Christine Cosme v. Debora A. Warfield

IN THE

Indiana Supreme Court

Supreme Court Case No. 24S-CT-159

FILED

Christine Cosme and Roy Cosme, May 06 2024, 3:22 pm

Appellants, CLERK

Indiana Supreme Court

Court of Appeals

and Tax Court

–v–

Debora A. Warfield Clark, Dan Churilla d/b/a

Churilla Insurance, and Erie Insurance Exchange,

Appellees.

Argued: December 14, 2023 | Decided: May 6, 2024

Appeal from the Lake Superior Court Civil Division Room One

No. 45D01-1803-CT-39

The Honorable John M. Sedia, Judge

On Petition to Transfer from the Indiana Court of Appeals

No. 22A-CT-1897

Opinion by Justice Slaughter

Chief Justice Rush and Justices Massa, Goff, and Molter concur.

Slaughter, Justice.

After a plaintiff rests his case, the trial court may enter a directed

verdict (or judgment on the evidence) against him if there is insufficient

evidence on any element of his prima facie case. We reaffirmed this

standard in Purcell v. Old National Bank, 972 N.E.2d 835 (Ind. 2012). There,

we held a trial court may review evidence both quantitatively and

qualitatively. But this standard left open a question we must resolve

today—whether a court may take on the jury’s fact-finding role to weigh

evidence and assess witness credibility at the close of the plaintiff’s case.

We hold that at the directed-verdict stage, the court can review whether

inferences from the evidence are reasonable, but it cannot weigh

conflicting evidence or assess witness credibility. To do otherwise would

deprive the plaintiff of his constitutional right to a jury trial. Applying this

standard here, we hold the trial court erred in directing the verdict for

defendant Erie Insurance Exchange, but we affirm the directed verdict for

defendant Churilla Insurance.

I

A

This case arises from an insurance claim filed after the insurer cancelled

an insurance policy. The plaintiffs, Christine and Roy Cosme, had an

automobile insurance policy with Erie Insurance Exchange. The policy

listed their son, Broyce Cosme, as a driver. The Cosmes’ troubles began

with a misunderstanding between Broyce and the Indiana Bureau of

Motor Vehicles.

In February 2017, Broyce, who was 19 years old at the time, was a

passenger in his friend’s car when Hobart police pulled them over. Broyce

and his friends were arrested for possessing marijuana. After the arrest,

BMV records showed mistakenly that Broyce was the driver and that he

did not provide proof the car was insured. Based on this mistake, the BMV

suspended Broyce’s license. Upon learning of the suspension, Broyce

contacted both the BMV and the officer, Kevin Garber, who wrote the

police report. Garber assured Broyce “he would fix it”. But Garber did not

“fix it”, and Broyce’s license remained suspended.

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 2 of 20

In August 2017, the Cosmes’ insurance policy automatically renewed

for another year. While doing a routine motor-vehicle-report search for

underwriting, Erie discovered Broyce’s suspended license. On September

27, Erie sent a letter to the Cosmes stating that, because Broyce’s license

was suspended, it would cancel their insurance policy unless it could

exclude coverage for Broyce. The letter explained the policy would cancel

effective November 1, 2017, unless the Cosmes submitted a coverage-

exclusion form removing Broyce from the policy by October 28.

After receiving the letter, Roy waited until October 26 to call Erie.

When he called, Erie directed his call to Janine Aguilar, an insurance agent

at Churilla Insurance. Aguilar and Roy gave different accounts of this

phone call at trial. According to Aguilar, after Roy explained the mistaken

license suspension, she advised Roy still to sign the exclusion form to

remove Broyce from the policy and have Broyce reinstated later. But Roy

rejected this advice. Instead, he said he would have Broyce send

paperwork to Aguilar showing the suspension was a mistake.

Roy agrees that Aguilar mentioned signing the exclusion form. But he

says he told Aguilar that if Broyce got his license reinstated, they “could

just have this fixed” without taking Broyce off the insurance. He says

Aguilar did not tell him he needed to sign the exclusion form or he would

lose the insurance even if Broyce’s license were reinstated. If she had, Roy

says he would have signed the form. According to Roy, Aguilar also did

not mention the possibility of Roy getting other insurance for the family,

including for Broyce.

After her phone call with Roy, Aguilar emailed and called Megan

Malena, an underwriter at Erie, to ask her not to cancel the Cosmes’ policy

since Broyce’s suspension was a mistake. Malena responded that the

underwriting system still showed a license suspension, and the only way

to maintain coverage for Christine and Roy was to remove Broyce from

the policy. Aguilar and Roy spoke the next day, and Aguilar asked Broyce

to provide his reinstatement papers. Roy says Aguilar did not mention

signing the exclusion form or obtaining other insurance.

The Cosmes did not submit the exclusion form before Erie’s October 28

deadline. But the BMV reinstated Broyce’s license on October 28 after

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 3 of 20

Broyce paid a fee. After at first sending the reinstatement papers to the

wrong email address, Broyce emailed Aguilar a receipt on October 30

showing he paid to have his license reinstated. Aguilar confirmed receipt.

This confirmation gave Roy the impression that the issue on the policy

was resolved. And because Aguilar was still working with him past the

October 28 deadline, Roy thought the deadline no longer mattered

because he was doing what the agent had told him to do.

On October 31, Malena told Aguilar that Erie could cancel despite the

reinstatement of Broyce’s license because Erie can cancel a policy midterm

if a listed insured has a suspended license at any time during the policy

period. Thus, the only way Roy could maintain coverage for his family

was to submit the exclusion form by midnight that day. Aguilar admits

she knew this before receiving Malena’s email. Aguilar left a voicemail for

Roy and Broyce on October 31 and sent an email to Broyce

communicating this information. Neither discovered the voicemails or

email until several days after Erie’s November cancellation date.

According to Roy, Aguilar’s voicemail was the first time she told him he

needed to sign the exclusion form or the policy would be cancelled

regardless of Broyce’s reinstatement.

As threatened, Erie cancelled the Cosmes’ policy on November 1. Three

days later, an uninsured motorist, Deborah A. Warfield Clark, rear-ended

Roy and Christine. Roy and Christine did not receive notice that Erie had

cancelled their policy until November 6. Until then Roy “assumed we’re

good” because Broyce sent Aguilar the reinstatement papers, and they

had heard nothing in return. After discovering the policy cancellation,

Roy sent an email to Aguilar explaining that he “was under the

impression from [Aguilar] in [their] conversations that if he had [Broyce’s]

drivers license reinstated the insurance coverage for all [Roy’s] vehicles

would continue as it always ha[d].” He also wrote:

if Broyce needed to be removed from my automobile insurance

coverage policy[,] no matter what[,] why wasn’t that stated to

me instead of you telling me you were taking it to the

underwriter to have it checked if Broyce’s license was

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 4 of 20

reinstated. Why would you do that? What was the point of

that?

Once the Cosmes discovered the policy was cancelled, they submitted the

exclusion form and got the policy reinstated. On November 13, the trial

court in a separate matter ordered the BMV to expunge Broyce’s license

suspension from its record—as if the suspension never happened. The

Cosmes submitted the November 4 accident as a claim, but Erie denied

coverage because their policy was no longer in effect on that date.

B

After Erie denied the claim, the Cosmes sued Clark, Erie, and Churilla.

Against Clark, they brought a negligence claim for causing the accident.

The claim against her is not before us. Against Erie and Churilla, the

Cosmes alleged breach of contract and sought punitive damages, and they

requested declaratory relief that Erie and Churilla breached contractual

and common-law duties owed them under the insurance policy. And

against Erie alone, they brought a bad-faith claim, alleging Erie breached

its duty to deal with the Cosmes in good faith.

In his opening statement at trial, Churilla’s counsel referenced the

initial phone conversation between Roy and Aguilar. He explained that

“what exactly was said” is “going to be a matter of dispute.” The jury, as

factfinder, is “just going to have to listen to the testimony, examine the

documentary evidence, and decide what happened.” The Cosmes then

presented their case-in-chief, including testimony from Roy, Christine,

Broyce, Aguilar, Malena, and their expert, Elliott Flood. The Cosmes also

presented documentary evidence, including the certified insurance policy,

emails between Roy and Aguilar, emails between Aguilar and Malena,

and the letters Erie sent to Roy.

Relevant to our review here, the Cosmes presented various evidence on

the insurance policy’s effective dates. The Cosmes presented a letter from

Julia Swanson, who worked at Erie, to Erie’s counsel. In this letter,

Swanson certified that “from August 27, 2017 to August 27, 2018”—

notably including the November 4, 2017 accident date—“the enclosed

Declarations, policy form and endorsements were in effect . . . unless

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 5 of 20

otherwise modified or cancelled in the future.” But also in evidence was

Swanson’s affidavit stating that her certification included a scrivener’s

error about the date and should have said August 27, 2017, to November

1, 2017. The Cosmes’ expert, Elliott Flood, an insurance consultant and a

former insurance executive, testified that Swanson’s certification

suggested the November 4 accident was covered under the policy. Flood

explained that Swanson’s certification was “under oath”, and she had

“been trained . . . to be careful to make sure you get the official record”.

While he acknowledged that Swanson claimed the certification was a

mistake, Flood viewed this mistake as a “big red flag” because it made it

unclear whether the policy was in effect at the time of the accident.

After the Cosmes rested their case, Erie and Churilla moved for

judgment on the evidence. Clark never appeared at trial and thus did not

make a similar motion. The trial court granted the motion, reasoning that

the Cosmes brought about their own lack-of-coverage injuries when they

failed to sign the exclusion form before October 28. The court denied the

Cosmes’ motion to correct error. The Cosmes then appealed, challenging

the order granting the motions for judgment on the evidence but not the

order denying their motion to correct error.

The court of appeals affirmed, holding the Cosmes failed to present

sufficient evidence to support their claims against Erie and Churilla.

Cosme v. Warfield Clark, No. 22A-CT-1897, at *3 (Ind. Ct. App. Mar. 8, 2023)

(mem.). On the professional-negligence claim against Churilla, the

appellate panel found that if Churilla owed the Cosmes a duty, Churilla

met its duty of reasonable care by telling the Cosmes to sign the exclusion

form and attempting to persuade Erie not to cancel the policy. Id. at *14–

15. On the breach-of-contract claim against Erie, the panel found “the

evidence relating to cancellation overwhelmingly and entirely establishes”

that the policy was cancelled because the Cosmes failed to submit the

exclusion form. Id. at *18. “As such, it cannot be said that the Cosmes’

intended inference, i.e., that the Policy was in effect at the time of the

Accident, can logically be made from the evidence presented during their

case-in-chief.” Id. at *18–19. On the bad-faith claim, the panel found that

because there was no contract in place between Erie and the Cosmes when

Clark rear-ended Christine and Roy, “Erie could not have been found to

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 6 of 20

have breached its duty” when it denied the Cosmes’ insurance claim. Id. at

*20. And Erie did not cancel the policy in bad faith, the panel found,

because Broyce’s license was suspended when Erie cancelled the policy.

Id. at *20–21. Because all claims against Churilla and Erie failed, the

punitive-damages claim, which was derivative of the other claims, also

failed. Id. at *21–23.

The Cosmes then sought transfer, which we now grant, thus vacating

the appellate opinion, Ind. Appellate Rule 58(A).

II

Under Trial Rule 50(A), a movant may seek judgment on the evidence

at the close of a plaintiff’s case if all or some of the issues are “not

supported by sufficient evidence”. Ind. Trial Rule 50(A). In Purcell v. Old

National Bank, we reaffirmed this standard for Rule 50(A) motions. 972

N.E.2d at 839. But Purcell left it unclear whether a court may weigh

evidence or assess witness credibility in deciding whether “sufficient

evidence” supports an issue. Today, we answer that question in the

negative. When ruling on a Rule 50(A) motion, a judge may assess both

the quantity and quality of the evidence presented by the nonmovant but

may not weigh the conflicting evidence or assess witness credibility; these

are fact-finding functions within the jury’s sole province.

Here, we hold that the trial court erred in granting judgment on the

evidence to Erie because the Cosmes’ case-in-chief presented sufficient

(though conflicting) evidence to prove Erie breached its contract and

violated its duty of good faith. But the court correctly granted judgment to

Churilla because the evidence showed Churilla owed no special duty to

the Cosmes to procure insurance or advise on the insurance policy.

A

Under Purcell, we analyze Rule 50(A) motions both quantitatively and

qualitatively. Evidence fails quantitatively if no evidence supports finding

for the nonmovant (the any-evidence standard). Id. at 840. Evidence fails

qualitatively if the probative evidence cannot create a reasonable inference

that a jury could find for the nonmovant (the substantial-evidence

standard). Ibid. A nonmovant—usually a plaintiff—may fail the

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 7 of 20

qualitative prong “either because of an absence of credibility of a witness

or because the intended inference may not be drawn therefrom without

undue speculation.” Ibid. (quoting Am. Optical Co. v. Weidenhamer, 457

N.E.2d 181, 184 (Ind. 1983)). When evaluating the evidence, the court must

look at the evidence in the light most favorable to the nonmovant. Id. at

839.

On this point, Purcell is inconsistent in both promoting and

simultaneously disavowing courts that would assess witness credibility

and weigh evidence at the directed-verdict stage. The qualitative prong

expressly permits the court to assess “an absence of credibility of a

witness”. Id. at 840 (quoting Am. Optical Co., 457 N.E.2d at 184). It also

implicitly permits the court to weigh evidence. The qualitative prong asks

“not merely whether a conflict of evidence may exist, but rather whether

there exists probative evidence, substantial enough to create a reasonable

inference that the non-movant has met his burden.” Id. at 841. This

suggests that a conflict of evidence would not defeat a directed-verdict

motion and that a court must assess both the “probative” value of

evidence and whether that evidence is “substantial”. Ibid.

In practice, Purcell’s analysis allows courts to weigh some of the

evidence. There, we found a generalized, ambiguous interrogatory

response insufficient to link the defendant to the alleged fraud. Id. at 841–

42. We also considered the conflicting evidence—testimony explaining the

interrogatory response during trial that suggested the defendant was not

tied to the fraud. Ibid. Thus, along with looking at the quality of the

nonmovant’s evidence (what could be reasonably inferred from the

evidence most favorable to the nonmovant), we also weighed the

conflicting evidence not favorable to the nonmovant and found “as a

whole” the evidence could not defeat the directed verdict. Id. at 841.

While permitting courts to assess witness credibility and weigh

evidence in the qualitative prong, Purcell simultaneously instructs courts

to refrain from either function: “It remains true that a court is not free to

engage in the fact-finder’s function of weighing evidence or judging the

credibility of witnesses to grant judgment on the evidence, where fair-

minded men may reasonably come to competing conclusions.” Id. at 842.

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 8 of 20

Indeed, Purcell says, this function “has always been within the purview of

the jury.” Ibid.

Given Purcell’s contradictory commands, we clarify that courts may not

weigh evidence or assess witness credibility—fact-finding functions

reserved for the jury—at the close of plaintiff’s case-in-chief. This is why,

historically, we have cautioned courts not to deprive juries of this role by

granting directed verdicts. See, e.g., Whitaker v. Borntrager, 122 N.E.2d 734,

734–35 (Ind. 1954). This approach also aligns with our summary-judgment

standard, which allows even a self-serving affidavit to defeat summary

judgment so a case can go to trial. Hughley v. State, 15 N.E.3d 1000, 1004

(Ind. 2014). Only after both sides have rested and the jury returns its

verdict do we permit the trial judge to take a more substantive role in

assessing the evidence as a so-called thirteenth juror, empowering the

court to conclude that no reasonable jury could have reached the result it

did. Chi Yun Ho v. Frye, 880 N.E.2d 1192, 1196 (Ind. 2008). At the post-

verdict stage, the court is not impeding the jury-trial right. And directing

judgment after a jury verdict has a lower effect on judicial resources. If a

trial court sets aside a jury verdict erroneously, the appellate court can

reinstate the verdict. But if there is no jury verdict, the only suitable

appellate remedy is a new trial.

1

The core reason we bar weighing evidence and assessing witness

credibility at the directed-verdict stage is because our legal system

reserves the fact-finding function to juries. Our state constitution

expressly protects the jury-trial right in civil cases. And our historical

treatment of directed verdicts shows a reticence to remove any factual

issues from the jury supported by sufficient evidence to permit a

reasonable jury to return a verdict for the plaintiff.

The Indiana constitution protects “the right of trial by jury” in all civil

cases. Ind. Const. art. 1, § 20. “The jury are the exclusive judges of the

evidence.” Rannells v. State, 18 Ind. 255, 257 (1862). Thus, parties have a

“constitutional right . . . to have a jury determine the credibility of the

witnesses and the weight that shall be given the evidence and to decide

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 9 of 20

the facts accordingly.” Novak v. Chicago & Calumet Dist. Transit Co., 135

N.E.2d 1, 5 (Ind. 1956).

A directed verdict withdraws an issue from the jury and hands it to the

judge. But to maintain the jury-trial right, we cannot permit the court to

preempt the jury’s fact-finding function. We said as much in Purcell: “Our

decision does not alter the critical, invaluable, and constitutionally

protected role of the jury in Indiana’s system of jurisprudence. It remains

true that a court is not free to engage in the fact-finder’s function of

weighing evidence or judging the credibility of witnesses”. 972 N.E.2d at

842.

Our precedent protects the jury’s function in civil cases. The first hint of

permitting courts to qualitatively review evidence and witness credibility

on directed verdicts was not until 1983 in American Optical, 457 N.E.2d at

184. Before American Optical, we followed the any-evidence rule and did

not permit a directed verdict if any evidence or legitimate inference

supported each material allegation of the nonmovant’s claim. Whitaker,

122 N.E.2d at 734–35. Under this rule, a court should not direct a verdict

unless “there is a total absence of evidence or legitimate inference in favor

of the plaintiff upon an essential issue; or where the evidence is without

conflict and is susceptible of but one inference” for the movant. Ibid.

“[T]he court will not weigh the conflicting evidence or inferences but will

consider only the evidence and inferences that are most favorable to the

[nonmovant].” Id. at 735. We embraced this rule to preserve the jury-trial

right, Novak, 135 N.E.2d at 5, and reaffirm it today.

In line with our historical approach, we hold that Purcell’s qualitative

prong limits the court to reviewing only the reasonableness of inferences

drawn from evidence. See Whitaker, 122 N.E.2d at 735 (holding courts

view “all inferences which the jury might reasonably draw” on a directed-

verdict motion). Thus, the court cannot ignore direct evidence, but it can

assess whether proposed inferences to be drawn from circumstantial

evidence are reasonable or speculative. See ibid. Still, the court cannot

substitute its own view of the evidence for that of the jury since this

prerogative is solely the jury’s. See Novak, 135 N.E.2d at 5. A court views

the evidence with all reasonable inferences for the nonmovant, and the

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 10 of 20

court cannot assess witness credibility or weigh conflicting evidence (or

the conflicting inferences drawn from it). Whitaker, 122 N.E.2d at 735.

In sum, under our current standard, we permit courts to ensure the

inferences supporting the nonmovant’s claims are reasonable, but courts

cannot take on the jury’s fact-finding functions of weighing conflicting

evidence and assessing witness credibility.

2

Limiting courts this way with directed verdicts aligns with our

approach in Rule 56 summary-judgment motions. Summary judgment is

appropriate when there is no disputed issue of material fact, and the

moving party is entitled to a judgment as a matter of law. T.R. 56(C);

Griffin v. Menard, Inc., 175 N.E.3d 811, 813 (Ind. 2021). On summary

judgment, we draw all reasonable inferences for the nonmovant. Griffin,

175 N.E.3d at 813. But “the non-moving party must designate some

evidence to defeat the moving parties’ motion”, and “speculation is not

enough to overcome summary judgment.” Id. at 814.

While Rule 50(A) and Rule 56 motions occur at different stages of the

litigation, both have the same goal—withdrawing issues from the jury

when there are no factual issues for the jury to decide. Summary judgment

is available when the nonmovant cannot prove its claim based on the

undisputed evidence. Judgment on the evidence (directed verdict) is

available when the nonmovant has not proved its claim because no

reasonable jury could find for it. Thus, just as a self-serving affidavit can

defeat summary judgment, Hughley, 15 N.E.3d at 1004, so too can the same

self-serving trial testimony defeat a directed verdict.

Consistent with Indiana’s approach, federal courts likewise apply

parallel standards on summary judgment and judgment on the evidence.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250–51 (1986). “In essence,

though, the inquiry under each is the same: whether the evidence presents

a sufficient disagreement to require submission to a jury or whether it is

so one-sided that one party must prevail as a matter of law.” Id. at 251–52.

Again, the primary difference between the summary-judgment and

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 11 of 20

directed-verdict standards is procedural—the former is made on evidence

adduced before trial, and the latter on evidence admitted at trial. Id. at 251.

Given the two motions’ similar functions, it makes little sense to let a

case go to trial on some quantum of evidence but not to a jury. Evidence

that creates a factual dispute requiring a trial should also require a jury to

resolve that dispute. It would be paradoxical for courts to let a case

proceed to trial based on certain evidence but once at trial to withdraw the

case from the jury based on the same evidence.

3

While a trial court has no fact-finding role under Rule 50(A), the court

may take a more active role after the jury has returned a verdict, or after

the court has entered judgment. On a motion to correct error under Rule

59(J), a trial court shall grant a new trial if the jury’s verdict “is against the

weight of the evidence”. T.R. 59(J)(7). And the court shall enter judgment

notwithstanding the jury’s verdict if the verdict “is clearly erroneous as

contrary to or not supported by the evidence”. Ibid. On a Rule 59(J)

motion, the judge acts as the “thirteenth juror” and must “sift and weigh

the evidence and judge witness credibility.” Chi Yun Ho, 880 N.E.2d at

1196 (quoting Keith v. Mendus, 661 N.E.2d 26, 31 (Ind. Ct. App. 1996)).

One reason we permit a more active role for the trial court after the jury

has entered its verdict is because, on appeal, if the appellate court

disagrees with the trial judge’s ruling under Rule 59(J), it can reinstate the

jury’s verdict. At that stage, there is a verdict to reinstate. But on directed

verdict, an appellate reversal requires a new trial before a different jury

because the first jury never got to render a verdict—an unwise, inefficient

use of judicial resources. An appellate court also can better review the

merits of how a trial court weighed evidence at the Rule 59(J) stage

because the court must detail its reasoning in a written order. When

ordering a new trial, the trial court must both “specify the general

reasons” for its ruling and “make special findings of fact upon each

material issue or element of the claim”. T.R. 59(J). Rule 50(A) does not

impose the same requirements.

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 12 of 20

The trial court does not circumvent the jury-trial right at the Rule 59(J)

stage. At this stage, the jury has already heard the evidence and returned

its verdict. If the trial court orders a new trial, it hands the case to another

jury rather than just taking the case from the jury. See Weida v. Kegarise,

849 N.E.2d 1147, 1151 (Ind. 2006). The court enters judgment

notwithstanding the verdict only when the verdict is “clearly erroneous”,

T.R. 59(J), which asks if any facts support the verdict, see Yanoff v. Muncy,

688 N.E.2d 1259, 1262 (Ind. 1997) (applying clear-error review to trial-

court judgment on appeal). And the court cannot enter judgment if “such

relief is shown to be impracticable or unfair to any of the parties or is

otherwise improper”. T.R. 59(J). As we explained in Novak, this motion

protects the parties’ jury-trial right and protects the defendant from a

significant error by the jury:

Thus it is that a complaining party, whose case is supported by

some evidence of probative value upon every material issue, is

given the benefit of his constitutional guarantee to have the

right which he asserts finally affirmed or denied by a qualified

and impartial jury. Thus also it is that a party-defendant is

protected against the errors of a jury by the trial judge, whose

duty it is to review the entire proceedings in the cause, and, in

the light of his greater experience and understanding of the

law, either affirm or reject the verdict of the jury.

135 N.E.2d at 5. Defendants concerned during trial about receiving an

unfair or erroneous jury verdict must wait to file a post-judgment Rule

59(J) motion to receive a judge’s more holistic, qualitative analysis that

considers and weighs all the evidence the jury heard.

B

Next, we apply our directed-verdict test to the Cosmes’ claims. But

before reaching the merits, we must first set out the standard of appellate

review.

Our precedent has been unclear about what standard of review applies.

On one hand, we have said the reviewing court applies “the same

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 13 of 20

standard that the trial court uses”, Purcell, 972 N.E.2d at 839, which is de

novo review. But we have also said that “the trial judge is within his or

her discretion to issue judgment on the evidence”, id. at 842, which is an

abuse-of-discretion standard. We resolve the uncertainty by observing

that because trial courts do not weigh evidence or assess witness

credibility on directed verdicts, we must apply de novo review. The paper

record alone is enough for a reviewing court to assess whether, without

any weighing, the evidence supports any reasonable inference in favor of

the nonmovant. This standard of review aligns with our summary-

judgment standard of review, Griffin, 175 N.E.3d at 812–13, and with the

federal approach, Simstad v. Scheub, 816 F.3d 893, 900 (7th Cir. 2016).

Turning to the merits, without assessing witness credibility or weighing

evidence, we hold that sufficient evidence supports the Cosmes’ claims for

breach of contract and bad faith against Erie. Based on the Cosmes’

evidence, a reasonable jury could find that the insurance policy was in

effect when Clark rear-ended Christine and Roy on November 4, 2017. A

jury could also find that Erie dealt with the Cosmes in bad faith when

communicating about the policy cancellation and when it ultimately

denied their insurance claim. Because a reasonable jury could find bad

faith, it could also award punitive damages against Erie. But insufficient

evidence supports the Cosmes’ professional-negligence claim against

Churilla because no reasonable jury could find Churilla owed the Cosmes

a special duty.

1

As for the claims against Erie, the Cosmes presented conflicting

evidence to support their breach-of-contract and bad-faith claims. We look

only to the evidence supporting the Cosmes’ claims, with all reasonable

inferences in their favor, to assess whether a reasonable jury could find for

them on all elements of their two claims. Though conflicting, the Cosmes’

evidence on both claims—one sounding in contract, the other in tort—is

enough to defeat a directed verdict. “[A]n insured who believes that an

insurance claim has been wrongly denied may have available two distinct

legal theories, one in contract and one in tort”. Erie Ins. v. Hickman ex rel.

Smith, 622 N.E.2d 515, 520 (Ind. 1993). The breach-of-contract claim

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 14 of 20

requires that a contract be in place at the time of the breach. Collins v.

McKinney, 871 N.E.2d 363, 370 (Ind. Ct. App. 2007). Whether a policy was

cancelled, making the contract no longer in effect, is the insurer’s burden

to prove. See Am. Fam. Ins. v. Ford, 293 N.E.2d 524, 526 (Ind. Ct. App.

1973). A related tort claim arises from an insurer’s duty to deal with its

insured in good faith. Erie Ins., 622 N.E.2d at 518–19. This duty

encompasses more than a coverage claim. Monroe Guar. Ins. v. Magwerks

Corp., 829 N.E.2d 968, 976 (Ind. 2005). We recognize four specific duties

that insurers owe insureds: (1) refrain from unfounded refusal to pay

policy proceeds; (2) refrain from unfounded delay in payment; (3) avoid

deceiving the insured; and (4) avoid exercising any unfair advantage to

pressure the insured into settling a claim. Ibid.

Erie argues there was no bad faith and no breach of contract because

the policy was not in effect when Clark rear-ended the Cosmes. But the

Cosmes’ evidence suggests the policy was in place at the time of the

accident. An affidavit from Swanson, the Erie employee, certified that the

policy was in effect at the time of the accident in November 2017—“from

August 27, 2017 to August 27, 2018”. The Cosmes’ expert repeatedly

claimed that the certification was a valid basis to think the policy was in

force at the time of the accident. A jury could reasonably infer from this

evidence that the policy was in effect on November 4.

Erie directs us to conflicting evidence, but weighing conflicting

evidence is reserved for the jury. After Swanson sent the policy

certification to Erie’s counsel, Swanson later testified the end date in her

certification was a scrivener’s error. The certification should have said the

policy was in effect from “August 27, 2017 to November 1, 2017”. But we

do not look to conflicting evidence to determine sufficiency. Erie admits

that the Cosmes presented “reed-thin quantitative evidence that a contract

was in place at the time of the accident”. But just as “reed-thin” evidence

is enough to defeat summary judgment, see Hughley, 15 N.E.3d at 1004, so

too is it enough to withstand a directed verdict. The jury may ultimately

agree with Erie that the initial certification was an error, and thus the

policy was not in effect at the time of the accident. But that factual dispute

is for the jury to decide after hearing all the evidence, not for the trial

judge to decide at the close of plaintiffs’ case.

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 15 of 20

The evidence that Erie cancelled the policy after discovering Broyce’s

suspended license is also conflicting. Erie is correct there is nothing

improper with cancelling an auto-insurance policy if a named insured’s

driver’s license is suspended “during the policy period”. Ind. Code § 27-7-

6-4(b). But the Cosmes’ evidence is that Erie’s conduct leading up to the

cancellation lulled them into believing Erie would not cancel their policy.

We hold that a reasonable jury could find that Erie breached the policy

and acted in bad faith first when it cancelled the policy and later when it

denied the Cosmes’ claim.

To begin, when Aguilar, the Churilla employee, was communicating

with the Cosmes about the impending cancellation of their policy, Aguilar

was Erie’s agent. While an insurance agent is the agent of the insured

when procuring a policy, Filip v. Block, 879 N.E.2d 1076, 1085 (Ind. 2008),

once the policy is issued, an agent becomes the agent of the insurer, Aetna

Ins. Co. of the Midwest v. Rodriguez, 517 N.E.2d 386, 388 (Ind. 1988). When

the Cosmes were communicating with Aguilar about the policy

cancellation, the policy had been issued, and Aguilar was then acting as

Erie’s agent. Aguilar also had apparent authority because when Roy called

Erie about the imminent cancellation, Erie directed him to Churilla. This

manifestation by Erie gave the Cosmes reason to believe that Churilla had

authority to bind Erie on the policy-cancellation issues. See Gallant Ins. v.

Isaac, 751 N.E.2d 672, 675 (Ind. 2001). Thus, Aguilar could bind Erie, and

her actions may be imputed to Erie.

With Aguilar’s actions imputed to Erie, a reasonable jury could find

Erie’s bad-faith conduct caused the policy’s cancellation. Aguilar’s

communications with the Cosmes led them to believe Erie would not

cancel their policy and deterred them from taking action that would have

kept the policy in effect. According to Roy, Aguilar never made clear that

he had to sign the exclusion form to avoid cancellation, or that providing

license-reinstatement documents would not preserve the policy. Rather

than insist that Roy sign the exclusion form, Aguilar sought Broyce’s

reinstatement papers and confirmed receipt of these papers on October 30.

From these communications, Roy believed that he had resolved Erie’s

threat to cancel the policy, and that the October 28 deadline to prevent

cancellation no longer applied—or so a reasonable jury could believe.

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 16 of 20

It was not until October 31, a day before the policy would cancel, when

Aguilar finally informed the Cosmes that signing the exclusion form was

the only way to keep the policy in force. Aguilar knew before this date

that the reinstatement documents would not prevent cancellation. But she

worked with the Cosmes to obtain the reinstatement documents anyway,

letting the Cosmes believe they were resolving the cancellation issue.

Unfortunately, Aguilar’s last-minute attempt to inform the Cosmes

failed, and neither Roy nor Broyce received her messages in time. Thus,

unbeknownst to the Cosmes, their policy had already been cancelled

when Clark rear-ended them a few days later. After leading the Cosmes to

believe the policy issue was resolved, Erie then denied the claim because

the policy was no longer in effect. Construing all reasonable inferences in

the Cosmes’ favor, we hold that a reasonable jury could find that this was

an unfounded refusal to pay the claim and a bad-faith breach of contract

for which punitive damages may be proper. See Monroe Guar. Ins., 829

N.E.2d at 976.

For these reasons, a reasonable jury could find that the policy was still

in effect at the time of the accident, and that Erie’s communications in

cancelling the policy and its subsequent denial of the Cosmes’ insurance

claim were a bad-faith breach of contract. Directed verdict for Erie was

thus improper.

2

Though the trial court erred in granting judgment on the evidence to

Erie, it correctly found insufficient evidence supported the Cosmes’ claim

against Churilla. Looking only at the evidence supporting their

professional-negligence claim, we hold the plaintiffs’ claim against

Churilla fails because Churilla owed no legal duty to the Cosmes.

Two potential duties an insurance agent can owe to an insured are

relevant here: duty to procure and duty to advise. Under the duty to

procure, agents owe their clients “a general duty of reasonable care and

skill in obtaining insurance and following their clients’ instructions.” Ind.

Restorative Dentistry, P.C. v. Laven Ins. Agency, Inc., 27 N.E.3d 260, 264 (Ind.

2015).

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 17 of 20

The Cosmes frame their communications with Churilla as obtaining

insurance from Erie. But their discussions on the imminent cancellation of

the policy did not involve obtaining insurance. And Churilla had no duty

to offer the Cosmes alternative insurance. The duty to procure arises from

a contract to procure, which requires at a minimum that the insured give

the agent enough direction so the agent can obtain an insurance contract.

Id. at 269. Here, the Cosmes never directed Churilla to procure alternative

insurance. Thus, there was no contract to procure, and Churilla owed no

duty to the Cosmes.

The Cosmes’ claim for breach of duty to advise also fails. An agent may

have a duty to advise insureds about coverage. Id. at 264. But this duty

arises only when a “special relationship” exists. Ibid. The nature and

length of the relationship determine whether it is “special”, and “[a]ll

special relationships are long-term”. Id. at 265. A special relationship

depends on four factors: (1) the agent exercises broad discretion to serve

the insured’s needs; (2) the agent counsels the insured on specialized

coverage; (3) the agent holds herself out as a highly skilled insurance

expert, and the insured relied on this expertise; and (4) the agent receives

compensation for expert advice. Ibid. The Cosmes argue a special

relationship exists because Churilla advised the Cosmes on the

cancellation and advocated with Erie to keep Broyce on the policy. But

these facts are irrelevant to finding a special relationship. The Cosmes

introduced no evidence to show the relationship was long-term, that

Churilla had broad discretion, or that Churilla had any special expertise or

obtained specialized coverage.

Lacking evidence on the duty element of their professional-negligence

claim, the Cosmes cannot meet the quantitative prong of the directed-

verdict standard. Thus, we agree with the trial court that Churilla is

entitled to a directed verdict.

* * *

For these reasons, we reverse the trial court’s directed verdict for Erie,

we affirm as to Churilla, and we remand for further proceedings

consistent with our opinion.

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 18 of 20

Rush, C.J., and Massa, Goff, and Molter, JJ., concur.

ATTORNEYS FOR APPELLANTS, CHRISTINE COSME AND ROY

COSME

Angela M. Jones

The Law Office of Angela M. Jones, LLC

St. John, Indiana

Steven J. Sersic

Smith Sersic, LLC

Munster, Indiana

ATTORNEY FOR APPELLEE, DAN CHURILLA D/B/A CHURILLA

INSURANCE

Trevor W. Wells

Reminger Co., L.P.A.

Merrillville, Indiana

ATTORNEY FOR APPELLEE, ERIE INSURANCE EXCHANGE

James P. Strenski

Drewry Simmons Vornehm, LLP

Carmel, Indiana

ATTORNEYS FOR AMICUS CURIAE, DEFENSE TRIAL COUNSEL

OF INDIANA

Lucy R. Dollens

Quarles & Brady, LLP

Indianapolis, Indiana

Crystal G. Rowe

Kightlinger & Gray, LLP

New Albany, Indiana

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 19 of 20

ATTORNEYS FOR AMICUS CURIAE, INDIANA TRIAL LAWYERS

ASSOCIATION

Nicholas C. Deets

Tyler J. Zipes

Hovde Dassow + Deets, LLC

Indianapolis, Indiana

ATTORNEYS FOR AMICUS CURIAE, INDIANAPOLIS BAR

ASSOCIATION, APPELLATE PRACTICE SECTION

Paul L. Jefferson

McNeely Law

Indianapolis, Indiana

Bryan H. Babb

Bose McKinney & Evans LLP

Indianapolis, Indiana

Christopher J. Bayh

Barnes & Thornburg LLP

Indianapolis, Indiana

Joel M. Schumm

Indiana University Robert H. McKinney School of Law

Indianapolis, Indiana

Indiana Supreme Court | Case No. 24S-CT-159 | May 6, 2024 Page 20 of 20