The Bar Plan Mutual Insurance Company v. Likes Law Office, LLC Kevin L. Likes Rickey D. Whitaker and Cheryl L. Whitaker

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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