Melissa Freeman Melissa Freeman Realty, Inc. and Realty Group-Freeman, LLC d/b/a Prudential Indiana Realty Group v. Property-Owners Insurance Company (mem. dec.)
73A05-1606-PL-1255
| Ind. Ct. App. | Jan 31, 2017Background
- A prospective buyer, Gerald Powers, was injured while touring a residence listed by Prudential Indiana Realty Group; the Powerses sued Prudential and others for negligence.
- Prudential’s insurer, Property-Owners Insurance Co., filed a declaratory-judgment action seeking a ruling that Prudential’s Businessowners Policy did not cover claims arising from the accident due to a “Limitation of Real Estate Operations Endorsement.”
- The Endorsement limits coverage for real estate operations to injuries arising out of premises used for the insured’s general office purposes or premises for which the insured does not have care, custody, or control (among other conditions) when the premises is listed for sale or rental.
- Prudential had a written listing agreement obligating its broker-salesperson to inspect the property weekly, perform various management tasks, and assume care/custody/management duties for the listed property.
- The trial court granted summary judgment to Property-Owners; Prudential appealed, arguing the Endorsement was ambiguous (specifically the phrase “care, custody or control”) and that factual conduct could negate the contract-based exclusion.
- The appellate court affirmed summary judgment for Property-Owners, holding the Endorsement unambiguous and finding Prudential had care, custody, or control under the listing agreement; Prudential’s failure to perform its contractual duties was not a basis to avoid the exclusion and the argument was waived because not raised below.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Endorsement is ambiguous ("care, custody or control") | Property-Owners: Endorsement is clear and excludes coverage when insured has care/custody/control | Prudential: Phrase ambiguous as it is silent whether actual exercise or mere contractual obligation is required | Court: Not ambiguous; plain meaning applies and listing agreement gave Prudential care/custody/control — exclusion applies |
| Whether Prudential’s contractual failure to exercise care/custody/control restores coverage | Property-Owners: Exclusion applies regardless of insured’s performance | Prudential: If it did not actually exercise control, insurer should still cover loss caused while it failed to perform | Court: Argument waived (not raised below); in any event insurer exclusion applies based on contractual status |
| Whether summary judgment was appropriate | Property-Owners: No genuine issue of material fact; entitled to judgment as matter of law | Prudential: Factual disputes about control/preclusive effect of Endorsement preclude summary judgment | Court: Summary judgment proper; material facts construed for non-movant but policy interpretation is legal and plain |
| Whether policy language should be construed against insurer | Prudential: Ambiguities should be resolved in insured’s favor | Property-Owners: Language not ambiguous; plain meaning controls | Court: Applied ordinary rules — no ambiguity so no contra proferentem relief for Prudential |
Key Cases Cited
- Liberty Mut. Ins. Co. v. Michigan Mut. Ins. Co., 891 N.E.2d 99 (Ind. Ct. App. 2008) (contractual interpretation of insurance policies and summary judgment principles)
- Benko v. Auto-Owners Ins. Co., 964 N.E.2d 886 (Ind. Ct. App. 2012) (policy terms interpreted like other contracts; ambiguity construed against insurer)
- Zeller v. AAA Ins. Co., 40 N.E.3d 958 (Ind. Ct. App. 2015) (plain-meaning rule for unambiguous policy terms)
- Sheehan Constr. Co. v. Continental Cas. Co., 938 N.E.2d 685 (Ind. 2010) (summary-judgment review limited to designated materials; inferences to non-movant)
- Haag v. Castro, 959 N.E.2d 819 (Ind. 2012) (a mere dispute over interpretation does not automatically create ambiguity)
- Holiday Hosp. Franchising, Inc. v. AMCO Ins. Co., 983 N.E.2d 574 (Ind. 2013) (definitions of "care, custody, or control" and treating the terms disjunctively)
- I.A.E., Inc. v. Hall, 49 N.E.3d 138 (Ind. Ct. App. 2015) (issues not raised in trial court are generally waived on appeal)