Hartford Acc. & Indem. Co. v. Dana Corp., 49A02-9602-CV-110

Citation690 N.E.2d 285
Decision Date12 December 1997
Docket NumberNo. 49A02-9602-CV-110,49A02-9602-CV-110
PartiesHARTFORD ACCIDENT & INDEMNITY CO., et al, Appellants-Defendants, v. DANA CORPORATION, Appellee-Plaintiff.
CourtCourt of Appeals of Indiana

CHEZEM, Judge.

Case Summary

Appellants-Defendants, American Insurance Company, Associated Indemnity Corporation and Fireman's Fund Insurance Company, (collectively "Fireman's Fund"), and Granite State Insurance Company, Lexington Insurance Company, and National Union Fire Insurance Company, (collectively "Granite State") appeal from the trial court's grant of partial summary judgment in favor of Appellee-Plaintiff, Dana Corporation ("Dana"). We affirm.


Fireman's Fund raises five issues 1 for our review which we restate as:

I. Whether the trial court properly applied Indiana law;

II. Whether Dana designated sufficient facts to support summary judgment;

III. Whether the trial court properly concluded that the policy term "suit" applies to administrative proceedings;

IV. Whether the trial court properly concluded that the policy term "damages" includes environmental cleanup and response costs; and

V. Whether the trial court properly found that Fireman's Fund has a duty to defend Dana.

Facts and Procedural History

The designated evidence shows that Dana is a manufacturer of automotive components with facilities across the United States and worldwide. Dana has obtained both primary and excess comprehensive general liability ("CGL") insurance coverage for its operations from a variety of insurers. Prior to 1947, Dana's primary CGL insurer was Hartford Accident and Indemnity Company ("Hartford"). Fireman's Fund was Dana's primary CGL insurer from 1947 to 1957. From 1957 to 1963, Dana obtained primary CGL coverage from Associated Indemnity Corporation and from 1963 to 1969, American Insurance Company was Dana's primary CGL insurer. From 1969 to 1978, Dana's primary CGL coverage was obtained from Associated Indemnity Corporation, and since 1978, Hartford was again Dana's primary CGL insurer. 2 In addition, Dana obtained excess or umbrella CGL coverage from a multitude of other insurers, including Granite State.

Sixty-three of Dana's facilities, located in nineteen states, have become the subject of various governmental agency or third party actions regarding alleged environmental contamination. Dana has made claims for coverage under its CGL insurance policies and has been denied coverage for the most part. As a result, Dana filed suit against fifty-six insurers seeking a declaration that it is entitled to indemnification and defense under its primary, umbrella, and excess CGL insurance policies. Fireman's Fund filed a counterclaim against Dana and a cross-claim against Hartford for declaratory relief and contribution. The trial court issued a Case Management Plan and Order establishing that Phase I would involve contract interpretation.

Dana filed a motion for partial summary judgment against Fireman's Fund seeking to establish the meaning of certain policy terms, to require Fireman's Fund to defend, and to obtain reimbursement of damages and legal expenses already incurred. Granite State filed a cross-motion for partial summary judgment. The trial court granted Dana's motion and entered findings of fact and conclusions of law, in part, as follows:

A. Undisputed Facts

1. ... Dana is a Virginia corporation headquartered in Toledo, Ohio. Twenty-five of Dana's plants and facilities are located in the state of Indiana; no other state is home to more Dana facilities and plants. Dana also employs over 6,000 people in this State, far more than it employs in any other state. Indiana is the home of approximately 20 percent of Dana's United States work force. Based on these facts and on the number or amount of plants, divisions, employees, sales, payroll, square footage of plants, and other criteria, Dana's operations have been centered in Indiana more than in any other state since at least 1963. These factors are important because they demonstrate that Dana's insured risk, completely separate from the location of the waste sites, has been centered in Indiana for many years. Moreover, Dana's premiums paid by Dana were based on sales; more sales are generated by Dana's Indiana facilities than those in any other state. Ohio, which state's law the insurers would have this Court apply, is far behind Indiana in all of these criteria and is not even second in most.

2. Fireman's Fund is a California corporation with its principal place of business in California. Its excess or umbrella insurers on the Dana policies are located throughout the United States.

3. Dana is allegedly liable for environmental contamination at a number of sites across the country.... Fifteen of those sites--nearly one-fourth of the total and substantially more than in any other state--are located in Indiana.


5. The contracts of insurance relevant to this case were issued by Fireman's from its Detroit, Michigan, office. The contracts were primarily negotiated at the office of Marsh & McLennan--Dana's insurance broker--located in Michigan.

6. The "insuring agreements" in all these policies are standard insurance industry forms using "form" language. The earlier policies provided in relevant part that Fireman's would:

pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof, caused by accident.

(Emphasis added). Further:

With respect to such insurance as is afforded by this policy, the Company shall:

(a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; but the Company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient.

(Emphasis added). The later policies stated in relevant part that:

The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of

Coverage A--bodily injury or

Coverage B--property damage

to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payment of judgments or settlements.

(original boldface).

7. At several of the 63 sites, third parties or governmental entities have filed actions against Dana in courthouse lawsuits to recover their costs incurred, or to compel Dana to participate, in the cleanup of the alleged contamination. At other sites third parties or government entities are pursuing Dana for the same kind of relief but through administrative rather than judicial actions.


B. Conclusions of Law

1. ... [T]he Court finds that Indiana law applies to this dispute.


6. Under § 188 [of the Restatement (Second) of Conflict of Laws], the place of contracting in this case is Michigan; the place of negotiation is Michigan; the primary place of performance--where the insurance money will be put to use--is Indiana; the primary location of the insured risk--based on the fact that Dana's operations have clearly been centered in Indiana throughout the policy periods here at issue and because nearly one-fourth of all the cleanup sites are located in this State--is Indiana; and the domicile of the parties is indeterminate. In sum, two of these factors point to Michigan, while two of the factors--including the most important, location of the insured risk--point to Indiana. As between Indiana and Ohio (or any other state), the § 188 factors require the Court to apply Indiana law in this case.


10. The parties agree and this Court holds that the law of one state should be applied in this case. Applying the law of a single state would foster judicial economy, predictability and uniformity.


ORDER ....

2. Dana's motion for partial summary judgment on the meaning of "suit" and "damages" is GRANTED. In addition to traditional judicial actions, "suit" includes any coercive environmental administrative proceeding, including the following:

--unilateral orders alleging liability for and demanding the cleanup of a site, issued under § 106 of CERCLA (42 U.S.C. § 9606) or analogous state statutes;

--demands alleging liability for and seeking payment of costs incurred by the agency for the cleanup of the site, issued under § 107 of CERCLA (42 U.S.C. § 9607) or analogous state statutes;

--non-CERCLA demands by state or federal authorities in the form of a Notice of Violation or similar notice requiring site cleanups as part of ongoing compliance with state or federal environmental law;

--offers of settlement alleging liability and seeking either cost recovery or...

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