Wayne Tp. Bd. of School Com'rs v. Indiana Ins. Co., 49A05-9403-CV-106

• Decision Date: 30 May 1995
• Docket Number: No. 49A05-9403-CV-106,49A05-9403-CV-106
• Parties: 100 Ed. Law Rep. 1123 WAYNE TOWNSHIP BOARD OF SCHOOL COMMISSIONERS and The Metropolitan School District of Wayne Township, Appellants-Defendants, v. INDIANA INSURANCE COMPANY and Tudor Insurance Company, Appellees-Plaintiffs.
• Court: Indiana Appellate Court

Page 1205

650 N.E.2d 1205

100 Ed. Law Rep. 1123

WAYNE TOWNSHIP BOARD OF SCHOOL COMMISSIONERS and The

Metropolitan School District of Wayne Township, Appellants-Defendants, v. INDIANA INSURANCE COMPANY and Tudor Insurance Company,

Appellees-Plaintiffs.

No. 49A05-9403-CV-106.

Court of Appeals of Indiana,

Fifth District.

May 30, 1995.

Rehearing Denied July 24, 1995.

Jon M. Bailey, Robert B. Clemens, Marya Mernitz Rose, Bose McKinney & Evans, Indianapolis, for appellants.

George V. Heins, Smith, Maley & Douglas, Robert A. Smith, William F. McManus, Bishop Smith & Bishop, Indianapolis, for appellees.

OPINION

BARTEAU, Judge.

The Wayne Township Board of Education and the Metropolitan School District of Wayne Township (collectively, "the school") appeal from the trial court's order granting summary judgment in favor of Indiana Insurance Company ("Indiana Insurance") and Tudor Insurance Company ("Tudor"). We heard oral argument on April 25, 1995.

FACTS

In February or March of 1988, Mr. Barger, the principal of Robey Elementary School, sexually molested S.M. while the student was in his office. The incident consisted of S.M. sitting on Barger's lap while Barger forced S.M. to touch his genitals with her hand through his trousers. Barger was convicted of child molesting under Ind. Code 35-42-4-3. S.M. filed suit against Barger and the school, alleging:

As a direct proximate result of the negligence of the Defendant, Wayne Township Board of Education, and the actions of the Defendant, Michael Barger, described hereinabove, the Plaintiff, [S.M.], has suffered severe emotional and psychological trauma and distress requiring extensive counseling, she has inflicted injury upon herself, she has incurred medical expenses, and will carry the emotional scars of this molestation for the remainder of her life.

R. 30.

At the time of the incident, the school and Barger were insured under a Comprehensive General Liability Insurance Coverage ("CGL") policy issued by Indiana Insurance, and an Educational Errors and Omissions policy issued by Tudor. When both insurers denied coverage, the school brought the instant action for declaratory judgment seeking defense and coverage of the claims.

ISSUE

We restate the issue presented by the school as whether the trial court erred in granting summary judgment in favor of Indiana Insurance and Tudor.

DISCUSSION

In summary judgment proceedings, the party moving for summary judgment must show that there are no genuine issues of material fact and that the movant is entitled to judgment as a matter of law. Once the movant establishes that no genuine issue of fact exists, the party opposing summary judgment must set forth specific facts indicating that there is a genuine issue in dispute. If the non-moving party fails to meet this burden, summary judgment in favor of the moving party is appropriate. Pierce v. Bank One-Franklin, NA (1993), Ind.App., 618 N.E.2d 16, 18, trans. denied. Further, the party moving for summary judgment must designate to the trial court all parts of the matters included in the record that it relies on for the motion. The opposing party likewise must designate to the trial court "each material issue of fact which that party asserts precludes entry of summary judgment and the evidence relevant thereto." Ind. Trial Rule 56(C). Any doubt as to the existence of a factual issue should be resolved against the moving party, construing all properly asserted facts and reasonable inferences in favor of the non-movant. Cowe v. Forum Group, Inc. (1991), Ind., 575 N.E.2d 630, 633.

Summary judgment based upon construction of an insurance contract is a determination, as a matter of law, that the contract is not so ambiguous that resort must be made to extrinsic evidence in order to ascertain the contract's meaning. Sharp v. Indiana Union Mut. Ins. Co. (1988), 526 N.E.2d 237, 239, reh'g denied, trans. denied. The provisions of an insurance contract are subject to the same rules of construction as are other contracts, and the construction of a written contract is a question of law for which summary judgment is particularly appropriate. Id.

An insurer's duty to defend its insureds against suit is broader than its coverage liability or duty to indemnify. Trisler v. Indiana Ins. Co. (1991), Ind.App., 575 N.E.2d 1021, 1023. However, the insurer's duty to defend is determined from the allegations of the complaint and from those facts known to or ascertainable by the insurer after reasonable investigation. Id. If the pleadings disclose that a claim is clearly excluded under the policy, no defense is required. Id.

The insurer may go beyond the face of the complaint and refuse to defend based upon the factual underpinnings of the claims against its insured. Cincinnati Ins. Co. v. Mallon (1980), Ind.App., 409 N.E.2d 1100, 1105. "Accordingly, in evaluating the factual basis of a claim and the insurer's concomitant duty to defend, this court may properly consider the evidentiary materials offered by the parties to show coverage." Trisler, 575 N.E.2d at 1023. When the underlying factual basis of the complaint, even if proved true, would not result in liability under the insurance policy, the insurance company can properly refuse to defend. Mallon, 409 N.E.2d at 1105 (citing 7C John A. Appleman, Insurance Law and Practice, § 4683). "It is the nature of the claim and not its merits that determines the duty to defend." Terre Haute First National Bank (1993), Ind.App., 634 N.E.2d 1336, 1339; Mallon, 409 N.E.2d at 1105.

Indiana Insurance Policy

The Indiana Insurance policy provides coverage under the following provision:

The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of ... bodily injury to which this insurance applies, caused by an occurrence....

R. 435. The parties dispute whether S.M.'s injury was caused by an occurrence, and whether her injury is covered as bodily injury under the policy.

Occurrence

Coverage under the Indiana Insurance policy is triggered by an occurrence. "Occurrence" is defined in the policy as:

An accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected no[r] intended from the standpoint of the insured.

R. 433. The parties do not dispute that Barger's conduct was not accidental. "In the context of insurance coverage, an accident means an unexpected happening without an intention or design." Terre Haute First National Bank, 634 N.E.2d at 1338; see also, City of Jasper v. Employers Ins. of Wausau (7th Cir.1993), 987 F.2d 453. And, Indiana law infers that Barger intended to injure S.M., regardless of his subjective mental state. Wiseman v. Leming (1991), Ind.App., 574 N.E.2d 327, 329, reh'g denied, trans. denied. Thus, as a matter of law, S.M.'s injury was intended from the standpoint of Barger, an insured. The parties do not dispute that Barger's misconduct was not an occurrence.

However, the school argues that the separate allegations made against the school do rise to an occurrence under the policy. S.M.'s complaint sets forth claims against the school under a theory of negligence in counts separate from that brought against Barger. The school contends that the policy requires Indiana Insurance to consider these claims against the school separate from those brought against Barger.

The policy states that "[t]he insurance afforded applies separately to each insured against whom claim is made or suit is brought...." R. 433. The school links this provision to the definition of an occurrence requiring the injury to be neither expected nor intended from the standpoint of the insured. ¹ R. 433 (emphasis added). The school concludes that in order to determine whether S.M. has alleged an occurrence against the school, we must analyze the claims brought against the school separately from the claims brought against Barger.

Words in an insurance contract should be given their plain and ordinary meaning whenever possible. Lexington Ins. Co. v. American Healthcare Providers (1993), Ind.App., 621 N.E.2d 332, 335, trans. denied. The Indiana Insurance policy states that the coverage applies separately to each insured. Whether an occurrence has been alleged is determined from the standpoint of the insured. Trisler, 575 N.E.2d at 1023. The school is a separate insured under the policy, and S.M. has not alleged any intentional conduct on the part of the school. S.M.'s claims against the school sound in negligence.

Indiana Insurance has not designated any evidence demonstrating that the school's alleged conduct was not an accident: there is no evidence that the school intended or expected Barger's misconduct or that the molestation was the result of the school's intent or design. Terre Haute First National Bank, 634 N.E.2d at 1338. Indiana Insurance argues that, under Indiana law, S.M.'s injury is intended from the standpoint of the school because we infer that child molesters intend to harm their victims. See Wiseman, 574 N.E.2d at 329.

In support of this position, Indiana Insurance points to cases from other jurisdictions that have concluded that insurance policies, which define "occurrence" in terms virtually identical to the Indiana Insurance policy, provide no coverage for child molestation since the law infers that the injury is intended from the standpoint of the insured. See Commercial Union Ins. Co. v. Sky, Inc. (W.D.Ark.1992), 810 F.Supp. 249; Old Republic Ins. v. Comprehensive Health Care (N.D.Tex.1992), 786 F.Supp. 629, aff'd, 2 F.3d 105. However, the cases cited by Indiana Insurance do not discuss the critical provision found in the Indiana Insurance policy calling for "the insurance afforded [to be applied] separately to each insured against whom claim is made or suit is brought...." R. 433.

Indiana Insurance seeks to apply the insurance to the school and Barger jointly, in an effort to impute the intent...