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Wednesday, March 06, 2013

Ind. Decisions - One today, so far, from the Supreme Court

In Holiday Hospitality Franchising, Inc. v. Amco Insurance Company, a 15-page, 4-1 opinion, Justice David writes:

A motel and an insurance company entered into an insurance contract that specifically excluded several categories of injury and harm—including harm resulting from acts of sexual molestation by motel employees. After an off-duty motel employee (now convicted for his crimes) molested a young motel guest, the motel’s insurer sought a declaratory judgment to enforce its reading of the contract disclaiming coverage for, and its duty to defend against, a civil complaint brought by the motel guest. The trial court granted summary judgment in favor of the insurer, and the Court of Appeals reversed. We now affirm the trial court. * * *

The Court of Appeals reversed and remanded, concluding that an “occurrence” took place under the terms of AMCO’s insurance policy, and that there remained a genuine issue of material fact as to whether R.M.H. was “in the care, custody or control” of Holiday Inn Express at the time Forshey molested him. Holiday Hospitality Franchising, Inc. v. Amco Ins. Co., 955 N.E.2d 827, 836 (Ind. Ct. App. Oct. 13, 2011).

On rehearing, the Court of Appeals clarified that its reversal applied only to Holiday Hospitality, Holiday Hospitality Franchising, Inc. v. Amco Ins. Co., 963 N.E.2d 1125, 1125–26 (Ind. Ct. App. Jan. 18, 2012), because even though Appellate Rule 17(A) made S.H., Holiday Inn Express, and Megha “parties to the appeal,” that did not relieve them of their Rule 9(A) obligation to file a notice of appeal within thirty days after a final judgment was entered against them or forfeit appellate relief, id. at 1126.

We granted transfer, thereby vacating the two Court of Appeals decisions. * * *

AMCO sought summary judgment based on two distinct provisions of the contract. First, it said that the contractual definition of “occurrence” did not extend to Forshey’s criminal conduct or Holiday Inn Express’s decision to hire and retain him. Second, it argued that the policy specifically excluded coverage for acts of abuse and molestation, as well as coverage for any negligence in hiring or retaining someone committing those acts. Because we find this second issue dispositive on appeal, we need not address the first. * * *

However, given the scope and context of the insurance policy, we believe the facts are sufficient to show, as a matter of law, that R.M.H. was in the “care” of Holiday Inn Express (as that term was used in the policy) at the time the molestation occurred. It is undisputed that R.M.H. was molested by Forshey while R.M.H. was a guest at Holiday Inn Express, staying in a room rented to the mother of R.M.H.’s friend. It is further undisputed that R.M.H. was in that guest room, behind a door locked by an electronic key provided by Holiday Inn Express, when Forshey entered and molested him. It is also undisputed that at this time—because of R.M.H.’s status as a guest—Holiday Inn Express owed him a duty of care by law. * * *

Simply put, we believe these facts reflect precisely the sort of scenario contemplated by the parties to be excluded from coverage when they agreed to the insurance contract. In fact, if these facts did not reflect the contemplated exclusion, we would struggle to imagine what reasonably could and still remain within the confines of an ordinary motel business. * * *

We therefore affirm the trial court’s grant of summary judgment.

Massa and Rush, JJ., concur.
Dickson, C.J., concurs with separate opinion.
Rucker, J., dissents with separate opinion.

Dickson, C.J., concurring. I write separately because I believe that the proper understanding of "care" is determined by well-established Indiana law that a hotel guest is considered a business invitee and is entitled a duty of reasonable care. Ellis v. Luxbury Hotels, Inc., 716 N.E.2d 359, 360 (Ind. 1999). Here, the exclusion is phrased in the disjunctive, and excludes coverage when the victim is in the "care, custody, or control" of any insured. I agree with Justice Rucker's dissent with respect to the question of fact as to "custody" and "control." But in this case, "care" exists as a matter of law. As such, the exclusion applies, and the summary judgment for the insurer was correct.

Rucker, J., dissenting. The Court of Appeals concluded there is a genuine issue of material fact as to whether R.M.H. was “in the care, custody or control” of Holiday Inn Express. Holiday Hospitality Franchising, Inc. v. Amco Ins. Co., 955 N.E.2d 827, 836 (Ind. Ct. App. 2011). At least with respect to “care” and “control” I agree with the court’s conclusion and would thus deny summary judgment in favor of AMCO on this issue. Therefore I respectfully dissent.

Posted by Marcia Oddi on March 6, 2013 09:54 AM
Posted to Ind. Sup.Ct. Decisions