Opinion ID: 2778644
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: A. Mr. Lodholtz was employed by Forge Staffing and assigned to perform services at Pulliam’s assembly plant. A machine owned and maintained by Pulliam malfunctioned and caused Mr. Lodholtz to be pulled into a laser cutting machine. He suffered severe injuries. On June 24, 2011, Mr. Lodholtz filed an action against Pulliam in the Superior Court of St. Joseph County, Indiana, alleging that he sustained his injuries as a result of Pulliam’s negligence. On June 27, 2011, Pulliam was served with the complaint, which it promptly forwarded to Granite, its insurer. 2 Granite then assigned York the task of handling the Lodholtz complaint for Pulliam. 1 The jurisdiction of the district court was based on 28 U.S.C. § 1332. Our jurisdiction is based on 28 U.S.C. § 1291. 2 Granite had sold an insurance policy to Pulliam on January 12, 2011. Pulliam timely paid all premiums on the policy, which covered January 2011 to January 2012. No. 14-2571 4 On July 7, 2011, York notified Pulliam that it had received the complaint and had set up a file on the matter. The next day, York contacted Mr. Lodholtz’s counsel and requested an extension for Pulliam to file an answer to the complaint. Mr. Lodholtz’s counsel agreed to the extension. On July 11, 2011, York confirmed in a letter to Mr. Lodholtz that Pulliam had received an extension to answer the complaint until August 19, 2011. This letter confirmed that York was the authorized representative of Granite and their insured, Pulliam. York reassigned the handling of the claim to a more senior adjuster within the company, who began to investigate whether the claim was within the policy’s coverage. A third adjuster later assumed internal responsibility for the case and, on August 18, 2011, sent a letter to Pulliam stating that the handling of the claim would “progress as seamlessly as possible.” 3 Despite these assurances to Pulliam, York did not retain counsel to defend the company against Mr. Lodholtz’s claim. Nor did it inform Pulliam that Granite would not defend Pulliam. Granite admitted that York “should have advised Defendant Pulliam before August 19, 2011 that it believed this lawsuit was not covered under the Granite State Policy and that Defendant Pulliam should have retained counsel to protect its interests.” 4 On August 22, 2011, after Pulliam’s extended deadline to file an answer had passed, Mr. Lodholtz filed a motion for 3 R.1-8 at 1. All record citations are to the docket in Case No. 3:11-cv-435. 4 R.1 at 4 ¶ 27 (Lodholtz Compl.). No. 14-2571 5 default judgment. This motion was served upon Pulliam, who forwarded it to Granite on August 23. On the same day, the court entered a default judgment against Pulliam and ordered that a trial be set on damages. Also on the same day, York sent an email to Pulliam, stating: Sincere apologies for any miscommunication in the past regarding the assignment of defense counsel. Please note that Pulliam Enterprises, Inc. will need to retain its own defense attor- ney to represent you in this matter for as ex- plained the insurance carrier Granite State does not appear to cover this loss.[ 5] The email explained that the policy did not cover injuries to employees of the insured. 6 On August 24, 2011, Pulliam’s counsel appeared for Pulliam in the state action and obtained an extension until September 22, 2011, to file an answer. Pulliam also emailed York and requested that Granite provide its official coverage position. Pulliam stated that, in light of what had occurred, Pulliam might have to assert various claims against York and Granite. York responded that Granite has issued or would issue shortly, or direct York to issue, a letter denying cover- 5 R.1-7. 6The Granite insurance policy excluded coverage for bodily injury to an employee of the insured that occurred in the course of employment. See R.1-1 at 16 (Insurance Contract). In a motion submitted to the state court, Granite stated that it was not clear whether Mr. Lodholtz, as an employee of Forge Staffing assigned to Pulliam, was an “employee” of Pulliam. See R.1-4 at 4 ¶ 23. No. 14-2571 6 age. York further suggested that Pulliam take action to vacate the default and defend itself in the state action. Pulliam reached a settlement with Mr. Lodholtz on September 7, 2011. The agreement provided that Pulliam would not move to vacate the default judgment, nor would it contest the amount of damages that Mr. Lodholtz sought to establish. Pulliam further agreed to assign Mr. Lodholtz all claims that it had against Granite and its agents. Mr. Lodholtz would be entitled to proceed against Granite and York to collect damages on any judgment Mr. Lodholtz obtained against Pulliam. For his part, Mr. Lodholtz agreed not to seek execution against Pulliam’s assets for any portion of the judgment. On November 1, 2011, after an evidentiary hearing, the state court entered a final judgment for Mr. Lodholtz and against Pulliam for $3,866,462. B. On November 3, 2011, Granite filed an action in the district court, seeking a declaratory judgment that it had no duty to indemnify Pulliam in the underlying state court lawsuit. The next day, Mr. Lodholtz, as assignee of the claims held by Pulliam, filed a complaint against Granite for breach of contract, bad faith, and negligence, and against York for negligence. The district court consolidated these cases. Count IV of Mr. Lodholtz’s federal complaint alleged that York negligently had breached a duty owed to Pulliam by failing to exercise reasonable care in handling Pulliam’s defense in the state-court proceedings. York answered that no relationship existed between either York and Pulliam or No. 14-2571 7 between York and Mr. Lodholtz from which a duty or breach could occur. York then filed a motion for judgment on the pleadings, contending that Mr. Lodholtz’s complaint does not give rise to a negligence claim. Specifically, York contended that it had no legal duty to Pulliam, Mr. Lodholtz’s assignor, and therefore Mr. Lodholtz could not recover. The district court granted York’s motion. The court noted that whether a claims adjuster, such as York, had a common law duty of reasonable care toward an insured, such as Pulliam, is not a novel question under Indiana law. It concluded that “York, as Granite State’s insurance adjuster, has no common law duty of reasonable care to Pulliam in handling the defense of the state court case.” 7 The court further concluded that York did not assume a duty to Pulliam because York had not specifically and deliberately undertaken the task that it was alleged to have performed negligently. On June 6, 2014, the district court granted York’s motion for entry of final judgment under Federal Rule of Civil Procedure 54(b). 8 Mr. Lodholtz now appeals the court’s decision to dismiss his claim against York. 7Granite State Ins. Co. v. Pulliam Enters., Inc., Nos. 3:11-CV-432, 3:11-CV435, 2014 WL 1094877, at  (N.D. Ind. Mar. 19, 2014). 8 Federal Rule of Civil Procedure 54(b) provides: When an action presents more than one claim for re- lief—whether as a claim, counterclaim, crossclaim, or third-party claim—or when multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only (continued…) No. 14-2571 8