State Farm Fire & Casualty Co. v. T.B. ex rel. Bruce

Summary

The Indiana Supreme Court held that an insurer that declined to defend its insured without reserving rights or seeking declaratory relief was bound by matters necessarily determined in the underlying tort action, but not by unnecessary characterizations in a consent judgment. The court concluded that factual issues remained regarding whether the child was receiving childcare services and whether the occasional-care exception to the policy exclusion applied. It reversed the summary judgment for the child and remanded for a merits hearing, while summarily affirming that liability was limited to the policy's $300,000 limit.

Holdings

1. Because State Farm declined to defend and did not seek a declaratory judgment, it was bound by matters necessarily determined in the underlying action, but it was not estopped from contesting unnecessary factual characterizations in the consent judgment, including the statement that the molestation was unrelated to daycare activities.
2. Summary judgment for either party was improper because genuine issues of material fact existed concerning whether T.B. was in the care of an insured because of childcare services and whether the care provided on the date of the molestation was occasional within the policy exception.
3. The insurer's liability was limited to the homeowner's policy limit of $300,000.

Questions Presented

1. Whether State Farm was collaterally estopped from contesting factual statements in the consent judgment concerning whether T.B.'s injury was unrelated to daycare activities.
2. Whether summary judgment was proper on the policy's childcare exclusion and its exception for occasional childcare services.
3. Whether the damages award could exceed the homeowner's policy limit.

Disposition

reversed_and_remanded