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COA splits on whether Dreaded decision requires judgment for insurer

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In a dispute over whether an insurer was required to pay pre-notice costs for environmental cleanup, the Indiana Court of Appeals was divided over whether the Indiana Supreme Court ruling Dreaded Inc. v. St. Paul Guardian Insurance was distinguishable from the instant case.

Maplehurst Farms sought to recover from Travelers Insurance Companies and other insurers environmental cleanup costs it incurred after an underground storage tank it installed on property it later sold to Dean Foods Co. leaked petroleum constituents in 2000. Maplehurst settled with Dean’s regarding costs in December 2002, but the company did not give notice to its insurers until March, April, and May 2003. When it learned of the environmental issues, Maplehurst tried to locate its insurance information but had difficulty doing so because so many people who had been with the company when it was still operating were now deceased.  

Travelers denied coverage of the Indiana Department of Environmental Management claim, citing among other things, lack of timely notice of claims and that Maplehurst had paid out money on claims to Dean’s without its consent. The trial court found Travelers breached its duty to defend under its policy and that the case was distinguished from Dreaded, 904 N.E.2d 1267 (Ind, 2009), because Travelers refused to defend Maplehurst once tender was made. In Dreaded, St. Paul Guardian Insurance agreed to defend Dreaded for the time after it received notice, but not prior to that.

The trial court’s ruling also noted that Dreaded determined that delayed tender may be “legally excused” in certain circumstances and that the ruling didn’t discuss or address indemnity costs.

In Travelers Insurance Companies, et al. v. Maplehurst Farms, Inc., et al., No. 49A04-1006-PL-394, Judges John Baker and Cale Bradford reversed, finding the lower court’s order directing Travelers to reimburse Maplehurst for the pre-notice, pre-tender costs is contrary to the fundamental holding in Dreaded that such costs cannot be recovered.

“Granted, when an insured is late in providing notice of a claim and the insurer responds by denying all coverage, prejudice to the insurer caused by the late notice is a potentially relevant consideration as to the insurer’s post-notice obligations. However, regardless of the relevance that prejudice plays in the context of post-notice obligations, an insured is not entitled to recover pre-notice costs. Simply put, an insurer’s duties under the policy do not arise unless and until the insurer has knowledge of the claim,” wrote Judge Baker.

Judge Melissa May dissented, declining to adopt the majority’s “apparent premise” that after Dreaded, reasonableness is no longer a permissible consideration in the analysis of late-notice disputes. This premise is inconsistent with Miller v. Dilts, 463 N.E.2d 257, 265-66 (Ind. 1984), and nothing relied on by the majority in Dreaded suggests that reasonableness must, should, or can be disregarded, she wrote.

The majority reversed and found Travelers’ to only be liable for the costs and expenses under the insurance policy that Maplehurst incurred after it gave notice of the claim. The judges also upheld the denial of Maplehurst’s requests for attorney fees.
 

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  1. Such things are no more elections than those in the late, unlamented Soviet Union.

  2. It appears the police and prosecutors are allowed to change the rules halfway through the game to suit themselves. I am surprised that the congress has not yet eliminated the right to a trial in cases involving any type of forensic evidence. That would suit their foolish law and order police state views. I say we eliminate the statute of limitations for crimes committed by members of congress and other government employees. Of course they would never do that. They are all corrupt cowards!!!

  3. Poor Judge Brown probably thought that by slavishly serving the godz of the age her violations of 18th century concepts like due process and the rule of law would be overlooked. Mayhaps she was merely a Judge ahead of her time?

  4. in a lawyer discipline case Judge Brown, now removed, was presiding over a hearing about a lawyer accused of the supposedly heinous ethical violation of saying the words "Illegal immigrant." (IN re Barker) http://www.in.gov/judiciary/files/order-discipline-2013-55S00-1008-DI-429.pdf .... I wonder if when we compare the egregious violations of due process by Judge Brown, to her chiding of another lawyer for politically incorrectness, if there are any conclusions to be drawn about what kind of person, what kind of judge, what kind of apparatchik, is busy implementing the agenda of political correctness and making off-limits legit advocacy about an adverse party in a suit whose illegal alien status is relevant? I am just asking the question, the reader can make own conclsuion. Oh wait-- did I use the wrong adjective-- let me rephrase that, um undocumented alien?

  5. of course the bigger questions of whether or not the people want to pay for ANY bussing is off limits, due to the Supreme Court protecting the people from DEMOCRACY. Several decades hence from desegregation and bussing plans and we STILL need to be taking all this taxpayer money to combat mostly-imagined "discrimination" in the most obviously failed social program of the postwar period.

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