John W. Schoettmer & Karen Schoettmer v. Jolene C. Wright & South Central Community Action Program, Inc. , 992 N.E.2d 702 ( 2013 )

ATTORNEY FOR APPELLANTS ATTORNEY FOR APPELLEES
Jeremy S. Baber James J. Hutton
Carmel, Indiana Indianapolis, Indiana
__________________________________________________________________________________________
In the
Indiana Supreme Court Aug 27 2013, 9:16 am
No. 49S04-1210-CT-607
JOHN W. SCHOETTMER & KAREN
SCHOETTMER,
Appellants (Plaintiffs below),
v.
JOLENE C. WRIGHT & SOUTH CENTRAL
COMMUNITY ACTION PROGRAM, INC.,
Appellees (Defendants below).
Appeal from the Marion Superior Court, No. 49D11-1010-CT-43803
The Honorable John F. Hanley, Judge
On Petition to Transfer from the Indiana Court of Appeals, No. 49A04-1108-CT-406
August 27, 2013
Massa, Justice.
After he was injured in an automobile accident, John Schoettmer cooperated with the
other driver’s insurer in hopes of settling his claim. Nearly a year later, when settlement proved
elusive, he hired a lawyer and filed suit. Only then did he learn that the other driver was
employed by a political subdivision subject to the Indiana Tort Claims Act. Schoettmer cited
several reasons to excuse his failure to comply with the notice requirements of that Act,
including waiver, substantial compliance, agency, and estoppel. We find the first three
unavailing, but conclude he should be permitted to present proof of estoppel to the trial court,
and we reverse and remand on that basis.
Facts and Procedural History
On November 24, 2008, Schoettmer was driving down North German Church Road in
Indianapolis. As he passed through the 46th Street intersection, he was involved in a collision
with Jolene Wright, an employee of South Central Community Action Program, Inc. 1
Schoettmer suffered personal injuries as a result of the collision.
On December 29, Schoettmer received a letter from Cincinnati Insurance Company,
South Central’s liability insurer, stating that it had been trying unsuccessfully to contact him and
requesting information to process his claim. About two weeks later, Schoettmer provided a
recorded statement to a Cincinnati Insurance agent, who advised him his claim could not be
settled until his medical treatments were completed. On April 22, 2009, those treatments were
completed, and Schoettmer signed a release form giving Cincinnati Insurance access to his
medical records and bills. On August 13, the agent informed him she had all the information
necessary to settle his claim, and Cincinnati Insurance subsequently offered Schoettmer a
settlement.
Schoettmer declined that offer, and in September 2009, he retained legal counsel. Efforts
to negotiate an acceptable settlement failed, and on October 6, 2010, Schoettmer sued Wright
and South Central for personal injury damages. His wife, Karen Schoettmer, also brought claims
against both defendants for loss of consortium. Defendants answered the complaint on
November 29, but on February 3, 2011, they moved to amend their answer to assert an
affirmative defense: South Central is a community action agency and thus a political subdivision
1
Both parties agree that at the time of the accident, Wright was acting within the scope of her
employment.
2
governed by the Indiana Tort Claims Act, and the Schoettmers failed to comply with the ITCA
notice requirement. On April 12, 2011, defendants moved for summary judgment on that
ground. Both in a written response to the motion and at a hearing on it, the Schoettmers
identified three2 issues of material fact:
First, did the Plaintiffs substantially comply with the requirements
of the Tort Claims Act? Second, did the Defendants[’] failure to
timely raise the defense of Plaintiffs[’] alleged noncompliance act
as a waiver? Three, did the actions and representations of the
Defendant and its agents rise to the level that Defendant should be
estoppe[d] from asserting Plaintiffs[’] alleged noncompliance?
Tr. at 17. The trial court ultimately granted summary judgment in the defendants’ favor.
The Schoettmers appealed, raising the same arguments they brought up in the trial court.
A divided panel of our Court of Appeals rejected all of these arguments and affirmed the trial
court. Schoettmer v. Wright, 971 N.E.2d 118, 120 (Ind. Ct. App. 2012). Judge Crone dissented,
believing “South Central should be estopped from asserting the Schoettmers’ noncompliance
with the ITCA.” Id. at 126 (Crone, J., dissenting).
We granted transfer. Schoettmer v. Wright, 977 N.E.2d 353 (Ind. 2012) (table); Ind.
Appellate Rule 58(A).
Standard of Review
Summary judgment is appropriate only when the moving party shows there are no
genuine issues of material fact for trial and he is entitled to judgment as a matter of law. Haegert
v. Univ. of Evansville, 977 N.E.2d 924, 936 (Ind. 2012); see also Ind. Trial Rule 56(C). Once
2
The Schoettmers raised a fourth argument in the hearing and on appeal: because Cincinnati Insurance
acted as South Central’s agent for the purpose of resolving Schoettmer’s claim, notice to Cincinnati
Insurance should have operated as notice to South Central.
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that showing is made, the burden shifts to the non-moving party to rebut. Town of Avon v. W.
Cent. Conservancy Dist., 957 N.E.2d 598, 602 (Ind. 2011). When ruling on the motion, the trial
court construes all evidence and resolves all doubts in favor of the non-moving party. Id. We
review the trial court’s grant of summary judgment de novo, Woodruff v. Ind. Family & Soc.
Servs. Admin., 964 N.E.2d 784, 790 (Ind. 2012), cert. denied, 133 S. Ct. 233 (2012), taking care
to ensure that no party is denied his day in court. Mangold ex rel. Mangold v. Ind. Dep’t of
Natural Res., 756 N.E.2d 970, 974 (Ind. 2001).
This Case Is Not Ripe for Summary Judgment.
The Indiana Tort Claims Act provides that a tort claim against a government entity is
barred unless the claimant provides the entity with notice of the claim within 180 days of the
loss. Ind. Code § 34-13-3-8 (2008). The notice “must describe in a short and plain statement
the facts on which the claim is based,” including “the circumstances which brought about the
loss, the extent of the loss, the time and place the loss occurred, the names of all persons
involved if known, the amount of the damages sought, and the residence of the person making
the claim at the time of the loss and at the time of filing the notice.” Ind. Code § 34-13-3-10(2008). This requirement is intended to ensure that government entities have the opportunity to
investigate the incident giving rise to the claim and prepare a defense. Galbreath v. City of
Indianapolis, 253 Ind. 472, 477, 255 N.E.2d 225, 228 (1970). “Like any statute in derogation of
the common law, the ITCA ‘must be strictly construed against limitations on the claimant’s right
to bring suit.’” City of Indianapolis v. Buschman, 988 N.E.2d 791, 794 (Ind. 2013) (quoting
Hinshaw v. Bd. of Comm’rs of Jay Cnty., 611 N.E.2d 637, 639 (Ind. 1993)). And as we have
said before, so long as its essential purpose has been satisfied, it should not function as “a trap
for the unwary.” Galbreath, 253 Ind. at 480, 255 N.E.2d at 229.
Here, the Schoettmers acknowledge they failed strictly to comply with the ITCA notice
requirement, but they raise four theories under which their claim might proceed anyway. First,
they argue South Central waived its ITCA notice defense by failing to raise it in a timely fashion.
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Second, they suggest their cooperation with Cincinnati Insurance constituted substantial
compliance with the notice requirement. Third, they argue Cincinnati Insurance acted as South
Central’s constructive agent such that notice to Cincinnati Insurance operated as notice to South
Central. Finally, they assert that even if South Central had no notice of their tort claim, the
equitable principle of estoppel nevertheless should apply to bar its ITCA notice defense.
I. South Central Did Not Waive Its ITCA Notice Defense.
As a threshold matter, the Schoettmers contend South Central waived its ITCA notice
defense by failing to raise it in its original answer. We previously have said this defense is
waived if not “asserted in a responsive pleading.” Thompson v. City of Aurora, 263 Ind. 187,
190, 325 N.E.2d 839, 841 (1975). An answer is a responsive pleading, and our trial rules permit
a party to amend his pleading by leave of court, which should be granted “when justice so
requires.” Ind. Trial Rule 15(A). Absent prejudice to the non-moving party, we have said that
such amendments “should be liberally allowed.” Templin v. Fobes, 617 N.E.2d 541, 543 (Ind.
1993). Indeed, our Court of Appeals has found no abuse of discretion where a trial court
permitted a defendant to amend its answer to assert an ITCA notice defense as long as eighteen
months after the original answer was filed because the plaintiffs failed to show the amendment
caused them undue prejudice. Fowler v. Brewer, 773 N.E.2d 858, 862–63 (Ind. Ct. App. 2002),
trans. denied.
South Central filed its original answer on November 29, 2010, and moved for leave to
amend that answer on February 3, 2011. The Schoettmers apparently did not object to that
motion, and the trial court granted it on March 23. In their appellate brief, the Schoettmers do
not specify how the amendment prejudiced them except to say they did not know South Central
was covered under the ITCA until it filed its amended answer. But even if South Central had
asserted its ITCA notice defense in its original answer, it is unclear how the Schoettmers’
position would be any different. The accident occurred on November 24, 2008. Under the
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ITCA, the Schoettmers had 180 days—until Monday, May 25, 20093—to file their notice. That
deadline had long expired by the time South Central filed its original answer on November 29,
2010. The Schoettmers have not shown they suffered undue prejudice; thus, we find the trial
court did not abuse its discretion by permitting the amendment, and we conclude South Central
has not waived its ITCA notice defense. We therefore turn to the Schoettmers’ remaining
arguments on appeal.
II. Notice to Cincinnati Insurance Did Not Constitute Substantial Compliance with
the ITCA Notice Requirement.
The Schoettmers argue their communications with Cincinnati Insurance satisfied the
purpose of the ITCA notice requirement such that the trial court should have found they
substantially complied with that requirement. We disagree.
“Substantial compliance with the statutory notice requirements is sufficient when the
purpose of the notice requirement is satisfied.” Ind. State Highway Comm’n v. Morris, 528
N.E.2d 468, 471 (Ind. 1988). “The purposes of the notice statute include informing the officials
of the political subdivision with reasonable certainty of the accident and surrounding
circumstances so that [the] political [sub]division may investigate, determine its possible
liability, and prepare a defense to the claim.” Id. “What constitutes substantial compliance,
while not a question of fact but one of law, is a fact-sensitive determination.” Collier v. Prater,
544 N.E.2d 497, 499 (Ind. 1989). “The crucial consideration is whether the notice supplied by
the claimant of his intent to take legal action contains sufficient information for the city to
ascertain the full nature of the claim against it so that it can determine its liability and prepare a
defense.” Id. at 500. But “mere actual knowledge of an occurrence, even when coupled with
routine investigation, does not constitute substantial compliance.” Morris, 528 N.E.2d at 470.
3
The 180th day actually would have been Saturday, May 23, 2009, but as that was a weekend day, we
count forward to the next working day. Ind. Trial Rule 6(A).
6
Different panels of our Court of Appeals have reached varying conclusions as to whether
a plaintiff’s notice to a defendant’s insurer constitutes substantial compliance with the ITCA. In
City of Tipton v. Baxter, 593 N.E.2d 1280 (Ind. Ct. App. 1992), for example, the plaintiff was a
passenger in a vehicle hit by a City-owned truck. Id. at 1280. Although he did not provide
written notice of his claim to any City official or department, the panel noted that the City’s
insurer “had actual knowledge of the accident several days after it happened, conducted an
investigation, and indicated a willingness to settle.” Id. at 1283. It was also significant, the
panel stated, that the insurance examiner “admitted he knew the date the accident occurred, the
identities of the claimant . . . and the truck driver for the City, and that there had been personal
injuries,” “had information concerning the vehicles involved in the accident, the location where
the accident occurred, the phone number and address where the [plaintiff] could be reached, and
information concerning the extent of the injuries” as well as a copy of a statement the plaintiff
gave to an insurance investigator. Id. Taken together, the panel concluded, all of this
information added up to substantial compliance. Id.On the other hand, in Brown v. Alexander, 876 N.E.2d 376 (Ind. Ct. App. 2007), trans.
denied, the plaintiff driver was injured when a city utility truck trailer detached and collided with
her vehicle. Id. at 378. The truck driver informed the city’s insurer of the accident, and a claims
representative attempted to contact the plaintiff, who was variously unavailable, uncooperative,
and uncommunicative until she filed a personal injury lawsuit—seventeen days before the statute
of limitations was due to expire. Id. at 378–79. The panel noted that while the utility “knew
about the accident it had none of the financial details required to settle the claim” and concluded
“we cannot find substantial compliance when the claimant took no steps whatsoever to comply
with the notice statute.” Id. at 383; see also Hasty v. Floyd Mem’l Hosp., 612 N.E.2d 119, 123
(Ind. Ct. App. 1992) (finding notice to hospital’s insurer did not substantially comply with ITCA
notice requirement); Fowler, 773 N.E.2d at 865 (finding notice to fire department’s insurer did
not substantially comply with ITCA notice requirement, even where fire department had actual
knowledge of the claim).
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On balance, we agree with the Brown panel and decline to find substantial compliance
where, as here, the claimant communicated only with the insurer and “took no steps whatsoever
to comply with the notice statute.” We recognize that it may be desirable to encourage potential
claimants to work with insurers to settle claims rather than proceed directly to litigation, and we
acknowledge that our conclusion today may tend to encourage the opposite. We are confident,
however, that such policy considerations will be addressed in the proper forum: the General
Assembly.
III. Cincinnati Insurance Is Not South Central’s Agent for the Purpose of Notice of
Tort Claims.
The Schoettmers also contend that by purchasing liability coverage from Cincinnati
Insurance, South Central effectively appointed Cincinnati Insurance as its agent for the purpose
of settling Schoettmer’s claim, and thus notice to the insurer should be deemed notice to the
insured. Again, we disagree.
The Schoettmers cite no section of the Tort Claim Act, and the Court finds none,
providing that a governmental entity’s insurer is the entity’s agent for the purpose of receiving
tort claim notices. Ind. Code § 34-13-3-20(a) authorizes the entity to purchase liability insurance
if it wishes to do so, but it says nothing about agency or notice. Ind. Code § 34-13-3-20(a) (2008
& Supp. 2012). The General Assembly has demonstrated a clear ability to draft statutes
regarding agency for notice purposes when it wishes to do so. See, e.g., Ind. Code §§ 27-8-1-13(2012) (requiring life insurance companies incorporated outside Indiana to appoint an individual
or corporate resident of Indiana “or an authorized Indiana insurer as its agent . . . upon whom
service of process . . . may be made”); 27-11-9-1 (2012) (imposing the same requirement on
fraternal business societies authorized to do business in Indiana). As it has not done so here, we
will presume it did not intend for such an agency relationship to be part of the ITCA, and we will
apply the statute in accordance with that intent.
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IV. Genuine Issues of Material Fact Remain as to Whether South Central Should Be
Estopped from Asserting Its ITCA Notice Defense.
Finally, the Schoettmers argue equitable estoppel should apply to bar South Central from
raising its ITCA notice defense because the Schoettmers were unaware South Central was a
government entity covered by the ITCA. The trial court found this argument failed as a matter of
law. We believe that conclusion is premature.
“The party claiming equitable estoppel must show its ‘(1) lack of knowledge and of the
means of knowledge as to the facts in question, (2) reliance upon the conduct of the party
estopped, and (3) action based thereon of such a character as to change his position
prejudicially.’” Story Bed & Breakfast, LLP v. Brown Cnty. Area Plan Comm’n, 819 N.E.2d
55, 67 (Ind. 2004) (quoting City of Crown Point v. Lake Cnty., 510 N.E.2d 684, 687 (Ind.
1987)). Equitable estoppel will not apply against the State unless there is “clear evidence that its
agents made representations upon which the party asserting estoppel relied.” Id. The burden to
produce that evidence rests upon the party claiming estoppel. Id.Here, the Schoettmers have presented evidence that they did not know South Central was
a statutorily designated community action program and thus a political subdivision subject to the
ITCA until South Central asserted its ITCA notice defense in its amended complaint. John
Schoettmer executed an affidavit stating neither the Cincinnati Insurance agent nor the
defendants ever gave him any reason to believe South Central was covered by the ITCA and his
claim might be time-barred unless he complied with its notice requirements. Neither the written
correspondence Schoettmer received from Cincinnati Insurance nor the telephone conversations
he had with its agent contain any mention of the ITCA or the 180-day time limit.
There is also evidence that Schoettmer relied on the agent’s conduct and representations.
Schoettmer’s affidavit states that on at least two occasions, the agent told him it would be in his
best interest to wait until all his medical treatments were complete before settling his claim. The
agent’s notes from her February 2, 2009, telephone conversation with Schoettmer corroborate the
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affidavit; she noted she told Schoettmer “it would be in his best interest to wait until he is
released from treatment” to settle his claim. Appellants’ App. at 78.
Finally, there is evidence that Schoettmer failed to act because of his reliance on the
Cincinnati Insurance agent’s representations. He worked with the agent; he provided a recorded
statement on January 12, 2009 and signed a release providing her access to his medical records
and bills on April 22, 2009. Nevertheless, he did not receive a settlement offer until August 20,
2009—nearly three months after the 180-day ITCA time limit had expired. Thus, we are
inclined to agree with Judge Crone that “the designated evidence reveals that genuine issues of
material fact remain, and the Schoettmers should be allowed to present proof of estoppel to the
trial court.” Schoettmer, 971 N.E.2d at 127 (Crone, J., dissenting) (citing Delaware Cnty. v.
Powell, 272 Ind. 82, 85, 393 N.E.2d 190, 192 (1979)).
Conclusion
We therefore reverse the trial court’s grant of summary judgment in the defendants’ favor
as to the adequacy of the Schoettmers’ tort claim notice and remand this case for further
proceedings consistent with our opinion.
Dickson, C.J., Rucker, David, and Rush, JJ., concur.
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