PEKIN Ins. Co. v. CONTRACTING, No. 1:09-cv-0521-TAB-TWP

• Court: United States District Courts. 7th Circuit. United States District Court (Southern District of Indiana)
• Writing for the Court: Tim A. Baker
• Parties: PEKIN INSURANCE COMPANY, Plaintiff, v. RODNEY BARBER d/b/a BARBER CONTRACTING, and JOHN A. LOGAN, Defendants.
• Decision Date: 31 March 2011
• Docket Number: No. 1:09-cv-0521-TAB-TWP

PEKIN INSURANCE COMPANY, Plaintiff,
v.
RODNEY BARBER d/b/a BARBER CONTRACTING, and JOHN A. LOGAN, Defendants.

No. 1:09-cv-0521-TAB-TWP

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

Dated: March 31, 2011

ORDER GRANTING PLAINTIFF'S SUMMARY JUDGMENT MOTION

I. Introduction.

Plaintiff Pekin Insurance Company moved for summary judgment, seeking a declaration that it has no duty under its commercial lines policy to defend and indemnify its named insured, Rodney Barber d/b/a Barber Contracting against two civil actions filed against Barber by John A. Logan: "John A. Logan, Plaintiff, vs. Donna Wilkins, M.D., Rodney Barber, Joshua Williams, Christine Dely-Stinson, Phil Taylor, George Sheridan, Jr., and Beth Robbins, Defendants," Cause No. 18C04-0707-PL-0044, Delaware Circuit Court No. 4 (the "State Lawsuit"); and "John A. Logan, Plaintiff, vs. Donna Wilkins, M.D., Rodney Barber, Joshua Williams, Christine Dely-Stinson, Phil Taylor, George Sheridan, Jr., and Beth Robbins, Defendants" Case No. 1:09-cv-00282-WTL-DML, United States District Court for the Southern District of Indiana, Indianapolis Division (the "Federal Lawsuit"). For the reasons that follow, the Court grants Pekin's unopposed motion for summary judgment. [Docket No. 49.]

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II. Legal Standards.

Summary judgment is proper if "the movant shows 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). The case is before the Court based on diversity jurisdiction. Therefore, the Court must apply Indiana law as it predicts the Supreme Court of Indiana would apply it. Clark v. State Farm Mut. Auto. Ins. Co., 473 F.3d 708, 712 (7th Cir. 2007).

Under Indiana law, the interpretation of an insurance policy is a question of law. Tate v. Secura Ins., 587 N.E.2d 665, 668 (Ind. 1992). Accordingly, summary judgment is "particularly appropriate" in this type of action. Am. Family Mut. Ins. Co. v. Hall, 764 N.E.2d 780, 784 (Ind. Ct. App. 2002). If the language in an insurance policy is clear and unambiguous, the Court will give it its plain and ordinary meaning. Tate, 587 N.E.2d at 668. Any ambiguities in the language of the insurance policy are to be construed in favor of the insured, Barber. Id.

Under Indiana law:

An insurer's duty to defend its insured is broader than its duty to indemnify. We determine the insurer's duty to defend from the allegations contained within the complaint and from those facts known or ascertainable by the insurer after reasonable investigation. Id. If it is revealed that a claim is clearly excluded under the policy, then no defense is required. Id.

Knight v. Ind. Ins. Co., 871 N.E.2d 357, 362 (Ind. Ct. App. 2007) (citations omitted). Because the duty to defend is broader than the duty to indemnity, if there is no duty to defend, there can be no duty to indemnify. See, e.g., Jim Barna Log Sys. Midwest, Inc. v. Gen. Cas. Ins. Co., 791 N.E.2d 816, 823 (Ind. Ct. App. 2003), trans. denied (affirming trial court's summary judgment discharging insurer from both duty to defend and duty to

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indemnify); Wright v. Am. States Ins. Co., 765 N.E.2d 690, 697 (Ind. Ct. App. 2002) ("[Insurer] did not have a duty to defend or indemnify [Insured] as to this complaint.").

III. Background.

The following facts are undisputed.¹ Logan owned and operated a mobile home park located at 11749 South U.S. 35 in Selma, Delaware County, Indiana (the "Real Estate"). [Docket No. 25 (Ex. 3, p. 4); Document No. 25 (Ex. 5, p. 4)]. On August 14, 2006, the Delaware County Board of Health (the "BOH") condemned thirteen mobile homes on the Real Estate and ordered their removal. [Document No. 25 (Ex. 5, p. 15)].

On September 6, 2006, the BOH filed suit in state court against Logan to enforce the condemnation order. [Document No. 25 (Ex. 3, p. 4); Document No. 25 (Ex. 5, pp. 5, 15-17)]. On October 27, 2006, the state court issued a demolition order, directing the BOH to hire persons to remove the thirteen mobile homes from the Real Estate. [Document No. 25 (Ex. 5, pp. 15-17)]. The BOH hired Barber to complete the demolition and removal of the mobile homes. [Document No. 25, p. 2; Document No. 29, p. 1; Document No. 38, p. 2)].

Shortly after October 27, 2006, Barber entered the Real Estate and demolished fourteen—rather than the ordered thirteen—mobile homes. [Document No. 25 (Ex. 3, p. 6); Document No. 25 (Ex. 5, pp. 7-8)]. Barber demolished the mobile homes without first capping public utilities (including electrical power) and private utility lines (including water and sewer) which service them, leaving Logan with repair expenses and permit problems. [Document No. 25 (Ex. 3, p. 6); Document No. 25 (Ex. 5, p. 18)]. In

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two separate places, Barber's use of a backhoe cut a 2" PVC water main, and demolished 4' terra cotta water risers. [Document No. 25, Ex. 5, p. 8)].

Barber stole a shed, electrical furnaces, electrical meters and boxes, other outbuildings, and other physical property from the Real Estate. [Document No. 25 (Ex. 3, p. 6); Document No. 25 (Ex. 3, p. 8)]. Barber did not clean up the Real Estate, resulting in a diminution in value of the Real Estate and a loss of rental income. [Document No. 25 (Ex. 3, p. 6); Document No. 25 (Ex. 5, p. 8)].

A. The State Lawsuit.

On December 15, 2008, Logan filed his "Amended Complaint for Damages" (the "State Lawsuit's Amended Complaint"). [Document No. 25 (Ex. 2)]. The State Lawsuit's Amended Complaint proceeded against Barber on two legal theories: conversion for assuming control of and disposing of the fourteenth mobile home and other property; and negligence in connection with the execution of the Court's demolition order. [Document No. 25 (Ex. 2, pp. 2-4)]. Pekin provided a defense to Barber against the State Lawsuit's Amended Complaint pursuant to a written reservation of all rights under its Policy. [Document No. 51 (Ex. 2)].

On June 15, 2009, Barber filed his "Amended Complaint for Damages" (the "State Lawsuit's 2^nd Amended Complaint"). [Document No. 25 (Ex. 3)]. The State Lawsuit's 2^nd Amended Complaint eliminated the negligence claim, and proceeded against Barber on three legal theories: conversion, theft, and conspiracy. Logan sought compensatory damages, treble damages, attorney's fees, and injunctive relief. [Document No. 25 (Ex. 3, pp. 6-9)]. Pekin denied coverage for the State Lawsuit's 2^nd Amended Complaint, but continued to provide a defense to Barber against the same

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pursuant to a written reservation of all rights under the Policy. [Document No. 51 (Ex. 3)].

B. The Federal Lawsuit.

On March 6, 2009, Logan filed his "Verified Complaint for Damages and Injunctive Relief (the "Federal Lawsuit's Complaint"). [Document No. 25 (Ex. 4)]. The Federal Lawsuit's Complaint proceeded against Barber on the following legal theories: conversion; theft; violation of 42 U.S.C. § 1981; violation of 42 U.S.C. § 1983; conspiracy to violate Logan's due process rights under the Fourteenth Amendment to the United States Constitution; and conspiracy to violate Logan's right against unreasonable seizures in violation of the Fourth Amendment to the United States Constitution. Logan sought damages, treble damages, attorney's fees, and injunctive relief. [Document No. 25 (Ex. 4, pp. 1-9)]. Pekin denied coverage for the Federal Lawsuit's Complaint, and declined to defend Barber against the same. [Document No. 51 (Ex. 1)].

On August 19, 2009, Logan filed a second "Verified Complaint for Damages and Injunctive Relief (the "Federal Lawsuit's Amended Complaint"). The Federal Lawsuit's Amended Complaint proceeded against Barber on the same legal theories, and sought the same relief. [Document No. 25 (Exhibit 5)]. Pekin denied coverage for the Federal Lawsuit's Amended Complaint, and declined to defend Barber against the same. [Document No. 51 (Ex. 4)].

C. The Policy.

Pekin's Policy [Docket No. 50, Ex. 1] included Commercial General Liability ("CGL") Bodily Injury and Property Damage Liability ("BI/PD"), and CGL Personal

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Injury ("PI") and Advertising Injury ("AI") coverages. The CGL BI/PD coverage excluded expected or intended injury and property damage arising out of work.

IV. Discussion.

In support of its motion for summary judgment, Pekin argues that neither the State Lawsuit nor the Federal Lawsuit triggers the CGL BI/PD or CGL PI/AI insuring agreements, and if they do, they are subject to Policy exclusions. Under Indiana law, the insured bears the initial burden of showing that its claim is covered by the policy. The burden then shifts to the insurer to prove that an exclusion applies. Aearo Corp. v. Am. Int'l Specialty Lines Ins. Co., 676 F. Supp. 2d 738, 744 (S.D. Ind. 2009). In this case, Pekin's summary judgment motion is unopposed, and Defendants have not met their burden to prove coverage.²

A. CGL BI/PD Insuring Agreement.

The CGL BI/PD coverage insuring agreement requires "bodily injury" or "property damage" caused by an "occurrence."

1. "Bodily Injury"

Bodily injury is defined to mean "bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time." Neither the State Lawsuit nor the Federal Lawsuit alleges that Logan sustained bodily injury, sickness or disease because of Barber's conduct.

2. "Property Damage"

Property damage is defined to include "physical injury to tangible property," and "loss of use of tangible property that is not physically injured." Part of the State Lawsuit

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and the Federal Lawsuit allege "property damage." Logan's allegation that Barber damaged electrical, water, and sewer utility lines while demolishing the...