Auto. Ins. Co. of Hartford v. Lipscomb, et al.


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Docket Number: 2010-IA-00149-SCT

Supreme Court: Opinion Link
Opinion Date: 12-08-2011
Opinion Author: Pierce, J.
Holding: Reversed and Remanded

Additional Case Information: Topic: Insurance - Duty to defend - Policy coverage - Exclusions
Judge(s) Concurring: Carlson and Dickinson, P.JJ., Randolph, Lamar, Chandler and King, JJ.
Non Participating Judge(s): Waller, C.J.
Dissenting Author : Kitchens, J.
Nature of the Case: CIVIL - INSURANCE

Trial Court: Date of Trial Judgment: 01-06-2010
Appealed from: Hinds County Circuit Court
Judge: Winston Kidd
Disposition: Denied a motion to sever and motion for summary judgment.
Case Number: 251-06-1114-CIV
  Consolidated: 2010-IA-00153-SCT The Automobile Insurance Company of Hartford v. William Lipscomb, Westbrook Cooper, and Harold E. Whittington; Hinds County Circuit Court 1st District; LC Case #: 251-06-1114-CIV; Ruling Date: 01/06/2010; Ruling Judge: Winston Kidd

  Party Name: Attorney Name:  
Appellant: The Automobile Insurance Company of Hartford




JESSIE WAYNE DOSS, JR. DAN W. WEBB



 

Appellee: William Lipscomb, Westbrook Cooper, and Harold E. Whittington PHILIP W. THOMAS BILL WALLER, SR.  

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Topic: Insurance - Duty to defend - Policy coverage - Exclusions

Summary of the Facts: In 2006, a fire occurred at the apartment building rented by Paul Booker Whittington, Jr., and Westbrook Cooper. Whittington died from injuries he sustained in the fire, while Cooper was injured but survived. The building was owned by William Lipscomb, and it was located on the same property as Lipscomb’s residence. Whittington and Cooper sued Lipscomb in tort and amended their complaint to seek declaratory judgment against Lipscomb’s insurer, the Automobile Insurance Company of Hartford, Connecticut, on the issue of coverage. AIC filed a motion to sever and a motion for summary judgment, which the trial court denied. AIC filed two separate petitions for interlocutory appeal which the Supreme Court granted.

Summary of Opinion Analysis: The issue is whether AIC has a duty to defend Lipscomb. An insurance company’s duty to defend is not triggered until it has knowledge that a complaint has been filed that contains allegations of conduct covered by the policy. These allegations, and particularly the conduct alleged in the complaint, determine whether an insurer is required to defend an action. No such duty arises when the alleged conduct falls outside the policy’s coverage. But where, through independent investigation, an insurer becomes aware that the true facts, if established, present a claim against the insured which potentially would be covered under the policy, the insurer must provide a defense until it appears that the facts upon which liability is predicated fall outside the policy’s coverage. Plaintiffs’ complaint included claims against Lipscomb for negligence, breach of building and fire codes, breach of contract and implied warranty, wrongful death, and punitive damages. Plaintiffs also sought a declaratory judgment against AIC. When AIC learned of Plaintiffs’ claim against Lipscomb, it sent a letter to Lipscomb denying coverage under two exclusions. The conduct alleged in Plaintiffs’ complaint is outside the coverage of the policy. Plaintiffs’ complaint and Lipscomb’s deposition testimony reveal that Lipscomb was operating a business by renting out rooms inside his home, as well as the two rooms in the apartment building behind his home. And it is undisputed that Lipscomb’s sole source of income at the time of the fire was his rental properties. Lipscomb’s policy with AIC clearly precludes coverage when bodily injury or property damage occurs that arises out of or in connection with a business engaged in by the insured, or that arises out of the rental of any premises by the insured that is not an insured location. Thus, AIC has no duty to defend Lipscomb against Plaintiffs’ claims.


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