COA reverses for insurance company, against quadriplegic man

An Indiana Court of Appeals panel has reversed the grant of a quadriplegic man’s motion to dismiss a declaratory judgment action after it found he was not entitled to bodily injury liability coverage under his insurance policy.

In February 2016, co-workers Gregory Smith and Nolan Clayton were intoxicated after drinking at an Indianapolis Stacked Pickle bar, and the bar called a cab for them. When their ride was pulling up, Smith and Clayton drove off in Smith’s truck, with Clayton driving and Smith sitting in the passenger seat. The vehicle crashed, leaving Smith permanently disabled.

At the time of the accident, Smith was insured by Progressive Southeastern Insurance Co. under a policy that provided coverage for liability, medical payments and underinsured motorist coverage, among other coverage. Progressive paid some of Smith’s vehicular damages and medical payments.

Smith eventually sued Clayton, and a jury awarded Smith a net amount of $35 million after finding Clayton 60% at fault, for an actual amount owed of $21 million. The jury verdict was upheld on appeal. 

Meanwhile, Progressive filed a complaint for declaratory judgment in January 2017, asking Marion Superior Judge Timothy Oakes for a determination that Smith was not entitled to coverage under the policy’s uninsured motorist provisions for injuries sustained during an accident while a passenger in his own vehicle. Without a hearing, the trial court granted judgment to Smith and against Progressive on the UM portion of the coverage declaration.

In a reversal of the summary judgment decision, the Indiana Court of Appeals held that the trial court erred by concluding Smith was entitled to receive payment under the policy’s UM coverage. However, the trial court ultimately granted Smith’s motion to dismiss and close the litigation after Smith argued that Progressive had waived the issues of the duty to defend declaration and the bodily injury liability portion of the coverage declaration by bringing its first appeal.

In its next appeal, Progressive argued it had waived no claims. In finding Progressive was entitled to judgment as a matter of law, the Indiana Court of Appeals in a Thursday decision reversed and remanded in Progressive Southeastern Insurance Co. v. Gregory Smith and Nolan Clayton, and Erie Insurance Group, Brackett Restaurant Group, LLC, d/b/a Stacked Pickle, and Allstate Insurance Company,19A-PL-1094.

The appellate court concluded Smith is not entitled to UM coverage and, based on Supreme Court precedent and his own concession, Smith is not entitled to bodily injury liability coverage.

“Under these circumstances, it is readily apparent that Progressive is entitled, as a matter of law, to a declaration that Smith is not entitled to bodily injury liability coverage, and the trial court erred by refusing to enter that declaration following the First Appeal,” Judge John Baker wrote for the appellate court.

The court also found the duty to defend was not triggered and that it was “eminently reasonable to conclude that if Smith is not entitled to coverage for his bodily injuries, Progressive is not required to defend Clayton from tort claims related to those bodily injuries.”

Additionally, the appellate court directed the trial court to deny Clayton’s motion for a declaratory judgment. It found “wholly unpersuasive” his argument that he was allegedly never properly served with the complaint.

The appellate court – writing that it wanted to be “crystal clear” in its decision given outstanding confusion following the first appeal – ultimately reversed the order granting Smith’s motion to dismiss the declaratory judgment and the order denying Progressive’s request for judgment on the bodily injury coverage and duty to defend declarations.

The panel also remanded with instructions for the trial court to declare that Smith is not entitled to bodily injury liability coverage under his Progressive insurance policy and that Progressive does not have a duty to defend or indemnify Clayton under that policy.

Lastly, it instructed the trial court to deny Clayton’s motion for a declaratory judgment and enter final judgment in favor of Progressive.