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. What is this, the Ind Supreme Court thinking that there is a separation of powers and limited enumerated powers as delegated by a dusty old document? Such eighteen century thinking, so rare and unwanted by the elites in this modern age. Dictate to us, dictate over us, the massess are chanting! George Soros agrees. Time to change with times Ind Supreme Court, says all President Snows. Rule by executive decree is the new black.

  2. I made the same argument before a commission of the Indiana Supreme Court and then to the fedeal district and federal appellate courts. Fell flat. So very glad to read that some judges still beleive that evidentiary foundations matter.

  3. KUDOS to the Indiana Supreme Court for realizing that some bureacracies need to go to the stake. Recall what RWR said: "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" NOW ... what next to this rare and inspiring chopping block? Well, the Commission on Gender and Race (but not religion!?!) is way overdue. And some other Board's could be cut with a positive for State and the reputation of the Indiana judiciary.

  4. During a visit where an informant with police wears audio and video, does the video necessary have to show hand to hand transaction of money and narcotics?

  5. I will agree with that as soon as law schools stop lying to prospective students about salaries and employment opportunities in the legal profession. There is no defense to the fraudulent numbers first year salaries they post to mislead people into going to law school.

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