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No liability coverage for “insured”

No liability coverage for “insured”

December 02
07:15 2019

No liability coverage for “insured”

Beginning in the summer of 2013 until April 2014, Brena Berardicelli and her two sons lived with Travis Shroyer at his residence. Berardicelli and Shroyer shared a bedroom at the residence. On April 26, 2014, Shroyer moved a Caterpillar skid loader out of his barn. He planned to use the skid loader to move stone, put in a garden, and do some other landscaping. At some point, Shroyer “thought he had backed over the pile of dirt he had just left behind him, but got off the machine to check and noticed [J.B.’s] battery-operated four-wheeler under the machine and saw J.B. laying [sic] on the ground injured,” having suffered serious injuries. J.B. was the son of Berardicelli.

Shroyer had a homeowners policy with Property-Owners Insurance Company, which is an affiliate of Auto-Owners. The policy provided personal liability coverage with limits of $500,000 for each occurrence. The relevant wording read:

Coverage E – Personal Liability. We will pay all sums any insured becomes legally obligated to pay as damages because of or arising out of bodily injury or property damage caused by an occurrence to which this coverage applies.

* * *

We will settle or defend, as we consider appropriate, any claim or suit for damages covered by this policy. We will do this at our expense, using attorneys of our choice. This agreement to settle or defend claims or suits ends when we have paid the limit of our liability.

Furthermore, the Policy contains certain exclusions from liability coverage:

Coverage E – Personal Liability does not apply:

* * *

(6) to bodily injury or personal injury to any insured.

A few days after the accident, on April 29, 2014, Shroyer submitted a claim to Auto-Owners regarding the accident. Auto-Owners informed Shroyer that no coverage existed for the accident because J.B. “resided at the insured premises with his mother and Shroyer (and was an ‘insured’ under the Policy, thereby triggering certain Policy Exclusions).”

In July 2014, Berardicelli, on behalf of J.B., filed suit against Shroyer, alleging that J.B. was injured on Shroyer’s property by Shroyer’s operation of a machine. In August 2015, Berardicelli filed a “First Amended Complaint for Damages with Jury Demand” against Shroyer. On October 9, 2015, Shroyer filed his answer. Auto-Owners continued to deny coverage for the accident.

On March 14, 2016, Shroyer filed a “Third-Party Complaint on Insurance Contract” against Auto-Owners, requesting that the court enter a declaratory judgment stating that Auto-Owners must defend and indemnify him in the lawsuit. Auto-Owners answered on May 10, 2016.

On October 9, 2017, Auto-Owners filed a “Motion for Summary Judgment and Designation of Evidence in Support Thereof.” On the same date, Auto-Owners also filed a “Brief in Support of Motion for Summary Judgment.” Auto-Owners argued that it had no duty to indemnify or defend Shroyer’s liability claims because the undisputed evidence demonstrated that J.B. was an insured under the policy and that as a matter of law, any coverage for bodily injury to J.B. was excluded.

Auto-Owners provided evidence that included testimony that Berardicelli was not employed, did not pay rent, anddid not contribute to any household expenses or utilities. In addition to providing money to Berardicelli, Shroyer purchased diapers and “necessities” for her two sons. (Shroyer typically told Berardicelli if the sons needed to be disciplined, however, he “might have told them to sit in the timeout chair or something like that.”)

In response, Shroyer filed a “Brief in Opposition to Motion for Summary Judgment” and designated evidence in support of his position that J.B. was not an insured under the policy. Included in this evidence was Shroyer’s own testimony that he was never involved in any of the decision making regarding the various needs of the children. He also testified that he never watched them. Likewise, Berardicelli testified that when she had an errand to run, she “always had [the boys] with [her].” She also testified that she took care of the discipline and if an issue did arise, she would “take care of it.” Furthermore, she stated that she provided food for her children through “food stamps[.]”

The court denied Auto-Owners motion for summary judgment. The court did not make any specific findings or conclusions regarding its denial of the motion. Auto-Owners appealed.

On appeal, the court noted that the parties did not dispute that Auto-Owners would not have to provide coverage for bodily injury if J.B. was an insured. Instead they disputed the evidence of a genuine issue of material fact as to whether J.B. was insured under the policy by virtue of being in Shroyer’s “care.” According to the policy, an insured meant “any other person under the age of 21 residing with the named insured who is in the insured’s care.” Based on this definition and the evidence provided by Auto-Owners, the court concluded that J.B. was an insured under the policy. Accordingly, the court reversed the trial court’s denial of summary judgment and remanded the case with instructions to grant summary judgment in favor of Auto-Owners.

Auto-Owners Insurance Company v. Shroyer-Court of Appeals of Indiana-June 19, 2019-No. 18A-CT-1330.


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