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. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.

  2. I had a hospital and dcs caseworker falsify reports that my child was born with drugs in her system. I filed a complaint with the Indiana department of health....and they found that the hospital falsified drug screens in their investigation. Then I filed a complaint with human health services in Washington DC...dcs drug Testing is unregulated and is indicating false positives...they are currently being investigated by human health services. Then I located an attorney and signed contracts one month ago to sue dcs and Anderson community hospital. Once the suit is filed I am taking out a loan against the suit and paying a law firm to file a writ of mandamus challenging the courts jurisdiction to invoke chins case against me. I also forwarded evidence to a u.s. senator who contacted hhs to push an investigation faster. Once the lawsuit is filed local news stations will be running coverage on the situation. Easy day....people will be losing their jobs soon...and judge pancol...who has attempted to cover up what has happened will also be in trouble. The drug testing is a kids for cash and federal funding situation.

  3. (A)ll (C)riminals (L)ove (U)s is up to their old, "If it's honorable and pro-American, we're against it," nonsense. I'm not a big Pence fan but at least he's showing his patriotism which is something the left won't do.

  4. While if true this auto dealer should be held liable, where was the BMV in all of this? How is it that the dealer was able to get "clean" titles to these vehicles in order to sell them to unsuspecting consumers?

  5. He has refused his Assent to Laws, the most wholesome and necessary for the public good. He has forbidden his Governors to pass Laws of immediate and pressing importance, He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance. He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation: For imposing Taxes on us without our Consent: He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.. He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless [ ] Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions. GOD BLESS THE GOVERNORS RESISTING! Count on the gutless judiciary to tie our children down and facilitate the swords being drawn across their throats. Wake Up America ...