Harper v. Vigilant Ins. Co.

• Decision Date: 06 December 2005
• Docket Number: No. 04-1087.,04-1087.
• Citation: 433 F.3d 521
• Parties: Charlene HARPER, Plaintiff-Appellant, v. VIGILANT INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 521

433 F.3d 521

Charlene HARPER, Plaintiff-Appellant, v.VIGILANT INSURANCE COMPANY, Defendant-Appellee.

No. 04-1087.

United States Court of Appeals, Seventh Circuit.

Argued September 15, 2004.

Decided December 6, 2005.

John S. Wallach(argued), Michael A. Gross, St. Louis, MO, for Plaintiff-Appellant.

William J. Knapp(argued), Burroughs, Hepler, Broom, Macdonald & Hebrank, Elizabeth A. Bradley, Knap, Ohl & Green, Edwardsville, IL, for Defendant-Appellee.

Before BAUER, COFFEY and KANNE, Circuit Judges.

COFFEY, Circuit Judge.

Plaintiff-appellant, Charlene Harper, acting in the capacity of administrator of Jane Doe's ("Jane") estate, appeals an order of the district court granting summary judgment in favor of the defendant-appelleeVigilant Insurance Company("Vigilant").The district court found that Jane, as an assignee of John Doe's ("John") rights to sue Vigilant for bad faith failure to defend and indemnify, could not prevail because John was not a "resident" of his father's "household" under the terms of his father's homeowner's insurance policy.The trial court also concluded, in the alternative, that even if John was an insured under the policy, Harper had failed to establish that Jane's injury occurred during the effective insurance policy coverage period.We affirm.

I.BACKGROUND

John and Jane met in St. Louis, Missouri, in the spring or summer of 1987.Not long after meeting they began dating, and became sexually active somewhere in September or October of that year.While dating Jane, John lived with his motherat 5525 Wilson Avenue in St. Louis, Missouri, but occasionally visited his estranged father's lake house in Lake of the Ozarks, Missouri.He and Jane stayed at his father's lake house "maybe six times . . . a year" and he went there "pretty consistently" without Jane.¹

Prior to, and throughout his relationship with Jane, John engaged in high-risk sexual behavior.Among other things, John admitted to having sexual encounters with numerous men as well as other women while contemporaneously having relations with Jane.In 1990, John's treating physician advised him to get tested for HIV, as the doctor suspected he was suffering from AIDS.However, throughout the period of time that he was dating Jane, John failed to seek or obtain a HIV test.In addition, John neglected to inform Jane of either his sexual behavior or his doctor's suspicion that he was suffering from AIDS.In 1991 John and Jane broke up, and in January of 1992, John tested positive for HIV.Just a few months later, in April of 1992, Jane discovered that she too was infected with the HIV virus.

In March of 1994, Jane filed suit against John in St. Clair County, Illinois, ("the St. Clair lawsuit") seeking recovery for bodily injury, pain and suffering, emotional distress, loss of income and medical expense based on John's alleged negligence, battery and intentional infliction of emotional distress in infecting her with the HIV virus.Specifically, Jane alleged inter alia that: (1) John "transmitted HIV [to her] when he knew or should have known he was infected with the communicable disease"; and (2) John had "failed to take adequate precautions to prevent himself from contracting HIV" after he had "engaged in high-risk [sexual] behavior" while simultaneously sleeping with Jane.

After the St. Clair lawsuit was filed, John made numerous demands² upon Vigilant — as his father's insurer — to defend and indemnify him in the St. Clair lawsuit, relying on four different homeowner's insurance policies issued to his father.The four Vigilant policies included: (1) Policy Number 5224-35-36 — issued to John's mother and father for property located at 2100 South 59th Street in St. Louis, Missouri, effective from January 7, 1985, through January 7, 1986; (2) Policy Number 5228-68-33 — issued to John's father for property located at 4390 Via Giudici Drive in St. Louis, Missouri, effective from September 15, 1985, through September 15, 1991; (3) Policy Number 5229-31-78 — issued to John's father for Lot # 4, Horseshoe Bend # 9, Lake Ozark, Missouri, effective from October 23, 1985, through October 23, 1989("the lake house policy"); and (4) Policy Number 1060-24-3601 — issued to John's father for the Via Giudici Drive address, effective from September 15, 1989, through September 15, 1991.After investigating and reviewing each of the claims, Vigilant denied each request for coverage.³

During their investigation, Vigilant proceeded to conduct a number of depositions as well as serve informal interrogatories on John through his counsel.For example, on November 13, 1997, John participated in a deposition dealing with the St. Clair lawsuit and stated that his residence was 5525 Wilson Avenue, St. Louis, Missouri and added that he had lived at that location "all of [his] life."John also testified that he had never claimed any other residence as his own and that he owned no real estate and had not lived anywhere else for an extended period of time.In addition, in response to a letter requesting more information, dated June 9, 1998, John, through his counsel, stated that: (a)he never maintained a bedroom at his father's lake house and that he resided at his mother's home "all of [his] life"; (b)he did not keep personal belongings at the lake house; and (c)he listed his mother's address on his tax returns and other legal documents.After concluding their investigation, Vigilant made a final determination on August 13, 1998, and advised John that Vigilant was not obligated, under any of the policies, to defend him, stating that they would: "neither defend [n]or indemnify [him in][the St. Clair lawsuit] or participate in any settlement."

On March 29, 1999, Jane and John entered into a confidential Settlement and Mutual Release ("the settlement agreement"), thus terminating the St. Clair lawsuit.⁴In the settlement agreement, in addition to consenting to the entry of judgment against him in the amount of $2,000,000, John also assigned to Jane⁵ the right to pursue any bad faith or vexatious refusal to pay claims he accrued⁶ against Vigilant for refusal to defend him in the St. Clair lawsuit.John died on November 24, 1999.

Pursuant to John's assignment of the right to sue, Jane filed a complaint against Vigilant on July 3, 2001, in St. Clair County, Illinois alleging: (1) bad faith refusal to defend; (2) bad faith refusal to settle; and (3) violation of section 155 of the Illinois Insurance Code,215 ILCS 5/155.In response, Vigilant filed a motion with the circuit court seeking permission to remove the case to federal court pursuant to 28 U.S.C. § 1332.Vigilant's motion was granted and the case was removed to the United States District Court for the Southern District of Illinois.Jane subsequently died on October 19, 2001, while the case was pending.In February, 2002, Harper, Jane's sister and estate administrator, was substituted for Jane as the plaintiff in the pending suit.

Following discovery, Vigilant filed a motion for summary judgment against Harper, claiming that it had no duty to defend John in the St. Clair lawsuit because he was not an insured under the terms of any of his father's policies.Also, Vigilant argued that, even if John was an insured under any of the policies, there was no evidence in the record which would establish that John infected Jane during the effective time limits of the lake house policy.The district court agreed with Vigilant's arguments and entered summary judgment in the insurance company's favor on November 3, 2003, finding that John was not insured under the terms of any of Vigilant's policies issued to John's father and that, even if he were, there was no evidence establishing that Jane had been infected during the coverage periods of the policies at issue.Harper appeals the judgment only with respect to Policy Number 5229-31-78, the lake house policy.

II.ISSUES

On appeal, Harper argues that the district court erred in granting Vigilant's motion for summary judgment.Specifically, Harper claims that summary judgment was improper because: (a) Vigilant "failed to establish beyond dispute that [John] was not an insured person under the lake house policy because he`never resided' at the vacation property" and (b) whether or not John infected Jane with the HIV virus at the vacation property was a disputed question of material fact.

III.DISCUSSION

We review the district court's grant of summary judgment de novo, and in doing so view the record in the light most favorable to Harper, the nonmoving party.SeeHottenroth v. Village of Slinger,388 F.3d 1015, 1027(7th Cir.2004).Summary judgment is warranted only where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits . . . show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."Fed.R.Civ.P. 56(c);seeCelotex Corp. v. Catrett,477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265(1986)."An issue of fact is `material' if it is outcome determinative . . . [h]owever, `bare allegations not supported by specific facts are not sufficient in opposing a motion for summary judgment.'"Hottenroth,388 F.3d at 1027(quotingHildebrandt v. Ill. Dept. of Natural Res.,347 F.3d 1014, 1036(7th Cir.2003)).

As a federal court sitting in diversity by virtue of jurisdiction pursuant to 28 U.S.C. § 1332, we apply state law "to resolve substantive questions and federal law to resolve procedural and evidentiary issues."Colip v. Clare,26 F.3d 712, 714(7th Cir.1994)(citingMercado v. Ahmed,974 F.2d 863, 866(7th Cir.1992)).In the district court proceedings, both parties"agree[d] that . . . the substantive law of the State of Missouri" would govern interpretation of the insurance contract at issue.Harper v. VigilantIns. Co., No. 01-CV-554-MJR, at *7 (S.D.Ill. Nov. 3, 2003).Also, because the trial court...