Wolverine Mutual Insurance v. Johnny Vance , Dawn Vance , Johnny R. Tinsley (vance ), by

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 02-1877
W OLVERINE M UTUAL I NSURANCE ,
Plaintiff-Appellee,
v.
J OHNNY V ANCE , D AWN V ANCE ,
J OHNNY R. T INSLEY (V ANCE ), BY AND
THROUGH HIS NATURAL PARENT AND GUARDIAN
AND NEXT FRIEND , P AMELA T INSLEY , et al.,
Defendants-Appellants.
____________
Appeal from the United States District Court
for the Northern District of Indiana, South Bend Division.
No. 00 C 768—Robert L. Miller, Jr., Chief Judge.
____________
A RGUED D ECEMBER 3, 2002—D ECIDED A PRIL 10, 2003
____________
Before E ASTERBROOK , M ANION , and E VANS , Circuit Judges.
M ANION , Circuit Judge.
I.
Wolverine Mutual Insurance Co. filed a declaratory action
in federal court seeking to determine the extent of the
coverage owed to policyholder Michael Gingery and, in

-- 1 of 8 --

2 No. 02-1877
1 Johnny Ray Tinsley and Kacey Tinsley bring their action
through Pamela Tinsley. Pamela Tinsley and Johnny Ray Vance
are the parents of Kacey and her brother Johnny.
turn, the victims of his crime. The district court, in granting
summary judgment in Wolverine Mutual’s favor, con-
cluded that Gingery’s coverage did not provide for his
defense or indemnification in the subsequent civil suit
brought by his victims because Gingery had been found
guilty in state court of the intentional crime of attempted
murder. We affirm.
II.
On May 3, 2000, Michael Eugene Gingery shot Johnny
Ray Vance after an altercation near the street outside
Gingery’s house. At the time of the offense, Gingery had
a homeowner’s insurance policy with Wolverine Mutual
Insurance Co. (“Wolverine”) that excluded from coverage
for personal liability those actions expected or intended
by the insured. Gingery was subsequently prosecuted for
attempted murder, and, while the criminal trial was pro-
ceeding, Johnny Ray Vance and Dawn Vance, and Johnny
Ray Tinsley and Kacey Tinsley 1 (hereinafter “plaintiffs”)
filed two separate civil complaints against Gingery in the
Elkhart, Indiana superior court. The complaints alleged,
in part, that Gingery negligently and carelessly shot Johnny
Vance and proximately caused damages to all of the plain-
tiffs. In December 2000, Wolverine filed a complaint in
federal court for declaratory judgment seeking to estab-
lish its duties and obligations under Gingery’s homeown-
er’s insurance.
On July 18, 2001, a jury found Gingery guilty of attempted
murder, a verdict that required the jury to find specific

-- 2 of 8 --

No. 02-1877 3
2 Michael Gingery did not oppose the summary judgment
motion in the district court, and he does not participate in this
appeal. Even though the plaintiffs are not a party to Gingery’s
and Wolverine’s insurance contract, we have held that a tort
victim may appeal from a declaration that a policy of insurance
is inapplicable, even if the insured does not participate in the
appeal. Grinnell Mutual Reinsurance Co. v. Reinke, 43 F.3d 1152,
1153 (7th Cir. 1995). However, the plaintiffs only have stand-
ing to appeal the district court’s determination that Wolverine
owes no duty to indemnify. The plaintiffs do not have stand-
ing to appeal the district court’s finding that Wolverine does
not have a duty to defend Gingery. As we stated in Grinnell,
“an appellant must seek relief rather than injury at the hands
of the court of appeals.” Id. at 1154. Because the plaintiffs can-
not show how they will gain by providing Gingery with a bet-
ter defense at his civil trial, they have no standing to appeal
the district court’s decision that Wolverine does not owe Gin-
gery a duty to defend in their civil action.
intent under Indiana Code § 35-41-5-1. In light of this
verdict, Wolverine filed a motion for summary judgment
in its declaratory judgment action, claiming that Gingery’s
conviction for an intentional act precluded liability cover-
age.
The district court granted summary judgment in Wolver-
ine’s favor, concluding that Wolverine did not owe Gingery
a duty to defend or indemnification under the policy be-
cause his criminal conviction for attempted murder re-
quired a jury to find that his acts that led to the plaintiffs’
injuries were intentional. The court also concluded that,
although the plaintiffs were free to allege that Gingery had
acted negligently in their civil suit, that would not trigger
coverage under Gingery’s homeowner’s policy because
Wolverine’s contractual obligations run only to Gingery.
The plaintiffs appeal. 2

-- 3 of 8 --

4 No. 02-1877
III.
The plaintiffs argue that the district court erred as a mat-
ter of law when it concluded that Wolverine did not owe
Gingery indemnification under his homeowner’s insur-
ance policy. They contend that, under Indiana law, the
conviction of a policyholder of a crime that includes
intent as an element does not negate the contractual ob-
ligation the insurance company has to provide indemnifi-
cation to the policyholder. This court reviews the district
court’s grant of summary judgment de novo, construing
all facts in favor of the plaintiffs, the nonmoving party.
Commercial Underwriters Ins. Co. v. Aires Envtl. Servs. Ltd.,
259 F.3d 792, 795 (7th Cir. 2001). Summary judgment is
proper when the “pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as
to any material fact and that the moving party is entitled
to a judgment as a matter of law.” Fed. R. Civ. P. 56(c).
In this case we sit in diversity, and therefore we are
required to apply the substantive law of the forum state,
Indiana. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).
In fulfilling the mandate of Erie, we must apply the law
of the state as we believe the highest court of the state
would apply it. State Farm Mutual Auto. Ins. Co. v. Pate, 275
F.3d 666, 669 (7th Cir. 2001). The plaintiffs argue that,
pursuant to Indiana precedent, they are not estopped from
arguing Gingery’s intent in a civil action despite his crim-
inal conviction. They further contend that, because they
are permitted to allege that Gingery was negligent, Wol-
verine is obligated to indemnify Gingery pursuant to his
homeowner’s policy.
We agree with the plaintiffs with respect to their first
argument. Collateral estoppel would not apply to the
plaintiffs in this scenario because that doctrine only pre-

-- 4 of 8 --

No. 02-1877 5
3 When used “defensively,” collateral estoppel forecloses a
plaintiff from asserting a claim that the plaintiff had previously
litigated and lost against another defendant. “Offensive” collat-
eral estoppel bars a defendant from relitigating an issue the
defendant previously lost against another plaintiff. Parklane
Hosiery Co. v. Shore, 439 U.S. 322, 329 (1979).
cludes a party from relitigating those issues already liti-
gated and decided. Doe v. Tobias, 715 N.E.2d 829, 831 (Ind.
1999); see also, Holtz v. J.J.B. Hilliard W.L. Lyons, Inc., 185 F.3d
732, 739 (7th Cir. 1999). Trial courts must consider two
factors in determining whether to apply collateral estoppel:
“whether the party against whom the judgment is pled
had a full and fair opportunity to litigate the issue, and
whether it would be otherwise unfair under the circum-
stances” of the particular case. Tofany v. NBS Imaging,
616 N.E.2d 1034, 1037 (Ind. 1993). Because a tort victim
does not have an opportunity to litigate on his own behalf
in a criminal proceeding, Indiana courts have held that
a tort victim is not collaterally estopped from relitigating
the insured’s intent despite a verdict or a guilty plea in
a criminal trial. Meridian Ins. Co. v. Zepeda, 734 N.E.2d
1126, 1132 (Ind. Ct. App. 2000). See also, Kimberlin v. DeLong,
637 N.E.2d 121, 125 (Ind. 1994).
The Indiana Court of Appeals addressed the issue of
offensive collateral estoppel in a context very similar to
the case at hand in Meridian Insurance Co. v. Zepeda, 734
N.E.2d 1126 (Ind. Ct. App. 2000). 3 In Zepeda, the insurer
filed a declaratory judgment action in Indiana state court
claiming that it had no duty to indemnify its insured,
Zepeda, in a personal injury action filed by his shooting
victim, King, after a criminal jury found Zepeda guilty
of aggravated battery. Id. at 1129. Meridian’s policy ex-
cluded coverage for “expected or intended acts.” Id. Merid-

-- 5 of 8 --

6 No. 02-1877
ian sought to collaterally estop both Zepeda and King from
litigating the issue of Zepeda’s intent, after the jury in
Zepeda’s criminal case found his acts to be intentional in
finding him guilty of aggravated battery. Id. The court
found that King could litigate the issue of Zepeda’s intent
because King, as the victim, never had a full and fair
opportunity to litigate this issue in the criminal trial. Id.
at 1128, 1131-32.
However, the court found that Zepeda, the insured, was
precluded from relitigating the issue of his intent be-
cause none of the policy concerns applicable to civil de-
fendants in using offensive collateral estoppel was ap-
plicable to Zepeda. Id. at 1130. Zepeda, and, by analogy,
Gingery, each had the incentive and opportunity to litigate
the issue of intent in his previous criminal prosecution.
In this case, the district court held that Gingery could
not establish why collateral estoppel should not apply,
and he does not appeal that decision. Gingery is there-
fore precluded from arguing that he did not intentionally
injure Vance. Cf. Snodgrass v. Baize, 405 N.E.2d 48, 55 (Ind.
Ct. App. 1980) (holding that evidence of a previous crim-
inal conviction for intentional conduct was sufficient to
uphold trial court’s finding in subsequent civil suit that
defendant had acted intentionally).
This preclusion prevents us from agreeing with the
plaintiffs’ second argument, that Wolverine owes Gin-
gery indemnification in their civil suit. Even though a
third-party victim may pursue legal theories in a civil ac-
tion that an insured may not, the plaintiffs have not cited
any Indiana precedent for the proposition that an insur-
ance company must indemnify the insured based on
that civil action. In fact, the case law in Indiana supports
the opposite conclusion. Indiana is not a “direct action”
state, meaning that an injured third party may not bring

-- 6 of 8 --

No. 02-1877 7
4 Gingery’s homeowner’s policy also reflects this position,
stating that “no action with respect to [personal liability insur-
ance] can be brought against us until the obligation of the
insured has been determined by a final judgment or agreement
signed by us.”
a direct action against a wrongdoer’s liability insurer
until he first obtains a judgment against the insured.
Rausch v. Reinhold, 716 N.E.2d 993, 1002 (Ind. Ct. App. 1999);
Cromer v. Sefton, 471 N.E.2d 700, 703 (Ind. Ct. App. 1984);
Donald v. Liberty Mutual Ins. Co., 18 F.3d 474, 480-81 (7th
Cir. 1994). 4 Once a personal injury plaintiff succeeds in
obtaining a judgment against the insured, he can bring
an action against the liability carrier if it refuses to honor
the terms of the insurance policy. Cromer, 471 N.E.2d at
703. In other words, in Indiana an injured plaintiff “stands
in the legal shoes” of the insured, and his claim can be no
greater than the insured’s claim would be against his
own insurer under the insurance policy. See Araiza v.
Chrysler Ins. Co., 699 N.E.2d 1162, 1163 (Ind. Ct. App. 1998),
rehearing granted in part and modified in, Araiza v. Chrysler
Ins. Co., 703 N.E.2d 661 (Ind. Ct. App. 1998); see also Selleck
v. Westfield Ins. Co., 617 N.E.2d 968, 970-71 (Ind. App.
1993) (accord); Redar v. Allstate Ins. Co., 497 N.E. 2d 566, 568
(Ind. Ct. App. 1985) (accord); Motorists Mut. Ins. Co. v.
Johnson, 218 N.E.2d 712, 715 (Ind. App. 1966).
Thus because Wolverine’s contractual duty runs only to
Gingery, the plaintiffs can only recover insurance pro-
ceeds insofar as their rights derive from Gingery’s rights
under his homeowner’s policy. See Cromer, 471 N.E.2d
at 703 (“[T]here is no duty or fiduciary relation running
from the insurer to the injured plaintiff. The insurer’s only
duty is to the insured on its contract.”); cf. State Farm Fire
& Cas. Co. v. Fullerton, 118 F.3d 374, 385-86 (5th Cir.

-- 7 of 8 --

8 No. 02-1877
1997) (noting that by holding that tort victims’ rights are
derivative of the insured, they have placed Texas among
the bulk of other jurisdictions that have considered the
question). In this context, we examine the plaintiffs’ claims.
Gingery’s actions fall outside his policy with Wolverine
because they have been held to be intentional in his crim-
inal case. The district court held that Gingery is estopped
from asserting that his acts were unintentional and he
has not appealed that ruling. Accordingly, the plaintiffs,
relegated as they are to standing in Gingery’s “legal shoes,”
may not seek indemnification from Wolverine under
Gingery’s homeowner’s policy.
The plaintiffs’ inability to recover insurance proceeds
does not wholly deprive them of a remedy. They can still
obtain damages against Gingery in their civil action,
although Gingery may not be able to satisfy the judgment.
However, whatever cause of action the plaintiffs even-
tually choose to pursue against Gingery, it will be his
responsibility, and not the responsibility of Wolverine, to
pay the damages caused by his actions.
IV.
For the foregoing reasons we affirm the district court.
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—4-10-03

-- 8 of 8 --