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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. OK, now do something about this preverted anacronism

  2. William Hartley prosecutor of Wabash county constantly violates people rights. Withholds statement's, is bias towards certain people. His actions have ruined lives and families. In this county you question him or go out of town for a lawyer,he finds a way to make things worse for you. Unfair,biased and crooked.

  3. why is the State trying to play GOD? Automatic sealing of a record is immoral. People should have the right to decide how to handle a record. the state is playing GOD. I have searched for decades, then you want me to pay someone a huge price to contact my son. THIS is extortion and gestapo control. OPEN THE RECORDS NOW. OPEN THE RECORDS NOW. OPEN THE RECORDS NOW.

  4. I haven't made some of the best choices in the last two years I have been to marion county jail 1 and two on three different occasions each time of release dates I've spent 48 to 72 hours after date of release losing a job being denied my freedom after ordered please help

  5. Out here in Kansas, where I now work as a government attorney, we are nearing the end of a process that could have relevance in this matter: "Senate Bill 45 would allow any adult otherwise able to possess a handgun under state and federal laws to carry that gun concealed as a matter of course without a permit. This move, commonly called constitutional carry, would elevate the state to the same club that Vermont, Arizona, Alaska and Wyoming have joined in the past generation." More reading here: http://www.guns.com/2015/03/18/kansas-house-panel-goes-all-in-on-constitutional-carry-measure/ Time to man up, Hoosiers. (And I do not mean that in a sexist way.)

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