ILNews

Court rules on corporate insurance policy issues

Michael W. Hoskins
January 1, 2007
Keywords
Back to TopCommentsE-mailPrintBookmark and Share
One of the first things you'll notice about an Indiana Court of Appeals decision issued today is the number of attorneys and parties on the case.

The first four pages of the 29-page ruling in Travelers Casualty and Surety Company, et al. v. U.S. Filter Corp., list the parties and respective attorneys. Those include 13 appellant insurance companies and organizations, two appellees-plaintiffs, and three amici curiae parties from Indianapolis; Washington, D.C.; New York, Chicago; and parts of Michigan.

Issues addressed in this case are listed in the opinion as: 1. Whether the trial court erred in concluding that U.S. Filter acquired the rights to and is entitled to seek insurance coverage under Insurers' policies when the relevant corporate transactions did not assign rights under those policies; 2. Whether the trial court erred in holding that U.S. Filter is not, as a matter of law, precluded from seeking coverage under Insurers' policies notwithstanding U.S. Filter's noncompliance with the "consent-to-assignment" provision; and 3. Whether the trial court erred in granting U.S. Filter rights under Insurers' policies, but summarily denying Waste Management those same rights where no party requested such relief and no supportive evidence was designated.

Today's decision affirms and vacates the decision in part, remanding back to the trial court level.

"In a nutshell, this is a big win for Indiana policyholders," said Indianapolis attorney Brent Huber with Ice Miller, an attorney representing appellee Waste Management Holdings. "This often arises when one company buys another and tries to assign insurance to the buyer. You can still have coverage and the buying and selling of companies as corporate America often does, doesn't end liability coverage."

Writing for the unanimous three-judge panel, Judge James Kirsch delves into a case from Marion Superior Court that involves product liability insurance policies, corporate transactions going back to the 1930s, contract-based claims involving chose in action, and ultimately related public policy and Indiana case law going back to the late 1800s.

At the ground level, this dispute arises from U.S. Filter and Waste Management's efforts to assert rights under insurance policies issued to predecessor or affiliate companies, specifically relating to coverage for thousands of underlying bodily injury claims caused by exposure to silica working in the vicinity of a metal-cleaning air blast machine. Known as the "Wheelabrator," it produced silica dust that can cause a potentially deadly occupational lung disease if inhaled over time.

According to the appellate court, the significance of this litigation goes back to 1932 when the plaintiffs' predecessors first made the product now under ownership of U.S. Filter since 1996. Plaintiffs filed a breach of action complaint in 2004 for declaratory judgment, asserting they had rights under a policy issued under Travelers Casualty and Surety Company and a number of other insurance companies.

"This court has never addressed the question of when a chose in action becomes an enforceable right," Judge Kirsch wrote, dismissing a California Supreme Court ruling and ultimately relying on a U.S. Supreme Court cases to reach its decision. "Adopting the same principle, we hold that a chose in action arises under an occurrence-based insurance policy at the time of the covered loss - a conclusion that we reached many years ago."

With that, Judge Kirsch cited a century-old Indiana ruling (New v. German Ins. Co. of Freeport, 5 Ind. App. 82, 85,31, N.E. 475, 476 (Ind. Ct. App. 1892)) that held after a loss has occurred, a policy becomes a chose in action assignable like any other.

On the consent to transfer issue, the court wrote that the plaintiffs' predecessors and affiliates had compensated the insurers for insuring the risk associated with the Wheelabrator blast operation.

"Thus, to now hold the Insurers responsible for the liability arising under that risk only imposes on the Insurers the liability that they agreed to insure and for which they were already compensated," the opinion states. "Indeed, any contrary holding would provide an unfair windfall for Insurers."

Judge Kirsch wrote that the court was also persuaded by the considerations offered by amicus curiae parties that "the smooth flow of assets from one entity to another by way of merger or acquisition is integral to the functioning of a modern free market economy."
ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. I was wondering about the 6 million put aside for common attorney fees?does that mean that if you are a plaintiff your attorney fees will be partially covered?

  2. My situation was hopeless me and my husband was on the verge of divorce. I was in a awful state and felt that I was not able to cope with life any longer. I found out about this great spell caster drlawrencespelltemple@hotmail.com and tried him. Well, he did return and now we are doing well again, more than ever before. Thank you so much Drlawrencespelltemple@hotmail.comi will forever be grateful to you Drlawrencespelltemple@hotmail.com

  3. I expressed my thought in the title, long as it was. I am shocked that there is ever immunity from accountability for ANY Government agency. That appears to violate every principle in the US Constitution, which exists to limit Government power and to ensure Government accountability. I don't know how many cases of legitimate child abuse exist, but in the few cases in which I knew the people involved, in every example an anonymous caller used DCS as their personal weapon to strike at innocent people over trivial disagreements that had no connection with any facts. Given that the system is vulnerable to abuse, and given the extreme harm any action by DCS causes to families, I would assume any degree of failure to comply with the smallest infraction of personal rights would result in mandatory review. Even one day of parent-child separation in the absence of reasonable cause for a felony arrest should result in severe penalties to those involved in the action. It appears to me, that like all bureaucracies, DCS is prone to interpret every case as legitimate. This is not an accusation against DCS. It is a statement about the nature of bureaucracies, and the need for ADDED scrutiny of all bureaucratic actions. Frankly, I question the constitutionality of bureaucracies in general, because their power is delegated, and therefore unaccountable. No Government action can be unaccountable if we want to avoid its eventual degeneration into irrelevance and lawlessness, and the law of the jungle. Our Constitution is the source of all Government power, and it is the contract that legitimizes all Government power. To the extent that its various protections against intrusion are set aside, so is the power afforded by that contract. Eventually overstepping the limits of power eliminates that power, as a law of nature. Even total tyranny eventually crumbles to nothing.

  4. Being dedicated to a genre keeps it alive until the masses catch up to the "trend." Kent and Bill are keepin' it LIVE!! Thank you gentlemen..you know your JAZZ.

  5. Hemp has very little THC which is needed to kill cancer cells! Growing cannabis plants for THC inside a hemp field will not work...where is the fear? From not really knowing about Cannabis and Hemp or just not listening to the people teaching you through testimonies and packets of info over the last few years! Wake up Hoosier law makers!

ADVERTISEMENT