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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. The is an unsigned editorial masquerading as a news story. Almost everyone quoted was biased in favor of letting all illegal immigrants remain in the U.S. (Ignoring that Obama deported 3.5 million in 8 years). For some reason Obama enforcing part of the immigration laws was O.K. but Trump enforcing additional parts is terrible. I have listed to press conferences and explanations of the Homeland Security memos and I gather from them that less than 1 million will be targeted for deportation, the "dreamers" will be left alone and illegals arriving in the last two years -- especially those arriving very recently -- will be subject to deportation but after the criminals. This will not substantially affect the GDP negatively, especially as it will take place over a number of years. I personally think this is a rational approach to the illegal immigration problem. It may cause Congress to finally pass new immigration laws rationalizing the whole immigration situation.

  2. Mr. Straw, I hope you prevail in the fight. Please show us fellow American's that there is a way to fight the corrupted justice system and make them an example that you and others will not be treated unfairly. I hope you the best and good luck....

  3. @ President Snow - Nah, why try to fix something that ain't broken??? You do make an excellent point. I am sure some Mickey or Minnie Mouse will take Ruckers seat, I wonder how his retirement planning is coming along???

  4. Can someone please explain why Judge Barnes, Judge Mathias and Chief Judge Vaidik thought it was OK to re weigh the evidence blatantly knowing that by doing so was against the rules and went ahead and voted in favor of the father? I would love to ask them WHY??? I would also like to ask the three Supreme Justices why they thought it was OK too.

  5. How nice, on the day of my car accident on the way to work at the Indiana Supreme Court. Unlike the others, I did not steal any money or do ANYTHING unethical whatsoever. I am suing the Indiana Supreme Court and appealed the failure of the district court in SDIN to protect me. I am suing the federal judge because she failed to protect me and her abandonment of jurisdiction leaves her open to lawsuits because she stripped herself of immunity. I am a candidate for Indiana Supreme Court justice, and they imposed just enough sanction so that I am made ineligible. I am asking the 7th Circuit to remove all of them and appoint me as the new Chief Justice of Indiana. That's what they get for dishonoring my sacrifice and and violating the ADA in about 50 different ways.

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