The Bar Plan Mutual Insurance Company v. Likes Law Office, LLC Kevin L. Likes Rickey D. Whitaker and Cheryl L. Whitaker , 44 N.E.3d 1279 ( 2015 )

Oct 15 2015, 8:40 am
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEES
Philip E. Kalamaros Richard P. Samek
Hunt Suedhoff Kalamaros, LLP Larry L. Barnard
St. Joseph, Michigan Carson Boxberger, LLP
Fort Wayne, Indiana
IN THE
COURT OF APPEALS OF INDIANA
The Bar Plan Mutual Insurance October 15, 2015
Company, Court of Appeals Case No.
Appellant-Defendant, 02A03-1502-CT-65
Appeal from the Allen Superior
v. Court
The Honorable Nancy Eshcoff
Likes Law Office, LLC; Kevin Boyer
L. Likes; Rickey D. Whitaker; Trial Court Cause No. 02D01-
and Cheryl L. Whitaker, 1211-CT-532
Appellees-Plaintiffs.
Riley, Judge.
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STATEMENT OF THE CASE
[1] 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.
[2] We reverse.
ISSUES
[3] The Bar Plan raises three issues on appeal, two of which we find dispositive and
which we restate as follows:
(1) Whether the trial court properly concluded that the designated and
undisputed evidence established that Likes did not make a material
misrepresentation in his 2011 application for renewal of his insurance
policy; and
(2) Whether the trial court abused its discretion in denying, in part, the
Bar Plan’s motion to strike Likes’ expert testimony as to the custom
and practice in the Professional Liability Insurance and Underwriting
Industry.
FACTS AND PROCEDURAL HISTORY
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[4] 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.
[5] 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.
[6] 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
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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.
[7] 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.
[8] In its Exclusions section, the Policy provided, in pertinent part,
III. EXCLUSIONS
THIS POLICY DOES NOT PROVIDE COVERAGE FOR
ANY CLAIM BASED UPON OR ARISING OUT OF:
***
L. A Claim against an Insured who before the Policy effective
date knew, or should reasonably have known, of any
circumstance, act or omission that might reasonably be expected
to be the basis of that Claim.
(Appellant’s App. pp. 442-43).
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[9] 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:
Although there is some discrepancy with regard to your notice in
2012, you advised that your first notice to [t]he Bar Plan about
this matter was made on January 27, 2012, following the Indiana
Supreme Court’s decision. As you know, the [s]upreme [c]ourt’s
decision was rendered on January 18, 2012. The [t]rial [c]ourt,
however, dismissed [Whitaker’s] lawsuit and awarded sanctions
on March 16, 2010.
In addition, your renewal application submitted to [t]he Bar Plan
on November 15, 2010 and November 14, 2011, specifically
inquired whether the firm or any attorney in the firm had
“knowledge of any incident, circumstance, act or omission which
may give rise to a claim.” The responses on both applications
were “no.”
Based on the foregoing and our review, you were aware of
circumstances which could give rise to a claim, as early as March
16, 2010, when the [t]rial [c]ourt dismissed [Whitaker’s] lawsuit
and awarded sanctions. The dismissal and award of sanctions
occurred during the policy period of December 1, 2009 through
December 1, 2010. However, your first notice to [t]he Bar Plan
was not until January or March 2012, during a different policy
period.
Consequently, we must respectfully decline coverage of defense
and coverage in this matter.
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(Appellant’s App. p. 425) (emphasis in original).
[10] 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.
[11] 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.
[12] 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.
[13] The Bar Plan now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
I. Summary Judgment
A. Standard of Review
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[14] 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).
[15] 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. Ct. App. 2008), trans. denied. Thus, on appeal, we
must determine whether there is a genuine issue of material fact and whether
the trial court has correctly applied the law. Id. at 607-08. In doing so, we
consider all of the designated evidence in the light most favorable to the non-
moving party. Id. at 608. The party appealing the grant of summary judgment
has the burden of persuading this court that the trial court’s ruling was
improper. Id. When the defendant is the moving party, the defendant must
show that the undisputed facts negate at least one element of the plaintiff’s
cause of action or that the defendant has a factually unchallenged affirmative
defense that bars the plaintiff’s claim. Id. Accordingly, the grant of summary
judgment must be reversed if the record discloses an incorrect application of the
law to the facts. Id.
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[16] 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.
B. Material Misrepresentation
[17] 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.
[18] 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.” Fisher v. Heymann, 943 N.E.2d 896, 900 (Ind. Ct.
App. 2011), trans. denied.
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[19] 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.
[20] 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. v.
Cont’l Cas. Co., 733 N.E.2d 513, 522 (Ind. Ct. App. 2000) (citing Home Ins. Co. of
Ill. v. Adco Oil Co., 154 F.3d 739, 742 (7th Cir. 1998)), trans. denied. Thus, a
‘claims made’ policy protects the holder only against claims made during the
life of the policy. Id. (citing St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531,
535 n.3 (1978)).
[21] 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
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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, 66 N.E.
481, 482 (Ind. Ct. App. 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.
[22] 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.
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[23] 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). 1
[24] 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).
[25] Even though Koransky is a federal decision, the Seventh Circuit Court applied
Indiana law in evaluating the application of the professional liability insurance
Koransky had entered into with the Bar Plan. Due to an accidental misfiling in
Koransky’s office, a real estate sale was rescinded by the seller of the property.
Id. at 339. The buyer, Koransky’s client, initiated a professional malpractice
claim against its counsel. Id. Meanwhile, and prior to the commencement of
the law suit, Koransky was in the process of renewing its professional liability
insurance policy with the Bar Plan. Id. In completing its application for
1
Throughout his appellate brief, Likes relies on the affidavit of his expert to support his claims with
references to the custom and practice in the professional and liability insurance and underwriting industry.
However, because we conclude in the second issue that these statements are inadmissible, we will not
respond to Likes’ arguments relying on those parts of his expert’s affidavit.
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renewal, Koransky responded in the negative to the question: “Does the firm
or any attorney or employee in the firm have knowledge of any accident,
circumstance, act or omission, which may give rise to a claim not previously
reported to us?” Id. Thereafter, the Bar Plan issued Koransky a new policy. Id.
at 340. Relying on the same exclusionary provision as in the instant case, the
Bar Plan denied coverage, claiming that Koransky did not properly notify it of
his potential liability. Id. at 342.
[26] 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
it had no reason to think that the [real estate] deal was truly
doomed because it had on good authority—a former Alabama
Supreme Court Chief Justice—that the Alabama court would not
exercise jurisdiction and Buyer’s Ohio counsel informed
[Koransky] that the contract was enforceable because Ohio law
does not require delivery.
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
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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
[o]nce the Alabama case was filed, [the law firm] knew or should
have known that the only thing standing between it and a
probable malpractice claim was the question of whether the
Alabama court would exercise jurisdiction. No matter how we
construed the record, it is clear that a reasonable attorney would
have recognized that his failure to deliver the contract, in light of
the communications and activity that quickly followed, was an
omission that could reasonably be expected to be the basis of a
legal malpractice claim.
Id. at 343-44.
[27] 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 Auto. Mut. Ins. Co., 871 N.E.2d 335, 338 (Ind. Ct. App. 2007) (noting
that contract terms are ambiguous “where a reasonable person could find the
terms are susceptible to more than one interpretation”). On March 16, 2010,
the trial court dismissed Whitaker’s claim against Becker for damages resulting
from a car accident based on Likes’ failure to respond to Becker’s
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interrogatories and deliberate concealment of certain evidence. This court
subsequently reversed the trial court on March 29, 2011. At the time of the
appellate reversal, Likes could reasonably affirm that he had no reason to
believe any of his acts or omissions “may result in a claim for malpractice.” Id.
at 343.
[28] 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.
[29] 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
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whether any alleged misrepresentation contained in the application for the 2011
Policy was material.” (Appellee’s Br. p. 11).
[30] 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.
[31] 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
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the Bar plan thereof now precludes coverage under the Policy’s exclusionary
provision. 2
II. Motion to Strike
[32] 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).
[33] 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:
[s]upporting and opposing affidavits shall be made on personal
knowledge, shall set forth such facts as would be admissible in
evidence, and shall show affirmatively that the affiant is
2
Because we decide this cause based on the exclusion clause of the Policy, we will not address the Bar Plan’s
alternative argument, whether the insurance company is entitled to rescission of the Policy.
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competent to testify to the matters stated herein. Sworn or
certified copies not previously self-authenticated of all papers or
parts thereof referred to in an affidavit shall be attached thereto
or served therewith.
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.
A. Likes’ Affidavit
[34] 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
4. Based upon the Opinion of the [c]ourt of [a]ppeals, Affiant did
not have any knowledge of any incident, circumstance, act or
omission which may give rise to a claim not previously reported
to the [Bar Plan] at the time he executed the Renewal
Application.
(Appellant’s App. p. 663).
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[35] 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. granted and
vacated, 960 N.E.2d 111 (Ind. 2012). Viewed in this light, Likes’ affirmation
amounts to a legal conclusion which he hopes we will reach in this matter. As
an affiant may not testify to a legal conclusion, the trial court abused its
discretion by admitting paragraph 4 of Likes’ affidavit. See Ind. Evid. R. 704.
B. Expert’s Affidavit
[36] 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:
(a) If scientific, technical, or other specialized knowledge will
assist the trier of fact to understand the evidence or to
determine a fact in issue, a witness qualified as an expert by
knowledge, skill, experience, training, or education, may
testify thereto in the form of an opinion or otherwise.
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(b) Expert scientific testimony is admissible only if the court is
satisfied that the scientific principles upon which the expert
testimony rests are reliable.
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.
[37] 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.
[38] Turning to the affidavit itself, the Bar Plan takes issue with paragraphs 15
(second sentence), 17 to 24, and 26, which read as follows:
15. [] This is the only application of relevance in this case as this
was the sole application for the 2011 Policy.
17. Based on the custom and practice of the professional liability
insurance and underwriting industry, there was no act or incident
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as of the date of the insurance application for the 2011 Policy
which reasonably would give rise to a potential claim against
Likes as a result of the Opinion of the [c]ourt of [a]ppeals.
18. Based on the custom and practice of the professional liability
insurance and underwriting industry, Exclusion L of the 2011
Policy, the known wrongful fact exclusion, has no application in
this case for the same reason, that is because at the time of the
policy effective date, the [c]ourt of [a]ppeals’s opinion in favor of
Likes has been issued. It was not until after the inception date of
the 2011 Policy that the Indiana Supreme Court reversed the
opinion of the [c]ourt of [a]ppeals. At that point, Likes advised
the Bar Plan of the circumstances that could give rise to a claim.
It did not, in fact, give rise to a claim until many months later, on
November 12, 2012. There is no dispute between the parties that
Likes timely reported the claim under the 2011 Policy.
19. Based upon the custom and practice of the professional
liability insurance and underwriting industry, Exclusion L relates
to the knowledge of the insured at the time of the application for
the policy of insurance at issue, and not globally at all periods of
time prior to that. This is especially true here, where any such
prior knowledge became moot as a result of the reason of the
[c]ourt of [a]ppeals opinion of March 29, 2011.
20. Accordingly, neither the application for insurance nor
Exclusion L excludes coverage for the Whitakers’ claim.
21. Further, if Likes had provided notice to the Bar Plan of the
Whitakers’ potential claim immediately after the dismissal of the
Whitakers’ case on March 16, 2010 (as the Bar Plan would want
one to believe he should have), there would have been coverage
for the Whitakers’ claim under the policy of Professional
Liability Insurance issued by the Bar Plan, Policy No: 0010002-
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2009, effective from December 1, 2009 through December 1,
2010 (“2009 Policy”).
22. Specifically, pursuant to the Discovery Clause (Clause C of
Part ii, Coverage) if the insured gives written notice to the Bar
Plan of a specific incident, act or omission, which may give rise
to a claim for which coverage is provided under the policy, then
any claim that may subsequently be made against the insured
arising out of such incident, act or omission, is deemed, for the
purposes of insurance, to have been made during the policy
period when the notice was given.
23. Accordingly, any attempt by the Bar Plan to refuse to issue a
policy in the future as a result of such notice would have been
unavailing, as there would be coverage for the Whitakers’ claim
under the 2009 Policy. Since the terms, conditions, limits and
retention of the 2011 Policy and 2009 Policy were the same, and
there were no other claims under either policy, there would have
been coverage for Likes even if he acted as the Bar Plan would
wish.
24. In her affidavit filed in connection with the Motion for
Summary judgment, Valerie Polites, Senior Claims Counsel for
the Bar Plan, asserts that had the facts and circumstances of the
Whitaker matter been disclosed to the Bar Plan, the Bar Plan
may have declined to issue the 2011 Policy.
***
26. Accordingly, the Bar Plan, with full knowledge of the
Whitakers’ claim, issued the 2012 Policy to Likes.
(Appellant’s App. pp. 656-58).
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[39] 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.
[40] 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 made aware of [the facts or
data] or personally observed.” Ind. Evid. R. 703; Jackson v. Trancik, 953 N.E.2d
1087, 1093 (Ind. Ct. App. 2011). Thus, we conclude that the trial court
properly admitted paragraph 24. However, paragraph 26 again draws a legal
conclusion with respect to the knowledge of the Bar Plan, which is directly at
issue in this cause. Therefore, paragraph 26 amounts to an impermissible legal
conclusion which should have been stricken by the trial court.
CONCLUSION
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[41] 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.
[42] Reversed.
[43] Brown, J. and Altice, J. concur
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