GRINNELL MUTUAL REINSURANCE COMPANY v. SHERMAR OIL, LLC et al

1
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
GRINNELL MUTUAL REINSURANCE
COMPANY,
)
)
)
Plaintiff, 	)
)
v. 	) 	No. 1:23-cv-00931-JPH-MG
)
SHERMAR OIL, LLC, 	)
AJAY PAUL, 	)
AARON JONES, 	)
)
Defendants. 	)
ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
In an underlying state-court lawsuit, Aaron Jones seeks damages after
he was shot by Ajay Paul, who was working at a gas station owned by Shermar
Oil. 	Shermar Oil's insurer, Grinnell Mutual Reinsurance Company, then
brought this action seeking a declaratory judgment that it has no duty to
defend or indemnify Shermar Oil and Mr. Paul in that underlying lawsuit.
Grinnell and Shermar Oil have filed cross-motions for summary judgment. 	For
the reasons below, Shermar Oil's motion, dkt. [56], is DENIED, and Grinnell's
motion, dkt. [62], is GRANTED.
I.
Facts and Background
The parties have filed cross-motions for summary judgment, so the Court
takes the motions "one at a time." 	Am. Fam. Mut. Ins. v. Williams, 832 F.3d
645, 648 (7th Cir. 2016). 	For each motion, the Court views and recites the
evidence and draws all reasonable inferences "in favor of the non-moving
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party." 	That's not necessary here, however, because even when all evidence is
interpreted in Defendants' favor, Grinnell is entitled to summary judgment.
A. Underlying facts
In November 2022, Mr. Jones visited a gas station in Indianapolis. 	Dkt.
62-1 at 9 (Jones Dep. at 7). 	After parking at the pumps, he went inside the
store and bought antifreeze. 	See id. at 28–29 (Dep. at 26–27). 	Shortly after
leaving the store, Mr. Jones noticed that the antifreeze bottle's seal was already
broken, so he went back inside the store to swap it for a new one. 	Id. at 34–35
(Dep. at 33–34). 	Mr. Jones told Ajay Paul, a clerk at the store, what he was
doing. 	Id. at 34–35, 44–45 (Dep. at 33–34, 42–43).
Mr. Jones then went back out to his car, but Mr. Paul—suspecting that
Mr. Jones was stealing antifreeze—followed him and threatened to report him
to the police. 	Id. 	Mr. Jones went back into the store, carrying the antifreeze
bottle and a small jack handle he had been using to pry open the hood of his
car. 	Id. at 33, 50 (Dep. at 31, 49); dkt. 62-3 at 3:15–40. 	Just inside the
doorway, Mr. Jones and Mr. Paul got into an argument, which escalated into a
physical brawl after Mr. Paul hit Mr. Jones in the face. 	Dkt. 62-1 at 58 (Jones
Dep. at 56); dkt. 62-3 at 3:36–55. 	Another person pulled Mr. Jones away from
Mr. Paul, and then Mr. Jones exited the store. 	Dkt. 62-3 at 3:36–55.
Mr. Paul stayed in the store, where someone else handed him a loaded
handgun. 	Dkt. 62-3 at 3:50–59. 	Within seconds, Mr. Jones realized he had
dropped his car keys during the fight and turned around back toward the store
to get them. 	Dkt. 69-2 at 27 (Jones criminal trial testimony). 	Mr. Paul opened
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the door and shot several times, hitting Mr. Jones in the back, thigh, and
wrist.1 Dkt. 62-1 at 123–29 (Jones Dep. at 121–27); dkt. 62-3 at 4:03.
Four days later, the State of Indiana charged Mr. Paul with aggravated
battery; battery by means of a deadly weapon; criminal recklessness; and
battery resulting in bodily injury. 	Dkt. 62-6 (charging information in cause
number 49D30-2211-F3-031435). 	In July 2024, a jury convicted Mr. Paul of
criminal recklessness and battery resulting in bodily injury, but did not reach a
verdict on the other counts. 	Dkt. 62-7.
In May 2023, Mr. Jones sued Shermar Oil and Mr. Paul in Indiana state
court, alleging negligence against Mr. Paul; vicarious liability and negligent
hiring, retention, and supervision against Shermar Oil; and seeking punitive
damages. 	See dkt. 1 at 2–3; dkt. 23-1 (amended state-court complaint).
B. The insurance policy
At the time of the shooting, Shermar Oil was covered by a commercial
general liability insurance policy issued by Grinnell. 	Dkt. 1-1 at 1. 	The policy
also covered Shermar Oil's "'employees' . . . but only for acts within the scope of
their employment for you or while performing duties related to the conduct of
[Shermar Oil's] business." 	Id. at 67. 	Under the "Separation of Insured"
provision, the policy applies "[a]s if each Named Insured were the only Named
1 Mr. Jones and Mr. Paul dispute whether Mr. Jones was still approaching Mr. Paul
when he fired the gun, or whether Mr. Jones had already turned to flee. See dkt. 63 at
8; dkt. 70 at 7. They also dispute whether the wound to Mr. Jones's back was caused
by the bullet's exit or its entry. See dkt. 63 at 10; dkt. 70 at 7. For the reasons below,
neither dispute is material.
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Insured," and "separately to each insured against whom claim is made or 'suit'
is brought." 	Id. at 69.
The policy requires Grinnell to pay "sums that the insured becomes
legally obligated to pay as damages because of 'bodily injury'" if that injury is
"caused by an 'occurrence.'" 	Id. at 57. 	The policy defines an "occurrence" as
"an accident, including continuous or repeated exposure to substantially the
same general harmful conditions." 	Id. at 71.
C. Procedural history
Grinnell filed this case in May 2023 seeking a declaratory judgment that
it has no duty to defend or indemnify Shermar Oil and Mr. Paul in Mr. Jones's
underlying state-court suit. 	Dkt. 1 at 11. 	Shermar Oil and Grinnell have filed
cross-motions for summary judgment.2 Dkt. 56; dkt. 62.
II.
Summary Judgment Standard
Summary judgment shall be granted "if the movant shows that 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). 	The moving party must
inform the court "of the basis for its motion" and specify evidence
demonstrating "the absence of a genuine issue of material fact." 	Celotex Corp.
v. Catrett, 477 U.S. 317, 323 (1986). 	Once the moving party meets this
burden, the nonmoving party must "go beyond the pleadings" and identify
"specific facts showing that there is a genuine issue for trial." 	Id. at 324.
2 Mr. Paul and Mr. Jones do not seek summary judgment, see dkt. 56, but have
responded in opposition to Grinnell's motion for summary judgment, dkt. 70.
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In ruling on cross motions for summary judgment, the Court takes the
motions "one at a time," viewing and reciting the evidence and drawing all
reasonable inferences "in favor of the non-moving party." 	Williams, 832 F.3d at
648.
III.
Analysis
The parties agree that Indiana law applies. 	Dkt. 57 at 7; dkt. 63 at 20–
21. 	Absent a controlling decision from the Indiana Supreme Court, the Court
does its best to predict how that court would rule on issues of law. Mashallah,
Inc. v. W. Bend Mut. Ins. Co., 20 F.4th 311, 319 (7th Cir. 2021). 	In doing so,
the Court may consider decisions from the Indiana Court of Appeals. 	See id.
Under Indiana law, insurance policy interpretation is "primarily a question of
law." 	Wagner v. Yates, 912 N.E.2d 805, 808 (Ind. 2009). 	Indiana courts "give
clear and unambiguous language in a policy its plain and ordinary meaning."
Ebert v. Illinois Cas. Co., 188 N.E.3d 858, 864 (Ind. 2022).
A. Coverage as to Mr. Paul
The policy here covers "'bodily injury' . . . caused by an 'occurrence,'" and
defines "occurrence" as "an accident, including continuous or repeated
exposure to substantially the same general harmful conditions." 	Dkt. 1-1 at
57, 71. 	Indiana law defines "accident" in this context as "an unexpected
happening without an intention or design." 	Sheehan Constr. Co. v. Cont'l Cas.
Co., 935 N.E.2d 160, 170 (Ind. 2010) ("Implicit in the meaning of 'accident' is
the lack of intentionality.").
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Grinnell argues that the shooting was not an "accident," so there is no
"occurrence" under the policy and it is not required to defend or indemnify Mr.
Paul. 	See dkt. 63 at 22–25. 	Defendants respond that there is a triable issue of
fact on whether the shooting was an "accident" because even though Mr. Paul
intentionally fired the gun, he did not intend to shoot or injure Mr. Jones. 	Dkt.
70 at 17–23.
Under Indiana law, unintended injuries from an intentional act can
sometimes qualify as an "accident." 	Auto-Owners Ins. Co. v. Harvey, 842
N.E.2d 1279, 1284–85 (Ind. 2006) (holding that a slip, fall, and drowning could
qualify as an "accident" even though it resulted from an intentional push); FLM,
LLC v. Cincinnati Ins. Co., 24 N.E.3d 444, 454–55 (Ind. Ct. App. 2014).
Defendants rely on Harvey to argue that the harm to Mr. Jones was
unintentional even though Mr. Paul's firing the gun was not. 	Dkt. 70 at 19.
But in Harvey, the intentional act and the harm were separated. 	There,
teenagers Brandy Harvey and Toby Gearheart were having a sexual encounter
on a boat ramp when they got into a shoving match. 	Harvey, 842 N.E.2d at
1281–82. 	After Ms. Harvey pushed Mr. Gearheart, he shoved her and she
slipped, fell down a rocky embankment, and drowned in the river. 	Id. The
Indiana Supreme Court held that while Mr. Gearheart intended to shove Ms.
Harvey, there was a triable issue of fact about whether he intended the harm.
Id. at 1284–85, 1291.
Harvey recognized, though, that in some instances the nature of an
intentional act shows that the harm must have been intended. 	Id. at 1291
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(There is no "occurrence" when, "from the very nature of an insured's actions,
harm must have been intended."). 	For example, a death cannot be an
"accident" under Indiana law when someone intentionally chases down and
runs over someone. 	State Farm Mut. Automobile Ins. Co. v. Sanders, No. 3:17-
cv-137, 2017 WL 4764347 at *3–4 (N.D. Ind. Oct. 19, 2017) (applying Harvey).
This rule applies to shootings like the one here. 	The Indiana Supreme
Court has held that intent to harm necessarily is inferred as a matter of law
when someone "deliberately fire[s] four shots into a crowd of fleeing people."
Allstate Ins. Co. v. Herman, 551 N.E.2d 844, 845–46 (Ind. 1990). 	Other courts
applying Indiana law also consistently infer intent to harm when someone
injures a victim by intentionally shooting in their direction. See State Farm Fire
& Cas. Co. v. Castillo, No. 2:11–CV–00303–WCL–APR, 2013 WL 1122730 at *6
(N.D. Ind. Mar. 18, 2013) (inferring intent as a matter of law even if it was
disputed whether the shooter was aiming at the victim); see also Allstate Ins.
Co. v. Canell, 133 F. Supp. 3d 1124, 1129 (N.D. Ind. 2015) (surveying Indiana
law and holding that intent to harm was not established as a matter of law
when evidence allowed the inference that the shot did not hit the victim and
was fired as a warning to leave). 	So there cannot be an "occurrence" as a
matter of law when someone takes a gun and "intentionally fir[es] it in the
direction" of the victim. 	Castillo, 2013 WL 1122730 at *6.
Applying this rule here, the nature of Mr. Paul's actions necessarily
establishes his intent to harm as a matter of law. 	The undisputed designated
evidence shows that Mr. Paul (1) intentionally fired the gun immediately after
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his physical altercation with Mr. Jones; (2) was only a few feet away from Mr.
Jones when he fired the first shot; and (3) shot out of the store in Mr. Jones's
direction. 	See dkt. 62-3 at 4:03–06. 	Indeed, each of those things is
established by the video evidence in this case. 	Id.; see United States v. Norville,
43 F.4th 680, 682 (7th Cir. 2022) ("[A] video record of the events at issue can
evaporate any factual dispute that would otherwise exist." (quoting Scott v.
Harris, 550 U.S. 372, 381 (2007)). 	It's also undisputed that Mr. Paul shot Mr.
Jones three times. 	Dkt. 62-1 at 123–29 (Jones Dep. at 121–27). 	On these
facts, "from the very nature of an insured's actions, harm must have been
intended." 	Harvey, 842 N.E.2d at 1291.3
In short, Mr. Paul's actions were dangerous and "pointedly directed" at
Mr. Jones, which necessarily shows "intent to injure as a matter of law."
Canell, 133 F. Supp. 3d at 1129; see Herman, 551 N.E.2d at 845. 	So, under
the undisputed designated evidence here, no reasonable jury could find that
Mr. Jones's injuries were an unintended consequence of Mr. Paul's
intentionally fired shots. 	See Castillo, 2013 WL 1122730 at *6 (finding no
accident despite the parties' dispute about whether the shooter aimed at the
victim because "[r]egardless of which version of events the court considers, it is
undisputed that [the shooter] has admitted the act of retrieving the weapon
3 Because those undisputed facts resolve Mr. Paul's intent under Indiana law, the
parties' disputes about whether Mr. Jones was still approaching Mr. Paul when he
fired the gun and whether the wound to Mr. Jones's back was caused by the bullet's
exit or its entry are not material. See dkt. 79 at 8 n.2 (Grinnell's arguing that while
the video may not resolve all factual disputes, it "certainly dispels any argument [that]
Mr. Paul did not mean to shoot Mr. Jones.").
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and intentionally firing it in the direction of where [the victim] . . . [was]
located").
Defendants nevertheless rely on Mr. Paul's affidavit testimony that he
fired the shots out of fear and confusion and "did not aim or intend to harm
Aaron Jones or any other person." 	Dkt. 70 at 21 (citing dkt. 69-1 at 2–3). 	But
given the video evidence and Mr. Paul's trial testimony, that affidavit cannot
show a triable issue of fact.
First, no reasonable jury could watch the video evidence and find that
Mr. Paul did not aim at Mr. Jones when he fired the gun. 	See dkt. 62-3 at
4:03–06; dkt. 69-3; Norville, 43 F.4th at 682 ("[A] video record of the events at
issue can evaporate any factual dispute that would otherwise exist."); accord
Pam v. City of Evansville, 154 F.4th 523, 529 (7th Cir. 2025) ("[V]ideos that
establish a fact 'with confidence' and 'beyond reasonable question' may
eliminate factual disputes."). 	That's enough to establish intent, even accepting
Mr. Paul's argument that Mr. Jones was moving toward the building when Mr.
Paul shot him. 	See Harvey, 842 N.E.2d at 1291; Herman, 551 N.E.2d 844 at
845.
Even if the video weren't dispositive, Mr. Paul's affidavit testimony must
be disregarded because it contradicts his prior testimony at his criminal trial
that he shot at Mr. Jones:
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* 	* 	*
Dkt. 62-2 at 62, 65 (Trial Tr. at 118, 191). 	Mr. Paul may not contradict his
prior trial testimony in this case with a new affidavit. 	See James v. Hale, 959
F.3d 307, 316 (7th Cir. 2020) ("[T]he sham-affidavit rule prohibits a party from
submitting an affidavit that contradicts the party's prior deposition or other
sworn testimony."). 	Mr. Paul's trial testimony was clear that he shot "at the
gentleman"—Mr. Jones—so Mr. Paul's new testimony to the contrary is
disregarded. 	See Clacks v. Kwik Trip, Inc., 108 F.4th 950, 956 (7th Cir. 2024)
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("[C]ourts may disregard affidavits that add new factual details not previously
disclosed in . . . testimony when those details seek to undo the effects of the
prior testimony and manufacture a dispute to get past summary judgment.");
Kelly v. Stevanovich, 40 F.4th 779, 787 (7th Cir. 2022) ("A weak affidavit—of
questionable veracity, lacking corroborating evidence, and contradicting prior
sworn . . . testimony—is insufficient to meaningfully refute" a strong summary-
judgment showing based on "uncontested facts, supported by the evidence.").
In sum, no reasonable jury could find an "accident" here under Indiana
law, so Mr. Paul's actions do not qualify as an "occurrence" under the policy.4
Grinnell is therefore entitled to summary judgment as to coverage for Mr. Paul.
B. Coverage as to Shermar Oil
In the underlying suit, Mr. Jones brings two claims against Shermar
Oil—one for vicarious liability and the other for negligent hiring, retention, and
supervision. 	Dkt. 23-1 at 2–3.
1. Vicarious liability
Vicarious liability holds "a party legally responsible for the negligence of
another, not because the party did anything wrong but rather because of the
party's relationship to the wrongdoer." 	Yost v. Wabash Coll., 3 N.E.3d 509, 518
(Ind. 2014). 	"Under this doctrine of imputed liability, an employer, who is not
liable because of his own acts, can be held liable for the wrongful acts of his
employee which are committed within the scope of employment." 	Id.
4 Because Grinnell is entitled to summary judgment on this basis, the Court does not
address whether Mr. Paul's state of mind is established by his criminal convictions or
whether the policy's intentional act exclusion applies.
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Grinnell argues that because Mr. Paul's shooting Mr. Jones was not an
"accident" under the policy, Shermar Oil does not have policy coverage on Mr.
Jones's vicarious liability claim. 	Dkt. 63 at 29. 	Shermar Oil contends that,
under the policy's separation-of-insureds provision, Grinnell must consider
Shermar Oil separately from Mr. Paul, making Mr. Paul's intent "irrelevant" as
to Shermar Oil. 	Dkt. 57 at 8; dkt. 70 at 13–15.
Vicarious liability is built on the agency-law tenet of "the identity of
principal and agent when the agent is engaged in the principal's business."
BGC Entertainment, Inc. v. Buchanan, 41 N.E.3d 692, 701 (Ind. Ct. App. 2015).
So, for a vicarious-liability claim, an employee's actions and knowledge are
imputed to the employer. 	See id.; Southport Little League v. Vaughan, 734
N.E.2d 261, 274 (Ind. Ct. App. 2000). 	In other words, the principal and agent
are treated as the same, with respondeat superior liability being the "means of
extending liability" from the employee to the employer. 	Stump v. Indiana Equip.
Co., 601 N.E.2d 398, 403 (Ind. Ct. App. 1992). 	So when a claim rests on
vicarious liability, the intentionality of the employee applies equally to the
employer. 	See Southport Little League, 734 N.E.2d at 268 ("The doctrine of
respondeat superior creates liability for the principal where it otherwise would
not exist."); accord In re Sterling, 933 F.3d 828, 833–35 (7th Cir. 2019).
Indeed, Shermar Oil does not contest imputing Mr. Paul's intent to injure
Mr. Jones to Shermar Oil as a matter of Indiana agency law. 	See dkt. 57 at 8–
9; dkt. 70 at 14–15 (Shermar Oil's agreeing that this claim is for vicarious
liability based on its employee's underlying acts). 	Dkt. 70 at 14. 	Shermar Oil
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instead argues that the policy's separation-of-insureds provision, under which
coverage applies "separately to each insured," prevents Mr. Paul's intent from
being imputed to Shermar Oil. 	Dkt. 1-1 at 69.
The Indiana Supreme Court has not addressed the application of
separation-of-insureds provisions in the context of an agency relationship. 	It
has held, however, that such a provision does not prevent a finding that
multiple insureds are not entitled to coverage for the same reason. 	See Holiday
Hosp. Franchising, Inc. v. AMCO Ins. Co., 983 N.E.2d 574, 581 (Ind. 2013). 	So,
in Holiday Hospitality, the insured Holiday Inn Express and its insured
employee were both excluded from coverage under an abuse/molestation
exclusion after the employee abused a guest—notwithstanding the separation-
of-insureds provision. Id. 	While Holiday Hospitality did not address any
agency relationship due to the exclusion's broad language, it demonstrates that
a separation-of-insureds provision does not prevent insureds from being
excluded from coverage for the same reason, as long as they are considered
separately. 	See id.
It's therefore reasonable to predict that the Indiana Supreme Court
would interpret the separation-of-insureds provision as requiring only that
each insured receive its own independent analysis of coverage under the policy.
See Green Plains Trade Grp., LLC v. Archer Daniels Midland Co., 90 F.4th 919,
927–28 (7th Cir. 2024) ("[W]hen the highest court of the state has not spoken"
a federal court "must ascertain, as best [it] can, the rule of law that the highest
court of the state would apply."); see American Family Mut. Ins. Co. v. Bower,
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752 F. Supp. 2d 957, 960 (N.D. Ind. 2010) ("Severability clauses [in insurance
policies] are commonly used to provide each insured with separate coverage, as
if each were separately insured with a distinct policy."). 	Applying that
approach here, Indiana agency law would still impute Mr. Paul's intent to
Shermar Oil for a vicarious-liability theory if Shermar Oil were the only
insured. 	See BGC Entertainment, Inc., 41 N.E.3d at 701; Yost, 3 N.E.3d at 518.
That is what the Fourth Circuit has persuasively held, applying Virginia
law, in a similar situation. 	Liberty University, Inc. v. Citizens Ins. Co. of Am.,
792 F.3d 520, 529–30 (4th Cir. 2015) (holding that a separation-of-insureds
provision does not displace the rule that "an agent's intentionally tortious act
cannot be 'unexpected' by the principal who is vicariously liable for the act");
Green Plains Trade, 90 F.4th at 927–28 (explaining that a federal court may
consider other jurisdictions' decisions in predicting how the state's highest
court would rule). 	So, as in Liberty University, this Court has "ample reason to
anticipate that [the Indiana Supreme Court] would impute the intent of
[Shermar Oil's] agents accordingly." 	792 F.3d at 530. 	Defendants' cited cases
do not show otherwise, because they involved direct rather than vicarious
liability. 	See Wayne Twp. Bd. of Sch. Comm'rs. v. Indiana Ins. Co., 650 N.E.2d
1205, 1209 (Ind. Ct. App. 1995) (explaining that the complaint's "separate
allegations . . . against the school" brought "claims against the school under a
theory of negligence in counts separate from that brought against" its
employee, the school's principal); Bower, 752 F. Supp. 2d at 960.
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Accordingly, Mr. Paul's actions were not an "accident" as to Shermar Oil
under Mr. Jones's theory of vicarious liability. 	Grinnell is entitled to summary
judgment motion as to coverage for the vicarious liability claim.
2. Direct liability
In the underlying lawsuit, Mr. Jones also alleges that Shermar Oil is
liable for its negligent hiring, retention, and supervision of Mr. Paul. 	Dkt. 23-1
at 3. 	Because this is a direct claim based on Shermar Oil's own actions, Mr.
Paul's intent is not imputed to Shermar Oil under the policy's separation-of-
insureds provision. 	See Wayne Twp. Bd. of Sch. Comm'rs, 650 N.E.2d at 1209.
Even without intent to cause the harm, however, "commercial or
professional conduct" is not always an "accident" or "occurrence" under
Indiana law. 	Tri-Etch, Inc. v. Cincinnati Ins. Co., 909 N.E.2d 997, 1001–02 (Ind.
2009) ("Lack of intentional wrongdoing does not convert every business error
into an 'accident.'"). 	That's because a commercial general liability policy does
"not guarantee the quality of work or products of its insureds." 	Id. 	So when an
act fails to conform to the business's "standard of care for that profession," it is
not a covered "occurrence." 	Id. Instead, it is a "[b]usiness risk" that "occurs as
a consequence of the insured not performing well and is a component of every
business relationship that is necessarily borne by the insured in order to
satisfy its customers." 	Id. at 1003.
Grinnell argues that Shermar Oil's hiring, retention, and supervision
constitutes such a business risk that is not an "occurrence." 	Dkt. 63 at 32–33.
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Defendants respond that Mr. Paul's conduct cannot be characterized as a
business risk "reasonably attributable" to Shermar Oil. 	Dkt. 70 at 17.
Indiana law construes the "business risk" rule broadly, encompassing
negligent hiring and retention claims. 	See Tri-Etch, 909 N.E.2d at 1002. 	In Tri-
Etch, the Indiana Supreme Court cited with approval an Indiana Court of
Appeals decision holding that there was "no coverage for property damage
alleged to have arisen from negligent hiring and retention of an employee." 	909
N.E.2d at 1002 (explaining Erie Ins. Co. v. American Painting Co., 678 N.E.2d
844 (Ind. Ct. App. 1997)). 	In American Painting, an employee who was
supposed to paint a home instead burglarized it and set it on fire. 	678 N.E.2d
at 845. 	Despite the flagrant nature of the employee's actions, the Indiana
Supreme Court in Tri–Etch recognized American Painting as an example of a
non-covered claim "arising out of professional or other business services." 	909
N.E.2d at 1002; accord Allstate Ins. Co. v. McColly Realtors, Inc., 296 F. Supp.
3d 947, 956 (N.D. Ind. 2017) ("In [American Painting], the court found that even
if American's hiring or retention of the employee was proven to be negligent, it
was not accidental.").
Here, Mr. Jones's negligent hiring, retention, and supervision claim
against Shermar Oil fits squarely within this rule. 	See American Painting, 678
N.E.2d at 846. 	That's because Shermar Oil's hiring, retention, and supervision
of Mr. Paul was not an "accident," but an intentional choice made so that it
could run its business. 	See id.; Tri-Etch, 909 N.E.2d at 1001–02.
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Defendants resist this conclusion by arguing that it renders coverage
illusory, since Grinnell could "avoid ever covering the [insured] business or its
employees for any type of conduct, accident or otherwise." 	Dkt. 70 at 17. 	But
under Indiana law's business-risk rule, an employer's hiring decision is not an
"occurrence" because it was an intentional choice, even if the eventual harm
was unintended. 	See American Painting, 678 N.E.2d at 846; U.S. Liability Ins.
Co. v. Parchman, No. 1:11-cv-1244-TWP-DML, 2013 WL 2600406 at *5 (S.D.
Ind. June 11, 2013). That narrow rule does not make coverage illusory.
Instead, as Tri-Etch explained, "there is a difference between risks that arise
out of a business and business risks," and the former (perhaps a premises-
liability claim) may still be covered under a commercial general liability policy.
909 N.E.2d at 1003; see Parchman, 2013 WL 2600406 at *5.
Accordingly, Shermar Oil's hiring, retention, and supervision was not an
"occurrence" under the policy, and Grinnell is entitled to summary judgment as
to coverage for this claim.5
C. Indemnification for punitive damages
The parties agree that Grinnell does not have a duty to indemnify for
punitive damages under the policy. 	See dkt. 63 at 33–34; dkt. 70 at 28.
Therefore, Grinnell is entitled to summary judgment as to Mr. Jones's punitive
damages claim in the underlying lawsuit.
5 Because there is no coverage for Mr. Paul or Shermar Oil under the policy, neither of
them is required to pay Mr. Jones's medical expenses under the policy's medical
payments provision. Dkt. 1-1 at 59; see dkt. 63 at 34–35 (recognizing that the
provision's applicability hinges on whether there was an "occurrence").
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IV.
Conclusion
Shermar Oil's motion for summary judgment is DENIED. 	Dkt. [56].
Grinnell's motion for summary judgment is GRANTED. 	Dkt. [62]. 	Grinnell is
entitled to a declaration that it is not required to defend or indemnify Shermar
Oil or Mr. Paul or provide medical-expense coverage for Mr. Jones. 	Final
judgment shall issue by separate entry.
SO ORDERED.
Distribution:
All electronically registered counsel
Date: 11/6/2025
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