‐1‐ 

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF INDIANA 

HAMMOND DIVISION 

ALLSTATE INSURANCE COMPANY, 

 Plaintiff, 

 vs. 

MCCOLLY REALTORS, INC., 

RUTH LOCKHART, and 

ROSEMARY PURNELL, AS 

ADMINSTRATRIX OF THE ESTATE OF 

KENNETHA PURNELL, DECEASED, 

 Defendants. 

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NO. 2:16-cv-00142 

OPINION AND ORDER

 This matter is before the Court on Allstate Insurance 

Company’s (“Allstate”) Motion for Summary Judgment, filed on April 

7, 2017 (DE #26), and Cross Motion for Summary Judgment by McColly 

Realtors, Inc. and Ruth Lockhart filed on May 19, 2017 (DE #30). 

For the reasons set forth below, Allstate’s motion for summary 

judgment (DE #26) is GRANTED. Defendants’ cross motion for summary 

judgment (DE #30) is DENIED. The Clerk of the Court is DIRECTED

to enter a DECLARATORY JUDGMENT in favor of Allstate declaring 

that under insurance policy number 648550390, Allstate has no duty 

to defend or indemnify McColly Realtors, Inc. and/or Ruth Lockhart 

against claims asserted by Rosemary Purnell in case number 45D01-

1503-CT-50 in Lake Superior Court. 
‐2‐ 

BACKGROUND 

 On October 12, 2013, Kennetha Purnell (“Kennetha”), her 

husband and two children died when carbon monoxide gas infiltrated 

the home they were leasing from a generator operating in the 

garage. Kennetha’s mother, Rosemary Purnell (“Purnell”), filed a 

wrongful death suit against the homeowner. Purnell later amended 

her complaint (“Underlying Complaint”) to include a wrongful death 

claim against McColly Realtors, Inc. and Ruth Lockhart (together, 

“Defendants”), asserting that the homeowner had contracted with 

Defendants for the purpose of leasing the home. 

Defendants requested that Allstate defend and indemnify them 

against the Underlying Complaint pursuant to an Allstate insurance 

policy held by McColly Realtors, Inc. (“McColly”). Allstate agreed 

to defend the Defendants under a reservation of rights, and filed 

the instant declaratory judgment action against Defendants and 

Purnell.1 Allstate now moves for summary judgment, asking the 

Court to find that the insurance policy does not provide coverage 

for the claim in the Underlying Complaint, and that Allstate has 

no duty to defend or indemnify the Defendants in that action. The 

Defendants oppose this motion and filed a cross motion for summary 

judgment. The motions have been fully briefed and are ripe for 

adjudication. 

                                                            

1 The Court granted default judgment against Purnell and the Clerk 

entered judgment on October 5, 2016. (DE #20, #21.)
‐3‐ 

SUMMARY JUDGMENT STANDARD 

Summary judgment must be granted when “there is no genuine 

dispute as to any material fact and the movant is entitled to 

judgment as a matter of law.” Fed. R. Civ. P. 56(a). A genuine 

dispute of material fact exists when “the evidence is such that a 

reasonable jury could return a verdict for the nonmoving party.” 

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 

2505, 91 L. Ed. 2d 202 (1986). Not every dispute between the 

parties makes summary judgment inappropriate; “[o]nly disputes 

over facts that might affect the outcome of the suit under the 

governing law will properly preclude the entry of summary 

judgment.” Id. In determining whether summary judgment is 

appropriate, the court must construe all facts in the light most 

favorable to the nonmoving party and draw all reasonable inferences 

in that party’s favor. Ogden v. Atterholt, 606 F.3d 355, 358 (7th 

Cir. 2010). “However, our favor toward the nonmoving party does 

not extend to drawing inferences that are supported by only 

speculation or conjecture.” Fitzgerald v. Santoro, 707 F.3d 725, 

730 (7th Cir. 2013) (citation omitted). 

While the movant bears the initial burden of production to 

inform the district court why a trial is not necessary, these 

requirements “are not onerous” where the nonmoving party “bears 

the ultimate burden of persuasion on a particular issue.” 

Modrowski v. Pigatto, 712 F.3d 1166, 1168 (7th Cir. 2013). A party 
‐4‐ 

may move for summary judgment based on either “affirmative evidence 

that negates an essential element of the nonmoving party’s claim” 

or by “asserting that the nonmoving party’s evidence [is] 

insufficient to establish an essential element of the nonmoving 

party’s claim.” Id. at 1169 (citation and internal quotations 

omitted). A party opposing a properly supported summary judgment 

motion may not rely on allegations or denials in his own pleading, 

but rather, must “marshal and present the court with the evidence 

[he] contends will prove [his] case.” Goodman v. Nat'l Sec. 

Agency, Inc., 621 F.3d 651, 654 (7th Cir. 2010). If the nonmoving 

party fails to establish the existence of an essential element on 

which he bears the burden of proof at trial, summary judgment is 

proper. Massey v. Johnson, 457 F.3d 711, 716 (7th Cir. 2006). 

“Interpretation of a written contract, including a contract 

of insurance, typically presents a question of law suitable for 

resolution on motions for summary judgment.” Royer v. USAA Cas. 

Ins. Co., 781 F. Supp. 2d 767, 770 (N.D. Ind. 2011) (citation 

omitted). “When the question presented is whether an insurance 

policy provides liability coverage for a particular claim or 

lawsuit, the central material facts are ordinarily the terms of 

the written contract and the contents of the plaintiff's 

allegations in the underlying litigation.” Id. (citation 

omitted). 
‐5‐ 

FACTS 

The Court finds the following undisputed facts to be supported 

by admissible evidence in the record:2

The Underlying Complaint 

Purnell, as administratrix of Kennetha’s estate, filed a 

lawsuit against Madeline Chale (“Chale”) in Lake County Superior 

Court entitled Purnell v. Chale, No. 45D01-1503-CT-50 (“Underlying 

Lawsuit”). Purnell’s Second Amended Complaint (“Underlying 

Complaint”) asserts claims against Chale and Defendants. The 

Underlying Complaint alleges that Chale was the owner of premises 

located in Merrillville, Indiana (“premises” or “property”). 

Count I alleges that as of October 1, 20l3, Kennetha leased the 

property from Chale, and that Chale owed a duty to follow 

applicable law in leasing the premises, and a duty to warn of 

latent or concealed dangers, to the residents of the premises. It 

alleges that Chale negligently and/or recklessly failed to 

register the premises as a rental as required by law, thereby 

causing the premises to be leased without proper inspection. 

According to the Underlying Complaint, an inspection would have 

revealed that the property was not fit for habitation, including 

insufficient barrier protection against infiltration of harmful 

                                                            

2 The parties also address minor issues of fact in their briefing 

on the motions for summary judgment. The Court finds that those 

issues are not material to ruling on the motions.
‐6‐ 

gases from the garage to the living quarters of the premises. 

Count I alleges that Chale’s violation of law, failure to warn 

and/or concealment of a latent and dangerous condition wrongfully 

caused the deaths of Kennetha, her husband and two minor children 

(together, “Kennetha’s family”) on October 12, 2013, when carbon 

monoxide infiltrated the living quarters of the premises from a 

generator operating in the garage. 

Count II asserts a similar wrongful death claim against 

McColly and Ruth Lockhart (“Lockhart”), who was allegedly working 

in her capacity as an agent and/or employee of McColly. (DE #1-

1, Ex. A at ¶13.) Count II states in part: 

 “Chale hired, contracted with and/or otherwise engaged 

McColly Real Estate by and through its agent and/or 

employee Lockhart for purposes of leasing the premises. 

. . . As a result, [Defendants] had a duty to follow 

applicable law, including local codes and/or ordinances, 

in leasing the premises, as well as a duty to warn of 

latent or concealed dangers to residents.” (Id. at ¶¶15-

16.) 

 Defendants “negligently and/or recklessly failed to 

register the premises as a rental as required by 

applicable law, including local codes and/or 

ordinances.” (Id., ¶17.) 

 Defendants’ “violation of law . . . caused the property 

to be leased without proper inspection which would have

revealed that it was not fit for habitation and/or was 

otherwise in violation of applicable law, including 

local codes and/or ordinances, including . . . 

insufficient barrier protection against infiltration of 

harmful gases such as carbon monoxide from the garage to 

the living quarters of the premises.” (Id., ¶18.) 
‐7‐ 

Count II alleges that Defendants’ violation of law, failure to 

warn, and/or concealment of a latent and dangerous condition 

wrongfully caused the deaths of Kennetha’s family. 

The Policy 

Allstate issued Commercial Package Policy number 648550390 to 

McColly effective December 15, 2012 to December 15, 2013 

(“Policy”). The Policy includes commercial general liability 

(“CGL”) bodily injury and property damage coverage (“Coverage A”). 

Coverage A states in part: 

We will pay those sums that the insured becomes 

legally obligated to pay as damages because of 

“bodily injury” or “property damage” to which this 

insurance applies. We will have the right and duty 

to defend the insured against any "suit" seeking 

those damages. However, we will have no duty to 

defend the insured against any "suit" seeking 

damages for "bodily injury" or "property damage" to 

which this insurance does not apply. . . . 

(DE #1-1 at 101.) Coverage A only applies if “[t]he ‘bodily 

injury’ or ‘property damage’ is caused by an ‘occurrence’. . . .” 

(Id.) The Policy defines “occurrence” as “an accident, including 

continuous or repeated exposure to substantially the same general 

harmful conditions.” (Id. at 114.) The term “bodily injury” is 

defined as “bodily injury, sickness or disease sustained by a 

person, including death resulting from any of these at any time.” 

(Id. at 113.) The term “suit” is defined as “a civil proceeding 

in which damages because of ‘bodily injury,’ ‘property damage’ or 
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‘personal and advertising injury’ to which this insurance applies 

are alleged.” (Id. at 115.) 

The Policy includes personal and advertising injury liability 

coverage (“Coverage B”), which states in part: 

We will pay those sums that the insured becomes legally 

obligated to pay as damages because of “personal and 

advertising injury” to which this insurance applies. We 

will have the right and duty to defend the insured 

against any "suit" seeking those damages. However, we 

will have no duty to defend the insured against any 

"suit" seeking damages for "personal and advertising 

injury" to which this insurance does not apply. 

(Id. at 106.) “Personal and advertising injury” is defined in 

part as “injury, including consequential ‘bodily injury’, arising 

out of one or more of the following offenses: . . . The wrongful 

eviction from, wrongful entry into, or invasion of the right of 

private occupancy of a room, dwelling or premises that a person 

occupies, committed by or on behalf of its owner, landlord or 

lessor.” (Id. at 114.) 

 The Policy also includes a Real Estate Agents or Brokers 

Errors or Omissions Exclusion (“Realtor E&O Exclusion”), which 

states that the Policy “does not apply to ‘bodily injury,’ 

‘property damage’ or ‘personal and advertising injury’ arising out 

of any misrepresentation, error or omission by you or any real 

estate agent or broker who is either employed by you or performing 

work on your behalf in such capacity.” (Id. at 132.) 
‐9‐ 

Defendants requested that Allstate defend and indemnify them 

under the Policy against the Underlying Lawsuit. Allstate agreed 

to defend under a reservation of rights, and commenced this 

declaratory judgment action. 

Complaint for Declaratory Judgment and Additional Facts 

Allstate’s Complaint for Declaratory Judgment alleges three 

counts seeking declarations that: (1) Lockhart does not qualify as 

an insured under the Policy; (2) the Underlying Complaint does not 

allege an “occurrence” under the Policy; and (3) the Realtor E&O 

Exclusion applies to exclude coverage.3 (DE #1.) The complaint 

attaches a contract between Chale and McColly for the lease or 

sale of Chale’s property dated September 9, 2013 (“Listing 

Contract”). The Listing Contract provides that Chale appoints 

McColly as Chale’s broker with the exclusive right to sell, 

exchange, or lease the property, and was executed by Chale, 

McColly, and Lockhart as “salesperson/agent.” (DE #1-1 at 14.) 

The Lake County Coroner’s autopsy reports of Kennetha and her 

children state that the manner of death was “ACCIDENT,” and the 

cause of death was carbon monoxide poisoning. (See, e.g., DE #32 

at 12, 66.) 

                                                            

3 In the instant motions, the parties do not address the issue of 

whether Lockhart qualifies as an insured under the Policy.
‐10‐ 

In an April 2016 email regarding the Underlying Complaint, an 

Allstate Commercial Claims adjuster (“Allstate adjuster”) stated 

in part: 

Allegations in the complaint: Failure to follow 

applicable law, including local codes and/or ordinances, 

in leasing a premises and listing it as rental property 

and failure to warn and/or concealment of a latent and 

dangerous condition, allegedly resulting in the death of 

4 individuals by carbon monoxide poisoning. McColly is 

being sued for all damages attributable to Lockhart's 

actions through the doctrine of respondeat superior. 

Liability - at this time it is our understanding the 

local code and/or ordinances referenced in the complaint 

applies to the owner of the property, not to the real 

estate agent or broker. . . . 

(DE #32-1 at 96-97.) 

DISCUSSION 

The parties do not dispute that Indiana law governs the 

coverage obligations and duties to defend arising from the Policy. 

In Indiana, “[t]he interpretation of an insurance policy is 

primarily a question of law for the court, and it is therefore a 

question which is particularly suited for summary judgment.” 

Wagner v. Yates, 912 N.E.2d 805, 808 (Ind. 2009) (citation 

omitted). In an insurance policy dispute under Indiana law, “[t]he 

insured is required to prove that its claims fall within the 

coverage provision of its policy, but the insurance provider bears 

the burden of proving specific exclusions or limitations to policy 

coverage.” Ind. Funeral Dirs. Ins. Tr. v. Trustmark Ins. Corp., 

347 F.3d 652, 654 (7th Cir. 2003) (citation omitted). “Under 
‐11‐ 

Indiana law, insurance contracts are governed by the same rules of 

construction as other contracts.” Id. (citation omitted). 

“[C]lear and unambiguous language in an insurance policy should be 

given its plain and ordinary meaning, even if those terms limit an 

insurer’s liability.” Everett Cash Mut. Ins. Co. v. Taylor, 926 

N.E.2d 1008, 1012 (Ind. 2010) (internal citation omitted). Where 

policy language is ambiguous, Indiana courts generally construe it 

strictly against the insurer and in favor of the insured. Id. 

“[A]n ambiguity does not exist simply because an insured and an 

insurer disagree about the meaning of a provision, but only if 

reasonable people could disagree about the meaning of the 

contract’s terms.” Empire Fire v. Frierson, 49 N.E.3d 1075, 1079 

(Ind. Ct. App. 2016) (citations omitted). 

Allstate argues that it has no duty under the Policy to defend 

or indemnify Defendants for the claim made against them in the 

Underlying Complaint. An insurer’s duty to defend is broader than 

its duty to indemnify. Newnam Mfg., Inc. v. Transcontinental Ins. 

Co., 871 N.E.2d 396, 401 (Ind. Ct. App. 2007). Indiana courts 

“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. 

(citation omitted). “Typically, an insurer has a duty to defend 

its insured against suits alleging facts that might fall within 

the coverage.” Federal Ins. Co. v. Stroh Brewing Co., 127 F.3d 
‐12‐ 

563, 566 (7th Cir. 1997). If the pleadings demonstrate that “a 

claim is clearly excluded under the policy, then no defense is 

required.” Newnam, 871 N.E.2d at 401. “It is the nature of the 

claim, not its merit, which establishes the insurer's duty to 

defend.” Trisler v. Indiana Ins. Co., 575 N.E.2d 1021, 1023 (Ind. 

Ct. App. 1991). “[A]n insurer who has no duty to defend has no 

duty to indemnify its insured either. Conversely, where there is 

a duty to defend, the duty to indemnify must await resolution of 

the underlying suits.” Pekin Ins. Co. v. Main St. Cons't., Inc.,

No. 106-CV-0961-TAB-DFH, 2007 WL 1597924, at *4 (S.D. Ind. June 1, 

2007) (citing United Nat. Ins. Co. v. Dunbar & Sullivan Dredging 

Co., 953 F.2d 334, 338 (7th Cir. 1992)). 

“Occurrence” under Coverage A 

Allstate asserts that the Underlying Complaint does not 

allege an “occurrence” as required by Coverage A of the Policy. 

Coverage A provides coverage for damages for bodily injury, 

including death, caused by an occurrence. The Policy defines 

“occurrence” as “an accident, including continuous or repeated 

exposure to substantially the same general harmful conditions.” 

(DE #1-1 at 114.) Defendants argue that because the term 

“accident” is not defined in the Policy, it should be construed 

against Allstate. But the Indiana Supreme Court has “reaffirmed 

that an accident means an unexpected happening without an intention 

or design.” Tri-Etch, Inc. v. Cincinnati Ins. Co., 909 N.E.2d 
‐13‐ 

997, 1002 (Ind. 2009) (citing Auto–Owners Ins. Co. v. Harvey, 842 

N.E.2d 1279, 1283 (Ind. 2006)). Defendants maintain that the 

deaths of Kennetha’s family constitute an “accident” under 

Coverage A, and thus, Coverage A applies to the Underlying 

Complaint. In support, they cite the Lake County Coroner’s reports 

stating that the manner of their deaths was an “accident.” 

Allstate does not dispute that the deaths were accidental. 

Allstate argues that the claim alleged against Defendants is 

not based on an occurrence or accident covered by Coverage A, but 

rather, is based on a professional error or omission. “[A]lthough 

‘accident’ is broadly construed,” the Indiana Supreme Court has 

noted the “distinction between an ‘occurrence’ as the term is used 

in CGL policies, and claims based on ‘commercial or professional 

conduct.’” Id. (citation omitted). “Claims based on negligent 

performance of commercial or professional services are ordinarily 

insured under ‘errors and omissions’ or malpractice policies.” 

Id. While it is undisputed the deaths of Kennetha’s family were 

accidental, “[l]ack of intentional wrongdoing does not convert 

every business error into an ‘accident.’” Id. at 1001; see U.S. 

Liab. Ins. Co. v. Parchman, No. 1:11-CV-01244-TWP, 2013 WL 2600406, 

at *5 (S.D. Ind. June 11, 2013) (although the insured “did not 

intentionally commit wrongdoing, this failure does not convert his 

actions into an ‘accident’”). 
‐14‐ 

Here, the Underlying Complaint alleges that Chale contracted 

with Defendants “for purposes of leasing the premises,” and that 

“[a]s a result” of this contractual relationship, Defendants “had 

a duty to follow applicable law” in leasing the premises, and a 

duty to warn residents of latent or concealed dangers. (DE #1-1, 

Ex. A, ¶¶15, 16.) It alleges that Defendants “negligently and/or 

recklessly failed to register the premises as a rental property as 

required by applicable law,” and that the violation of such law 

caused the property to be leased without proper inspection. (Id. 

¶17; see id. ¶18.) Defendants’ alleged “violation of the law 

and/or the absence of a proper inspection . . . wrongfully 

concealed a latent and dangerous condition,” which allegedly led 

to the belief that a generator could be operated in the garage 

without risk of harm to the residents in the house, and allegedly 

caused the deaths of Kennetha’s family. (Id. ¶¶19-20.) 

The parties rely upon several Indiana court opinions that 

address whether a claim is based on an “occurrence” or “accident” 

for the purpose of determining insurance coverage. In Erie 

Insurance Company v. American Painting Company, American’s 

employee burglarized and set fire to the home of its customer. 

678 N.E.2d 844, 845 (Ind. Ct. App. 1997). The homeowner sued 

American, alleging that its negligent hiring and retention of the 

employee caused the property damage. American’s insurer sought a 

declaration of no liability insurance coverage for those claims. 
‐15‐ 

The policy defined “occurrence” as “an accident.” Id. at 846. 

The court noted that “[i]n the context of insurance coverage, 

[Indiana courts] have held that an accident means ‘an unexpected 

happening without an intention or design.’” Id. (citation 

omitted). The court held that even if American’s actions of hiring 

and retaining the employee were proven to be careless and 

negligent, they “were intentional, not accidental.” Id. (citation 

omitted). As such, the homeowner’s “action against American did 

not arise from an ‘accident’ and, thus, was not the result of an 

‘occurrence’” as defined by the policy. Id. 

Defendants attempt to distinguish Erie from the instant case 

by contrasting American’s intentional conduct in hiring and 

retaining the employee with Defendants’ lack of knowledge 

regarding Kennetha’s family’s use of the generator. This argument 

is unpersuasive. In both Erie and the instant matter, the 

insured’s alleged liability is based on the insured’s alleged 

conduct. American was allegedly liable based on its negligent 

hiring and retention of its employee; the Underlying Complaint 

alleges that Defendants are liable for negligently and/or 

recklessly failing in duties that arose as a result of their 

contract with Chale for purposes of leasing the property. In Erie, 

the court found that even if American’s hiring or retention of the 

employee was proven to be negligent, it was not accidental. Here, 

Defendants do not assert that their alleged failure to perform the 
‐16‐ 

alleged duties was an accident; rather, they maintain that such 

duties do not apply to them. 

In Auto-Owners Insurance Company v. Harvey, the issue was 

whether an insurance policy provided coverage for the harm caused 

by the insured who had pushed his girlfriend, who slipped, fell 

into a river and drowned. 842 N.E.2d at 1281. The policy provided 

coverage for an “occurrence,” which the policy defined as “an 

accident that results in bodily injury. . . .” Id. at 1283. The 

question was whether the push was an “accident” under the policy, 

because while the push was intentional, it possibly had unintended 

consequences. The Indiana Supreme Court found the policy language 

ambiguous and construed it against the insurer, holding that the 

term “occurrence” applied to the girlfriend’s slip, fall, and 

drowning, and not to the insured’s push. Id. at 1286. The court 

distinguished Erie and other cases as involving “whether 

‘occurrence’ applies to circumstances remote from instances of 

specific personal physical conduct, but rather arising from claims 

based on commercial or professional conduct.” Id. at 1284 

(emphasis added); see Parchman, 2013 WL 2600406 at *5 

(distinguishing Harvey because it “did not involve a commercial 

general liability policy, but a homeowner's insurance policy, and 

further included direct physical conduct with the deceased”). 

Here, there are no allegations that Defendants had any direct 

personal physical conduct with Kennetha’s family. Rather, 
‐17‐ 

Defendants’ alleged liability is based on their contract with 

Chale, and the duties that allegedly arose as a result of that 

contract. 

In Tri-Etch, Inc. v. Cincinnati Insurance Company, a robber 

had abducted a liquor store employee before the store closed at 

midnight, tied him to a tree, and beat him. 909 N.E.2d at 999. 

The store’s security service, which was to call the store manager 

within thirty minutes if the alarm was not set at closing, failed 

to call the manager until after 3:00 a.m. Id. The employee was 

found alive, but later died from his injuries. Id. The employee’s 

estate filed a wrongful death action alleging that the security 

service was negligent in failing to call the manager within thirty 

minutes. Id. In the related insurance coverage action, the 

Indiana Supreme Court held that the security service’s failure was 

not an “occurrence” covered by the CGL and umbrella policies, but 

rather, was a professional “error or omission” analogous to lawyer 

malpractice. Id. at 1001. 

The CGL policy does not guarantee the quality of work or 

products of its insureds. To the extent Tri–Etch had a 

duty to [the employee], it arose from its contract with 

[his] employer. This may give rise to tort liability. 

See Restatement (Second) of Torts § 324A (1965). But it 

does not convert a failure to meet a standard of care 

under a contractually assumed duty into an “accident.” 

Id.; see Allstate Ins. Co. v. Preferred Fin. Sols., Inc., 8 F. 

Supp. 3d 1039, 1050-51 (S.D. Ind. 2014) (“the essential point was 

that the claim was based on Tri–Etch’s simple failure to do its 
‐18‐ 

job as promised, a risk that's involved in every business 

relationship, but which is not an accident covered under a general 

liability insurance policy”). 

The Court finds Tri–Etch to be the relevant authority guiding 

its decision. Here, the Underlying Complaint alleges the Chale 

entered into a contract with Defendants to perform the service of 

leasing Chale’s property. To the extent Defendants had duties to 

register the property as a rental and warn of latent dangers, they 

arose from Defendants’ contract with Chale. Defendants’ alleged 

negligence and/or recklessness in failing to perform those legal 

duties is “based on the failure of the insured, in his or her 

professional status, to comply with . . . the standard of care for 

that profession,” which is the type of liability covered by errors 

and omissions insurance. Id. at 1001 (quoting 1 Couch on Insurance 

§ 1:35); see id. at 1002 (“Claims based on negligent performance 

of commercial or professional services are ordinarily insured 

under ‘errors and omissions’ or malpractice policies.”). The fact 

that the deaths of Kennetha’s family were accidental does not alter 

the analysis because “[l]ack of intentional wrongdoing does not 

convert every business error into an ‘accident.’” Id. at 1001. 

As in Tri-Etch, Defendants’ alleged negligent performance of their 

commercial or professional services is not an accident, and for 

that reason it is not an “occurrence” covered by Coverage A. See 

id.; Allstate, 8 F. Supp. 3d at 1050 (“a business’s failure to 
‐19‐ 

perform its services in the manner that it had promised is an 

‘error or omission’ but not by any stretch an ‘accident’”). 

Defendants attempt to distinguish Tri-Etch by asserting that 

the Underlying Complaint only alleges the duties of Chale. A 

cursory review of the Underlying Complaint demonstrates otherwise: 

“As a result [of the contract between Chale and Defendants], 

Defendants McColly Real Estate and its agent and/or employee 

Lockhart had a duty to follow applicable law, including local codes 

and/or ordinances, in leasing the premises, as well as a duty to 

warn of latent or concealed dangers to residents.” (DE #1-1, Ex. 

A at ¶16.) Defendants insist that the alleged duties do not apply 

to real estate agents or brokers. In support, they rely upon an 

Allstate adjuster’s email which states in part that “at this time 

it is our understanding the local code and/or ordinances referenced 

in the complaint applies to the owner of the property, not to the 

real estate agent or broker.” (DE #32-1 at 97.) Defendants 

maintain that the Allstate adjuster’s investigation and opinion 

must be considered in determining the duty to defend. See Newnam, 

871 N.E.2d at 401 (an insurer’s duty to defend is based on the 

complaint allegations and “those facts known or ascertainable by 

the insurer after reasonable investigation”). According to 

Defendants, the Allstate adjustor’s understanding that they “are 

being sued for owner breaches and responsibilities and not for 

broker or agent responsibilities” means that Defendants may 
‐20‐ 

possibly be held liable for conduct “that is not a broker or agent 

error or omission.” (DE #35 at 12.) But Defendants do not identify 

any claim under which they could be held liable for Chale’s 

breaches and responsibilities. See Trustmark, 347 F.3d at 654 

(the insured bears the burden to prove that claims fall within the 

coverage provision of its policy). 

The sole claim against Defendants is based on their 

contractual relationship with Chale to lease the property, which 

allegedly resulted in legal duties to register the property as a 

rental and to warn residents of latent or concealed dangers. (See

DE #1-1, Ex. A ¶16.) While the Allstate adjuster opines that these 

obligations do not apply to real estate agents or brokers, her 

opinion goes to the merits of the claim against Defendants. 

Indiana courts have held that the Court must consider “the nature 

of the claim, not its merit,” in determining whether an insurer 

has a duty to defend an insured. Terre Haute First Nat'l Bank v. 

Pac. Employers Ins. Co., 634 N.E.2d 1336, 1339 (Ind. Ct. App. 

1993); see Trisler, 575 N.E.2d at 1023; Home Fed. Sav. Bank v. 

Ticor Title Ins. Co., 695 F.3d 725, 731 (7th Cir. 2012) (“The duty 

to defend depends on what the claimant alleges, not the ultimate 

merit or lack of merit of the claim.”) (applying Indiana law). 

Assuming the allegations in the Amended Complaint are proved true, 

Defendants failed in duties that arose from their contract with 

Chale for the purpose of leasing the property. See Stroh Brewing 
‐21‐ 

Co., 127 F.3d at 566 (stating that “there is essentially only one 

standard—that the allegations of the complaint, including the 

facts alleged, give rise to a duty to defend whenever, if proved 

true, coverage would attach.”). This claim alleges a professional 

error or omission, rather than an accident or occurrence under 

Coverage A. 

Coverage B 

Coverage B of the Policy provides that Allstate has the duty 

to defend the insured against any suit seeking personal and 

advertising injury damages. Coverage B provides coverage for 

bodily injury arising out of one or more enumerated offenses, 

including the following offense: “The wrongful eviction from, 

wrongful entry into, or invasion of the right of private occupancy 

of a room, dwelling or premises that a person occupies, committed 

by or on behalf of its owner, landlord or lessor.” (DE #1-1 at 

114.) Defendants contend that Coverage B applies to the claim 

against them based on this invasion offense. In support, they 

cite the Underlying Complaint’s allegations that “Kennetha leased 

the premises from Defendant Chale” (DE #1-1, Ex. A ¶3), the 

property “was not fit for habitation” (id., ¶6, ¶18), and “carbon 

monoxide gas was allowed to infiltrate the living quarters of the 

premises from a generator operating in the garage” (id., ¶8, ¶20). 

They do not cite any allegations that Defendant committed wrongful 

entry or invasion of the property. 
‐22‐ 

Allstate maintains that Coverage B does not apply because 

Defendants rely upon an offense that must be “committed by or on 

behalf of the owner, landlord, or lessor.” (DE #1-1 at 114.) “The 

‘committed by’ language makes clear that the policy coverage 

extends only to wrongful entry, eviction, or invasion committed by 

or on behalf of the owner of the land.” Cont'l Cas. Co. v. Sycamore 

Springs Homeowners Ass'n, Inc., No. 1:09-CV-0007-LMJ-DML, 2010 WL 

3522955, at *7 (S.D. Ind. Aug. 31, 2010). Here, the Underlying 

Complaint does not allege that Defendants are an owner, landlord 

or lessor of the property; rather, Chale is indisputably the owner 

and lessor of the property. 

Defendants respond that the invasion of carbon monoxide was 

committed on behalf of the property owner, i.e., Chale. In 

support, they cite the Allstate adjuster’s opinion that the local 

code and/or ordinances referenced in the Underlying Complaint 

apply “to the owner of the property, not to the real estate agent 

or broker.” (DE #32-1 at 97.) While Defendants insist that the 

Allstate adjuster’s opinion constitutes an admission by Allstate, 

they do not explain how the adjuster’s opinion affects Allstate’s 

duty to defend Defendants under Coverage B, nor do they cite any 

legal authority supporting their position.4 Moreover, they do not 

                                                            

4 The Court notes that Defendants gave their argument regarding 

Coverage B little attention, addressing the issue in less than a 

page in each of their briefs. (See DE #31 at 20; DE #35 at 7.)
‐23‐ 

explain how an alleged invasion of the property committed by or on 

behalf of Chale supports such a claim against Defendants. See 

generally Pekin Ins. Co. v. Barber, No. 1:09-CV-0521-TAB-TWP, 2011 

WL 1258063, at *7 (S.D. Ind. Mar. 31, 2011) (holding lawsuits did 

not allege “the personal injury offense of ‘wrongful entry’” under 

a similar coverage provision where the insured “was not the owner, 

landlord or lessor of the Real Estate”). Because the Underlying 

Complaint does not allege a wrongful entry or invasion of property 

committed by or on behalf of Defendants as owners, landlords or 

lessors of the property, Coverage B does not apply here. 

The Court holds that the claim against Defendants in the 

Underlying Complaint is not covered by Coverage A or Coverage B of 

the Policy, and therefore, need not address whether coverage is 

excluded by the Realtor E&O Exclusion. The Court further holds 

that under the Policy, Allstate has no duty to defend the claim 

against Defendants in the Underlying Complaint. Because Allstate 

has no duty to defend Defendants, it also has no duty to indemnify 

Defendants. See Pekin, 2007 WL 1597924, at *4. 

CONCLUSION 

 For the reasons set forth above, Allstate’s motion for summary 

judgment (DE #26) is GRANTED. Defendants’ cross motion for summary 

judgment (DE #30) is DENIED. The Clerk of the Court is DIRECTED

to enter a DECLARATORY JUDGMENT in favor of Allstate declaring 

that under insurance policy number 648550390, Allstate has no duty 
‐24‐ 

to defend or indemnify McColly Realtors, Inc. and/or Ruth Lockhart 

against claims asserted by Rosemary Purnell in case number 45D01-

1503-CT-50 in Lake Superior Court. 

DATED: October 31, 2017 /s/ RUDY LOZANO, Judge 

 United States District Court