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Alarm company's actions not covered by policies

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The Indiana Supreme Court reversed the denial of summary judgment on an insurance company's coverage defenses, ruling its insured's actions leading to a lawsuit were "errors or omissions," and so weren't covered by the commercial general liability or umbrella policies.

In Tri-Etch, Inc., d/b/a Sonitrol Security Systems of Muncie, et al. v. Cincinnati Insurance Co.,  No. 49S02-0901-CV-8, the justices unanimously held that alarm company Tri-Etch's CGL and umbrella insurance policies don't cover a wrongful death claim against Tri-Etch for delays in observing or reacting to the failure of a liquor store to make a scheduled setting of a night alarm. In 1997, Muncie liquor store clerk Michael Young was abducted and beaten just before the store's midnight closing, so the scheduled midnight alarm wasn't activated. It wasn't until 3 a.m. that Tri-Etch discovered the alarm hadn't been set. Young was found later that morning and died of his injuries.

Young's estate won a $2.5 million jury verdict against Tri-Etch in December 2004. The company had three insurance policies; at issue in this appeal is whether Cincinnati's CGL and umbrella policies cover the claim against Tri-Etch. Also disputed is whether Tri-Etch gave Cincinnati timely notice of the wrongful death claim.

In a dispute between Cincinnati, the estate, and the other insurers, the trial court ruled the estate's claim against Tri-Etch was covered by Cincinnati and ruled Tri-Etch's notice to Cincinnati was unreasonably late and no coverage under the CGL or umbrella policies was owed. The Indiana Court of Appeals reversed.

Cincinnati's CGL and umbrella policies both insure against liability for "bodily injury" caused by an "occurrence." The parties disputed whether Young's death was considered an accident, which would be covered as an occurrence, but the justices concluded Tri-Etch's unintentional oversight to call about the alarm around 12:30 a.m. was an error or omission, so it's not an occurrence covered by the CGL or umbrella policies, wrote Justice Theodore Boehm.

The umbrella policy also specifically excludes bodily injury "arising out of any act, error or omission of the insured in rendering or failing to render telephone answering, alarm monitoring or similar services."

"The jury's verdict necessarily established that Tri-Etch's failure breached its contractual obligation to the store or fell below the standard of care of a reasonable alarm company," wrote the justice. "The judgment therefore was for liability squarely within the exclusions of the umbrella policy."

In determining whether Cincinnati received late notice and was prejudiced by it, the Supreme Court looked to Miller v. Dilts, 463 N.E.2d 257 (Ind. 1984). The high court disagreed with the ruling of the Court of Appeals using Miller, believing that an insurer's denial of coverage on other grounds as a matter of law doesn't rebut the presumption of prejudice from late notice.

"Even if an insurer consistently denies coverage, timely notice gives the insurer an opportunity to investigate while evidence is fresh, evaluate the claim, and participate in early settlement. The fact that an insurer asserts other coverage defenses does not render these opportunities meaningless," he wrote.

Because the high court determined Cincinnati's polices don't apply to the claim in this case, it didn't consider whether Tri-Etch's notice was late or if so, whether the late notice prejudiced Cincinnati. The trial court's denial of summary judgment in favor of Cincinnati's coverage defenses was reversed and the issue remanded with instructions to enter judgment in favor of the insurer.

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  1. So that none are misinformed by my posting wihtout a non de plume here, please allow me to state that I am NOT an Indiana licensed attorney, although I am an Indiana resident approved to practice law and represent clients in Indiana's fed court of Nth Dist and before the 7th circuit. I remain licensed in KS, since 1996, no discipline. This must be clarified since the IN court records will reveal that I did sit for and pass the Indiana bar last February. Yet be not confused by the fact that I was so allowed to be tested .... I am not, to be clear in the service of my duty to be absolutely candid about this, I AM NOT a member of the Indiana bar, and might never be so licensed given my unrepented from errors of thought documented in this opinion, at fn2, which likely supports Mr Smith's initial post in this thread: http://caselaw.findlaw.com/us-7th-circuit/1592921.html

  2. When I served the State of Kansas as Deputy AG over Consumer Protection & Antitrust for four years, supervising 20 special agents and assistant attorneys general (back before the IBLE denied me the right to practice law in Indiana for not having the right stuff and pretty much crushed my legal career) we had a saying around the office: Resist the lure of the ring!!! It was a take off on Tolkiem, the idea that absolute power (I signed investigative subpoenas as a judge would in many other contexts, no need to show probable cause)could corrupt absolutely. We feared that we would overreach constitutional limits if not reminded, over and over, to be mindful to not do so. Our approach in so challenging one another was Madisonian, as the following quotes from the Father of our Constitution reveal: The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse. We are right to take alarm at the first experiment upon our liberties. I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations. Liberty may be endangered by the abuse of liberty, but also by the abuse of power. All men having power ought to be mistrusted. -- James Madison, Federalist Papers and other sources: http://www.constitution.org/jm/jm_quotes.htm RESIST THE LURE OF THE RING ALL YE WITH POLITICAL OR JUDICIAL POWER!

  3. My dear Mr Smith, I respect your opinions and much enjoy your posts here. We do differ on our view of the benefits and viability of the American Experiment in Ordered Liberty. While I do agree that it could be better, and that your points in criticism are well taken, Utopia does indeed mean nowhere. I think Madison, Jefferson, Adams and company got it about as good as it gets in a fallen post-Enlightenment social order. That said, a constitution only protects the citizens if it is followed. We currently have a bevy of public officials and judicial agents who believe that their subjectivism, their personal ideology, their elitist fears and concerns and cause celebs trump the constitutions of our forefathers. This is most troubling. More to follow in the next post on that subject.

  4. Yep I am not Bryan Brown. Bryan you appear to be a bigger believer in the Constitution than I am. Were I still a big believer then I might be using my real name like you. Personally, I am no longer a fan of secularism. I favor the confessional state. In religious mattes, it seems to me that social diversity is chaos and conflict, while uniformity is order and peace.... secularism has been imposed by America on other nations now by force and that has not exactly worked out very well.... I think the American historical experiment with disestablishmentarianism is withering on the vine before our eyes..... Since I do not know if that is OK for an officially licensed lawyer to say, I keep the nom de plume.

  5. I am compelled to announce that I am not posting under any Smith monikers here. That said, the post below does have a certain ring to it that sounds familiar to me: http://www.catholicnewworld.com/cnwonline/2014/0907/cardinal.aspx

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