Court Opinion

ID: 2785296
Source: CourtListenerOpinion
Date Created: 2015-03-11 15:07:12.702168+00
Date Added: 2024-06-11T09:15:15.746325
License: Public Domain

Mar 11 2015, 10:24 am

      ATTORNEYS FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
      George M. Plews                                            THE CINCINNATI INSURANCE
      Jeffrey D. Claflin                                         COMPANY
      Jonathan P. Emenhiser                                      Julia Blackwell Gelinas
      Plews Shadley Racher & Braun LLP                           Maggie L. Smith
      Indianapolis, Indiana                                      Carrie G. Doehrmann
                                                                 Frost Brown Todd LLC
                                                                 Indianapolis, Indiana

                                                  IN THE
          COURT OF APPEALS OF INDIANA

      FLM, LLC,                                                 March 11, 2015

      Appellant-Plaintiff,                                      Court of Appeals Case No.
                                                                49A02-1401-PL-17
              v.                                                Appeal from the Marion Superior
                                                                Court
                                                                The Honorable David J. Dreyer,
      The Cincinnati Insurance                                  Judge
      Company, et al.,                                          Case No. 49D10-0501-PL-943
      Appellees-Defendants

      Crone, Judge.

[1]   In FLM, LLC v. Cincinnati Ins. Co., 24 N.E.3d 444 (Ind. Ct. App. 2014) (“FLM

      II”), we held, among other things, that the commercial general liability

      (“CGL”) policy issued by The Cincinnati Insurance Company (“Cincinnati”)

      provided property damage coverage to the insured, International Recycling Inc.

      Court of Appeals of Indiana | Opinion on Rehearing 49A02-1401-PL-17 | March 11, 2015        Page 1 of 5
      (“IRI”), which went out of business and abandoned 100,000 tons of Chrysler

      foundry sand on property owned by FLM, LLC (“FLM”), after Chrysler

      stopped paying IRI for its sand disposal services. Consequently, we reversed

      the trial court’s contrary ruling and remanded with instructions to enter

      summary judgment in FLM’s favor on that issue. Cincinnati now petitions for

      rehearing, asserting that we also should have addressed whether the property

      damage was expected or intended by IRI and therefore subject to a coverage

      exclusion under the policy. We grant Cincinnati’s petition to address this issue

      and affirm our original opinion in all respects.

[2]   As mentioned in FLM II,

              The CGL policy states that Cincinnati “will pay those sums that the
              insured becomes legally obligated to pay as damages because of ‘bodily
              injury’ or ‘property damage’ to which this insurance applies.”
              Appellant's App. at 165. The insurance applies to “property damage”
              only if it “is caused by an ‘occurrence’ that takes place in the ‘coverage
              territory’ ” and “occurs during the policy period.” Id. The policy
              defines “property damage” in pertinent part as “[p]hysical injury to
              tangible property, including all resulting loss of use of that property.”
              Id. at 175. “Occurrence” is defined as “an accident, including
              continuous or repeated exposure to substantially the same general
              harmful conditions.” Id. The term “accident” is not defined.
      Id. at 454. Based on Judge Bradford’s separate opinion in the first appeal in this

      case, FLM, LLC v. Cincinnati Ins. Co., 973 N.E.2d 1167 (Ind. Ct. App. 2012)

      (“FLM I”), trans. denied (2013), we concluded that the contamination of FLM’s

      property by the abandoned foundry sand was an “accident” and therefore an

      “occurrence” under the policy. See FLM II at 455 (“In other words, ‘accident’

      could just as easily be referring to IRI’s actions as to the unintended

      Court of Appeals of Indiana | Opinion on Rehearing 49A02-1401-PL-17 | March 11, 2015   Page 2 of 5
      consequences of those actions, and this ambiguity must be resolved in favor of

      coverage.”) (quoting FLM I, 973 N.E.2d at 1179 (Bradford, J., concurring in

      result)). Cincinnati does not ask us to reconsider that determination on

      rehearing.

[3]   Instead, Cincinnati directs us to the following coverage exclusion in the policy:

               This insurance does not apply to:
               a. Expected or intended injury
                   “Bodily injury” or “property damage” which may reasonably be
                   expected to result from the intentional or criminal acts of an insured
                   or which is in fact expected or intended by the insured, even if the
                   injury or damage is of a different degree or type than actually
                   expected or intended.
      Appellant’s App. at 165. Cincinnati argues that “just because an act may fall

      within the definition of occurrence, that does not mean that it automatically

      falls outside the ‘expected or intended’ exclusion/exception.” Petition for

      Reh’g at 2. According to Cincinnati, IRI “made the intentional business

      decision to breach its contract with [FLM], vacate the property, and abandon

      the thousands of tons of foundry sand being stored on [FLM’s] property. [IRI]

      did so knowing that this act would violate Indiana law and cause [FLM] to be

      in non-compliance with IDEM regulations.” Id. at 3 (citing Appellee’s App. at

      92-94, 103).1

      1
       The citation refers to Cincinnati’s petition to transfer in FLM I, which cites an appendix filed in that appeal.
      Cincinnati does not cite directly to any evidence that was specifically designated to the trial court on
      summary judgment.

      Court of Appeals of Indiana | Opinion on Rehearing 49A02-1401-PL-17 | March 11, 2015                  Page 3 of 5
[4]   We note that “[i]nterpretation of an insurance policy is a question of law that is

      appropriate for summary judgment.” Keckler v. Meridian Sec. Ins. Co., 967

      N.E.2d 18, 22 (Ind. Ct. App. 2012), trans. denied. “Generally, when an insurer

      wishes to rely upon an exclusionary clause in its policy, it is raising an

      affirmative defense to coverage and it bears the burden of proving its

      applicability.” Id. at 23. “If there is an ambiguity in a policy, we construe it

      strictly against the insurer. This is particularly the case where a policy excludes

      coverage.” Id. at 22 (citation and quotation marks omitted). “[A]n exclusion in

      an insurance policy must clearly and unmistakably bring within its scope the

      particular act or omission that will give rise to the exclusion in order to be

      effective, and coverage will not be excluded or destroyed by an exclusion or

      condition unless such clarity exists.” Id. at 22-23. A claim that an injury was

      expected or intended “requires consideration of whether, at the time of the acts

      causing the injury, the insured expected or intended the injury, an inquiry that

      generally asks merely whether the injury was accidental.” Gen. Housewares Corp.

      v. Nat’l Sur. Corp., 741 N.E.2d 408, 416 (Ind. Ct. App. 2000) (emphasis, citation,

      and quotation marks omitted).

[5]   FLM observes that we have already determined that the contamination of its

      property resulting from IRI’s abandonment of the foundry sand constituted an

      “accident” under the policy. FLM also notes that “Chrysler was IRI’s sole

      source of revenue” and asserts that

              Cincinnati does not, and cannot, claim [that] IRI had the means to
              remove the foundry sand after Chrysler stopped paying but instead
              chose not to. IRI did not make a “business decision” and it did not
      Court of Appeals of Indiana | Opinion on Rehearing 49A02-1401-PL-17 | March 11, 2015   Page 4 of 5
              “intentionally” or “deliberately” abandon the foundry sand.
              Chrysler’s refusal to pay forced IRI out of business – there was no
              “choice” or intentional act for IRI then. And it was only when IRI
              was unexpectedly forced out of business by Chrysler that the injuries
              occurred.
      Response to Petition for Reh’g at 9.

[6]   We find FLM’s argument persuasive and therefore conclude as a matter of law

      that the property damage was not expected or intended by IRI and thus the

      exclusion does not apply. Subject to this clarification, we affirm our original

      opinion in all respects.

      Baker, J., and Pyle, J., concur.

      Court of Appeals of Indiana | Opinion on Rehearing 49A02-1401-PL-17 | March 11, 2015   Page 5 of 5