ILNews

State Supreme Court rules in favor of power company insurers

Michael W. Hoskins
January 1, 2007
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The Indiana Supreme Court said today that insurance carriers are not required to pay for power companies' costs incurred in a federal lawsuit, nor the installation of new equipment to reduce pollution as ordered in a recent ruling by the Supreme Court of the United States.

In Cinergy Corp and Duke Energy v. Associated Electric & Gas Insurance Services, et al., 32S05-0604-CV-151, the state's highest court issued a 17-page unanimous opinion affirming a decision by Hendricks Superior Judge David H. Coleman. The trial judge had denied a motion by the power companies Cinergy and Duke for partial summary judgment.

Nineteen insurance companies had filed a complaint against Cinergy and Duke, wanting to determine the extent of the their insurance obligations with respect to a federal lawsuit relating to pollution reduction filed against the power companies by the United States, three states, and several environmental organizations. That case, U.S. v. Cinergy Corp. et al., No. 06-1224, was decided last year by the 7th Circuit Court of Appeals in Chicago. It upheld a decision by District Court Judge Larry McKinney in the Southern District of Indiana that an increase in actual emissions at industrial plants triggers new source review requirements for plants to install emissions controls.

The U.S. Supreme Court declined to hear the case in April, following a decision in a similar lawsuit that held the utility companies must install pollution control equipment on aging coal-fired power plants across the country.

According to this Indiana Supreme Court decision, the power companies filed a motion for plaintiff AEGIS to pay the more than $4 million the power companies have spent in defending itself in that Cinergy case - an amount exceeding the self-insured retention amount of up to $1 million. Costs include complying with the recent SCOTUS opinion that requires them to install equipment to reduce future emissions of pollutants, according to the state suit.

The insurance carriers - AEGIS - contended that the policies provide no coverage for claims made against the power companies in the federal suit, and therefore have no duty to pay defense costs.

The justices held that the phrase "ultimate net loss" as used in the insurance policies at issue, does not impose any responsibility on the carrier to pay for sums that the power companies might be legally obligated to pay as "ultimate net loss" for the costs of installing government-mandated equipment.

Justice Brent Dickson authored the opinion and wrote, "We affirm the trial court's denial of the motion because it seeks relief more extensive than that to which the power companies are entitled. ... Because the AEGIS insurance policies do not provide coverage for the costs of installing such equipment, the trial court did not err in denying partial summary judgment seeking to compel payment of all costs incurred by the power companies in defending all claims in the federal lawsuit."
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  1. Your article is a good intro the recent amendments to Fed.R.Civ.P. For a much longer - though not necessarily better -- summary, counsel might want to read THE CHIEF UMPIRE IS CHANGING THE STRIKE ZONE, which I co-authored and which was just published in the January issue of THE VERDICT (the monthly publication of the Indiana Trial Lawyers Association).

  2. Thank you, John Smith, for pointing out a needed correction. The article has been revised.

  3. The "National institute for Justice" is an agency for the Dept of Justice. That is not the law firm you are talking about in this article. The "institute for justice" is a public interest law firm. http://ij.org/ thanks for interesting article however

  4. I would like to try to find a lawyer as soon possible I've had my money stolen off of my bank card driver pressed charges and I try to get the information they need it and a Social Security board is just give me a hold up a run around for no reason and now it think it might be too late cuz its been over a year I believe and I can't get the right information they need because they keep giving me the runaroundwhat should I do about that

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