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Justices reaffirm uniform-contract interpreation approach

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The Indiana Supreme Court has reaffirmed the state’s reliance on the uniform-contract interpretation approach rather than a site-specific approach for deciding which of several states’ laws should apply to an environmental remediation insurance coverage case.

The justices determined that Indiana law doesn’t apply here. The Supreme Court ruled that Maryland law applies and should decide the outcome of a case that “typifies frequently recurring disputes over insurers’ obligations to defend and indemnify their insureds in the face of demands to clean up or pay for environmental contamination at multiple sites in multiple states.”

A unanimous 11-page ruling comes today in National Union Fire Insurance Company of Pittsburgh, et al. v. Standard Fusee Corporation , No. 49S04-1006-CV-318, a case out of Marion Superior Court that drew amicus curiae parties such as the Complex Insurance Claims Litigation Association, Eli Lilly, Citizens Energy Group, Vectren Corp., the National Solid Waste Management Association, and the Indiana Petroleum Marketers and Convenience Stores Association.

A manufacturer of emergency signaling flares, SFC is incorporated in Delaware and headquartered in Maryland, and since the late 1980s has owned various sites in multiple states. The company purchased comprehensive general liability insurance policies, and in 2005 it filed a suit against its insurers seeking a declaratory judgment that insurers were require to defend and indemnify SFC under the policies for environmental liabilities arising in Indiana and California.
 
The trial court applied Indiana substantive law to interpret the insurance policies, instead of Maryland law, and the insurance premiums were paid. Late last year, the Indiana Court of Appeals issued a 30-page decision that for the first time adopted a site-specific approach in deciding which state law should apply, rather than the uniform-contract interpretation approach that has long been recognized in Indiana. Following the uniform-contract interpretation approach would be contrary to the general principles of the Restatement (Second) of Conflict of Laws (1971), the appellate court held, and the respective states’ laws should apply because Indiana and California respectively have the most significant relationship with the contamination issues.

But looking to a long history of caselaw and adopted practice here, the Indiana justices overturned their intermediate appellate colleagues’ rationale from a year ago.

“After reviewing our doctrine’s history, we conclude that the uniform approach is more consistent with Indiana’s choice-of-law jurisprudence, and as such should apply in cases involving multisite, mulistate insurance policies,” Justice Frank Sullivan wrote.

Justice Sullivan cited the development of Indiana’s choice-of-law rules in the 65 years since the landmark decision of W. H. Barber Co. V. Hughes, 223 Ind. 570, 63 N.E.2d 417 (1945), in which the state court held a contract is governed by the law of the state where it is made, and that a contract is deemed made in the state where the last act necessary to make it a binding agreement occurs. With that ruling, Indiana became one of the first to suggest the use of what has become known as “the most significant relationship” approach in determining what law to apply in contract disputes.

“We see no reason why pollution sites in multiple states should be treated any differently than other contracts,” Justice Sullivan wrote, rejecting the rationale the Court of Appeals had used to justify its favor of the site-specific approach.

The justices also pointed to their ruling in Simon v. United States, 805 N.E. 2d 798, 801 (Ind. 2004), in which they clearly rejected the use of “the process of analyzing different issues within the same case separately under the laws of different states.”

“To be sure, our concern in contracts cases has been determining the state in most intimate contact with the facts,” the court wrote. “A single event – like executing a contract – has not been determinative if that event occurred in a state with insignificant contacts. Similarly, where environmental contamination plagues multiple sites in multiple states, the site of the pollution should not control if it is not located in the state with the most intimate contacts.”

Both parties disagreed about whether Indiana or Maryland law should apply, and the justices came to a different conclusion than the trial court about the place of performance pointing to Indiana. The SFC headquarters is located in Maryland, which indicates it’s the principle location of the insured risk. Some dispute may still remain about the location of insured risk, but the justices determined that the place of performance is not exclusively Indiana and so the “overall number and quality of contacts” favor Maryland over Indiana.

The reversal sends the case back to the trial level for the application of Maryland law to the entire dispute.
 

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  1. He TIL team,please zap this comment too since it was merely marking a scammer and not reflecting on the story. Thanks, happy Monday, keep up the fine work.

  2. You just need my social security number sent to your Gmail account to process then loan, right? Beware scammers indeed.

  3. The appellate court just said doctors can be sued for reporting child abuse. The most dangerous form of child abuse with the highest mortality rate of any form of child abuse (between 6% and 9% according to the below listed studies). Now doctors will be far less likely to report this form of dangerous child abuse in Indiana. If you want to know what this is, google the names Lacey Spears, Julie Conley (and look at what happened when uninformed judges returned that child against medical advice), Hope Ybarra, and Dixie Blanchard. Here is some really good reporting on what this allegation was: http://media.star-telegram.com/Munchausenmoms/ Here are the two research papers: http://www.sciencedirect.com/science/article/pii/0145213487900810 http://www.sciencedirect.com/science/article/pii/S0145213403000309 25% of sibling are dead in that second study. 25%!!! Unbelievable ruling. Chilling. Wrong.

  4. Mr. Levin says that the BMV engaged in misconduct--that the BMV (or, rather, someone in the BMV) knew Indiana motorists were being overcharged fees but did nothing to correct the situation. Such misconduct, whether engaged in by one individual or by a group, is called theft (defined as knowingly or intentionally exerting unauthorized control over the property of another person with the intent to deprive the other person of the property's value or use). Theft is a crime in Indiana (as it still is in most of the civilized world). One wonders, then, why there have been no criminal prosecutions of BMV officials for this theft? Government misconduct doesn't occur in a vacuum. An individual who works for or oversees a government agency is responsible for the misconduct. In this instance, somebody (or somebodies) with the BMV, at some time, knew Indiana motorists were being overcharged. What's more, this person (or these people), even after having the error of their ways pointed out to them, did nothing to fix the problem. Instead, the overcharges continued. Thus, the taxpayers of Indiana are also on the hook for the millions of dollars in attorneys fees (for both sides; the BMV didn't see fit to avail itself of the services of a lawyer employed by the state government) that had to be spent in order to finally convince the BMV that stealing money from Indiana motorists was a bad thing. Given that the BMV official(s) responsible for this crime continued their misconduct, covered it up, and never did anything until the agency reached an agreeable settlement, it seems the statute of limitations for prosecuting these folks has not yet run. I hope our Attorney General is paying attention to this fiasco and is seriously considering prosecution. Indiana, the state that works . . . for thieves.

  5. I'm glad that attorney Carl Hayes, who represented the BMV in this case, is able to say that his client "is pleased to have resolved the issue". Everyone makes mistakes, even bureaucratic behemoths like Indiana's BMV. So to some extent we need to be forgiving of such mistakes. But when those mistakes are going to cost Indiana taxpayers millions of dollars to rectify (because neither plaintiff's counsel nor Mr. Hayes gave freely of their services, and the BMV, being a state-funded agency, relies on taxpayer dollars to pay these attorneys their fees), the agency doesn't have a right to feel "pleased to have resolved the issue". One is left wondering why the BMV feels so pleased with this resolution? The magnitude of the agency's overcharges might suggest to some that, perhaps, these errors were more than mere oversight. Could this be why the agency is so "pleased" with this resolution? Will Indiana motorists ever be assured that the culture of incompetence (if not worse) that the BMV seems to have fostered is no longer the status quo? Or will even more "overcharges" and lawsuits result? It's fairly obvious who is really "pleased to have resolved the issue", and it's not Indiana's taxpayers who are on the hook for the legal fees generated in these cases.

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