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. Such things are no more elections than those in the late, unlamented Soviet Union.

  2. It appears the police and prosecutors are allowed to change the rules halfway through the game to suit themselves. I am surprised that the congress has not yet eliminated the right to a trial in cases involving any type of forensic evidence. That would suit their foolish law and order police state views. I say we eliminate the statute of limitations for crimes committed by members of congress and other government employees. Of course they would never do that. They are all corrupt cowards!!!

  3. Poor Judge Brown probably thought that by slavishly serving the godz of the age her violations of 18th century concepts like due process and the rule of law would be overlooked. Mayhaps she was merely a Judge ahead of her time?

  4. in a lawyer discipline case Judge Brown, now removed, was presiding over a hearing about a lawyer accused of the supposedly heinous ethical violation of saying the words "Illegal immigrant." (IN re Barker) http://www.in.gov/judiciary/files/order-discipline-2013-55S00-1008-DI-429.pdf .... I wonder if when we compare the egregious violations of due process by Judge Brown, to her chiding of another lawyer for politically incorrectness, if there are any conclusions to be drawn about what kind of person, what kind of judge, what kind of apparatchik, is busy implementing the agenda of political correctness and making off-limits legit advocacy about an adverse party in a suit whose illegal alien status is relevant? I am just asking the question, the reader can make own conclsuion. Oh wait-- did I use the wrong adjective-- let me rephrase that, um undocumented alien?

  5. of course the bigger questions of whether or not the people want to pay for ANY bussing is off limits, due to the Supreme Court protecting the people from DEMOCRACY. Several decades hence from desegregation and bussing plans and we STILL need to be taking all this taxpayer money to combat mostly-imagined "discrimination" in the most obviously failed social program of the postwar period.

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