Employers Ins. of Wausau v. RFC

Decision Date30 September 1999
Docket NumberNo. 49A02-9702-CV-124.,49A02-9702-CV-124.
Citation716 N.E.2d 1015
PartiesEMPLOYERS INSURANCE OF WAUSAU, a Mutual Company, Appellant-Defendant, v. RECTICEL FOAM CORPORATION, Jim Van Hooser, O.E. Fox, Eldon Hall, Chet Meyers and Steve Murphy, Appellees-Plaintiffs.
CourtIndiana Appellate Court

G. Ronald Heath, Thomas A. Barnard, Johnson Smith Pence Densborn Wright & Heath, Indianapolis, Indiana, David C. Linder, King & Counsel, L.L.C., St. Paul, Minnesota, Attorneys for Appellant.

George M. Plews, Jeffrey D. Feathestun, Plews Shadley Racher & Braun, Indianapolis, Indiana, Henry W. Killeen, III, Nelson Perel, Harris Beach & Wilcox, Hamburg, New York, Attorneys For Appellees.

OPINION

NAJAM, Judge

STATEMENT OF THE CASE

Recticel Foam Corporation ("RFC") and its employees Jim Van Hooser, O.E. Fox, Eldon Hall, Chet Meyers and Steve Murphy (collectively, "Recticel") were the subject of legal proceedings associated with waste handling practices at Tennessee manufacturing plants once owned by RFC. Recticel initiated this action against certain insurers, including Employers Insurance of Wausau ("Wausau"), to establish insurance coverage for its alleged environmental contamination. Wausau brings this interlocutory appeal from the denial of its motion to dismiss Recticel's complaint on grounds of forum non conveniens and from the grant of partial summary judgment in favor of Recticel on claims that Wausau owes duties to defend and indemnify Recticel.

We affirm in part, reverse in part and remand.1

ISSUES

Wausau raises multiple issues which we consolidate and restate as:

1. Whether the trial court abused its discretion when it denied Wausau's motion to dismiss for forum non conveniens.

2. Whether genuine issues of material fact preclude summary judgment on Wausau's duty to defend the legal proceedings initiated against Recticel.

3. Whether genuine issues of material fact preclude summary judgment on Wausau's duty to pay all present and future "defense costs."

4. Whether genuine issues of material fact preclude summary judgment on the propriety of invoking the equitable doctrine of estoppel to prevent Wausau from raising policy defenses.

FACTUAL AND PROCEDURAL HISTORY

RFC, a Delaware corporation, began its operations in 1979 with the acquisition of two manufacturers of polyurethane foam. From 1983 to 1990, RFC was headquartered in LaPorte, Indiana, the site of a core manufacturing center, after which the corporation transferred operational responsibility for its manufacturing plants to Foamex, L.P. ("Foamex"), a newly formed limited partnership.

RFC purchased primary and excess comprehensive general liability policies from Wausau, a Wisconsin corporation, for consecutive periods between August 1, 1981, and June 30, 1987. In 1991, the Tennessee Department of Environment and Conservation ("TDEC") sent Foamex a formal "Notice of Violation" letter stating that the agency had been conducting an investigation into allegations that hazardous waste generated at Foamex had been illegally transported from its Morristown, Tennessee facility and disposed of at the "Fred & Steve Cansler Hazardous Waste Site" located in a neighboring county (the "Cansler Farm"). The TDEC letter demanded that "corrective action" be taken. RFC advised Wausau of the letter and, in a 1993 non-waiver agreement, Wausau agreed to participate in RFC's defense "for the suit entitled Tennessee DEC v. Recticel Corporation, if so requested, as though such policies are applicable." Wausau had the right to cancel this undertaking upon thirty days notice.

Meanwhile, persons residing near the Cansler Farm filed two suits against RFC in Tennessee state courts, Foshie v. Cansler and Cobble v. Cansler. Each complaint alleged damages resulting from improper disposal of RFC materials at the Cansler Farm. The Foshie complaint added the RFC employees named as individual plaintiffs in this action as defendants. Wausau and RFC executed two additional non-waiver agreements in which Wausau agreed to participate in the defense of the Foshie and Cobble lawsuits as if the policies are applicable. In all three non-waiver agreements, Wausau reserved the right to "enforce all rights and obligations" against RFC. Wausau did not assume Recticel's defense directly. Rather, Recticel assembled a defense team and then tendered invoices for "defense costs" to Wausau.

In October of 1994, Wausau filed a declaratory judgment action in the United States District Court for the Eastern District of Tennessee. Recticel moved to dismiss that case and, on January 4, 1995, filed the present action against Wausau and other insurance carriers in the Marion Superior Court. Recticel asserted that Wausau had refused to pay all but a small portion of the defense costs submitted. In Counts I and II, Recticel averred that Wausau breached its duty to defend under the non-waiver agreements and the comprehensive general liability policies, respectively. Count III alleged a breach of the duty of good faith and fair dealing and, in Count IV, Recticel sought indemnification under the Wausau policies. In a separate count, Recticel sought recovery from other insurance carriers.

Wausau moved to dismiss this action on grounds of forum non conveniens. While that motion was pending, the Tennessee federal court dismissed Wausau's declaratory judgment action on jurisdictional grounds. Wausau then filed a third suit in a Tennessee state court.2 Meanwhile, Recticel moved for partial summary judgment in the Marion Superior Court seeking an order (1) directing Wausau to pay Recticel's past and future defense costs in the TDEC, Foshie and Cobble matters under both the non-waiver agreements and the insurance policies, and (2) estopping Wausau from asserting policy defenses to avoid its duties to defend and indemnify Recticel. Wausau did not file any "designation of material facts" or request additional discovery but, instead, responded with a memorandum of law and a two-page affidavit with five attachments.3 Following a hearing, the trial court denied Wausau's motion to dismiss and granted Recticel's motion for partial summary judgment on Counts I, II and IV. The January 6, 1997, judgment reads in part:

b. Recticel shall recover from Wausau a judgment in the amount of $1,562,419.43, plus defense costs incurred by Recticel from June 1995 to date;
c. Wausau shall pay future costs of defense of Recticel in the Cansler Farm TDEC [Notice of Violation], Foshie, and Cobble actions as they are incurred; and
d. Wausau is estopped from raising any policy defenses against defense or indemnification obligations to these underlying actions.

Record at 1852.

Approximately one month after the judgment was entered, Wausau filed its answer and counterclaims together with a motion to correct error and voluminous additional evidentiary material. The motion to correct error was deemed denied by operation of law.4 Wausau initiated separate appeals from the January 6, 1997 judgment and from the denial of its motion to correct error. This court consolidated the appeals.

Issue One: Forum non Conveniens

Wausau first contends that the court erred when it denied Wausau's motion to dismiss Recticel's complaint on the grounds of forum non conveniens.5 Indiana Trial Rule 4.4(C), (D) and (E) govern forum non conveniens determinations. Trial Rule 4.4(C) provides:

Jurisdiction under this rule is subject to the power of the court to order the litigation to be held elsewhere under such reasonable conditions as the court in its discretion may determine to be just.
In the exercise of that discretion the court may appropriately consider such factors as:
(1) Amenability to personal jurisdiction in this state and in any alternative forum of the parties to the action;
(2) Convenience to the parties and witnesses of the trial in this state [and] in any alternative forum;
(3) Differences in conflict of law rules applicable in this state and in the alternative forum; or
(4) Any other factors having substantial bearing upon the selection of a convenient, reasonable and fair place of trial.

The purpose of Trial Rule 4.4(C) is to permit a case to be litigated in another state upon a showing that litigation in Indiana is so inconvenient that substantial injustice is likely to result. Freemond v. Somma, 611 N.E.2d 684, 691 (Ind.Ct.App. 1993), trans. denied. The determination of whether to dismiss an action under Rule 4.4(C) lies within the trial court's sound discretion. Id. at 690.

Here, Recticel chose to litigate its claim in Indiana, and that choice should be given great weight. Euler v. Seymour Nat'l Bank, 519 N.E.2d 1242, 1245 (Ind.Ct. App.1988). In its complaint, Recticel named twenty-three insurance companies, including Wausau, as defendants.6 Three other insurers joined in Wausau's motion to dismiss for forum non conveniens but neither they, nor the other defendant insurers, are parties to this appeal.7 The other nineteen defendants did not contend that litigation in Indiana would be so inconvenient as to cause a substantial injustice. In considering the motion to dismiss, the trial court necessarily took all defendants into account, including those which had contractually agreed to litigate in any court of competent jurisdiction.

During the relevant policy periods, RFC was headquartered in Indiana where a significant portion of its manufacturing operations was located. Indiana has an interest in protecting its insureds. Although Tennessee has an interest in interpreting it own laws, in this case, Wausau argues for application of New York law. Tennessee has no more stake in construing New York law than does Indiana.

In addition, although the conduct that gave rise to the TDEC, Foshie and Cobble actions occurred in Tennessee, this case involves insurance coverage, i.e., Wausau's duties to defend and indemnify Recticel. Resolution of those issues is largely a matter of interpreting written contracts, which is generally a question of law. Barga v. Indiana...

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