Holiday Hospitality Franchising, Inc. v. Amco Insurance Co.
955 N.E.2d 827
Ind. Ct. App.2011Background
- In 2007, a Holiday Inn employee molested a fifteen-year-old hotel guest, giving rise to liability considerations for Holiday Inn, Holiday Hospitality, and related entities insured under AMCO.
- The AMCO policy provides bodily injury liability with an explicit ‘occurrence’ definition and an abuse/molestation exclusion for injuries arising from negligent supervision or retention, among others.
- Prior state court rulings on Forshey’s conduct concluded the molestation was outside the employment scope, limiting coverage for some defendants.
- AMCO filed for declaratory judgment seeking a ruling that the policy does not cover the underlying negligent claims; Holiday Hospitality sought to establish that an occurrence occurred and that the care/custody/control issue favored coverage due to a separation-of-insureds clause.
- The trial court granted AMCO summary judgment; on appeal, the Indiana Court of Appeals reversed in part, holding an occurrence did take place but genuine issues remained as to whether the guest was in the hotel’s care, custody or control.
- The appellate court remanded for further proceedings consistent with its opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did an occurrence occur under the policy? | Holiday Hospitality argues the negligent hiring/retention could be an occurrence due to policy ambiguity and separation of insureds. | AMCO contends the molestation is not an occurrence, citing intentional conduct and the abuse/molestation exclusion. | Occurrence existed; genuine issue remains about care/control. |
| Was R.M.H. in the care, custody or control of an insured? | Holiday Hospitality contends uncertainty about care, custody or control favors coverage due to separation of insureds and ambiguity against the insurer. | AMCO asserts R.M.H. was in the care, custody or control of the hotel as a guest, triggering the exclusion. | Genuine issues of material fact exist; summary judgment improper. |
Key Cases Cited
- Erie Insurance Co. v. American Painting Co., 678 N.E.2d 844 (Ind.Ct.App.1997) (occurrence defined as accident; initially applied to negligent hiring/retention analysis)
- Wayne Twp. Bd. of Sch. Comm’rs v. Indiana Ins. Co., 650 N.E.2d 1205 (Ind.Ct.App.1995) (separation of insureds can keep coverage for one insured where another’s acts are intentional)
- Harvey v. Auto-Owners Ins. Co., 842 N.E.2d 1279 (Ind.2006) (ambiguous policy language; fact questions preclude summary judgment on occurrence)
- American Family Mut. Ins. Co. v. Bower, 752 F. Supp. 2d 957 (N.D. Ind.2010) (ambiguous definition of accident sustains occurrence for negligent supervision)
- Booher v. Sheeram, LLC, 937 N.E.2d 392 (Ind.Ct. App.2010) (hotels’ duty to guests; care/custody/control distinction analyzed)
- TriEtch, Inc. v. Cincinnati Ins. Co., 909 N.E.2d 997 (Ind.2009) (ambiguous policy language and severability favor insured in occurrence analysis)
- Ted’s Tavern, Inc. v. Property-Owners Ins. Co., 853 N.E.2d 973 (Ind.Ct.App.2006) (predominating cause analysis in coverage determinations)
- Sarah G. v. Maine Bonding & Cas. Co., 866 A.2d 835 (Me.2005) (abuse/molestation exclusion analysis under separate state law contexts)