ILNews

COA: Insurers have no duty to defend Cinergy

Back to TopE-mailPrintBookmark and Share

The Indiana Court of Appeals ruled today that the insurers of Cinergy, which was bought out by Duke Energy in 2006, have no duty to defend, indemnify, or otherwise provide coverage in connection with Cinergy's alleged liability for violations of the Clean Air Act at certain plants. The dispute over the insurers' obligations has been ongoing for years and previously litigated twice in the state's appellate courts.

The Indiana Supreme Court in Cinergy Corp. v. Associated Electric & Gas Insurance Services, Ltd., 865 N.E.2d 571 (Ind. 2007), (Cinergy I), determined the insurers in that case had no duty to defend or indemnify Cinergy in connection with the power company's alleged violations of the Clean Air Act based on the policies. The policy requirement that covered damages resulting from the happening of an occurrence doesn't mean that coverage extended to damages that result from the prevention of an occurrence, the high court ruled. In Cinergy Corp. v. St. Paul Surplus Lines Ins. Co., 873 N.E.2d 105 (Ind. Ct. App. 2007), (Cinergy II), the Court of Appeals affirmed the entry of partial summary judgment for the insurers after concluding Cinergy failed to establish that there was a "potential occurrence" during the 1983-1984 policy term year at the Cayuga Plant. The COA concluded there was neither an actual or potential occurrence under the policy at issue as that term was interpreted in Cinergy I.

In the instant case, Cinergy Corp., Duke Energy Indiana Inc., and Duke Energy Ohio Inc. v. St. Paul Surplus Lines Insurance Co., et al., No. 32A04-0810-CV-622, St. Paul and other insurers moved for summary judgment seeking an order declaring they have no obligation to defend or indemnify Cinergy for any of the claims being adjudicated in an ongoing lawsuit filed in 1999 in federal court for alleged violations of the Clean Air Act at six power plants. Cinergy wanted the issue of indemnity determination postponed until the federal litigation was resolved; the trial court denied that and ruled the insurers didn't have any obligation to Cinergy for these violations.

Relying on Cinergy I and Cinergy II, the Court of Appeals determined the relief demanded in the underlying federal litigation isn't covered under the insurers' policies. In May 2009, the District Court ordered three units at a Terre Haute facility shut down, ordered Duke to pay fines on another plant, and permanently surrender sulfur dioxide emission allowances in an amount equal to the amount of sulfur dioxide emissions from those three units during a specific time period.

The order included remedies designed to prevent future environmental harm, which aren't covered damages under the insurers' policies, per Cinergy I, wrote Judge Paul Mathias.

"Because preventing future emissions and environmental harm is not an occurrence under the terms of the Insurers' policies, we conclude that the trial court properly determined that the Insurers have no obligation to defend, indemnify, or otherwise provide coverage to Cinergy for the claims being litigated in the underlying federal litigation concerning Cinergy's violations of the Clean Air Act," wrote Judge Mathias.

Penalties and attorneys' fees are also not covered by the insurance policies, as those issues were settled in Cinergy I and Cinergy II, he wrote. The Court of Appeals also determined the trial court didn't err in denying the postponement of the indemnity determination pending dispositive developments in the federal litigation. Cinergy didn't cite any Indiana authority requiring a court to postpone a coverage determination until after the underlying liability trial has finished.

ADVERTISEMENT

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. First comment on this thread is a fitting final comment on this thread, as that the MCBA never answered Duncan's fine question, and now even Eric Holder agrees that the MCBA was in material error as to the facts: "I don't get it" from Duncan December 1, 2014 5:10 PM "The Grand Jury met for 25 days and heard 70 hours of testimony according to this article and they made a decision that no crime occurred. On what basis does the MCBA conclude that their decision was "unjust"? What special knowledge or evidence does the MCBA have that the Grand Jury hearing this matter was unaware of? The system that we as lawyers are sworn to uphold made a decision that there was insufficient proof that officer committed a crime. How can any of us say we know better what was right than the jury that actually heard all of the the evidence in this case."

  2. wow is this a bunch of bs! i know the facts!

  3. MCBA .... time for a new release about your entire membership (or is it just the alter ego) being "saddened and disappointed" in the failure to lynch a police officer protecting himself in the line of duty. But this time against Eric Holder and the Federal Bureau of Investigation: "WASHINGTON — Justice Department lawyers will recommend that no civil rights charges be brought against the police officer who fatally shot an unarmed teenager in Ferguson, Mo., after an F.B.I. investigation found no evidence to support charges, law enforcement officials said Wednesday." http://www.nytimes.com/2015/01/22/us/justice-department-ferguson-civil-rights-darren-wilson.html?ref=us&_r=0

  4. Dr wail asfour lives 3 hours from the hospital,where if he gets an emergency at least he needs three hours,while even if he is on call he should be in a location where it gives him max 10 minutes to be beside the patient,they get paid double on their on call days ,where look how they handle it,so if the death of the patient occurs on weekend and these doctors still repeat same pattern such issue should be raised,they should be closer to the patient.on other hand if all the death occured on the absence of the Dr and the nurses handle it,the nurses should get trained how to function appearntly they not that good,if the Dr lives 3 hours far from the hospital on his call days he should sleep in the hospital

  5. It's a capital offense...one for you Latin scholars..

ADVERTISEMENT