UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

HAMMOND DIVISION

AMERICAN FAMILY MUTUAL )

INSURANCE COMPANY, )

)

Plaintiff, )

)

v. ) No. 2:14 CV 46 

)

DUSTIN McCOWAN, et al., )

)

Defendants. )

OPINION and ORDER

I. BACKGROUND1

Defendants William and Sandra Bach (the “Bachs”) were the parents of Amanda

Bach. Amanda died on September 16, 2011, as a result of a gunshot wound. (DE ## 12

at 3, 46-5 at 2.) On February 26, 2013, Defendant Dustin McCowan was convicted of the

murder of Amanda. (DE # 46-3.)

At the time of Amanda’s death, Dustin resided at the household of his parents:

Amy McCowan and Defendant Joseph McCowan. (DE # 46-7 at 6.) American Family

Mutual Insurance Company (“American Family”) issued a homeowners policy of

insurance (the “Policy”) to Amy and Joseph McCowan for their residence in Valparaiso,

Indiana. (DE # 46-1.) The Policy was in force on the date of Amanda’s death. (DE # 46-

1.)

 In the summary that follows, the court refers only to undisputed facts, or, if 1

there is a dispute, notes that it exists and relies on the version of the facts, or inference

therefrom, that is most favorable to the non-moving parties. This summary provides an

overview. Additional relevant undisputed facts will be referred to in the analysis that

follows.
The Policy, written by American Family, provided liability coverage as follows:

Coverage D— Personal Liability Coverage. We will pay, up

to our limit, compensatory damages for which any insured is

legally liable because of bodily injury or property damage

caused by an occurrence covered by this policy.

Defense Provision. If a suit is brought against any insured

for damages because of bodily injury or property damage

caused by an occurrence to which this policy applies, we will

provide a defense at our expense by counsel of our choice.

We will defend any suit or settle any claim for damages

payable under this policy as we think proper.

(DE # 46-1 at 12.) The Policy defines “bodily injury” as “bodily harm, sickness or

disease. It includes resulting loss of services, required care and death.” (Id. at 4.) The

Policy defines “occurrence” as “an accident, including exposure to conditions, which

results during the policy period in” (a) bodily injury; or (b) property damage. (Id.)

Additionally, “[i]nsured means you and, if residents of your household: (1) your

relatives; and (2) any other person under the age of 21 in your care or in the care of your

resident relatives.” (Id.)

Furthermore, the Policy contains certain exclusions from liability coverage:

Coverage D— Personal Liability and Coverage E— Medical

Expense do not apply to:

10. Intentional Injury. We will not cover bodily injury or

property damage caused intentionally by or at the direction

of any insured even if the actual bodily injury or property

damage is different than that which was expected or

intended from the standpoint of the insured.

* * *

17. Violation of Law. We will not cover bodily injury or

property damage arising out of . . . violation of any criminal

law for which any insured is convicted.

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(DE # 46-1 at 14.)

On March 28, 2013, the Bachs filed a lawsuit against Dustin and Joseph

McCowan in the Porter County Superior Court. (DE # 46-5.) In the lawsuit, the Bachs

allege that Dustin McCowan negligently, carelessly, recklessly, and/or intentionally

shot Amanda Bach. (Id. at 3.) They also allege Joseph McCowan negligently failed to

secure his firearms, one of which was used to shoot Amanda Bach. (Id. at 4.)

On February 14, 2014, American Family filed a complaint against Dustin

McCowan, Joseph McCowan, and the Bachs in this court. (DE # 1.) American Family

seeks a declaratory judgment stating, in essence, that it has no obligations under the

Policy as to the actions of Dustin and Joseph McCowan which are the subject of the

lawsuit filed by the Bachs. (See id.)

On July 31, 2015, American Family moved for summary judgment. (DE # 45.)

Joseph McCowan filed a response to the motion (DE # 50) as did the Bachs (DE # 51).

American Family filed a single reply addressing the responses. (DE # 54.) The motion is

ripe for ruling.

II. LEGAL STANDARD

Plaintiff has moved for summary judgment. Federal Rule of Civil Procedure 56

requires the entry of summary judgment, after adequate time for discovery, against a

party “who fails to make a showing sufficient to establish the existence of an element

essential to that party’s case, and on which that party will bear the burden of proof at

trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). “[S]ummary judgment is

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appropriate—in fact, is mandated—where there are no disputed issues of material fact

and the movant must prevail as a matter of law. In other words, the record must reveal

that no reasonable jury could find for the non-moving party.” Dempsey v. Atchison,

Topeka, & Santa Fe Ry. Co., 16 F.3d 832, 836 (7th Cir. 1994) (citations and quotation marks

omitted).

The moving party bears the initial burden of demonstrating that these

requirements have been met. Carmichael v. Village of Palatine, Ill., 605 F.3d 451, 460 (7th

Cir. 2010). “[T]he burden on the moving party may be discharged by ‘showing’—that is,

pointing out to the district court—that there is an absence of evidence to support the

nonmoving party’s case.” Celotex, 477 U.S. at 325. Once the moving party has met his

burden, the non-moving party must identify specific facts establishing that there is a

genuine issue of fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986);

Palmer v. Marion County, 327 F.3d 588, 595 (7th Cir. 2003) (citing Celotex, 477 U.S. at 324).

In doing so, the non-moving party cannot rest on the pleadings alone, but must present

fresh proof in support of its position. Anderson, 477 U.S. at 248; Donovan v. City of

Milwaukee, 17 F.3d 944, 947 (7th Cir. 1994). In viewing the facts presented on a motion

for summary judgment, the court must construe all facts in a light most favorable to the

non-moving party and draw all reasonable inferences in favor of that party. Chmiel v. JC

Penney Life Ins. Co., 158 F.3d 966 (7th Cir. 1998).

In the context of declaratory judgment actions, “[w]hen the basis of jurisdiction is

diversity, most courts rely on the applicable state law to determine which party

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shoulders the burden of proving the facts.” Am. Nat’l Fire Ins. Co. v. Rose Acre Farms,

Inc., 911 F. Supp. 366, 369 (S.D. Ind. 1995). In Indiana, the party seeking the judgment in

an action for declaratory judgment carries the burden of proof. Sans v. Monticello Ins.

Co., 718 N.E.2d 814, 819 (Ind. Ct. App. 1999). Here, American Family bears the initial

burden of showing that no genuine issue of material fact remains.

III. DISCUSSION

A. Dustin McCowan

In their lawsuit, the Bachs allege that Dustin McCowan shot Amanda Bach, and

this caused a bodily injury resulting in her death. (DE # 46-5 at 2.) In its motion for

summary judgment, American Family argues that it is not required to provide coverage

to Dustin for any potential liability resulting from that injury, due to the terms of the

Policy. (DE # 45 at 6–9.) Under the Policy, any relative of the named insured is also

insured if he or she resides at the covered household. (DE # 46-1 at 4.) It is undisputed

that Dustin was a resident of his parents’ household at the time of the shooting, and

therefore Dustin is also an insured. (See DE # 46-7 at 6.) Nevertheless, American Family

contends that the Policy does not apply here for two reasons: (1) Dustin’s actions were

not an “occurrence” as defined in the Policy; and (2) liability coverage for Dustin is

excluded under the intentional injury and violation of law exclusions. (DE # 45 at 6–9.)

Regarding the first of these two arguments, the Policy only provides liability

coverage for injuries caused by “occurrences,” which the Policy defines as accidents.

(DE # 46-1 at 4, 12.) The Policy does not define the word “accident” but the Indiana

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Supreme Court has held that “implicit in the meaning of ‘accident’ is the lack of

intentionality.” Auto Owners Ins. Co. v. Harvey, 842 N.E.2d 1279, 1283 (Ind. 2006).

2

American Family argues that Dustin’s murder conviction establishes his conduct

was intentional, and therefore collateral estoppel bars any argument that his actions

constitute an accidental occurrence. (DE # 45 at 6–8.) On the other hand, the Bachs

argue that collateral estoppel does not apply. (DE # 51 at 3–4.) 

However, the court need not reach the issue of whether or not Dustin’s actions

were intentional. Even if Dustin’s conviction does not necessitate a finding of

intentionality, it certainly triggers the Policy’s violation of law exclusion. That exclusion

states that American Family will not provide personal liability coverage for bodily

injury “arising out of . . . violation of any criminal law for which any insured is

convicted.” (DE # 46-1 at 14.) There is no dispute that Dustin was convicted of murder.

(DE # 46-3.) To the extent that Dustin caused the fatal bodily injury to Amanda Bach, as

described in the Bachs’ claim against Dustin, that injury arose out of Dustin’s violation

of the law. Thus, the exclusion applies and American Family need not provide liability

coverage for Dustin McCowan. 

Furthermore, the Policy’s defense provision only applies to bodily injury caused

by an occurrence to which this policy applies. (DE # 46-1 at 12 (emphasis added).) Since

coverage for this bodily injury is excluded under the Policy, American family is not

obligated to provide a defense for Dustin McCowan in the Bachs’ suit.

 The parties do not dispute that Indiana substantive law applies. (See DE ## 45 2

at 5, 50 at 7, 51 at 9.)

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B. Joseph McCowan

Regarding Joseph McCowan, the Bachs allege that his negligence in failing to

secure his firearms caused injury to Amanda Bach. (DE # 46-5 at 4.) However, American

Family argues that it is not required to provide coverage to Joseph for any potential

liability resulting from that injury. (DE # 45 at 10–20.) In its brief, American Family puts

forth several arguments which assert, in sum, that even if Joseph did cause such an

injury through his negligent actions, his liability coverage would be excluded under the

Policy as a matter of law, due to Dustin’s actions. (See id.)

The Bachs disagree with plaintiff’s arguments and contend that American Family

fails to address the holding in Frankenmuth Mutual Insurance, Co. v. Williams, 690 N.E.2d

675 (Ind. 1997). Frankenmuth specifically examines if the intentional acts of one insured

preclude coverage for the negligent acts of a co-insured. Id. The facts of Frankenmuth

involved a man who intentionally molested a child, while his wife committed only

negligence. Id. at 676, 679. The Indiana Supreme Court held that the wife’s negligence

resulted in a legally distinct injury to the child: an injury of “exposure to the risk of

molestation.” Id. at 679. The husband and wife were co-insureds under the same

insurance policy, but the Indiana Supreme Court concluded that the policy’s

“intentional act exclusion” did not apply to her negligence. Id. at 677, 679.

After the Frankenmuth decision, another judge in this district issued an opinion in

which he applied the Indiana Supreme Court’s reasoning while interpreting an

American Family homeowners policy. American Family Mut. Ins. Co. V. Bower, 752 F.

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Supp. 2d 957, 960 (N.D. Ind. 2010). The policy in Bower contained the exact same

language as the McCowan’s Policy in the sections outlining personal liability coverage,

the intentional injury exclusion, and the violation of law exclusion. Id. at 962, 965. Both

the policy in Bower and the Policy in the case at hand also contain identical “sexual

molestation exclusions.” (DE # 46-1 at 13); Bower, 752 F. Supp. 2d at 965. Ultimately, the

court held that “under Indiana law the sexual molestation, the criminal law, or the

intentional acts exclusions in American Family’s policies do not apply to preclude

coverage for the alleged negligent acts of a co-insured.” Id. at 970. 

The court also noted in Bower that Frankenmuth does not include discussion of

any exclusions other than the intentional act exclusion. Id. Nevertheless, the court found

no reason not to extend its holding to American Family’s violation of law exclusion and

the sexual molestation exclusion. Id. (“Indeed, it would make little sense to delineate

among the three exclusions . . . .”). However, in a more recent decision, another judge in

this district found that Frankenmuth’s reasoning did not apply to the interpretation of a

sexual molestation exclusion, because the language of that exclusion was dissimilar to

the language found in the intentional act exclusion in Frankenmuth. Westfield Ins. Co. v.

Hill, 790 F. Supp. 2d 855, 867–68 (N.D. Ind. 2011). Specifically, the court focused on the

“arising out of” language used in the sexual molestation exclusion. See id. at 863–64,

867–68. The violation of law exclusion in the McCowan Policy also contains “arising out

of” language, while the intentional injury exclusion does not. (DE # 46-1 at 14.) Thus,

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Hill indirectly brings into question Bower’s conclusion that there was no reason to

delineate between the exclusions in American Family’s policies.

Hill itself makes no mention of Bower so there is no discussion of their apparent

inconsistencies in either case. Furthermore, although the Bachs and American family

each discuss Bower at length, the defendants do not address Hill. Meanwhile, American

Family mentions Hill only in its reply brief, and even then it does not discuss the

decision’s apparent disagreement with Bower or the possibility that it may call for the

violation of law exclusion to apply even in a situation where the intentional injury

exclusion does not. (See DE # 54 at 12–13.) Since the parties have not provided sufficient

briefing on this issue, the court is inclined to follow the holding of Bower and not draw a

distinction between the two exclusions.

Given the cases outlined above, the court must now decide whether to grant

American Family’s motion for summary judgment as to Joseph McCowan. American

Family has failed to draw a distinction between this case and Bower. At the very least,

Frankenmuth and Bower support the Bachs’ assertion that an injury caused by Joseph

McCowan’s negligence would fall under the personal liability coverage of the Policy,

and that the intentional injury exclusion would not preclude coverage. American

Family has also failed to address the possibility that the violation of law exclusion

might apply where the intentional injury exclusion does not. Consequently, the court

denies the motion for summary judgment as to Joseph McCowan.

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The court can, however, move for summary judgment sua sponte “if [it has] given

the affected parties advance notice of their intent to do so and a fair opportunity to

respond with argument and evidence.” Smith v. Bray, 681 F.3d 888, 903 (7th Cir. 2012),

overruled on other grounds by Ortiz v. Werner Enters., Inc., 834 F.3d 760 (7th Cir. 2016). The

court so moves, here, on the question of whether summary judgment is appropriate as

to Joseph McCowan under the violation of law exclusion. Specifically, this motion will

allow the parties to address the applicability of Westfield Insurance Company v. Hill.

IV. CONCLUSION 

For the foregoing reasons, the court

(1) GRANTS, in part, American Family’s motion for summary judgment

(DE # 44) as to the allegations against Dustin McCowan;

(2) otherwise DENIES American Family’s motion for summary judgment;

(3) MOVES for summary judgment against defendants; and, 

(4) GRANTS the parties thirty days from the date of this order in which to file

any argument or evidence that they believe is relevant to the court’s analysis regarding

whether or not American Family is entitled to summary judgment as to Joseph

McCowan on the basis of the violation of law exclusion.

SO ORDERED.

Date: February 16, 2017

s/James T. Moody 

JUDGE JAMES T. MOODY

UNITED STATES DISTRICT COURT

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