ILNews

Court rules on corporate insurance policy issues

Michael W. Hoskins
January 1, 2007
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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."
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  1. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

  2. As a lawyer who grew up in Fort Wayne (but went to a real law school), it is not that hard to find a mentor in the legal community without your school's assistance. One does not need to pay tens of thousands of dollars to go to an unaccredited legal diploma mill to get a mentor. Having a mentor means precisely nothing if you cannot get a job upon graduation, and considering that the legal job market is utterly terrible, these students from Indiana Tech are going to be adrift after graduation.

  3. 700,000 to 800,000 Americans are arrested for marijuana possession each year in the US. Do we need a new justice center if we decriminalize marijuana by having the City Council enact a $100 fine for marijuana possession and have the money go towards road repair?

  4. I am sorry to hear this.

  5. I tried a case in Judge Barker's court many years ago and I recall it vividly as a highlight of my career. I don't get in federal court very often but found myself back there again last Summer. We had both aged a bit but I must say she was just as I had remembered her. Authoritative, organized and yes, human ...with a good sense of humor. I also appreciated that even though we were dealing with difficult criminal cases, she treated my clients with dignity and understanding. My clients certainly respected her. Thanks for this nice article. Congratulations to Judge Barker for reaching another milestone in a remarkable career.

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