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COA orders trial over 1 issue in contaminated development land suit

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The Indiana Court of Appeals has ordered a trial on the issue of whether the known loss doctrine would bar coverage of an insurance policy held by the owner of land sold for a housing development that later was found to have been contaminated with toxic waste. A builder sued the landowner, claiming he knew of the potential contamination and failed to inform the builder.

George Kopetsky and Durabuilders, now KB Home Indiana Inc., entered into an agreement in 1998 where KB Home would purchase lots in a housing development being developed by Kopetsky. He indicated in the agreement that he was unaware of any contamination in Cedar Park at the time. KB Home became aware that some of the lots it had purchased contained contaminants from a nearby business and filed its lawsuit in 2007 against Kopetsky and those responsible for the contamination.

KB Home alleged that Kopetsky knew in 2002 some of the lots were contaminated but waited until 2004 to tell KB home of the problem. KB purchased more than 60 lots during that time.

Kopetsky’s commercial general liability insurance carrier, Indiana Insurance Co., in 2009 sought a declaration that it had no duty to defend or indemnify him in the lawsuit. The trial court ruled against the insurance company. His wife, Patricia, was substituted as a party after Kopetsy passed away in 2010.

The case, Indiana Insurance Company v. Patricia Kopetsky, and KB Home Indiana Inc., 49A02-1304-PL-340, brings up an issue of first impression. The policies preclude coverage for bodily injury or property damage for which the insured is obligated to pay damages by reason of the assumption of the liability in a contract or agreement. The judges agreed with Kopetsky that while he may be held liable for entering into the agreement and breaching it, this is not the same thing as assuming liability pursuant to it.

“Although our research has uncovered no Indiana case precisely on point, today we explicitly endorse the proposition that ‘assumed’ liability is liability originally incurred by a third party but then taken on by another,” Judge Cale Bradford wrote. “Today we join those jurisdictions who have held that contractual liability exclusions in CGL policies bar coverage not for liability incurred by a contract breach but, rather, for liability assumed from a third party, which seems to be the majority position by a wide margin.”

The judges held that KB Home successfully alleged “property damage” caused by an “occurrence” pursuant to the policies, and that the policies’ “expected and intended” and “contractual liability” exclusions do not work to bar coverage. But the designated evidence generates a question of fact as to whether the known loss doctrine would bar coverage. There is evidence showing that Kopetsky was aware of the contamination in Cedar Park before the effective dates of the first of his policies with Indiana Insurance.  The case is remanded for trial on the known loss doctrine issue.
 

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  1. Hail to our Constitutional Law Expert in the Executive Office! “What you’re not paying attention to is the fact that I just took an action to change the law,” Obama said.

  2. What is this, the Ind Supreme Court thinking that there is a separation of powers and limited enumerated powers as delegated by a dusty old document? Such eighteen century thinking, so rare and unwanted by the elites in this modern age. Dictate to us, dictate over us, the massess are chanting! George Soros agrees. Time to change with times Ind Supreme Court, says all President Snows. Rule by executive decree is the new black.

  3. I made the same argument before a commission of the Indiana Supreme Court and then to the fedeal district and federal appellate courts. Fell flat. So very glad to read that some judges still beleive that evidentiary foundations matter.

  4. KUDOS to the Indiana Supreme Court for realizing that some bureacracies need to go to the stake. Recall what RWR said: "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" NOW ... what next to this rare and inspiring chopping block? Well, the Commission on Gender and Race (but not religion!?!) is way overdue. And some other Board's could be cut with a positive for State and the reputation of the Indiana judiciary.

  5. During a visit where an informant with police wears audio and video, does the video necessary have to show hand to hand transaction of money and narcotics?

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