Opinion
Cause No. IP 99-0476 C M/S.
July 18, 2000.
ORDER ON MOTION FOR SUMMARY JUDGMENT
This matter comes before the Court on the motion of plaintiff, State Farm Fire Casualty Company ("State Farm"), seeking judgment in its favor as a matter of law on all of the claims presented in its complaint for a declaratory judgment filed on April 7, 1999. State Farm contends that under Indiana law the homeowners insurance policy issued to Lori ("Mrs. Roeder") and Stephen Roeder ("Mr. Roeder") (collectively "the Roeders") does not provide coverage for the wrongful death and breach of contract claims filed against Mrs. Roeder by Logan and Sonja Peerman ("the Peermans"). Am. Compl. ¶¶ 12, 14. In addition, State Farm asserts that it has no duty to indemnify Roeder or pay any judgment in favor of the Peermans. Id. The Court has fully considered the parties' arguments and, for the reasons discussed below, GRANTS the plaintiff's motion for summary judgment.
I. FACTUAL PROCEDURAL BACKGROUND
State Farm is an Illinois corporation which offers insurance coverage to homeowners in Indiana. Statement of Undisputed Material Facts ("Joint Statement") ¶ 3. In April of 1997, State Farm issued a Homeowners Extra Policy to the Roeders. Id. ¶ 9. The Roeders needed such a policy because they were buying a home in Indianapolis. Id. ¶ 10.
On April 8, 1997, the Roeders met with State Farm agent William Collins ("Collins") to discuss the coverage options available. Vernon Aff. ¶ 9. Initially, Mrs. Roeder was not present and Mr. Roeder met with Collins alone. Id. After explaining the various options to Mr. Roeder, Collins completed an application. Id. Mr. Roeder only wanted the bare minimum coverage available. Joint Statement ¶ 11. Thus, the application did not include an optional endorsement which would have provided coverage for liability related to child care services offered by the insured. Mrs. Roeder did not arrive until after the application was filled out. Vernon Aff. ¶ 9. When she arrived, she did not ask Collins to reexplain the coverage options and exclusions because Mr. Roeder told her that he would explain everything to her later. Id. Instead, Mrs. Roeder simply signed the completed application immediately below a paragraph which provided:
I am applying for the insurance indicated and the information on the application is correct. The coverages, options and endorsements described above have been explained to me, and I want to purchase only those that are marked as accepted and for which a premium is shown. . .
Pl.'s Ex. H.
During the summer of 1997, Mrs. Roeder began offering child care services in her home. Joint Statement ¶¶ 21, 22. At some point, Mrs. Roeder went into Collins' office to discuss whether she could obtain insurance coverage if she decided to become a day care provider licensed by the state of Indiana. Vernon Aff. ¶ 3. She met with a person who she believed was Collins' daughter. Id. ¶ 4. The agent explained the types of coverage which might be available if Mrs. Roeder became a licensed day care provider. Id. ¶ 7. At the time, Mrs. Roeder knew that she would have to build up her clientele to at least six children in order to become licensed. Joint Statement ¶ 15. During the course of the meeting, Mrs. Roeder did not ask whether she had liability coverage for the services that she was currently providing in her home. Vernon Aff. ¶ 5. Rather, she assumed that her current policy provided coverage for the daycare services which she was providing even though neither Collins nor the agent told her that her policy would cover liability if she cared for less than six children in her home. Id. ¶ 8.
In order to build her clientele, Mrs. Roeder advertised her operation, which she named "Lori's Playhouse," in three publications which were circulated in the Indianapolis/Greenwood area. Id. ¶ 23. Mrs. Peerman responded to one of the advertisements. Id. ¶ 25. Mrs. Peerman was looking for child care services for her two children, Tylan and Brendon, while she and her husband worked full-time. Id. ¶ 35. Mrs. Roeder and Mrs. Peerman met for the first time in October of 1997. Id. ¶ 27. The two women reached an agreement under which Mrs. Peerman would pay Mrs. Roeder $100.00 per week to watch Tylan and Brendon five days a week between 7:00 a.m. and 5:30 p.m. Id. ¶¶ 34, 35. The agreement was memorialized in writing. Id. ¶ 33.
On November 11, 1997, Mrs. Roeder was watching Tylan at her residence when she found him in respiratory distress. Id. ¶¶ 43, 44. Tylan died later that day. Id. ¶ 45. The Marion County Coroner reported that Tylan died from Sudden Infant Death Syndrome. Id. ¶ 46. However, the Peermans contest that report and contend that Mrs. Roeder acted negligently in caring for Tylan and that her conduct was the proximate cause of Tylan's death. Id.
In April of 1998, the Peermans filed a complaint against Mrs. Roeder alleging that Roeder breached her contractual and common law duties as a child care provider and that such breach proximately caused the wrongful death of Tylan. Id. ¶ 48. On May 18, 1998, State Farm hired defense counsel Ron Frazier to represent Mrs. Roeder in the Peerman suit. Id. ¶ 45. In a letter notifying Mrs. Roeder of this appointment, State Farm indicated that it was reserving its right to deny coverage. Pl.'s Ex. D. The letter stated:
We wish to call your attention to the fact that we specifically reserve our right to deny coverage to you (and anyone claiming coverage under the policy) for the following reasons:
1. It is questionable whether the claim or suit for bodily injury arose out of child care services provided by or at the direction of any insured.
2. It is questionable whether the conditions of the policy have been violated by reason of delay by or on behalf of the insured in giving written notice to the Company concerning the accident or occurrence.
3. It is questionable whether the conditions of the policy have been violated by failure of the insured to immediately forward to the Company every notice, demand, summons or other process relating to the accident or occurrence.Id.
On October 26, 1998, State Farm sent another letter to the Roeders. Joint Statement ¶ 59. The letter again informed the Roeders that there were questions regarding State Farm's obligation to defend or indemnify Mrs. Roeder. Pl.'s Ex. C. It expressly reserved the right to deny coverage for the following reasons:
It is questionable whether the claim or suit for bodily injury arose out of the business pursuits by any insured.
It is questionable whether the claim or suit for bodily injury arose out of child care services provided by or at the direction of any insured.Id.
After an investigation of the facts and circumstances surrounding the Peerman suit, State Farm made a decision that the Roeders' policy did not provide coverage for the allegations raised by the Peermans. Joint Statement ¶ 47. Specifically, State Farm determined that the incident involving Tylan fell within the policy exclusions for bodily injury arising out of a business pursuit and child care services being provided by the insured. In a letter dated January 21, 1999, State Farm notified Mrs. Roeder that State Farm was denying coverage and, therefore, would no longer provide a defense in the suit. Pl.'s Ex. B.
Thereafter, the Peermans and Mrs. Roeder entered into a mediation agreement wherein Roeder agreed to pay the Peermans $100,000 as full settlement of all claims but then assigned her rights to the Peermans for any claims which she may have had against State Farm or her insurance agent. Def.'s Ex. E. In exchange, the Peermans agreed not to execute any further claims against Mrs. Roeder. Id. Instead, the Peermans agreed to pursue future actions against State Farm or the Roeders' agent. Id.
State Farm filed a complaint for declaratory judgment on April 7, 1999. State Farm requests that the Court enter a declaratory judgment finding that the State Farm Homeowners Extra Policy does not provide coverage for the allegations raised in the lawsuit filed by the Peermans against Mrs. Roeder because such allegations involve bodily injury and liability arising out of business pursuits and child care services provided by Roeder, which are excluded under the terms and conditions of the policy. Further, State Farm asks the Court to enter an order that it has no duty to indemnify or pay any judgment or settlement against or agreed to by Mrs. Roeder in favor of the Peermans. An amended complaint was filed on April 28, 1999.
At present, this case is before the Court on the motion for summary judgment filed by State Farm on April 24, 2000. State Farm asserts that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332 because the dispute involves citizens of different states and the amount in controversy exceeds $75,000. Having reviewed the factual background, the Court now turns to a brief overview of the standards governing its decision.
II. SUMMARY JUDGMENT STANDARD
Summary judgment is granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). An issue is genuine only if the evidence is such that a reasonable jury could return a verdict for the opposing party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A disputed fact is material only if it might affect the outcome of the suit in light of the substantive law. Id.
The moving party has the initial burden to show the absence of genuine issues of material fact. See Schroeder v. Barth, 969 F.2d 421, 423 (7th Cir. 1992). This burden does not entail producing evidence to negate claims on which the opposing party has the burden of proof. See Green v. Whiteco Indus., Inc., 17 F.3d 199, 201 n. 3 (7th Cir. 1994). The party opposing a summary judgment motion bears an affirmative burden of presenting evidence that a disputed issue of material fact exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Scherer v. Rockwell Int'l Corp., 975 F.2d 356, 360 (7th Cir. 1992). The opposing party must "go beyond the pleadings" and set forth specific facts to show that a genuine issue exists. See Hong v. Children's Mem. Hosp., 993 F.2d 1257, 1261 (7th Cir. 1993), cert. denied, 511 U.S. 1005 (1994). This burden cannot be met with conclusory statements or speculation, see Weihaupt v. American Med. Ass'n, 874 F.2d 419, 428 (7th Cir. 1989), but only with appropriate citations to relevant admissible evidence. See Local Rule 56.1; Brasic v. Heinemann's Inc., Bakeries, 121 F.3d 281, 286 (7th Cir. 1997); Waldridge v. American Hoechst Corp., 24 F.3d 918, 923-24 (7th Cir. 1994). Evidence sufficient to support every essential element of the claims on which the opposing party bears the burden of proof must be cited. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
In considering a summary judgment motion, a court must draw all reasonable inferences "in the light most favorable" to the opposing party. Spraying Sys. Co. v. Delavan, Inc., 975 F.2d 387, 392 (7th Cir. 1992). If a reasonable factfinder could find for the opposing party, then summary judgment is inappropriate. Shields Enters., Inc. v. First Chicago Corp., 975 F.2d 1290, 1294 (7th Cir. 1992). When the standard embraced in Rule 56(c) is met, summary judgment is mandatory. Celotex Corp., 477 U.S. at 322-23; Shields Enters., 975 F.2d at 1294.
III. DISCUSSION
State Farm contends that the Roeders' insurance policy does not provide coverage for the liability incurred by Mrs. Roeder in the death of Tylan at her home. In response, the Peermans argue that State Farm should be estopped from asserting either policy exclusion in denying coverage for Tylan's death because its agent stated and/or represented to Mrs. Roeder that liability arising from any child care services which she was providing at the time of the incident was covered under her current policy and that she did not need to purchase additional coverage. In presenting this argument, the Peermans appear to concede that Mrs. Roeder's child care activity fell within the exclusionary language of the policy.
To survive summary judgment, the Peermans must present specific facts which establish each element of their estoppel defense. Under Indiana law, the elements of estoppel are the misleading of a party entitled to rely on the acts or statements in question and a consequent change of position to his detriment. United Services Auto. Ass'n v. Caplin, 656 N.E.2d 1159, 1163 (Ind.App. 1995). In this case, the Peermans rely almost entirely on Mrs. Roeder's deposition testimony as well as her recorded statement to State Farm employee Don Phillips. Neither piece of evidence is sufficient to create a genuine issue for trial.
In addition, the Peermans cite to portions of Mrs. Roeder's affidavit. However, since their brief was filed the Peermans have substituted a new affidavit from Roeder.
In both statements, Mrs. Roeder merely indicates that she went to Collins' office at some point during the summer of 1997 in order to discuss child care insurance. Although she states that she left the office believing that she would only need child care insurance if she started watching more than six children, Mrs. Roeder makes no suggestion that the agent made a specific misrepresentation about the coverage to which she was entitled under her current policy. Nor does she state that the agent was aware of her mistaken belief but chose not to correct her misunderstanding. To the contrary, Mrs. Roeder's affidavit indicates that Roeder never even asked the agent whether she had liability coverage under her current policy for the child care services which she was providing. Specifically, the affidavit provides:
5. I did not ask whether I had liability coverage if I was providing child care services for fewer than six children in my home.
6. Mr. Collins' daughter did not tell me that my current policy provided coverage for the child care services that I was providing in my home.
7. We only discussed what types of coverages might be available if I decided to become a state licensed day care provider.
8. I assumed that my policy provided coverage for the child care services I was providing, but neither William C. Collins nor his daughter told me that my policy provided liability coverage if I cared for fewer than six children in my home.
Without evidence that the agent said or did something to prompt Mrs. Roeder's mistaken belief that she had liability coverage under her current policy or that the agent was aware of Roeder's mistaken assumption, the Peermans have failed to meet their burden in establishing their estoppel defense. Thus, State Farm is entitled to judgment as a matter of law.
To the extent that the Peermans may contend that Mrs. Roeder was misled by State Farm when she initially purchased the insurance policy, summary judgment would still be appropriate even if the Peermans could demonstrate that Roeder was unaware of the business pursuit or child care exclusions when she signed the application. In Burns v. Rockford Life Ins. Co., 740 F.2d 542 (7th Cir. 1984), the Seventh Circuit held that an agent's failure to mention each provision in a policy was not actionable where the term was clearly and comprehensibly set out in the policy. Id. at 543. In so doing, the Court explained that an insurance company is not "estopped from reliance on the exclusion in a policy because the agent did not specifically explain the exclusion. . . [T]he failure of an agent to review each provision of the policy does not operate to eliminate those provisions not specified from the policy." Id. (quoting State Farm Mutual Auto. Ins. Co. v. Xaphes, 384 F.2d 640, 642 (2d Cir. 1967)). Here, Mrs. Roeder stated in her affidavit that she was not present when Collins explained the various coverage options available to Mr. Roeder. Instead, she arrived after the application was completed and did not ask Collins to reexplain the coverages and exclusions to her because her husband told her that he would explain everything to her later. Applying Burns as well as the basic contracts principle that an individual is generally responsible for the contents of a document which she signs, the Court therefore concludes that State Farm is entitled to rely on the exclusions set forth in the Roeder policy in denying coverage for Tylan's death.
IV. CONCLUSION
The Peermans have failed to present sufficient evidence from which to find a genuine issue of material fact in this matter. Therefore, the Court finds that the Roeders' insurance policy does not provide coverage for the allegations raised in the action filed by the Peermans and that State Farm has no duty to indemnify Mrs. Roeder or pay any judgment or settlement in favor of the Peermans. The motion for summary judgment filed by State Farm is GRANTED.