Court Opinion

ID: 4322260
Source: CourtListenerOpinion
Date Created: 2018-10-18 15:10:43.349045+00
Date Added: 2024-06-11T14:46:05.597698
License: Public Domain

FILED
                                                                    Oct 18 2018, 9:48 am

                                                                        CLERK
                                                                    Indiana Supreme Court
                                                                       Court of Appeals
                                                                         and Tax Court

ATTORNEYS FOR APPELLANTS                                   ATTORNEY FOR APPELLEE
George M. Plews                                            Katherine L. Shelby
Sean M. Hirschten                                          Cantrell Strenski & Mehringer,
Plews Shadley Racher & Braun LLP                           LLP
Indianapolis, Indiana                                      Indianapolis, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Franke Plating Works, Inc.,                                October 18, 2018
Appellant-Plaintiff,                                       Court of Appeals Case No.
                                                           49A02-1710-PL-2462
        v.                                                 Appeal from the Marion Superior
                                                           Court
The Cincinnati Insurance                                   The Honorable Timothy W.
Company,                                                   Oakes, Judge
Appellee-Defendant.                                        The Honorable Therese A.
                                                           Hannah, Commissioner
                                                           Trial Court Cause No.
                                                           49D12-0703-PL-8448

Brown, Judge.

Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018                 Page 1 of 26
[1]   Franke Plating Works, Inc. (“Franke Plating”) appeals the trial court’s

      September 26, 2016 entry of summary judgment and the denial of its motion to

      correct error.1 Franke Plating raises several issues which we consolidate and

      restate as whether after fully investigating, defending, settling, and completing a

      number of payments relating to four environmental liabilities, it is entitled to

      indemnity where the first notice given to the insurer occurred no earlier than

      nine years after it knew of the claims against it.2 We affirm.

                                         Facts and Procedural History

      A. Background

[2]   This is an insurance coverage dispute between Franke Plating and the

      Cincinnati Insurance Company (“Cincinnati”) concerning Insurance Policy

      No. 49 83 32, effective November 1, 1987 (the “1987 Policy”). Indiana

      corporation Franke Plating has metal finishing, plating, and coating operations

      that cover parts in zinc and other constituents and which had generated various

      hazardous and nonhazardous wastes that were shipped to several waste-

      handling facilities for disposal. In connection to its operations, Franke Plating

      1
        Franke Plating’s Notice of Appeal states that, in addition to appealing the trial court’s entry of summary
      judgment, it appeals the trial court’s September 28, 2017 order on its Motion to Compel Discovery, but its
      Brief and Reply Brief make no arguments to that effect.
      2
       We heard oral argument in this case on August 15, 2018, in Indianapolis. We commend counsel for the
      quality of their oral advocacy and written presentations in this matter.

      Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018                        Page 2 of 26
      was named as a potentially responsible party (“PRP”) 3 in actions involving

      environmental cleanups at three landfill sites and a citizen suit filed by Atlantic

      States Legal Foundation, Inc. (“ASLF”) (the four claims collectively, the

      “Underlying Claims”).

               1. Four County

[3]   The Four County State Cleanup site (“Four County”) operated from 1972,

      when it began accepting municipal wastes, until 1989, when its owners filed for

      Chapter 11 bankruptcy. In later years, it was licensed to accept other wastes,

      including industrial and later Resource Conservation and Recovery Act

      hazardous wastes. Until the late 1980s, the wastes were placed in unlined pits

      and covered with soil. Investigations found the groundwater under the site to

      be contaminated with Volatile Organic Compounds, Semi-Volatile Organic

      Compounds, and metals.

[4]   On October 29, 1991, the PRP Ad Hoc Steering Committee sent the PRPs a

      letter which discussed a final participation agreement and checks which were to

      be made payable to the Four County Landfill Administrative Fund.4 On

      3
       In portions of his deposition, Warren Franke (“Warren”), Franke Plating’s President, indicated he
      understood PRP to mean “[t]hat [Franke Plating has] a pretty good chance of having our material on that
      property, so, therefore, we are partially responsible for the waste at this location.” Appellee’s Appendix
      Volume II at 29.
      4
       The record contains a copy of the “FOUR COUNTY LANDFILL SITE PRP STEERING COMMITTEE
      AGREEMENT,” which is stamped “DRAFT” and provides in part: “All Members of the PRP Steering
      Committee shall make an initial contribution of $1,000.00 for those members ranked number 1 through

      Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018                      Page 3 of 26
      November 5, 1991, Franke Plating entered into the Four County Landfill

      Group Agreement. On February 20, 1992, the Indiana Department of

      Environmental Management (“IDEM”) sent Franke Plating a Special Notice of

      Potential Liability.

[5]   Ultimately, Franke Plating was alleged to have shipped 1,158,000 converted

      pounds of waste or 0.1558% of the total waste contribution at Four County.5 Its

      allocation was subsequently adjusted to 1,738,800 converted pounds, or

      0.2042% of the total waste. On April 6, 1993, Franke Plating signed an Agreed

      Order, pursuant to which it paid a “percentage of waste that [it] contributed to

      the site.” Appellant’s Appendix Volume III at 22. It completed payments and,

      in total, incurred costs of $32,420.09.

              2. Fort Wayne Reduction

[6]   The Fort Wayne Reduction Superfund site (“Fort Wayne Reduction”), located

      in Allen County just east of Fort Wayne, was a chemical recycling factory and

      operated from 1967 to 1975 as a waste disposal facility. On February 22, 1989,

      a Consent Decree for Remedial Design/Remedial Action was lodged, the

      Remedial Design was completed in December 1989, and the construction of the

      Remedial Action began in July 1991 and was completed in October 1994. Over

      number 58 inclusive on the attached Four County Landfill PRI Volumetric List.” Appellee’s Appendix
      Volume II at 136, 144. Warren’s deposition indicates that Franke Plating was “No. 48 on the list.” Id. at 55.
      5
       The designated Volumetric Rating defines “converted pounds” as the “waste equivalent in pounds for all
      volume types given in the annual waste volume reports.” Appellant’s Appendix Volume II at 213.

      Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018                      Page 4 of 26
      27,000 drums were removed from the site and final work was completed in

      1996.

[7]   Franke Plating was sued as a fourth-party defendant for contribution of

      response costs6 associated with remediating Fort Wayne Reduction.

      Ultimately, Franke Plating was alleged to have contributed 0.1738% of the total

      material at Fort Wayne Reduction and the demand on it was $14,217.40, plus

      oversight costs of $1,909.34, for a total demand of $16,126.74. Franke Plating

      settled the claims against it, paid its share to clean up the site, and incurred total

      costs of $8,000.7

               3. Wayne Reclamation

[8]   The Wayne Reclamation site covers approximately thirty acres in the southeast

      part of Columbia City, Indiana. Wayne Waste Oil deposited about one million

      gallons of oil-related wastes at the Wayne Reclamation site from 1975 to 1980.

      6
        In its April 4, 2016 Supplemental Submission and Designation of Evidence in Support of its Motion for
      Summary Judgment and in Opposition to Plaintiff’s Motion for Summary Judgment, Cincinnati included
      excerpts from the Deposition of Frank Deveau regarding response, removal, and remedial costs, which
      indicate that “[r]esponse costs are costs to investigate or remediate contamination” that may be in the soil
      and groundwater; that response costs can include oversight costs for the agency as well. Appellee’s Appendix
      Volume IV at 84. Deveau also states in his affidavit that he would include costs of removal in the “overall
      term of ‘response costs’”; that removal and remedial costs “ALL fall under the umbrella of response costs”;
      that removal costs are “something that may be done to remove sort of, on an expedited basis, drums or
      whatever is located at a site”; and that remedial costs differ from removal costs in that “generally, remedial
      are costs that are incurred after a remedy has been selected, and those costs involve implementing the
      remedial [action].” Id. at 84-85.
      7
       On December 16, 1994, Franke Plating paid $1,000 to the Fourth-Party Defense Fund, and on June 20,
      1995, paid $7,000 in settlement. It was dismissed from the lawsuit in October 1995.

      Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018                      Page 5 of 26
      A de minimis consent decree involving over 800 parties and $5 million was

      entered in court in August 1997.

[9]   Franke Plating’s involvement with the Wayne Reclamation site began as early

      as August 17, 1985, when the United States Environmental Protection Agency

      (“EPA”) sent Franke Plating a letter. On August 26, 1985, the father of Warren

      Franke (“Warren”), William J. Franke, sent a letter on Franke Plating

      stationery to the EPA which stated, “We are in receipt of your certified letter

      dated August 17, 1985, in which we are informed that we may be a responsible

      party generator with respect to this site and its subsequent clean-up activities.”

      Id. at 5. On November 6, 1985, the EPA sent a letter to the Site Management

      Section which stated:

              U.S. EPA believes that you may be a party responsible for this
              release or threat of release. Before the government undertakes
              the necessary action at the site, we offer you the opportunity to
              perform voluntarily the required work to abate any releases of
              hazardous substances, pollutants, or contaminants from the site.
              If private party cleanup is not forthcoming and public funds are
              expended, you may be liable for the costs incurred. . . .

              U.S. EPA intends to perform the following work:

              1. Excavate and dispose of approximately 400 drums.
              Approximately ninety-one of the drums are located above the
              surface.

              2. Remove and dispose of contaminated soil around the drums.

              3. Conduct a geophysical survey in order to locate any possible
              additional buried drums on the site.

      Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018   Page 6 of 26
                4. Install three cluster monitoring wells between the city well
                field and the sludge ravine.

                5. Initiate a sampling program for existing wells.

       Appellant’s Appendix Volume V at 241-242. On June 16, 1986, Franke Plating

       signed its agreement to an Administrative Order by Consent proceeding under

       Section 106 of the Comprehensive Environmental Response, Compensation,

       and Liability Act (“CERCLA”),8 which states in part that the respondents

       agreed to “undertake all actions required by the terms and conditions of this

       Consent Order” and that they “shall undertake and assure, at their expense, the

       implementation of the Work Plan incorporated herein.” Id. at 188, 195.

[10]   On May 26, 1995, the Wayne Reclamation Site Cleanup Settlor sent a demand

       letter stating that Franke Plating had “received notices over the years

       concerning its status as a [PRP]” under CERCLA, that “to date, [Franke

       Plating] has failed to join in the Consent Decree and pay a share of costs of one

       or more of the three earlier cleanups,” that it represented Franke Plating’s “final

       opportunity to settle its share of responsibility for the cleanup of the Site

       without litigation,” and that the “Cleanup Settlors hereby demand the

       amount(s) set forth . . . if settlement is reached not later than June 27, 1995.”

       8
         In the federal arena, the EPA is statutorily authorized to enforce remediation of environmental pollution.
       CERCLA provides several ways for the EPA to accomplish its objectives, 42 U.S.C. § 9601 et seq, and
       empowers the EPA to respond to contamination and then shift liability for “response costs” to those parties
       responsible. Hartford Acc. & Indem. Co. v. Dana Corp., 690 N.E.2d 285 (Ind. Ct. App. 1997) (citing 42 U.S.C. §
       9607), trans. denied.

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018                       Page 7 of 26
       Appellant’s Appendix Volume III at 214-215. On November 13, 1996, Franke

       Plating’s attorney, Mark A. Thoma, sent a letter concerning the Wayne

       Reclamation site which enclosed “the original of a signature page for the

       proposed de minimis [c]onsent [d]ecree signed by Warren T. Franke” as the

       representative of Franke Plating.9 Id. at 220. Franke Plating signed a consent

       decree relating to Wayne Reclamation10 and made the refund payments. In

       total, its response costs at Wayne Reclamation amounted to $49,676.83.

               4. ASLF Citizen Suit

[11]   ASLF filed a citizen suit on April 9, 1991, in the United States District Court

       for the Northern District of Indiana, styled American States Legal Foundations,

       Inc. v. Franke Plating Works, Inc., Cause No. F 91-00083 (“Cause No. 83”),

       alleging that Franke Plating violated its Industrial Discharge Permit No. FT

       00350, issued pursuant to the authority of sections 30l(a), and 307(d) of the

       Federal Water Pollution Control Act, 33 U.S.C. 1311(a), l317(d) (the “Clean

       Water Act”), to “discharge to the [public-owned treatment works].” Appellee’s

       Appendix Volume II at 38.

       9
        The record contains a copy of a document signed by Warren T. Franke on November 13, 1996, for
       “Defendant Franke Plating Works, Inc. . . . in A.H. Choitz action” which indicates Mark A. Thoma as the
       agent authorized to accept service on behalf of Franke Plating. Appellant’s Appendix Volume VI at 123.
       10
        The record contains a copy of a December 22, 1997 consent decree in U.S. v. A.H. Choitz, Cause No. 1:97-
       CV-362.

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018                   Page 8 of 26
[12]   ASLF citizen suits, like that filed in Cause No. 83, were common and recurring

       throughout the 1980s and 1990s. ASLF is a not-for-profit organization that,

       according to its complaint in Cause No. 83, is “dedicated to protecting and

       restoring the natural resources, particularly the water resources, of the United

       States and its territories.” Appellant’s Appendix Volume VII at 216. During

       the 1990s, ASLF obtained public records of permitted facilities and initiated

       citizen suits against companies that experienced exceedances of the discharge

       limits of their National Pollution Discharge Elimination Systems (“NPDES”)

       or Industrial Discharge permits.11 The Clean Water Act allowed ASLF to

       recover attorney fees, daily penalties, and other costs in such cases.

[13]   On June 30, 1992, Franke Plating and ASLF entered a Revised Consent Decree

       in Cause No. 83, wherein Franke Plating agreed to pay a $20,000 penalty to the

       United States Treasury Department and a $50,000 payment to the Nature

       Conservancy in Indiana “to put to use in its Fish Creek Watershed preservation

       project,” as well as to reimburse ASLF “in the amount of $5,000 for its efforts

       in monitoring [Franke Plating’s] compliance with both the Clean Water Act

       and the terms of this settlement” and “its fees and costs . . . up to a maximum

       of $20,000.” Appellant’s Appendix Volume III at 234-235. Franke Plating

       made the payment pursuant to the Revised Consent Decree from August 17,

       11
         The designated revised affidavit of Frank Deveau states that NPDES permits set “limits on water
       discharges by regulating point sources that discharge pollutants into waters of the United States. An
       Industrial Discharge Permit is issued pursuant to the NPDES program, typically as authorized by a local
       ordinance. Discharges are self-reported and data is publicly available.” Appellant’s Appendix Volume IV at
       58.

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018                    Page 9 of 26
       1992, through April 23, 1993, and, in total, incurred costs in the ASLF suit of

       $90,002.24.

       B. The 1987 Policy

[14]   Franke Plating seeks coverage under only the 1987 Policy, a comprehensive

       general liability policy, which provides in relevant part:

                  4. Insured’s Duties in the Event of Occurrence, Claim or Suit

                  (a) In the event of an occurrence,[12] written notice containing
                  particulars sufficient to identify the insured and also reasonably
                  obtainable information with respect to the time, place and
                  circumstances thereof, and the names and addresses of the
                  injured and of available witnesses, shall be given by or for the
                  insured to the company or any of its authorized agents as soon as
                  practicable.

                  (b) If claim is made or suit is brought against the insured, the
                  insured shall immediately forward to the company every
                  demand, notice, summons or other process received by him or
                  his representative.

       12
            The 1987 Policy provides 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 A. bodily injury or
                           Coverage B. property 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 . . . .
       Appellant’s Appendix Volume II at 128. The 1987 Policy defines “property damage” in part as “(1) physical
       injury to or destruction of tangible property which occurs during the policy period, including the loss of use
       thereof at any time resulting therefrom,” and “personal injury” to include “wrongful entry or eviction or
       other invasion of the right of private occupancy.” Id. at 113, 133.

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018                      Page 10 of 26
                (c) The insured shall cooperate with the company and, upon the
                company’s request, assist in making settlements, in the conduct
                of suits and in enforcing any right of contribution or indemnity
                against any person or organization who may be liable to the
                insured because of injury or damage with respect to which
                insurance is afforded under this policy; and the insured shall
                attend hearings and trials and assist in securing and giving
                evidences and obtaining the attendance of witnesses. The
                insured shall not, except at his own cost, voluntarily make any
                payment, assume any obligation or incur any expense other than
                for first aid to others at the time of accident.

       Appellant’s Appendix Volume II at 114.

       C. Procedural History

[15]   On March 1, 2007, Franke Plating filed a complaint against Cincinnati and

       other insurers for declaratory relief and damages.13 At the time when the

       complaint was filed, there was no ongoing defense being undertaken for any of

       the Underlying Claims. On October 31, 2015, Franke Plating sought summary

       judgment and designated materials in support of its motion including the

       revised affidavits of Warren and Frank Deveau.

       13
          To the extent that Franke Plating maintains on appeal that it seeks to limit its argument to indemnification
       costs, see Appellant’s Brief at 15 (“[I]ndemnification costs are the subject of this case. Franke Plating is not
       seeking defense costs.”), we observe the statements in Franke Plating’s complaint that it “was for declaratory
       relief and damages” and that Cincinnati was “obligated under each of their policies to pay defense costs
       incurred by Franke Plating and/or all sums, subject only to policy limits, incurred by Franke Plating for
       response, contribution, and/or settlement costs incurred as a result of the Underlying Claims.” Appellant’s
       Appendix Volume II at 95, 98. It also requested, in part, that the court “requir[e] [Cincinnati] to defend and
       indemnify Franke Plating in the Underlying Claims.” Id. at 99.

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018                       Page 11 of 26
[16]   Warren’s revised affidavit contained attached copies of Damage Summary and

       Pre-Judgment Interest spreadsheets pertaining to the Underlying Claims.

       Combining the incurred response costs with the corresponding pre-judgment

       interest,14 as calculated and presented in the designated spreadsheets, produced

       the following:

                                                                     Pre-Judgment
            Underlying Claim                      Cost               Interest (as of                Total
                                                                     Oct. 1, 2015)
             Four County                     $ 32,420.09               $ 20,159.56              $ 52,579.65
        Fort Wayne Reduction                  $ 8,000.00               $ 13,020.05              $ 21,020.05
         Wayne Reclamation                   $ 49,676.83               $ 73,271.28             $ 122,948.11
                ASLF                         $ 90,002.24              $ 164,870.97             $ 254,873.21
               Totals                       $ 180,099.16              $ 271,321.86             $ 451,421.02

       See Appellant’s Appendix Volume IV at 33-37.

[17]   Deveau’s revised affidavit provides that he was a partner at Taft Stettinius &

       Hollister LLP, in Indianapolis, Indiana; that liability under CERCLA is

       retroactive, joint and several, strict, and onerous; that defenses to liability are

       few; and that the EPA “has long adhered to an ‘enforcement first’ strategy,” has

       authority to issue unilateral orders to compel cleanups, and “frequently is able

       to compel PRPs to settle cleanup and cost reimbursement claims.” Id. at 49-50.

       The affidavit also provides that there is no minimum threshold amount to

       impose liability under CERCLA, and that the Clean Water Act governing the

       14
         Franke Plating maintains it seeks the incurred response costs which, along with the pre-judgment interest,
       constitute “total indemnification costs.” Appellant’s Brief at 15.

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018                     Page 12 of 26
       ASLF citizen suit “likewise is a strict liability regime” that “imposes strict

       liability and statutory penalties for NPDES exceedances.” Id. at 51. It also

       states, in part, that Deveau became familiar with both the Underlying Claims

       involving Franke Plating and the litigation between it and Cincinnati, that the

       “response, contribution and indemnification costs Franke Plating incurred

       resolving its liability . . . were reasonable, appropriate, and necessary,” and that

       it was “highly unlikely that the costs Franke Plating incurred . . . could have

       been further reduced or minimized.” Id. at 59.

[18]   On December 2, 2015, Cincinnati filed its own motion for summary judgment

       and a brief in opposition to Franke Plating’s motion and in support of its

       motion. Cincinnati designated evidence, including Franke Plating’s response to

       Cincinnati’s Interrogatory No. 5.f,15 affidavits of Brian Keipert and Debra

       Davis, and excerpts from Deveau’s deposition.

[19]   Deveau’s deposition includes testimony that he did not ask Attorney Thoma for

       a copy of his file in the ASLF litigation or discuss with him any defenses that

       were put forth by Franke Plating; that he did not have a copy of the ASLF

       complaint that was filed before his first affidavit was signed; and that he did not

       believe that a copy of the fourth-party amended complaint in Fort Wayne

       15
          Cincinnati’s December 2, 2015 submission and designation of evidence states that it “hereby submits and
       designates . . . 2. [Franke Plating’s] Answers to Interrogatories, Interrogatory No. 5.f., attached hereto as
       Exhibit A.” Appellee’s Appendix II Volume 2 at 2. The included Response to Interrogatory No. 5 states in
       part that, “[w]ith regard to f, Franke Plating has not sought coverage with respect to any of the Underlying
       claims.” Id. at 13.

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018                      Page 13 of 26
       Reduction was provided to him but he remembered being “part of the group

       that prepared and filed it.” Appellee’s Appendix Volume IV at 34. In response

       to the question of whether he asked Attorney Thoma for a copy of his files for

       any of the sites in which he represented Franke Plating in the Underlying

       Claims, Deveau testified, “Yeah. We talked about his files. . . . I’m pretty sure

       he said they couldn’t find anything. Certainly, as to Atlantic States, he said

       they couldn’t find anything.” Id. at 32. When asked, with regard to Fort

       Wayne Reduction, where he obtained information for the statement in his

       original affidavit that Franke Plating’s total response costs were $14,250.00, he

       stated it “was a number provided to me by counsel” and that he did not look at

       any documentation in preparing the affidavit that supported that number, and

       that he made the assumption that “the numbers provided by counsel for this

       payment . . . was the payment” made for Fort Wayne Reduction Site. Id. at 36.

       Deveau also agreed that he had not reviewed the shipping records for Franke

       Plating and stated, “I think as to Wayne Reclamation, there were some

       payment documents, or some record of payments for shipments sent there that I

       saw.” Id. at 38.

[20]   On April 18, 2016, the trial court held a hearing on the summary judgment

       motions and, on September 26, 2016, granted Cincinnati’s summary judgment

       motion and denied Franke Plating’s motion. The court’s September 26, 2016

       order excerpted the “Insured’s Duties in the Event of Occurrence, Claim or

       Suit” section of the 1987 Policy and found that paragraph 4(a) set “forth the

       insured’s responsibility for an occurrence”; paragraph 4(b) set forth “the

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018   Page 14 of 26
insured’s responsibilities for a claim or lawsuit”; and paragraph 4(c) set forth

“the insured’s cooperation clause.” Appellant’s Appendix Volume II at 37. It

additionally stated in relevant part:

        It is undisputed that [Cincinnati] first learned of the four
        [Underlying Claims] against Franke Plating when the lawsuit
        was filed. (Aff. Of Brian Keipert, . . . p.1, ¶3.)

        It is undisputed that Franke Plating failed to provide notice of a
        loss to [Cincinnati] until it filed this declaratory judgment action.
        There is also no dispute that Franke Plating paid all sums
        resulting from the [Underlying Claims] before [Cincinnati] was
        notified of the claims.

                                            DECISION

        The Parties to this case make arguments based on the Policy’s
        notice requirement and the cooperation clause. [Cincinnati]
        urges that recent decisions compel this Court to find the
        presumption of harm becomes irrebutable when untimely notice
        is given, such as notice after a settlement. Or, in Judge Posner’s
        words, “when notice is that late the insurer is off the hook.” Nat’l
        Union Fire Ins. Co. of Pittsburgh v. Mead Johnson & Co. LLC, 735
F.3d 539, 544 (7th Cir. 2013) (Court found Indiana adhered to
        rebuttable presumption of harm even if notice of loss occurred
        after verdict[).]

        In[] Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267
        (Ind. 2009), our Supreme Court held an insured who failed to
        comply with a notice requirement could not prevail in a cause of
        action claiming its insurer breached a duty to defend because an
        insurer “cannot defend a claim of which it has no knowledge.”
        Dreaded at 1273. Under this holding, the insurer bears no
        responsibility for pre-notice costs.

        In Travelers Ins. Companies v. Maplehurst Farms, Inc.[,] 953 N.E.2d
1153 (Ind. Ct. App. 2011)[,] trans. denied [(“Maplehurst Farms I”)],

Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018   Page 15 of 26
               and the case on remand, Travelers Cas. And Sur. Co. v. Maplehurst
               Farms, Inc.[,] 18 N.E.3d 311 (Ind. Ct. App. 2014)[,] trans. denied
               [(“Maplehurst Farms II”)], the Indiana Court of Appeals held an
               insurer was not responsible for any costs incurred by the insured
               prior to receiving notice of the loss. Travelers Cas. And Sur. Co. v.
               Maplehurst Farms, Inc.[,] 18 N.E.3d [at 313].

               [Cincinnati] argues recent decisions treat an insured’s notice
               requirement clause as a condition precedent to the insurer’s duty
               to defend, [Dreaded, 904 N.E.2d 1267, 1271 fn.1]. The Maplehurst
               Court abandoned a prejudice requirement when a genuine issue
               of fact that late notice did not prejudice an insurer was of no
               consequence. [Maplehurst Farms I,] 953 N.E.2d [at 1163]. Under
               this analysis, an insurer is absolved of responsibility for expenses
               incurred by an insured before the insurer receives policy notice
               regardless of prejudice.

               The Court, following recent precedent, finds that Franke
               Plating’s failure to forward notice of the four claims and Franke
               Plating’s payment and settlement of the claims prior to
               [Cincinnati’s] receipt of notice of a claim, excuse [Cincinnati]
               from any obligation to pay Franke Plating for settlement costs or
               interest thereon.

       Id. at 37-39. Franke Plating filed a motion to correct error which, after a hearing,

       the court denied.

                                                     Discussion

[21]   The issue is whether the trial court erred in entering summary judgment in

       favor of Cincinnati and against Franke Plating. The purpose of summary

       judgment is to terminate litigation about which there can be no factual dispute

       and which may be determined as a matter of law. Sheehan Const. Co., Inc. v.

       Continental Cas. Co., 938 N.E.2d 685, 689 (Ind. 2010) (citing Bushong v.

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018   Page 16 of 26
       Williamson, 790 N.E.2d 467, 474 (Ind. 2003)), reh’g denied. Once the moving

       party has sustained its initial burden of proving the absence of a genuine issue

       of material fact and the appropriateness of judgment as a matter of law, the

       party opposing summary judgment must respond by designating specific facts

       establishing a genuine issue for trial. Id. (citing Stephenson v. Ledbetter, 596
N.E.2d 1369, 1371 (Ind. 1992)). If the opposing party fails to meet its

       responsive burden, the court shall render summary judgment. Id. (citing

       Bushong, 790 N.E.2d at 474). We construe all factual inferences in the

       nonmoving party’s favor and resolve all doubts as to the existence of a material

       issue against the moving party. Reed v. Reid, 980 N.E.2d 277, 285 (Ind. 2012).

       “The fact that the parties have filed cross-motions for summary judgment does

       not alter our standard for review.” Asklar v. Gilb, 9 N.E.3d 165, 167 (Ind. 2014)

       (citing Reed, 980 N.E.2d at 289). Instead, we must consider each motion

       separately to determine whether the moving party is entitled to judgment as a

       matter of law. Id.

[22]   An insurance policy is a contract, and as such is subject to the same rules of

       construction as other contracts. Dunn v. Meridian Mut. Ins. Co., 836 N.E.2d 249,

       251 (Ind. 2005) (citations omitted). Interpretation of a contract is a pure

       question of law and thus, is reviewed de novo. Harrison v. Thomas, 761 N.E.2d
816, 818 (Ind. 2002). When construing the language of an insurance policy, a

       court “should construe the language of an insurance policy so as not to render

       any words, phrases or terms ineffective or meaningless.” State Farm Mut. Auto.

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018   Page 17 of 26
       Ins. Co. v. Jakubowicz, 56 N.E.3d 617, 619 (Ind. 2016) (citing Wert v. Meridian

       Sec. Ins. Co., 997 N.E.2d 1167, 1170 (Ind. Ct. App. 2013) (citation omitted)).

[23]   Clear and unambiguous terms are given their clear and ordinary meaning,

       Jernas v. Gumz, 53 N.E.3d 434, 444 (Ind. Ct. App. 2016), trans. denied, in order

       “to accomplish the primary goal of contract interpretation: ‘to determine the

       intent of the parties at the time the contract was made as disclosed by the

       language used to express their rights and duties.’” Holiday Hospitality

       Franchising, Inc. v. AMCO Ins. Co., 983 N.E.2d 574, 577-578 (Ind. 2013) (quoting

       First Fed. Sav. Bank of Ind. v. Key Markets, Inc., 559 N.E.2d 600, 603 (Ind. 1990)).

       Insurance policies with directly conflicting terms are ambiguous. Jakubowicz, 56
N.E.3d at 619 (citing Wert, 997 N.E.2d at 1171). Under Indiana law, an

       insurance policy is ambiguous if reasonable persons may honestly differ as to

       the meaning of the policy language. Eli Lilly & Co. v. Home Ins. Co., 482 N.E.2d
467, 470 (Ind. 1985) (citing Benefit Tr. Life Ins. Co. v. Waggoner, 473 N.E.2d 646

       (Ind. Ct. App. 1985); Huntington Mut. Ins. Co. v. Walker, 392 N.E.2d 1182 (Ind.

       Ct. App. 1979)). Where there is ambiguity, insurance policies are construed

       strictly against the insurer, and the policy language is viewed from the

       standpoint of the insured. Jakubowicz, 56 N.E.3d at 619 (citing Allstate Ins. Co. v.

       Dana Corp., 759 N.E.2d 1049, 1056 (Ind. 2001)).

[24]   In a case involving a claim for indemnification under a standard commercial

       general liability policy, the Indiana Supreme Court has provided:

               Requiring prompt notice allows insurers the opportunity to
               investigate the circumstances surrounding claimed losses in a
       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018   Page 18 of 26
               timely and adequate manner. P.R. Mallory & Co. v. Am. Cas. Co. of
               Reading, Pa., 920 N.E.2d 736, 746 (Ind. Ct. App.2010), trans.
               denied. In Miller v. Dilts, this Court determined that “[p]rejudice
               to the insurance company’s ability to prepare an adequate
               defense can therefore be presumed by an unreasonable delay in
               notifying the company about the accident or about the filing of
               the lawsuit.” 463 N.E.2d 257, 265 (Ind. 1984) (emphasis added).
               Once prejudice is presumed, the burden is on the insured to
               “establish some evidence that prejudice did not occur in the
               particular situation.” Id.; see also Askren Hub States Pest Control
               Svcs., Inc. v. Zurich Ins. Co., 721 N.E.2d 270, 279 (Ind. Ct. App.
               1999) (“The presumption of prejudice essentially means that if
               the delay in giving the required notice is unreasonable, the
               injured party or the insured has the burden to produce evidence
               that prejudice did not actually occur in the particular situation.”).
               The duty to notify is a condition precedent to the insurance
               company’s liability to its insured. Miller, 463 N.E.2d at 263.
               “Where prejudice is created by the insured’s noncompliance with
               the policy’s provisions, the insurance company is relieved of its
               liability under the policy.” Id. at 261.

       Sheehan Const. Co., Inc., 938 N.E.2d at 689.

[25]   Franke Plating characterizes the instant case as one of forfeiture, or where an

       insurer “seeks to work a forfeiture due to late notice,” Appellant’s Brief at 32,

       and argues that “barring coverage absent a showing of prejudice” is an extreme

       remedy. Id. at 18. It also argues that Dreaded and Maplehurst Farms I do not

       control, because the 1987 Policy lacks a consent requirement, and that the trial

       court should have instead relied on Governmental Interinsurance Exch. v. City of

       Angola, 8 F. Supp. 2d 1120, 1134-1135 (N.D. Ind. 1998), which it asserts

       involved the same policy language used in the 1987 Policy and which held that

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018   Page 19 of 26
       the voluntary payments provision involved therein did not operate to bar

       coverage. It contends that without a consent requirement “the only issue under

       the voluntary payments clause is whether the liability costs paid are ‘voluntary

       payments’” and it is “reasonable to construe the clause as City of Angola did,

       barring only truly ‘voluntary’ payments.” Appellant’s Brief at 27, 30. It

       contends that Dreaded dealt with defense costs and not indemnity costs, and

       asserts that “[b]ecause the duty to defend is broader than the duty to indemnify,

       and requires the involvement of the insurer, . . . it makes sense that late notice

       of a defense claim would be more problematic than late notice of an indemnity

       claim.” Id. at 33.

[26]   In response, Cincinnati argues that Dreaded and Maplehurst Farms I found “pre-

       notice defense and indemnity costs were not covered due to failure to comply

       with the notice requirements of the policies.” Appellee’s Brief at 22. It argues

       that Franke Plating’s settlements and indemnity payments were voluntarily

       made and contends that, even with the additional language of “without our

       consent” in the voluntary payments clause in Maplehurst Farms I, the “costs

       must still be voluntarily made before the ‘without our consent’ language would

       apply.” Id. at 31. Cincinnati points to several actions of Franke Plating,

       including its joining of the Land County Landfill PRP Group in 1991, signing

       of the “1986 Consent Order” concerning the Wayne Reclamation site, and

       settling of the Fort Wayne Reduction lawsuit “brought against it by other PRPs,

       not the EPA,” and asserts that Franke Plating’s conduct in the Underlying

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018   Page 20 of 26
       Claims contradicts the argument that its actions were not voluntary. Id. at 32-

       33.

[27]   We first find that the plain language of Sections 4(a) and 4(b) of the 1987 Policy

       is clear regarding the provision of notice to Cincinnati by Franke Plating, and

       unambiguously requires that, in the event of an occurrence, written notice

       containing particulars shall be given by or for Franke Plating to Cincinnati “as

       soon as practicable” and that, if a claim is made or suit is brought against

       Franke Plating, it “shall immediately forward to [Cincinnati] every demand,

       notice, summons or other process received.” Appellant’s Appendix Volume II

       at 114 (emphasis added). Per the record, it is undisputed that the first notice of

       any loss that Franke Plating gave to Cincinnati was when it filed the March 1,

       2007 complaint. With respect to the Wayne Reclamation site the first notice

       was given to Cincinnati either, at the very least, nine years or, at the very most,

       twenty-two years after it had knowledge of any loss. We also note that Franke

       Plating did not give notice until more than eleven years had passed after making

       the June 20, 1995 payment with respect to Fort Wayne Reduction; thirteen

       years had passed after signing the April 6, 1993 Agreed Order with respect to

       Four County; and fourteen years had passed after starting to pay pursuant to

       the June 20, 1992 Revised Consent Decree with respect to the ASLF citizen

       suit. Accordingly, we cannot say that Franke Plating satisfied the 1987 Policy’s

       section 4(a) and 4(b) notice provisions.

[28]   We further find that Franke Plating’s delay in giving Cincinnati notice was

       unreasonable and that prejudice is, therefore, presumed here. See Sheehan Const.

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018   Page 21 of 26
       Co., Inc., 938 N.E.2d at 689. At oral argument, counsel for Franke Plating

       admitted that Franke Plating breached the 1987 Policy and indicated that

       “nothing prevented it from giving notice except a lack of understanding of [its]

       legal rights.” Oral Argument at 7:53-7:58.

[29]   Franke Plating’s arguments concerning remedies – and characterizing the

       instant case as one involving forfeiture – essentially assert, at their core, that the

       notice provisions, as conditions precedent, should be excused because

       enforcement would otherwise cause it to suffer a disproportionate forfeiture. In

       its brief and at oral argument, Franke Plating referred to Restatement (Second)

       of Contracts § 229 (1981) in support of this position. Section 229 provides:

               To the extent that the non-occurrence of a condition would cause
               disproportionate forfeiture, a court may excuse the non-
               occurrence of that condition unless its occurrence was a material
               part of the agreed exchange.

       Section 229 of the Restatement requires performance by the party seeking to

       avoid the forfeiture. Hoosier Energy Rural Elec. Co-op., Inc. v. Amoco Tax Leasing

       IV Corp., 34 F.3d 1310, 1320 (7th Cir. 1994). Comment b of Section 229

       provides: “[F]orfeiture is used to refer to the denial of compensation that results

       when the obligee loses his right to the agreed exchange after he has relied

       substantially, as by preparation or performance on the expectation of that

       exchange. . . .” In this case, Franke Plating did not prepare to perform or

       perform in any way: after having learned of the Underlying Claims, it waited

       until after it had fully investigated, defended, settled, and paid on each of the

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018   Page 22 of 26
       claims before eventually notifying Cincinnati of its losses. Accordingly, Franke

       Plating’s argument about remedies does not overcome the plain language of the

       1987 Policy.

[30]   For these reasons, we conclude that Franke Plating has not met its burden of

       establishing evidence that prejudice did not occur in the particular situation and

       the trial court did not err in entering summary judgment in favor of Cincinnati.

                                                    Conclusion

[31]   For the foregoing reasons, we affirm the trial court’s entry of summary

       judgment.

       Bailey, J., concurs.

       Crone, J., concurs in part and dissents in part.

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018   Page 23 of 26
                                                   IN THE
           COURT OF APPEALS OF INDIANA

       Franke Plating Works, Inc.,                                Court of Appeals Case No.
                                                                  49A02-1710-PL-2462
       Appellant-Plaintiff,
                                                                  Appeal from the Marion Superior
               v.                                                 Court
                                                                  The Honorable Timothy Oakes,
       The Cincinnati Insurance                                   Judge
       Company,                                                   The Honorable Theresa Hannah,
                                                                  Magistrate
       Appellee-Defendant.
                                                                  Trial Court Cause No.
                                                                  49D02-0703-PL-8448

       Crone, Judge, concurring in part and dissenting in part.

[32]   Citing Sheehan, 938 N.E.2d at 689, the majority finds that “Franke Plating’s

       delay in giving Cincinnati notice was unreasonable and that prejudice is,

       therefore, presumed here[,]” and holds that Franke Plating failed to designate

       sufficient evidence to rebut that presumption. Slip op. at 22, 23. I believe that

       Deveau’s affidavit is sufficient to establish genuine issues of material fact

       regarding whether Cincinnati was prejudiced by Franke Plating’s delay.

       Denying Franke Plating the coverage that it paid for in the absence of any

       prejudice to Cincinnati would result in a disproportionate forfeiture, and

       “forfeitures are generally disfavored by the law.” Gates v. Houston, 897 N.E.2d
532, 536 (Ind. Ct. App. 2008).

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018            Page 24 of 26
[33]   For its part, Cincinnati relies on Maplehurst Farms I, in which a divided panel of

       this Court stated that “where an insured enters into a settlement agreement

       without the insurer’s consent in violation of a voluntary payment provision, that

       obligation cannot be recovered from the insurer, and prejudice is irrelevant.”
953 N.E.2d at 1161 (emphasis added).16 This begs the question, unanswered by

       my colleagues, of whether Franke Plating entered into its settlement agreements

       in violation of the 1987 Policy’s voluntary payment provision. Franke Plating

       argues that it did not, and I believe that it designated enough evidence to

       establish genuine questions of fact on this issue. 17

[34]   There is a fundamental difference between not being able to recover defense

       costs and forfeiting the indemnification rights pursuant to the policy. Upon

       remand, Cincinnati would still be permitted to argue prejudice sufficient to

       warrant forfeiture of their indemnification obligation, but I do not think that

       summary judgment on that issue is appropriate on this record. In sum, I would

       reverse the trial court’s entry of summary judgment for Cincinnati, affirm its

       16
         As did Judge May in her dissent, I disagree with the Maplehurst “majority’s apparent premise that after
       [Dreaded v. St. Paul Guardian Insurance Co.], reasonableness is no longer a permissible consideration in our
       analysis of late-notice disputes[,]” because “[s]uch a premise is inconsistent with the explicit language of
       [Miller v. Dilts], and nothing in [Dreaded] suggests reasonableness must, should, or can be disregarded.” 953
N.E.2d at 1163 (May, J., dissenting).
       17
         The voluntary payment provision in Maplehurst Farms I reads, “No insureds will, except at their own cost,
       voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without our
       consent.” 953 N.E.2d at 1156 (emphasis added). The italicized phrase is absent from the 1987 Policy in this
       case. I do not agree with Franke Plating that the absence of this phrase is dispositive of whether it violated
       the 1987 Policy’s voluntary payment provision, but I do believe that it militates against a denial of coverage.

       Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018                       Page 25 of 26
denial of summary judgment for Franke Plating, and remand for further

proceedings.18

18
  I believe that genuine issues of material fact exist regarding whether the “known loss” doctrine applies to
the Wayne Reclamation claim, whether the Atlantic States claim involves “property damage,” and whether
Franke Plating is entitled to prejudgment interest.

Court of Appeals of Indiana | Opinion 49A02-1710-PL-2462 | October 18, 2018                      Page 26 of 26