CINCINNATI INSURANCE COMPANY v. LOST RUN FARM COMMUNITY ASSOCIATION, INC. et al

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
CINCINNATI INSURANCE COMPANY, 	)
)
Plaintiff, 	)
)
v. 	) 	No. 1:24-cv-00321-TWP-MKK
)
LOST RUN FARM COMMUNITY
ASSOCIATION, INC.,
)
)
ARMOUR PROPERTY MANAGEMENT, LLC, 	)
VINCENT KROON, 	)
BEN WHEAT, 	)
SCOTT BRUNS, 	)
ASHLEE WHEAT, 	)
EDWARD KOWLOWITZ, 	)
REBECCA KIELL, 	)
JOHN GARCIA, 	)
MARY KAY GARCIA, 	)
)
Defendants. 	)
)
)
SCOTT BRUNS, 	)
ASHLEE WHEAT, 	)
REBECCA KIELL, 	)
LOST RUN FARM COMMUNITY
ASSOCIATION, INC.,
)
)
EDWARD KOWLOWITZ, 	)
VINCENT KROON, 	)
BEN WHEAT, 	)
)
Counter Claimants, 	)
)
v. 	)
)
CINCINNATI INSURANCE COMPANY, 	)
)
Counter Defendant. 	)
ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT
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This matter is before the Court on the parties' cross motions for summary judgment.
Plaintiff/Counter Defendant Cincinnati Insurance Company ("Cincinnati") filed a Motion for
Summary Judgment (Filing No. 50); Defendants/Counter Claimants Lost Run Farm Community
Association, Inc. ("Lost Run Farm"), Vincent Kroon, Ben Wheat, Scott Bruns, Ashlee Wheat,
Edward Kowlowitz, and Rebecca Kiell (collectively, the "Lost Run Defendants") filed a Cross
Motion for Summary Judgement (Filing No. 55); and Defendant Armour Property Management,
LLC ("Armour") filed a Response to Plaintiff’s Motion For Summary Judgment and Cross-Motion
for Summary Judgment (Filing No. 58). Cincinnati initiated this action seeking a declaratory
judgment in its favor stating that it had no duty to defend or indemnify the Lost Run Defendants
or Armour for claims filed against them in state court by Defendants John Garcia and Mary Kay
Garcia (the "Garcias") (Filing No. 1). For the following reasons, Cincinnati's Motion is granted,
and the Lost Run Defendants' and Armour's Motions are denied.
I. 	BACKGROUND
This insurance coverage dispute surrounds an underlying state court lawsuit between the
Garcia's and their homeowner's association—Defendants Lost Run Farm Community Association
and individual members of the association's board (Vincent Kroon, Ben Wheat, Scott Bruns,
Ashlee Wheat, Edward Kowlowitz, and Rebecca Kiell)—and Defendant Armour, the property
management company for Lost Run Farm. The underlying lawsuit alleges discrimination against
John Garcia based on his race and national origin, and against Mary Kay Garcia based on an
alleged disability. All parties have moved for summary judgment, agreeing that the material facts
recited below, are not in dispute.
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A. 	Facts Leading to Underlying Lawsuit
The Garcias are husband and wife who purchased Lot 17 of the Lost Run Farm
Development located in Zionsville, Indiana on or about January 11, 2019 (Filing No. 52-1 at 3).
Lot 17 was vacant, unimproved land. Any individual who owns a lot in the Lost Run Farm
Development is a member of the Lost Run Farm Association. Id. The Association has a Board of
Directors (the "Board") which consists of members of the Association. Id.
The Garcias began planning to build their home on the lot but received multiple complaints
and notices of covenant violations prior to beginning construction. Id. at 4. On December 11, 2019,
the Garcias submitted preliminary drawings to the Board. Id. On November 19, 2020, the Garcias
submitted a formal construction application and delivered the application, deposit, and all required
exterior material samples to the Board. Id. The Garcias also provided various plans to the Board
via email. Id. On January 4, 2021, the Garcias received an approval letter from the Board for their
construction application and landscape plan, with three exceptions regarding the fence, cultured
stone, and the removal of a walnut tree. Id.
The Garcias engaged in communications with the Board to reach a compromise regarding
the aspects of their application and plan that the Board did not approve. Id. at 5. Specifically, the
Garcias communicated to the Board that they needed a fence to contain their dogs given Mary Kay
Garcia's disability and the steepness of a 27-foot hill on the property. Id. However, the Board
refused to allow any type of fence denying the Garcias' request for an accommodation for Mary
Kay Garcia's disability. Id. at 6.
On July 15, 2021, the Garcias began construction on their home. Id. The next day, the Board
and Armour, the property management company for Lost Run Farm, immediately requested that
the Garcias stop all construction and relocate their approved driveway. Id. The Board and Armour
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threatened to seek an injunction to halt the Garcias' construction efforts even though the driveway
location had been previously approved. Id.
In December 2021, Armour called the Garcias to revoke their landscape plan and said that
they would need to resubmit new plans under new requirements. Id. Armour required the Garcias
to build large boulder walls and install a continuous row of trees across the entire backyard, which
significantly increased construction costs. Id.
On February 23, 2022, the Garcias received a Notice of Noncompliance that required them
to reapply with a new landscape plan, subject to the Board's approval. Id. On April 20, 2022, the
Garcias submitted a revised landscape plan for approval. Id. On May 18, 2022, the Garcias
received a new requirement that large stone planter beds were needed to accommodate trees near
the pool. Id. at 5.
That same day, May 18, 2022, the Garcias withdrew their request for approval and
informed Armour and the Board that they planned to work off the original approved landscape
plan. On June 3, 2022, Armour and the Board rejected the previously withdrawn landscape plan
and ignored the Garcias request to work off the original. Id.
That same day, the Garcias received yet another list of new requirements. Sod had to be
fescue rather than the standard 85% Bluegrass Annual Rye mix; and Ozark Mountain Stone was
required for all outcroppings even though that stone did not match the modern rustic style of the
Garcias' residence. Id. In addition, the Garcias were informed that they must sod 100% of the
property, even though others in the Lost Run Farm Development had used seed and straw. Id.
Finally, the Board said that fencing around mechanical equipment was not allowed, even though
others have fencing, and the covenants allow for fencing. Id.
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On June 26, 2022, Armour and the Board demanded the Garcias submit another landscape
plan. The Garcias complied with the demand, but Armour and the Board rejected the plan on
September 7, 2022, claiming the plan was not in compliance with the covenants of the Lost Run
Farm Development. Id. at 5–6.
B. 	Procedural History of Underlying Lawsuit
Lost Run Farm filed suit in state court on October 21, 2022, against the Garcias to enforce
the homeowners' association's covenants and by-laws that the Garcias allegedly violated (the
"Underlying Lawsuit") (Filing No. 51 at 6). Lost Run Farm filed an amended complaint on
November 14, 2022. The Garcias then filed counterclaims against Lost Run Farm and the
individual Defendants listed in this case. Id.
On August 24, 2023, the Garcias were granted leave to file an amended counterclaim and
third-party claims (the "Amended Counterclaim") against Armour and the Lost Run Farm
Defendants. Id. The Amended Counterclaim asserted violations of the Federal Fair Housing Act,
the Indiana Fair Housing Act, and the Civil Rights Act of 1866, as well as claims for intentional
infliction of emotional distress, breach of fiduciary duty, breach of the duty of loyalty, breach of
the duty to act in good faith, enforcement of restrictive covenants, breach of contract, and
declaratory judgment. Id.
Armour and the Lost Run Farm Defendants each filed motions to dismiss but the state court
denied those motions on January 23, 2024. Id. at 7. Armour and the Lost Run Farm Defendants
then filed answers to the Amended Counterclaim on March 4, 2024, and March 15, 2024. Id.
On September 23, 2024, the Garcias were granted leave to file a second amended
counterclaim and third-party complaint (the "Second Amended Counterclaim"), which advanced
claims including allegations of violation of the Indiana Fair Housing Act, intentional infliction of
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emotional distress, enforcement of restrictive covenants, breach of contract, abuse of process,
frivolous claims, and declaratory judgment. Id.
On October 31, 2024, Armour and the Lost Run Defendants, respectively filed a motion to
dismiss and a partial motion to dismiss the Second Amended Counterclaim. Id. On February 3,
2025, the state court dismissed all the Garcias' counterclaims except for breach of contract and
declaratory judgment. Id. On October 14, 2025, the state court entered final judgment in favor of
Lost Run Farm and denied all other claims. See Final Judgment Order, Lost Run Farm Community
Association, Inc. v. John C. Garcia et. al, Cause No. 06D01-2210-PL-001319 (Boone Super. Ct.
Oct. 14, 2025).1
C. 	The Insurance Policies
Cincinnati issued a Commercial Policy (the "Policy") to Lost Run Farm and Armour, which
was continually renewed and effective during the events pertaining to this case (Filing No. 51 at
8–9). The Policy contained two parts each providing different forms of coverage—the Commercial
General Liability ("CGL") coverage and the Wrongful Acts coverage. The relevant terms of the
CGL coverage of the Policy are as follows:
SECTION I – COVERAGES
COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as
damages because of "bodily injury" or "property damage" to which this insurance
applies. We will have the right and duty to defend the insured against any "suit"
seeking those damages. However, we will have no duty to defend the insured
against any "suit" seeking damages for "bodily injury" or "property damage" to
which this insurance does not apply. We may, at our discretion, investigate any
"occurrence" and settle any claim or "suit" that may result.
1 A motion to correct errors remains pending in the Underlying state court action. See Lost Run Farm Community
Association, Inc. v. John C. Garcia et. al, Cause No. 06D01-2210-PL-001319, last visited January 5, 2026.
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b. This insurance applies to "bodily injury" and "property damage" only if:
(1) The "bodily injury" or "property damage" is caused by an "occurrence" that
takes place in the "coverage territory";
(2) The "bodily injury" or "property damage" occurs during the policy period.
(Filing No. 52-4 at 3).
The CGL also contained the following exclusions:
2. Exclusions
This insurance does not apply to:
a. Expected or Intended Injury
"Bodily injury" or "property damage" which may reasonably be expected to result
from the intentional or criminal acts of the insured or which is in fact expected or
intended by the insured, even if the injury or damage is of a different degree or type
than actually expected or intended. This exclusion does not apply to "bodily injury"
resulting from the use of reasonable force to protect persons or property.
m. Damage to Impaired Property or Property Not Physically Injured
"Property damage" to "impaired property" or property that has not been physically
injured, arising out of:
(1) A defect, deficiency, inadequacy or dangerous condition in "your product"
or "your work"; or
(2) A delay or failure by you or anyone acting on your behalf to perform a
contract or agreement in accordance with its terms. This exclusion does not
apply to the loss of use of other property arising out of sudden and accidental
physical injury to "your product" or "your work" after it has been put to its
intended use.
Id. at 4, 8.
The CGL contained the following definitions:
SECTION V – DEFINITIONS
4. "Bodily injury" means bodily injury, sickness or disease sustained by a person,
including death resulting from any of these at any time.
16. "Occurrence" means an accident, including continuous or repeated exposure to
substantially the same general harmful conditions.
20. "Property damage" means:
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a. Physical injury to tangible property, including all resulting loss of use of that
property. All such loss of use shall be deemed to occur at the time of the physical
injury that caused it; or
b. Loss of use of tangible property that is not physically injured. All such loss
of use shall be deemed to occur at the time of the "occurrence" that caused it.
For the purposes of this insurance, "electronic data" is not tangible property.
Id. at 18, 21, 22.
The Policy also contained a Wrongful Acts Coverage Part which stated in relevant part:
SECTION I – COVERAGE
1. 	Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as
"damages" because of a "wrongful act". We will have the right and duty to defend
the insured against any "suit" seeking those "damages". However, we will have no
duty to defend the insured against any "suit" seeking "damages" to which this
insurance does not apply. We may, at our discretion, investigate any incident that
may lead to a "claim" or "suit" and settle any "claim" or "suit" that may result.
(2) Our right and duty to defend ends when we have used up the applicable limit
of insurance in the payment of judgments or settlements.
b. This insurance applies to a "wrongful act" only if:
(1) The "wrongful act" takes place in the "coverage territory"; and
(2) The "wrongful act" occurs during the policy period;
Id. at 35.
The Wrongful Acts Coverage also contained the following exclusions:
3. Exclusions
This insurance does not apply to any liability based upon, arising out of, directly or
indirectly resulting from or in consequence of, or in any way involving:
c. Bodily Injury, Personal Injury or Property Damage
Any actual or alleged:
(1) Bodily injury, sickness, disease, or death of any person, assault, battery,
mental anguish, or emotional distress;
(2) "Property damage", including but not limited to physical injury, loss of or
loss of use of currency or any negotiable or non-negotiable instruments or
contracts representing money;
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(3) 	Invasion 	of 	privacy, 	wrongful 	entry, 	eviction, 	false 	arrest, 	false
imprisonment, false detention, abuse of process, malicious prosecution, libel,
slander, defamation, or disparaging of a person's or organization's goods,
products or services; or
(4) Interference with or damage to business reputation.
d. Breach of Contract
Breach of contract.
g. Dishonest, Criminal or Malicious Acts
Any insured or any person for whose actions an insured is legally responsible,
committing any deliberately fraudulent, dishonest, criminal or malicious act or
omission, or willful or reckless violation of any statute, rule, regulation, agreement,
or judicial or regulatory order.
t. Violation of Civil Rights
Violation of any civil rights law whether Federal or State or local ordinance,
including but not limited to discrimination on account of race, religion, sex, or age.
Id. at 35–37.
Finally, the Wrongful Acts Coverage contained the following definitions:
SECTION V – DEFINITIONS
1. "Claim" means a demand received by an insured for money, including the service
of a "suit".
4. "Damages" means the total amount of monetary damages that the insured become
legally obligated to pay on account of all "claims" for a "wrongful act" with respect
to 	which 	coverage 	hereunder 	applies, 	including 	damages, 	judgments, 	and
settlements.
"Damages" shall not include:
a. Taxes, criminal or civil fines, or penalties imposed by law;
b. Punitive or exemplary damages or any multiplied damage award in
excess of the amount so multiplied;
c. Any amounts which the insured is obligated to pay as a result of a "claim"
seeking relief or redress in any form other than monetary damages; or
d. Any matter deemed uninsurable under the law pursuant to which this
Coverage Part shall be construed.
9. "Property damage" means:
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a. Injury or damage, of any nature, to tangible or intangible property, including
all resulting loss of use of that property; or
b. Loss of or loss of use of tangible or intangible property that is not otherwise
injured or damaged.
10. "Suit means a civil proceeding in which "damages" because of a "wrongful act"
to which this insurance are alleged. "Suit" includes
a. An arbitration proceeding in which such "damages" are claimed and to which
the insured must submit or does submit with our consent;
b. Any other alternative dispute resolution proceeding in which such "damages"
are claimed and to which the insured submits with our consent; or
c. An appeal of a civil proceeding . . . .
11. "Wrongful act" means any actual or alleged error, misstatement, misleading
statement, act or omission, or neglect or breach of duty by your "directors and
officers" in the discharge of their duties as such.
Id. at 39–40.
The Policy also specifically applies to all "Directors and Officers" of either entity including
the individual Lost Run Defendants. Id. at 37.
II. 	LEGAL STANDARD
The purpose of summary judgment is to "pierce the pleadings and to assess the proof in
order to see whether there is a genuine need for trial." Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986). Federal Rule of Civil Procedure 56 provides that summary
judgment is appropriate if "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." Hemsworth v.
Quotesmith.com, Inc., 476 F.3d 487, 489–90 (7th Cir. 2007).
In ruling on a motion for summary judgment, the court reviews "the record in the light most
favorable to the non-moving party and draw[s] all reasonable inferences in that party's favor."
Zerante v. DeLuca, 555 F.3d 582, 584 (citation omitted). "However, inferences that are supported
by only speculation or conjecture will not defeat a summary judgment motion." Dorsey v. Morgan
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Stanley, 507 F.3d 624, 627 (7th Cir. 2007) (citation and quotation marks omitted). Additionally,
"[a] party who bears the burden of proof on a particular issue may not rest on its pleadings, but
must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of
material fact that requires trial." Hemsworth, 476 F.3d at 490 (citation omitted). "The opposing
party cannot meet this burden with conclusory statements or speculation but only with appropriate
citations to relevant admissible evidence." Sink v. Knox Cnty. Hosp., 900 F. Supp. 1065, 1072 (S.D.
Ind. 1995) (citations omitted).
These same standards apply even when each side files a motion for summary judgment.
The existence of cross-motions for summary judgment does not imply that there are no genuine
issues of material fact. R.J. Corman Derailment Serv., LLC v. Int'l Union of Operating Eng'rs, 335
F.3d 643, 647 (7th Cir. 2003). The process of taking the facts in the light most favorable to the
non-moving party, first for one side and then for the other, may reveal that neither side has enough
to prevail without a trial. Id. at 648. "With cross-motions, [the Court's] review of the record requires
that [the Court] construe all inferences in favor of the party against whom the motion under
consideration is made." O'Regan v. Arb. Forums, Inc., 246 F.3d 975, 983 (7th Cir. 2001) (citation
and quotation marks omitted).
III. 	DISCUSSION
Under Indiana law, the interpretation of an insurance policy is a pure question of law. See
Erie Ins. Exch. v. Sams, 20 N.E.3d 182, 187 (Ind. Ct. App. 2014), trans denied. The parties agree
that there are no issues of material fact precluding summary judgment in this action. Accordingly,
summary judgment is proper as the parties disagree only as to the applicability of the Policy.
Cincinnati asserts that the Second Amended Counterclaim does not contain allegations for
which it has a duty to defend. Whereas Armour and the Lost Run Defendants argue that the
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Amended Counterclaim contains allegations that initiate Cincinnati's duty to defend. The parties
dispute two issues which the Court will address in turn: (1) which pleading—between the
Amended Counterclaim and the Second Amended Counterclaim—serves as the operative pleading
for the purposes of Cincinnati's duty to defend; and (2) whether there was a duty to defend prior
to the state court's dismissal of the Garcias' claims other than breach of contract and declaratory
judgment.
A. 	The Operative Pleading
Cincinnati asserts that although the Garcias asserted a breach of fiduciary duty claim in the
Amended Counterclaim, they voluntarily abandoned that claim when they filed the Second
Amended Counterclaim which did not contain a similar claim (Filing No. 61 at 12). Cincinnati
argues that this is material because the Garcias cannot appeal claims that they voluntarily
abandoned. Cincinnati acknowledges the cases which state that claims in a dismissed original
complaint are not abandoned for appellate purposes if they do not appear in a subsequently filed
amended complaint, id. (citing Scott v. Chuhak & Tecson, P.C., 725 F.3d 772, 782 (7th Cir. 2013)),
but nonetheless argues that when the state court granted the Garcias request for leave to amend,
the Garcias received the relief they sought and thus, forfeited appellate review. Id. at 13 (citing
Palka v. City of Chicago, 662 F.3d 428, 436 (7th Cir. 2011)).
Cincinnati relies on Atwood v Shelby County Sheriffs' Dept. for its argument that an original
complaint is irrelevant once an amended complaint is filed because the amended complaint
completely replaces the original complaint. Id. at 12 (citing Atwood v. Shelby County Sheriffs'
Dept., No. 1:20-cv-03161, 2021 U.S. Dist. LEXIS 77970, at *4 n.1 (S.D. Ind. April 22, 2021)).
Cincinnati also cites Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523, 529 (5th Cir.
2004), wherein the Fifth Circuit held that a court cannot consider the allegations in the original
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complaint when determining whether an insurer has a duty to defend under an amended complaint
(Filing No. 61 at 12).
The Lost Run Defendants argue that Atwood is inapplicable because that case concerned
whether pleadings are allowed to be considered when ruling on motions to dismiss Title 42 U.S.C.
violations (Filing No. 63 at 5). They argue that the Fifth Circuit case Northfield is also inapplicable
because it applied Texas law, which is fundamentally different from Indiana law. They continue
that Texas insurance law does not allow courts to look outside the pleadings, whereas Indiana
insurance law does. Id. (citing cases). The Lost Run Defendants point out that Texas Rule of Civil
Procedure 65 provides that amended pleadings completely supersede prior pleadings for purposes
of the record in Texas, but Indiana does not have a similar trial rule. Id. (citing Tex. R. Civ. P. 65).
The Lost Run Defendants note that Cincinnati has failed to cite any Indiana authority holding that
under Indiana insurance coverage law, the duty to defend may only be determined by analyzing
the most recent complaint. Id. In addition, the Lost Run Defendants argue that whether there is any
defense or indemnity coverage under Indiana law does not depend on the legal theories in the
complaint but rather the facts that give rise to such claims.
The Lost Run Defendants successfully rebut Cincinnati's assertions that the Garcias
abandoned 	their 	breach 	of 	fiduciary 	duty 	claims 	when 	they 	filed 	the Second Amended
Counterclaim. They argue persuasively that,
An insurer is obligated to defend its insured against suits alleging facts that might
fall within the coverage of the policy. The first place to look when trying to
determine the insurer's duty to defend is the allegations contained within the
complaint and from those facts known or ascertainable by the insurer after
reasonable investigation.
Id. (quoting Knight v. Ind. Ins. Co., 871 N.E.2d 357, 362 (Ind. Ct. App. 2007)). The Lost Run
Defendants continue by noting that the Wrongful Acts Coverage section of the Policy defines a
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"wrongful act" as "any actual or alleged error, misstatement, misleading statement, act or omission,
or neglect or breach of duty by your 'directors and officers' in the discharge of their duties as such."
This definition focuses on "acts" rather than legal theories or causes of action, and thus, the facts
of a fiduciary nature are carried forward to the Second Amended Counterclaim.
The Court agrees with the Lost Run Defendants that the duty to defend analysis begins
under the Amended Counterclaim and Cincinnati is not absolved merely because a Second
Amended Counterclaim was filed. As the Lost Run Defendants point out, the duty to defend under
Indiana insurance law arises when a suit alleging facts that might fall within the coverage of the
policy is filed against the insured and the insured tenders such lawsuit to the insurer. Knight, 871
N.E.2d at 362. The specific legal theories, while relevant to the underlying lawsuit, do not bear on
the determination of whether an insurer must defend the insured. Accordingly, the Courts analysis
will proceed under the Amended Counterclaim because that was the first instance in which the
Lost Run Defendants and Armour alleged facts that may fall under the Policy.
B. 	Whether There Was a Duty to Defend Prior to Dismissal of Claims
The Court must now 	determine whether the Garcias allegations in the Amended
Counterclaim fall within the coverage of the Policy, such that Cincinnati is required to defend the
Lost Run Defendants and Armour in the Underlying Lawsuit. The Garcias allege the following
counterclaims in their Amended Counterclaim: Count I – Fair Housing Act (42 U.S.C. §§3601 et
seq.); Count II – Fair Housing Act (42 U.S.C. § 3604(f)(3)(B)); Count III – Indiana Fair Housing
Act; Count IV – Civil Rights Act of 1866 (42 U.S.C. § 1982); Count V – Intentional Infliction of
Emotional Distress/Intimidation; Count VI – Breach of Fiduciary Duty, Breach of Duty of Loyalty,
Breach of Duty to Act in Good Faith; Count VII – Enforcement of Restrictive Covenants; Count
VIII – Breach of Contract; and Count IX – Declaratory Judgment (see Filing No. 1-5).
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"In Indiana, insurance contracts are subject to the same rules of interpretation as other
contracts." Ebert v. Ill. Cas. Co., 188 N.E.3d 858, 864 (Ind. 2022). Ordinarily, ambiguous policy
provisions will be construed "in favor of the insured, especially if the 'provisions limiting coverage
are not clearly and plainly expressed.'" Id. (quoting Meridian Mut. Ins. Co. v. Auto-Owners Ins.
Co., 698 N.E.2d 770, 773 (Ind. 1998)). However, unambiguous language in a policy is given its
plain and ordinary meaning. Id. "A policy is unambiguous if reasonable persons cannot honestly
differ as to its meaning." Id.
Further, "in Indiana, an insurer's 'duty to defend is broader than an insurance company's
coverage liability or its duty to indemnify[.]'" Aluminum Trailer Co. v. Westchester Fire Ins. Co.,
24 F.4th 1134, 1136 (7th Cir. 2022) (quoting Seymour Mfg. Co. v. Com. Union Ins. Co., 665 N.E.2d
891, 892 (Ind. 1996)). "[A]n insurer has a duty to defend its insured against suits alleging facts
that might fall within the coverage." Id. (quoting Fed. Ins. Co. v. Stroh Brewing Co., 127 F.3d 563,
566 (7th Cir. 1997) (alteration in original)). "Only if there is no possible factual or legal basis on
which the insurer might be obligated to indemnify will the insurer be excused from defending its
insured." Id. (quoting City of Gary v. Auto-Owners Ins. Co., 116 N.E.3d 1116, 1121 (Ind. Ct. App.
2018)).
The parties separate their arguments on coverage under the Policy into two parts—the CGL
coverage and the Wrongful Acts coverage. The Court will address each part of the Policy in turn.
1. 	The Commercial General Liability ("CGL") Coverage
The CGL coverage provides for sums that the insured becomes legally obligated to pay as
damages because of "bodily injury" or "property damage" caused by an "occurrence," which the
Policy defines as "an accident." (Filing No. 52-4 at 3). Cincinnati argues that the Garcias' claims
in the Underlying Lawsuit are based on the Lost Run Defendants' intentional acts of enforcing
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covenants and other restrictions against them with a discriminatory intent and thus, cannot have
been accidental (Filing No. 51 at 17).
Cincinnati cites Jim Barna Log Sys. Midwest, Inc. v. Gen. Cas. Ins. Co. of Wisconsin, 791
N.E.2d 816, 826 (Ind. Ct. App. 2003) arguing that alleged torts of negligent hiring and conversion
were found not to constitute an occurrence and likening the Garcias' allegations to the claims in
that case. Id. Cincinnati argues that nothing the Garcias have alleged can be construed as
accidental; rather, all allegations are that the Lost Run Defendants and Armour committed the acts
maliciously and oppressively and with the intent of harming the Garcias.
Cincinnati argues that the Garcias do not allege "bodily injury" or "property damage"
within the meaning of the CGL coverage. Rather, the Garcias' allege emotional distress, which
does not constitute bodily injury because they fail to allege any bodily touching. Id. (citing State
Farm Mut. Auto. Ins. Co. v. D.L.B., 881 N.E.2d 665, 666 (Ind. 2008); citing also Westfield Ins. Co.
v. Hill, 790 F. Supp. 2d 855, 861–62 (N.D. Ind. 2011))). Cincinnati argues that the Garcias also fail
to allege "property damage" because they allege purely economic losses as a result of the Lost Run
Defendants' and Armour's actions, which is not "property damage" within the meaning of an
insurance policy (Filing No. 51 at 18–19 (citing Amerisure Mut. Ins. Co. v. Microplasics, Inc., 622
F.3d 806, 811 (7th Cir. 2010); Berry Plastics Corp. v. Ill Nat'l Ins. Co., 903 F.3d 630, 637 (7th Cir.
2018)).
In response, Armour cites Auto-Owners Ins. Co. v. Harvey, 842 N.E.2d 1279 (Ind. 2006)
in support of its position that the CGL coverage must be construed to provide it coverage (Filing
No. 59 at 12). Armour argues that in Harvey, the Indiana Supreme Court dealt with the same
issue—having to determine the scope of an "occurrence" under nearly identical policy language.
In Harvey, the son of the insured pushed his girlfriend, the plaintiffs' daughter, into a river resulting
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in the daughter's death. Id. at 1281. After the son of the insured pleaded guilty to involuntary
manslaughter, the daughter's parents, on behalf of her estate, sued the son for the wrongful death
of their daughter. Id. When the insured's son tendered the complaint to the insurer, the insurer
declined coverage, arguing that the son's conduct was intentional and thus did not constitute an
"occurrence," which was defined as "an accident." Id. at 1282. The word "accident" was not
defined. Id. The Indiana Supreme Court stated that an "accident" under Indiana insurance law
means "an unexpected happening without an intention or design." Id. at 1283 (quoting Terre Haute
First Nat. v. Pacific Employers Ins. Co., 634 N.E.2d 1336, 1338 (Ind. Ct. App. 1993)). Finding
that the term "accident" or "occurrence" was ambiguous and should be construed strictly against
the insurer and the policy viewed from the insured's standpoint, the Indiana Supreme Court
concluded that the daughter's drowning fell within the scope of an "occurrence" because the son
did not intend for her to drown even though his pushing was intentional. Id. at 1285–1286.
Armour argues that Harvey controls here because the conduct alleged by the Garcias entails
the Lost Run Farm's attempts to secure the Garcias' compliance with the neighborhood covenants.
(Filing No. 59 at 15). Armour concedes that such attempts were intentional, however, it argues that
the resulting harm—the lost use of the Garcias' property—was unexpected as a matter of law.
Armour contends that holding otherwise would mean that any enforcement of the covenants would
be intended to result in property damage, which cannot be true. Id. at 16.
The Lost Run Defendants argue that the CGL coverage applies because it defines "property
damage" as the "[l]oss of use of tangible property that is not physically injured," and the Garcias
Amended Counterclaim specifically alleges, "[a]s a result of the [Lost Run Defendants' and
Armour's] unlawful acts, the Garcias suffered a violation of their civil rights, loss of the use and
enjoyment of their property, and emotional distress." (Filing No. 57 at 24). The Lost Run
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Defendants also cite Harvey, 842 N.E.2d at 1285 for the proposition that even an intentional act
can constitute an "occurrence" if the resulting damage was not intended or expected (Filing No.
57 at 25). Lastly, the Lost Run Defendants join in the arguments asserted above by Armour.
The Court is not persuaded and finds that the CGL coverage does not apply. First, the
Garcias clearly allege "property damage" within the meaning of the CGL coverage. The CGL
coverage defines "property damage" as "physical injury to tangible property, including all resulting
loss of use of that property" or "loss of use of tangible property that is not physically injured."
(Filing No. 52-4 at 18). The Garcias specifically allege that "[a]s a result of the [Lost Run
Defendants' and Armour's] unlawful acts, the Garcias suffered a violation of their civil rights, loss
of the use and enjoyment of their property, and emotional distress." (Filing No. 56-6 at 21 ¶102
(emphasis added)). Accordingly, the only question under the CGL coverage is whether the Garcias
allegations in the Amended Counterclaim constitute an "occurrence." The Court finds that they do
not.
In Harvey, the Indiana Supreme Court held that an intentional act may constitute an
"occurrence" if the resulting damage was not intended. 842 N.E.2d at 1285. However, the Garcias'
alleged that the resulting harm was intended. The Garcias specifically alleged that the unlawful
acts and enforcement of the restrictive covenants were done with discriminatory and malicious
intent and to cause emotional distress and intimidation (Filing No. 56-6 at 27–29). While such
allegations do not explicitly reference an intent to cause the loss of use of the Garcias' property,
the allegations are certainly akin to harassing, delaying, or thwarting the Garcias ability to use the
property as they wished.
Moreover, this action is distinguishable from Harvey because Harvey involved an instance
of specific personal physical conduct. The Indiana Supreme Court contrasted Harvey from cases
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involving claims based on commercial or professional conduct such as the case here. 842 N.E.2d
at 1284 (citing Transamerica Ins. Serv. v. Kopko, 570 N.E.2d 1283, 1284–85 (Ind. 1991) (holding
that a liability policy's "occurrence" requirement, which was defined to require an "accident," did
not cover a claim against an insured home builder by the home purchaser claiming the house had
settled due to the instability of the sub-soil); Erie Ins. Co. v. Am. Painting Co., 678 N.E.2d 844,
845–46 (Ind. Ct. App. 1997) (finding a claim of negligent hiring and retaining of a painter who
allegedly burglarized a home did not arise from an accident, and thus was not an occurrence
covered under the liability insurance contract); R.N. Thompson & Assoc. v. Monroe Guar. Ins. Co.,
686 N.E.2d 160, 164–65 (Ind. Ct. App. 1997) (finding economic losses arising from inadequate
materials and substandard construction work were not an accident or occurrence); Terre Haute
First Nat'l Bank, 634 N.E.2d at 1338 (finding a claim for the bank's negligence and breach of
fiduciary duty in acting as plaintiff's guardian was not covered as an accident or occurrence under
a liability insurance policy); City of Muncie v. United Nat'l Ins. Co., 564 N.E.2d 979, 982 (Ind. Ct.
App. 1991) (affirming summary judgment for a liability insurer where the insured asserted that an
action for the wrongful discharge of employees was covered as an "occurrence," which was defined
as conduct of an insured that results in harm "neither expected nor intended")). The courts in those
cases found no occurrence. See id.
This case is more akin to Jim Barna, where the Indiana Court of Appeals found that
negligent hiring of a home builder by a distributor of log home packages did not constitute an
occurrence because even if the distributor did not intend for the harm the builder caused to the
home, they intended to hire the builder. 791 N.E.2d at 826. Here, the Lost Run Defendants and
Armour intended to restrict the Garcias' use of their property when they enforced the restrictive
covenants. The Lost Run Defendants argue this finding ignores that under Indiana law "[r]estrictive
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covenants serve . . . to maintain or enhance the value of land by controlling the nature and use of
lands subject to a covenant's provisions." (Filing No. 63 at 4 (quoting Hamilton v. Schaefer Lake
Lot Owners Ass'n, Inc., 59 N.E.3d 1051, 1054 (Ind. Ct. App. 2016)). Though the general purpose
of restrictive covenants is to enhance the value of land, the intent is still to restrict the use of the
property. Consequently, whether the Lost Run Defendants and Armour specifically intended to
cause a loss or increase of the property value is irrelevant because the act of restricting the Garcias
use of their property was intentional.
Finally, Armour argues if the Court finds that the act of enforcing the restrictive covenants
was intentional, the Court is essentially finding that any enforcement of restrictive covenants "will
necessarily result in property damage." (Filing No. 59 at 16). This is not so. In holding as it does
in this Order, the Court does not aver that the enforcement of restrictive covenants is intended to
result in loss. Rather, the intent is in the action of enforcing the restrictive covenants irrespective
of whether such enforcement ultimately results in a loss or gain. Such a finding is consistent with
the various Indiana cases judging the scope of an "occurrence" based on commercial or
professional conduct—as is the case here—rather than based on specific personal physical
conduct. See Harvey, 842 N.E.2d at 1284 (citing cases). That said, the Court finds that the act of
enforcing the restrictive covenants was intentional and thus, not an "occurrence" within the
meaning of the CGL coverage. Consequently, there is no coverage, and therefore, no duty to defend
under the CGL portion of the Policy.
2. 	The Wrongful Acts Coverage
The Wrongful Acts Coverage excludes any liability based upon, arising out of, directly or
indirectly resulting from or in consequence of, or in any way involving an insured's deliberately
fraudulent, dishonest, criminal or malicious act or omission, or willful or reckless violation of any
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statute, rule, regulation, agreement, or judicial or regulatory order (Filing No. 52-4 at 35-37). The
Wrongful Acts coverage of the Policy defines a "wrongful act" as any actual or alleged error,
misstatement, misleading statement, act or omission, or neglect or breach of duty by your
"directors and officers" in the discharge of their duties as such. Id. at 40.
Cincinnati asserts five reasons why the Wrongful Acts coverage exclusions bar coverage
for the Garcias' claims (Filing No. 51 at 27–30). First, the Wrongful Acts coverage excludes any
liability based upon, arising out of, directly or indirectly resulting from or in consequence of, or in
any way involving an insured's deliberately fraudulent, dishonest, criminal or malicious act or
omission, or willful or reckless violation of any statute, rule, regulation, agreement, or judicial or
regulatory order. Id. at 28. Cincinnati contends that the Garcias' claims are based on discriminatory
conduct committed with an intentional, discriminatory motive, therefore, the exclusion applies.
Specifically, because the Garcias assert that the Lost Run Defendants' and Armour's conduct was
malicious and intentionally violated Indiana's civil rights laws, coverage is barred. Accordingly,
Cincinnati contends that the exclusion bars coverage for Count I – Fair Housing Act §§3601 et
seq.; Count II – Fair Housing Act § 3604(f)(3)(B)); Count III – Indiana Fair Housing Act; Count
IV 	– 	Civil 	Rights 	Act 	of 	1866; 	and 	Count 	V 	– 	Intentional 	Infliction 	of 	Emotional
Distress/Intimidation. Id.
Second, Cincinnati argues the Wrongful Acts coverage excludes any liability based upon,
arising out of, directly or indirectly resulting from or in consequence of, or in any way involving
violations of any civil rights law whether Federal or State or local ordinance, including but not
limited to discrimination on account of race, religion, sex, or age. Cincinnati thus contends that
the Garcias' discrimination claims—Counts I and II—are barred from coverage. Id.
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Third, Cincinnati contends that the Wrongful Acts coverage excludes liability based upon,
arising out of, directly or indirectly resulting from or in consequence of, or in any way involving
bodily injury, which includes mental anguish or emotional distress. Cincinnati asserts that this bars
coverage for the Garcias' Count V – Intentional Infliction of Emotional Distress/Intimidation. Id.
at 29.
Fourth, Cincinnati argues that the Wrongful Acts coverage excludes liability based upon,
arising out of, directly or indirectly resulting from or in consequence of, or in any way involving
abuse of process. Cincinnati asserts that this exclusion applies to the Garcias' claim of abuse of
process, a claim later added in the Second Amended Counterclaim.
Fifth and finally, Cincinnati contends that the Garcias' claims to enforce restrictive
covenants against other homeowners and their claim for declaratory judgment—Counts VII and
IX—are equitable in nature and do not fall within the definition of a "wrongful act," as they are
not based on actions taken as "directors or officers," of the Lost Run Defendants, but rather as
individual homeowners. Cincinnati further argues that the damages the Garcias seek are not
covered as the Wrongful Acts coverage excludes any amounts in any form other than monetary
damages. Id. at 29.
In Response, the Lost Run Defendants argue that Cincinnati is mistaken in their assumption
that because the Garcias' Amended Counterclaim included alleged violations of civil rights laws,
all of the allegations are excluded from coverage (Filing No. 57 at 21). The Lost Run Defendants
continue that the Garcias' claim for breach of fiduciary duty—Count VI—satisfies the definition
of a wrongful act and is not excluded from coverage. They add that it is incorrect to say that the
breach of fiduciary duty allegations arose from civil rights violations or any dishonest, criminal,
or malicious acts because the Garcias do not need to prove any civil rights violation or any
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dishonest, criminal, or malicious acts to succeed on their breach of fiduciary duty claim. The Lost
Run Defendants assert that, conversely, just because the Garcias have alleged some acts that may
constitute intentional, discriminatory, dishonest, criminal, or malicious acts does not mean that it
was not possible for there to be potential liability for allegations of a "wrongful act" constituting a
breach of fiduciary duty that was not intentional, discriminatory, dishonest, criminal, or malicious.
Id. at 22. The Court disagrees.
Cincinnati implicitly concedes that the Garcias' allegations fall within the Wrongful Acts
coverage, as it makes no attempt to argue otherwise. The Court agrees with the Defendants that
Count VI: Breach of Fiduciary Duty of the Amended Counterclaim clearly falls within the
definition of a "wrongful act" under the Wrongful Acts coverage and thus, unless it is excluded,
the Wrongful Acts coverage shall apply. Upon review, the 	Court concludes that exclusion "g.
Dishonest, Criminal or Malicious Acts" applies.
The exclusion excludes coverage for the following: "Any insured or any person for whose
actions an insured is legally responsible, committing any deliberately fraudulent, dishonest,
criminal or malicious act or omission, or willful or reckless violation of any statute, rule,
regulation, agreement, or judicial or regulatory order." (Filing No. 52-4 at 36). The Garcias allege
that the Lost Run Defendants and Armour breached their fiduciary duties by enforcing the
restrictive covenants in the following ways: (1) doing so based on discrimination and malice; (2)
doing so in a selective and self-serving fashion; (3) by failing to deal fairly, honestly, and openly
with the Garcias; and (4) doing so while having a conflict of interest due to their own violations
of the restrictive covenants (Filing No. 56-6 at 27 ¶¶130–133). All of these allegations fall within
the exclusion of deliberate dishonest acts or omissions. Indeed, it is difficult to imagine a situation
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in which any of these allegations would not be considered allegations of dishonest acts or
omissions, especially given that among them are explicit allegations of malice and dishonesty.
Though the Lost Run Defendants argue that the Garcias would not need to prove any
dishonest acts to succeed on their claims, the Lost Run Defendants provide no authority for their
assertions. It is true that under Indiana law, a dishonest act or omission is not expressly required
for a breach of fiduciary duty claim. See Rapkin Group, Inc. v. Cardinal Ventures, Inc., 29 N.E.3d
752, 757 (Ind. Ct. App. 2015) ("[A] claim for breach of fiduciary duty requires proof of three
elements: (1) the existence of a fiduciary relationship; (2) a breach of that duty owed by the
fiduciary to the beneficiary; and (3) harm to the beneficiary."). However, it stands to reason that
an allegation of a breach of a fiduciary duty based on a dishonest act or omission requires proof of
the dishonest act or omission. For example, to succeed on their claim, the Garcias must prove that
the Lost Run Defendants and Armour breached their duty by enforcing the restrictive covenants
based on discrimination and malice, doing so in a selective and self-serving fashion, doing so
unfairly or dishonestly, or doing so while necessarily omitting their conflict of interest.
Accordingly, exclusion g. Dishonest, Criminal or Malicious Acts applies to the Garcias claim of a
breach of fiduciary duty.
Moreover, the parties do not contend that any other of the Garcias' claims meet the
definition of a "wrongful act" within the meaning of the Wrongful Acts coverage. Consequently,
there is no coverage under the Wrongful Acts part of the Policy.
Finally, the only claim asserted in the Second Amended Counterclaim not contained in the
Amended Complaint was a claim for abuse of process (see Filing No. 52-1 at 16). The Policy
explicitly excludes coverage for "[a]ny actual or alleged . . . abuse of process." (Filing No. 52-4 at
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35 §2(c)(3)). Accordingly, there is no coverage under the Policy for the Garcias' claims of abuse
of process.
Because the Court concludes that no coverage exists under the CGL coverage and finds
that no coverage exists under the Wrongful Acts coverage, Cincinnati has no duty to defend the
Lost Run Defendants or Armour pursuant to the Policy. Accordingly, Cincinnati's Motion for
Summary Judgment is granted, the Lost Run Defendants' Cross-Motion for Summary Judgment
is denied, and Armour's Cross-Motion for Summary Judgment is denied.
C. 	Remaining Claims against Defendants John and Mary Kay Garcia
As final matter, the Court declines to enter final judgment in this action because claims
against the Garcias remain pending. Cincinnati named the Garcias as defendants in this action, and
issued a summons (Filing No. 26). However, the docket does not reflect that service was perfected
and the Garcias have not appeared. Because the Garcias have not answered or filed a motion for
summary judgment, Cincinnati may move to dismiss its claims against them under Rule 41(a)(1);
or if it intends to pursue its claims against them, must take appropriate actions promptly. Because
this matter is scheduled for final pretrial conference on February 11, 2026 and trial on March 9,
2026, Cincinnati is Ordered to file Notice of how it intends to proceed concerning the Garcias, by
no later than January 13, 2026.
IV. 	CONCLUSION
For the reasons stated above, Cincinnati's Motion for Summary Judgment (Filing No. 50)
is GRANTED. The Lost Run Defendants' Cross-Motion for Summary Judgment (Filing No. 55)
is DENIED, and Armour's Cross-Motion for Summary Judgment (Filing No. 58) is DENIED.
The Court declares that Cincinnati had no duty to defend either the Lost Run Defendants
or Armour under the Policy in the Underlying Lawsuit filed by the Garcias. Because there is no
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duty to defend any of the Garcias’ claims there is no duty to indemnify any of the Defendants.
Dave’s Detailing, Inc. v. Catlin Ins., Co., 13 F.Supp.3d 935, 944 (S.D. Ind. 2014) (stating “and
insurer who has no duty to defend has no duty to indemnify its insured either.”). Declaratory
Judgment will issue in a separate Order.
Because the claims against the Garcias remain pending, no partial final judgment will issue
at this time. Cincinnati shall provide Notice concerning its intent concerning the claims against the
Garcias by no later than January 13, 2026.
SO ORDERED.
Date: 	1/6/2026
Distribution:
Dennis F. Cantrell
Stoll Keenon Ogden PLLC
dennis.cantrell@skofirm.com
Justin G. Hazlett
Wilson Elser
justin.hazlett@wilsonelser.com
Dane Andrew Mize
SKILES DETRUDE
dmize@skilesdetrude.com
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