Insurer had duty to defend lawsuit against Menard and loss prevention company

A trial court incorrectly granted summary judgment in favor of a loss prevention company’s insurer over whether it had a duty to defend a Menard customer’s lawsuit stemming from actions of the loss prevention specialist.

Arthur Barnard sued Menard Inc. and Blue Line LP Inc., alleging he was physically attacked by a loss prevention officer outside an Indianapolis Menard store. The officer suspected Barnard stole something from Menard. Menard and Blue Line filed a third-party complaint against Blue Line’s insurer, Capitol Specialty Insurance Corp., invoking the insurer’s duties to defend and indemnify.

Menard contracts with Blue Line to provide security services. Blue Line’s insurance policy also covers Menard.

The trial court granted summary judgment in favor of Menard on Barnard’s complaint and in favor of Capitol on the third-party complaints.

Summary judgment in favor of Menard was proper, the COA held in Arthur Barnard III v. Menard, Inc.; Menard, Inc., and Blue Line LP, Inc. v. Capitol Specialty Insurance Corp., 49A02-1407-CT-486. It agreed with the lower court that the actions allegedly taken by Blue Line’s loss prevention officer were not reasonably foreseeable by Menard, so it did not breach any duty owed to Barnard as a business invitee on the premises. The appeals court also noted it was a close call, but Blue Line is an independent contractor of Menard, so Menard, as principal, is not liable for the negligence of its independent contractors.

But the lower court erred in granting summary judgment in favor of Capitol based on the policy’s assault and battery exclusion, Judge John Baker wrote.

Barnard claims the loss prevention officer followed him to his car, grabbed his arm, and slammed him against his vehicle, causing injuries. He also said he was slandered and detained longer than he should have been after the office suspected him of stealing a hasp worth $1.99.

While the policy does exclude the physical altercation described by Barnard, the judges pointed out that Barnard also raised several alternate theories of liability, including being slandered and falsely accused of theft and detaining him longer than allowed by statute.

“While Capitol does not have a duty to defend or indemnify Menard or Blue Line with respect to the allegations of battery, there is no such exclusion applied to his claims of false imprisonment or slander,” Baker wrote.

Whether the insurer is responsible for a portion of the damages, if any, will have to be determined at a later date, he noted. The matter is remanded for further proceedings.