Opinion
NA 00-0176-c-b/s
September 5, 2001
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
Defendants Tony and Patricia Main own and operate the Marengo Tavern, located at 205 South Depot Street, Marengo, Crawford County, Indiana. On or about March 12, 1998, Dale Gillespie visited the tavern, where he consumed alcoholic beverages served by the Mains or their agents. Mr. Gillespie subsequently died of acute alcohol intoxication. His estate subsequently filed a wrongful death action against the Mains. Plaintiff, provider of Defendants' homeowners insurance, filed this action, seeking a declaration that Defendants' policy does not cover liability or medical expenses arising from the death of Mr. Gillespie and, therefore, does not obligate Plaintiff to defend a wrongful death lawsuit brought by Mr. Gillespie's estate. Plaintiff has filed a Motion for Summary Judgment on these issues. For the reasons set forth below, the Court GRANTS Plaintiff's Motion for Summary Judgment.
Factual Background
At all times relevant to this dispute, the Mains maintained a homeowners insurance policy ("Policy") through State Farm for their residence at 185 West Cherry Street, Marengo, Crawford County, Indiana. (Compl. ¶ 7; Answer ¶ 2.) The Policy provided up to $300,000 per occurrence for personal liability and $5,000 per person for medical payments. Id. The Policy excluded coverage for "bodily injury or property damage arising out of the business pursuits of any insured or the rental or holding for rental of any part of any premises by any insured." (Policy at 15.) It also excluded "bodily injury or property damage arising out of any premises owned or rented to any insured which is not an insured location." (Id.)
On December 16, 1999, Mr. Gillespie's Estate filed a wrongful death suit against the Mains in Crawford County Circuit Court. (Compl. ¶ 6; Answer ¶ 2.) The complaint alleged that Mr. Gillespie's death was caused by the negligent service of alcohol by the Mains' agents or employees. Id. Plaintiff now seeks a declaratory judgment that the Policy does not cover the Defendants' actions preceding Mr. Gillespie's death and that Plaintiff has no duty to defend them in the wrongful death suit.
Standard of Review Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A genuine issue of material fact exists if there is sufficient evidence for a reasonable jury to return a verdict in favor of the non-moving party on the particular issue. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The mere existence of a factual dispute will not bar summary judgment; the facts in dispute must be outcome-determinative. Id. In considering a motion for summary judgment, a court must review the record and draw all reasonable inferences in the light most favorable to the non-moving party. Id. at 255; Del Raso v. United States, 244 F.3d 567, 570 (7th Cir. 2001). Summary judgment is required only if it is clear that a plaintiff will be unable to satisfy the legal requirements necessary to establish his or her case. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed 265 (1986).
We are charged with interpreting language of the Mains' insurance policy to determine whether it applies to actions preceding the death of Mr. Gillespie. First, we must determine whether the service of alcohol to Mr. Gillespie prior to his death by acute intoxication qualifies as a "bodily injury." Next, we must determine whether the Policy's reference to "Option BU — Business Pursuits" is sufficiently ambiguous to warrant the extension of coverage. If so, we must determine whether the Mains qualify for coverage under the terms of Option BU as salespersons or collectors. Then, we must determine whether employee Joey Robinson is the Defendants' "residence employee" such that the policy would cover his actions at the tavern on the night in question. Finally, we must determine whether Plaintiffs have a duty to defend Defendants in the pending wrongful death suit.
Because we are sitting in diversity, we must apply the law of Indiana as interpreted by the highest court of the state. Fidelity and Guar. Ins. Underwriters, Inc. v. Everett I. Brown Co, L.P., 25 F.3d 484, 486 (7th Cir. 1994). Under Indiana law, insurance policies are subject to the same rules of construction as other contracts. Pennington v. American Family Ins. Group, 626 N.E.2d 461, 463-64 (Ind.Ct.App. 1993). Clear, unambiguous language must be given its plain, ordinary meaning. Tate v. Secura Ins., 587 N.E.2d 665, 668 (Ind. 1992); General Accident Ins. Co. of Am. v. Hughes, 706 N.E.2d 208, 211 (Ind.Ct.App. 1999). Ambiguities must be construed strictly against the insurer. Sutton v. Littlepage, 669 N.E.2d 1019, 1021 (Ind.Ct.App. 1996). "An ambiguity does not exist merely because the parties proffer differing interpretations of the policy language. Rather, the policy is ambiguous only if reasonably intelligent persons may honestly differ as to the meaning of the policy." Town of Orland v. Nat'l Fire and Cas. Co., 726 N.E.2d 364, 370 (Ind.Ct.App. 2000) (citations omitted).
Bodily injury Plaintiff contends that Dale Gillespie's death from acute alcohol intoxication qualifies as a "bodily injury" sustained "in the course of business," and therefore falls outside the scope of Defendants' homeowners insurance policy. The Policy states, in relevant part:
1. "bodily injury" means physical injury, sickness, or disease to a person. This includes required care, loss of services and death resulting therefrom.
(Policy at 1.) Defendants argue that the Policy's definition of "bodily injury" is ambiguous and may or may not include the service of alcohol to a visibly intoxicated patron. (Resp. to Mot. for Summ. J. at 2.) Defendants suggest that providing alcohol may actually constitute a "non-bodily" injury and that, on the present facts, the bodily injury was actually self-inflicted. (Id.) The Supreme Court of Indiana has not decided this question, probably because the notion of a non-bodily injury would entail extensive metaphysical analysis. Therefore, we must determine how the court would resolve the issue. Huntzinger v. Hastings Mut. Ins. Co., 143 F.3d 302, 308 (7th Cir. 1998) (citations omitted). The parties have not briefed, and the Court has not found, any Indiana cases relating the service of alcoholic beverages to "bodily injury." However, two analogous decisions guide our understanding of the plain and ordinary meaning of the term.
In Wayne Township Board of School Commissioners v. Indiana Insurance Company, a student alleged that molestation by her school principal had caused her emotional injury. 650 N.E.2d 1205, 1207 (Ind.Ct.App. 1995). The insurer refused to defend or indemnify the school district because the alleged harm was not a bodily injury. Id. Indiana Insurance brought an action for declaratory judgment, arguing that emotional injury fell outside the scope of the policy. Id. at 1208. In reviewing the trial court's grant of summary judgment for the insurer, the appellate court found that "S.M.'s allegation that the negligence of the school caused her to inflict injury upon herself states a claim for bodily injury." Id. at 1211.
Then, in General Accident Insurance Company of America v. Gastineau, this Court found that, under Indiana law, a sexual harassment claim for hostile work environment fit within an insurance policy's definition of "bodily injury." 990 F. Supp. 631, 635 (S.D.Ind. 1998). GAIC sought a declaratory judgment regarding liability coverage and its duty to defend a sexual harassment claim brought against an employer. Id. at 632. The policy at issue defined "bodily injury" as "bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time." Id. at 633. GAIC argued that it was not obligated to investigate Gastineau's hostile work environment claim on the grounds that it involved only "emotional and psychological damage," not bodily injury. Id.
The Court noted that "bodily contact is sufficiently inherent in hostile work environment claims that, without conducting any reasonable investigation into Gastineau's allegations, GAIC's duty to defend was triggered," and the policy covered the alleged acts. Id. at 635.
Here, Defendants argue that serving alcohol to an intoxicated patron to the point of acute intoxication does not constitute a bodily injury under the terms of the Policy. This argument has no merit. To properly interpret "bodily injury," we must look to the relationship between the alleged harm and the physical body or physical acts. Death by ingestion of excessive amounts of alcohol is certainly more directly related to the corporeal form than emotional harm. Serving alcohol is a physical act, which in this case led to physical harm. Just as in Wayne Township, Defendants' alleged negligence in serving Mr. Gillespie related to his physical harm, even if Mr. Gillespie actually inflicted the harm.
Defendants would have the Court stray beyond the plain, ordinary meaning of the terms of the Policy to categorize this as a non-bodily injury, but such strained interpretation is not warranted. As a matter of law, service of alcohol to the point of death by intoxication qualifies as a "bodily injury."
Defendants, either personally or through their agents, served alcohol to Dale Gillespie, who subsequently died as a result of acute alcohol intoxication. This bodily injury was inflicted in the ordinary course of Defendants' business — operating a tavern. Therefore, the terms of the Policy exclude this occurrence from coverage. We must now analyze whether the Mains were covered under Option BU, a supplementary provision covering business activities.
Coverage under optional provisions Defendants argue that the Policy's Declarations Form was ambiguous as to the effect of Optional Provisions and that this ambiguity entitles them to coverage under Option BU. This is simply not a reasonable reading of the policy. The Declarations Form makes reference to Special Form 3, the main coverage document, and also itemizes options and additional endorsements. The same section of Special Form 3 contains both "Option RC — Replacement Cost," which Defendants appear to have elected, and Option BU, which does not appear as an elected option. Defendants should reasonably have surmised from this difference that one option applied, whereas the other did not. Taking the document as a whole, no ambiguity exists regarding the application of these optional provisions.
Even assuming that Option BU were elected, however, this provision would afford Defendants no relief in this instance. The terms of Option BU modify the exclusion for business pursuits in the following manner:
1. Section II coverage applies to the business pursuits of an insured who is a: a. clerical office employee, salesperson, collector, messenger; or b. teacher (except college, university and professional athletic coaches), school principal or school administrator; while acting in the scope of the above listed occupations. 2. However, no coverage is provided: a. for bodily injury or property damage arising out of a business owned or financially controlled by the insured or by a partnership of which the insured is a partner or member.
(Policy, at 20.) A plain reading reveals that section 2 of Option BU expressly limits the general coverage provided under section 1. Defendants admitted in their Answer that they own and operate the Marengo Tavern. (Compl. ¶ 2; Answer ¶ 1.) Therefore, they are excluded from coverage under section 2, part a.
Defendants argue that ambiguity exists under Option BU where an insured is both an owner and a collector. The plain text of the Policy creates no ambiguity, however. The option extends coverage to collectors and salespersons, except where those individuals own or control the finances of the business. Again, Defendants suggest a strained reading of these clauses to create the illusion of ambiguity where there is none. As a matter of law, the claim arising from their service of alcohol to Mr. Gillespie would not qualify for coverage under Option BU. Because we find that Option BU specifically excluded Defendants from coverage based on their ownership of the tavern, we need not decide the questions Defendants raise regarding their status as salespersons or collectors.
Residence employee Defendants claim that their liability for the death of Mr. Gillespie arose from the actions of Joey Robinson, an employee whom Defendants contend is eligible for coverage under the Policy. Plaintiffs counter that Robinson, a bartender at Defendants' tavern, acted in furtherance of Defendants' business, and that any of his conduct giving rise to liability is excluded from coverage by the Policy. The relevant clause of the Policy states:
Defendants also contend that ambiguity in the definition of "residence employee" creates a genuine issue of material fact. This is an interpretive issue, however, and the proper interpretation of insurance contract terms is a question of law, particularly appropriate for summary judgment. Hastings Mut. Ins. Co. v. Webb, 659 N.E.2d 1049, 1051 (Ind.Ct.App. 1995).
9. "[R]esidence employee" means an employee of an insured who performs duties, including household or domestic services, in connection with the maintenance or use of the residence premises. This includes employees who perform similar duties elsewhere for you. This does not include employees while performing duties in connection with the business of an insured.
(Policy at 2.) By this definition, Robinson's actions supersede his alleged status as a residence employee. On the night in question, Joey Robinson served alcoholic beverages at the tavern owned and operated by Defendants. His activity obviously occurred "in connection with the business of an insured," excluding him from coverage under the Policy, regardless of whether he would otherwise qualify as a residence employee.
Duty to Defend Plaintiff contends that because the Policy does not extend coverage to Defendants for the acts at issue in the wrongful death suit, Plaintiff has no duty to defend Defendants in that suit. Indiana courts have wrestled with the contours of the "duty to defend" standard. See Huntzinger v. Hastings Mut. Ins. Co., 143 F.3d 302 (7th Cir. 1998); Transamerica Ins. Servs. v. Kopko, 570 N.E.2d 1283 (Ind. 1991). However, the fundamental requirement of coverage has remained constant. "While Indiana's courts may use differing language to describe the standard, we believe there is essentially one standard — that the allegations of the complaint, including the facts alleged, give rise to a duty to defend whenever, if proved true, coverage would attach." Federal Ins. Co. v. Stroh Brewing Co., 127 F.3d 563, 566 (7th Cir. 1997); see also Kopko, 570 N.E.2d at 1285. The fact that the Policy did not cover Defendants' activities related to the death of Mr. Gillespie means that Plaintiff has no duty to defend the suit brought by Mr. Gillespie's estate.
Conclusion Plaintiff moved for Summary Judgment, seeking a declaration that the Policy did not cover Defendants or their agents for actions preceding the death of Dale Gillespie and did not give rise to a duty to defend the subsequent wrongful death suit. To oppose this Motion, Defendants have suggested only strained interpretations of Policy language and have not produced any evidence illustrating a genuine issue of material fact. As set forth in our discussion above, we find 1) the Policy did not cover Defendants or Joey Robinson for their actions leading to the death of Mr. Gillespie; and, therefore 2) Plaintiffs had no duty to defend Defendants against the subsequent suit by Mr. Gillespie's estate.
Accordingly, we GRANT Plaintiff's Motion for Summary Judgment.
It is so ORDERED.