Indiana Insurance Company v. Patricia Kopetsky, and KB Home Indiana Inc.
11 N.E.3d 508
Ind. Ct. App.2014Background
- KB Home purchased Cedar Park lots from Kopetsky; Kopetsky represented Cedar Park was free of Hazardous Materials and signed lot-by-lot disclosures at each closing.
- Environmental testing near Cedar Park found TCE contamination in Section 3 and monitoring wells were installed with prior permission from Kopetsky.
- KB Home filed a 2007 negligence/trespass/nuisance/ENV action against Kopetsky and other defendants for contamination effects, seeking damages.
- Indiana Insurance issued CGL policies to George (named insured) 2002–2006; coverage dispute arose over duty to defend/indemnify in KB Home’s suit.
- Patricia Kopetsky substituted for George after his death in 2010; Indiana Insurance moved for/against summary judgment on coverage and bad-faith issues; trial court granted Patricia summary judgment on coverage, dismissed bad faith claim.
- Court held: genuine issue of material fact exists on known loss doctrine; indemnity timing not ripe; partial affirmance and remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether KB Home’s allegations fit the Policies’ property damage definition | KB Home argues the contaminated lots constitute property damage to tangible land | Indiana Insurance says there is no property damage, only economic loss | Yes, property damage under the policies |
| Whether the contamination constitutes an occurrence | KB Home alleges an occurrence caused by migration/contamination | Occurrence requires insured’s fault or that the incident was caused by the insured | Yes, there was an occurrence under policy definition |
| Whether the contractual liability exclusion bars coverage | KB Home argues exclusion does not apply to indemnity-like liability | Exclusion bars coverage for liability assumed in a contract | Excluded exclusion does not bar coverage (not applicable to indemnity-related liability) |
| Whether the known loss doctrine bars coverage | KB Home argues no known loss before policy period | Evidence raises genuine issue whether Kopetsky knew of contamination pre-policy | Remanded; genuine issue of material fact on known loss doctrine exists |
| Whether Patricia’s substitution and related indemnity issues are ripe | Patricia substituted for George; seeks coverage/indemnity rights | Substitution/information tender issues affect indemnity/ripe status | Substitution proper; indemnity not ripe; bad-faith claim upheld in part/denied in part |
Key Cases Cited
- Sheehan Constr. Co., Inc. v. Continental Casualty Co., 935 N.E.2d 160 (Ind. 2010) (redefined property damage concept under CGL and rejected pure economic loss doctrine for coverage)
- Gen. Housewares Corp. v. Nat’l Sur. Corp., 741 N.E.2d 408 (Ind. Ct. App. 2000) (discussed whether injury is accidental and applied to exclusions in coverage)
- Liberty Mut. Ins. Co. v. Metzler, 586 N.E.2d 897 (Ind. Ct. App. 1992) (insurer’s duty to defend and evaluation of coverage depends on independent determination)
- Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267 (Ind. 2009) (notice requirements and defense tender principles for insurers)
- Olympic, Inc. v. Providence Wash. Ins. Co. of Alaska, 648 P.2d 1008 (Alaska 1982) (discussed liability assumed under contracts vs. third-party indemnity and exclusions)