ILNews

COA: insurer owed duty to defend

Jennifer Nelson
January 1, 2008
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After nearly 10 years of litigation, the Indiana Court of Appeals has reversed a grant of summary judgment in favor of an insurance company because the company couldn't show it was prejudiced by a late notice from its insured as a matter of law.

In the unanimous 27-page opinion, Tri-Etch Inc., et al v. Cincinnati Insurance Co., No. 49A02-0709-CV-827, the appellate court ruled in favor of the appellants-plaintiffs in this appeal - Tri-Etch, which provides security services; the estate of Michael Young; and Scottsdale Insurance Co., which provided insurance to Tri-Etch with a $1 million limit of liability.

The back-and-forth litigation between Tri-Etch, the estate, and Scottsdale and Cincinnati Insurance Co., which also provided a commercial general liability (CGL) and umbrella policy to Tri-Etch, began in 1999 after the estate filed a complaint against Tri-Etch.

Tri-Etch provided security for Muncie Liquors and would call a store's general manager if the store's night alarm wasn't set within 30 minutes of closing. Michael Young, an employee at the liquor store, was found beaten outside of the store after Tri-Etch called the store's owner at 3:15 a.m. The store closed at midnight and the alarm wasn't set, but Tri-Etch didn't call the general manager to make sure everything was OK at the store until 3:15 a.m. Young subsequently died of his injuries, and the complaint alleged he would have lived had Tri-Etch called at 12:30 a.m. once it realized the alarm wasn't set.

At issue in this case are two orders granted by Marion County trial courts. In 2006, the first order granted partial summary judgment in favor of Tri-Etch and the appellants on the bad faith counterclaim brought by Cincinnati. It granted partial summary judgment to the appellants finding that Young's death is covered under Cincinnati's CGL and umbrella policies and denied Scottsdale and Cincinnati's motions for summary judgment regarding Scottsdale's claim to recover 50 percent of the legal fees and costs Scottsdale paid to defend Tri-Etch.

Cincinnati claimed it didn't learn of the litigation until 2004, just before the claim was to go to trial. The insurance company informed Tri-Etch that the estate's claim wasn't covered by either of its policies with Cincinnati, so it wouldn't be responsible to pay a portion of the $2.5 million in damages the estate won against Tri-Etch.

The second order issued in 2007 granted summary judgment in favor of Cincinnati and ordered that Tri-Etch's late notice to Cincinnati was unreasonably late as a matter of law, and due to the prejudice arising from the untimely notice, the company owes no coverage or indemnity to Tri-Etch.

The Indiana Court of Appeals determined that Cincinnati wasn't prejudiced by Tri-Etch's allegedly late notice because the insurance company consistently maintained Tri-Etch wasn't entitled to coverage for the claim, wrote Chief Judge John Baker. As a result, the appellate court reversed the grant of summary judgment in favor of Cincinnati in the second order and remanded with instructions to enter summary judgment in favor of the appellants.

Regarding the first order, the judges concluded Tri-Etch is entitled to coverage pursuant to both Cincinnati's CGL and umbrella policies, requiring Cincinnati to be responsible for $1.5 million in damages the estate won.

The court also remanded the issue of Cincinnati's liability for defense costs to Scottsdale because Scottsdale defended Tri-Etch from the start of the claim.

"Because we have concluded that coverage existed under Cincinnati's policies, each of which contained duty-to-defend provisions, it logically follows that Cincinnati must pay a portion of the costs Scottsdale incurred while defending Tri-Etch during the liability litigation," the chief judge wrote.

The appellate court remanded the issue to the trial court to determine when Cincinnati received notice of the claim to determine the amount of reasonable defense costs Cincinnati should pay.
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  1. KUDOS to the Indiana Supreme Court for realizing that some bureacracies need to go to the stake. Recall what RWR said: "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" NOW ... what next to this rare and inspiring chopping block? Well, the Commission on Gender and Race (but not religion!?!) is way overdue. And some other Board's could be cut with a positive for State and the reputation of the Indiana judiciary.

  2. During a visit where an informant with police wears audio and video, does the video necessary have to show hand to hand transaction of money and narcotics?

  3. I will agree with that as soon as law schools stop lying to prospective students about salaries and employment opportunities in the legal profession. There is no defense to the fraudulent numbers first year salaries they post to mislead people into going to law school.

  4. The sad thing is that no fish were thrown overboard The "greenhorn" who had never fished before those 5 days was interrogated for over 4 hours by 5 officers until his statement was illicited, "I don't want to go to prison....." The truth is that these fish were measured frozen off shore and thawed on shore. The FWC (state) officer did not know fish shrink, so the only reason that these fish could be bigger was a swap. There is no difference between a 19 1/2 fish or 19 3/4 fish, short fish is short fish, the ticket was written. In addition the FWC officer testified at trial, he does not measure fish in accordance with federal law. There was a document prepared by the FWC expert that said yes, fish shrink and if these had been measured correctly they averaged over 20 inches (offshore frozen). This was a smoke and mirror prosecution.

  5. I love this, Dave! Many congrats to you! We've come a long way from studying for the bar together! :)

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