                                                                                 FILED
                                                                             Nov 28 2018, 9:06 am

                                                                                 CLERK
                                                                             Indiana Supreme Court
                                                                                Court of Appeals
                                                                                  and Tax Court




      ATTORNEY FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
      Lewis S. Wooton                                           Mark K. Phillips
      Wooton Hoy, LLC                                           Michael K. Phillips
      Greenfield, Indiana                                       Phillips and Phillips, P.C.
                                                                Boonville, Indiana



                                                  IN THE
          COURT OF APPEALS OF INDIANA

      United Farm Family Mutual                                 November 28, 2018
      Insurance Company,                                        Court of Appeals Case No.
      Appellant-Plaintiff,                                      18A-CT-515
                                                                Appeal from the Perry Circuit
              v.                                                Court
                                                                The Honorable Lucy Goffinet,
      Stacy B. Matheny, Earl R.                                 Judge
      Matheny, and the Estate of                                Trial Court Cause No.
      Phillip Preston Chase by and                              62C01-1702-CT-99
      through Ana Marie Chase,
      Personal Representative of the
      Estate of Phillip Preston Chase,
      Appellees-Defendants



      May, Judge.


[1]   United Farm Family Mutual Insurance Company (“United”) appeals the trial

      court’s denial of its motion for summary judgment. United contends the trial


      Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018                           Page 1 of 17
      court’s conclusion Stacy Matheny (“Stacy”) and Earl Matheny (“Earl”) lived in

      separate residences was in error. We reverse and remand with instructions.



                            Facts and Procedural History                                 1




[2]   Stacy is Earl’s son. Stacy lives in an apartment on the second floor of Earl’s

      house. Stacy has lived under the same roof as his father since approximately

      2000, excepting some time Stacy spent in prison. While Stacy was imprisoned

      and after Earl’s wife died, Earl closed off access between the upstairs and

      downstairs of his home and rented the second floor to other people as an

      apartment. Thereafter, access to the upstairs apartment was via two separate

      entryways at the front and the back of the house. The upstairs apartment

      consisted of two bedrooms, a living room, and space for a kitchen; however, no

      appliances were ever installed to make the kitchen area functional for meal

      preparation.


[3]   To gain access to the downstairs where Earl lived, one must enter from outside

      and have a key. Stacy and his siblings all had keys to the part of the house

      where Earl lived. Stacy usually ate breakfast and lunch with Earl in Earl’s

      living area. The two men also typically ate dinner together. Stacy was




      1
       We heard oral argument on this matter on October 29, 2018, at South Dearborn High School in Aurora,
      Indiana. We commend counsel for their oral advocacy and for participating in the post-argument discussion
      with the audience. We especially thank the students and school personnel of Dearborn High School for their
      gracious hospitality and thoughtful post-argument questions.

      Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018                          Page 2 of 17
      unemployed and did not have a driver’s license. Earl paid Stacy’s living

      expenses, did not collect rent from him, and transported him on errands.


[4]   Earl had several long guns and a handgun. When Stacy was released from

      prison, Earl thought Stacy was not allowed to live in a house with guns. Earl

      stored his long guns off-site but kept his handgun with him for personal

      protection. Earl kept the gun under his pillow and took it with him in a bag

      when he travelled.


[5]   Earl had three mobile homes that he rented to other people. Pete Paris rented

      one of the homes. Phillip Chase frequently visited Paris; however, both Earl

      and Stacy had told Chase he was not welcome on the property. Earl and Stacy

      did not want Chase there because Chase allegedly manufactured drugs on the

      property.


[6]   On March 14, 2016, Earl and Stacy were headed into town when Earl noticed

      Paris had accumulated more than thirty bags of trash at the back of the mobile

      home. Earl and Stacy stopped so Earl could tell Paris to clean it up. When

      Earl pulled up to the mobile home, Stacy noted Chase’s car was beside the

      home. Paris came outside, and Stacy told him to have Chase come out to talk.

      As they were waiting for Chase, Earl was worried the men would fight. When

      Chase came out, he and Stacy moved toward the back of Earl’s truck to talk.

      Stacy shot Chase in the head with Earl’s handgun. Chase died. Earl did not

      know when or how Stacy obtained his gun.




      Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018   Page 3 of 17
[7]   On May 13, 2016, Chase’s Estate (“Estate”) sued Stacy and Earl for wrongful

      death alleging Stacy had “knowingly or intentionally sho[]t” Chase, (App. Vol.

      II at 14), and Earl had been negligent in storing and safe-keeping the handgun

      and in not controlling his son when a special relationship existed between the

      men. This special relationship, the Estate alleged, arose from the fact Earl

      knew Stacy had a history of violent and criminal activity, had been in prison for

      shooting someone, had an “emotional and/or mental disturbance,” (id. at 15),

      and was prohibited from owning or using a handgun because he is a convicted

      felon.


[8]   Earl had homeowner’s insurance with United, and United represented Earl in

      the negligence claim; however, on February 13, 2017, United filed a complaint

      for declaratory judgment alleging it was not obligated to defend or indemnify

      Earl or Stacy in the wrongful death suit because the policy included an

      exclusion for damages that were the result of a criminal act.


[9]   Earl’s insurance policy with United stated:


               If a claim is made or a suit is brought against an “insured” for
               damages because of “bodily injury” or “property damage”
               caused by an “occurrence” to which this coverage applies, we
               will:


                       1. Pay up to our limit of liability for the damages for
                          which the “insured” is legally liable. Damages include
                          prejudgment interest awarded against the “insured”;
                          and



      Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018        Page 4 of 17
                        2. Provide a defense at our expense by counsel of our
                           choice, even if the suit is groundless, false or
                           fraudulent. We may investigate and settle any claim or
                           suit that we decide is appropriate. Our duty to settle or
                           defend ends when the amount we pay for damages
                           resulting from the “occurrence” equals our limit of
                           liability.


       (Id. at 49.)


[10]   The policy contains the following pertinent definitions:


               In this policy, “you” and “your” refer to the “named insured”
               shown in the Declarations and the spouse if a resident of the
               same household. “We,” “us” and “our” refer to the Company
               providing this insurance. In addition, certain words and phrases
               are defined as follows:


                        1. “Bodily injury” means bodily harm, sickness or
                           disease, including required care, loss of services and
                           death that results.


                                                            *****


                        3. “Insured” means you and residents of your household
                           who are:


                                  a. Your relatives; or


                                  b. Other persons under the age of 21 and in the
                                     care of any person named above.


                                                            *****

       Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018         Page 5 of 17
                        4. “Insured location” means:


                                 a. The “residence premises”;


                                 b. The part of other premises, other structures and
                                    grounds used by you as a residence and:


                                              (1) Which is shown in the Declarations; or


                                              (2) Which is acquired by you during the
                                              policy period for your use as a residence;


                                                            *****


                                 h. Any part of a premises occasionally rented to an
                                    “insured” for other than “business” use.


                        5. “Occurrence” means an accident, including continuous
                           or repeated exposure to substantially the same general
                           harmful conditions, which results, during the policy
                           period, in:


                                 a. “Bodily injury”; or


                                 b. “Property damage.”


       (Id. at 37.)


[11]   The policy also includes exclusions that limit coverage in certain circumstances:


                            We do not pay for loss to property covered by this
                            policy, “bodily injury” or “property damage” intended

       Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018                Page 6 of 17
                       by, or which may reasonably be expected to result
                       from, the intentional or criminal acts or omissions of
                       any “insured.” This exclusion applies even if:


                            (1) Such “insured” lacks the mental capacity to
                            govern his or her conduct;


                            (2) Such loss, “bodily injury” or “property damage”
                            is of a different kind or degree than intended or
                            reasonably expected;


                            (3) Such loss, “bodily injury” or “property damage”
                            is sustained by a different person than intended or
                            reasonably expected; or


                            (4) Such loss or “property damage” is caused by or
                            results from an intentional or criminal act of any
                            person to whom an “insured” has rented, leased,
                            loaned or entrusted the property, unless the
                            “insured” has no knowledge of or reason to suspect
                            such intentional or criminal activity.


                  This exclusion applies regardless of whether or not such
                  “insured” is actually charged with, or convicted of, any
                  crime.


(Id. at 52.) 2




2
 United’s brief indicates this exclusion is in Section II, number 1, subpart “o”; however, at the citation
United provides, “Appellant’s App. Vol. 2, p. 52,” (Br. of Appellant at 9), the exclusion listed is in Section II,
number 1, subpart “n.” We believe this to be a scrivener’s error.

Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018                                 Page 7 of 17
[12]   On September 8, 2017, United filed a motion for summary judgment, claiming

       that because Stacy, as a relative residing in Earl’s household, was an insured

       party who intentionally shot Chase, the damages claimed by the Estate were

       excluded from coverage. The Estate filed a response and objected, alleging

       that, because Stacy was not a resident of Earl’s household, coverage for Earl

       was not excluded. On January 9, 2018, the trial court denied United’s motion

       for summary judgment, stating:


               COMES NOW THE COURT after review of the Motion for
               Summary Judgment filed by the Plaintiff’s [sic], after review of
               testimony and exhibits presented at hearing on this motion, after
               review of submissions filed by the parties, and the court being
               duly advised in the premises now FINDS as follows:


                        1. The Plaintiff’s [sic] issued a home insurance policy to
                        Defendant, Earl R. Matheny.


                        2. Defendant, Stacy B. Matheny, is the adult son of
                        Defendant, Earl R. Matheny.


                        3. Defendant, Stacy B. Matheny, was not listed as an
                        insured party under the home insurance policy that was
                        issued to Defendant Earl R. Matheny by the Plaintiff’s
                        [sic].


                        4. The Defendant, Earl R. Matheny, has repeatedly stated
                        that he lives alone.


                        5. Testimony revealed that the Defendant, Stacy B.
                        Matheny, lived in his own apartment alone.


       Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018          Page 8 of 17
                 6. Testimony revealed that the apartment of Defendant,
                 Stacy B. Matheny, had no access to the home of
                 Defendant, Earl R. Matheny.


                 7. Testimony revealed that the only access Defendant,
                 Stacy B. Matheny, had to the home of Defendant, Earl R.
                 Matheny, was through a locked door.


                 8. Testimony revealed that the apartment in which
                 Defendant, Stacy B. Matheny, had been living on March
                 14, 2016 had previously been rented to third parties and
                 had not been used as living quarters by Defendant, Earl R.
                 Matheny, for many years.


                 9. The apartment of the Defendant, Stacy B. Matheny,
                 was sealed off from the home of Defendant, Earl R.
                 Matheny.


                 10. The apartment of the Defendant, Stacy B. Matheny,
                 had its own outside entrance separate from that of the
                 Defendant, Earl R. Matheny.


        THE COURT NOW CONCLUDES AS FOLLOWS:


                 1. The homeowner’s policy issued to the Defendant, Earl
                 R. Matheny, listed only the Defendant, Earl R. Matheny,
                 as an insured party.


                 2. The Defendant, Earl R. Matheny, lived separate from
                 the Defendant, Stacy B. Matheny[,] in separate living
                 quarters.


                 3. The parties intended to live separately.


Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018       Page 9 of 17
                        4. The Plaintiff’s Motion for Summary Judgment should
                        be denied.


               IT IS THE ORDER OF THIS COURT that Plaintiff’s Motion
               for Summary Judgment is DENIED.


       (Appealed Order at 1-2.) United filed a motion requesting certification of that

       order for interlocutory appeal. The trial court granted that motion, and we

       accepted jurisdiction.



                                  Discussion and Decision
[13]   We review summary judgment using the same standard as the trial court:

       summary judgment is appropriate only where the designated evidence shows

       there is no genuine issue of material fact and the moving party is entitled to

       judgment as a matter of law. Rogers v. Martin, 63 N.E.3d 316, 320 (Ind. 2016).

       All facts and reasonable inferences are construed in favor of the non-moving

       party. City of Beech Grove v. Beloat, 50 N.E.3d 135, 137 (Ind. 2016). Where the

       challenge to summary judgment raises questions of law, we review them de

       novo. Rogers, 63 N.E.3d at 320.


[14]   When the trial court makes findings and conclusions in support of its order

       regarding summary judgment, we are not bound by such findings and

       conclusions, but they aid our review by providing reasons for the decision.

       Allen Gray Ltd. P’ship IV v. Mumford, 44 N.E.3d 1255, 1256 (Ind. Ct. App. 2015).

       We will affirm a summary judgment order on any theory or basis found in the

       record. Id.
       Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018     Page 10 of 17
[15]   When interpreting an insurance policy, we give plain and ordinary meaning to

       language that is clear and unambiguous. Meridian Mut. Ins. Co. v. Auto-Owners

       Ins. Co., 698 N.E.2d 770, 773 (Ind. 1998). Policy language is unambiguous if

       reasonable persons could not honestly differ as to its meaning. Id. To this end,

       we look to see “if policy language is susceptible to more than one

       interpretation.” Id. If an insurance policy contains ambiguous provisions, they

       are construed in favor of the insured. Id. “This strict construal against the

       insurer is driven by the fact that the insurer drafts the policy and foists its terms

       upon the customer. The insurance companies write the policies; we buy their

       forms or we do not buy insurance.” Id.


[16]   United argues it has no obligation to defend or indemnify either Stacy or Earl

       because Stacy was an insured party under the policy and, therefore, the

       exclusion for an intentional, criminal act applies. 3 Although Stacy was not a

       named insured on the policy, United argues he was an insured because the

       policy defined “insured” as relatives of the named insured who are also

       “residents in [the named insured’s] household.” (App. Vol. II at 37.)


[17]   When, as here, the parties’ policy leaves the term “resident in your household”

       undefined, we apply Indiana common law to determine its meaning. Indiana




       3
         Because the insurance policy states the exclusion applies to “the intentional or criminal acts or omissions of
       any ‘insured[,]’” this exclusion would apply to United’s obligation or lack thereof for both Stacy and Earl
       even though only Stacy committed a criminal act, provided Stacy is considered an insured party. See Holiday
       Hosp. Franchise, Inc. v. Amco Ins. Co., 983 N.E.2d 574, 581 (Ind. 2013) (obligation to defend or indemnify is
       relieved as to all insured parties even when exclusionary act committed by only one insured).

       Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018                              Page 11 of 17
       Farmers Mut. Ins. Co. v. Imel, 817 N.E.2d 299, 304 (Ind. Ct. App. 2004). In

       determining residency status under an automobile liability insurance contract,

       Indiana case law has developed a three-fold test, which has been applied to

       questions of residence arising in a personal liability insurance policy. Id. To

       determine whether someone is a resident of a household, we consider: 1)

       whether the claimant maintained a physical presence in the insured’s home; 2)

       whether he had the subjective intent to reside there; and 3) the nature of his

       access to the insured’s home and its contents. Id. When there is a question of

       fact, the factfinder must consider all of the evidence indicative of the claimant’s

       living habits. Id.


[18]   Alleging Stacy was a resident in Earl’s household, United argues that – because

       Stacy obviously had a physical presence in Earl’s home and obviously had

       access to Earl’s home – the only prong of the test at issue is the subjective intent

       prong. United maintains Earl and Stacy subjectively intended for Stacy to be a

       resident of Earl’s household because Stacy received all his mail at the single

       address for the home and Earl paid all Stacy’s expenses. Stacy paid no rent.

       Earl stated several times that Stacy lived with him. Maybe most important,

       Earl, without being directed to do so by law enforcement, removed all the long

       guns from the downstairs because he believed Stacy, as a felon, could not live in

       a house with guns. Earl admitted he nevertheless kept the handgun for personal

       protection.




       Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018      Page 12 of 17
[19]   Unable to find Indiana cases wherein residency was disputed when a party lived

       full-time under the same roof as the insured, 4 United turned to cases from other

       jurisdictions. United first cites Row v. United Services Automobile Association, 474

       So.2d 348 (Fla. Ct. App. 1985), wherein a son lived in an apartment complex

       inhabited and owned by his father. The Florida Court of Appeal noted that

       “what constitutes residency in a household is a mixed question of law and fact

       to be determined from the facts of each individual case.” Id. at 349. However,

       as the facts were “essentially undisputed . . . whether those facts fit within the

       policy definition is a question of law that may be decided on appellate review.”

       Id. The undisputed facts were that the son had a separate apartment unit, but

       also had the master key to his father’s apartment. Id. at 351. The son had

       unrestricted use of his father’s apartment and did not have a written lease or

       pay rent. Id. Therefore, the appellate court held the son was a resident of the

       father’s household. Id.


[20]   As in Row, Stacy had a separate living area from Earl but had a key to Earl’s

       living area. Additionally, Stacy did not pay rent, did not have a lease, and had

       virtually unrestricted use of Earl’s living area. Notably, Stacy’s living area was

       not a full apartment with kitchen facilities, nor was it in an apartment complex.




       4
         As United notes, the question Indiana courts usually have decided is whether children in college or children
       of divorced parents remain a resident of the insured’s household. See, e.g., Quiring v. GEICO Gen. Ins. Co., 953
       N.E.2d 119, 132 (Ind. Ct. App. 2011) (listing of several cases where residency is determined and noting
       residency of adult children is determined by several factors where “no single fact is determinative” but hinges
       on whether a reasonable person would consider the adult child to be a resident of the insured parent’s home).
       However, as the facts of those cases are materially different from the facts herein, we need not review the
       holdings of those cases.

       Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018                              Page 13 of 17
       Rather, Stacy’s living area was, at one time, connected to the rest of the house

       by a staircase and would have been considered part of the main house, albeit on

       a different floor.


[21]   United also cites Kepple v. Aetna Casualty and Surety Company, 634 So.2d 220

       (Fla. Ct. App. 1994), wherein the court was asked to decide if a married

       daughter of the named insured was also an insured when she and her husband

       lived on her parents’ property. Id. at 221. The young couple lived in the

       attached garage that had been converted into an apartment. Id. The converted

       garage, though small, was a full apartment with a kitchen and shower. Id. The

       couple paid a nominal amount in rent. Id. The garage did not have a separate

       address, the couple had a key to the main residence, and the couple frequently

       ate dinner in the main house with the daughter’s parents. Id. The appellate

       court decided that as “the material facts [we]re undisputed . . . this matter [wa]s

       a question of law to be decided by [it.]” Id. at 223. It then decided that, under

       these facts, the daughter was a resident of her parents’ home. Id.


[22]   As in Kepple, Stacy did not have a separate address from Earl, and Stacy lived in

       a part of the main house that had been converted into a separate living area. He

       also frequently ate his meals with Earl. Unlike Kepple, Stacy did not pay even

       nominal rent, and his apartment did not have a functional kitchen.


[23]   Using the three-part test for residency, we note Stacy had a physical presence in

       Earl’s home, whether we define that home as both the upstairs and downstairs

       or whether we limit it to the downstairs. Stacy slept upstairs but spent


       Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018       Page 14 of 17
       significant time downstairs with Earl. Stacy had access to Earl’s home, both

       upstairs and downstairs. Thus, we look to Earl’s subjective intent.


[24]   Earl stated during his deposition on August 22, 2017, that Stacy did not pay

       rent, Stacy had a key for the “whole house,” (Appellant’s App. Vol. III at 133),

       Earl provided all of Stacy’s transportation, and Stacy had free access to the

       house. However, he then insisted Stacy “wasn’t a part of [his] household, but

       [Stacy] did come and have his meals with me when he wanted.” (Id. at 135.)

       The Estate argues Earl has maintained consistently that Stacy does not live with

       him because in the interrogatories sent to Earl from the Estate in the underlying

       case Earl states none of his children live with him. (See Appellee’s App. Vol. II

       at 47 (when asked whether any of his children live with him, Earl answered

       “No”).) 5


[25]   The Estate’s argument that Earl’s subjective intent was that Stacy did not live

       with him is not supported by the evidence. It is undisputed that Stacy had

       unrestricted access to the whole house and that Stacy depended on Earl to

       support him by providing food, housing, utilities, and transportation. Earl’s

       statements that Stacy did not live with him are disingenuous as his actions prior

       to any litigation—provision of housing, food, utilities, and transportation—




       5
         The Estate also argues Earl admitted “that he lived alone. . . ; that Stacy was not living with him at that
       address; [and] that Stacy lived by himself at a separate apartment without an access to Earl’s place of
       residence other than through a locked door[.]” (Br. of Appellee at 10.) However, these admissions are the
       result of a request from the Estate to Earl and do not bind United. See Herff Jones, Inc. v. State Bd. of Tax
       Comm’rs, Ind.Tax, No. 49T05-8610-TA-00030, 512 N.E.2d 485, 489 (Ind. T.C. 1987) (admissions not directed
       to a party are not binding on that party).

       Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018                             Page 15 of 17
       show Stacy resided with Earl. See Quiring v. GEICO Gen. Ins. Co., 953 N.E.2d

       119, 130-31 (Ind. Ct. App. 2011) (party’s statements regarding her subjective

       intent as it related to her residence were “akin to a conclusion of law that is

       insufficient to preclude summary judgment,” therefore, a statement of intent is

       relevant but the reviewing court must look at the “totality of the evidence”).


[26]   No question of fact exists to preclude summary judgment. Stacy, like the

       children in Row and Kepple, was a resident of his parent’s household. 6 Under

       the policy definition, therefore, Stacy was an insured. Because Stacy qualifies

       as an insured, the exclusion clause applies and United is not obligated to defend

       or indemnify either Stacy or Earl. Therefore, as a matter of law, summary

       judgment for United is proper.



                                                  Conclusion
[27]   Because no question of material fact existed as to whether Stacy was a resident

       of Earl’s household, the trial court erred in denying summary judgment to




       6
         This case is distinguishable from our holding in Secura Supreme Ins. Co. v. Johnson, 51 N.E.3d 356 (Ind. Ct.
       App. 2016), reh’g denied. In Secura, the O’Brien family had a second house wherein a family member lived.
       The family member’s dogs harmed a third party. We held summary judgment was not proper because
       although the “extrinsic facts allow for the possibility that the O’Briens’ household extends from the Hobart
       house to the Valparaiso house . . . a fact-finder could also conclude that a landlord-tenant relationship is
       incompatible with being a member of a household.” Id. at 361. Thus, although the facts were undisputed,
       there existed a genuine issue of material fact as to whether the family member was a resident or a tenant.
       Here, Stacy is living in the same structure as Earl, does not pay rent, and does not support himself.
       Therefore, no genuine issue of material fact exists as to whether Stacy is a tenant or a resident of Earl’s
       household.

       Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018                              Page 16 of 17
       United. Accordingly, we reverse and remand with instructions to grant

       summary judgment in favor of United.


[28]   Reversed and remanded.


       Baker, J., and Bailey, J., concur.




       Court of Appeals of Indiana | Opinion 18A-CT-515 | November 28, 2018   Page 17 of 17
