Source: https://law.justia.com/cases/indiana/court-of-appeals/1997/49a02-9602-cv-110-8.html
Timestamp: 2019-07-17 08:17:47
Document Index: 441551896

Matched Legal Cases: ['§ 188', '§ 188', '§ 106', '§ 9606', '§ 107', '§ 9607', '§ 122', '§ 9622', '§ 104', '§ 9604']

Hartford Acc. & Indem. Co. v. Dana Corp. :: 1997 :: Indiana Court of Appeals Decisions :: Indiana Case Law :: Indiana Law :: US Law :: Justia
Justia › US Law › Case Law › Indiana Case Law › Indiana Court of Appeals Decisions › 1997 › Hartford Acc. & Indem. Co. v. Dana Corp.
Hartford Acc. & Indem. Co. v. Dana Corp.
HARTFORD ACCIDENT & INDEMNITY CO., et al, Appellants-Defendants, v. DANA CORPORATION, Appellee-Plaintiff.
Transfer Denied May 1, 1998.
I. Whether the trial court properly applied Indiana law; II. Whether Dana designated sufficient facts to support summary judgment; III. Whether the trial court properly concluded that the policy term "suit" applies to administrative proceedings; IV. Whether the trial court properly concluded that the policy term "damages" includes environmental cleanup and response costs; and V. Whether the trial court properly found that Fireman's Fund has a duty to defend Dana. Facts and Procedural History
*289 A. Undisputed Facts 1. ... Dana is a Virginia corporation headquartered in Toledo, Ohio. Twenty-five of Dana's plants and facilities are located in the state of Indiana; no other state is home to more Dana facilities and plants. Dana also employs over 6,000 people in this State, far more than it employs in any other state. Indiana is the home of approximately 20 percent of Dana's United States work force. Based on these facts and on the number or amount of plants, divisions, employees, sales, payroll, square footage of plants, and other criteria, Dana's operations have been centered in Indiana more than in any other state since at least 1963. These factors are important because they demonstrate that Dana's insured risk, completely separate from the location of the waste sites, has been centered in Indiana for many years. Moreover, Dana's premiums paid by Dana were based on sales; more sales are generated by Dana's Indiana facilities than those in any other state. Ohio, which state's law the insurers would have this Court apply, is far behind Indiana in all of these criteria and is not even second in most. 2. Fireman's Fund is a California corporation with its principal place of business in California. Its excess or umbrella insurers on the Dana policies are located throughout the United States. 3. Dana is allegedly liable for environmental contamination at a number of sites across the country.... Fifteen of those sitesnearly one-fourth of the total and substantially more than in any other stateare located in Indiana. .... 5. The contracts of insurance relevant to this case were issued by Fireman's from its Detroit, Michigan, office. The contracts were primarily negotiated at the office of Marsh & McLennanDana's insurance brokerlocated in Michigan. 6. The "insuring agreements" in all these policies are standard insurance industry forms using "form" language. The earlier policies provided in relevant part that Fireman's would: pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof, caused by accident. (Emphasis added). Further: With respect to such insurance as is afforded by this policy, the Company shall: (a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; but the Company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient. (Emphasis added). The later policies stated in relevant part that: The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of Coverage Abodily injury or Coverage Bproperty damage to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payment of judgments or settlements. (original boldface). 7. At several of the 63 sites, third parties or governmental entities have filed actions against Dana in courthouse lawsuits to recover their costs incurred, or to compel Dana to participate, in the cleanup of the alleged contamination. At other sites third parties or government entities are pursuing Dana for the same kind of relief, *290 but through administrative rather than judicial actions. .... B. Conclusions of Law 1. ... [T]he Court finds that Indiana law applies to this dispute. .... 6. Under § 188 [of the Restatement (Second) of Conflict of Laws], the place of contracting in this case is Michigan; the place of negotiation is Michigan; the primary place of performancewhere the insurance money will be put to useis Indiana; the primary location of the insured riskbased on the fact that Dana's operations have clearly been centered in Indiana throughout the policy periods here at issue and because nearly one-fourth of all the cleanup sites are located in this Stateis Indiana; and the domicile of the parties is indeterminate. In sum, two of these factors point to Michigan, while two of the factorsincluding the most important, location of the insured riskpoint to Indiana. As between Indiana and Ohio (or any other state), the § 188 factors require the Court to apply Indiana law in this case. .... 10. The parties agree and this Court holds that the law of one state should be applied in this case. Applying the law of a single state would foster judicial economy, predictability and uniformity. .... ORDER .... 2. Dana's motion for partial summary judgment on the meaning of "suit" and "damages" is GRANTED. In addition to traditional judicial actions, "suit" includes any coercive environmental administrative proceeding, including the following: unilateral orders alleging liability for and demanding the cleanup of a site, issued under § 106 of CERCLA (42 U.S.C. § 9606) or analogous state statutes; demands alleging liability for and seeking payment of costs incurred by the agency for the cleanup of the site, issued under § 107 of CERCLA (42 U.S.C. § 9607) or analogous state statutes; non-CERCLA demands by state or federal authorities in the form of a Notice of Violation or similar notice requiring site cleanups as part of ongoing compliance with state or federal environmental law; offers of settlement alleging liability and seeking either cost recovery or the cleanup of a contaminated site under § 122(e) (42 U.S.C. § 9622(e)) of CERCLA or analogous state statutes; information requests about alleged involvement, coupled with specific allegations of liability, under § 104(e) of CERCLA (42 U.S.C. § 9604(e)) or analogous state statutes; "voluntary" cleanup of a site by the policyholder in nominal cooperation with a governmental entity, but under explicit or implicit threat of a formal enforcement action. 3. "Damages" includes environmental cleanup and response costs, whether such costs are incurred by a governmental entity or third party seeking contribution or cost recovery from Dana or incurred directly by Dana as a result of any judicial or administrative proceeding against it. 4. Fireman's shall tender to Dana a defense in all pending "suits" and shall immediately reimburse Dana for defense costs incurred at each of the sites where there is or has been a "suit" as that term has been defined by this Order. 5. [Granite State's] cross-motion for summary judgment is DENIED.
The two substantive issues before us today, the meaning of CGL policy terms "suit" and "as damages," are questions of first impression in Indiana. However, Ohio courts have addressed both of these issues.[3] In Professional Rental, Inc. v. Shelby Ins. Co., 75 Ohio App.3d 365, 599 N.E.2d 423 (1991), the term "suit" was found to be susceptible to more than one meaning and thus construed in favor of the insured. "The junction where environmental law meets insurance law is an inappropriate place to erect an inflexible rule requiring the initiation of a *292 traditional lawsuit as a condition precedent to the insurer's obligation to defend." Id., 599 N.E.2d at 428. In that case, however, the court held that an agency notification regarding potential liability was merely a claim, and unless followed by an administrative order imposing liability, was not the functional equivalent of a suit. Id. at 430. In Sanborn Plastics Corp. v. St. Paul Fire and Marine Ins. Co., 84 Ohio App.3d 302, 616 N.E.2d 988 (1993), the Ohio court concluded that costs for environmental cleanup constituted "damages" even though such costs may be restitutional, or equitable, in nature. Also, in Morton Int'l, Inc. v. Harbor Ins. Co., 79 Ohio App.3d 183, 607 N.E.2d 28 (1992), the court held that settlement payments for environmental damage constituted sums payable as "damages."
While the absence of precedent in Indiana on these issues does not necessarily mean that a conflict of law exists, there are other issues in the litigation between these parties where Indiana and Ohio case law differ.[4] The various policies purchased by Dana include exclusions for pollution related claims.[5] Similar exclusions have been the subject of numerous cases nationwide. Our supreme court, in American States Ins. Co. v. Kiger, 662 N.E.2d 945 (Ind.1996), held that the term "sudden" used in the standard pollution exclusion clause was ambiguous in that it could mean "unexpected" as well as "abrupt." Under this interpretation, the clause would not exclude from coverage discharges which were unexpected or unintended. By contrast, the Ohio Supreme Court, in Hybud Equipment Corp. v. Sphere Drake Ins. Co., Ltd., 64 Ohio St.3d 657, 597 N.E.2d 1096 (1992), cert. denied, 507 U.S. 987, 113 S. Ct. 1585, 123 L. Ed. 2d 152 (1993), held that the term "sudden," used in the standard pollution exclusion clause, was unambiguous and must have a temporal aspect, as in "abrupt." As such, the exclusion does not apply to gradual or long term discharges of pollution. Thus, for purposes of the present case, the laws of Indiana and Ohio significantly differ, necessitating a choice of law decision.
As to the question of ambiguity, some courts hold that a difference of opinion among courts of various jurisdictions establishes conclusively that a particular clause is ambiguous, while others hold that it merely constitutes evidence of ambiguity. See Charles C. Marvel, Annotation, Division of Opinion Among Judges on Same Court or Among Other Courts or Jurisdictions Considering Same Question, as Evidence that Particular Clause of Insurance Policy is Ambiguous, 4 A.L.R.4th 1253 (1981). We conclude that the division of authority on this issue is instructive and is evidence that more than one reasonable interpretation of the term "suit" is possible. See Indiana Ins. Co. v. O.K. Transport, Inc., 587 N.E.2d 129, 132 (Ind.Ct.App.1992), trans. denied. A commonly cited definition of "suit" is "the attempt to gain an end by legal process." Webster's Third New International Dictionary 2286 (1976). Such a definition is not limited to traditional courthouse lawsuits. Alternatively, Black's defines "suit" as
As with the term "suit," we must determine whether the term "damages" is unambiguous. Both parties cite cases holding that the term: 1) is unambiguous and includes environmental cleanup and response costs;[16] 2) is unambiguous and excludes equitable remedies;[17] and 3) is ambiguous and therefore to be construed against the insurer.[18]See generally Carol A. Crocca, Annotation, Liability Insurance Coverage for Violations of Antipollution Laws, 87 A.L.R.4th 444 (1991). The division of authority on this issue is evidence that more than one reasonable interpretation of the term "damages" is possible. Several courts cite the definition of "damages" as "the estimated reparation in money for detriment or injury sustained." Webster's Third New International Dictionary 571 (1976).
[12] E.g., Aetna Casualty and Surety Co. v. General Dynamics Corp., 968 F.2d 707 (8th Cir.1992) (applying Missouri law); Lapham-Hickey Steel Corp. v. Protection Mut. Ins. Co., 166 Ill. 2d 520, 211 Ill.Dec. 459, 655 N.E.2d 842 (1995); City of Edgerton v. General Casualty Co. of Wisconsin, 184 Wis.2d 750, 517 N.W.2d 463 (1994), cert. denied, 514 U.S. 1017, 115 S. Ct. 1360, 131 L. Ed. 2d 217 (1995); Patrons Oxford Mut. Ins. Co. v. Marois, 573 A.2d 16 (Me.1990).
[16] E.g., Bituminous Cas. Corp. v. Vacuum Tanks, Inc., 75 F.3d 1048 (5th Cir.1996) (applying Texas law); Pintlar Corp., 948 F.2d at 1513 (applying Idaho law); Gerrish Corp. v. Universal Underwriters Ins. Co., 947 F.2d 1023, 1030 (2nd Cir.1991) (applying Vermont law), cert. denied 504 U.S. 973, 112 S. Ct. 2939, 119 L. Ed. 2d 564 (1992); Avondale Indus. Inc., 887 F.2d at 1207 (applying New York law), cert. denied 496 U.S. 906, 110 S. Ct. 2588, 110 L. Ed. 2d 269 (1990); Farmland Indus., Inc. v. Republic Ins. Co., 941 S.W.2d 505 (Mo.1997); SCSC Corp., 536 N.W.2d at 315 (Minnesota); Weyerhaeuser Co. v. Aetna Casualty & Sur. Co., 123 Wash. 2d 891, 874 P.2d 142 (1994); Coakley, 618 A.2d at 785 (New Hampshire); Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill. 2d 90, 180 Ill.Dec. 691, 702, 607 N.E.2d 1204, 1215 (1992); Boeing Co. v. Aetna Casualty & Sur. Co., 113 Wash. 2d 869, 784 P.2d 507 (1990).