296 F. Supp. 3d 947
N.D. Ind.2017Background
- In October 2013 four members of Kennetha Purnell’s family died from carbon monoxide entering a leased home; Rosemary Purnell (administratrix) sued the owner (Chale) and amended to add McColly Realtors, Inc. and agent Ruth Lockhart for wrongful death based on duties arising from a leasing/listing contract.
- McColly requested defense/indemnity from its commercial Allstate policy (Policy No. 648550390); Allstate agreed to defend under a reservation of rights and filed this declaratory-judgment action.
- The Underlying Complaint alleges Defendants had contractual duties to register the rental, comply with codes, inspect, and warn of latent hazards; it alleges negligent/reckless failure to do so led to the deaths.
- The Allstate CGL policy provides Coverage A for ‘‘occurrence’’ (defined as an ‘‘accident’’) and Coverage B for certain ‘‘personal and advertising injury’’ including invasion/wrongful entry ‘‘committed by or on behalf of’’ an owner/landlord; the policy also contains a Real Estate Agents/Brokers E&O exclusion.
- Allstate moves for summary judgment seeking a declaration it has no duty to defend or indemnify; defendants cross-move. The court resolved coverage as a matter of law on the pleadings and uncontested record.
Issues
| Issue | Plaintiff's Argument (Allstate) | Defendant's Argument (McColly/Lockhart) | Held |
|---|---|---|---|
| Whether the Underlying Complaint alleges an "occurrence" under Coverage A | The claim is a professional/commercial error (failure to perform leasing duties), not an accidental "occurrence," so Coverage A does not apply | The deaths were accidental (coroner ruled "accident"), so Coverage A covers the wrongful-death allegations | Held for Allstate: claim arises from alleged professional errors/omissions, not an "occurrence" under Coverage A |
| Whether Coverage B (wrongful entry/invasion) applies | Coverage B requires invasion/entry "committed by or on behalf of" an owner/landlord; Underlying Complaint does not allege McColly acted as owner/landlord | Defendants argue invasion was effectively committed on behalf of the owner (Chale) and Allstate adjuster conceded owner responsibility | Held for Allstate: Complaint does not allege wrongful entry/invasion by or on behalf of Defendants as owner/landlord; Coverage B inapplicable |
| Whether Allstate has a duty to defend | No duty: the nature of the claim (professional E&O) falls outside CGL coverages | Defendants rely on allegations of accidental death and insurer investigation suggesting owner liability, arguing coverage may attach | Held for Allstate: no duty to defend because complaint alleges only professional/commercial duties arising from the brokerage/leasing contract |
| Whether insurer must indemnify if no duty to defend | If no duty to defend, no duty to indemnify under policy | Defendants contend coverage may ultimately be required | Held for Allstate: no duty to indemnify because no duty to defend under the Policy |
Key Cases Cited
- Tri-Etch, Inc. v. Cincinnati Ins. Co., 909 N.E.2d 997 (Ind. 2009) (failure to perform contracted professional duties is an E&O claim, not a CGL "occurrence")
- Auto-Owners Ins. Co. v. Harvey, 842 N.E.2d 1279 (Ind. 2006) (definition of "accident" can be construed in homeowner context; distinguished from commercial/professional conduct cases)
- Erie Ins. Co. v. American Painting Co., 678 N.E.2d 844 (Ind. Ct. App. 1997) (claims grounded in negligent hiring/retention are not "accidents" for CGL coverage)
- Newnam Mfg., Inc. v. Transcontinental Ins. Co., 871 N.E.2d 396 (Ind. Ct. App. 2007) (insurer's duty to defend is determined from the underlying complaint and facts known after investigation)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (summary judgment standard governing genuine disputes of material fact)