Knight v. Indiana Ins. Co., 49A05-0608-CV-416.

• Citation: 871 N.E.2d 357
• Case Date: August 08, 2007
• Court: Court of Appeals of Indiana

871 N.E.2d 357 Robert M. KNIGHT, Appellant-Plaintiff,
v.
INDIANA INSURANCE COMPANY, Appellee-Defendant, and
Indiana University, Defendant.¹ No. 49A05-0608-CV-416. Court of Appeals of Indiana. August 8, 2007.

[871 N.E.2d 358]

James H. Voyles, Voyles, Zahn, Paul, Hogan & Merriman, Indianapolis, IN, Attorneys for Appellant.

Joseph M. Dietz, Meils Thompson Dietz & Berish, Indianapolis, IN, Attorney for Appellee.

Russell E. Yates, Yates Law Firm, LLC, Denver, CO, Pro Hac Vice.

OPINION

BAILEY, Judge.

Case Summary

Appellant-Plaintiff Robert M. Knight ("Knight") appeals a summary judgment order in favor of Appellee-Defendant Indiana Insurance Company ("the Insurer") on Knight's breach of contract, bad faith, negligence and punitive damages claims. We affirm.

Issue

Knight raises three issues, which we consolidate and restate as the following issue: whether the trial court erred by granting summary judgment to the Insurer upon Knight's claims that the Insurer wrongfully denied homeowners policy coverage and breached its duty to investigate and defend a lawsuit arising from Knight's workplace assault and battery of a co-worker that produced no bodily injury.

Facts and Procedural History

During December of 1999, Knight was employed as head Basketball Coach at Indiana University, and Ronald Felling ("Felling") was employed as an assistant Basketball Coach. In his office at Indiana University, Knight overheard a telephone conversation during which Felling criticized Knight's coaching abilities and called him a derogatory name. Knight interjected himself into the conversation and advised Felling to find another job.

Thereafter, Knight verbally confronted Felling in an office in Assembly Hall at Indiana University, with other assistant coaches present. As Felling moved to leave the room, Knight jumped up and made physical contact with Felling in a manner that Knight described in his deposition as a "bump."² (App. 122.) Felling

871 N.E.2d 359

was pushed backward into a television set.³ The contact resulted in Felling filing a lawsuit in the United States Southern District Court of Indiana on April 26, 2001. The lawsuit alleged that Knight's conduct against Felling violated 42 U.S.C. § 1983 because Felling enjoyed a constitutional right to be free from physical attacks. Additionally, the lawsuit presented a wrongful termination claim against Indiana University.

At that time, Knight held a homeowners policy procured from the Insurer. On October 2, 2001, Knight notified the Insurer of the Felling lawsuit. On October 19, 2001, the Insurer issued a reservation of rights letter to Knight. The reservation of rights letter provided in pertinent part as follows:

Please refer to the applicable sections of your policy as outlined below which reads:

SECTION II — LIABILITY COVERAGES

COVERAGE E — Personal Liability

If a claim is made or a suit is brought against an "insured" for damages because of "bodily injury" or "property damage" caused by an "occurrence" to which this coverage applies, we will:

1. Pay up to our limit of liability for the damages for which the "insured" is legally liable. Damages include prejudgment interest awarded against the "insured"; and

2. Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. We may investigate and settle any claim or suit that we decide is appropriate. Our duty to settle or defend ends when the amount we pay for damages resulting from the "occurrence" equals our limit of liability.

SECTION II — EXCLUSIONS

1. Coverage E — Personal Liability and Coverage F — Medical Payments to Others do not apply to "bodily injury" or "property damage":

a. Which is expected or intended by one or more "insureds"; (as modified by the HO 01 13 (10/94), SPECIAL PROVISIONS — INDIANA)

b. Arising out of or in connection with a "business" engaged in by an "insured" . . . (as modified by the 81-3CD (01/98)

k. Arising out of sexual molestation, corporal punishment or physical or mental abuse;

We further refer you to that section of your policy entitled DEFINITIONS — as modified by form 81-3CD (1/98) HOMEOWNERS AMENDATORY PROVISIONS endorsement which states:

1. "Bodily injury" means:

a. "Personal injury"

b. Bodily harm, sickness or disease, including required care, loss of services and death that results.

2. "Occurrence" means an offense or accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy in:

a. "Bodily injury", or

b. "Property damage"

871 N.E.2d 360

3. "Personal injury" means injury arising out of one or more of these offenses:

a. False arrest, detention or imprisonment, malicious prosecution, wrongful entry or eviction; or

b. Libel, slander, defamation of character or invasion of privacy[.]

This is a reservation of rights letter which is being issued to you because there may be no "bodily injury" or "property damage" caused by an "occurrence" as defined by the policy. Further, the exclusions mentioned above may apply.

(App. 83-85.)

During February of 2002, Indiana University was dismissed as a defendant in the federal lawsuit, and Felling filed an amended complaint against Knight.⁴ On July 29, 2002, the Insurer took a recorded statement from Knight, in which he reported that he "bumped into Felling," they "collided as [Knight] jumped up," and "[Felling] couldn't have been hurt." (App. 341-42.)

On August 26, 2002, the Insurer issued a letter to Knight denying coverage for the Felling lawsuit and "disclaim[ing] any and all obligation to Mr. Knight for this matter." (App. 86.) In particular, the Insurer indicated that the "business exclusion," together with "other exclusions cited" defeated coverage. (App. 88.) On August 30, 2002, the Felling lawsuit against Knight was settled upon Knight's payment of $25,000.00 and his admission that he shoved Felling in anger.

On August 26, 2004, Knight filed a complaint seeking indemnification from the Insurer and Indiana University. The Insurer moved for summary judgment, and Knight filed a cross-motion for summary judgment on the Insurer's duty to defend. On June 14, 2006, the trial court granted summary judgment to the Insurer upon Knight's claims for breach of contract, bad faith, negligence, and punitive damages. The claim against Indiana University remained pending. However, on July 12, 2006, the trial court, finding no just cause for delay, entered a final and appealable judgment as to the discrete claims against the Insurer. Knight now appeals.

Discussion and Decision A. Summary Judgment Standard of Review

Pursuant to Rule 56(C) of the Indiana Rules of Trial Procedure, summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. When reviewing a grant of summary judgment, our standard of review is the same as that of the trial court. Shambaugh & Son, Inc. v. Carlisle, 763 N.E.2d 459, 461 (Ind.2002). We consider only those facts that the parties designated to the trial court. Id. The Court must accept as true those facts alleged by the nonmoving party, construe the evidence in favor of the nonmovant, and resolve...