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Allstate Insurance Co. v. McColly Realtors Inc.

United States District Court, N.D. Indiana, Hammond Division

October 31, 2017

ALLSTATE INSURANCE COMPANY, Plaintiff,
v.
MCCOLLY REALTORS, INC., RUTH LOCKHART, and ROSEMARY PURNELL, AS ADMINSTRATRIX OF THE ESTATE OF KENNETHA PURNELL, DECEASED, Defendants.

          OPINION AND ORDER

          RUDY LOZANO, JUDGE

         This matter is before the Court on Allstate Insurance Company's (“Allstate”) Motion for Summary Judgment, filed on April 7, 2017 (DE #26), and Cross Motion for Summary Judgment by McColly Realtors, Inc. and Ruth Lockhart filed on May 19, 2017 (DE #30). For the reasons set forth below, Allstate's motion for summary judgment (DE #26) is GRANTED. Defendants' cross motion for summary judgment (DE #30) is DENIED. The Clerk of the Court is DIRECTED to enter a DECLARATORY JUDGMENT in favor of Allstate declaring that under insurance policy number 648550390, Allstate has no duty to defend or indemnify McColly Realtors, Inc. and/or Ruth Lockhart against claims asserted by Rosemary Purnell in case number 45D01-1503-CT-50 in Lake Superior Court.

         BACKGROUND

         On October 12, 2013, Kennetha Purnell (“Kennetha”), her husband and two children died when carbon monoxide gas infiltrated the home they were leasing from a generator operating in the garage. Kennetha's mother, Rosemary Purnell (“Purnell”), filed a wrongful death suit against the homeowner. Purnell later amended her complaint (“Underlying Complaint”) to include a wrongful death claim against McColly Realtors, Inc. and Ruth Lockhart (together, “Defendants”), asserting that the homeowner had contracted with Defendants for the purpose of leasing the home.

         Defendants requested that Allstate defend and indemnify them against the Underlying Complaint pursuant to an Allstate insurance policy held by McColly Realtors, Inc. (“McColly”). Allstate agreed to defend the Defendants under a reservation of rights, and filed the instant declaratory judgment action against Defendants and Purnell.[1] Allstate now moves for summary judgment, asking the Court to find that the insurance policy does not provide coverage for the claim in the Underlying Complaint, and that Allstate has no duty to defend or indemnify the Defendants in that action. The Defendants oppose this motion and filed a cross motion for summary judgment. The motions have been fully briefed and are ripe for adjudication.

         SUMMARY JUDGMENT STANDARD

         Summary judgment must be granted when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A genuine dispute of material fact exists when “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). Not every dispute between the parties makes summary judgment inappropriate; “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Id. In determining whether summary judgment is appropriate, the court must construe all facts in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor. Ogden v. Atterholt, 606 F.3d 355, 358 (7th Cir. 2010). “However, our favor toward the nonmoving party does not extend to drawing inferences that are supported by only speculation or conjecture.” Fitzgerald v. Santoro, 707 F.3d 725, 730 (7th Cir. 2013) (citation omitted).

         While the movant bears the initial burden of production to inform the district court why a trial is not necessary, these requirements “are not onerous” where the nonmoving party “bears the ultimate burden of persuasion on a particular issue.” Modrowski v. Pigatto, 712 F.3d 1166, 1168 (7th Cir. 2013). A party may move for summary judgment based on either “affirmative evidence that negates an essential element of the nonmoving party's claim” or by “asserting that the nonmoving party's evidence [is] insufficient to establish an essential element of the nonmoving party's claim.” Id. at 1169 (citation and internal quotations omitted). A party opposing a properly supported summary judgment motion may not rely on allegations or denials in his own pleading, but rather, must “marshal and present the court with the evidence [he] contends will prove [his] case.” Goodman v. Nat'l Sec. Agency, Inc., 621 F.3d 651, 654 (7th Cir. 2010). If the nonmoving party fails to establish the existence of an essential element on which he bears the burden of proof at trial, summary judgment is proper. Massey v. Johnson, 457 F.3d 711, 716 (7th Cir. 2006).

         “Interpretation of a written contract, including a contract of insurance, typically presents a question of law suitable for resolution on motions for summary judgment.” Royer v. USAA Cas. Ins. Co., 781 F.Supp.2d 767, 770 (N.D. Ind. 2011) (citation omitted). “When the question presented is whether an insurance policy provides liability coverage for a particular claim or lawsuit, the central material facts are ordinarily the terms of the written contract and the contents of the plaintiff's allegations in the underlying litigation.” Id. (citation omitted).

         FACTS

         The Court finds the following undisputed facts to be supported by admissible evidence in the record:[2]

         The Underlying Complaint

         Purnell, as administratrix of Kennetha's estate, filed a lawsuit against Madeline Chale (“Chale”) in Lake County Superior Court entitled Purnell v. Chale, No. 45D01-1503-CT-50 (“Underlying Lawsuit”). Purnell's Second Amended Complaint (“Underlying Complaint”) asserts claims against Chale and Defendants. The Underlying Complaint alleges that Chale was the owner of premises located in Merrillville, Indiana (“premises” or “property”). Count I alleges that as of October 1, 20l3, Kennetha leased the property from Chale, and that Chale owed a duty to follow applicable law in leasing the premises, and a duty to warn of latent or concealed dangers, to the residents of the premises. It alleges that Chale negligently and/or recklessly failed to register the premises as a rental as required by law, thereby causing the premises to be leased without proper inspection. According to the Underlying Complaint, an inspection would have revealed that the property was not fit for habitation, including insufficient barrier protection against infiltration of harmful gases from the garage to the living quarters of the premises. Count I alleges that Chale's violation of law, failure to warn and/or concealment of a latent and dangerous condition wrongfully caused the deaths of Kennetha, her husband and two minor children (together, “Kennetha's family”) on October 12, 2013, when carbon monoxide infiltrated the living quarters of the premises from a generator operating in the garage.

         Count II asserts a similar wrongful death claim against McColly and Ruth Lockhart (“Lockhart”), who was allegedly working in her capacity as an agent and/or employee of McColly. (DE #1-1, Ex. A at ¶13.) Count II states in part:

• “Chale hired, contracted with and/or otherwise engaged McColly Real Estate by and through its agent and/or employee Lockhart for purposes of leasing the premises. . . . As a result, [Defendants] had a duty to follow applicable law, including local codes and/or ordinances, in leasing the premises, as well as a duty to warn of latent or concealed dangers to residents.” (Id. at ¶¶15-16.)
• Defendants “negligently and/or recklessly failed to register the premises as a rental as required by applicable law, including local codes and/or ordinances.” (Id., ¶17.)
• Defendants' “violation of law . . . caused the property to be leased without proper inspection which would have revealed that it was not fit for habitation and/or was otherwise in violation of applicable law, including local codes and/or ordinances, including . . . insufficient barrier protection against infiltration of harmful gases such as carbon monoxide from the garage to the living quarters of the premises.” (Id., ¶18.)

         Count II alleges that Defendants' violation of law, failure to warn, and/or concealment of a latent and dangerous condition wrongfully caused the deaths of Kennetha's family.

         The ...


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