Justices disagree on pollution exclusion coverage

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A divided Indiana Supreme Court has held that the pollution exclusion contained in a general commercial liability policy is ambiguous and should be construed to provide coverage rather than in favor of the insurance company trying to deny coverage.

In a 3-2 decision in State Automobile Mutual Insurance Company v. Flexdar, Inc. and RTS Realty, Justices Robert Rucker and Brent Dickson affirmed a ruling by Marion Superior Judge Michael Keele in favor of Flexdar. Justice Steven David concurred in result. But Justice Frank Sullivan and Chief Justice Randall Shepard disagreed, writing that they think the majority’s ruling will result in higher insurance premiums.

The case involves an Indianapolis rubber stamp and printing plate facility that operated from the mid-1990s to 2003, and how the manufacturing process used a chemical solvent that later appeared in the soil and groundwater on and near the site. The Indiana Department of Environmental Management informed the company it would be liable for cleanup costs, and Flexdar turned to its commercial general liability and umbrella insurance policies with State Automobile Mutual Insurance for defense and indemnification. State Auto agreed to defend Flexdar against the claims under a reservation of its right to deny coverage, but it later argued that the contamination wasn’t covered because of a pollution exclusion in the policy.

The trial court agreed with Flexdar that the policy’s exclusion language was ambiguous and should be construed against State Auto, and the intermediate appellate court affirmed.

Rucker wrote that Indiana applies basic contract principles to these issues and precedent has consistently held that an insurer can and should specify what falls within its pollution exclusion. In cases where the court’s found the language ambiguous, it has ruled in favor of coverage. In this case, the question is whether the policy language is sufficiently unambiguous to identify the chemical solvent as a pollutant, and this time they’ve determined it is not. Precedent dictates affirming the trial court’s decision, he wrote.

Sullivan and Shepard dissented in a two-page opinion, finding in favor of the insurer and noting they would have reversed the trial judge’s decision. Pointing to a 1996 decision from the state’s justices, Sullivan wrote that Indiana caselaw has never before stood for the proposition that all pollution exclusions are unenforceable but that is what this ruling now does.



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  1. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.

  2. I had a hospital and dcs caseworker falsify reports that my child was born with drugs in her system. I filed a complaint with the Indiana department of health....and they found that the hospital falsified drug screens in their investigation. Then I filed a complaint with human health services in Washington DC...dcs drug Testing is unregulated and is indicating false positives...they are currently being investigated by human health services. Then I located an attorney and signed contracts one month ago to sue dcs and Anderson community hospital. Once the suit is filed I am taking out a loan against the suit and paying a law firm to file a writ of mandamus challenging the courts jurisdiction to invoke chins case against me. I also forwarded evidence to a u.s. senator who contacted hhs to push an investigation faster. Once the lawsuit is filed local news stations will be running coverage on the situation. Easy day....people will be losing their jobs soon...and judge pancol...who has attempted to cover up what has happened will also be in trouble. The drug testing is a kids for cash and federal funding situation.

  3. (A)ll (C)riminals (L)ove (U)s is up to their old, "If it's honorable and pro-American, we're against it," nonsense. I'm not a big Pence fan but at least he's showing his patriotism which is something the left won't do.

  4. While if true this auto dealer should be held liable, where was the BMV in all of this? How is it that the dealer was able to get "clean" titles to these vehicles in order to sell them to unsuspecting consumers?

  5. He has refused his Assent to Laws, the most wholesome and necessary for the public good. He has forbidden his Governors to pass Laws of immediate and pressing importance, He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance. He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation: For imposing Taxes on us without our Consent: He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.. He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless [ ] Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions. GOD BLESS THE GOVERNORS RESISTING! Count on the gutless judiciary to tie our children down and facilitate the swords being drawn across their throats. Wake Up America ...