469_C276

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Homeowner	Reservation of rights
Occurrence	Business exclusion

COACH KNIGHT DEMANDS HO COVERAGE FOR SHOVING AIDE

This case involves a dispute between basketball coaches Robert (Bobby) Knight and Ronald Felling. Knight was the head basketball coach at Indiana University, and Felling was an assistant basketball coach. In December 1999, the two coaches were arguing in an office in Assembly Hall at Indiana University. Felling moved to leave the office and Knight jumped up and made physical contact with him, causing him to fall into a television set. Knight described the contact as a "bump." Felling eventually filed a lawsuit against Knight in the United States Southern District Court of Indiana.

At the time of the dispute, Knight had a homeowners policy with Indiana Insurance Company. In October 2002, Knight notified Indiana Insurance of the Felling lawsuit. The insurer sent a reservation of rights letter to Knight referencing several provisions of the policy and informing Knight that there might not be "bodily injury" or "property damage" caused by an "occurrence" as defined by the policy. On August 26, 2002, the insurer issued a letter denying coverage for the Felling lawsuit, citing the "business exclusion" and the "other exclusions" cited in the reservation of rights letter. On August 30, 2002, the Felling lawsuit was settled; Knight paid $25,000 to Felling and admitted that he shoved Felling in anger.

Knight filed a complaint seeking indemnification from Indiana Insurance and his employer, Indiana University. While the claim against the university was pending, the trial court found in favor of Indiana Insurance. Knight appealed this decision.

The Indiana Insurance policy provided coverage for an "occurrence" that results in "bodily injury" or "property damage." "Bodily injury" was defined as "personal injury" or "bodily harm, sickness, or disease, including required care, loss of services and death that results." "Personal injury" was defined as an injury arising out of "false arrest, detention or imprisonment, malicious prosecution, wrongful entry or eviction, libel, slander, defamation of character or invasion of privacy." The Court of Appeals of Indiana found that, given these definitions, there was no "occurrence" of "bodily injury" as defined in the policy. Knight's admitted conduct was a "tort" covered by tort law but broader than conduct protected by the policy.

Furthermore, the policy excluded injury or damage "arising out of or in connection with a business engaged in by an insured." "Business" was defined to include "trade, profession or occupation." The court agreed with the trial court that this exclusion applied because the incident arose out of Knight's profession as a basketball coach.

Knight argued that even if Indiana Insurance was not obligated to indemnify him, it was required to investigate and defend him in the Felling lawsuit. Again, the court disagreed. While it acknowledged that an insurer's duty to defend is broader than its duty to indemnify, it found that the insurer was justified in refusing to defend Knight. Before denying coverage, it interviewed Knight and concluded that the incident was a workplace incident that resulted in no bodily injury. According to the court, "a reasonable claims manager would be able to discern the lack of contractual obligation at that juncture." Therefore, Indiana Insurance did not breach its duty to reasonably investigate and defend Knight in the Felling lawsuit.

The court found in favor of Indiana Insurance, and the decision of the lower court was affirmed.

Knight vs. Indiana Insurance Company-No. 49A05-0608-CV-416-Court of Appeals of Indiana-August 8, 2007-871 <I>North Eastern Reporter<I> 2d 357