State Farm Fire & Casualty Company v. Holderman et al
Filing
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OPINION AND ORDER DENYING 27 RULE 12(f) MOTION to Strike filed by State Farm Fire & Casualty Company; GRANTING 29 MOTION for Summary Judgment filed by State Farm Fire & Casualty Company. Clerk DIRECTED to enter a declaratory judgment that State Farm Fire & Casualty Insurance Company owes no duty to John HOlderman to defend or indemnify him with respect to any claims by the Estate of Timothy Robrock pending in the Allen Superior Court as Cause No 02D01-1012-CT-547. Signed by Judge Robert L Miller, Jr on 2/27/2014. (lns)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
STATE FARM FIRE & CASUALTY
COMPANY,
Plaintiff
vs.
JOHN HOLDERMAN, et al.,
Defendants
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CAUSE NO. 1:12-CV-351 RLM
OPINION and ORDER
This cause is before the court on the motion of State Farm Fire & Casualty
Company for summary judgment on its claims against John Holderman and the
Estate of Timothy Robrock1. State Farm seeks a declaration from the court that
the insurance policy State Farm issued to John Holderman doesn’t cover the
claims against Mr. Holderman pending in the Allen County Superior Court as
Sandra Robrock, Personal Representative of the Estate of Timothy Robrock v.
John Holderman, et al. (Cause No. 02D01-1012-CT-547). State Farm also has
moved to strike a portion of Mr. Holderman’s response brief pursuant to Federal
Rule of Civil Procedure 12(f) and Rule 56-1(e) of the Local Rules of the United
States District Court for the Northern District of Indiana. The court heard the
parties’ oral arguments on February 24, 2014. Based on a review of the parties’
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The Estate of Timothy Robrock is unrepresented in this action and no answer has been
filed; a default was entered against the estate on September 12, 2013.
submissions and arguments, the court concludes that the motions must be
granted.
FACTS
The parties don’t dispute the basic facts. Mr. Holderman is a journeyman
electrician: he’s worked as an electrician since 1983, he’s held a Journeyman
Electrical License since 1987, he owned his own electrical business in Fort Wayne
from 1990 to 1998, and before and after that time he worked as a journeyman
electrician for other companies. In 2009, Mr. Holderman became employed as a
journeyman electrician with Henry Electric: the company provided him with the
tools he needed (although Mr. Holderman also owns many of his own electrician’s
tools), he drives a van displaying a “Henry Electric” insignia, and he can purchase
supplies on a Henry Electric account at supply stores in the Fort Wayne area. Mr.
Holderman says that most, if not all, of his work at Henry Electric has been
performed for commercial clients.
In March 2009, Mr. Holderman agreed, at the request of his friend Andrew
Glancy, to perform electrical work for Andrew’s father, Perry Glancy, at a rental
house the elder Mr. Glancy owned. Mr. Holderman quoted a price of $300 for the
materials and labor, and Perry Glancy agreed. The next month, Mr. Holderman
picked up the necessary materials and installed electrical wiring at the rental
house so the tenants could use an air compressor in the garage. When the
electrical work was done, Mr. Glancy gave Mr. Holderman a check for $300. Mr.
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Holderman says the work he did for Perry Glancy amounted to a side job that he
did as a favor to the Glancys under an informal, unwritten agreement between the
parties.
In June 2010, Timothy Robrock was a guest of the Glancy tenants; Mr.
Robrock was fatally electrocuted while working in the garage at that residence.
Sandra Robrock, personal representative of Timothy Robrock’s estate, sued Mr.
Holderman and the Glancy tenants in the Allen County Superior Court, alleging
that Mr. Holderman negligently installed the faulty electrical wiring that caused
or contributed to Mr. Robrock’s death, and that the Glancy tenants negligently
failed to warn Mr. Robrock of the faulty wiring.
Mr. Holderman sought a defense from State Farm Fire & Casualty Company
under a homeowner’s policy State Farm issued to him with effective dates of
January 21, 2010 through January 21, 2011. State Farm is defending Mr.
Holderman in the state court action under a reservation of rights through defense
counsel.
In October 2012, State Farm filed this suit seeking a declaration that the
homeowner’s policy issued to Mr. Holderman doesn’t provide liability or medical
payment coverage for Sandra Robrock’s claims against him. State Farm has
moved for summary judgment based on its argument that the claims in the Allen
County action arose out of Mr. Holderman’s business pursuits, so State Farm has
no duty to defend or indemnify him in that action. Mr. Holderman maintains
material questions of fact exist as to whether “doing a favor for a friend is []
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transformed into a ‘business pursuit’ simply because the work might otherwise
fall within an area in which the insured is otherwise technically proficient.” Resp.,
at 4. Mr. Holderman answers that question in the negative, and State Farm
disagrees. The motions are ripe for review.
MOTION TO STRIKE
State Farm has moved to strike paragraph 1 of Mr. Holderman’s Statement
of Genuine Disputes contained in his summary judgment response. In that
paragraph, Mr. Holderman disputes State Farm’s claim that neither Andrew
Glancy nor Perry Glancy received any bids or estimates for the work Perry Glancy
wanted done at his rental property. State Farm says Mr. Holderman’s statement
that Andrew Glancy received two bids before Mr. Holderman agreed to do the work
is inadmissible hearsay: Mr. Holderman was only repeating what Andrew Glancy
allegedly told him, and Mr. Holderman had no personal knowledge of whether the
Glancys did, in fact, receive any bid(s) or estimate(s) for the electrical work. Thus,
State Farm says, Mr. Holderman’s assertion in paragraph 1 is inadmissible under
Rule 802 of the Federal Rules of Evidence. Mr. Holderman hasn’t responded to
State Farm’s argument.
The record contains Mr. Holderman’s deposition testimony that Andrew
Glancy told him that he (Andrew Glancy) got a couple of quotes for the work to be
done at his father’s rental property and those charges were more than the Glancys
wanted to pay. Pltf. Exh. 1 (Holderman Dep.), pp. 39, 52. The record also contains
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Andrew Glancy’s affidavit statement that he didn’t receive any bids or estimates
for the work to be done at his father’s rental property, Pltf. Exh. 5, ¶ 5, and Perry
Glancy’s deposition statement that he didn’t remember getting any estimates for
that work, other than a quote of $300 from John Holderman. Pltf. Exh. 4 (P.
Glancy Dep.), pp. 9, 12.
If offered to prove the truth of what Andrew Glancy is said to have stated —
that bids were obtained — it is hearsay within the meaning of Federal Rule of
Evidence 801 and presumptively barred by Rule 802. It might be admissible at
trial as a prior inconsistent statement, but impeachment rarely finds a seat at the
summary judgment table. Still, whether Andrew or Perry Glancy sought or
received other estimates before Andrew asked Mr. Holderman to do the work at
his father’s rental property isn’t material to the issue before the court — whether
State Farm has a duty to defend or indemnify Mr. Holderman in the state court
action. Therefore, the motion will be denied as unnecessary.
SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate when “the pleadings, depositions,
answers to the interrogatories, and admissions on file, together with the affidavits,
if any, show that there is no genuine issue of material fact and that the moving
party is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(c). A genuine
issue of material fact exists whenever “there is sufficient evidence favoring the
nonmoving party for a jury to return a verdict for that party.” Anderson v. Liberty
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Lobby, Inc., 477 U.S. 242, 249 (1986). In deciding whether a genuine issue of
material fact exists, “the evidence of the non-movant is to be believed, and all
justifiable inferences are to be drawn in his favor.” Anderson v. Liberty Lobby, 477
U.S. at 255. The existence of an alleged factual dispute, by itself, will not defeat
a summary judgment motion; “instead, the nonmovant must present definite,
competent evidence in rebuttal,” Butts v. Aurora Health Care, Inc., 387 F.3d 921,
924 (7th Cir. 2004), and “must affirmatively demonstrate, by specific factual
allegations, that there is a genuine issue of material fact that requires trial.”
Hemsworth v. Quotesmith.com, Inc., 476 F.3d 487, 490 (7th Cir. 2007); see also
FED. R. CIV. P. 56(e)(2). “It is not the duty of the court to scour the record in search
of evidence to defeat a motion for summary judgment; rather, the nonmoving
party bears the responsibility of identifying the evidence upon which he relies.”
Hastings Mut. Ins. Co. v. LaFollette, No. 1:07-cv-1085, 2009 WL 348769, at *2
(S.D. Ind. Feb. 6, 2009); see also Steen v. Myers, 486 F.3d 1017, 1022 (7th Cir.
2007) (“summary judgment is ‘not a dress rehearsal or practice run; it is the put
up or shut up moment in a lawsuit, when a party must show what evidence it has
that would convince a trier of fact to accept its version of events’” (quoting Hammel
v. Eau Galle Cheese Factory, 407 F.3d 852, 859 (7th Cir. 2005)).
POLICY PROVISIONS
The State Farm Homeowners Policy issued to John Holderman provides in
Section II, entitled Liability Coverages, as follows:
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Coverage L – Personal Liability
If a claim is made or a suit is brought against an insured for
damages because of bodily injury or property damage to which this
coverage applies, caused by an occurrence, we will:
1.
pay up to our limit of liability for the damages for which the
insured is legally liable; and
2.
provide a defense at our expense by counsel of our choice. We
may make any investigation and settle any claim or suit that
we decide is appropriate. Our obligation to defend any claim or
suit ends when the amount we pay for damages, to effect
settlement or satisfy a judgment resulting from the occurrence,
equals our limit of liability.
Compl.,Exh. A, p. 15.
The policy also provides in the Exclusion portion of Section II that
1.
Coverage L . . . [does] not apply to:
*
*
*
b. bodily injury or property damage arising out of
business pursuits of any insured . . . . This exclusion
does not apply:
(1)
to activities which are ordinarily incident to
non-business pursuits . . . .
Compl., Exh. A, p. 16.
The policy defines the term “business” as “a trade, profession, or
occupation,” Compl., Exh. A, p. 1, and the term “occurrence” as “an accident,
including exposure to conditions, which results in bodily injury or property
damage during the policy period.” Compl., Exh. A, p. 2.
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DISCUSSION
Neither party has indicated which state law might govern the insurance
policy at issue, but State Farm’s complaint is based on diversity jurisdiction and
the parties rely on Indiana law to support their summary judgment arguments,
so the court looks to Indiana law. Camp v. TNT Logistics Corp., 553 F.3d 502, 505
(7th Cir. 2009) (“Because none of the parties raised the choice of law issue, [the
court] appl[ies] the substantive law of . . . the forum state.”).
In Indiana, insurance policies are governed by the same rules of
construction as other contracts. Westfield Ins. Co. v. Hill, 790 F. Supp. 2d 855,
860 (N.D. Ind. 2011); Bradshaw v. Chandler, 916 N.E.2d 163, 166 (Ind. 2009). A
court’s goal in interpreting an insurance contract is to “ascertain and enforce the
parties’ intent as manifested in the insurance contract. [The court] construe[s] the
insurance policy as a whole and consider[s] all of the provisions of the contract
and not just the individual words, phrases or paragraphs. If the language is clear
and unambiguous, [the court] give[s] the language its plain and ordinary
meaning.” Argonaut Ins. Co. v. Jones, 953 N.E.2d 608, 615 (Ind. Ct. App. 2011)
(quoting Buckeye State Mut. Ins. Co. v. Carfield, 914 N.E.2d 315, 318 (Ind. Ct.
App. 2009)). “Where an ambiguity exists, that is, where reasonably intelligent
people may interpret the policy’s language differently, courts construe insurance
policies strictly against the insurer. . . . This is particularly the case where a policy
excludes coverage.” American Family Mut. Ins. Co. v. Bower, 752 F. Supp. 2d 957,
961-962 (N.D. Ind. 2010). Ambiguity doesn’t exist just because the parties
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disagree about the meaning of a provision or proffer differing interpretations of the
policy language. Westfield Ins. Co. v. Hill, 790 F. Supp. 2d 855, 860 (N.D. Ind.
2011); Buckeye State Mut. Ins. Co. v. Carfield, 914 N.E.2d 315, 318 (Ind. Ct. App.
2009). “Interpretation of an insurance policy presents a question of law that is
particularly suitable for summary judgment.” State Auto. Mut. Ins. Co. v. Flexdar,
Inc., 964 N.E.2d 845, 848 (Ind. 2012).
State Farm first says the policy’s relevant language is clear: the policy
excludes coverage for damages arising from the business pursuits of the insured
and defines the term “business” as a person’s trade, profession, or occupation. Mr.
Holderman says in response that Indiana law gives effect to an exclusion in an
insurance contract only if the exclusion clearly and unmistakably brings within
the contract’s scope the particular act or omission that will effectuate the
provision, and notes that any ambiguities must be construed against the insurer
and in favor of the insured, citing Asbury v. Indiana Union Mut. Ins. Co., 441
N.E.2d 232, 236 (Ind. Ct. App. 1982). Mr. Holderman also points to language in
Freeman v. Commonwealth Life Ins. Co. of Louisville, 271 N.E.2d 177 (Ind. Ct.
App. 1971), that insurance contracts must be construed to prevent the defeat of
the insured’s indemnification for a loss when the general language of the contract
is susceptible to two equally fair constructions. 271 N.E.2d at 181 n.6. Mr.
Holderman, however, hasn’t challenged the terms of the insurance policy or
pointed to any ambiguities in the contract, so the court will give the policy
language “‘its plain and ordinary meaning.’” LDT Keller Farms, LLC v. Brigitte
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Holmes Livestock Co., Inc., 722 F. Supp. 2d 1015, 1021 (N.D. Ind. 2010) (quoting
Barclay v. State Auto Ins. Cos., 816 N.E.2d 973, 975 (Ind. Ct. App. 2004)).
The parties’ dispute relates to their differing interpretations of the phrase
“business pursuit” in the Exclusion portion of the policy. While the policy doesn’t
define that phrase, “[w]hen interpreting insurance documents under Indiana law,
‘an insured is engaged in a business pursuit only when he pursues a continued
or regular activity for the purpose of earning a livelihood.’” Doaks v. Safeco Ins.
Co. of America, No. 3:09-CV-367, 2013 WL 951202, at *3 (N.D. Ind. Mar. 12,
2013) (quoting American Family Mut. Ins. Co. v. Bentley, 352 N.E.2d 860, 865
(Ind. Ct. App. 1976)); see also Frankenmuth Mut. Ins. Co. v. Williams, 690 N.E.2d
675, 680 (Ind. 1997) (reiterating that an insured is engaged in a business pursuit
only when he pursues a continued or regular activity for the purpose of earning
a livelihood). Thus, the court must determine whether Mr. Holderman pursued a
continued or regular activity and whether the purpose of the activity was earning
a livelihood. Doaks v. Safeco Ins. Co. of America, No. 3:09-CV-367, 2013 WL
951202, at *3 (N.D. Ind. Mar. 12, 2013).
1. Continuity
Mr. Holderman testified that his employment with Henry Electric generally
involves commercial work. He testified, too, that he is occasionally required to
perform service work, which involves rewiring existing structures, reading and
interpreting wiring diagrams and blueprints, running wire, setting up breaker and
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panel boxes, installing fixtures and lights, and installing ground rods. Holderman
Dep., at 37. Mr. Holderman testified that the work he did at the Glancy property
required him to take an amperage and voltage reading for an air compressor,
perform calculations using the code book, install a breaker and panel box in the
basement of the house, run wires up from the basement and from the house to
the garage, and install a pullout disconnect, non-fusible, by the back door of the
garage. Holderman Dep., at 43-44. Mr. Holderman performed the work at the
Glancy property without assistance from anyone else.
Mr. Holderman argues that the single, isolated “favor” he reluctantly did for
his friend’s father isn’t transformed into a “business pursuit” merely because the
favor may have been requested because of his competency. The court can’t agree:
the focus of this analysis is Mr. Holderman’s activity of doing electrical work, not
his activity of doing a favor. The undisputed facts establish that (i) Mr. Holderman
is a licensed electrician who has been working as a journeyman electrician for over
twenty years; (ii) Mr. Holderman was contacted by Andrew Glancy to do electrical
work based on Mr. Holderman’s status as a licensed electrician and because the
price Mr. Holderman quoted for the work seemed reasonable to the Glancys; (iii)
Mr. Holderman personally determined the scope of the work to be performed and
purchased all the necessary materials; (iv) he drove to the job site in the Henry
Electric van he uses during his employment with Henry Electric; (vi) he performed
tasks involved in his trade, profession, or occupation, i.e., installing electrical
wiring and related hardware using skills and tools of a journeyman electrician;
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and (vii) after undertaking the work for Mr. Glancy, Mr. Holderman continued to
be employed as a journeyman electrician. Those facts allow no finding other than
that Mr. Holderman engaged in regular or continued activity – working as an
electrician – satisfying the first part of the test.
2. Earning a Livelihood
Under the second prong of the test (whether Mr. Holderman engaged in
activity to earn a livelihood) the court initially considers whether Mr. Holderman
was gainfully employed elsewhere and then considers the significance to Mr.
Holderman of the income he received. Mr. Holderman’s main source of income is
derived from his employment with Henry Electric, where he works as a
journeyman electrician at a rate of $21 per hour. Holderman Dep., at 34.
Mr. Holderman received additional income from Perry Glancy for installing
electrical wiring and related hardware using skills and tools of a journeyman
electrician; Mr. Holderman charged Mr. Glancy $190 for the materials he
purchased, $10 for the gas he used, and $100 for his labor based on a rate of $20
per hour. Mr. Holderman maintains the amount he received for his labor wasn’t
significant; in fact, he says, whether the money he received for his labor was fair
compensation is open to debate.
The $20 hourly rate Mr. Holderman charged Mr. Glancy for the work he
performed was almost the same as the hourly rate he was paid by Henry Electric,
$21 per hour. While $100 might not represent a lot of money, that Mr. Holderman
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charged for his labor at about his regular rate of pay indicates that he sought
some monetary gain. Mr. Holderman might have viewed the work he did for Mr.
Glancy to be a “favor,” but the record compels a finding that he also believed he
deserved to be compensated for that favor at a rate comparable to what he
normally received for his work as a journeyman electrician, satisfying the second
prong of the test.
Viewing the record in the light most favorable to Mr. Holderman, the court
concludes that he hasn’t carried his burden of establishing a genuine issue of
material fact to defeat summary judgment. Mr. Holderman’s work for Perry Glancy
might have involved a much smaller time commitment and pecuniary gain than
his regular employment with Henry Electric, but his installation of electrical
service for Mr. Glancy was undertaken using his journeyman electrician’s skills
and pay grade and so constituted a continuous or regular business activity
undertaken for monetary gain. The court concludes that State Farm’s summary
judgment motion must be granted.
CONCLUSION
For the reasons discussed above, the court
(1) DENIES the plaintiff’s motion to strike [docket # 27]; and
(2) GRANTS the plaintiff’s summary judgment motion [docket
# 29].
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The Clerk is DIRECTED to enter a declaratory judgment that State Farm Fire &
Casualty Insurance Company owes no duty to John Holderman to defend or
indemnify him with respect to any claims by the Estate of Timothy Robrock
pending in the Allen County Superior Court as Cause No. 02D01-1012-CT-547.
SO ORDERED.
ENTERED:
February 27, 2014
/s/ Robert L. Miller, Jr.
Judge, United States District Court
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