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. Future generations will be amazed that we prosecuted people for possessing a harmless plant. The New York Times came out in favor of legalization in Saturday's edition of the newspaper.

  2. Well, maybe it's because they are unelected, and, they have a tendency to strike down laws by elected officials from all over the country. When you have been taught that "Democracy" is something almost sacred, then, you will have a tendency to frown on such imperious conduct. Lawyers get acculturated in law school into thinking that this is the very essence of high minded government, but to people who are more heavily than King George ever did, they may not like it. Thanks for the information.

  3. I pd for a bankruptcy years ago with Mr Stiles and just this week received a garnishment from my pay! He never filed it even though he told me he would! Don't let this guy practice law ever again!!!

  4. Excellent initiative on the part of the AG. Thankfully someone takes action against predators taking advantage of people who have already been through the wringer. Well done!

  5. Conour will never turn these funds over to his defrauded clients. He tearfully told the court, and his daughters dutifully pledged in interviews, that his first priority is to repay every dime of the money he stole from his clients. Judge Young bought it, much to the chagrin of Conour’s victims. Why would Conour need the $2,262 anyway? Taxpayers are now supporting him, paying for his housing, utilities, food, healthcare, and clothing. If Conour puts the money anywhere but in the restitution fund, he’s proved, once again, what a con artist he continues to be and that he has never had any intention of repaying his clients. Judge Young will be proven wrong... again; Conour has no remorse and the Judge is one of the many conned.

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