Home Federal Savings Bank v. Ticor Tile Ins. Co.

Dist. Ct. erred in granting defendant-title insurance company's motion for summary judgment in action by plaintiff-insured alleging that defendant acted in bad faith and breached it duties to defend and indemnify plaintiff in underlying counterclaim by third-party alleging that third-party's mechanic's lien had priority over plaintiff's mortgage in plaintiff's action seeking to enforce mortgage. Duty to defend arose where plaintiff had purchased endorsement in policy that required defendant to defend against any enforcement of mechanic's lien claim where said claim alleged priority or sharing of parity with plaintiff's mortgage, and where defendant had otherwise acknowledged during course of proceedings that third-party's counterclaim was attempt to seek declaration that mechanic's lien was superior to plaintiff's mortgage. Fact that third-party's counterclaim lacked merit under Indiana law did not excuse defendant from assuming defense of counterclaim. Moreover, while policy contained exclusion for claims "created, suffered or assumed" by plaintiff, said exclusion did not apply since defendant did not argue that third-party's lien resulted from intentional misconduct on part of plaintiff.