Court of Appeals Enforces Liability Exclusion for Claim by Minor Child in the “Care” of Named Insured

Michael R. Giordano

Auto-Owners Ins. Co. v. Shroyer 2019 WL 2518757 (Ind. Ct. App. 2019)

A mother of two sons began living with the named insured boyfriend. One day, the boyfriend was moving a skid loader out of his barn when he accidentally drove over one of the son’s battery-operated four-wheeler, resulting in personal injuries to the young boy. As a result, the boy’s mother, on his behalf, brought a liability lawsuit against the boyfriend.

The boyfriend submitted a claim to his insurance company seeking a defense and indemnity under the liability policy for the young boy’s claim. The insurer denied the claim by contending that coverage was excluded for any bodily injury claims presented by “any insured” under the policy. The policy defined an “insured” as “any other person under the age of 21 residing with [the named insured] who is in [the named insured’s] care…” The term “care” was not defined under the policy.

After the insurer was brought into the lawsuit on a third-party claim, the insurer filed a summary judgment motion asserting that the exclusion applied. The trial court found an issue of fact existed and denied the summary judgment motion. An interlocutory appeal followed.

The insurer contended that the evidence demonstrated that the boy’s mother “was not employed, did not pay rent to the named insured, and did not contribute to any household expenses or utilities.” The boyfriend advised the mother that she did not have to pay anything to live at his home, and he took care of the household expenses, including purchasing diapers and other necessities for the two sons. The boyfriend contended that if the sons needed to be disciplined, the only thing he might do is to “sit them in a timeout chair.”

On behalf of the son, the mother designated her own evidence to contend that the boyfriend was never involved in any of the decision-making with respect to the raising of children. She further claimed that when she had to run an errand, she always had the boys with her, and she took care of discipline. She also claimed that she provided food for the children through food stamps.

The Court of Appeals reversed and enforced the exclusion by finding that no coverage existed. The Court relied upon an Indiana Supreme Court Decision (Holiday Hospitality Franchising, Inc. v. AMCO Ins. Co., 983 N.E.2d 574 (Ind. 2013)), which applied a dictionary definition of “care” as “[t]he function of watching, guarding or overseeing.” Id. at 579 (citing Webster’s II New College Dictionary 168 (1995)). As a result, the appellate court concluded that applying the definition of an “insured” to the undisputed facts demonstrated that the son, three years old at the time, was under the age of 21 and residing with the boyfriend, and that both the mother and young son “lived” with the boyfriend at the time of the accident. Consequently, “by providing a place to live, transportation, financial support, and other necessities, [the boyfriend] engaged in ‘the function of watching, guarding, or overseeing’ the various needs and overall wellbeing of [the young boy].” Shroyer, slip opinion, p. 10 of 11. Likewise, the Court rejected the mother’s contention that she was “solely responsible” concerning the care of the young son. The Court further mentioned that the son can be in the care of both his mother and the boyfriend at the same time.

This case appears to be a clear and appropriate application of a policy exclusion. Despite the efforts to create an issue of fact on whether the boy was in the “care” of the named insured, he clearly was living and being provided care by the boyfriend.