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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. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  2. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  3. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

  4. When I hear 'Juvenile Lawyer' I think of an attorney helping a high school aged kid through the court system for a poor decision; like smashing mailboxes. Thank you for opening up my eyes to the bigger picture of the need for juvenile attorneys. It made me sad, but also fascinated, when it was explained, in the sixth paragraph, that parents making poor decisions (such as drug abuse) can cause situations where children need legal representation and aid from a lawyer.

  5. Some in the Hoosier legal elite consider this prayer recommended by the AG seditious, not to mention the Saint who pledged loyalty to God over King and went to the axe for so doing: "Thomas More, counselor of law and statesman of integrity, merry martyr and most human of saints: Pray that, for the glory of God and in the pursuit of His justice, I may be trustworthy with confidences, keen in study, accurate in analysis, correct in conclusion, able in argument, loyal to clients, honest with all, courteous to adversaries, ever attentive to conscience. Sit with me at my desk and listen with me to my clients' tales. Read with me in my library and stand always beside me so that today I shall not, to win a point, lose my soul. Pray that my family may find in me what yours found in you: friendship and courage, cheerfulness and charity, diligence in duties, counsel in adversity, patience in pain—their good servant, and God's first. Amen."

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