Jan 22 2015, 6:11 am
FOR PUBLICATION
ATTORNEYS FOR APPELLANT/ ATTORNEYS FOR APPELLEE
APPELLEE MENARD, INC.: CAPITOL SPECIALTY:
KEVIN C. TYRA SCOTT A. HARKNESS
ELIZABETH H. STEELE CYNTHIA E. LASHER
The Tyra Law Firm, P.C. Norris Choplin Schroeder LLP
Indianapolis, Indiana Indianapolis, Indiana
ATTORNEY FOR APPELLANT
BLUE LINE LP, INC.:
SCOTT L. BARNHART
Keffer Barnhart, LLP
Indianapolis, Indiana
ATTORNEY FOR APPELLANT
ARTHUR BARNARD, III:
ADAM LENKOWSKY
Roberts & Bishop
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
ARTHUR BARNARD III, )
)
Appellant-Plaintiff, )
)
vs. ) No. 49A02-1407-CT-486
)
MENARD, INC., )
)
Appellee-Defendant. )
________________________________________ )
)
MENARD, INC., and BLUE LINE LP, INC., )
)
Appellants-Third-Party-Plaintiffs, )
)
vs. )
)
CAPITOL SPECIALTY INSURANCE CORP., )
)
Appellee-Third-Party-Defendant. )
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable Michael D. Keele, Judge
Cause No. 49D07-1110-CT-39154
January 22, 2015
OPINION–FOR PUBLICATION
BAKER, Judge
Arthur Barnard was allegedly physically attacked by a Blue Line loss prevention
officer outside a Menard store. The loss prevention officer suspected that Barnard had
stolen something from the store. Barnard was injured and incurred medical expenses as a
result of the incident. He filed a complaint against Menard and Blue Line, and Menard
and Blue Line later filed third-party complaints against their insurer, Capitol Specialty
Insurance Corporation (Capitol), invoking the insurer’s duties to defend and indemnify.
The trial court granted summary judgment in favor of Menard on Barnard’s complaint
and in favor of Capitol on the third-party complaints.
We find no error in the summary judgment order in favor of Menard on Barnard’s
complaint. With respect to the third-party complaints against Capitol, we find that it was
2
erroneous to grant summary judgment in favor of Capitol and that, instead, summary
judgment should have been entered in favor of Menard and Blue Line with respect to
Capitol’s duty to defend. Therefore, we affirm in part, reverse in part, and remand for
further proceedings.
FACTS
On March 18, 2010, Barnard went to a Menard’s store located at 7140 South
Emerson Avenue in Indianapolis. Barnard had just been released by a hospital following
surgery. After shopping, Barnard and his fiancée purchased certain items and exited the
store. As they headed for their van in the parking lot, a loss prevention officer allegedly
grabbed Barnard by the arm, slammed him into the van, and threw him on the ground.
The loss prevention officer then forced Barnard back into the store, accusing Barnard of
stealing a hasp worth $1.99. Barnard claims that he was detained in the store for an
unreasonable amount of time, that he was slandered, and that he was injured as a result of
the incident.
The loss prevention officer is employed by Blue Line, which contracted with
Menard to provide security services. The Contract provides that Blue Line’s primary
duties include the prevention of “the loss of merchandise, property and shoplifter
apprehension.” Barnard App. p. 56. The Contract further stipulates that “[n]othing in
this Agreement shall be construed in any manner to create an agency or employer-
employee relationship between Menards and [Blue Line], and it is expressly understood,
acknowledged and agreed that [Blue Line] is an independent contractor.” Id. at 57.
3
Finally, the Contract requires that Blue Line shall “defend, indemnify and hold harmless
Menards, its agents and its employees from any liability, damages, expenses, claims,
demands, actions or causes of action, including attorney fees, arising out of the work
hereunder . . . .” Id. at 58.
Blue Line is insured by Capitol, and Menard is listed as an additional insured on
the relevant policy (the Policy). The Policy provides that Capitol has a duty to defend
Blue Line and Menard against any lawsuit seeking damages for bodily injury, property
damage, and personal and advertising injury. “Personal and advertising injury” is defined
as “false arrest, detention, or imprisonment,” and “[o]ral or written publication in any
manner . . . that slanders or libels a person . . . .” Menard App. p. 80. The Policy also,
however, has an endorsement excluding coverage for assault and battery.
On January 31, 2012, Barnard filed an amended complaint against Menard and
Blue Line.1 In the complaint, Barnard sought damages based on the following grounds:
16. That the Defendants were negligent and as a direct and proximate
result of carelessness and negligence of the Defendants, Plaintiff was
injured.
17. The Defendants, and each of them, were reckless and negligent,
including but [not] limited to the following ways:
a. The employee and/or agent used excessive force in detaining
Plaintiff. The manager of Defendant’s store failed to obtain
immediate medical care for the Plaintiff all in reckless
disregard of Plaintiff’s injuries.
1
Barnard originally filed a pro se complaint on October 7, 2011. He subsequently hired an attorney and
filed the amended complaint by counsel.
4
b. Defendants violated Indiana statutory law by illegally
detaining Plaintiff for a period in excess of that allowed by
statute.
c. The use of unnecessary excessive force upon the person of
the Plaintiff.
d. Plaintiff was battered by Menard’s employee and/or agent.
18. That Plaintiff was required to employ medical professionals to treat
his physical and psychological injuries[,] incurred medical expenses
for the treatment of his injuries and sustained great pain and
suffering.
Barnard App. p. 22. In November 2012, Menard and Blue Line each filed a third-party
complaint against Capitol, seeking to enforce the duty to defend and indemnify included
in the Policy.
On December 10, 2013, Menard filed a motion for summary judgment on
Barnard’s complaint. Menard contended that because Blue Line was an independent
contractor, Menard owed no duty of care to Barnard. The trial court granted Menard’s
summary judgment motion on June 12, 2014, finding as follows:
The actions allegedly taken by [Blue Line’s] loss-prevention officer
were not reasonably foreseeable by Menard, so Menard did not breach
any duty owed to [Barnard] as a business invitee on the premises and
[Blue Line] was an independent contractor of Menard as a matter of
law, and a principal is not liable for the negligence of its independent
contractors.
Id. at 14.2 Barnard now appeals.
2
Menard had also filed a cross-claim against Blue Line, and the trial court ordered that summary
judgment on that cross-claim be entered in Menard’s favor, directing that Blue Line “shall defend,
indemnify and hold harmless” Menard for the claims in Barnard’s complaint. Barnard App. p. 15. Blue
Line has not appealed that order.
5
With respect to Menard’s and Blue Line’s third-party complaints against Capitol,
Menard, Blue Line, and Capitol each filed cross-motions for summary judgment. Capitol
argued that the Assault and Battery Exclusion excuse it from having to defend and
indemnify either Menard or Blue Line. The trial court granted Capitol’s summary
judgment motion on June 12, 2014, finding as follows:
The Court finds the designated evidence shows all claims arise out
of and/or relate to an assault or battery and that no other party has
designated any facts to the contrary. The Court further finds that
[the assault and battery exclusion] expressly and unambiguously
states that Capitol has no duty to defend or indemnify any insured
against any claim or suit for injury arising out of or relating to an
assault or battery.
Menard App. p. 430. Consequently, the trial court denied Menard’s and Blue Line’s
motions for summary judgment and entered a declaratory judgment that Capitol owed no
coverage to Menard, Blue Line, or Barnard. Menard and Blue Line now appeal.
DISCUSSION AND DECISION
We apply a de novo standard of review to a trial court’s order granting or denying
summary judgment. Alldredge v. Good Samaritan Home, Inc., 9 N.E.3d 1257, 1259 (Ind.
2014). Therefore, we apply the same standard as the trial court: summary judgment is
appropriate only where the movant demonstrates there is no genuine issue of material fact
and that he is entitled to judgment as a matter of law. Id. We resolve all questions and
view all evidence in the light most favorable to the non-movant, so as to not improperly
deny him his day in court. Id.
6
I. Barnard vs. Menard
Barnard argues that the trial court erroneously concluded that Menard had no
enforceable duty to Barnard. First, Barnard argues that Menard owed him a general duty
of reasonable care as a business invitee. Second, Barnard argues that Blue Line was an
employee, rather than an independent contractor, of Menard, such that liability attaches to
Menard via the doctrine of respondeat superior. Finally, Barnard contends that even if
Blue Line was merely an independent contractor, Menard had a duty to protect Barnard
from the harm caused by an independent contractor.
A. Duty of Reasonable Care
First, Barnard argues that Menard owed a duty of reasonable care to him as a
business invitee. Menard concedes that it owes a duty of care to all of its business
invitees. And indeed, it is well established that “‘[p]roprietors owe a duty to their
business invitees to use reasonable care to protect them from injury caused by other
patrons and guests on their premises, including providing adequate staff to police and
control disorderly conduct.’” Paragon Family Restaurant v. Bartolini, 799 N.E.2d 1048,
1052 (Ind. 2003) (quoting Muex v. Hindel Bowling Lanes, Inc., 596 N.E.2d 263, 266
(Ind. Ct. App. 1992)). This duty of care, however, “only extends to harm from the
conduct of third persons that, under the facts of a particular case, is reasonably
foreseeable to the proprietor.” Id. Menard contends that the conduct of the Blue Line
loss prevention officer in this case was not reasonably foreseeable. Therefore, Menard
7
contends that the duty of care it owed to Barnard did not extend to harm caused by the
loss prevention officer.
The foreseeability component of duty (as opposed to the foreseeability component
of proximate cause) “requires a . . . general analysis of the broad type of plaintiff and
harm involved, without regard to the facts of the actual occurrence.” Goldsberry v.
Grubbs, 672 N.E.2d 475, 479 (Ind. Ct. App. 1996). In determining the question of
Menard’s duty, therefore, we will not consider the specific facts of Barnard’s case. As a
general matter, we do not believe that it is reasonably foreseeable to a business entity that
an independently contracted loss prevention officer would physically attack a customer,
causing injury to that customer.
To the extent that Barnard contends that the specific facts herein are relevant, we
merely note that the only evidence in the record regarding Blue Line’s previous history
with Menard establishes that “[o]ther than this incident, there has never been an injury to
a patron requiring medical treatment as a result of a Blue Line [] employee’s actions at
this or any other Menard location.” Barnard App. p. 150. Therefore, the undisputed
evidence in the record would lead us to the same conclusion. As a matter of law,
therefore, we find that Menard’s general duty of care owed to Barnard did not extend to
the actions of Blue Line’s loss prevention officer.
B. Respondeat Superior
Barnard next argues that Menard is liable under the doctrine of respondeat
superior. Under that doctrine, liability may be imposed on an employer for acts
8
committed by an employee that are within his scope of employment. Barnett v. Clark,
889 N.E.2d 281, 283 (Ind. 2008). Generally, a principal is not liable for the acts of
independent contractors. Gwinn v. Harry J. Kloeppel & Assocs., Inc., 9 N.E.3d 687, 691
(Ind. Ct. App. 2014). The rationale behind this rule is that a “‘general contractor
typically exercises little, if any, control over the means or manner of the work of its
subcontractors, and requires only that the completed work meet the specifications of the
owner in its contract with the general contractor.’” Shawnee Constr. & Eng’g, Inc. v.
Stanley, 962 N.E.2d 76, 81 (Ind. Ct. App. 2011) (quoting Harris v. Kettelhut Constr.,
Inc., 468 N.E.2d 1069, 1072 (Ind. Ct. App. 1984)).
Whether one acts as an employee or an independent contractor is generally a
question of fact, but if the underlying facts are undisputed, then the court may properly
determine a worker’s—or corporate entity’s—classification as a matter of law. Moberly
v. Day, 757 N.E.2d 1007, 1009 (Ind. 2001). Here, the underlying facts regarding the
nature of the business relationship between Menard and Blue Line are undisputed.
To distinguish between employees and independent contractors, we apply a ten-
factor analysis:
“(a) the extent of control which, by the agreement, the master may
exercise over the details of the work;
(b) whether or not the one employed is engaged in a distinct
occupation or business;
(c) the kind of occupation, with reference to whether, in the locality,
the work is usually done under the direction of the employer or
by a specialist without supervision;
9
(d) the skill required in the particular occupation;
(e) whether the employer or the workman supplies the
instrumentalities, tools, and the place of work for the person
doing the work;
(f) the length of time for which the person is employed;
(g) the method of payment, whether by the time or by the job;
(h) whether or not the work is a part of the regular business of the
employer;
(i) whether or not the parties believe they are creating the relation of
master and servant; and
(j) whether the principal is or is not in business.”
Id. at 1010 (quoting Restatement (Second) of Agency § 220(2) (1958)). We consider all
factors, and no single factor is dispositive. Id.
1. Extent of Control Over Details of the Work
As our Supreme Court has observed, an employee is defined as one “‘employed to
perform services in the affairs of another and who with respect to the physical conduct in
the performance of the services is subject to the other’s control or right to control.’” Id.
(quoting Restatement (Second) of Agency § 220(1) (1958)). Here, the record reveals that
Blue Line was in charge of the manner in which its work was to be done, unless Menard
notified Blue Line in writing or orally. If Menard notified Blue Line of new
requirements, Blue Line would have twenty-four hours to meet those new requirements.
Barnard App. p. 56. Formal notification and a twenty-four-hour time period in which to
make changes is more consistent with an independent contractor classification than an
employee classification. Moreover, Menard only has the right to request changes in what
10
Blue Line was responsible for doing, not in how those responsibilities were to be carried
out. All of these rights are more analogous to that of an independent contractor than that
of an employee. Therefore, we find that this factor weighs in favor of an independent
contractor classification.
2 and 3. Distinct Occupation or Business, Kind of Occupation
No evidence was presented regarding these factors.
4. Skill Required
This factor relates to a general assumption that “[u]nskilled labor is usually
performed by employees, while skilled labor is often performed by independent
contractors.” Walker v. Martin, 887 N.E.2d 125, 132 (Ind. Ct. App. 2008). Here, the
Contract refers to training and establishes Blue Line as an expert in loss prevention:
[Blue Line] warrants that any of its employees furnished to Menards
pursuant to this contract . . . shall have been duly trained by [Blue
Line] and known by [Blue Line] to perform the services of a loss
prevention officer in a professional manner adequate in the
occupational community but of no less quality and standards that are
generally in existence in the industry. [Blue Line] is the expert in
this field and Menards is relying upon [Blue Line’s] expertise to
provide competent service and to follow the law of the state in which
the services are being performed.
Id. at 57. We find that this factor weighs in favor of an independent contractor
classification.
5. Supplier of Equipment, Tools, and Work Location
Our Supreme Court notes that “it is particularly significant if an employer
provides tools or instrumentalities of substantial value, and the same would presumably
11
be true if the workman is the provider.” Moberly, 757 N.E.2d at 1012. Here, the record
reveals that aside from the workplace itself, Menard did not supply any materials to Blue
Line. In other words, Blue Line supplied the uniforms as well as whatever accessories
the loss prevention officers required. Neither provided tools or instrumentalities of
substantial value. We find that this factor is neutral.
6. Length of Employment
“[A] long-term relationship can indicate employee status . . . [especially]
‘employment over a considerable period of time with regular hours.’” Id. (quoting
Restatement (Second) of Agency § 220(2)). Here, the Contract had been in place since
2007, there was no end date, and the loss prevention services were provided by Blue Line
on a regular and consistent basis. We find that this factor weighs in favor of an employee
classification.
7. Method of Payment
“Sporadic payments in lump sum amounts for each job performed, instead of
payments by the hour or on a weekly basis are more typical of an independent contractor
than an employee.” Walker, 887 N.E.2d at 133. Here, the Contract provided that
Menard would pay Blue Line by the hour for the work done by the loss prevention
officers. This factor weighs in favor of an employee classification.
8. Regular Business of Employer
This factor considers whether or not the work at issue is a part of the regular
business of the employer. Moberly, 757 N.E.2d at 1010. Here, Blue Line provided
12
security services at Menard’s stores, while Menard itself was in the business of selling
home improvement products. Security is distinct from sales, but is a necessary part of the
sales business. Consequently, this factor is neutral. See Guillaume v. Hall Farms, Inc.,
914 N.E.2d 784, 790 (Ind. Ct. App. 2009) (finding that a company in the business of
buying and distributing melons did not engage in the business of harvesting melons but
that harvesting was a necessary part of its business, concluding that this factor was
neutral in the independent contractor/employee analysis).
9. Belief of the Parties
It is undisputed that Blue Line and Menard believed that they had an independent
contractor relationship. The Contract explicitly states as much. Consequently, this factor
weighs in favor of an independent contractor classification.
10. Whether the Principal is in Business
It is undisputed that Menard is a business that sells home improvement products.
This factor favors an employee classification.
Our Supreme Court notes that the “leading factor” in this analysis is the first
factor—control. Moberly, 757 N.E.2d at 1013. Here, this factor weighs in favor of an
independent contractor classification. Of the remaining factors, two weigh in favor of an
independent contractor classification, three weigh in favor of an employee classification,
and four are neutral or without evidentiary support in the record. While this is
undeniably a close call, we find that the facts in the record support the trial court’s
13
conclusion that Blue Line was an independent contractor. Consequently, liability does
not attach to Menard via the doctrine of respondeat superior.
C. Duty to Protect From Independent Contractor
Finally, Barnard argues that even if Blue Line was an independent contractor,
Menard still owed him a duty to protect him from the actions of Blue Line employees.
There are five circumstances in which a principle can be liable for the negligence of an
independent contractor: (1) where the contract requires the performance of inherently
dangerous work; (2) where the principal is by law or contract charged with performing
the specific duty; (3) where the act creates a nuisance; (4) where the act will probably
cause injury to others unless due precaution is taken; and (5) where the act is illegal.
Bagley v. Insight Commc’ns Co., 658 N.E.2d 584, 586 (Ind. 1995).
On appeal, Barnard argues that the fourth exception applies. This argument,
however, circles back to the foreseeability issue we considered above. See id. at 588
(noting that “[t]he essence of this exception is the foreseeability of the peculiar risk
involved in the work and of the need for special precautions”). As this Court has
explained, under this exception, “liability is established only when, at the time of
contracting, the employer should have foreseen that injury to others was ‘likely to
happen.’” Red Roof Inns, Inc. v. Purvis, 691 N.E.2d 1341, 1345-46 (Ind. Ct. App. 1999).
We have already found herein that as a general matter, we do not believe that it is
reasonably foreseeable to a business entity that an independently contracted loss
prevention officer would physically attack a customer, causing injury to that customer.
14
And in this context, the standard is even more rigorous: “[t]he contractee of an
independent contractor may always anticipate that if the contractor is negligent toward
third persons, some harm to those persons may result. More than the possibility of harm,
however, is required; a plaintiff must show a probability of such harm.” McDaniel v.
Business Inv. Group, Ltd., 709 N.E.2d 17, 22 (Ind. Ct. App. 1999) (internal citations
omitted) (emphases original). As noted above, the only evidence in the record specific to
Blue Line establishes that prior to this incident, there were no incidents between a Blue
Line employee and a Menard patron causing injury to the patron that required medical
treatment. Under these circumstances, we do not find any applicable exception to the
general rule that a principal is not liable for the negligence of its independent contractors.3
Consequently, we affirm the trial court’s order granting summary judgment in favor of
Menard on Barnard’s claims against it.
II. Menard and Blue Line vs. Capitol
Next, Menard and Blue Line argue that the trial court erred by granting summary
judgment in favor of Capitol on their respective third-party complaints against Capitol.
The trial court found that the Policy’s assault and battery exclusion applies such that
Capitol does not owe a duty to defend and/or indemnify either Menard or Blue Line for
this incident.
3
Barnard directs our attention to an Ohio case involving armed security guards. Pusey v. Bator, 762
N.E.2d 968, 974 (Ohio 2002). We find that case factually distinguishable, inasmuch as there is no
evidence whatsoever showing that the Blue Line loss prevention officers are armed. The addition of a
firearm to the equation could potentially alter our analysis, but here, there is no evidence suggesting that
firearms were involved. Therefore, this argument is unavailing.
15
When the language of an insurance contract is clear and unambiguous, it should be
given its plain and ordinary meaning. Eli Lilly & Co. v. Home Ins. Co., 482 N.E.2d 467,
470 (Ind. 1985). An ambiguity—where a provision is susceptible to more than one
interpretation and reasonable persons would differ as to its meaning—is construed strictly
against the insurer. Bosecker v. Westfield Ins. Co., 724 N.E.2d 241, 244 (Ind. 2000).
The failure to define a term in an insurance policy does not necessarily render it
ambiguous. Wagner v. Yates, 912 N.E.2d 805, 810 (Ind. 2009).
The Policy’s assault and battery exclusion reads as follows:
We have no duty to defend or indemnify any insured or any other person
against any claim or “suit” for “bodily injury,” “property damage,”
“personal injury,” or “advertising injury” arising out of or related to any:
A. Assault and/or battery committed by any insured, any employee
of any insured or any other person, whether or not caused by or
at the direction of any insured, or arising because of the
negligence of any insured; or
B. Assault and/or battery resulting from the negligent hiring,
retention, training, supervision or control of any employee of
the insured; or
C. The failure to prevent or suppress an assault and battery by any
person; or
D. The failure to provide an environment safe from assault and
battery, including but not limited to the failure to maintain
security; or
E. The use of force to protect persons or property.
We have no duty to defend any insured concerning any claim falling within
the provisions of this exclusion.
For the purposes of this exclusion, assault and/or battery includes any
physical altercation.
16
Id. at 94.
First, Menard and Blue Line argue that the Policy is ambiguous because it does
not define “physical altercation.” We cannot agree with this assertion. Initially, we note
that the Policy does not imply that “physical altercation” is an all-inclusive definition of
assault and/or battery. Instead, “physical altercation” is merely included within the terms
“assault and/or battery.” What we must determine, therefore, is whether “assault and/or
battery” is ambiguous. We find that it is not. Both of these terms are frequently and
readily used in a legal context. Specifically relevant in this case is the term “battery,”
which is defined consistently in case law, the Restatement (Second) of Torts, and Black’s
Law Dictionary. Across the board, “battery” is defined as an intentional and offensive
touching of another person. See, e.g., Everhart v. Founders Ins. Co., 993 N.E.2d 1170,
1175 (Ind. Ct. App. 2013); Restatement (Second) of Torts § 13 (1965); Black’s Law
Dictionary 146 (7th ed. 1999).
In this case, Barnard provides the following description of part of the incident with
the Blue Line loss prevention officer:
The security guard grabbed me by my arm, slung me around after
slamming me onto my van, and then threw me on the ground with
his forearm to my throat . . . . He then wrapped me up and forced
me into the store where we were waiting for the manager.
Menard App. p. 34. Whether or not this constituted a physical altercation, it clearly
constituted a battery within the widely-accepted definition of the term. We decline to
find the assault and battery exclusion ambiguous.
17
That conclusion, however, does not end our inquiry. In his complaint, Barnard
raises one count of negligence, with several alternate theories of liability:
11. After being confined and taken back in the store, Plaintiff was
slandered and falsely accused of the theft of a bright brass hasp
valued at One Dollar and Ninety-Nine Cents ($1.99).
***
17. The Defendants, and each of them, were reckless and negligent,
including but [not] limited to the following ways:
a. The employee and/or agent used excessive force in detaining
Plaintiff. The manager of Defendant’s store failed to obtain
immediate medical care for the Plaintiff all in reckless
disregard of Plaintiff’s injuries.
b. Defendants violated Indiana statutory law by illegally
detaining Plaintiff for a period in excess of that allowed by
statute.
c. The use of unnecessary excessive force upon the person of
the Plaintiff.
d. Plaintiff was battered by Menard’s employee and/or agent.
Menard App. p. 10. While Capitol does not have the duty to defend or indemnify
Menard or Blue Line with respect to the allegations of battery, there is no such exclusion
applied to his claims of false imprisonment or slander.
Regarding Capitol’s duty to defend, it is well established that “an insurer’s duty to
defend its insured is broader than its duty to indemnify.” Liberty Mut. Ins. Co. v. OSI
Indus., Inc., 831 N.E.2d 192, 198 (Ind. Ct. App. 2005). We will “determine the insurer’s
duty to defend from the allegations contained within the complaint and from those facts
known or ascertainable by the insurer after reasonable investigation.” Id. If a claim is
18
clearly excluded under the policy, then no defense is required, but “[t]here is no question
that if the policy is otherwise applicable, the insurance company is required to defend
even though it may not be responsible for all of the damages assessed . . . .”
Transamerica Ins. Servs. v. Kopko, 570 N.E.2d 1283, 1285 (Ind. 1991).
In this case, the Policy is “otherwise applicable” apart from the battery. We do not
agree with Capitol’s assertion that the entire incident “arose out of” or was “related to”
the battery. What occurred inside the store was separate from and unrelated to what
occurred outside in the parking lot. In other words, we do not find this to be one
continuous, ongoing incident that is categorically excluded from coverage. Because the
Policy applies to Barnard’s allegations related to false imprisonment and slander, we find
that Capitol has the duty to defend Menard and Blue Line. Whether Capitol is
responsible for a portion of the damages, if any, will have to be determined at a later date.
We find that it was error to grant summary judgment and a declaratory judgment to
Capitol. Instead, summary judgment on the issue of duty to defend should have been
granted to Menard and Blue Line.
Capitol argues that regardless of the battery exclusion, all of the conduct herein is
excluded because it stems from “[t]he use of force to protect persons or property,” which
is another excluded category of events. Menard App. p. 94. At the risk of stating the
obvious, Blue Line provides loss prevention services. The sole purpose of Blue Line’s
business—for which Menard contracted, and which Capitol insured—is to protect the
store’s property. To interpret this provision in the way suggested by Capitol would
19
render the entirety of the Policy illusory. Inasmuch as illusory insurance contracts are
against public policy, we decline to apply the provision as suggested by Capitol. See
Meridian Mut. Ins. Co. v. Richie, 544 N.E.2d 488, 489 (Ind. 1989) (holding that if an
insured could not have benefited from his insurance coverage under any set of
circumstances, the policy is illusory and in violation of public policy).
Finally, Capitol argues that the specific Menard location at issue in this incident
was not covered by the Policy. The Policy lists Menard, Inc., as an additional insured
party. Menard App. p. 221. On the Additional Interest Schedule, it lists the address of
Menard as its corporate headquarters in Eau Claire, Wisconsin. Id. On the Additional
Insured Endorsement, the Policy refers to the Additional Interest Schedule and lists the
location of covered operations as 2302 East Troy Street, Indianapolis. Id. at 249. The
East Troy Street address is Blue Line’s address. According to Capitol, the East Troy
address is the only location covered by the Policy.
We cannot countenance such an overly narrow interpretation of an insurance
policy. The Policy states that Blue Line is covered for “security guard service at Menards
stores.” Id. at 211 (emphasis added). This language, as well as the contract as a whole,
clearly indicates that the intent behind the Policy was to provide coverage to Blue Line
employees who are working at any and all Menard stores. That the Policy notes only the
Blue Line address as a covered premises is, at most, an inadvertent error, and at least, a
way to use shorthand and avoid listing each and every Menard store. We decline to find
20
that the Policy applies only to one singular Menard location, as such an interpretation
would, again, render the Policy virtually illusory.
CONCLUSION
In sum, we find as follows: (1) the trial court did not err by granting summary
judgment in favor of Menard on Barnard’s claims against it; (2) it was error to grant
summary judgment and a declaratory judgment in favor of Capitol on Menard’s and Blue
Line’s third-party complaints against it; and (3) summary judgment should have been
granted in favor of Menard and Blue Line on the issue of Capitol’s duty to defend, and
Menard and Blue Line are entitled to reimbursement for the defense costs they have
incurred since the date they tendered the defense to Capitol.
The judgment of the trial court is affirmed in part, reversed in part, and remanded
for further proceedings.
MAY, J., and BARNES, J., concur.
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