Wurster Construction Co. v. Essex Insurance Co.

Citations: 918 N.E.2d 666; 2009 Ind. App. LEXIS 2835; 2009 WL 5124539Docket: No. 41A01-0903-CV-130

Court: Indiana Court of Appeals; December 28, 2009; Indiana; State Appellate Court

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Wurster Construction Co., Inc. appeals the trial court's January 27, 2009, belated grant of Essex Insurance Company's motion to correct error, which resulted in a summary judgment favoring Essex. Wurster raises two issues: 1) Whether the belated grant is void due to Essex's motion being "deemed denied" under Indiana Trial Rule 58.3(A); and 2) Whether Essex is barred from cross-appealing the issues in its motion because of its failure to timely appeal the deemed denial. On cross-appeal, Essex questions whether the trial court erred in denying its motion for summary judgment against Kane Construction, Inc., Wurster's subcontractor, based on the court's finding that Essex had a duty to insure and defend Kane in a wrongful death suit filed by the Estate of Christian King.

The court finds the trial court's belated grant of Essex's motion to correct error void, vacates that order, and reverses the initial ruling, remanding with instructions to enter summary judgment in favor of Essex against both Kane and Wurster. 

The facts reveal that Wurster was the general contractor for a project in Marion County, having subcontracted with Kane, who was required to maintain insurance naming Wurster as an additional insured. Kane assigned its work to Main Street Construction, which was not obligated to secure insurance for Kane. Christian King, an employee of Main Street, died in an accident on the job site, leading the Estate to file a wrongful death suit against Wurster, claiming negligence. Wurster sought defense and indemnification from Kane, who refused, prompting Wurster to file a third-party complaint. Kane had commercial general liability insurance from Essex, with a policy in effect at the time of King's death.

In September 2006, Essex initiated legal action in Johnson Superior Court to obtain a declaratory judgment regarding its duty to insure and defend Wurster and Kane in a wrongful death claim brought by the Estate. The Estate counterclaimed against Essex, Kane, and Wurster. On April 7, 2008, Essex sought summary judgment against Kane, Wurster, and the Estate, with Wurster opposing the motion. The trial court issued an order on August 25, 2008, partially granting Essex’s motion: it ruled that Essex had no insurance coverage or defense obligation for Wurster's negligence but did have coverage and a duty to defend Kane against the Estate's claims. The court clarified that Essex's coverage for Kane did not extend to Main Street and noted that questions of liability were reserved for the pending wrongful death action.

On September 22, 2008, Wurster filed a motion for clarification regarding Essex's obligations concerning vicarious liability for Kane's negligence, while Essex also filed a motion to correct error on September 23, arguing it had no duty to defend either Kane or Wurster based on the circumstances surrounding the incident involving King, an employee of an independent contractor. A hearing on these motions occurred on December 9, 2008, but no ruling was made within thirty days, resulting in the motions being deemed denied on January 8, 2009.

Before the appeal deadline, the trial court issued a belated order on January 27, 2009, granting Essex’s motion to correct error and reaffirming that Essex had no obligation to defend or indemnify Kane or Wurster. Wurster appealed this decision, while Essex cross-appealed, revisiting the issues raised in its prior motion to correct error.

Belated Grant Motions to correct error are governed by Trial Rule 58.3, which states that such a motion is deemed denied if a trial judge does not rule on it within thirty days of a hearing or forty-five days after filing without a hearing. This denial is automatic and self-activating. A trial court has broad discretion to correct errors, but this discretion can only be reversed if abused, defined as actions contrary to the facts or based on impermissible reasons. Wurster argues that the trial court's January 27, 2009 Belated Grant is invalid according to Trial Rule 58.3(A) and cites Garrison v. Metcalf to support the claim that the 2008 Order should remain since the trial court lost the power to rule after the deemed denial period. Wurster asserts that to uphold a belated grant after a deemed denial, the party must appeal within thirty days of that denial. However, the court clarifies that the analysis involves two steps: first, determining if the belated grant is void; second, assessing if issues from the motion can be raised on cross-appeal. Historically, courts deemed belated grants null if not ruled on within the timeframe, but a shift occurred post-2000, recognizing belated grants as voidable rather than null if there is a timely appeal. In this case, Essex's motion was deemed denied on January 8, 2009, and the trial court's Belated Grant on January 27, 2009, occurred before Essex's appeal deadline. However, the court ruled that since Wurster appealed the Belated Grant, it was subject to the "deemed denied" provision and thus deemed void. The court agrees with Wurster that the Belated Grant is void.

Essex challenges the validity of the Belated Grant and seeks to raise issues from its motion to correct error as cross-errors. Essex argues that according to the Supreme Court's decisions in Cavinder and HomEq, it is entitled to appeal the trial court's denial of its summary judgment motion concerning Kane. Essex claims the trial court's Belated Grant occurred within the appeal period for the deemed denial, which would allow them to assert these issues on cross-appeal. Wurster contends that the case aligns with Garrison, which mandates that the deemed denial stands due to the inability to reconcile the cases.

The Supreme Court cases establish when issues from a motion to correct error can be raised on cross-appeal. In Cavinder, the proponent timely appealed the deemed denial, allowing cross-appeal despite the late Belated Grant. In contrast, Garrison and HomEq involved proponents who did not timely appeal their deemed denials, requiring them to meet the Footnote 4 exception of Scenario 2 to raise those issues again. Scenario 2 applies when the trial court's belated grant occurs before the appeal initiation but within the appeal period. This was met in both Garrison and HomEq, where the proponents could cross-appeal after the opponent appealed.

The current case mirrors HomEq, where Essex filed a motion to correct error after a trial court ruling on August 25, 2008, which was deemed denied on January 8, 2009. Despite not appealing this deemed denial, Essex's motion was belatedly granted, prompting Wurster's appeal claiming its invalidity under Garrison. Essex's cross-appeal raises the same issues as its motion to correct error. The conclusion is that Essex is entitled to assert cross-error on these issues, aligning with the Supreme Court's reasoning.

Essex’s cross-appeal contends that the trial court erred in denying its motion for summary judgment regarding its duty to defend and indemnify Kane in connection with a lawsuit filed by the Estate. The standard for summary judgment requires the absence of genuine issues of material fact, with all facts and inferences viewed in favor of the nonmovant. Essex's cross-appeal reasserts its claim that it owes no duty to cover or defend Kane, based on the undisputed facts: Wurster, a contractor, subcontracted with Kane, who subsequently assigned this work to Main Street, whose employee, King, was fatally injured on the job. Essex issued a commercial general liability policy to Kane that contained specific exclusions for injuries to independent contractors or their employees unless certain conditions were met. These exclusions were reiterated in a revised policy. Essex argues that the trial court incorrectly maintained its 2008 Order, which found that Essex owed Kane a duty to indemnify and defend despite these exclusions. Essex further claims that the trial court failed to address its duty regarding Wurster under vicarious liability, despite having ruled that Essex had no duty to defend Wurster for his own negligence.

Wurster sought clarification regarding a legal question, leading the trial court to recognize Wurster's petition as a request for ruling rather than a motion to correct error. The court then corrected a prior mistake and clarified that under Essex's Renewed Policy, Essex is not obligated to defend or indemnify Kane or Wurster in any actions taken by the Estate. Insurance policies are interpreted like other contracts, focusing on the intent of the parties as expressed in the contract. Insurance carriers can limit coverage through clearly stated exclusions. Wurster argues there is a genuine material fact issue regarding the applicability of certain endorsements to the Renewed Policy, asserting that the Initial Policy lacked these exclusions. Wurster claims Kane was unaware of the exclusion's addition and never received a copy of the Renewed Policy, suggesting that the complexity of insurance contracts limits the insured's understanding of their terms. 

The court recently clarified the roles of "insurance agents" and "brokers," noting that a broker typically represents the insured and acts as an intermediary, while an agent represents the insurer and is liable for their actions. The classification of an insurance intermediary is fact-sensitive, requiring an analysis of the relationship and actions of the parties involved. Evidence suggests Walker acted as Kane's broker, supported by John Kane's testimony about his long-term dealings with Walker.

John, in his affidavit, stated he never received the 2004-2005 renewal policy or any communication regarding significant changes to it from his agent, Walker, or Essex Insurance Company. He indicated that had he been informed of these changes, he would have notified his insurance agency that they were unacceptable. Walker was identified as Kane's broker, responsible for procuring the insurance Kane requested, and owed a duty of reasonable care and diligence in that role. Essex outlined the amended terms of the renewed policy and, once accepted by Walker, those terms were imputed to Kane, who could not deny knowledge of a specific exclusion in the policy regarding coverage for injuries to employees of independent contractors. The trial court found that King, who was injured, was an employee of an independent contractor (Main Street), thus Essex had no duty to insure either Kane or Wurster for King's injuries. Consequently, Essex was also not obligated to defend Kane or Wurster in this matter. The court vacated a prior order and reversed the 2008 Order, remanding the case with instructions to enter summary judgment in favor of Essex against Kane and Wurster. The judges concurred, and Essex was the only appellee to file a brief or appendix.

Essex is identified as the appellee in the case, with neither Kane nor the Estate responding to its motion for summary judgment. Essex included Wurster in its motion to correct error despite having already been granted summary judgment regarding Wurster, potentially in response to Wurster's prior motion seeking clarification on Essex's duty to defend or indemnify Wurster against claims of vicarious liability for Kane's negligence. Wurster filed a motion to dismiss Essex's cross-appeal on May 6, 2009, which was subsequently denied by the court on June 1, 2009. The court retains the authority to reconsider decisions during an ongoing appeal, referencing Miller v. Hague Ins. Agency, Inc.

Had Wurster not appealed a belated grant, it would have waived the ability to contest its validity, as outlined in Cavinder, which clarifies that a belated grant would remain effective unless timely appealed. The document also discusses the Supreme Court's decisions in Cavinder and Garrison, indicating that arguments based on prior rulings can fail if the scenarios differ. Additionally, specific endorsements (M/E-067 and M/E-102) relating to insurance coverage are examined, determining that they do not apply to the case's facts. Wurster argues that there was no mutual agreement in forming the Renewed Policy with Essex, which is essential for contract formation. The lack of mutuality would invalidate the Renewed Policy and support summary judgment in favor of Essex against Wurster and Kane.