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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. Just an aside, but regardless of the outcome, I 'm proud of Judge William Hughes. He was the original magistrate on the Home place issue. He ruled for Home Place, and was primaried by Brainard for it. Their tool Poindexter failed to unseat Hughes, who won support for his honesty and courage throughout the county, and he was reelected Judge of Hamilton County's Superior Court. You can still stand for something and survive. Thanks, Judge Hughes!

  2. CCHP's real accomplishment is the 2015 law signed by Gov Pence that basically outlaws any annexation that is forced where a 65% majority of landowners in the affected area disagree. Regardless of whether HP wins or loses, the citizens of Indiana will not have another fiasco like this. The law Gov Pence signed is a direct result of this malgovernance.

  3. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  4. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  5. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

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