September 21, 2016
from the United States District Court for the Northern
District of Indiana, South Bend Division. No. 3:13-CV-113 -
Rudy Lozano, Judge.
Flaum, Kanne, and Williams, Circuit Judges.
Frye was injured in a car accident caused by an underinsured
driver. Frye sued his insurance company for coverage, and the
parties reached a partial settlement, but Frye thought he was
entitled to additional payments under the policy. The
district court disagreed, and awarded summary judgment to the
insurer. Frye appeals, and for the reasons that follow, we
reverse the decision of the district court.
January 2011, Dee Frye was seriously injured in a car
accident while driving for his job. The other driver admitted
responsibility for the collision, and the latter's
insurance company agreed to pay Frye $100, 000, the
applicable per-person limit. Frye accepted the payment and
offered to assign it to his lawyer and to his employer's
insurer, Auto-Owners Insurance Company, from which Frye had
already received $692, 895.79 in workers'-compensation
benefits. Auto-Owners took $75, 000 of the third-party
payment (in partial satisfaction of a statutory lien), and
the remaining $25, 000 went to Frye's attorney.
See Ind. Code § 22-3-2-13.
injuries were also covered by two other insurance policies-a
commercial automobile policy, and a commercial umbrella
policy-issued by Auto-Owners to Frye's employer. The
former policy required Auto-Owners to pay any compensatory
damages Frye was legally entitled to recover for bodily
injuries caused by an underinsured motorist, and defined the
insurer's per-occurrence limit of liability as the lesser
(1) the difference between:
(a) the amount paid in compensatory damages ... to the
injured person by or for any person ... who may be liable for
the injured person's bodily injury; and
(b)the "each person" limit for ... Under-insured
Motorist Coverage stated in the Declarations [i.e., $1
(2) the difference between:
(a) the total amount of compensatory damages ... incurred by
the injured person; and
(b)the amount paid by or for any person ... liable for the
injured person's bodily injury.
latter policy afforded follow-on coverage to the automobile
policy, and stated with respect to the insurer's limit of
The most we shall pay under this [umbrella policy] in any one
occurrence shall not exceed the Limit of Liability shown in
the Declarations for ... [t]he combined coverages of
Uninsured Motorist and Underinsured Motorist....
declarations reflected an uninsured-and-underinsured-motorist
liability limit of $1 million. (The general limit for bodily
injury was also $1 million when the umbrella policy was first
issued in November 2007. Beginning in May 2010, however, the
general limit was increased to $5 million per occurrence.) As
to underinsured-motorist (or UIM) coverage in particular, the
umbrella policy stated:
For [such] coverage, our Limit of Liability shall be reduced
by any amounts:
. . .
2) Paid or payable for the same bodily injury covered under
any workers compensation or similar law; and
3) Paid by or on behalf of any person ... who may be legally
responsible for ...