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United Farm Family Mutual Insurance Co. v. Matheny

Court of Appeals of Indiana

November 28, 2018

United Farm Family Mutual Insurance Company, Appellant-Plaintiff,
Stacy B. Matheny, Earl R. Matheny, and the Estate of Phillip Preston Chase by and through Ana Marie Chase, Personal Representative of the Estate of Phillip Preston Chase, Appellees-Defendants

          Appeal from the Perry Circuit Court The Honorable Lucy Goffinet, Judge Trial Court Cause No. 62C01-1702-CT-99

          Attorney for Appellant Lewis S. Wooton Wooton Hoy, LLC Greenfield, Indiana

          Attorneys for Appellee Mark K. Phillips Michael K. Phillips Phillips and Phillips, P.C. Boonville, Indiana

          MAY, JUDGE.

         [¶1] United Farm Family Mutual Insurance Company ("United") appeals the trial court's denial of its motion for summary judgment. United contends the trial court's conclusion Stacy Matheny ("Stacy") and Earl Matheny ("Earl") lived in separate residences was in error. We reverse and remand with instructions.

         Facts and Procedural History[1]

         [¶2] Stacy is Earl's son. Stacy lives in an apartment on the second floor of Earl's house. Stacy has lived under the same roof as his father since approximately 2000, excepting some time Stacy spent in prison. While Stacy was imprisoned and after Earl's wife died, Earl closed off access between the upstairs and downstairs of his home and rented the second floor to other people as an apartment. Thereafter, access to the upstairs apartment was via two separate entryways at the front and the back of the house. The upstairs apartment consisted of two bedrooms, a living room, and space for a kitchen; however, no appliances were ever installed to make the kitchen area functional for meal preparation.

         [¶3] To gain access to the downstairs where Earl lived, one must enter from outside and have a key. Stacy and his siblings all had keys to the part of the house where Earl lived. Stacy usually ate breakfast and lunch with Earl in Earl's living area. The two men also typically ate dinner together. Stacy was unemployed and did not have a driver's license. Earl paid Stacy's living expenses, did not collect rent from him, and transported him on errands.

         [¶4] Earl had several long guns and a handgun. When Stacy was released from prison, Earl thought Stacy was not allowed to live in a house with guns. Earl stored his long guns off-site but kept his handgun with him for personal protection. Earl kept the gun under his pillow and took it with him in a bag when he travelled.

         [¶5] Earl had three mobile homes that he rented to other people. Pete Paris rented one of the homes. Phillip Chase frequently visited Paris; however, both Earl and Stacy had told Chase he was not welcome on the property. Earl and Stacy did not want Chase there because Chase allegedly manufactured drugs on the property.

         [¶6] On March 14, 2016, Earl and Stacy were headed into town when Earl noticed Paris had accumulated more than thirty bags of trash at the back of the mobile home. Earl and Stacy stopped so Earl could tell Paris to clean it up. When Earl pulled up to the mobile home, Stacy noted Chase's car was beside the home. Paris came outside, and Stacy told him to have Chase come out to talk. As they were waiting for Chase, Earl was worried the men would fight. When Chase came out, he and Stacy moved toward the back of Earl's truck to talk. Stacy shot Chase in the head with Earl's handgun. Chase died. Earl did not know when or how Stacy obtained his gun.

         [¶7] On May 13, 2016, Chase's Estate ("Estate") sued Stacy and Earl for wrongful death alleging Stacy had "knowingly or intentionally sho[]t" Chase, (App. Vol. II at 14), and Earl had been negligent in storing and safe-keeping the handgun and in not controlling his son when a special relationship existed between the men. This special relationship, the Estate alleged, arose from the fact Earl knew Stacy had a history of violent and criminal activity, had been in prison for shooting someone, had an "emotional and/or mental disturbance," (id. at 15), and was prohibited from owning or using a handgun because he is a convicted felon.

         [¶8] Earl had homeowner's insurance with United, and United represented Earl in the negligence claim; however, on February 13, 2017, United filed a complaint for declaratory judgment alleging it was not obligated to defend or indemnify Earl or Stacy in the wrongful death suit because the policy included an exclusion for damages that were the result of a criminal act.

         [¶9] Earl's insurance policy with United stated:

         If a claim is made or a suit is brought against an "insured" for damages because of "bodily injury" or "property damage" caused by an "occurrence" to which this coverage applies, we will:

1. Pay up to our limit of liability for the damages for which the "insured" is legally liable. Damages include prejudgment interest awarded against the "insured"; and
2. Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. We may investigate and settle any claim or suit that we decide is appropriate. Our duty to settle or defend ends when the amount we pay for damages ...

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