United States District Court, S.D. Indiana, Indianapolis Division
ENTRY DENYING MOTION SUMMARY JUDGMENT
WILLIAM T. LAWRENCE, District Judge.
This cause is before the Court on the Plaintiff's motion for summary judgment (dkt. no. 29). The motion is fully briefed and the Court, being duly advised, DENIES the motion for the reasons set forth below.
Federal Rule of Civil Procedure 56(a) provides that summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." In ruling on a motion for summary judgment, the admissible evidence presented by the non-moving party must be believed and all reasonable inferences must be drawn in the non-movant's favor. Hemsworth v. Quotesmith.com, Inc., 476 F.3d 487, 490 (7th Cir. 2007); Zerante v. DeLuca, 555 F.3d 582, 584 (7th Cir. 2009) ("We view the record in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor."). However, "[a] party who bears the burden of proof on a particular issue may not rest on its pleadings, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact that requires trial." Id. Finally, the non-moving party bears the burden of specifically identifying the relevant evidence of record, and "the court is not required to scour the record in search of evidence to defeat a motion for summary judgment." Ritchie v. Glidden Co., 242 F.3d 713, 723 (7th Cir. 2001).
The relevant facts of record, viewed in the light most favorable to the Defendants,  as the non-moving parties, are not in dispute. Defendant Kore of Indiana Enterprises, Inc., ("Kore") owns and operates the Rock & Roll & A Hard Place General Store in Indianapolis, Indiana ("General Store"). Defendant On Kore LLC ("On Kore") owns and operates Average Joe's Sports Pub and Grill ("Average Joe's"), also in Indianapolis. Both businesses are covered by a Business Owner's Policy ("Business Policy") and a Commercial Umbrella Policy ("Umbrella Policy") issued by Plaintiff Society Insurance ("Society").
On September 30, 2011, David Hughes, on behalf of himself and all others similarly situated, filed suit against Kore ("Hughes Action"), asserting violations of the Electronic Fund Transfers Act, 15 U.S.C. § 1693, et seq. ("EFTA"), based upon the absence of posted notices on an ATM located in General Store and another ATM located in Average Joe's. The notices required by the EFTA were affixed to the ATMs on or about April 29, 2010; at some time later, the notices were "removed, damaged or altered" by an act that Kore and On Kore (hereinafter "the Kore Defendants") characterize as vandalism.
Kore retained attorney Judy Woods to represent it in the Hughes action; she entered her appearance in that case on October 13, 2011. Pursuant to the Business Policy, Society would pay "those sums that the insured becomes legally obligated to pay as damages because of bodily injury, ' property damage' or personal and advertising injury' to which [the Business Policy] applies, " and Society had "the right and duty to defend the insured against any suit' seeking those damages." Dkt. 1-2 at 15. The Business Policy further provides that "[t]his insurance applies... [t]o bodily injury' and property damage' only if... [t]he bodily injury' and property damage' is caused by an occurrence'...." Id. Finally, the Business Policy provides: "Occurrence' means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.'" Id. at 28. Society asserted its right of defense and hired attorney Thomas Rosta to represent and defend Kore in the Hughes Action. Rosta entered his appearance on March 13, 2012.
On May 1, 2012, Society mailed a reservation of rights letter to the insured's address on the Business Policy: Mineshaft Saloon,  812 Broad Ripple Ave., Indianapolis, Indiana, by certified mail, return receipt requested. The letter was addressed to the Mineshaft Saloon, Attn.: Rob Sabitini, who is the principal of On Kore and the owner of Kore. It was signed for by someone (the signature is illegible and the box for "printed name" was not completed) on May 5, 2012. The reservation of rights letter stated that Society was reserving its right to deny coverage to "anyone claiming coverage under the policies."
Attorney Woods withdrew her appearance in the Hughes Action on May 17, 2012. A few days later, Hughes amended his complaint to add On Kore as a defendant, apparently having learned that On Kore rather than Kore owned and operated Average Joe's. Rosta assumed the defense of On Kore as well.
Society filed this case on August 17, 2012, seeking declaratory judgment that it has no duty to defend the Kore Defendants in the Hughes Action because the claims asserted by Hughes are not covered by either the Business Policy or the Umbrella Policy.
Society advances several arguments in support of its motion for summary judgment. In their response, the Defendants first assert the Society is estopped from denying coverage because it undertook defense of the Hughes action without properly reserving its rights.
The doctrine of estoppel generally may not be applied to extend the scope of coverage of an insurance contract because "an insurance company should not be forced to pay for a loss for which it had not charged a premium." Founders Ins. Co. v. Olivares, ...