Indiana Farm Bureau Insurance Company, as Subrogee of Real Estate Technologies, LLC v. Wood Shield, LLC ( 2014 )

Pursuant to Ind.Appellate Rule 65(D), this
Memorandum Decision shall not be
regarded as precedent or cited before any
Sep 25 2014, 9:17 am
court except for the purpose of establishing
the defense of res judicata, collateral
estoppel, or the law of the case.
ATTORNEYS FOR APPELLANT: ATTORNEY FOR APPELLEE:
M. MICHAEL STEPHENSON SCOTT E. ANDRES
SEAN R. ROTH Due Doyle Fanning, LLP
McNeely Stephenson Indianapolis, Indiana
Thopy & Harrold
Shelbyville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
INDIANA FARM BUREAU INSURANCE )
COMPANY, AS SUBROGEE OF REAL )
ESTATE TECHNOLOGIES, LLC, )
)
Appellant, )
)
vs. ) No. 29A02-1403-PL-136
)
WOOD SHIELD, LLC, )
)
Appellee. )
APPEAL FROM THE HAMILTON CIRCUIT COURT
The Honorable Paul A. Felix, Judge
Cause No. 29C01-1107-PL-7168
September 25, 2014
MEMORANDUM DECISION - NOT FOR PUBLICATION
VAIDIK, Chief Judge
Case Summary
Indiana Farm Bureau Insurance Company, as subrogee of Real Estate Technologies,
LLC (RET), appeals the trial court’s order granting summary judgment to Wood Shield,
LLC. Because there is a genuine issue of material fact as to what risks the parties intended
to include within the property-insurance provision of their lease, summary judgment was
inappropriate. We therefore reverse the trial court’s order and remand for further
proceedings.
Facts and Procedural History
In a real-estate lease effective April 1, 2010, landlord Dean Graham, president of
RET, leased an office space in Noblesville, Indiana, to tenant Adam Hayes, Managing
Director of Wood Shield, a wood-staining business. The lease contained the following
provision (“Property Insurance provision”):
PROPERTY INSURANCE. Landlord and Tenant shall each be responsible
to maintain appropriate insurance for their respective interests in the
Premises and property located on the Premises. Landlord and Tenant shall
not be liable for, and each hereby waives all claims against the other for any
injuries, damages (including, but not limited to, consequential damages) or
losses, of or to a person, property or otherwise, sustained by the Landlord
and/or Tenant in connection with any of the risks required to be insured
against under this Lease; provided, however, that this shall not waive
Landlord’s or Tenant’s claims for contract damages resulting from a breach
of this Lease.1
1
In a deposition taken in October 2013, Graham stated that he had initially provided a boilerplate
lease to Hayes containing the following provision:
PROPERTY INSURANCE. Landlord and Tenant shall each be responsible to maintain
appropriate insurance for their respective interests in the Premises and property located on
the Premises.
Appellant’s App. p. 64, 67. Graham testified that Hayes had requested that the Property Insurance provision
be amended to include the language that ultimately appeared in the real-estate lease.
2
Appellant’s App. p. 49. The lease also included a provision requiring Wood Shield to
maintain liability insurance “in a total aggregate sum of at least $500,000.” Id.
In July 2010 a fire occurred in the area of the property occupied by Wood Shield,
resulting in $295,976.04 in property damage. Id. at 56. Farm Bureau tendered insurance
proceeds in this amount to RET and thereafter—as subrogee of RET—filed a complaint
against Wood Shield seeking damages. Wood Shield filed a motion for summary
judgment, arguing that the Property Insurance provision of the lease constituted a
“mutually agreed upon waiver of subrogation clause” precluding Farm Bureau’s recovery
from Wood Shield. See id. at 237. The trial court denied Wood Shield’s motion, stating,
“The lease is ambiguous and extrinsic evidence is needed to determine whether the parties
agreed that R[ET] had the responsibility to insure against damage due to fire.” Id. at 195.
In November 2013 Wood Shield filed a second motion for summary judgment,
designating evidence in support of its motion. Specifically, Wood Shield designated
testimony from Graham’s October 2013 deposition, in which Graham “acknowledged that
RET purchased fire insurance for the subject building because it was the ‘appropriate’ thing
to do from a business standpoint.” Id. at 92, 122. The trial court granted Wood Shield’s
second motion for summary judgment, writing as follows:
Mr. Graham’s testimony clearly indicates that fire coverage is appropriate
insurance for a landlord to carry, as contemplated by the plain language of
the Lease. The Court finds fire coverage to be appropriate insurance that
must be maintained by the Landlord pursuant to the terms of the [L]ease.
Because fire coverage is appropriate for the Landlord to carry, it is therefore
also a ‘risk required to be insured against’ by the Landlord under the Lease.
The terms of the contract therefore bar RET from pursuing subrogation
against [Wood Shield] for damage caused by fire, a risk which RET was
required to insure against.
3
Id. at 9. Farm Bureau now appeals.
Discussion and Decision
Wood Shield contends that the trial court properly awarded summary judgment in
its favor because in Graham’s October 2013 deposition, Graham testified that insurance
for fire damage was “appropriate” for his company to purchase; this evidence, according
to Wood Shield, “provided the trial court with the evidence it needed to correctly conclude
that the parties agreed that R[ET] did have the responsibility to insure against damage due
to fire.” Appellee’s Br. p. 7. We disagree.
On appeal, we review the grant of summary judgment de novo, applying the same
standard as the trial court: “Drawing all reasonable inferences in favor of . . . the non-
moving parties, summary judgment is appropriate ‘if the designated evidentiary matter
shows that there is no genuine issue as to any material fact and that the moving party is
entitled to judgment as a matter of law.’” Williams v. Tharp, 914 N.E.2d 756, 761 (Ind.
2009) (quoting Ind. Trial Rule 56(C)). A fact is “material” if its resolution would affect
the outcome of the case, and an issue is “genuine” if a trier of fact is required to resolve the
parties’ differing accounts of the truth, or if the undisputed material facts support
conflicting reasonable inferences. Id. (internal citations omitted). In determining whether
there is a genuine issue of material fact precluding summary judgment, all doubts must be
resolved against the moving party and the facts set forth by the party opposing the motion
must be accepted as true. Hyperbaric Oxygen Therapy Sys., Inc. v. St. Joseph Med. Ctr. of
Ft. Wayne, Inc., 683 N.E.2d 243, 247 (Ind. Ct. App. 1997), trans. denied.
4
In support of its second motion for summary judgment and on appeal, Wood Shield
designates as evidence the following excerpts from Graham’s October 2013 deposition:
Q: . . . [RET] owns a building, you’re a member of that LLC?
A: Right.
Q: There’s been a business decision made, obviously, to purchase insurance
--
A: Right.
Q: -- for that building. I can only assume that [RET] deems it appropriate
to purchase fire insurance for the building, correct?
A: That’s correct.
Appellant’s App. p. 121-22.
Q: Sir, you own a business, you’re a member of an LLC that owns property.
In your opinion, is it appropriate for a business owner to purchase fire
insurance for a property that the business owns?
A: Yes.
Id. at 122. This, according to Wood Shield, “provided the trial court with the evidence it
needed to correctly conclude that the parties agreed that [RET] did have the responsibility
to insure against damage due to fire.” Appellant’s Br. p. 7.
Farm Bureau argues, however, that the issue is not whether Graham subjectively
felt that it was “appropriate” for a commercial landlord to insure his property against the
risk of fire, or whether he did in fact purchase such insurance; the issue, instead, is whether
both parties intended for fire to be a risk required to be insured against under the lease. See
id. at 17. In support of its claim that the parties never actually agreed that RET was required
under the lease to insure against the risk of fire, Farm Bureau submits evidence from
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Graham’s deposition and a March 2013 affidavit. Specifically, Farm Bureau offers the
following deposition testimony:
Q: . . . Pursuant to this lease we’re looking at here, R[ET], you’ve already
testified, was responsible for electricity, gas and heating and cooling?
A: As part of this lease, is that --
Q: Yeah.
A: Yes, yes.
Q: Now, that being the case, it makes sense, does it not, that R[ET] would
carry fire insurance for the building?
A: No.
Q: Okay, and why does that not make sense?
A: Again, I guess I can’t see in my head how it does. I guess I don’t know.
I don’t know why it is I would provide fire insurance to someone else. This
is specifically tied to a tenant. Everything in this document is tied to a tenant.
This is telling you what I will provide to a tenant. And fire insurance is not
what I’m giving them.
Appellant’s App. p. 63 (objection omitted).
Q: And, again, it would probably make sense for the landlord being
responsible for the electricity and heating and so forth to maintain fire
insurance; correct?
...
A: Well, specifically it does not say that I’m providing insurance here. I
never thought for one second that they -- that I would provide insurance as
part of the lease.
Id. at 122 (objection omitted).
Farm Bureau also submits as evidence the following excerpt from Graham’s
affidavit:
[10.] At no time during negotiations of the Lease Agreement did I, on behalf
of R[ET], agree to assume the duty to procure property insurance insuring
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the Property against the risk of fire caused by the acts and omissions of Wood
Shield.
[11.] The risk of fire loss was not a risk [] Hayes and I required R[ET] to be
insured against pursuant to the terms of the Lease Agreement.
Id. at 56.
In light of Graham’s deposition and affidavit testimony, it cannot be said that the
designated evidentiary matter shows that there is no genuine issue as to any material fact
and that the moving party is entitled to judgment as a matter of law. See Williams, 914
N.E.2d at 761. Specifically, there is a dispute as to which risks the parties intended to
include within the “risks required to be insured against under th[e] [l]ease.” Appellant’s
App. p. 49. Given this dispute, summary judgment was inappropriate, and we reverse.2
Reversed and remanded.
FRIEDLANDER, J., and MAY, J., concur.
2
Because we find the conflicting evidence regarding the parties’ intent sufficient to defeat a motion
for summary judgment, we do not need to reach the question of whether Farm Bureau, under the terms of
the agreement, waived its right to file a claim against Wood Shield for damages sustained in connection
with any risks required to be insured against.
7