|May 8, 2013
||State’s High Court Allows Key Insurance Ruling to Stand
By Plews Shadley Racher & Braun LLP
Indiana Supreme Court has refused to grant transfer on a case that was
successfully argued in the Indiana Court of Appeals by Plews Shadley Racher
& Braun LLP (PSRB). The case
involves insurance coverage for environmental claims arising from the
abandonment of foundry sand from the Daimler Chrysler foundry in
client FLM, LLC had leased a piece of Indianapolis property to International
Recycling Inc. (IRI). IRI entered into a
contract with Chrysler to collect, transport and dispose of the foundry sand
generated at its Indianapolis facility.
However, in 2002, Chrysler stopped paying IRI and the company could not
afford to remove the sand from FLM’s property.
More than 100,000 tons of foundry sand was abandoned on the property. Some of the sand then migrated onto nearby
properties, allegedly causing clogged pipes and water accumulation. The Indiana Department of Environmental Management
(IDEM) ordered the removal of the foundry sand. The City of Indianapolis followed suit. FLM then sought to have the removal covered
by IRI’s insurance policies with The Cincinnati Insurance Company.
decision includes several important rulings.
The Court of Appeals upheld FLM’s argument that personal injury coverage
in the policy applies to cover an environmental cleanup, and that the policy’s
“contractual liability” exclusions do not bar coverage. “Personal injury” coverage is a separate
coverage found in almost all liability policies that is in addition to bodily
injury and property damage coverage. The
contractual liability exclusion did not apply, the Court held, since IRI would
have been liable even absent the tenant’s indemnity “agreement” in the lease
with FLM. A concurrence by Judge Bradford found that the
abandonment of the sand by the tenant constituted an “occurrence” covered by
the policy’s property damage coverage, because although the abandonment was
intentional (and compelled by the tenant’s financial woes), the damage
resulting was not. The denial of the
transfer request leaves the Court of Appeal’s ruling intact.
M. Plews, Jeffrey D. Claflin and Jonathan P.
Emenhiser represented FLM in this case. If you have questions about this or other
insurance coverage issues, feel free to contact George, Jeff or Jonathan.
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