claim was the supreme court ruling. Therefore, he should have disclosed these facts on his application for renewal.
Relying on French v. State Farm Fire & Cas. Co., 950 N.E.2d 303 (Ind.Ct. App.2011), trans. denied, Likes now asserts that "the Bar Plan may only rescind the policy of insurance if the misrepresentation was material to the risks involved." (Appellee's Br. p. 10). In support of his claim, Likes points to the Bar Plan's renewal of the Policy in the following year, November of 2012, even though the Bar Plan was aware of the pending legal malpractice claim. Therefore, Likes maintains that "at the very least, a genuine issue of material fact existed [] as to whether any alleged misrepresentation contained in the application for the 2011 Policy was material." (Appellee's Br. p. 11).
Nevertheless, we find French not dispositive to the cause before us. French pertained to coverage under a homeowners' policy, which is a conventional liability insurance policy. French, 950 N.E.2d at 306. Conventional liability insurance policies are "occurrence policies," which link coverage to the date of the tort rather than to the suit. Paint Shuttle, Inc., 733 N.E.2d at 522. On the other hand, a "claims made policy," like the one before us, links coverage to the claim and notice rather than to the injury. Id. Whether Likes properly notified the Bar Plan of a claim under its Policy has no bearing on the Bar Plan's business decision as to whether a subsequent policy will be issued. Moreover, even if proper notification can be excused by waiver or acquiescence by the insurance company, as proposed by Likes, here, the Bar Plan's conduct belies the opposite. Throughout the proceedings, the Bar Plan's acts consistently reflect adherence to the terms of its Policy.
Accordingly, based on the designated evidence we conclude that because Likes knew or reasonably should have known of the potential legal malpractice claim at the time of the renewal application of the Policy, his failure to timely notify the Bar plan thereof now precludes coverage under the Policy's exclusionary provision.
The Bar Plan maintains that, while the trial court granted its motion to strike in part, the trial court abused its discretion in admitting certain paragraphs included in Likes' affidavit and in the affidavit of Likes' expert. These affidavits were designated in Likes' response to the Bar Plan's motion for summary judgment and cross-motion, and the Bar Plan now contends that these documents contained "legal conclusions, speculation, and parol evidence," which have no bearing on this case. (Appellant's Br. p. 25).
The standard of review for admissibility of evidence is an abuse of discretion. Blocher v. DeBartolo Properties Management, Inc., 760 N.E.2d 229, 233 (Ind.Ct.App.2001), trans. denied. The trial court abuses its discretion only when its action is clearly erroneous and against the logic and effect of the facts and circumstances before the court. Id. Affidavits in support of or in opposition to a motion for summary judgment are governed by Indiana Trial Rule 56(E), which provides that:
The affidavit requirements of Ind. Trial Rule 56(E) are mandatory and a trial court considering a summary judgment motion should disregard inadmissible information contained in supporting or opposing affidavits. McCutchan v. Blanck, 846 N.E.2d 256, 260 (Ind.Ct.App.2006). A party offering the affidavit bears the burden of establishing its admissibility. Id. Because we already determined that the contested terms of the contract are ambiguous, we are not constricted to the terms of the contract, but can consider extrinsic evidence. See Kessel, 871 N.E.2d at 338.
The Bar Plan contends that paragraph 4 of Likes' affidavit should have been stricken by the trial court as it contained "inadmissible self-serving legal conclusions." (Appellant's Br. p. 25). Paragraph 4 of Likes' affidavit affirms
(Appellant's App. p. 663).
While, at first glance, it appears that this paragraph rephrases the decision reached by this court in the underlying cause, this is not the case. The appellate decision, issued on March 29, 2011, and subsequently vacated and reversed by the supreme court, concluded that based on fairness and equity the trial court had abused its discretion in dismissing the cause. We noted that Likes was not aware that the trial court was considering the "death knell" sanction of dismissal and the arguable misrepresentation by Likes in the interrogatory response merely resulted in "a lack of proper diligence on the part of [Likes]." Whitaker v. Becker, 946 N.E.2d 51, 57 (Ind.Ct.App.2011), trans.
Ind. Evidence Rule 702 relates to the admissibility of expert testimony. It assigns to the trial court a gatekeeping function of ensuring that an expert's testimony both rests on a reliable foundation and is relevant to the task at hand. Lytle v. Ford Motor Co., 814 N.E.2d 301, 309 (Ind.Ct.App.2004), trans. denied. The Rule states:
However, where, as here, an expert's testimony is based upon the expert's skill or experience rather than on the application of scientific principles, the proponent of the testimony must only demonstrate that the subject matter is related to some field beyond the knowledge of laypersons and that the witness possesses sufficient skill, knowledge, or experience in the field to assist the trier of fact in understanding the evidence or determining a fact in issue. Lytle, 814 N.E.2d at 308-09.
In the present case, the Bar Plan merely takes issue with Likes's expert's, Ty R. Sagalow (Sagalow), personal knowledge about the specific Bar Plan's policies and underwriting process but does not dispute Sagalow's qualification as an expert of the insurance industry per se. Specifically, the curriculum vitae attached to Sagalow's affidavit details that he is a thirty-year veteran of the insurance industry who specializes in, among other things, professional liability insurance.
Turning to the affidavit itself, the Bar Plan takes issue with paragraphs 15 (second sentence), 17 to 24, and 26, which read as follows:
(Appellant's App. pp. 656-58).
Although Sagalow claims that his opinions are derived from the insurance industry's custom and practice, nowhere in his affidavit does Sagalow clarify what these customs actually are or identify his sources therefor. Rather, the paragraphs touch immediately upon the heart of the matter and the issue this court is prevailed upon to answer, i.e., whether Likes is entitled to coverage under the Policy and, as such, the paragraphs propone a legal conclusion. See Ind. Evid. R. 704. A mere generalized statement of "based on the custom and practice of the professional liability insurance and underwriting industry" without any further clarification does not lift these paragraphs from the impermissible realm of legal conclusion into valid expert opinion. Accordingly, we conclude that the trial court abused its discretion in admitting paragraphs 15 through 23 of Sagalow's affidavit.
With respect to paragraph 24, we note that this is a correct paraphrasing of Valerie Polites' affidavit, and an expert may utilize hearsay information in forming his opinion when "the expert has been
Based on the foregoing, we conclude that the trial court erred in granting summary judgment to Likes because the undisputed evidence establishes that Likes failed to timely notify the Bar Plan of the Claim and therefore is now precluded from coverage under the Policy. In addition, we find that the trial court abused its discretion when it admitted paragraph 4 of Likes' affidavit and paragraphs 15-23 and 26 of Sagalow's affidavit.
Reversed.
BROWN, J. and ALTICE, J., concur.
