Secura Supreme Insurance Company, Tim O'Brien, and Sandra O'Brien v. Diana Johnson
51 N.E.3d 356
Ind. Ct. App.2016Background
- Tim and Sandra O’Brien owned a primary residence in Hobart and purchased a Valparaiso house as a secondary residence in 2009; they listed the Valparaiso address for their children’s school enrollment.
- The O’Briens rented the Valparaiso house to Sandra’s sister, Nicole Alarid, who lived there and kept two dogs.
- On May 26, 2010, one of Alarid’s dogs escaped the Valparaiso yard and attacked Diana Johnson and her dogs; Johnson sued Alarid and the O’Briens for injuries.
- The homeowners policy listed the Valparaiso property as a “SECONDARY RESIDENCE PREMISES” and defined “insured” to include “you and residents of your household who are your relatives,” but the policy did not define “resident” or “household.”
- Secura (insurer) moved for summary judgment arguing Alarid was not an insured because she was a tenant and not a member of the O’Briens’ household; Johnson cross-moved, arguing ambiguity in undefined terms favors the insured and Alarid should be declared an insured.
- Trial court denied Secura’s motion and granted Johnson’s; the court of appeals affirmed denial for Secura, reversed the grant for Johnson, and remanded, holding the undefined terms created genuine factual issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Alarid is an “insured” under the homeowners policy | Johnson: policy terms are ambiguous (no definition of “household”/“resident”); construed against insurer, Alarid is an insured as a matter of law | Secura: Alarid was a tenant and not a member of the O’Briens’ household; insurer not required to extend coverage to tenants absent definition | The court held the undefined terms permit conflicting reasonable inferences from undisputed facts—issue is a genuine issue of material fact; summary judgment for Johnson reversed; Secura’s denial affirmed and case remanded |
| Whether court should adopt a dependency requirement for “household” | Johnson: (implicitly) broad common-law meaning supports inclusion without added dependency requirement | Secura: urges a rule requiring some dependent relationship among household members | Court: declines to adopt a dependency requirement; insurer could have defined such a limitation in the policy but did not |
| Whether extrinsic facts create or cure ambiguity | Johnson: ambiguity should be construed against insurer | Secura: (implicitly) policy meaning clear to exclude tenant | Court: extrinsic facts (secondary residence designation, school enrollment, rental) create ambiguity about whether Valparaiso was part of O’Briens’ household; ambiguity arises from facts, so summary judgment inappropriate |
| Proper standard on cross-motions for summary judgment | Johnson: entitlement to judgment as a matter of law based on contract construction | Secura: summary judgment appropriate to preclude coverage as a matter of law | Court: applies de novo review; because reasonable minds could differ, neither moving party was entitled to judgment as a matter of law |
Key Cases Cited
- Hughley v. State, 15 N.E.3d 1000 (Ind. 2014) (summary judgment standard; de novo review)
- Jones v. Western Reserve Group/Lighting Rod Mut. Ins. Co., 699 N.E.2d 711 (Ind. Ct. App. 1998) (apply Indiana common law definitions when policy omits terms)
- Erie Ins. Exchange v. Stephenson, 674 N.E.2d 607 (Ind. Ct. App. 1996) (household need not mean persons under same roof; insurer may define term if it intends narrower meaning)
- Ind. Farmers Mut. Ins. Group v. Blaskie, 727 N.E.2d 13 (Ind. Ct. App. 2000) (three-part residency test: physical presence, subjective intent, access to home/contents)
- Cinergy Corp. v. Associated Elec. & Gas Ins. Servs., Ltd., 865 N.E.2d 571 (Ind. 2007) (ambiguous insurance terms construed against insurer; ambiguity from language, not extrinsic facts, governs application)
- Allstate Ins. Co. v. Dana Corp., 759 N.E.2d 1049 (Ind. 2001) (contract language given plain meaning when unambiguous)