Ill. Farmers Ins. Co. v. Overman

• Decision Date: 11 May 2016
• Docket Number: CAUSE NO.: 4:14-CV-75-TLS
• Citation: 186 F.Supp.3d 938
• Parties: Illinois Farmers Insurance Company, Plaintiff, v. TJ Overman, Brandy Overman, Eulonda Laguire, Individually, and d/b/a Lonie's Day Care, Defendants.
• Court: U.S. District Court — Northern District of Indiana

186 F.Supp.3d 938

Illinois Farmers Insurance Company, Plaintiff,

v.TJ Overman, Brandy Overman, Eulonda Laguire, Individually, and d/b/a Lonie's Day Care, Defendants.

CAUSE NO.: 4:14-CV-75-TLS

United States District Court, N.D. Indiana.

Signed May 11, 2016

Laura S. Reed, Riley Bennett & Egloff LLP, Indianapolis, IN, for Plaintiff.

James F. Olds, William E. Emerick, Stuart & Branigin LLP, Lafayette, IN, for Defendants.

OPINION AND ORDER

THERESA L. SPRINGMANN, UNITED STATES DISTRICT COURT, FORT WAYNE DIVISION

Eulonda LaGuire provided day care services in her home. She and her husband had a homeowner's insurance policy with Illinois Farmers Insurance Company when W.O., a child she was hired to provide day care services for, died in the home. W.O.'s parents, TJ and Brandy Overman, filed suit against LaGuire in state court. Farmers filed a Complaint for Declaratory Judgment in this Court, seeking a declaration that it has no duty to defend or indemnify LaGuire for the Overman's claims. This matter is before the Court on Illinois Farmers' Motion for Summary Judgment [ECF No. 18], TJ & Brandy Overman's Brief in Response [ECF No. 21], Illinois Farmers' Reply [ECF No. 22], and the accompanying exhibits.

The Plaintiff asserts that there is no insurance coverage under the terms of the policy for the Overman's claims against LaGuire because the injuries arose during the course of LaGuire's business pursuits. In response, the Overmans assert that the Plaintiff is estopped from relying on the written terms of the policy because the LaGuires' insurance agent made statements that caused the LaGuires to believe that their homeowner's policy would cover a claim arising from operation of the daycare. They submit that, because there is a genuine issue of material fact regarding whether the LaGuires' reliance on the agent's statement was reasonable, the Court must deny the Plaintiff's Motion for Summary Judgment.

STATEMENT OF FACTS

A. The Policy

From May 29, 2013, to May 29, 2014, Randall and Eulonda LaGuire held homeowner's insurance under Illinois Farmers policy number 091436-52-77 (the Policy) for their residence in Lafayette, Indiana. The Policy provided:

We do not cover bodily injury, property damage or personal injury which:

1. arises from or during the course of business pursuits of an insured . But we do cover:

a. that part of a residence of yours which is rented or available for rent:

(1) on an occasional basis for sole use as a residence.

(2) to no more than two roomers or boarders for sole use as a residence.

(3) as an office, studio or private garage.

b. part-time services performed by an insured under age 21 who is a resident of your household. "Part-time" means no more than 20 hours a week.

2. results from the rendering or failure to render business or professional services.

4. results from the legal liability of any insured because of home care services provided to any person on a regular basis by or at the direction of:

a. any insured ;

b. any employee of any insured ;

c. any other person actually or apparently acting on behalf of any insured .

Regular basis means more than 20 hours per week.

This exclusion does not apply to:

a. home care services provided to the relatives of any insured ;

b. occasional or part time home care services provided by any insured under 21 years of age.

(ECF No. 1-1 at 19.) The Policy defined a business as "any full or part-time trade, profession or occupation." (Id. 7.)

B. The Day Care

Since 1986, Eulonda LaGuire has provided licensed day care services in her Lafayette home under the name Lonie's Day Care (the Day Care). Eulonda and Randall were both licensed by the State of Indiana to provide daycare services, although Randall was not involved in the day-to-day operations of the Day Care. Randall handled insurance and tax matters. Eulonda worked in the Day Care on a full-time basis.

TJ and Brandy Overman contracted with the Day Care to provide services to their children, L.O. and W.O. In January 2014, W.O. died while at the Day Care. A complaint is pending in Tippecanoe Superior Court on claims that Eulonda LaGuire d/b/a Lonie's Day Care is liable for W.O.'s death.

C. Procuring the Insurance

Joe Hufford had been the LaGuires' insurance agent since about 2003. The LaGuires obtained all of their insurance through Hufford, including the homeowner's policy and three automobile policies. A number of years before W.O.'s death, Randall was at the Plaintiff's office and learned that they did not offer business insurance. Randall asked Hufford what would happen if the LaGuires filed a claim arising out of the daycare being operated out of their home. Hufford's response, although not a definitive statement about coverage, led Randall to believe that Illinois Farmers would most likely cover the first daycare-related claim, but then terminate the LaGuires' homeowner's coverage. Randall relayed this information to Eulonda.

ANALYSIS

A. Standard of Review

Summary Judgment is appropriate when the record before the Court establishes that there is "no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."

Fed. R. Civ. P. 56(a). Disputes concerning material facts are genuine where the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In deciding whether genuine issues of material fact exist, the Court construes all facts in a light most favorable to the non-moving party and draws all reasonable inferences in favor of the non-moving party. Id. at 255, 106 S.Ct. 2505.

In deciding issues of insurance coverage, the Court must apply Indiana law for contract interpretation. Allstate Ins. Co. v. Keca , 368 F.3d 793, 796 (7th Cir.2004) ("A federal court sitting in diversity has the obligation to apply the law of the state as it believes the highest court of the state would apply it if presented with the issue."); State Farm Mut. Auto Ins. Co. v. Pate , 275 F.3d 666, 669 (7th Cir.2001) ("When the state Supreme Court has not decided the issue, the rulings of the state intermediate appellate courts must be accorded great weight, unless there are persuasive indications that the state's highest court would decide the case differently."). An insurance contract "is subject to the same rules of interpretation as are other contracts." Morris v. Econ. Fire & Cas. Co. , 848 N.E.2d 663, 666 (Ind.2006) (citing USA Life One Ins. Co. of Ind. v. Nuckolls , 682 N.E.2d 534, 537–38 (Ind.1997) ). As with other contracts, the interpretation of an insurance contract is a question of law. Cinergy Corp. v. Associated Elec. & Gas Ins. Servs. , 865 N.E.2d 571, 574 (Ind.2007).

In reviewing policy terms, the court construes them "from the perspective of an ordinary policyholder of average intelligence." Allgood v. Meridian Sec. Ins. Co. , 836 N.E.2d 243, 246–47 (Ind.2005) (quoting Burkett v. Am. Family Ins. Grp. , 737 N.E.2d 447, 452 (Ind.Ct.App.2000) ). If the contract language is clear and unambiguous, it should be given its plain and ordinary meaning. Tate v. Secura Ins. , 587 N.E.2d 665, 668 (Ind.1992).

B. Estoppel

There is no dispute that clear and unambiguous terms of the Policy excluded coverage for injuries arising from or during the course of business pursuits, such as the Day Care. Nevertheless, the Overmans argue that a reasonable jury could conclude that the LaGuires reasonably relied on statements from their agent regarding coverage, and that the Plaintiff is therefore precluded from asserting the plain language of the Policy to deny coverage. (See, e.g., Br. Resp. 6 (citing Village Furniture, Inc. v. Associated Ins. Mgrs., Inc. , 541 N.E.2d 306, 308 (Ind.Ct.App.1989), for the proposition that "where an agent represents to an insured that the policy will insure against a hazard about which the insured is particularly concerned and the hazard materializes, the company will be estopped to plead the terms of the policy when the insured's reliance on the agent's representations was reasonable").)

The Overmans argue that it is undisputed that Randall believed, based on representations from Hufford, that a daycare-related claim would be covered under the policy, and that it is only unclear what the "basis for that belief" was. (Br. Resp. 13.) "On the one hand he states he believes he had coverage under the policy, while on the other hand he states that he believed that Illinois Farmers would honor the claim as a matter of practice ." (Id. 13–14 (emphasis added).) The Defendants assert that this lack of clarity regarding the basis for Randall's belief is not problematic, at least at this stage of the proceedings:

An issue of material fact "is not required to be resolved conclusively in favor of the party asserting its existence."

Anderson v. Liberty Lobby, Inc. , 477 U.S. at 249, 106 S.Ct. 2505 (1986) (quoting First Nat'l Bank of Arizona v. Cities Service Co. , 391 U.S. 253, 288, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968) ). Rather it is the conflict of evidence which gives rise to a question for the jury. See Anderson v. Liberty Lobby, Inc. , 477 U.S. at 249, 106 S.Ct. 2505 ("all that is required is that sufficient evidence supporting the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial.").

(Id. 14.)

The Court does not agree with the Defendants' application of the cited legal principles. There is no "conflict of evidence" in this case, and no differing versions of the truth for a jury to decide. Randall states that he was aware that the Day Care did not have business insurance, but "was under the assumption that most likely Farmer's would cover the first issue and then cancel us." (Randall Dep. 6–7, ECF No. 21-2.) His assumption is based on a conversation he had with Hufford, his insurance agent. But the Court finds that this conversation is not sufficient, as a matter of law, to expand the scope of coverage and estop the...