Youell v. Cincinnati Ins. Co.

• Decision Date: 28 December 2018
• Docket Number: Court of Appeals Case No. 18A-CT-1466
• Parties: Robert YOUELL and Best One Giant Tire, Inc., Appellants-Defendants, v. The CINCINNATI INSURANCE COMPANY a/s/o Greg Dotson, Appellee-Plaintiff
• Court: Indiana Appellate Court

117 N.E.3d 639

Robert YOUELL and Best One Giant Tire, Inc., Appellants-Defendants,

v.The CINCINNATI INSURANCE COMPANY a/s/o Greg Dotson, Appellee-Plaintiff

Court of Appeals Case No. 18A-CT-1466

Court of Appeals of Indiana.

Filed December 28, 2018

Attorneys for Appellants: Thomas J. Jarzyniecki, Jr., Jennifer M. Van Dame, Kightlinger & Gray, LLP, Indianapolis, Indiana, Crystal G. Rowe, Kightlinger & Gray, LLP, New Albany, Indiana

Attorneys for Appellee: Catherine Siebecker, Doug Fisher, Law Offices, The Cincinnati Insurance Company, Indianapolis, Indiana

Vaidik, Chief Judge.

Case Summary

[1] A landlord and a tenant entered into a commercial lease that provided that the landlord would insure the building and the tenant would insure its personal property inside the building. When the property was later damaged by fire, the landlord's insurance covered the loss. The landlord's insurer later filed a subrogation action against the tenant to recover the amount paid. The tenant filed a motion for judgment on the pleadings, arguing that the landlord's agreement to obtain property insurance was an agreement to provide both parties with the benefits of insurance and expressly allocated the risk of loss in case of fire to insurance, thereby barring a subrogation action as a matter of law. The trial court denied the motion, and the tenant now appeals. We reverse and remand.

Facts and Procedural History

[2] In 2013, Greg Dotson ("Landlord") leased a commercial building on West Washington Street in Indianapolis to Robert Youell and Best One Giant Tire, Inc. (referred to collectively as "Tenant"). The Commercial Lease Agreement addressed insurance as follows:

8. Insurance

A. If the Leased Premises or any other party [sic] of the Building is damaged by fire or other casualty resulting from any act or negligence of Tenant or any of Tenant's agents, employees or invitees, rent shall not be diminished or abated while such damages are under repair, and Tenant shall be responsible for the costs of repair not covered by insurance.

B. Landlord shall maintain fire and extended coverage insurance on the Building and the Leased Premises in such amounts as Landlord shall deem appropriate. Tenant shall be responsible, at its expense, for fire and extended coverage insurance on all of its personal property, including removable trade fixtures, located in the Leased Premises.

C. Tenant and Landlord shall, each at its own expense, maintain a policy or policies of comprehensive general liability insurance with respect to the respective activities of each in the Building with the premiums thereon fully paid on or before due date, issued by and binding upon some insurance company approved by Landlord, such insurance to afford minimum protection of not less than $1,000,000 combined single limit coverage of bodily injury, property damageor combination thereof. Landlord shall be listed as an additional insured on Tenant's policy or policies of comprehensive general liability insurance, and Tenant shall provide Landlord with current Certificates of Insurance evidencing Tenant's compliance with this Paragraph. Tenant shall obtain the agreement of Tenant's insurers to notify Landlord that a policy is due to expire at least [ten] (10) days prior to such expiration. Landlord shall not be required to maintain insurance against thefts within the Leased Premises or the Building.

Appellants' App. Vol. II p. 15 (emphasis added). In accordance with the lease, Landlord maintained property insurance on the building through a policy with The Cincinnati Insurance Company (CIC).

[3] On August 8, 2015, a fire occurred at the building. Pursuant to Landlord's insurance policy, CIC paid Landlord $227,653 for damages to the building. In August 2017, CIC, as subrogee of Landlord, filed a complaint against Tenant to recover that amount. CIC attached the Commercial Lease Agreement to its complaint.

[4] Thereafter, Tenant filed a motion for judgment on the pleadings, arguing that CIC had no right to pursue the subrogation claim because Landlord's agreement to provide property insurance was an agreement to provide both parties with the benefits of insurance. The trial court denied Tenant's motion. Appellants' App. Vol. II p. 9.

[5] At Tenant's request, the trial court certified its order for interlocutory appeal, and this Court accepted jurisdiction of the appeal.

Discussion and Decision

[6] Tenant contends that the trial court should have granted its motion for judgment on the pleadings. According to Indiana Trial Rule 12(C), after the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings. A written instrument attached to a pleading is considered a part of that pleading. Ind. Trial Rule 10(C). A motion for judgment on the pleadings is typically directed toward a determination of the substantive merits of the controversy. Mourning v. Allison Transmission, Inc. , 72 N.E.3d 482, 486 (Ind. Ct. App. 2017). Such motions should be granted only where it is clear from the face of the complaint that under no circumstances could relief be granted. Id. ; see also ESPN, Inc. v. Univ. of Notre Dame Police Dep't , 62 N.E.3d 1192, 1195 (Ind. 2016) (judgment on the pleadings should be granted only "where it is clear from the face of the pleadings that one party is entitled to prevail as a matter of law"). We review the trial court's ruling on such motions de novo. ESPN , 62 N.E.3d at 1195.

[7] In addition, a lease is construed in the same manner as any other contract. T-3 Martinsville, LLC v. US Holding, LLC , 911 N.E.2d 100, 111 (Ind. Ct. App. 2009), aff'd on reh'g , trans. denied . When construing the meaning of a contract, our primary task is to determine and effectuate the intent of the parties. Id. First, we must determine whether the language of the contract is ambiguous. Id. The unambiguous language of a contract is conclusive upon the parties to the contract and upon the courts. Id. If the language of the instrument is unambiguous, the parties' intent will be determined from the four corners of the contract. Id. If, on the other hand, a contract is ambiguous, its meaning must be determined by examining extrinsic evidence and its construction is a matter for the fact-finder. Id.

[8] Tenant asserts that Morsches Lumber, Inc. v. Probst , 180 Ind. App. 202, 388 N.E.2d 284 (Ind. Ct. App. 1979), is controlling here. In that case, the parties entered into a contract for the construction of a pole barn. According to the contract, the landowner was required to obtain property insurance for fire and windstorm damage and the builder was required to obtain general liability insurance. When a windstorm later destroyed the barn during construction, the landowner's insurance covered only 75% of the loss. The landowner then filed suit against the builder, alleging that the builder's negligence was the proximate cause of the barn's destruction. The builder responded that regardless of any negligence on its part, neither the landowner nor his insurer as subrogee could bring an action for a loss that the parties agreed would be allocated to insurance. We agreed with the builder, reasoning:

[A]n agreement to insure is an agreement to provide both parties with the benefits of insurance. Individuals understand that insurance will protect them against the consequences of their own negligence and more than likely assume that if one who is a party to a contract agrees as part of his or its duties to provide insurance, that the insurance will protect both of them regardless of the cause of the loss (excepting, of course, wanton and willful acts). If that were not their intent, each would provide his or its own insurance protection and there would be no need for the contract to place the duty on one of them.

Id. at 287. Accordingly, we held that the landowner was "limited in his recovery to the proceeds of the insurance policy. The fact that he failed to take out a policy sufficient to cover the cost of the undertaking is a cost he will have to bear." Id. ; see also Woodruff v. Wilson Oil Co. , 178 Ind. App. 428, 382 N.E.2d 1009 (1978) (holding that a contract requiring the lessors to obtain fire insurance for the leased property was for the benefit of both the lessors and...