Nat'l Union Fire Ins. Co. of Pittsburgh v. Standard Fusee Corp..

Decision Date20 May 2011
Docket NumberNo. 49S04–1006–CV–318.,49S04–1006–CV–318.
Citation940 N.E.2d 810
PartiesNATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, et al., Appellants (Defendants below),v.STANDARD FUSEE CORPORATION, Appellee (Plaintiff below).
CourtIndiana Supreme Court


Jeffrey D. Claflin, Thao T. Nguyen, South Bend, IN, Gregory M. Gotwald, Theresa M. Willard, Indianapolis, IN, Attorneys for Appellee.Charles Browning, Jeffrey C. Gerish, Bloomfield Hills, MI, Bryce H. Bennett, Jr., Jeffrey B. Fecht, Indianapolis, IN, Attorneys for Appellants, Chubb Custom Ins. Co. and Travelers Indem. Co. of Illinois.Brian E. Mahoney, Chicago, IL, Bruce L. Kamplain, Indianapolis, IN, Attorneys for Appellant, Westchester Fire Ins. Co., Assuming Reinsurer of Freemont Indem. Co. (Successor to Indus. Indem. Co.).Karen W. Howard, Chicago, IL, Martha S. Hollingsworth, Indianapolis, IN, Attorneys for Appellant, Continental Ins. Co.Edward F. Harney, Jr., Indianapolis, IN, Attorney for Appellant, Gan North American Ins. Co.Barbara A. Jones, Dennis F. Cantrell, Indianapolis, IN, Attorneys for Appellant, Liberty Ins. Underwriters, Inc.Frank J. Deveau, Thomas A. Barnard, Indianapolis, IN, Attorneys for Amici Curiae, Eli Lilly & Co., Citizens Energy Group, Vectren Corp., Indiana Mfg. Ass'n, Nat'l Solid Waste Mgmt. Ass'n, and Indiana Petroleum Marketers and Convenience Stores Ass'n, Inc.Michael A. Dorelli, Patrick J. Olmstead, Jr., Indianapolis, IN, Attorneys for Amicus Curiae, Complex Ins. Claims Litig. Ass'n.

On Petition to Transfer from the Indiana Court of Appeals, No. 49A04–0811–CV–665

SULLIVAN, Justice.

Insurance companies question whether they have a duty to defend an insured in environmental remediation proceedings under policies alleged to cover risks in Indiana and California. Predicate to answering that question is determining whether the law governing the policies' interpretation is “site-specific” (whereby Indiana law governs the policies' interpretation with respect to the Indiana site and California law with respect to the California site) as held by the Court of Appeals or “uniform” (whereby a single state's law governs) as argued by both parties. But while agreeing that the interpretation should be uniform, the insurance companies argue that Maryland law applies; the insured argues for Indiana law.

The uniform approach has long been Indiana law and we reaffirm it here. Under that approach, we find that Maryland is the state with the most intimate contacts to the facts and that its law should therefore be applied to resolve this dispute.


Standard Fusee Corporation (SFC), a manufacturer of emergency signaling flares, is incorporated in Delaware and headquartered in Maryland. When it incorporated in 1988, SFC owned one facility in Maryland, two in Pennsylvania, one in New Jersey, and one in Ohio. Also in 1988, SFC began leasing facilities in both Indiana and California from Olin Corporation (“Olin”); in the same year, it sold its facilities in both Pennsylvania and Ohio. In 1992, SFC purchased another facility in Pennsylvania and in 1995, ceased operations at its California facility. From 1995 to 2002, SFC owned and operated a facility in Illinois. In 1997, SFC purchased the Indiana facility from Olin. Today, SFC has operations in Maryland, Indiana, and Pennsylvania.

SFC purchased the comprehensive general liability (“CGL”) primary, excess, and umbrella insurance policies at issue in this case through two brokers, one located in Maryland and one located in Massachusetts. All discussions with respect to the purchase of these policies occurred at SFC's Maryland headquarters. The policies were delivered to and retained in and all premiums were paid from SFC's Maryland headquarters. The policies do not contain any provisions specifying the law of the state that would govern their interpretation.

In 2002, SFC learned that perchlorate, a chemical used in the production of flares, had been discovered in groundwater samples at and around its former California facility. Thereafter, more than 250 lawsuits were filed against SFC in California, but they were ultimately dismissed when it was determined that SFC had never discharged perchlorate there. SFC is not currently subject to present or future remediation orders with respect to its California facility.

In 2004, SFC voluntarily tested its Indiana facility. The test suggested potential perchlorate contamination. SFC applied for, and was granted, inclusion in the Indiana Department of Environmental Management's Voluntary Remediation Program the following year.

SFC requested defense and indemnification from the companies that had issued the insurance policies discussed above (“Insurers”) with respect to the proceedings in California and Indiana. Insurers either disputed that they had obligations to defend and indemnify SFC or otherwise failed to respond to SFC's request.

In 2005, SFC filed this action against Insurers seeking a declaratory judgment that Insurers were required to defend and indemnify SFC under the CGL policies against environmental liabilities arising in Indiana and California and seeking damages for Insurers' failure to defend and indemnify. In 2006, SFC sought partial summary judgment that Indiana law governed the interpretation of the policies and that the Insurers had a duty to defend. The trial court granted partial summary judgment on these grounds. Insurers sought, and were granted, an interlocutory appeal of the trial court's order.

The Court of Appeals reversed the trial court's determination that Indiana law governed the entire dispute. Instead, the Court of Appeals adopted a “site-specific” approach to choice of law, whereby Indiana law governed the interpretation of the policies with respect to the Indiana site and California law with respect to the California site.1 Nat'l Union Fire Ins. Co. v. Standard Fusee Corp., 917 N.E.2d 170, 181 (Ind.Ct.App.2009).

Both SFC and Insurers sought, and we granted, transfer, Nat'l Union Fire Ins. Co. v. Standard Fusee Corp., 929 N.E.2d 796 (Ind.2010) (table), thereby vacating the opinion of the Court of Appeals, Ind. Appellate Rule 58(A).


This case typifies frequently recurring disputes over insurers' obligations to defend and indemnify their insureds in the face of demands to clean up or pay for environmental contamination at multiple sites in multiple states. “‘At the very core of these disputes, which have spawned hundreds of reported cases nationwide, is the interpretation to be accorded certain contractual language contained in [CGL] policies.” Symeon C. Symeonides, Choice of Law in the American Courts in 1998: Twelfth Annual Survey, 47 Am. J. Comp. L. 327, 361 (1999) (footnote omitted). Predicate to that interpretation is determining applicable law. Courts faced with these cases have generally addressed choice-of-law issues in one of two ways—either by what is called a “uniform-contract-interpretation” approach or by a “site-specific” approach. Id. at 362. The uniform-contract-interpretation approach applies the law of a single state to the whole contract even though it covers multiple risks in multiple states; the site-specific approach applies the law of the state or states where the insured risks are located, unless another state has a more significant relationship to the particular issue. Id.

The Indiana Court of Appeals has faced cases similar to the present one at least four times in the recent past and in each case has applied the uniform-contract-interpretation approach to resolve choice-of-law issues. Am. Emp'rs Ins. Co. v. Coachmen Indus., Inc., 838 N.E.2d 1172, 1181 (Ind.Ct.App.2005); Hartford Accident & Indem. Co. v. Dana Corp., 690 N.E.2d 285, 293–94 (Ind.Ct.App.1997), trans. denied; see also Emp'rs Ins. of Wausau v. Recticel Foam Corp., 716 N.E.2d 1015, 1024–25 (Ind.Ct.App.1999) (determining which state's law should apply to a multisite, multistate dispute), trans. denied; Travelers Indem. Co. v. Summit Corp. of Am., 715 N.E.2d 926, 931–33 (Ind.Ct.App.1999) (same). But see Pulse Eng'g, Inc. v. Travelers Indem. Co., 679 F.Supp.2d 969 (S.D.Ind.2009) (adopting the site-specific approach solely on the authority of the decision of the Court of Appeals in this case). Indeed, the Court of Appeals in this case recognized the prior practice of generally following the uniform-contract-interpretation approach but nevertheless applied the site-specific approach. Standard Fusee Corp., 917 N.E.2d at 178, 181.

Both SFC and Insurers urge this Court to conclude that Indiana should continue its adherence to the uniform-contract-interpretation approach. After reviewing our doctrine's history, we conclude that the uniform approach is more consistent with Indiana's choice-of-law jurisprudence, and as such, should apply in cases involving multisite, multistate insurance policies.


As a preliminary matter, we recognize that the courts of the state in which the lawsuit is pending determine the applicable law. Hubbard Mfg. Co. v. Greeson, 515 N.E.2d 1071, 1073 (Ind.1987). Here, because SFC filed suit in Indiana, Indiana choice-of-law rules apply. Further, this case presents a choice-of-law problem because SFC contends that the laws of the State of Maryland and the laws of the State of Indiana differ in their interpretation of insurance contracts in general and the pollution exclusion in particular, Allen v. Great Am. Reserve Ins. Co., 766 N.E.2d 1157, 1162 (Ind.2002), although, as noted in footnote 1, supra, we express no opinion on whether that is the case.

In the first half of the twentieth century, choice-of-law determinations in contract cases “followed a rigid territorialist-rule system.... [that] mandated the application of the law of the ... place in which the contract was made ( lex loci contractus ), ... regardless of any other contacts or factors.” Symeon C. Symeonides, Oregon's New Choice–of–Law Codification for Tort Conflicts: An Exegesis, 88 Or. L. Rev. 963, 966 (2009) [herein...

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