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Circuit Court reverses insurance case

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The 7th Circuit Court of Appeals reversed summary judgment for an insurer on the issue of whether the commercial general liability policy covered faulty subcontractor work, citing a similar case recently ruled on by the Indiana Supreme Court. The Circuit Court also dealt with an issue surrounding umbrella policies for the first time.

In Trinity Homes LLC and Beazer Homes Investments LLC v. Ohio Casualty Insurance Co. and Cincinnati Insurance Co., No. 09-3613, the homebuilders appealed summary judgment in favor of Ohio Casualty and Cincinnati Insurance on its suit that the insurers breached their contracts by not providing coverage after builders incurred significant liability related to defective work done by subcontractors. Ohio Casualty, a primary insurer, claimed its policy didn’t cover subcontractor work. Cincinnati, which provided an umbrella policy, argued its coverage wasn’t triggered because all of the builders’ underlying policies were not unavailable as required by the policy.

The builders settled with all its other commercial general liability insurers, which resulted in those insurers paying at least 75 percent of the relevant policy limit. This would functionally exhaust the CGL policy. The builders would make up the difference.  

The 7th Circuit reversed summary judgment in favor of Ohio Casualty, citing Sheehan Construction Co. v. Continental Cas. Co., 935 N.E.2d 160 (Ind. 2010). In Sheehan, the Supreme Court clarified a standard CGL policy does cover damage to a home’s structure resulting from defective subcontractor work unless the subcontractor work was intentionally faulty. They left the application of any exclusions or limitations in the policy, as well as any other state law doctrines, for the District Court on remand.

The judges then moved on to the claim against Cincinnati. They looked at whether the settlement between the other insurers was sufficient to exhaust the CGL’s policy coverage under the umbrella policy. They disagreed that the umbrella policy clearly required exhaustion, finding the terms of the policy to be ambiguous.

Cincinnati argued that other courts dealing with similar umbrella policies have held that the policies require a full payout before it’s exhausted. But Cincinnati’s policy didn’t include clear language that stated the coverage wasn’t triggered absent a payment of the full CGL policy limit by the insurer, as the insurers involved in the cases Cincinnati cited had included.

Other Circuit Courts have held that exhaustion of a primary policy could be accomplished by a settlement agreement where the primary insurer paid some of the limit and the insurer paid the remainder.

“Although Indiana law controls, there is no reason to suspect that it would differ from these analogous holdings,” wrote Judge Michael Kanne. “Our construction of the ambiguity in Cincinnati’s policy is also reinforced by Indiana public policy favoring out-of-court settlement. Cincinnati’s reading of the policy would deter parties who have both CGL and excess insurance from settling with their CGL insurers.”

The judges also declined to reach the question of whether any exclusions or limitations in Cincinnati’s policy apply to the builders’ claim, leaving that for the District Court on remand.
 

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  1. The voices of the prophets are more on blogs than subway walls these days, Dawn. Here is the voice of one calling out in the wilderness ... against a corrupted judiciary ... that remains corrupt a decade and a half later ... due to, so sadly, the acquiescence of good judges unwilling to shake the forest ... for fear that is not faith .. http://www.ogdenonpolitics.com/2013/09/prof-alan-dershowitz-on-indiana.html

  2. So I purchased a vehicle cash from the lot on West Washington in Feb 2017. Since then I found it the vehicle had been declared a total loss and had sat in a salvage yard due to fire. My title does not show any of that. I also have had to put thousands of dollars into repairs because it was not a solid vehicle like they stated. I need to find out how to contact the lawyers on this lawsuit.

  3. It really doesn't matter what the law IS, if law enforcement refuses to take reports (or take them seriously), if courts refuse to allow unrepresented parties to speak (especially in Small Claims, which is supposedly "informal"). It doesn't matter what the law IS, if constituents are unable to make effective contact or receive any meaningful response from their representatives. Two of our pets were unnecessarily killed; court records reflect that I "abandoned" them. Not so; when I was denied one of them (and my possessions, which by court order I was supposed to be able to remove), I went directly to the court. And earlier, when I tried to have the DV PO extended (it expired while the subject was on probation for violating it), the court denied any extension. The result? Same problems, less than eight hours after expiration. Ironic that the county sheriff was charged (and later pleaded to) with intimidation, but none of his officers seemed interested or capable of taking such a report from a private citizen. When I learned from one officer what I needed to do, I forwarded audio and transcript of one occurrence and my call to law enforcement (before the statute of limitations expired) to the prosecutor's office. I didn't even receive an acknowledgement. Earlier, I'd gone in to the prosecutor's office and been told that the officer's (written) report didn't match what I said occurred. Since I had the audio, I can only say that I have very little faith in Indiana government or law enforcement.

  4. One can only wonder whether Mr. Kimmel was paid for his work by Mr. Burgh ... or whether that bill fell to the citizens of Indiana, many of whom cannot afford attorneys for important matters. It really doesn't take a judge(s) to know that "pavement" can be considered a deadly weapon. It only takes a brain and some education or thought. I'm glad to see the conviction was upheld although sorry to see that the asphalt could even be considered "an issue".

  5. In response to bryanjbrown: thank you for your comment. I am familiar with Paul Ogden (and applaud his assistance to Shirley Justice) and have read of Gary Welsh's (strange) death (and have visited his blog on many occasions). I am not familiar with you (yet). I lived in Kosciusko county, where the sheriff was just removed after pleading in what seems a very "sweetheart" deal. Unfortunately, something NEEDS to change since the attorneys won't (en masse) stand up for ethics (rather making a show to please the "rules" and apparently the judges). I read that many attorneys are underemployed. Seems wisdom would be to cull the herd and get rid of the rotting apples in practice and on the bench, for everyone's sake as well as justice. I'd like to file an attorney complaint, but I have little faith in anything (other than the most flagrant and obvious) resulting in action. My own belief is that if this was medicine, there'd be maimed and injured all over and the carnage caused by "the profession" would be difficult to hide. One can dream ... meanwhile, back to figuring out to file a pro se "motion to dismiss" as well as another court required paper that Indiana is so fond of providing NO resources for (unlike many other states, who don't automatically assume that citizens involved in the court process are scumbags) so that maybe I can get the family law attorney - whose work left me with no settlement, no possessions and resulted in the death of two pets (etc ad nauseum) - to stop abusing the proceedings supplemental and small claims rules and using it as a vehicle for harassment and apparently, amusement.

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