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COA: Insurers have no duty to defend Cinergy

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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.

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  1. Indianapolis employers harassment among minorities AFRICAN Americans needs to be discussed the metro Indianapolis area is horrible when it comes to harassing African American employees especially in the local healthcare facilities. Racially profiling in the workplace is an major issue. Please make it better because I'm many civil rights leaders would come here and justify that Indiana is a state the WORKS only applies to Caucasian Americans especially in Hamilton county. Indiana targets African Americans in the workplace so when governor pence is trying to convince people to vote for him this would be awesome publicity for the Presidency Elections.

  2. Wishing Mary Willis only God's best, and superhuman strength, as she attempts to right a ship that too often strays far off course. May she never suffer this personal affect, as some do who attempt to change a broken system: https://www.youtube.com/watch?v=QojajMsd2nE

  3. Indiana's seatbelt law is not punishable as a crime. It is an infraction. Apparently some of our Circuit judges have deemed settled law inapplicable if it fails to fit their litmus test of political correctness. Extrapolating to redefine terms of behavior in a violation of immigration law to the entire body of criminal law leaves a smorgasbord of opportunity for judicial mischief.

  4. I wonder if $10 diversions for failure to wear seat belts are considered moral turpitude in federal immigration law like they are under Indiana law? Anyone know?

  5. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

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