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Appellate court reverses summary judgment for insurer

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The Indiana Court of Appeals reversed summary judgment in favor of a hotel’s insurance company in a negligent hiring suit, ruling there is a question as to whether the teenage hotel guest was under the “care, custody or control” of the hotel at the time the teen was molested by an employee.

The parent of R.H.M., a 15-year-old guest at the Holiday Inn Express of New Castle, sued the hotel, its parent company and employee Michael Forshey after R.H.M. was molested by Forshey. AMCO Insurance Co. sought a declaratory judgment action that its policy with Holiday Inn doesn’t provide coverage to any of the defendants. The trial court granted summary judgment to AMCO.

The hotel parent company, Holiday Hospitality, argued that the trial court was wrong in concluding the molestation wasn’t an “occurrence” as that term is defined in the policy. The appellate court agreed with Holiday Hospitality, citing Wayne Township Bd. Of Sch. Commissioners v. Indiana Insurance Co., 650 N.E.2d 1205, 1209 (Ind. Ct. App. 1995). The COA concluded in that case that due to a separation of insureds provision in the township’s insurance policy, the actions of the school board commissioners may have been accidental even though the principal’s action of molesting a minor in his office were intentional. AMCO’s insurance policy also contained a separation of insureds provision.

The judges noted that only once have the state appellate courts specifically addressed whether an employer’s negligent hiring or supervision of an employee could be accidental. They adopted the analysis in American Family Mut. Ins. Co. v. Bower, 752 F.Supp.2d 957 (N.D. Ind. 2010), a negligence supervision suit brought against parents Michael and Anne Bower after their son molested a minor. That court held in light of Indiana’s construction of ambiguous insurance policies against the insurance company, where a severability provision exists, no evidence is designated showing the defendants intended or expected their son Jonathan to molest the minor when they allegedly acted negligently and the term “accident” is not further defined in the policy and is “susceptible to differing reasonable interpretations,” then the alleged negligent conduct constitutes an “occurrence” for purposes of the insurance policy.  

The separation of insureds provision allows the finding of an “occurrence” regarding Holiday Hospital’s action even if Forshey’s actions don’t amount to an accident; there is ambiguity in the insurance policy; and without evidence that the employer intended or expected the sexual misconduct to result, it can’t be deemed intentional, wrote Chief Judge Margret Robb in Holiday Hospitality Franchising Inc. v. AMCO Insurance Company, No. 33A01-1103-CT-104.

The judges also concluded there was a genuine issue of material fact as to whether R.M.H. was in the “care, custody or control” of Holiday Inn, Holiday Hospitality or any other insured. There are exclusions in the insurance policy for abuse or molestation that occur while the person is in the care, custody or control of any of the insured.

While AMCO may be correct that the teen was a business invitee of the hotel and was owed a duty of reasonable care, that is not the same as being “in the care, custody or control” of Holiday Inn, wrote Robb.

“In the context of a hotel, it would require something additional, such as a minor being supervised by hotel employees. Thus, AMCO has not demonstrated that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law,” she wrote. The judges remanded the case for further proceedings.

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  1. He TIL team,please zap this comment too since it was merely marking a scammer and not reflecting on the story. Thanks, happy Monday, keep up the fine work.

  2. You just need my social security number sent to your Gmail account to process then loan, right? Beware scammers indeed.

  3. The appellate court just said doctors can be sued for reporting child abuse. The most dangerous form of child abuse with the highest mortality rate of any form of child abuse (between 6% and 9% according to the below listed studies). Now doctors will be far less likely to report this form of dangerous child abuse in Indiana. If you want to know what this is, google the names Lacey Spears, Julie Conley (and look at what happened when uninformed judges returned that child against medical advice), Hope Ybarra, and Dixie Blanchard. Here is some really good reporting on what this allegation was: http://media.star-telegram.com/Munchausenmoms/ Here are the two research papers: http://www.sciencedirect.com/science/article/pii/0145213487900810 http://www.sciencedirect.com/science/article/pii/S0145213403000309 25% of sibling are dead in that second study. 25%!!! Unbelievable ruling. Chilling. Wrong.

  4. Mr. Levin says that the BMV engaged in misconduct--that the BMV (or, rather, someone in the BMV) knew Indiana motorists were being overcharged fees but did nothing to correct the situation. Such misconduct, whether engaged in by one individual or by a group, is called theft (defined as knowingly or intentionally exerting unauthorized control over the property of another person with the intent to deprive the other person of the property's value or use). Theft is a crime in Indiana (as it still is in most of the civilized world). One wonders, then, why there have been no criminal prosecutions of BMV officials for this theft? Government misconduct doesn't occur in a vacuum. An individual who works for or oversees a government agency is responsible for the misconduct. In this instance, somebody (or somebodies) with the BMV, at some time, knew Indiana motorists were being overcharged. What's more, this person (or these people), even after having the error of their ways pointed out to them, did nothing to fix the problem. Instead, the overcharges continued. Thus, the taxpayers of Indiana are also on the hook for the millions of dollars in attorneys fees (for both sides; the BMV didn't see fit to avail itself of the services of a lawyer employed by the state government) that had to be spent in order to finally convince the BMV that stealing money from Indiana motorists was a bad thing. Given that the BMV official(s) responsible for this crime continued their misconduct, covered it up, and never did anything until the agency reached an agreeable settlement, it seems the statute of limitations for prosecuting these folks has not yet run. I hope our Attorney General is paying attention to this fiasco and is seriously considering prosecution. Indiana, the state that works . . . for thieves.

  5. I'm glad that attorney Carl Hayes, who represented the BMV in this case, is able to say that his client "is pleased to have resolved the issue". Everyone makes mistakes, even bureaucratic behemoths like Indiana's BMV. So to some extent we need to be forgiving of such mistakes. But when those mistakes are going to cost Indiana taxpayers millions of dollars to rectify (because neither plaintiff's counsel nor Mr. Hayes gave freely of their services, and the BMV, being a state-funded agency, relies on taxpayer dollars to pay these attorneys their fees), the agency doesn't have a right to feel "pleased to have resolved the issue". One is left wondering why the BMV feels so pleased with this resolution? The magnitude of the agency's overcharges might suggest to some that, perhaps, these errors were more than mere oversight. Could this be why the agency is so "pleased" with this resolution? Will Indiana motorists ever be assured that the culture of incompetence (if not worse) that the BMV seems to have fostered is no longer the status quo? Or will even more "overcharges" and lawsuits result? It's fairly obvious who is really "pleased to have resolved the issue", and it's not Indiana's taxpayers who are on the hook for the legal fees generated in these cases.

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