Lightning Rod Mut. Ins. Co. v. Cole

LIGHTNING ROD MUTUAL INSURANCE COMPANY, Plaintiff,

v. JAMIE COLE, Individually and as the Mother and Natural Guardian of KC, a Minor; JAMES H. HOWELL;LINDA K. HOWELL; KIM REIFF and ROXANNE REIFF, Individually and as the Parents and Natural Guardians of TLR, a Minor;and LISA HALL and SHAWN GRIFFITH, Individually and as the Parents and Natural Guardians of AWG, a Minor;UNITED FARM FAMILY MUTUAL INSURANCE COMPANY;and STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendants.

CASE NO. 3:10-CV-00428-WCL-RBC

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF INDIANA SOUTH BEND DIVISION

Filed: September 21, 2012

Presently before the Court is Plaintiff, Lightning Rod Mutual Insurance Company's ("LRM's") "Motion for Summary Judgment" [DE 63] against defendants, Kim and Roxanne Reiff, Individually and as the Parents and Natural Guardians of TLR ("the Reiffs"), and Lisa Hall and Shawn Griffith, Individually and as the Parents and Natural Guardians of AWG ("Hall and Griffith").¹ The Defendants filed a timely response to which LRM replied. For the following reasons, the Motion for Summary Judgment will be GRANTED.

Factual Background

The underlying facts of this case are undisputed and are as follows: LRM is an Ohio insurance company duly licensed to transact business in the Indiana. On May 11, 2008, LRM issued its Personal Auto Policy No. LPV 1300196490-8 to James H. Howell and Linda K. Howell of Huntington County, Indiana (the "Howells"), as the named insured, with effective dates of coverage of May 11, 2008, to November 11, 2008 (the "Policy"). Scheduled vehicle number 11 on the Policy was a 1997 Ford Contour (the "Auto"). This was a renewal policy which listed the scheduled drivers as James Howell, Linda Howell, and Joni Howell. The Howell's daughter, Jamie Cole² ("Cole"), was not a scheduled driver on the Policy nor was she a resident of the Howell's household in Huntington County, Indiana.

A few weeks before September 13, 2008, the Howells loaned the Auto to Cole, who kept the Auto at her residence in Pierceton, Kosciusko County, Indiana. As noted, Cole was not a scheduled driver under the Policy. The Howells also had not completed a "Request for Change" form seeking to add Cole to the Policy. The Howells had not paid LRM a premium to add Cole to the Policy nor had LRM amended the Policy to add Cole as a scheduled driver.³

Cole's twelve (12) year old daughter, KC, lived with Cole at her residence in Pierceton, Kosciusko County, Indiana. KC was not a licensed driver under the laws of any state, as she was a minor under the age of 16 years of age. However, on September 13, 2008, KC was operating the Auto when it was involved in an accident on County Road 750 South, near its intersection withCounty Road 600 East in Kosciusko County, Indiana (the "Accident"). TLR (age 13) and AWG (age 12) were passengers in the Auto at the time of the Accident, and suffered certain bodily injuries.

On September 1, 2010, the Reiffs filed their "Complaint for Damages and Jury Demand" (the "Reiff Complaint"), against, inter alia, Cole and KC in the following legal proceedings: "[TLR], a Minor, By and Through her Parents and Next of Friends, Kim Reiff and Roxanne Reiff, Plaintiff, vs. [KC], A Minor, Jamie Cole, Individually and as Parent, Legal Guardian, and/or Next of Friend of [KC], James A. Howell, and United Farm Family Mutual Ins. Co., and/or UFB Casualty Ins. Co., d/b/a Indiana Farm Bureau Ins., Defendants", Cause No. 43C01-1009-CT-475, Kosciusko Circuit Court (the "Reiff Lawsuit").

On September 10, 2010, Hall and Griffith filed their "Complaint for Damages and Jury Demand" (the "Griffith Complaint") against, inter alia, Cole and KC in the following legal proceedings: "[AWG],a Minor, By and Through his Parents and Next of Friends, Lisa Hall and Shawn Griffith, Plaintiff, vs. [KC], a Minor, Jamie Cole, Individually and as Parent, Legal Guardian, and/or Next of Friend of [KC], James A Howell, and United Farm Family Mutual Ins. Co., d/b/a Indiana Farm Bureau Ins., and State Farm Mutual Automobile Ins. Co., d/b/a State Farm Ins., Defendants", Cause No. 42C01-1009-CT-494, Kosciusko Circuit Court (the "Griffith Lawsuit"). The Reiff Lawsuit and the Griffith Lawsuit will be collectively referred to hereinafter as the "Lawsuits." Both the Lawsuits sought to hold KC liable on a negligence theory and Cole liable on theories of negligent supervision and negligent entrustment.

In September, 2010, LRM received a copy of the Lawsuits. LRM denied coverage for the Lawsuits, declined to defend Cole and KC against the same, and commenced this declaratory judgment action seeking a declaration that it has no duty to defend or indemnify Cole and KC. In addition, LRM seeks a declaration that its policy does not provide uninsured motorist bodilyinjury("UIMBI") Coverage to the Reiffs, Hall and Griffith.

Policy Provisions

The Policy's Liability Coverage insuring agreement reads as follows:

We will pay damages for "bodily injury" or "property damage" for which any "insured" becomes legally responsible because of an auto accident. Damages include prejudgment interest awarded against the "insured". We will settle or defend, as we consider appropriate, any claim or suit asking for these damages. In addition to our limit of liability, we will pay all defense costs we incur. Our duty to settle or defend ends when our limit of liability for this coverage has been exhausted by payment of judgments or settlements. We have no duty to defend any suit or settle any claim for "bodily injury" or "property damage" not covered under this policy.

DE 59-4, p. 13.

The Policy's Liability Coverage defines the term "insured" as follows:

Insured as used in this Part means:

1. You or any "family member" for the ownership, maintenance or use of any auto or "trailer".

2. Any person using "your covered auto".

3. For "your covered auto", any person or organization but only with respect to legal responsibility for acts or omissions of a person for whom coverage is afforded under this Part.

4. For any auto or "trailer", other than "your covered auto", any other person or organization but only with respect to legal responsibility for acts or omissions of you or any "family member" for whom coverage is afforded under this Part. This Provision (B.4) applies only if the person or organization does not own or hire the auto or "trailer".

DE 59-4, p. 13.

The Policy defines the term "you" as follows:

Throughout this policy, "you" and "your" refer to:

1. The "named insured" shown in the Declarations; and2. The spouse if a resident of the same household.

* * * * *

DE 59-4, p. 11.

The Policy's Liability Coverage defines the term "family member" as follows:

"Family member" means a person related to you by blood, marriage or adoption who is a resident of your household. This includes a ward or foster child.

DE 59-4, p. 11.

The Policy defines the term "your covered auto" as follows:

"Your covered auto" means:

1. Any vehicles shown in the Declarations.

* * * * *

DE 59-4, pp. 11-12.

The Policy's Liability Coverage contains the following exclusion:

We do not provide Liability Coverage for any "insured":

* * * * *

8. Using a vehicle without a reasonable belief that that "insured" is entitled to do so. This Exclusion (A.8.) does not apply to a "family member" using "your covered auto" which is owned by you.

DE 59-4, pp. 13-14.

By endorsement, the Policy's UIMBI coverage insuring agreement reads as follows:

A. We will pay compensatory damages which an "insured" is legally entitled to recover from the owner or operator of an "uninsured motor vehicle" because of:

1. "Bodily injury" sustained by an "insured" and caused by an accident; and* * * * *

The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the "uninsured motor vehicle".

Any judgment for damages arising out of a suit brought without our written consent is not binding on us.

DE 59-4, p. 35.

The Policy's UIMBI coverage defines the term "insured" as follows:

B. "Insured" as used in this Part means:

1. You or any "family member";

2. Any other person "occupying" "your covered auto";

3. Any person for damages that person is entitled to recover because of "bodily injury" to which this coverage applies sustained by a person described in 1. or 2. above.

DE 59-4, p. 35.

The Policy's UIMBI coverage defines the term "uninsured motor vehicle", in relevant part, as follows:

D. "Uninsured motor vehicle" means a land motor vehicle or trailer of any type:

* * * * *

4. To which a liability bond or policy applies at the time of the accident but the bonding or insuring company:

a. Denies coverage; or

b. Is or becomes insolvent.

However, "uninsured motor vehicle" does not include any vehicle or equipment:

3. Owned by or furnished or available for the regular use of you or any "family member";

DE 59-4, pp. 35-36.

Applicable Standard

Summary judgment is proper when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P 56(c)(2). A genuine issue of material fact exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In determining summary judgment motions, "facts must be viewed in the light most favorable to the nonmoving party only if there is a 'genuine' dispute as to those facts." Scott v. Harris, 550 U.S. 372, 127 S.Ct. 1769, 1776, 167 L.Ed.2d 686 (2007). The party seeking summary judgment has the burden of establishing the lack of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). After "a properly supported motion for summary judgment is made, the adverse party 'must set forth specific facts showing that there is a genuine issue for trial.' " Anderson, 477 U.S. at 255 (quoti...