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Transfer granted in cleanup liability case

January 1, 2008
The Indiana Supreme Court granted transfer Wednesday in a case involving environmental cleanup costs and which party would be liable to incur those costs.

At issue in Dreaded Inc., v. St. Paul Guardian Insurance Co., et al., No. 49A02-0701-CV-78, is whether St. Paul is liable for environmental cleanup defense costs incurred prior to receiving notice of potential liability from Dreaded about an environmental claim.

Dreaded received a claim letter in 2000 from the Indiana Department of Environmental Management demanding the company do a site characterization at their former truck center in Muncie. Dreaded didn't inform its insurer, St. Paul, of the claim until March 24, 2004. St. Paul agreed to pay all defense costs from March 30, 2004, and on, but refused to pay for any defense costs incurred prior to that date.

The trial court granted summary judgment in favor of St. Paul, finding the company not liable for the defense costs. Dreaded appealed the ruling, claiming its delay in notifying St. Paul of its claim was not a material breach of Dreaded's comprehensive general liability policy with St. Paul.

The Indiana Court of Appeals affirmed the trial court ruling that Dreaded's delay in informing St. Paul of an IDEM claim was unreasonable but reversed the summary judgment in favor of St. Paul because Dreaded had designated sufficient evidence to raise a genuine issue of material fact as to whether St. Paul had been prejudiced as a result of the delayed notice from Dreaded.
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