27 N.E.3d 1141
Ind. Ct. App.2015Background
- FLM, LLC owned property where International Recycling Inc. (IRI) stored ~100,000 tons of Chrysler foundry sand under a disposal arrangement with Chrysler.
- Chrysler stopped paying IRI; IRI went out of business and abandoned the sand on FLM’s property, causing contamination and regulatory noncompliance.
- FLM sued The Cincinnati Insurance Company (Cincinnati), seeking coverage under IRI’s commercial general liability (CGL) policy for property damage to FLM’s land.
- On appeal in FLM II, this court held the contamination qualified as an "occurrence" because it was an "accident" under the policy and reversed summary judgment for Cincinnati on coverage.
- Cincinnati petitioned for rehearing to raise the separate policy exclusion for "expected or intended" injury/property damage, arguing IRI intentionally breached and abandoned the sand knowing harm would result.
- The court granted rehearing, considered the exclusion, and concluded as a matter of law that IRI did not expect or intend the property damage; the exclusion did not apply.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the CGL policy covers FLM’s property damage as an "occurrence" | FLM: contamination was accidental and thus an "occurrence" under the policy | Cincinnati: not disputed on rehearing (previously contested) | Court previously held it was an "occurrence"; Cincinnati did not ask to revisit that ruling |
| Whether the "expected or intended" exclusion bars coverage | FLM: IRI had no meaningful choice; bankruptcy forced abandonment, so harm was not expected or intended | Cincinnati: IRI intentionally breached, vacated, and abandoned sand knowing legal/regulatory harm would follow, so exclusion applies | Court held exclusion does not apply; property damage was not expected or intended by IRI |
| Burden and standard for construing exclusions | FLM: ambiguities resolved against insurer; exclusion must be clear to apply | Cincinnati: exclusion applies where insured’s intentional acts foreseeably caused damage | Court applied summary-judgment standard and rules favoring insured; insurer bears burden to prove exclusion applicability |
| Proper legal inquiry for "expected or intended" exclusion | FLM: focus on whether injury was accidental at time of acts | Cincinnati: focus on insured’s knowledge and decisions that led to harm | Court adopted inquiry whether insured expected/intended the injury; concluded injury was accidental in this case |
Key Cases Cited
- FLM, LLC v. Cincinnati Ins. Co., 24 N.E.3d 444 (Ind. Ct. App. 2014) (prior opinion holding contamination was an "occurrence")
- FLM, LLC v. Cincinnati Ins. Co., 973 N.E.2d 1167 (Ind. Ct. App. 2012) (earlier appeal discussed in concurring opinion regarding "accident")
- Keckler v. Meridian Sec. Ins. Co., 967 N.E.2d 18 (Ind. Ct. App. 2012) (insurance policy interpretation and insurer’s burden to prove exclusions)
- Gen. Housewares Corp. v. Nat’l Sur. Corp., 741 N.E.2d 408 (Ind. Ct. App. 2000) (analysis of "expected or intended" exclusion and whether injury was accidental)