COA reverses, rules for PI attorney in subrogation dispute

The Indiana Court of Appeals reversed a trial court judgment, ordering summary judgment for a Lawrenceburg attorney facing a breach lawsuit related to his representation of a personal injury client. The appellate court ruled the insurer suing him did not timely file its subrogation claim.

After being retained to represent a woman in a personal injury lawsuit stemming from a vehicle collision, Douglas Holland asked the client to allow him to keep $3,500 of her settlement to cover subrogation claims that Indiana Farm Bureau Insurance might have for one year beginning in December 2014. Farm Bureau had paid the client $5,000 two years earlier to cover her medical bills.

Holland and Farm Bureau were unable to negotiate a subrogation amount in June 2015, so Farm Bureau asked Holland to request a damages hearing in the Dearborn Superior Court. The attorney, however, said the lawsuit had been dismissed, so Farm Bureau would have to file a small claims action to determine what amount the client owed.

That was the end of the communication between the parties in 2015, so Holland complied with the client’s request to return the balance of the settlement that December. But in 2017, the insurer made a formal demand for payment of its subrogation claim and filed a breach of fiduciary duty complaint against Holland, seeking $3,333.

Both parties moved for summary judgment, and the trial court eventually ruled in Farm Bureau’s favor. The attorney appealed in Douglas C. Holland v. Indiana Farm Bureau Insurance, 18A-PL-792, and the Indiana Court of Appeals reversed the grant of summary judgment to Farm Bureau on Tuesday.

Writing for the unanimous appellate court, Judge John Baker said the court understood Holland’s assumption that Farm Bureau had waived its subrogation claim after the insurer failed to communicate with him in the last six months of 2015. But the court also found Holland had a duty to retain the funds until the subrogation dispute was resolved, rather than returning the funds in December 2015.

“That duty, however, is not interminable – the attorney need not hold the money forever,” Baker said.

In this case, the court found the applicable statute of limitations for Farm Bureau to file its complaint ran for two years, considering the issue in the complaint — breach of fiduciary duty — “is a tort claim for injury to personal property, and an action for injury to personal property must be commenced within two years after the cause of action accrues.” Here, the cause of action accrued on June 9, 2015, when the parties reached an impasse in their discussions of the subrogation amount.

“Farm Bureau filed its complaint against Holland on September 14, 2017 — more than three months too late,” Baker wrote. “The trial court erred by granting summary judgment for Farm Bureau and by denying Holland’s motion for summary judgment when Farm Bureau’s claim was time-barred.

“The judgment of the trial court is reversed and remanded with instructions to enter judgment in favor of Holland,” he said.