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High court denies rehearing

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A split Indiana Supreme Court has denied rehearing a case involving faulty workmanship being covered under a commercial general liability policy.

On Dec. 17, Justices Brent Dickson, Robert Rucker, and Steven David denied Continental Casualty Company’s petition for rehearing. In October, the justices were divided on whether an “occurrence” under a CGL covers an insured contract for faulty workmanship of its subcontractors. Justices Dickson, Rucker, and Theodore Boehm reversed the trial court ruling in favor of the insurers on grounds that there wasn’t property damage and thus there was no “occurrence” or “property damage.”

The majority aligned themselves with the jurisdictions that held improper or faulty workmanship does constitute an accident as long as the resulting damage is an event that occurs without expectation or foresight. They remanded for further proceedings because none of the parties’ Trial Rule 56 materials addressed the question of whether the faulty workmanship was the product of intentional or unintentional conduct, so the trial court reached no conclusion on that. If the subcontractor’s defective work was done intentionally instead of “without intention or design” then it is not an accident, the majority decided.

Chief Justice Randall T. Shepard and Justice Frank Sullivan dissented from the October ruling and also dissented from the denial to grant Continental’s petition for rehearing. In his three-page dissent, Justice Sullivan reiterated his belief that the damage isn’t covered under a CGL policy. He pointed to a 6th Circuit Court of Appeals case, Cincinnati Insurance Co. v. Beazer Homes Investments, LLC 594 F.3d 441 (6th Circ. 2010), in which that court addressed this exact issue of Indiana law. He believed the Circuit Court more accurately analyzed Indiana law on the subject than the Supreme Court’s opinion. The 6th Circuit Court of Appeals concluded that because it is neither “property damage” nor an “occurrence”, faulty workmanship causing damage to the insured property isn’t covered by CGL polices under Indiana law.

Justice Sullivan and Chief Justice Shepard, who joined him in the dissent, agreed with the alternatives available to provide appropriate recourse to general contractors who are faced with damage from faulty workmanship, including requiring performance bonds.

Also on Dec. 17, the justices issued an opinion on rehearing from Indiana Insurance in the same matter. They granted the rehearing to address the timeliness of Sheehan Construction Company’s notice to Indiana Insurance. Neither the Indiana Court of Appeals nor the Supreme Court addressed this issue on appeal. The justices unanimously affirmed summary judgment in favor of the insurer on this matter.

“In this case Sheehan conceded it did not give Indiana Insurance timely notice of Sheehan’s claims under the CGL policy. Because prejudice to the insurer was therefore presumed, Indiana Insurance carried its initial burden of demonstrating it had no liability to Sheehan under the policy of insurance. Sheehan has not directed this Court to any evidence it presented to the trial court rebutting the presumption of prejudice,” wrote Justice Rucker.

In all other respects, the original opinion was affirmed.

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  1. I just wanted to point out that Congressman Jim Sensenbrenner, Senator Feinstein, former Senate majority leader Bill Frist, and former attorney general John Ashcroft are responsible for this rubbish. We need to keep a eye on these corrupt, arrogant, and incompetent fools.

  2. Well I guess our politicians have decided to give these idiot federal prosecutors unlimited power. Now if I guy bounces a fifty-dollar check, the U.S. attorney can intentionally wait for twenty-five years or so and have the check swabbed for DNA and file charges. These power hungry federal prosecutors now have unlimited power to mess with people. we can thank Wisconsin's Jim Sensenbrenner and Diane Feinstein, John Achcroft and Bill Frist for this one. Way to go, idiots.

  3. I wonder if the USSR had electronic voting machines that changed the ballot after it was cast? Oh well, at least we have a free media serving as vicious watchdog and exposing all of the rot in the system! (Insert rimshot)

  4. Jose, you are assuming those in power do not wish to be totalitarian. My experience has convinced me otherwise. Constitutionalists are nearly as rare as hens teeth among the powerbrokers "managing" us for The Glorious State. Oh, and your point is dead on, el correcta mundo. Keep the Founders’ (1791 & 1851) vision alive, my friend, even if most all others, and especially the ruling junta, chase only power and money (i.e. mammon)

  5. Hypocrisy in high places, absolute immunity handed out like Halloween treats (it is the stuff of which tyranny is made) and the belief that government agents are above the constitutions and cannot be held responsible for mere citizen is killing, perhaps has killed, The Republic. And yet those same power drunk statists just reel on down the hallway toward bureaucratic fascism.

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