Property-Owners Insurance Company v. Gerald T. Powers and Phyllis J. Powers (mem. dec.)

MEMORANDUM DECISION
Jul 22 2015, 9:37 am
Pursuant to Ind. Appellate Rule 65(D), this
Memorandum Decision shall not be regarded as
precedent or cited before any court except for the
purpose of establishing the defense of res judicata,
collateral estoppel, or the law of the case.
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEES
Stephen C. Wheeler GERALD T. POWERS AND PHYLLIS
Smith Fisher Maas Howard & Lloyd, J. POWERS
P.C. Michelle A. Spahr
Indianapolis, Indiana Richard A. Norris
Cynthia E. Lasher
Norris Choplin Schroeder LLP
Indianapolis, Indiana
ATTORNEYS FOR APPELLEES
MELISSA FREEMAN REALTY, INC.,
REALTY GROUP-FREEMAN, LLC
d/b/a PRUDENTIAL INDIANA
REALTY GROUP, RITA WILLIAMS,
AND MELISSA FREEMAN
Robert T. Thopy
Eric M. Glasco
McNeely Stephenson
Shelbyville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Property-Owners Insurance July 22, 2015
Company, Court of Appeals Case No.
73A05-1501-PL-2
Appellant-Plaintiff,
Appeal from the Shelby Circuit
v. Court
The Honorable Charles D.
O’Connor, Judge
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Gerald T. Powers and Phyllis J.
Case. No. 73C01-1405-PL-14
Powers, et. al.,
Appellees-Defendants
Crone, Judge.
Case Summary
[1] Gerald T. Powers sustained injuries while being shown a residential property
listed for sale by Prudential Indiana Realty Group (“Prudential”). Gerald and
his wife, Phyllis J. Powers (collectively “the Powerses”), sued numerous
defendants, including Prudential, for negligence. Thereafter, Prudential’s
liability insurer, Property-Owners Insurance Company (“Property-Owners”),
filed a declaratory judgment action alleging that, pursuant to a specific
endorsement to the insurance policy provided to Prudential, there is no
insurance coverage for defense or indemnity under the circumstances and that
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the Powerses have no right to recover from Property-Owners. 1 Subsequently,
the Powerses, as well as other defendants, filed motions for judgment on the
pleadings asserting that the policy endorsement relied upon by Property-
Owners to deny coverage is inapplicable to the premises upon which Gerald
was injured. The trial court issued its order granting the motions for judgment
on the pleadings, concluding that the policy endorsement relied upon by
Property-Owners is inapplicable to deny coverage. Property-Owners appeals
that ruling. We reverse and remand.
Facts and Procedural History
[2] On or about September 5, 2011, Gerald sustained bodily injuries while being
shown a house for sale on Blanchard Street in Shelbyville (“Blanchard Street
Property”). The Powerses filed an amended complaint for negligence against
numerous defendants, including Prudential, the real estate listing agent for the
1
In addition to naming the Powerses as defendants in the declaratory judgment action, Property-Owners
named: U.S. Bank National Association, as Trustee Under the Securitization Servicing Agreement dated as
of July 1, 2005 Structured Asset Securities Corporation, Structured Asset Investment Loan Trust Mortgage
Pass-Through Certificates, Series 2005-HE2; Melissa Freeman Realty, Inc.; Realty Group-Freeman, LLC
d/b/a Prudential Indiana Realty Group; Altisource Solutions, Inc.; Altisource Fulfillment Operations, Inc.;
Altisource; RealHome Services and Solutions, Inc., d/b/a Altisource Homes; Altisource Portfolio Solutions
S.A.; Altisource Portfolio Solutions, Inc.; Altisource U.S. Holdings, Inc.; Altisource Holdings, LLC; Real
Estate Servicing Solutions, LLC; Real Estate Servicing Solutions, Inc.; Altisource Portfolio Solutions
S.A.R.L.; Ocwen Loan Servicing, LLC; Ocwen Financial Corporation; Rita Williams; Melissa Freeman;
David Craig; Usher & Associates, Inc.; and Field Connections, LLC. The trial court refers to the additional
defendants collectively in separate groups, namely the “U.S. Bank Defendants” and the “Prudential
Defendants,” and we will do so as well where necessary. Although the Powerses and some of whom the trial
court referred to as the Prudential Defendants are the only defendants who have appeared and filed briefs on
appeal, all of the named defendants remain parties to this appeal pursuant to Indiana Appellate Rule 17(A).
See Barnette v. U.S. Architects, LLP, 15 N.E.3d 1, 8 (Ind. Ct. App. 2014) (noting that Appellate Rule 17(A)
operates on its own force to make all parties in the trial court parties on appeal whether such parties
participate actively or not).
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Blanchard Street Property, alleging that the defendants were negligent in failing
to maintain safe premises, in constructing and/or maintaining a dangerous or
defective staircase, and in failing to warn of the dangerous condition of the
staircase on the Blanchard Street Property. Thereafter, Property-Owners,
Prudential’s liability insurer, filed a complaint for declaratory judgment alleging
that it has no duty to provide insurance coverage, defend, or indemnify the
Prudential Defendants for any claims brought by the Powerses. Property-
Owners attached the insurance policy issued to Prudential by Property-Owners
and Prudential’s listing contract for the Blanchard Street Property to its
complaint for declaratory judgment.
[3] The “Businessowners Insurance Policy” issued to Prudential by Property-
Owners (the “Businessowners Policy”) includes Endorsement 54638, titled
“Limitation of Real Estate Operations,” which provides:
It is agreed that with respect to any real estate operation, the insurance
provided under the Businessowners Liability Coverage Form applies
only to “bodily injury”, “property damage”, “personal injury”, and
“advertising injury” arising out of:
1. that part of a premises used by you for general office purposes; and
2. a premises:
a. which you do not own, operate, rent or manage;
b. which is not in your care, custody or control; or
c. for which you do not act as an agent for rent collection
or in a supervisory capacity;
if such premises is listed with you for sale or rental.
All other terms and conditions of the policy apply.
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Appellant’s App. at 162. Property-Owners alleged that on February 1, 2011,
Rita Williams, a real estate agent and broker-salesperson for Prudential, signed
a listing contract for the Blanchard Street Property that included the following
language:
3. Broker agrees to assume the care, custody and management of the
property, including but not limited to performing the following:
A. Input listing in appropriate MLS;
B. Install signage;
C. Answer calls/emails from buyers/agents;
D. Conduct open houses when necessary;
E. To inspect the property at least once each week and take
reasonable and prudent action to prevent any damage to the
property including, but not limited to, damage caused by
fire, vandalism, and weather conditions, and notify Seller
immediately by telephone in the event of any emergency, code
violation or damage related to the property; and ….
Id. at 169-170. Property-Owners alleged that Prudential required all listings
brought in by its broker-salespersons to be the property of Prudential, that all
such listings be listed in Prudential’s name, and that, pursuant to the listing
contract, Prudential assumed the care, custody, or control of the Blanchard
Street Property. Accordingly, Property-Owners sought judgment declaring that
no insurance coverage, defense, or indemnity is afforded to Prudential pursuant
to the Businessowners Policy and, specifically, Endorsement 54638.
[4] The Powerses filed a motion for judgment on the pleadings asserting that
Endorsement 54638 is inapplicable to the Blanchard Street Property where
Gerald was injured, and thus cannot be a basis to deny coverage under the
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Businessowners Policy. Specifically, the Powerses argued that, based upon the
declarations pages of the Businessowners Policy, Endorsement 54638 applies
only to Prudential’s business office because that “building” is listed on the
declarations pages as the only “building” and “location” to which Endorsement
54638 applies. Id. at 92. The Prudential Defendants joined in that motion.
The U.S. Bank Defendants also filed a motion for judgment on the pleadings
asserting that Endorsement 54638 is inapplicable to deny coverage. Following
separate hearings, the trial court granted the motions and entered judgment on
the pleadings against Property-Owners. Property-Owners now appeals.
Discussion and Decision
[5] Property-Owners appeals the trial court’s entry of judgment on the pleadings on
its complaint for declaratory judgment. 2 We apply a de novo standard of
review to a trial court’s ruling on an Indiana Trial Rule 12(C) motion for
judgment on the pleadings. Consol. Ins. Co. v. Nat’l Water Serv., LLC, 994 N.E.2d
1192, 1196 (Ind. Ct. App. 2013), trans. denied. “We accept as true the well-
pleaded facts alleged in the complaint, and base our ruling solely on the
pleadings.” Id. A motion for judgment on the pleadings should not be granted
unless it is clear from the face of the complaint that under no circumstances
could relief be granted. Id. To the extent that interpretation of a contract is
2
If an insurer has made an independent determination that it has no duty to defend, it must protect its
interest by either filing a declaratory judgment action for a judicial determination of its obligations or hiring
independent counsel to defend its insured under a reservation of rights. Freidline v. Shelby Ins. Co., 774 N.E.2d
37, 42 n.6 (Ind. 2002).
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involved, “we may look to both the complaint and the attached contract for
purposes of determining the appropriateness of the court’s ruling on the motion
for judgment on the pleadings.” Eskew v. Cornett, 744 N.E.2d 954, 957 (Ind. Ct.
App. 2001) (noting that Ind. Trial Rule 9.2(A) requires a written document
upon which the action is premised to be attached to the complaint), trans.
denied. When allegations of a pleading are inconsistent with terms of a written
contract attached as an exhibit, the terms of the contract must prevail over a
contrary allegation. Id.[6] Insurance contracts are governed by the same rules of construction as other
contracts, and their interpretation is a question of law which we address de
novo. Justice v. Am. Family Mut. Ins. Co., 4 N.E.3d 1171, 1175 (Ind. 2014). Our
goal when interpreting an insurance policy is to ascertain and enforce the
parties’ intent as manifested in the insurance contract. Erie Ins. Exch. v. Sams, 20
N.E.3d 182, 187 (Ind. Ct. App. 2014), trans. denied (2015). When interpreting
an endorsement to an insurance policy, “the endorsement ‘must be read
together, construed, and reconciled with the policy to give effect to the whole.’”
Matsen v. AMCO Ins. Co., 953 N.E.2d 566, 569 (Ind. Ct. App. 2011) (quoting
Stevenson v. Hamilton Mut. Ins. Co., 672 N.E.2d 467, 473 (Ind. Ct. App. 1996),
trans. denied (1997)), trans. denied (2012). “We construe the policy and relevant
endorsements from the perspective of an ordinary policy holder of average
intelligence, and if reasonably intelligent people may interpret the policy’s
language differently, the policy is ambiguous.” Id. (citation and quotation
marks omitted). “However, an ambiguity does not exist merely because the
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parties proffer differing interpretations of the policy language.” Buckeye State
Mut. Ins. Co. v. Carfield, 914 N.E.2d 315, 318 (Ind. Ct. App. 2009), trans. denied
(2010).
[7] If no ambiguity exists, the language of the contract is given its plain and
ordinary meaning. Bradshaw v. Chandler, 916 N.E.2d 163, 166 (Ind. 2009). “An
insurance policy that is unambiguous must be enforced according to its terms,
even those terms that limit an insurer’s liability.” Haag v. Castro, 959 N.E.2d
819, 824 (Ind. 2012) (citation and quotation marks omitted).
[8] We begin our review of the insurance contract here by ascertaining the purpose
and intent of the Businessowners Policy, and specifically Endorsement 54638.
In purchasing the Businessowners Policy, Prudential sought and received
general liability coverage for its real estate sales business located at “703 N.
Harrison Street” in Shelbyville (“Harrison Street Business Office”).
Endorsement 54638 then provides additional liability coverage for the
operations of the real estate business not otherwise provided by the
Businessowners Policy. Indeed, contrary to the Prudential Defendants’
assertion, Endorsement 54638 is an extension of coverage and not an exclusion.
Endorsement 54638 provides additional coverage, although subject to some
limitations, for bodily injury, property damage, personal injury, and advertising
injury “arising out of” “that part of a premises used by [Prudential] for general
office purposes” and “premises listed with [Prudential] for sale or rental.”
Appellant’s App. at 162. In short, the purpose and intent of Endorsement
54638, in part, is for certain coverages to follow the real estate operation outside
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of its already-covered Harrison Street Business Office, to premises listed by
Prudential for sale or rental.
[9] In moving for judgment on the pleadings, the Powerses and the Prudential
Defendants argued that, based upon the declarations pages of the
Businessowners Policy, Endorsement 54638 was limited in its application to
the Harrison Street Business Office, and therefore could not be relied upon to
deny coverage for personal injuries sustained at the Blanchard Street Property.
The declarations pages of the Businessowners Policy contain a summary of the
list of coverage limits as well as a list of applicable forms. The forms are listed
in categories titled “Forms that Apply to All Locations,” “Additional Forms for
This Location,” and “Additional Forms for this Building.” Id. at 91-92.
Endorsement 54638 is listed only under the “Additional Forms for This
Building” category. The only “building” or “location” referenced on the
declarations pages is the address of the Harrison Street Business Office. Thus,
the Powerses and the Prudential Defendants claim that Endorsement 54638 is
inapplicable to the Blanchard Street Property “location” where Gerald was
injured.
[10] The Powerses and the Prudential Defendants assert that if Property-Owners
wished for Endorsement 54638 to apply to a “building” or “location” other
than the Harrison Street Business Office, such as the Blanchard Street Property,
Property-Owners should have included Endorsement 54638 in the list of forms
that apply to “All Locations.” This argument wholly misses the mark. First,
whether a form applies to “All Locations,” “This Location,” or “This Building”
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is irrelevant in this case because there is only one “location” and only one
“building” referenced in this insurance policy: the Harrison Street Business
Office. 3
[11] The category under which Property-Owners has placed Endorsement 54638 on
the declarations pages is of no consequence here. In arguing that Endorsement
54638 is inapplicable to the Blanchard Street Property, the Powerses and the
Prudential Defendants appear to equate the term “location” used on the
declarations pages with the term “premises” used in Endorsement 54638. A
careful reading of the Businessowners Policy indicates that the terms “location”
and “premises” mean very different things in these contexts. As already stated,
there is only one “location” insured by this insurance policy, and that location
is the Harrison Street Business Office. Endorsement 54638 extends additional
coverage to certain “premises,” including “premises listed with [Prudential] for
sale or rental.” Id. at 162. Accordingly, Endorsement 54638 is not limited in its
application to the Harrison Street Business Office. We reject the suggestion
that we should read the unambiguous term “location” as used on the
declarations pages in a vacuum and without reference to the language used in
Endorsement 54638. It is well settled that insurance policy provisions,
including endorsements, must be read together, construed, and reconciled with
the policy to give effect to the whole. Matsen, 953 N.E.2d at 569.
3
Presumably, if Prudential had multiple business offices and/or buildings, the declarations pages would have
had multiple addresses listed as “locations.”
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[12] If we were to read the Businessowners Policy as the Powerses and the
Prudential Defendants suggest, Endorsement 54638 would be a meaningless
provision as it would provide no coverage at all for injuries arising out of
premises listed by Prudential for sale or rental. It is axiomatic that if a
provision is inapplicable to a premises to deny coverage as argued by the
Powerses and the Prudential Defendants, it would also be inapplicable to
provide coverage, meaning that Endorsement 54638 would be an illusory
endorsement. Clearly, a policy endorsement drafted for real estate operations
and meant specifically to cover premises listed for sale or rental would not be
limited in its application to the realty business office. That would render the
endorsement’s coverage meaningless and without effect. Our charge is to
construe the language of a contract so as not to render any words, phrases, or
terms ineffective or meaningless. Thomson Inc. v. Ins. Co. of N. Am., 11 N.E.3d
982, 994 (Ind. Ct. App. 2014), trans. denied (2015).
[13] By its unambiguous terms, the insurance coverage provided by Endorsement
54638 is not limited to the Harrison Street Business Office. Thus, accepting as
true the well-pleaded facts alleged in Property-Owners’ complaint for
declaratory judgment, we cannot say that it is clear from the face of the
complaint that under no circumstances could relief be granted. Accordingly,
judgment on the pleadings against Property-Owners is not warranted. We
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reverse the trial court’s entry of judgment on the pleadings and remand for
further proceedings consistent with this opinion. 4
[14] Reversed and remanded.
Brown, J., and Pyle, J., concur.
4
We conclude only that the coverage provided by Endorsement 54638 is not limited to the Harrison Street
Business Office and that Endorsement 54638 applies and provides coverage, subject to some limitations, to
premises listed by Prudential for sale or rental. We need not and do not reach the question of whether
Endorsement 54638 extends liability coverage for the injuries sustained on the Blanchard Street Property
under the circumstances presented in this case. We also note that in its complaint for declaratory judgment,
in addition to Endorsement 54638, Property-Owners identified additional bases that it claimed could support
the denial of coverage. We make no conclusions regarding those additional bases.
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