GLOBAL CARAVAN TECHNOLOGIES, INC.; Christopher Douglas; Husheng Ding; Kyle Fang; Chris Tzeng; C.H. Douglas & Gray, LLC; Thomas Gray; Doris Roberts; and Red Wing Capital, LLC, Appellants-Defendants,
The CINCINNATI INSURANCE COMPANY, Appellee-Plaintiff
[Copyrighted Material Omitted]
from the Marion Superior Court, The Honorable James B.
Osborn, Judge, Trial Court Cause No. 49D14-1709-PL-34008.
for Appellants: George M. Plews, Jonathan P. Emenhiser, Plews
Shadley Racher & Braun LLP, Indianapolis, Indiana
for Appellee: James J. Hutton, Indianapolis, Indiana
1] Global Caravan Technologies, Inc.
("Global"), Christopher Douglas, Husheng Ding, Kyle
Fang, and Red Wind Capital, LLC ("Red Wing"),
(collectively, "Defendants") appeal the trial
courts grant of summary judgment in favor of The Cincinnati
Insurance Company ("Cincinnati") in Cincinnatis
action requesting a declaration that it had no obligation to
defend Defendants in other litigation. Defendants raise
multiple issues, which we restate as:
1. Whether Globals voluntary intervention in a claim filed
by Charles Hoefer Jr. is a "suit" under the
language of Globals insurance contract with Cincinnati; and
2. Whether the insurance contracts Employment Related
Practices Exclusion ("ERP Exclusion") relieves
Cincinnati of any obligation to provide defense and
indemnification coverage to Douglas, Ding, and Fang for
and Procedural History
[¶ 2] In January 2013, Global was formed by
Charles Hoefer Jr. and sought to enter the recreational
vehicle market. At relevant times, Hoefer possessed
experience and intellectual property rights to materials
related to manufacturing recreational vehicles. Douglas,
Ding, and Fang were investors in Global; Douglas and Ding
were executive officers of Global and Fang was a director at
Global. Red Wing is a separate business entity owned by
Douglas, Ding, Thomas Gray, Doris Roberts, and Steve Coons.
Red Wing is an investor in Global. Cincinnati insures Global.
3] Through a series of events, Hoefer was removed as
owner of Global. On May 1, 2014, Hoefer filed a complaint in
Marion County ("Hoefer Litigation") against Ding,
Douglas, Fang, Red Wing, Gray, Roberts, Christopher
Tzeng, C.H. Douglas & Gray,
LLC, and Steve Coons. In that complaint,
Hoefer presented several claims, including conspiracy, unjust
enrichment, securities fraud, common law fraud, constructive
fraud, breach of fiduciary duty, defamation, defamation
per se, theft, and interference with contractual
[¶ 4] On May 14, 2014, Global, as the
policyholder, notified Cincinnati of the Hoefer Litigation
and requested defense and indemnification for Global,
Douglas, Ding, and Fang. Cincinnati agreed to provide defense
of Douglas, Ding, and Fang, and it assigned defense counsel
for Douglas, Ding, and Fang without consulting Global. Global
insisted Cincinnati provide defense to all parties related to
Global, including Global, which was not a named defendant in
the Hoefer Litigation. Global argued the counsel assigned to
Douglas, Ding, and Fang was unacceptable due to an alleged
conflict of interest. Cincinnati agreed to assign different
counsel to Ding, Douglas, and Fang, but stated it would pay
only a portion of the defense if different counsel was
selected. Cincinnati denied Globals request for defense
beyond that of Ding, Douglas, and Fang. Global rejected
Cincinnatis response to their request and retained separate
counsel unapproved by Cincinnati.
[¶ 5] On July 7, 2014, Global moved to
intervene in the Hoefer Litigation, arguing that some of the
claims related to incidents occurring at Global and that
Hoefer sought to obtain Global assets as part of his claims.
The trial court granted Globals request over Hoefers
objection. On October 8, 2014, Hoefer amended his claim. The
amended claim did not include any allegations against Global.
On December 1, 2014, Ding and Douglas filed offensive
counterclaims against Hoefer. Also on December 1, 2014,
Global filed an answer to Hoefers amended complaint and
asserted an offensive counterclaim against Hoefer.
[¶ 6] Meanwhile, in federal court, on
October 8, 2014, Cincinnati filed an action seeking
declaratory judgment that it had no duty to defend or
indemnify Global in the Hoefer Litigation. Cincinnati and
Global cross-moved for summary judgment. The district court
granted summary judgment in favor of Cincinnati, and Global
appealed. The Seventh Circuit Court of Appeals did not reach
the merits of the appeal, as it determined it did not have
jurisdiction over the matter because Hoefer was not a citizen
of Indiana at the time the district court action was filed.
[¶ 7] While the federal claims were pending,
Douglas, Ding, Fang, and Red Wing retained Delk McNally, LLP,
to defend them in the Hoefer Litigation. Douglas, Ding, Fang,
and Red Wing incurred $50,715.37 in attorneys fees and costs
and submitted the relevant invoices to Cincinnati for
payment. Cincinnati has not paid those invoices. As part of
its involvement in the Hoefer Litigation, Global retained Ice
Miller, LLC, and incurred $90,661.31 in attorneys fees and
costs, which Cincinnati has not reimbursed.
[¶ 8] On September 5, 2017, CIC filed the
present action, which was a complaint for declaratory
judgment asking the trial court to declare that CIC is not
required to defend or indemnify Defendants in the Hoefer
Litigation. Defendants filed an answer and counterclaim. On
March 7, 2018, Defendants filed a motion for partial summary
judgment. On April 20, 2018, CIC filed a cross-motion for
summary judgment. The trial court held oral argument on the
motions on July 31, 2018, and September 17, 2018. The trial
court denied Defendants partial motion for summary judgment
and granted summary judgment in favor of CIC, finding in
relevant part: (1) CIC had no obligation to defend Global
because "suit" as defined by the insurance contract
does not include Globals act of voluntarily intervening in
the Hoefer Litigation, and (2) the ERP Exclusion relieves CIC
from any obligation to provide defense or indemnification
coverage for Douglas, Ding, and Fang.
Discussion and Decision
Summary Judgment Standard of Review
9] We review summary judgment using the same
standard as the trial court: summary judgment is appropriate
only where the designated evidence shows there is no genuine
issue of material fact and the moving party is entitled to
judgment as a matter of law. Rogers v. Martin, 63
N.E.3d 316, 320 (Ind. 2016). All facts and reasonable
inferences are construed in favor of the non-moving party.
City of Beech Grove v. Beloat, 50 N.E.3d 135, 137
(Ind. 2016). Where the challenge to summary judgment raises
questions of law, we review them de novo.
Rogers, 63 N.E.3d at 320.
10] We do not modify our standard of review when the
parties make cross motions for summary judgment. State
Auto Ins. Co. v. DMY Realty Co., LLP, 977 N.E.2d 411,
419 (Ind.Ct.App. 2012). "Instead, we must consider each
motion separately to determine whether the moving party is
entitled to judgment as a matter of law." Id.
When the trial court makes findings and conclusions in
support of its order regarding summary judgment, we are not
bound by such findings and conclusions, but they aid our
review by providing reasons for the decision. Allen Gray
Ltd. Pship IV v. Mumford, 44 N.E.3d 1255, 1256
(Ind.Ct.App. 2015). We will affirm a summary judgment order
on any theory or basis found in the record. Id.
Insurance Policy Interpretation Standard of
[¶ 11] When interpreting an insurance
policy, we give plain and ordinary meaning to language that
is clear and unambiguous. Meridian Mut. Ins. Co. v.
Auto-Owners Ins. Co., 698 N.E.2d 770, 773 (Ind. 1998).
Policy language is unambiguous if reasonable persons could
not honestly differ as to its meaning. Id. To this
end, we look to see "if policy language is susceptible
to more than one interpretation." Id. If an
insurance policy contains ambiguous provisions, they are
construed in favor of the insured. Id. "This
strict construal against the insurer is driven by the fact
that the insurer drafts the policy and foists its terms upon
the customer. The insurance companies write the policies; we
buy their forms or we do not buy insurance."
Duty to Defend Global
[¶ 12] The insurance contract between Global
and Cincinnati provides for defense of the insured
"against any suit seeking damages." (App. Vol. II
at 72.) The policy further defines:
21. "Suit" means a civil proceeding in which money
damages because of "bodily injury", "property
damage" or "Personal and advertising injury"
to which this insurance applies are alleged. "Suit"
a. An arbitration proceeding in which such damages are
claimed and to which the insured must submit or does submit
with our consent;
b. Any other alternative dispute resolution proceeding in
which such damages are claimed and to which the insured
submits with our consent; or
c. An appeal of a civil proceeding.
(Id. at 85.)
[¶ 13] The trial court determined Globals
voluntary intervention in the Hoefer Litigation did not
qualify as a "suit" under the insurance policy:
An insurers duty to defend its insured is broader than its
duty to indemnify. Yet, the duty to defend is determined by
the examination of the "allegations of the complaint
coupled with those facts
known to or ascertainable by the insurer after reasonable
investigation." " [A]n insurer may properly refuse
to defend where an independent investigation reveals a claim
patently outside the risks covered by the policy. "
Moreover, when a policy exclusion applies to preclude
coverage, the insurer has no duty to defend its insured.
Therefore, while an insurers duty to defend is broader than
its duty to indemnify an insured, it is not boundless. When
an insurer has no duty to defend, it also has no duty to
indemnify its insured under the policy.
The Coverage B insuring agreement provides that [Cincinnati]
has the right and duty to defend [Global] against any
"suit" seeking to hold the named insured legally
liable for damages because of covered "personal and
advertising injury." However, [Cincinnati] has no duty
to defend insured [Global] under the [Cincinnati] Policy
unless a "suit" has been brought against the
insured for potentially covered damages in the [Hoefer
Litigation]. The term "suit" is defined in the
[Cincinnati] Policy to mean, in relevant part, "a civil
proceeding in which money damages because of bodily injury,
property damage or personal and advertising injury to
which this insurance applies are alleged." While
[Global] is an insured, it still has the burden to prove the