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. If real money was spent on this study, what a shame. And if some air-head professor tries to use this to advance a career, pity the poor student. I am approaching a time that i (and others around me) should be vigilant. I don't think I'm anywhere near there yet, but seeing the subject I was looking forward to something I might use to look for some benchmarks. When finally finding my way to the hidden questionnaire all I could say to myself was...what a joke. Those are open and obvious signs of any impaired lawyer (or non-lawyer, for that matter), And if one needs a checklist to discern those tell-tale signs of impairment at any age, one shouldn't be practicing law. Another reason I don't regret dropping my ABA membership some number of years ago.

  2. The case should have been spiked. Give the kid a break. He can serve and maybe die for Uncle Sam and can't have a drink? Wow. And they won't even let him defend himself. What a gross lack of prosecutorial oversight and judgment. WOW

  3. I work with some older lawyers in the 70s, 80s, and they are sharp as tacks compared to the foggy minded, undisciplined, inexperienced, listless & aimless "youths" being churned out by the diploma mill law schools by the tens of thousands. A client is generally lucky to land a lawyer who has decided to stay in practice a long time. Young people shouldn't kid themselves. Experience is golden especially in something like law. When you start out as a new lawyer you are about as powerful as a babe in the cradle. Whereas the silver halo of age usually crowns someone who can strike like thunder.

  4. YES I WENT THROUGH THIS BEFORE IN A DIFFERENT SITUATION WITH MY YOUNGEST SON PEOPLE NEED TO LEAVE US ALONE WITH DCS IF WE ARE NOT HURTING OR NEGLECT OUR CHILDREN WHY ARE THEY EVEN CALLED OUT AND THE PEOPLE MAKING FALSE REPORTS NEED TO GO TO JAIL AND HAVE A CLASS D FELONY ON THERE RECORD TO SEE HOW IT FEELS. I WENT THREW ALOT WHEN HE WAS TAKEN WHAT ELSE DOES THESE SCHOOL WANT ME TO SERVE 25 YEARS TO LIFE ON LIES THERE TELLING OR EVEN LE SAME THING LIED TO THE COUNTY PROSECUTOR JUST SO I WOULD GET ARRESTED AND GET TIME HE THOUGHT AND IT TURNED OUT I DID WHAT I HAD TO DO NOT PROUD OF WHAT HAPPEN AND SHOULD KNOW ABOUT SEEKING MEDICAL ATTENTION FOR MY CHILD I AM DISABLED AND SICK OF GETTING TREATED BADLY HOW WOULD THEY LIKE IT IF I CALLED APS ON THEM FOR A CHANGE THEN THEY CAN COME AND ARREST THEM RIGHT OUT OF THE SCHOOL. NOW WE ARE HOMELESS AND THE CHILDREN ARE STAYING WITH A RELATIVE AND GUARDIAN AND THE SCHOOL WON'T LET THEM GO TO SCHOOL THERE BUT WANT THEM TO GO TO SCHOOL WHERE BULLYING IS ALLOWED REAL SMART THINKING ON A SCHOOL STAFF.

  5. Family court judges never fail to surprise me with their irrational thinking. First of all any man who abuses his wife is not fit to be a parent. A man who can't control his anger should not be allowed around his child unsupervised period. Just because he's never been convicted of abusing his child doesn't mean he won't and maybe he hasn't but a man that has such poor judgement and control is not fit to parent without oversight - only a moron would think otherwise. Secondly, why should the mother have to pay? He's the one who made the poor decisions to abuse and he should be the one to pay the price - monetarily and otherwise. Yes it's sad that the little girl may be deprived of her father, but really what kind of father is he - the one that abuses her mother the one that can't even step up and do what's necessary on his own instead the abused mother is to pay for him???? What is this Judge thinking? Another example of how this world rewards bad behavior and punishes those who do right. Way to go Judge - NOT.

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