Opinion
No. 49A04-1006-PL-371
09-09-2011
BEVERLY JINKINS, Appellant, v. CUMIS INSURANCE SOCIETY, INC, Appellee.
ATTORNEY FOR APPELLANT: EDWARD L. HARRIS, III Abbott & Harris Fishers, Indiana ATTORNEY FOR APPELLEE: STEPHEN R. PENNELL Stuart & Branigin LLP Lafayette, Indiana
Pursuant to Ind.Appellate Rule 65(D), this Memorandum Decision shall not be regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case.
ATTORNEY FOR APPELLANT:
EDWARD L. HARRIS, III
Abbott & Harris
Fishers, Indiana
ATTORNEY FOR APPELLEE:
STEPHEN R. PENNELL
Stuart & Branigin LLP
Lafayette, Indiana
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable S.K. Reid, Judge
Cause No. 49D14-0402-PL-334
MEMORANDUM DECISION - NOT FOR PUBLICATION
MATHIAS , Judge
Beverly Jinkins ("Jinkins") appeals the Marion Superior Court's grant of summary judgment in favor of Cumis Insurance Society, Inc. ("Cumis") in Jinkins's third-party complaint against Cumis. On appeal, Jinkins presents several issues, which we restate as whether the trial court erred in granting Cumis's motion for summary judgment.
We affirm.
Facts and Procedural History
The basic facts of this case appear to be undisputed. From January 1, 2001 until February 27, 2004, Jinkins was a member of the board of directors of Jet Credit Union ("Jet"). Jinkins also served as chief operating officer of Jet from January 1, 2001 until August 22, 2003. And from August 23, 2003 until February 27, 2004, Jinkins was Jet's chief executive officer.
Jet had purchased two insurance policies from Cumis that are relevant to this appeal. The first was a Directors, Volunteers, and Employees policy ("DVE policy"), which was in effect from December 1, 2002 until March 31, 2005. The second was a Business Liability Policy ("BLP policy"), which was in effect from December 1, 2002 until December 1, 2003.
On October 15, 2003, Jet filed a complaint against its former chief executive officer, John V. Loudermilk ("Loudermilk"), alleging "several instances of misconduct and financial improprieties that caused harm to Jet." See Jet Credit Union v. Loudermilk, 879 N.E.2d 594, 595 (Ind. Ct. App. 2008) (record citation omitted), trans denied. Loudermilk's alleged transgressions were investigated by Jet, American Mutual Share Insurance Company ("AMSI"), and the Indiana Department of Financial Institutions ("DFI"). Jinkins cooperated with the investigation and assisted with the assessment of Jet's financial status in the wake of Loudermilk's alleged malfeasance. On February 27, 2004, Jet, Jinkins, AMSI, and the DFI entered into an agreement, in which Jinkins resigned as Jet's chief executive officer and waived her rights under a 1993 succession agreement between her and Jet. See Jinkins v. Jet Credit Union, No. 49A02-1006-PL-666 (Ind. Ct. App. Aug. 17, 2011).
AMSI guarantees the payment of credit union share accounts of Jet's members.
On November 15, 2006, Jet filed a third amended complaint in the Loudermilk litigation. In the complaint, Jet added Jinkins as a party and alleged that she acted as Loudermilk's agent "in furtherance of a conspiracy to commit Deception, Fraud on a Financial Institution, and breach of other fiduciary duties to Jet Credit Union." Appellant's App. p. 96. Jet further alleged that Jinkins was aware of Loudermilk's misconduct and failed to report it, thereby breaching her fiduciary duty to Jet. Jet requested both compensatory and punitive damage awards for Jinkins's "lack of due diligence," "breach of fiduciary duty" and her "reckless willful, wanton, or heedless disregard of the consequences" of her acts and omissions. Appellee's App. p. 99.
As discussed below, this suit was brought in Jet's name by Cumis, acting as Jet's subrogee. Cumis was Jet's bonding company and was subrogated to Jet's rights when it paid Jet's bond claim. See Jinkins, slip op. at 10, 12.
On November 18, 2006, Jinkins mailed Cumis a copy of the complaint against her and requested that Cumis "advise who my counsel will be to defend me[.]" Appellant's App. p. 500. A litigation consultant employed by Cumis reviewed Jinkins's request and determined that she was not covered under either the DVE policy or the BLP policy. Cumis then sent Jinkins a letter on December 13, 2006, notifying her that she was not covered under the DVE policy because it was a "claims made" policy and that the claims made against Jinkins were not made until after the coverage period of the policy expired on December 1, 2004. The letter further informed Jinkins that she was not covered under the BLP policy because that policy insured against bodily injury and property damage and, based on Cumis's reading of the complaint against Jinkins, the claims did not seek to recover for bodily injury or property damage.
Thereafter, on July 31, 2008, Jinkins filed a third-party complaint for damages and declaratory judgment against Cumis, arising out of Cumis's denial of coverage under the DVE and BLP policies. Jinkins's complaint alleged breach of contract, unjust enrichment, quasi contract, breach of the duty of good faith, negligence per se, and sought a declaratory judgment that she was covered by the DVE and/or the BLP policies. Cumis filed an answer to this complaint on September 4, 2008, asserting several affirmative defenses.
On February 19, 2009, Cumis filed a motion for summary judgment. Jenkins filed her response in opposition to Cumis's motion on July 27, 2009. The trial court held a hearing on Cumis's motion for summary judgment on December 17, 2009, and on February 4, 2010, the trial court issued an order granting summary judgment in favor of Cumis. Jinkins filed a motion to correct error on March 8, 2010. On April 22, 2010, the trial court held a hearing on Jinkins's motion, and issued an order denying her motion to correct error on May 20, 2010. Jinkins now appeals.
Summary Judgment
Our standard of review from a grant of summary judgment is well settled:
When reviewing a grant of summary judgment, our standard of review is the same as that of the trial court. Considering only those facts that the parties designated to the trial court, we must determine whether there is a "genuine issue as to any material fact" and whether "the moving party is entitled to a judgment as a matter of law." Ind. Trial Rule 56(C). In answering these questions, the reviewing court construes all factual inferences in the non-moving party's favor and resolves all doubts as to the existence of a material issue against the moving party. The moving party bears the burden of making a prima facie showing that there are no genuine issues of material fact and that the movant is entitled to judgment as a matter of law; and once the movant satisfies the burden, the burden then shifts to the non-moving party to designate and produce evidence of facts showing the existence of a genuine issue of material fact.Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267, 1269-70 (Ind. 2009) (citations omitted).
Where the trial court makes findings and conclusions in support of its entry of summary judgment, we are not bound by such findings and conclusions, but they aid our review by providing reasons for the trial court's decision. Kumar v. Bay Bridge, LLC, 903 N.E.2d 114, 115 (Ind. Ct. App. 2009). A de novo standard of review applies where the dispute is one of law rather than fact. Dugan v. Mittal Steel USA Inc., 929 N.E.2d 184, 185-86 (Ind. 2010). If the trial court's entry of summary judgment can be sustained on any theory or basis in the record, we will affirm. Kumar, 903 N.E.2d at 115.
I. Failure to Designate Complaint
Jinkins first argues that Cumis failed to designate Jet's third-party complaint against her, and that without this complaint, Cumis failed to meet its prima facie burden of demonstrating that it was entitled to summary judgment. Cumis does not deny that it failed to include Jet's complaint against Jinkins in its list of designated evidence that accompanied its motion for summary judgment.
Cumis notes, however, that we will also consider evidence as designated if it is clearly cited in a memorandum. See Whinery v. Roberson, 819 N.E.2d 465, 471-72 (Ind. Ct. App. 2004) (rejecting appellant's claim that appellee's designation of report was improper where appellee "clearly cite[d]" a page of the report in its reply brief in support of summary judgment). Here, Cumis repeatedly referred to allegations in the complaint against Jinkins, but did not do so with citation to any specific page or portion thereof. Nevertheless, the portions of the complaint containing the claims asserted against Jinkins is not terribly lengthy, comprising approximately three pages of text. See Appellee's Br. p. 96-99. Therefore, these broad references do not require excessive unnecessary reading, and we decline to say that the designation was insufficiently specific. See Duncan v. M & M Auto Serv., Inc., 898 N.E.2d 338, 342 (Ind. Ct. App. 2008) (designation of items without specific page or paragraph numbers was not insufficiently specific where the text at issue was only three pages long and all of the text was relevant to the issue on summary judgment); Boczar v. Reuben, 742 N.E.2d 1010, 1017 (Ind. Ct. App. 2001) (designation of entire affidavit did not fail for lack of specificity where entire affidavit was required and affidavit consisted of nineteen paragraphs spanning less than four pages).
We further note that in Jinkins's own memorandum opposing summary judgment, she repeatedly referred to Jet's complaint against her. Indeed, Jinkins cited the complaint several different times in her memorandum. See, e.g., Appellant's App. pp. 111, 112, 118, 119, 124. Thus to the extent that she claims the trial court improperly relied on the complaint, any error would be invited by Jinkins's own references to the complaint in her memorandum. See Reinhart v. Reinhart, 938 N.E.2d 788, 791 (Ind. Ct. App. 2010) ("Under the invited error doctrine, a party may not take advantage of an error that he commits, invites, or which is the natural consequence of his own neglect or misconduct.").
To the extent that Jinkins claims that the trial court could consider only the evidence designated by Cumis, we observe that our supreme court has held "a party may rely on designations by an opposing party[.]" Filip v. Block, 879 N.E.2d 1076, 1081 (Ind. 2008). If a party may rely upon evidence designated by another party, then the trial court may property consider evidence designated by either party. We cannot say that the trial court erred in considering Jet's complaint against Jinkins in determining the propriety of summary judgment.
II. Claims Made
Jinkins next argues that there is a genuine issue of material fact regarding whether the claims made against her were made during the DVE policy period. The parties agree that the DVE policy was a "claims made" policy, that is it insured only against loss resulting from a claim that was "first made during an Annual Policy Period." Appellant's App. p. 185. See Paint Shuttle, Inc. v. Cont'l Cas. Co., 733 N.E.2d 513, 522 (Ind. Ct. App. 2000) (noting that "claims made" policy protects holder only against claims made during the life of the policy). Here, the policy period expired on March 1, 2005, but the claim against Jinkins was not filed until November 15, 2006. Based on this undisputed fact, Cumis argued, and the trial court agreed, that there was no claim made against Jinkins during the policy period and that Jinkins was therefore not covered by the DVE policy.
The DVE policy was cancelled effective March 1, 2004, when Jet merged with Credit Union 1. But Jet had purchased "tail coverage" from Cumis which extended the coverage period to March 1, 2005.
Jinkins nevertheless argues that the claim against her was made within the policy period. Jenkins notes that Cumis was provided with a copy of the claims asserted against Loudermilk in November 2003, well before the policy period expired. She claims that this gave Cumis notice of the potential claims against her as well. Specifically, she contends that, pursuant to the language of the DVE policy itself, a claim is first made when "either (1) the insured first receives written notice of the claim," or "(2) the insured or the credit union first becomes aware of a circumstance which may reasonably be expected to give rise to a claim, and, as soon as practical thereafter, CUMIS is provided with written notice of certain information relating to the potential claim. " Appellant's Br. p. 14. "In the latter event, if a claim is subsequently made against the insured after the policy period has expired, it is treated as having been first made during the policy period." Id.
Jinkins's argument is based on Paragraph 26(2) of the DVE policy. Paragraph 26 of the DVE policy provides:
26. When A Claim Is First MadeAppellant's App. p. 201.
1. A "claim" is first made when the "insureds" first receive written notice of the "claim."
2. In addition, if:
a. During an Annual Policy Period (but not during a Reporting Extension), the "insured" or the "credit union" first become aware of an
act, incident or circumstance which may reasonably be expected to give rise to a "claim" against the "insured" for a "wrongful act"; and b. As soon as practicable thereafter but before the end of that Annual Policy Period, CUMIS is given written notice from the "insured" or the "credit union" containing specific details of:
1) Such act, incident or circumstance; andthen a "claim" that is subsequently first made based upon that act, incident or circumstance will be considered to have been first made during the Annual Policy Period in which 2.a. and 2.b. above occurred.
2) The potential "wrongful act" involved; and
3) The reasons for reasonably anticipating that a "claim" will be made against the "insureds,"
As noted by Cumis, Jinkins made no argument regarding Paragraph 26(2) of the DVE policy before the trial court. She did argue that Jet's complaint should "relate back" to the complaint Jet filed against Loudermilk. But relating back is a doctrine involving amended complaints and the applicable statute of limitations. See Rieth-Riley Const. Co. v. Gibson, 923 N.E.2d 472, 477-78 (Ind. Ct. App. 2010) (noting that if a amended complaint relates back under Trial Rule 15(C), then it is excepted from the general rule that a new defendant to a claim must be added prior to the running of the statute of limitations). This is not the same as arguing that the claim against Jinkins was made within the policy period pursuant to Paragraph 26(2).
"Issues not raised before the trial court on summary judgment cannot be argued for the first time on appeal and are waived." Dunaway v. Allstate Ins. Co., 813 N.E.2d 376, 387 (Ind. Ct. App. 2004); see also Benton Cnty. Remonstrators v. Bd. of Zoning Appeals, 905 N.E.2d 1090, 1096 (Ind. Ct. App. 2009) ("A party generally waives appellate review of an issue or argument unless the party raised that issue or argument before the trial court."). Therefore, we agree with Cumis that Jinkins has waived any argument regarding Paragraph 26(2) by failing to present this argument before the trial court.
Even if we considered Jinkins's argument on the merits, she would not prevail. Jinkins claims that Paragraph 26(2) means that a claim is first made when either the insured receives written notice of the claim or the insured or the credit union becomes aware of a circumstance which may reasonably be expected to give rise to a claim. But Paragraph 26(2) further requires Cumis to be given written notice from either Jinkins or Jet containing "specific details" of the act, incident, or circumstance which may reasonably be expected to give rise to a claim, and the potential wrongful act involved, and the reasons for anticipating that a claim will be made against the insured.
Jinkins argues that Cumis was put on notice regarding the claims, especially since it already knew of the claims against Loudermilk, whose agent she was alleged to have
been. Jinkins notes that one of Jet's attorneys sent her a letter on November 26, 2003 stating in relevant part:
I have provided CUMIS with a copy of the suit filed against Mr. Loudermilk. There are notice provisions in the DV&E policy and I thought it might be a good idea to give CUMIS Claims a copy of the complaint in the event that Loudermilk does not tender the defense of the matter to CUMIS. At least CUMIS will have been placed on notice as to any allegations which might invoke the DV&E policy.Appellant's App. p. 135. Thus, by November 2003, Cumis had been provided with a copy of the claims against Loudermilk. Jinkins therefore argues that "[w]hen CUMIS received [Jet's complaint against Jinkins] in early December 2006, its allegations and claims would have read much the same as the claims previously made in this case against Loudermilk." Appellant's Br. p. 15.
Despite the fact that Cumis was on notice regarding the claims against Loudermilk, Jinkins has referred us to nothing that would satisfy the requirement in Paragraph 26(2) that Cumis be given written notice from either Jinkins or Jet containing "specific details of . . . [the] act, incident or circumstance" and "the potential wrongful act involved" and "[t]he reasons for reasonably anticipating that a 'claim' will be made against [Jinkins]." See Appellant's App. p. 201. Put simply, notifying Cumis of the claims against Loudermilk cannot be said to satisfy the requirements of Paragraph 26(2) with regard to the claims against Jinkins.
Because no claim was made against Jinkins within the policy period ending March 1, 2005, Jinkins was not covered by the DVE policy when the claim against her was made on November 15, 2006. See Paint Shuttle, 733 N.E.2d at 523 (holding that insured had no coverage under "claims made" policy where the insured failed to give insurer the required written notice under the policy within the policy period because "excusing a delay in notice beyond the policy period would alter a basic term of the . . . policy[,] which is impermissible.").
III. Conflict of Interest
Jinkins also argues that Cumis should be estopped from denying coverage based on the fact that claims against her were not made until after the expiration of the policy period because of an alleged conflict of interest on Cumis's part. Specifically, she claims that Cumis, acting as Jet's subrogee, brought the claim against her in Jet's name. Thus, Jinkins contends that Cumis had an undisclosed conflict of interest because it was acting both as her insurer and suing her as Jet's subrogee and that Cumis chose to wait until after the policy period had expired before suing her.
However, Jinkins failed to make any argument regarding estoppel before the trial court. Therefore, she waived this argument for purposes of appeal. See Dunaway, 813 N.E.2d at 387; Benton Cnty. Remonstrators, 905 N.E.2d at 1096. Moreover, in support of her estoppel argument, Jinkins refers to a brief Jet filed in this court in another related case. In that brief, Jet stated that "the undisputed evidence shows that Cumis, not Jet, filed the [complaint against Jinkins.]." Brief of Appellee Jet Credit Union, No. 49A02-1006-PL-666, 2011 WL 597742, p. 9 (January 18, 2011). Of course, we are not permitted to consider evidence that was not designated by the parties. Dreaded, Inc., 904 N.E.2d at 1269.
But even if we overlook this and consider Jet's appellee's brief filed in this other related case, all we discover is that Cumis was Jet's bonding company and became subrogated to Jet's claims against Jinkins as a result of paying that bond. Yet, to the extent that the suit against Jinkins was one asserting subrogation rights, the DVE policy again provides no coverage.
Subrogation is a doctrine of equity long recognized in Indiana, which "applies whenever a party, not acting as a volunteer, pays the debt of another that, in good conscience, should have been paid by the one primarily liable." Erie Ins. Co. v. George, 681 N.E.2d 183, 186 (Ind. 1997). When a claim based on subrogation is recognized, a court substitutes another person in the place of a creditor, so that the person in whose favor it is exercised succeeds to the right of the creditor in relation to the debt. Id. The subrogee "stands in the same position as the subrogor, for one cannot acquire by subrogation what another, whose rights he claims, did not have." Id. (citations omitted).
The DVE policy explicitly provides that Cumis "will not be liable to make any payment for 'loss' in connection with or arising out of any 'claim' . . . [b]ased upon or resulting directly or indirectly from the assertion of subrogation or recovery rights by or on behalf of any fidelity bonding company or fidelity insurer." Appellant's App. p. 192. Since Cumis sued Jinkins as Jet's subrogee, the DVE policy provides Jinkins no coverage pursuant to this exclusion. Indeed, Cumis notes that "[i]t would make no sense to require Cumis to provide Jinkins with a defense and indemnify her against the very subrogation claims which Cumis is asserting against her[.]" Appellee's Br. p. 24.
It does not matter when Cumis, as Jet's subrogee, brought suit; there could never be any coverage for a claim brought from the assertion of subrogation rights. And because there could be no coverage under the DVE policy for subrogation claims, it does not matter whether the action against Jinkins was filed during or after the policy period. Therefore, Jinkins could not have been prejudiced by any perceived conflict of interest that caused Cumis's alleged delay in bringing suit against her after the policy period.
IV. Breach of Fiduciary Duty
Jinkins also argues that either the DVE policy or the BLP policy provide coverage for the claims brought against her for a breach of her fiduciary duty to Jet. Jinkins claims that a claim of breach of fiduciary duty "is a tort claim for injury to personal property." Appellant's Br. p. 18. In support of this assertion, she cites City of E. Chicago v. E. Chicago Second Century, Inc., 908 N.E.2d 611 (Ind. 2009), reh'g denied. In that case, our supreme court noted that this court has determined that "a breach of fiduciary duty is a tort claim for injury to personal property and therefore the applicable statute of limitation is two years." Id. at 618.
However, we have already concluded that the DVE policy does not provide coverage to Jinkins; we therefore need consider only whether she was covered under the BLP policy. The parties agree that the BLP policy provides coverage for claims alleging property damage. But Cumis notes that the BLP policy provides coverage for "property damage" only when such damage is caused by an "occurrence." Appellant's App. p. 280. The policy defines an "occurrence" generally as: (1) "[a]n accident, including continuous or repeated exposure to substantially the same general harmful conditions, that results in 'bodily injury' or 'property damage'"; (2) "[a]n offense that results in 'personal injury'"; or (3) "An offense that results in 'advertising injury.'" Appellant's App. p. 292.
Indeed, Jinkins admits that the DVE policy contains an exclusion for claims for property damage. See Appellant's Br. p. 18 ("The DVE Policy excludes damage of any 'tangible personal property, including loss of use of the property.'") (quoting Appellant's App. p. 191).
Here, the allegations against Jinkins do not allege any personal injury or advertising injury, nor does Jinkins even argue on appeal that the claims against her involve personal or advertising injury. Instead, she argues that "it is not clear whether any of the claims asserted against Jinkins in [the] Complaint seek damages for injury to property and, if so, the type of property that was injured." Appellant's Br. p. 19. The question then is whether the claims against Jet constitute an "accident . . . that resulted in 'property damage.'" Appellant's App. p. 292.
The BLP policy defines "personal injury" as "injury other than 'bodily injury,'" arising out of one or more of the following offenses: (1) false arrest, detention or imprisonment; (2) malicious prosecution; (3) wrongful entry into, or eviction of a person from, a room, dwelling or premises that the person occupies; (4) oral or written defamation; (5) oral or written invasion of privacy; or (6) discrimination. Id. at 293.
The BLP policy defines "advertising injury" as injury arising out of one or more of the following offenses: (1) oral or written defamation; (2) oral or written invasion of privacy; (3) misappropriation of advertising ideas or style of doing business; or (4) infringement of copyright, title, slogan, or trademark. Id. at 291.
Our courts have repeatedly held that, in the context of insurance coverage, an "accident" means an "unexpected happening without an intention or design." Terre Haute First Nat'l Bank v. Pac. Emp'rs Ins. Co., 634 N.E.2d 1336, 1338 (Ind. Ct. App. 1993). As our supreme court has stated, "implicit in the meaning of 'accident' is the lack of intentionality." Auto-Owners Ins. Co. v. Harvey, 842 N.E.2d 1279, 1283 (Ind. 2006).
Here, we agree with Cumis that the claims against Jinkins are not based on acts that would constitute an accident—and therefore an occurrence—under the BLP policy. None of the claims in the complaint allege what could be characterized as an accident. Instead, the complaint alleges that Jinkins was aware of Loudermilk's misconduct and even conspired with him, thus breaching her fiduciary duty to Jet. The complaint even characterizes Jinkins's alleged misconduct as "reckless, willful, wanton, or [with] heedless disregard of the consequences." Appellee's App. p. 99. Indeed, in Jinkins's brief in opposition to summary judgment, she characterized the claims against her alleging that she "acted as an agent of Loudermilk in connection with purported bad acts, including various acts of intentional malfeasance and various breaches of fiduciary duty to the detriment of Jet." Appellant's App. p. 112 (emphases added). We agree with the trial court that Jinkins's alleged misconduct does not constitute an "occurrence" under the BLP policy because such is not an "unexpected happening without an intention or design." Terre Haute First Nat'l Bank, 634 N.E.2d at 1338.
We find this case similar to Terre Haute First National Bank. In that case, the insured bank was sued by its former ward for negligence and breach of fiduciary duty while acting as the ward's guardian. Id. On appeal, we held that the complaint against the bank did not arise from an "accident" and was therefore not an "occurrence" as defined in the bank's liability policy because it alleged a breach of a fiduciary duty in a professional relationship, which is not an "accident." Id. Jet's complaint against Jinkins, like the claim against the bank in Terre Haute First National Bank, "arose from a professional relationship and not from an accident." Id. Because the complaint against Jinkins does not allege property damage as a result of an "accident," the trial court properly concluded that the alleged property damage was not caused by an "occurrence" as defined in the BLP policy. Therefore, the trial court correctly concluded that the BLP policy provides no coverage for Jinkins.
V. Duty to Defend
Jinkins next argues that the DVE policy is ambiguous with regard to the duty to defend. The DVE policy states that Cumis has no duty to defend an insured prior to final adjudication or disposition of any claim, but that "if it appears reasonably likely that coverage will be afforded under this Policy for any 'claim,'" then Cumis will defend a claim. Appellant's App. p. 195. This, Jinkins argues, is ambiguous and contrary to Indiana law regarding an insurer's duty to defend.
In Indiana, an insurer's duty to defend is broader than its duty to indemnify. Ind. Farmers Mut. Ins. Co. v. N. Vernon Drop Forge, Inc., 917 N.E.2d 1258, 1267 (Ind. Ct. App. 2009), trans. denied. As a general rule, an insurer, after making an independent determination that it has no duty to defend, must protect its interest by either filing a declaratory judgment action for a judicial determination of its obligations under the policy or by defending its insured under a reservation of rights. Microvote Corp. v. GRE Ins. Grp., 779 N.E.2d 94, 96 (Ind. Ct. App. 2002). But, contrary to Jinkins's suggestion, an insurance company may refuse to defend an insured after an investigation of the underlying factual basis of the complaint. Id. But if it so chooses, it does so at its own peril. Id. That is, it will be estopped from raising policy defenses for the first time after judgment has been entered against the insured. Liberty Mut. Ins. Co. v. Metzler, 586 N.E.2d 897, 902 (Ind. Ct. App. 1992).
We see nothing in the DVE policy language quoted above that is ambiguous or contrary to law. It simply explains that if coverage is reasonably likely under the policy, Cumis will defend against the claim. But if Cumis declines to defend against the claim, this is not contrary to law; it simply does so at its own peril if coverage is later found to exist. See id.; see also Walton v. First Am. Title Ins. Co., 844 N.E.2d 143, 146 (Ind. Ct. App. 2006) (where insurer's investigation of the facts underlying a complaint against insured reveals that claim is patently outside of the risks covered by the policy, insurer may properly refuse to defend). And here, we have already concluded that Jinkins was not entitled to coverage under either the DVE or the BLP policy.
Still, Jinkins argues that Cumis should be equitably estopped from denying her a defense because, she claims, Cumis promised to defend her. Equitable estoppel is available when one party, through its representations or course of conduct, knowingly misleads or induces another party to believe and act upon their conduct in good faith and without knowledge of the facts. Am. Family Mut. Ins. Co. v. Ginther, 803 N.E.2d 224, 234 (Ind. Ct. App. 2004). The elements of equitable estoppel are: (1) a representation or concealment of a material fact, (2) made by a person with knowledge of the fact and with the intention that the other party act upon it, (3) to a party ignorant of the fact, and (4) which induces the other party to rely or act upon it to his detriment. Id. The basis for the doctrine of equitable estoppel is fraud, either actual or constructive, on the part of the person estopped. Paramo v. Edwards, 563 N.E.2d 595, 598 (Ind. 1990). Before the doctrine of equitable estoppel may be used, the defendant's fraud must be of such character as to prevent inquiry, or to elude investigation, or to mislead the party who claims the cause of action. Id. (citing Guy v. Schuldt, 236 Ind. 101, 107, 138 N.E.2d 891, 894 (1956)). "Whether particular conduct actually prevents inquiry, eludes investigation, or misleads, reflects upon the unconscionability of the resulting advantage." Id.
In support of her estoppel argument, Jinkins refers to her own affidavit she designated in opposition to summary judgment wherein she averred that the members of Jet's Board of Directors were assured by a representative of Cumis that "all litigation expenses related to their service as a board member would be furnished by CUMIS for any actions brought against directors of Jet and all of its employees." Appellant's App. p. 137. She also asserted in her affidavit that the directors "were advised that one of the purposes of the DVE policy was to provide protection from litigation expenses for all employees and officers of Jet." Id.
Accepting this affidavit as true, we still cannot conclude that Jinkins established the existence of a genuine issue of material fact regarding equitable estoppel. There is nothing in the designated materials that indicates that Cumis concealed the terms of the policies or that Jinkins, as an officer and director of Jet, was in any way unable to review the terms of the policy herself. Because there is nothing suggesting concealment on the part of Cumis or ignorance on the part of Jinkins, the doctrine of equitable estoppel is inapplicable. Under these fact and circumstances, the trial court properly concluded that Cumis did not breach a duty to defend Jinkins.
Furthermore, the application of the doctrine of estoppel is not intended to create new rights; rather, it is to preserve rights that one party already had. Little v. Progressive Ins., 783 N.E.2d 307, 316 (Ind. Ct. App. 2003), trans. denied. Although "an insurer's conduct can waive provisions of an existing policy, equitable estoppel cannot extend coverage that does not exist." Id. Here, Jinkins is not arguing that Cumis waived a provision of the insurance policies, but is instead arguing that Cumis should be liable for coverage that did not exist. This is impermissible. See id. (concluding that application of doctrine of equitable estoppel was improper where it would require the insurer to provide a form of coverage to the insured that was not purchased under the policy).
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VI. Declaratory Judgment
Jinkins further claims that the trial court erred in denying her complaint seeking declaratory judgment. The trial court found that Jinkins's claim for declaratory relief was duplicative of the claims she asserted in her claims for breach of the insurance contract. When considering the appropriateness of declaratory judgment, the test to be applied is whether the issuance of a declaratory judgment will effectively solve the problem, whether it will serve a useful purpose, and whether or not another remedy is more effective or efficient. Dible v. City of Lafayette, 713 N.E.2d 269, 272 (Ind. 1999). "The determinative factor is whether the declaratory action will result in a just and more expeditious and economical determination of the entire controversy." Id. The use of a declaratory judgment is discretionary with the trial court and is usually unnecessary where a full and adequate remedy is already provided by another form of action. Id. But, pursuant to Trial Rule 57, "'[t]he existence of another adequate remedy does not preclude a judgment for declaratory relief in cases where it is appropriate.'" Id. (quoting Ind. Trial Rule 57).
Here, Jinkins brought a claim of breach of contract against Cumis and sought monetary damages as a result of the alleged breach. Given this available remedy, we cannot say that the trial court abused its discretion in denying her request for declaratory judgment. Moreover, we have concluded that the trial court properly concluded Jinkins was not entitled to coverage under either the DVE or BLP policies. Thus, Jinkins would not have prevailed on the merits of the declaratory judgment action.
VII. Breach of Good Faith
Lastly, Jinkins claims that the trial court erred in granting summary judgment on her claim that Cumis breached its duty of good faith. In her complaint, Jinkins alleged that "CUMIS has oppressively, intentionally, and in bad faith, wholly failed and refused to provide Jinkins with the benefits of [sic] which she is entitled." Appellant's App. p. 496.
Indiana law recognizes that there is a legal duty implied in all insurance contracts that the insurer deal with its insured in good faith. Allstate Ins. Co. v. Fields, 885 N.E.2d 728, 732 (Ind. Ct. App. 2008), trans. denied (citing Erie Ins. Co. v. Hickman, 622 N.E.2d 515, 518 (Ind. 1993)). In Hickman, our supreme court specifically recognized a cause of action for the "tortious breach of an insurer's duty to deal with its insured in good faith." 662 N.E.2d at 519. The insurer's obligation of good faith and fair dealing with respect to the discharge of the insurer's contractual obligation includes the obligation to refrain from: (1) making an unfounded refusal to pay policy proceeds; (2) causing an unfounded delay in making payment; (3) deceiving the insured; and (4) exercising any unfair advantage to pressure an insured into a settlement of his claim. Id.
A good faith dispute about whether the insured has a valid claim or the amount of a valid claim will not support the grounds for recovery in tort for the breach of the obligation to exercise good faith. Hickman, 622 N.E.2d at 520. This is so because it has long been the rule in Indiana that insurance companies may, in good faith, dispute claims. Id. This is so even if it is ultimately determined that the insurer breached its contract. Id. Even an insurance company's lack of diligent investigation is, by itself, insufficient to support an award for breach of the duty of good faith. Id. The insurer breaches its duty to act in good faith only if it denies liability knowing that there is no rational, principled basis for doing so. Id. Poor judgment or even negligence do not amount to bad faith, which instead requires the additional element of conscious wrongdoing. Fields, 885 N.E.2d at 732 (citing Lumbermens Mut. Cas. Co. v. Combs, 873 N.E.2d 692, 714 (Ind. Ct. App. 2007)). This requires evidence of a state of mind reflecting dishonest purpose, moral obliquity, furtive design, or ill will. Id. "'A bad faith determination inherently includes an element of culpability.'" Id. (quoting Combs, 873 N.E.2d at 714).
Here, Cumis cannot be said to have failed to respond promptly to Jinkins's claim, as it denied her claim less than four weeks after Jinkins's request for coverage. And, contrary to Jinkins's argument regarding the duty to defend, Cumis was not legally required to defend her. Although Jinkins claims that Cumis failed to properly investigate the claims against her, an insurer's lack of diligent investigation is insufficient by itself to support a claim of breach of the duty of good faith. See id. at 519. Nor can Cumis be said to have denied Jinkins coverage in bad faith because, as set forth above, we agree with Cumis that the policies did not provide Jinkins with coverage for the claims against her. In short, Cumis did not act with a dishonest purpose, moral obliquity, furtive design, or ill will, as is required for recovery in a claim of breach of the duty of good faith.
Conclusion
The trial court did not err in considering Jet's complaint against Jinkins in deciding whether summary judgment was appropriate. The trial court also properly concluded that neither the DVE policy nor the BLP policy provide coverage for the claims against Jinkins. Because the claims against Jinkins were not covered under the policies, Cumis did not breach the insurance contracts and did not breach its duty to defend Jinkins under the policies. Therefore, Jinkins was not entitled to declaratory judgment, and Jinkins's claim of breach of the duty to act in good faith fails. For all of these reasons, the trial court did not err in concluding that Cumis was entitled to summary judgment in its favor. We affirm the judgment of the trial court.
Affirmed. KIRSCH, J., and VAIDIK, J., concur.