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
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. The practitioners and judges who hail E-filing as the Saviour of the West need to contain their respective excitements. E-filing is federal court requires the practitioner to cram his motion practice into pigeonholes created by IT people. Compound motions or those seeking alternative relief are effectively barred, unless the practitioner wants to receive a tart note from some functionary admonishing about the "problem". E-filing is just another method by which courts and judges transfer their burden to practitioners, who are the really the only powerless components of the system. Of COURSE it is easier for the court to require all of its imput to conform to certain formats, but this imposition does NOT improve the quality of the practice of law and does NOT improve the ability of the practitioner to advocate for his client or to fashion pleadings that exactly conform to his client's best interests. And we should be very wary of the disingenuous pablum about the costs. The courts will find a way to stick it to the practitioner. Lake County is a VERY good example of this rapaciousness. Any one who does not believe this is invited to review the various special fees that system imposes upon practitioners- as practitioners- and upon each case ON TOP of the court costs normal in every case manually filed. Jurisprudence according to Aldous Huxley.

  2. Any attorneys who practice in federal court should be able to say the same as I can ... efiling is great. I have been doing it in fed court since it started way back. Pacer has its drawbacks, but the ability to hit an e-docket and pull up anything and everything onscreen is a huge plus for a litigator, eps the sole practitioner, who lacks a filing clerk and the paralegal support of large firms. Were I an Indiana attorney I would welcome this great step forward.

  3. Can we get full disclosure on lobbyist's payments to legislatures such as Mr Buck? AS long as there are idiots that are disrespectful of neighbors and intent on shooting fireworks every night, some kind of regulations are needed.

  4. I am the mother of the child in this case. My silence on the matter was due to the fact that I filed, both in Illinois and Indiana, child support cases. I even filed supporting documentation with the Indiana family law court. Not sure whether this information was provided to the court of appeals or not. Wish the case was done before moving to Indiana, because no matter what, there is NO WAY the state of Illinois would have allowed an appeal on a child support case!

  5. "No one is safe when the Legislature is in session."

ADVERTISEMENT