Indiana: No Coverage for Bob Knight Incident

The Indiana Court of Appeals held on Aug. 8 that former Indiana University basketball coach Bob Knight was not entitled to coverage under his homeowners policy to pay for a settlement Knight made to a former assistant coach.

The case, Robert Knight v. Indiana Insurance Company et al., No. 49A05-0608-CV-416, arose when Knight, after overhearing a telephone conversation in which assistant coach Ronald Felling criticized Knight’s coaching ability, confronted Felling, told him to find another job, then shoved and pushed him backward into a television set. Although Felling was not injured as a result of the encounter, Felling filed a lawsuit against Knight in which he alleged civil right violations and a claim of wrongful termination against IU.

Knight notified his homeowners insurer of the suit. Knight’s insurer, Indiana Insurance Company, issued a reservation of rights letter providing that any of several exclusions could apply and indicated that there may have been no “occurrence” as defined by the policy. About 10 months later, the insurer denied coverage for the Felling lawsuit, relying on the “business exclusion” in the policy along with other exclusions—intentional act and physical or mental abuse. A few days later, the lawsuit against Knight was settled when Knight paid Felling $25,000 and admitted he shoved Felling in anger.

Knight later sued his insurer and IU, seeking indemnification and claiming breach of contract, bad faith, negligence and punitive damages. Knight and his insurer both filed motions for summary judgment, and the court granted summary judgment to the insurer. The claim against IU remained pending.

On appeal, Knight argued that the summary judgment was improperly granted because the exclusion involving “expected or intended bodily injury” was inapplicable because Felling was not injured; there was a genuine issue of material fact concerning whether Knight acted with intent to cause injury; and the trial court concluded as a matter of law that the insurer had not breached its duty to defend.

The Court of Appeals rejected Knight’s first two contentions, finding, first, that since there was no injury to Felling, there was no “occurrence” of “bodily injury” as defined in the policy and thus no coverage. The court also held that the conduct to which Knight admitted and for which he provided compensation to Felling constitutes the common law tort of assault and battery. Assault creates an apprehension of imminent harmful or offensive conduct and battery is the intentional harmful or offensive conduct. Finally, the court found that the incident arose in Knight’s practice of his profession and the business exclusion was applicable.

With respect to the issue of breach of duty to defend, the Court of Appeals noted that the initial investigation of the lawsuit revealed that the event leading to the suit was a workplace incident that resulted in no bodily injury. Further, the court pointed out that a “reasonable claims manager would be able to discern the lack of contractual obligation at that juncture.” The insurer was entitled to judgment as a matter of law as to Knight’s claim of breach of its duties to reasonably investigate and to defend the Felling lawsuit.

Direct questions to NAMIC’s Regulatory Affairs Counsel Marsha Harrison.

Posted: Tuesday, August 14, 2007 12:00:00 AM. Modified: Tuesday, August 14, 2007 10:03:39 AM.

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