Consolidated Insurance Company v. National Water Services, LLC.
2013 Ind. App. LEXIS 411
| Ind. Ct. App. | 2013Background
- CIC appeals denial of its Rule 12(C) motion for judgment on the pleadings in favor of NWS.
- NWS obtained employee dishonesty coverage from CIC under Policy CBP8370511; Paragraph 19 requires transfer of recovery rights and prohibits impairment after loss.
- NWS suffered losses and CIC denied coverage; NWS sued for $497,500 plus interest under the Policy.
- CIC argued NWS destroyed subrogation rights by settling with Arnold and executing a release.
- Arnold counterclaimed; NWS replied with a Release releasing Arnold for all claims arising from Arnold's employment.
- Trial court denied CIC’s motion; interlocutory appeal was granted; the court certified the order for appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did NWS's Arnold settlement impair CIC's subrogation rights? | CIC: Release destroys subrogation rights under Paragraph 19. | NWS: Distinguishable cases; release did not impair CIC's rights; contract language not clear. | Yes; release impaired subrogation rights; order reversed and CIC awarded judgment. |
Key Cases Cited
- Hockelberg v. Farm Bureau Ins. Co., 407 N.E.2d 1160 (Ind. Ct. App. 1980) (insurer subrogation rights destroyed by insured's release)
- Auto Owners’ Ins. Co. v. Edwards, 136 N.E. 577 (Ind. Ct. App. 1922) (insurer subrogation rights destroyed when insured releases wrongdoer)
- Allstate Ins. Co. v. Meek, 489 N.E.2d 531 (Ind. Ct. App. 1986) (insurer subrogation rights after settlement, release; contract interpretation emphasis)
- Cincinnati Ins. Co. v. Adkins, 935 N.E.2d 190 (Ind. Ct. App. 2010) (insured must not impair insurer's subrogation rights; timing of notice/consent)
- Tate v. Secura Ins., 587 N.E.2d 665 (Ind. 1992) (subrogation rights and release interplay in contract interpretation)
- Capps v. Klebs, 382 N.E.2d 947 (Ind. Ct. App. 1979) (subrogation not mature until insured is fully compensated; contract language crucial)
- Willard v. Auto. Underwriters Inc., 407 N.E.2d 1192 (Ind. Ct. App. 1980) (insurer's subrogation rights may be in abeyance until full payment)