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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. This law is troubling in two respects: First, why wasn't the law reviewed "with the intention of getting all the facts surrounding the legislation and its actual impact on the marketplace" BEFORE it was passed and signed? Seems a bit backwards to me (even acknowledging that this is the Indiana state legislature we're talking about. Second, what is it with the laws in this state that seem to create artificial monopolies in various industries? Besides this one, the other law that comes to mind is the legislation that governed the granting of licenses to firms that wanted to set up craft distilleries. The licensing was limited to only those entities that were already in the craft beer brewing business. Republicans in this state talk a big game when it comes to being "business friendly". They're friendly alright . . . to certain businesses.

  2. Gretchen, Asia, Roberto, Tonia, Shannon, Cheri, Nicholas, Sondra, Carey, Laura ... my heart breaks for you, reaching out in a forum in which you are ignored by a professional suffering through both compassion fatigue and the love of filthy lucre. Most if not all of you seek a warm blooded Hoosier attorney unafraid to take on the government and plead that government officials have acted unconstitutionally to try to save a family and/or rescue children in need and/or press individual rights against the Leviathan state. I know an attorney from Kansas who has taken such cases across the country, arguing before half of the federal courts of appeal and presenting cases to the US S.Ct. numerous times seeking cert. Unfortunately, due to his zeal for the constitutional rights of peasants and willingness to confront powerful government bureaucrats seemingly violating the same ... he was denied character and fitness certification to join the Indiana bar, even after he was cleared to sit for, and passed, both the bar exam and ethics exam. And was even admitted to the Indiana federal bar! NOW KNOW THIS .... you will face headwinds and difficulties in locating a zealously motivated Hoosier attorney to face off against powerful government agents who violate the constitution, for those who do so tend to end up as marginalized as Paul Odgen, who was driven from the profession. So beware, many are mere expensive lapdogs, the kind of breed who will gladly take a large retainer, but then fail to press against the status quo and powers that be when told to heel to. It is a common belief among some in Indiana that those attorneys who truly fight the power and rigorously confront corruption often end up, actually or metaphorically, in real life or at least as to their careers, as dead as the late, great Gary Welch. All of that said, I wish you the very best in finding a Hoosier attorney with a fighting spirit to press your rights as far as you can, for you do have rights against government actors, no matter what said actors may tell you otherwise. Attorneys outside the elitist camp are often better fighters that those owing the powers that be for their salaries, corner offices and end of year bonuses. So do not be afraid to retain a green horn or unconnected lawyer, many of them are fine men and woman who are yet untainted by the "unique" Hoosier system.

  3. I am not the John below. He is a journalist and talk show host who knows me through my years working in Kansas government. I did no ask John to post the note below ...

  4. "...not those committed in the heat of an argument." If I ever see a man physically abusing a woman or a child and I'm close enough to intercede I will not ask him why he is abusing her/him. I will give him a split second to cease his attack and put his hands in the air while I call the police. If he continues, I will still call the police but to report, "Man down with a gunshot wound,"instead.

  5. And so the therapeutic state is weaonized. How soon until those with ideologies opposing the elite are disarmed in the name of mental health? If it can start anywhere it can start in the hoosiers' slavishly politically correct capital city.

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