ATTORNEYS FOR APPELLANT
Stephen D. Cuyler
Thomas J. Castano
Parsippany, New Jersey
Robert F. Walsh
Susan M. Chesler
New York, New York
ATTORNEYS FOR AMICUS CURIAE:
Steven M. Badger
Insurance Environmental Litigation Association
Laura A. Foggan
Karalee C. Morell
Insurance Environmental Litigation Association
ATTORNEYS FOR APPELLEE
George M. Plews
Frederick D. Emhardt
ATTORNEYS FOR AMICI CURIAE:
Frank J. Deveau
Donald C. Biggs
Julia E. Dimick
Indiana Petroleum Marketers and Convenience Stores Association, Inc.
Indiana Manufacturers Association
National Solid Wastes Management Association
SUPREME COURT OF INDIANA
ALLSTATE INSURANCE COMPANY, )
solely as successor-in-interest to )
Northbrook Excess & Surplus Insurance )
Company, f/k/a Northbrook Insurance )
Company, ) Indiana Supreme Court
) Cause No. 49S02-0105-CV-231
Appellant (Defendant Below), )
) Indiana Court of Appeals
v. ) Cause Nos. 49A02-9909-CV-666
DANA CORPORATION, )
Appellee (Plaintiff Below). )
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable David A. Jester, Judge
Cause No. 49D01-9301-CP-0026
ON PETITION FOR TRANSFER
December 20, 2001
This consolidated appeal addresses a number of issues of insurance coverage for environmental
Factual and Procedural Background
Dana Corporation is a manufacturer of automotive components. Sixty-three of its facilities,
located in nineteen states, have become the subject of governmental or third-party actions
resulting in substantial environmental cleanup costs. Allstate Insurance Company is the successor
in interest to Danas excess liability insurer in the relevant years. When
Danas liability insurers denied coverage for the cleanup, Dana sued. Several trial
court rulings produced an interlocutory appeal in 1997. Hartford Accident & Indem.
Co. v. Dana Corp., 690 N.E.2d 285, 288 (Ind. Ct. App. 1997), trans.
denied. In that appeal, the Court of Appeals held: (1) Indiana law
governed construction of the policies; (2) the term suits, as used in the
policies, included coercive and adversarial administrative proceedings; and (3) the term damages, as
used in the policies, included EPA or state-mandated cleanup and response costs.
Id. at 294, 296, 298. In general, these holdings meant Dana was
entitled to indemnity for cleanup costs, subject to policy limits and exclusions.
After the first appeal, Dana settled with all of its insurers except Allstate.
Although Danas coverage of at least some cleanup costs was established, a
number of issues remained unresolved. These were the subject of a second
round of motions resulting in the trial courts entry of judgment for Dana
in the amount of $4,599,314.30 as to Danas facility in Old Forge, Pennsylvania,
one of the several sites. Although liability as to the other sites
remained unadjudicated, the trial court certified the Old Forge judgment and a number
of earlier rulings on partial summary judgments for appeal pursuant to Trial Rule
54(B). Both Allstate and Dana appealed. Each challenged three of the
trial courts rulings and defended three others. The Court of Appeals addressed
all six in detail, affirming two and reversing four. Allstate Ins. Co.
v. Dana Corp., 737 N.E.2d 1177 (Ind. Ct. App. 2000). This Court
Standard of Review
All of the issues in this appeal address Allstates liability to Dana under
excess liability policies issued by Allstates predecessor, Northbrook Excess and Surplus Insurance Company,
for five policy years from 1977 through 1982.
See footnote The trial courts rulings
and judgments were on motions for partial summary judgment by Dana and Allstate.See footnote
Summary judgment is appropriate only where the evidence shows that there is
no genuine issue of material fact and that the moving party is entitled
to judgment as a matter of law. Ind. Trial Rule 56(C);
Oil Co. v. Lovold Co., 705 N.E.2d 981, 983-84 (Ind. 1998).
I. Liability for Property Damage to Ground Water on Dana-Owned Property
Each of the policies provides that Allstate will pay all sums Dana becomes
obligated to pay because of liability for damages resulting from property damage.
Much of the disputed cost is for remediation of contaminated ground water.
A primary issue in the trial court and Court of Appeals was whether
ground water constitutes property of the landowner, and if it does, whether the
policies cover cleanup related to ground water in Danas own property. Whether
Allstate must pay for the costs incurred by Dana in complying with orders
to clean up its own property depends on (1) the scope of the
policies coverage grants,
See footnote and (2) the effect of the policies exclusions for property
damage to property owned by Dana. Essentially, the determination of both issues
comes down to how property damage is defined in each policy.
Other courts have arrived at varying interpretations of similar owned property exclusions in
the context of claims for costs associated with environmental cleanup orders.See footnote We
start from the proposition that contracts for insurance are subject to the same
rules of interpretation as are other contracts. If the policy language is
clear and unambiguous, it should be given its plain and ordinary meaning.
Eli Lilly & Co. v. Home Ins. Co., 482 N.E.2d 467, 470 (Ind.
1985) (citations omitted). Here, each policys language does provide an answer, albeit
different answers for different policies.
The 1977, 1978 and 1979 policies contain identical language in both their coverage
grants and owned property exclusions. The 1980 and 1981 policies are identical
to each other in this respect, but differ from the first three.
A. 1977-79 Policies
The 1977-79 policies define property damage as loss of or direct damage to
or destruction of tangible property (other than property owned by an Insured) which
results in an Occurrence during the policy period. Given this definition of
property damage, these policies provide coverage for:
all sums which the insured shall be obligated to pay by reason of
the liability . . . imposed upon the Insured by law . .
. for damages on account of . . . [loss of or direct
damage to or destruction of tangible property (other than property owned by an
Insured)] . . . caused by or arising out of each Occurrence happening
anywhere in the world.
(emphasis added). Thus, these policies provide coverage for liability resulting from damage
to property owned by others, but deny coverage for liability resulting from damage
to Danas own property. Because there is no liability coverage for damage
to Danas own property, reference to the owned property exclusion in these policies
is unnecessary. II. Personal Injury Coverage
We are uncertain to what extent Danas claims are based on cleanup of
ground water that remained solely within the confines of Danas property. Under
this coverage grant, if ground water in Danas land is Danas property, then
the 1977-79 policies provide no coverage for cleanup in that category. The
Court of Appeals concluded that [u]nless and until a landowner takes the ground
water into actual possession, it remains the property of the State, 737
N.E.2d at 1187, and that because Dana had not taken the ground water
into possession, the policies afforded coverage. We disagree with the Court of
Appeals analysis of this issue.
In Wiggins v. Brazil Coal & Clay Corp., 452 N.E.2d 958, 964 (Ind.
1983), this Court held that plaintiffs who owned a lake formed from ground
water had no cause of action against a strip mining company, where the
companys removal of ground water on its property resulted in a lower water
level for the plaintiffs lake. This Court stated, Ground water is part
of the land in which it is present and belongs to the owner
of that land. Id. This holding derives from the English Rule,
or absolute dominion rule, that ground water is part of the land and
the landowner has the absolute right to use the water as he wishes.
City of Valparaiso v. Defler, 694 N.E.2d 1177, 1179 (Ind. Ct. App.
1998). In Defler, the Court of Appeals took Wiggins to mean that
the plaintiffs had no cause of action because, not having taken it into
possession, they had no ownership interest in the ground water on their land.
Id. at 1181. The Court of Appeals in the present case
applied this doctrine, citing Defler, to conclude that the owned property exclusion did
We believe the Court of Appeals, here and in Defler, misconstrued the holding
in Wiggins by equating restrictions on ground water use with lack of ground
water ownership. Wiggins observed that Indiana follows a modified version of the
English Rule, in that water may be put to use to the fullest
extent to further enjoyment of the land, however this right does not extend
to causing injury gratuitously or maliciously to nearby lands and their owners.
Wiggins, 452 N.E.2d at 964 (emphasis added). This is not a holding
with respect to ownership of the water. Rather, it is a holding
that although ground water is the landowners property, the landowner does not enjoy
the absolute immunity for its harmful use that the English Rule would have
granted. Otherwise stated, the plaintiffs in Wiggins had no cause of action,
not because they had no ownership interest in the water in their land,
but because the strip mining company was free to do with the water
in its land as it saw fit, so long as the resulting injury
was not gratuitous or malicious. Wiggins, 452 N.E.2d at 964. So
viewed, the Indiana modification to the English Rule limited the permissible use of
ground water, but did not abandon the common law status of ground water
as property of the landowner.
Because any contamination of ground water in Dana-owned land is contamination of Dana-owned
property, the 1977-79 policies do not provide indemnification under property damage for the
cost of treating contamination on Danas property. The necessary corollary to this
principle is that if the ground water has percolated beyond the confines of
the landowners property, it no longer belongs to that landowner. As a
result, there is property damage coverage to the extent liability is based on
damage caused by contaminated ground water escaping Danas property or by contamination directly
affecting ground water outside Danas borders. Although we reach this conclusion as
to the 1977-79 policies by a reading of the coverage grants, rather than
their owned property exclusions, we affirm the trial courts denial of Danas motion
for partial summary judgment on this issue.
The 1980 and 1981 policies do not refer to any concept of ownership
by others in defining the coverage for property damage. These policies provide
indemnification for all sums which the INSURED shall be obligated to pay by
reason of the liability imposed upon the INSURED by law . . .
for damages and expenses, because of [physical injury to or destruction of tangible
property]. As to these policies, Allstate relies on the owned property exclusion.
It states: This policy shall not apply: . . . [u]nder PROPERTY
DAMAGE to injury to or destruction of or loss of: (1) property owned
by any INSURED . . . . Allstate contends this exclusion bars
indemnification for costs imposed on Dana to clean up contamination at Dana-owned sites.
We do not agree. The exclusion states that no coverage exists
for the damage to Danas property, but does not state that no coverage
exists for the liability to third parties resulting from that damage.
This difference between claims for property damage and claims for liability resulting from
property damage was highlighted in Unigard Mut. Ins. Co. v. McCartys Inc., 756
F. Supp. 1366, 1369 (D. Idaho 1988). Here, as in Unigard, Dana
has not asserted claims intended to restore [its] land for [its] benefit, id.;
rather, Dana is asserting claims based on its liability to third parties, which
is the very purpose for which the policies were procured. Cf. Patz
v. St. Paul Fire & Marine Ins. Co., 15 F.3d 699, 705 (7th
Cir. 1994) (It is a policy of liability insurance, not casualty insurance, on
which [the insureds] have sued. They seek to recover the cost of
complying with a government order . . . . The fact that
the clean up occurred on their land is irrelevant.).
It is well settled that [w]here there is ambiguity, insurance policies are to
be construed strictly against the insurer and the policy language is viewed from
the standpoint of the insured. Bosecker v. Westfield Ins. Co., 724 N.E.2d
241, 244 (Ind. 2000) (quoting Am. States Ins. Co. v. Kiger, 662 N.E.2d
945, 947 (Ind. 1996)). We think the exclusion can be fairly read
to apply only to exclude repair or replacement of Danas property, not to
exclude liability to third parties. Unlike the 1977-79 policies, it does not
exclude damages from injuries to self-owned property. Given these frequently cited maxims
of insurance law, that is enough to confer coverage.
As to the 1980 and 1981 policies, we reverse the trial court and
direct entry of partial summary judgment on this issue for Dana.
The 1977-80 policies cover liability for damages due to the following Personal Injuries:
[B]odily injury (including death at any time resulting therefrom), mental injury, mental anguish,
shock, sickness, disease, disability, false arrest, false imprisonment, wrongful eviction, detention, malicious prosecution,
discrimination, humiliation; also libel, slander or defamation of character or invasion of rights
of privacy, except that which arises out of any advertising activities . .
None of the liabilities asserted here is for conventional individual personal injuries.
No one has claimed sickness or death resulting from toxic contact. Rather,
the liabilities are cleanup costs essentially prophylactic in nature. The trial court,
finding the terms wrongful eviction and invasion of rights of privacy ambiguous, nevertheless
determined that Danas environmental liabilities are covered as falling within these categories of
personal injuries. III. Coverage for All Sums Caused by an Occurrence
A. Wrongful Eviction
The Court of Appeals concluded that the term eviction depends upon a relationship
between the evictor and evictee of landlord and tenant. It also requires
a dispossession of property. 737 N.E.2d at 1199. Therefore, coverage under
this term in the 1977-79 policies does not extend to [environmental cleanup] costs
except where a tenant of Dana was compelled to vacate a location because
of environmental damage. Id. We agree with the Court of Appeals.
There is no showing that Dana dispossessed anyone, and we find no
coverage for wrongful eviction.
B. Invasion of Rights of Privacy
The extent to which the tort of invasion of privacy is recognized in
Indiana is not yet settled. See Doe v. Methodist Hosp., 690 N.E.2d
681 (Ind. 1997) (disagreement whether to recognize claim for public disclosure of private
facts). However, as a general proposition, the tort of invasion of rights
of privacy has taken four forms: (1) public disclosure of private facts, (2)
intrusion, (3) appropriation, and (4) false light in the public eye. Ledbetter
v. Ross, 725 N.E.2d 120, 123 (Ind. Ct. App. 2000). Of these
four, it seems apparent that only the intrusion form of the tort could
When the invasion of a plaintiffs right to privacy takes the form of
intrusion, it consists of an intrusion upon the plaintiffs physical solitude or seclusion
as by invading his home or conducting an illegal search. Cullison v.
Medley, 570 N.E.2d 27, 31 (Ind. 1991) (citing W. Prosser & J. Keaton,
Prosser and Keaton on Torts § 117 (5th ed. 1984)). Launching a
missile onto a persons property may be a tort, but it is, in
itself, not an invasion of privacy, however intrusive it may be. The
entry of contaminants onto ones property is in the same category. It
is a physical tort, and, except to the extent any tort is disturbing,
has no component of disrupting an individuals repose.
The Court of Appeals concluded that the term invasion of rights of privacy
is ambiguous, and construed it against Allstate in finding that the term provided
coverage for Dana. We agree that the term is shadowy, but for
ambiguity to confer coverage, the covered item must be somewhere within the circle
of ambiguity. Here, even the outermost reaches of the terms penumbra do
not embrace a chemical transgression of the sort giving rise to Danas environmental
Because the terms wrongful eviction and invasion of rights of privacy do not
support Danas claim for coverage, we reverse the trial courts grant of Danas
motion for partial summary judgment as to coverage for personal injury liability under
C. Wrongful Entry
Wrongful entry is among the personal injuries covered in the 1980 and 1981
policies. The trial court ruled that this term afforded Dana personal injury
coverage under those policies. Allstate has not challenged that ruling, and we
express no opinion as to it.
The policies provide that Allstate will pay all sums which [Dana] shall be
obligated to pay by reason of the liability . . . imposed upon
[Dana] by law . . . for damages because of [personal injury or
property damage] . . . caused by an OCCURRENCE . . . .
The definition of occurrence, in determining coverage for liability from personal injury
or property damage, is an accident, event or happening including continuous or repeated
exposure to conditions which results, during the policy period, in Personal Injury [or]
Property Damage . . . neither expected nor intended from the standpoint of
These policies require Allstate to indemnify Dana for all sums paid as a
result of liability arising from any covered accident or event resulting in property
damage or personal injury that occurs during the policy period. Allstate contends
it is responsible only for the portion of damages incurred in a particular
policy period. It argues for a proportional allocation of damages among each
triggered policy period. In the case of evolving damages, an occurrence as
that term was used in the CGL policies of this era may take
place over time. Cf. Eli Lilly & Co. v. Home Ins. Co.,
653 F. Supp. 1, 10 (D.D.C. 1984). If so, the other insurance
clauses typically found in these policies may have the effect of prorating the
damages among the insurers on the risk at different times in that period.
Cf. Ind. Ins. Co. v. Am. Underwriters, Inc., 261 Ind. 401, 407-08,
304 N.E.2d 783, 787 (1973).
However, there is no language in the coverage grant, including the definitions of
property damage, personal injury, or occurrence, that limits Allstates responsibility to indemnification for
liability derived solely for that portion of damages taking place within the policy
period. By the policys terms, once an accident or event resulting in
Danas liabilityan occurrencetakes place within the policy period, Allstate must indemnify Dana for
all sums Dana must pay as a result of that occurrence, subject to
the policy limits. We agree with the Court of Appeals that whether
or not the damaging effects of an occurrence continue beyond the end of
the policy period, if coverage is triggered by an occurrence, it is triggered
for all sums related to that occurrence.
We reverse the trial court and direct entry of partial summary judgment on
this issue for Dana.
IV. Exhaustion of Aggregate Limits of Primary Policies
Danas primary liability insurer in the relevant years was The Hartford Insurance Group.
Dana contends that the Hartford policies had property damage liability limits of
$1 million per occurrence and also an aggregate $1 million limit. If
so, once the total of $1 million in coverage for the policy year
was exhausted, Allstate, as the excess insurer, was responsible for the balance.
Allstate argues that the Hartford policies had no aggregate limits, and contained only
per occurrence limits of $1 million for property damage liability. Under Allstates
view, Allstates liability as an excess carrier was triggered only if Dana incurred
more than $1 million on a single occurrence. All agree that the
contamination at each Dana location constitutes a separate occurrence.
The trial court found no aggregate limits in the Hartford policy, and the
Court of Appeals agreed. 737 N.E.2d at 1196. The source of
contention is the section Limits of Liability in the Hartford policies. That
The total liability of the company for all damages because of all property
damage sustained by one or more persons or organizations as the result of
any one occurrence shall not exceed the limit of property damage liability stated
in the schedule as applicable to each occurrence.
Subject to the above provision respecting each occurrence, the total liability of the
company for all damages because of all property damage to which this coverage
applies and described in any of the numbered subparagraphs below shall not exceed
the limit of property damage liability stated in the schedule as aggregate:
(1) all property damage arising out of premises or operations rated on a
remuneration basis . . . .
Allstate contends that, for the aggregate limit to apply, the property damage liability
must have been rated on a remuneration basis. Allstate further contends that
the policies were rated on the basis of sales, not remuneration, and therefore
there are no aggregate limits. Dana argues that the policies are ambiguous
as to how the various risks were rated, and extrinsic evidence renders summary
judgment inappropriate. Although Hartford was among the insurers who settled their disputes
with Dana, it requested and received leave to intervene in this appeal because,
it contends, the presence of aggregate limits in policies of this type is
an important and recurring issue.
The declaration pages in the Hartford policies state that the policies are composite
rated. The policies do not state what that term means. The
Court of Appeals concluded that the composite rate is a figure that combines
the advance premiums for bodily injury coverages and property damage coverages and does
not describe how those advance premiums were calculated. Id. n.17. In
deciding that the property damage liability was not remuneration rated, the Court of
If the policies had used a remuneration basis to calculate premiums, as Dana
asserts, then the premiums listed on the coverage pages of the policies would
have been calculated according to the rates set forth in the Remuneration premium
basis category. Instead, the advance premiums were calculated according to rates that
were set forth in the Sales basis category and used Danas estimated sales
to arrive at the premium amount.
Id. at 1196. We agree that the premium charged for the policy
was apparently based on Danas estimated sales. The form shows columns for
calculating premiums for bodily injury and property damage. The entire premium is
shown in the bodily injury column. The column for the advance premium
on property damage liability coverage states only, INCL IN COMPOSITE RATE. The
printed form allows for two types of coveragebodily injury and property damageand describes
four Rating Classifications, one of which is Premises Operations, which has as
its Premium Bases area, frontage, remuneration, and receipts. Sales appears only as
a basis for premiums on completed operations and products, both of which are
excluded coverages under the policy.
See footnote V. Triggered Policies at Old Forge
We cannot discern from this record how Danas property damage liability was rated,
or even whether it was rated at all, though we suppose it was.
The Court of Appeals and the trial court equate rated on remuneration
with calculation of the premium. This is certainly one common understanding of
what it means to rate a risk. In the context of this
policy, however, we think an equally plausible reading is that the reference to
remuneration rating in the quoted subsection (1) of the printed form refers to
coverages that are identified as rated by remuneration on the printed portion of
the declaration. Property Damage is one of those, and under this reading
would be subject to an aggregate limit. The second view is consistent
with extrinsic evidence Dana designated in opposition to summary judgment regarding the understanding
of Hartford employees and Danas insurance broker as to how the Hartford policies
rated Danas property damage liability coverage.
Evidence of industry practice is admissible to construe terms of art or ambiguous
See 2 Lee R. Russ & Thomas F. Segalla, Couch on
Insurance § 22:49 (3d ed. 1995); cf. Abbey Villas Dev. Corp. v. Site
Contractors, Inc., 716 N.E.2d 91, 100 (Ind. Ct. App. 1999). In oversimplified
terms, Dana offered evidence from Hartford and Dana employees and Danas broker that
the reference to premises and operations rated on a remuneration basis was understood
in the industry to mean the premises and operations exposure of a manufacturing
operation like Dana. All of these witnesses agreed that the policy was
understood to include aggregate limits. The trial court found no ambiguity in
the contract and disregarded this evidence. Because of the facial ambiguities we
have described, we think Danas evidence created a genuine issue of material fact
as to the construction of this document and summary judgment was improperly granted
on this issue.
As a final note on the aggregate limits issue, Hartford complains that Allstate,
as a stranger to the policy, has no business disputing the understanding of
the parties and their broker as to the meaning of the document.
We disagree. Allstate, as an excess carrier, is entitled to rely on
the underlying policies in evaluating its risks. But, similarly, Allstate is charged
with an understanding of common industry practice. Cf. Martin Rispens & Son
v. Hall Farms, Inc., 601 N.E.2d 429, 438 (Ind. Ct. App. 1992), affd
in part, revd in part on other grounds, 621 N.E.2d 1078 (Ind. 1993)
([K]nowledge of trade usage must be imputed to those individuals who undertake business
transactions in the industry, be they industry giants or newcomers.). How this
all shakes out is a matter for the trier of fact in the
first instance. We reverse the trial courts award of partial summary judgment
to Allstate on this issue.
Allstate contends the trial court erred when it found that only the 1978
policy was triggered by contamination at the Old Forge site. In Allstates
view, the 1979 policy was also triggered because Danas contaminants continued causing damage
at the site beyond the 1978 policy period. Dana argues that only
the 1978 policy was triggered because the contamination at Old Forge constituted a
single occurrence. On the surface, the parties respective positions may seem counterintuitive.
The insurer is arguing that more than one policy applies and the
insured contends only one policy was triggered. However, Allstate is an excess
carrier whose liability is triggered only after exhaustion of underlying limits. If
Allstate can spread Danas Old Forge liabilities out over more than one policy
year it can take advantage of the full amount of the underlying coveragefrom
its point of view a deductiblein multiple years.
For the reasons given in Part III, once a covered occurrence takes place,
Allstate is obligated to indemnify Dana for all sums related to that occurrence
up to the policy limits. However, as the Court of Appeals correctly
noted, the policies do not preclude continuing exposure to conditions from being an
occurrence for the purposes of more than one policy period. 737 N.E.2d
at 1203. Cf. Eli Lilly & Co. v. Home Ins. Co., 482
N.E.2d 467, 471 (Ind. 1985) (coverage triggered at any point between ingestion of
DES and the manifestation of DES-related disease). If contamination caused a covered
occurrence in the 1978 policy period, and continued causing damage in the 1979
policy period, that contamination would trigger both policies.
The undisputed evidence is that contamination at the Old Forge site resulted from
the dumping of hazardous wastes into a strip mine pit from August through
December 1978. Complaints about the site began in early 1979, and investigations
revealed that most of the drums that were buried in the pits had
broken open and that toxic chemicals had been released into the soil.
737 N.E.2d at 1199. Allstates expert testified in a deposition that the
contamination continued causing damage into the 1980s. Id. at 1201. Assuming
this is correct, as the Court of Appeals held, it is sufficient to
trigger more than one policy. Allstates designated evidence thus created a genuine
issue of material fact precluding summary judgment in favor of Dana. We
reverse the trial courts grant of summary judgment on this issue. We
agree with Dana, however, that Dana may elect to seek indemnity from any
or all of the policies at risk as to any single occurrence.
VI. Exhaustion of Underlying Limits for Old Forge Claim
The parties disagree as to when Allstates excess coverage attaches for liabilities incurred
at the Old Forge site. Both parties argue this issue in the
framework of the trial courts and Court of Appeals holdings that Allstates 1978
and 1979 policies provided personal injury coverage and that there is no aggregate
limit on Hartfords property damage coverage. However, we concluded in Part II
that no excess personal injury coverage applied, and in Part IV that the
aggregate limit issue is not ripe for summary judgment. Our analysis stands
on the shoulders of those holdings.
Allstate contends that Dana must exhaust the underlying Hartford limits for both property
damage and personal injury before making a claim for excess coverage. Allstate
bases this conclusion on three premises, only the third of which we find
persuasive. First, Allstate contends that both coverages must be exhausted because the
1978 and 1979 Allstate policies
See footnote use the plural limits, instead of the singular
limit when referring to the exhaustion of underlying insurance.See footnote We disagree with
this contention because, even if Allstate were correct as to the intended effect
of the word limits, its use in this manner is, at least, ambiguous.
It is common for major enterprises such as Dana to have layers
of coverage stacked to provide insurance against risks at escalated levels. Here
there is only one underlying CGL policy, Hartfords, but the excess form employed
by Allstate presumably is used for higher level policies which insure above other
excess carriers as well as the primary insurer. Indeed, a number of
policies are listed in Allstates schedule of underlying policies, each with limits of
its own for the various coverages other than general liability (advertising, workers compensation,
etc.). The limits of the underlying insurances can readily be taken to
mean that Allstate is not responsible for coverage until the limits of all
the listed underlying policies covering a particular claim have been exhausted, but not
to imply that more than one limit in the same policy must be
exhausted by the same occurrence. Moreover, one provision of the policy (Endorsement
8) provides that a reduction in the limit or limits of the underlying
policy or policies causes the excess policy to drop down. This seems
to assume that a given coverage has only one limit, and multiple underlying
policies produce multiple applicable limits.
Allstate also bases its conclusion on this Courts statement in
Ryder Truck Lines,
Inc. v. Carolina Cas. Ins. Co., 270 Ind. 315, 319, 385 N.E.2d 449,
452 (1979), that the liability of the insurer under an excess insurance clause
arises only after the limits of the primary policy are exhausted. This
is, of course, generally a correct statement. However, we think Ryder means
only that Dana must exhaust the underlying coverage applicable to the losses supporting
its excess coverage claim, and does not resolve the issues presented here.
Finally, Allstate contends that both coverages must be exhausted because the parties have
stipulated that Danas liabilities at other sites are properly described as both personal
injury and property damage losses.
See footnote The trial court took the parties stipulation
to mean the underlying coverages for personal injury and property damage were both
available to Dana when Dana sought indemnification for the cleanup costs incurred at
those sites. The trial court then concluded that Danas costs for other
environmental liabilities could be allocated to either coverage for the purpose of determining
whether an underlying limit was exhausted. Although this reasoning could have led
the trial court to allocate the underlying payment to property damage, the trial
court allocated Danas losses at other sites to the bodily injury coverage of
the Hartford policies, exhausting that coverages underlying aggregate limit. In the trial
courts view, this resolution mooted the question of whether Hartfords limit for property
damage is aggregate or per occurrence because the trial court held exhaustion of
either coverage sufficient to reach the excess policy.
The Court of Appeals disagreed, ruling that Allstates obligation does not attach until
the Hartford policy limits for both personal injury and property damage have been
reached. 737 N.E.2d at 1205. The issue turns on what underlying
coverage is available to Dana under the Hartford policy, and whether Dana has
incurred covered losses in excess of the applicable limit or limits of that
coverage. Although it is not uncommon to have both personal injury and
property damage coverage for the same occurrence, we think it unusual that two
coverages apply to the same liability, as the parties stipulated is the case
here. We are not faced with a single event, such as an
explosion, that may harm both people and property and trigger both personal injury
and property damage coverage for different injuries. Rather, the parties have stipulated,
correctly or otherwise, that the same environmental cleanup liability falls under both underlying
coverages. Given that unusual situation, we agree with the Court of Appeals
that both underlying limits must be exhausted. This turns on the stipulated
applicability of both coverages to all liabilities and would not typically be the
case where different liabilities are incurred as a result of the same occurrence.
The remaining question is at what point the underlying policies are exhausted.
This issue turns on the resolution of the aggregate limits issue described in
Part IV. If there is an aggregate limit on Hartfords property damage
coverage, it is separate from the personal injury aggregate limit and, therefore, Dana
must incur $2 million in environmental liabilities for occurrences during the policy period
before liability for both $1 million in property damage and $1 million in
personal injury are incurred and Allstates coverage attaches.
See footnote If there is a
per occurrence limit on Hartfords property damage coverage, then Dana must have incurred
$1 million in liability at the Old Forge site alone, in addition to
another $1 million in liability at all sites for occurrences during the policy
period, before Allstates coverage attaches.
In sum, we hold that, because Dana and Allstate have stipulated that Danas
environmental liabilities are insured under both the property damage and the bodily injury
coverage of Hartfords policy, Dana must exhaust both underlying coverages before seeking excess
coverage from Allstate. Because the point at which Allstates coverage attaches ultimately
turns on whether Hartfords underlying limit is an aggregate or per occurrence limit,
see Part IV, the trial courts summary judgment as to Allstates coverage obligation
for the Old Forge site is reversed.
After this appeal had been briefed and this opinion substantially completed, the parties
advised this Court that they had settled and requested that the appeal be
dismissed. However, because we disagree with the Court of Appeals resolution of
some issues that we believe likely to recur, we concluded to publish this
opinion in the interest of guiding similarly situated parties in the future.
Cf. In re Lawrance, 579 N.E.2d 32, 37 (Ind. 1991).
We affirm in part, reverse in part, and remand to the trial court
to enter such orders of dismissal as may be warranted by the settlement
agreement, or to take other action consistent with this opinion. As to
all other issues, the Court of Appeals is summarily affirmed. Ind. Appellate
SHEPARD, C.J., and DICKSON and SULLIVAN, JJ. concur.
RUCKER, J., concurs except as to Part II-B, as to which he concurs
Danas policies were issued for annual periods beginning June 1 of each
year. We refer to the policy for June 1, 1977 through May
31, 1978 as the 1977 policy.
Footnote: After the first appeal, Dana moved for partial summary judgment against Allstate
on issues similar to those already decided by the trial court as to
the primary insurers. In addressing Danas motions, the trial court determined it
was not bound by the earlier rulings, but agreed with their conclusions.
The Court of Appeals referred to these rulings as disposing of motions for
reconsideration of earlier rulings. For simplicity, we treat them as original motions.
The record in this appeal begins with Danas motions against Allstate.
Footnote: The 1977, 1978 and 1979 policies provide the following coverage grant:
The Company hereby agrees, subject to the limitations, terms and conditions hereinafter mentioned,
to indemnify the insured for all sums which the insured shall be obligated
to pay by reason of the liability
A. imposed upon the Insured by law, or
B. assumed under contract or agreement by the Named Insured,
for damages on account of
A. Personal Injuries
B. Property Damage
C. Advertising Liability,
caused by or arising out of each Occurrence happening anywhere in the world.
The 1980 and 1981 policies provide:
To indemnify the INSURED for the ULTIMATE NET LOSS, in excess of the
greater of the RETAINED LIMIT, or UNDERLYING LIMIT, for all sums which the
INSURED shall be obligated to pay by reason of the liability imposed upon
the INSURED by law or liability assumed by the INSURED under contract or
agreement for damages and expenses, because of:
(1) PERSONAL INJURY,
(2) PROPERTY DAMAGE, or
(3) ADVERTISING LIABILITY
to which this policy applies, caused by an OCCURRENCE, happening anywhere in the
Footnote: Some courts find the exclusion bars coverage when the contamination is solely
on the insureds land, but do find coverage when there is a threat
of harm to a third party property interest.
See, e.g., Boardman Petroleum,
Inc. v. Federated Mut. Ins. Co., 498 S.E.2d 492, 495-96 (Ga. 1998); Arco
Indus. Corp. v. Am. Motorists Ins. Co., 594 N.W.2d 61, 67 (Mich. Ct.
App. 1998). Others find the exclusion bars coverage for cleanup unless the
contamination has leached onto anothers land. See, e.g., Gerrish Corp. v. Universal
Underwriters Ins. Co., 947 F.2d 1023, 1030-31 (2d Cir. 1991) (applying Vermont law);
Hakim v. Mass. Insurers Insolvency Fund, 675 N.E.2d 1161, 1164-66 (Mass. 1997); New
Jersey v. Signo Trading Intl, Inc., 612 A.2d 932, 938-39 (N.J. 1992).
We note that the legislature has placed further restraints on the use
See Ind. Code 14-25-3 (1998). Though these regulations demonstrate
the public policy of the state . . . to conserve and protect
the ground water resources of Indiana and for the most beneficial use and
disposition of ground water resources, id. § 14-25-3-3, we do not view them
as having altered the common law property status of ground water.
Beneath the words Composite Rated and General Liability are the words Excluding
Footnote: There is no contention by either party that the 1980 or 1981
Allstate policy is in dispute as to the Old Forge site.
Footnote: The 1978 and 1979 policies state:
II. LIMIT OF LIABILITY
The Company shall only be liable for the Ultimate Net Loss in excess
A. the limits of the underlying insurances as set out in the
attached SCHEDULE OF UNDERLYING POLICIES in respect of each Occurrence covered by said
underlying insurances . . . .
Endorsement No. 8 in the 1978 policy, as well as Endorsement No. 6
in the 1979 policy, states:
In consideration of the premium charged, it is agreed that this policy is
amended as indicated:
In the event of reduction or exhaustion of the aggregate limit or limits
designated in the underlying policy or policies solely by payment of losses in
respect to accidents or occurrences during the period of such underlying policy or
policies, it is hereby understood and agreed that such insurance as is afforded
by this policy shall apply in excess of the reduced underlying limit or,
if such limit is exhausted, shall apply as underlying insurance, notwithstanding anything to
the contrary in the terms and conditions of this policy, but this Endorsement
shall only apply to underlying policies listed in the original schedule of underlying
policies of this contract.
Footnote: The trial court described the parties stipulation as follows:
3. At the hearing in chambers, counsel for [Allstate] further stipulated that . .
. Dana incurred Ultimate Net Loss in excess of $1 million for Occurrences
other than [the] Old Forge landfill claim in both of the 78/79 and
79/80 policy years. . . . Counsel for [Allstate] further stipulatedwithout waiving
[Allstates] right to appeal the finding of the applicability of personal injury coverage
to environmental losses and without waiving the assertion [Allstate] made in briefing that
Dana had to exhaust both the personal injury aggregate limit and the property
damage per occurrence limit for any claim against the [Allstate] policythat [Danas other
environmental cleanup costs] are properly described as both personal injury and property damage
Though the trial court describes this as a stipulation by Allstate, Dana, in
its briefs, tells us that both parties agreed to it.
A determination of whether Hartfords settlement was actually paid as bodily injury
or property damage coverage, or both, is unnecessary. Allstates coverage attaches as
soon as liabilities are incurred in the amount of the underlying Hartford limits
for the applicable coverages. Whether Danas settlement with Hartford actually exhausted the
underlying limits is also irrelevant; if it did not, then Dana is self-insured
up to the applicable limits.