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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. 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?

  2. 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?

  3. 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.

  4. You can put your photos anywhere you like... When someone steals it they know it doesn't belong to them. And, a man getting a divorce is automatically not a nice guy...? That's ridiculous. Since when is need of money a conflict of interest? That would mean that no one should have a job unless they are already financially solvent without a job... A photographer is also under no obligation to use a watermark (again, people know when a photo doesn't belong to them) or provide contact information. Hey, he didn't make it easy for me to pay him so I'll just take it! Well heck, might as well walk out of the grocery store with a cart full of food because the lines are too long and you don't find that convenient. "Only in Indiana." Oh, now you're passing judgement on an entire state... What state do you live in? I need to characterize everyone in your state as ignorant and opinionated. And the final bit of ignorance; assuming a photo anyone would want is lucky and then how much does your camera have to cost to make it a good photo, in your obviously relevant opinion?

  5. Seventh Circuit Court Judge Diane Wood has stated in “The Rule of Law in Times of Stress” (2003), “that neither laws nor the procedures used to create or implement them should be secret; and . . . the laws must not be arbitrary.” According to the American Bar Association, Wood’s quote drives home this point: The rule of law also requires that people can expect predictable results from the legal system; this is what Judge Wood implies when she says that “the laws must not be arbitrary.” Predictable results mean that people who act in the same way can expect the law to treat them in the same way. If similar actions do not produce similar legal outcomes, people cannot use the law to guide their actions, and a “rule of law” does not exist.

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