Mt. Vernon Fire Insurance Co. v. Louis Jancetic (mem. dec.)
45A05-1607-PL-1696
| Ind. Ct. App. | Nov 4, 2016Background
- In October 2011 Louis Jancetic purchased a house from seller Debra Hadu; Source One Partners, LLC (Source One) was the real estate agent involved and prepared a disclosure stating no mold problems.
- Jancetic sued Source One and Hadu alleging they knew of mold/water damage but fraudulently misrepresented the condition, inducing the purchase; he later added a home inspector as a defendant.
- Source One held a Real Estate Agents Errors & Omissions policy from Mount Vernon Fire Insurance Company that covered negligent acts but expressly excluded claims arising from "dishonest, fraudulent, criminal or malicious act or omission or deliberate misrepresentation" and excluded claims arising from "Organic Pathogen[s]" (including mold).
- Mount Vernon denied coverage shortly after tendering; Source One did not contest the denial and later filed bankruptcy; Jancetic proceeded to a bench trial against Source One (which did not appear) and obtained a $149,496.33 judgment for remediation costs.
- Jancetic filed a proceeding supplemental seeking to collect that judgment from Mount Vernon; the trial court entered judgment against Mount Vernon, denied its summary-judgment motion, and Mount Vernon appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Policy covers the judgment against Source One | Jancetic argued the Policy provides facial coverage for the judgment and Mount Vernon is liable to satisfy it | Mount Vernon argued the Policy excludes intentional/fraudulent misrepresentations and claims arising from mold (Organic Pathogens), so no coverage | Court held the complaint and trial allegations charged only intentional/fraudulent conduct and thus the Policy’s intentional-act exclusion barred coverage; reversed trial court and instructed entry of summary judgment for Mount Vernon |
| Whether insurer is estopped from denying coverage by failing to defend or by conduct | Jancetic relied on estoppel doctrine where insurer may be barred from denying coverage if it defended without reservation | Mount Vernon argued it disclaimed coverage immediately and never defended or controlled the litigation, so estoppel does not apply | Court held estoppel inapplicable because Mount Vernon promptly asserted noncoverage and never defended the suit, so it was not estopped |
Key Cases Cited
- Hermitage Ins. Co. v. Salts, 698 N.E.2d 856 (Ind. Ct. App. 1998) (proceeding supplemental and insurer-estoppel principles when insurer defends without reservation)
- Williamson v. Rutana, 736 N.E.2d 1247 (Ind. Ct. App. 2000) (appellate review de novo where decision based on documentary evidence)
- Liberty Mut. Ins. Co. v. Michigan Mut. Ins. Co., 891 N.E.2d 99 (Ind. Ct. App. 2008) (insurance-policy interpretation is a question of law appropriate for summary judgment)