11 N.E.3d 982
Ind. Ct. App.2014Background
- Thomson Inc. (Delaware) and its parent/subsidiaries were sued in a Taiwan class action by former Taoyuan plant workers alleging exposure to TCE/PCE causing illness; plaintiffs sued the Taiwanese operating company (TCETVT) and later sought to add parent entities via veil-piercing theories.
- Thomson sought declaratory relief in Indiana against primary insurers (notably XL and Century) and umbrella insurers for duty to defend and indemnity for defense costs arising from the Taiwan litigation.
- The trial court issued a Duty-to-Defend Order (XL and Century—duty to defend), an Allocation Order (two occurrences found, trigger and allocation rulings), and Defense Costs Orders awarding defense-cost reimbursement and interest; multiple insurers appealed.
- Key factual points: contamination alleged from plant and dormitories (workplace exposure and contaminated groundwater); TCETVT paid defense costs and Thomson-managed defense; insurers reserved rights or denied coverage.
- The appellate court affirmed in part, reversed in part, and remanded: it (1) upheld duty to defend, (2) found two occurrences (factory and dormitory/groundwater), (3) required per-occurrence deductibles for certain years, (4) ordered proof of SIR exhaustion for later policies, (5) reversed on some allocation and coverage points, and (6) affirmed award of defense costs and prejudgment interest.
Issues
| Issue | Plaintiff's Argument (Thomson) | Defendant's Argument (XL/Century) | Held |
|---|---|---|---|
| Appeal justiciability / finality of Duty-to-Defend order | Duty order is final because later orders fixed defense costs | Duty order interlocutory and appeal premature | Affirmed: appeal not dismissed; later orders made Duty-to-Defend effectively final |
| Applicability of employer’s-liability exclusion | Exclusion doesn’t bar coverage because many injuries alleged occurred outside employment (dorms) | Exclusion bars coverage for employee bodily injury arising out of employment | Exclusion does not negate duty to defend (court rejects XL’s reading) |
| Late notice / known-loss / Deemer clause | Notice was timely; even if known contamination existed, liability was not known/loss not certain | Late notice and known-loss/Deemer clauses bar coverage | Court rejects insurer defenses as a matter of law on summary judgment (no prejudice, no known loss prior to policies) |
| Number of occurrences under policies | Each claimant’s exposure is a separate occurrence | Continuous/repeated exposure to same harmful conditions warrants aggregation | Affirmed: two occurrences (workplace conditions; contaminated dormitory/groundwater) using cause theory |
| Deductible application (XL 2000–2002) | Per-occurrence selection should aggregate per-occurrence damages once triggered | Deductible applies per occurrence; insurer entitled to that result | Affirmed: Thomson must satisfy deductible for each occurrence for 2000–2002 policies |
| Self-insured retentions (XL 2003–2005) | SIRs not properly applied below / trial court need not resolve now | SIRs must be satisfied before insurer obligations attach | Reversed and remanded: trial court must require proof SIRs per occurrence were satisfied before coverage triggers |
| Personal injury coverage (XL 2000 policy) | Personal & advertising injury insuring clause (which includes consequential bodily injury) covers environmental intrusion (wrongful entry/invasion) | Bodily injury coverage (Coverage A) controls; Coverage B would exclude same harm from Coverage A | Reversed: personal-injury provisions in 2000 XL policy can apply; trial court’s exclusion of Coverage B was erroneous |
| Trigger / manifestation point for continuous trigger | Adopt Eli Lilly continuous (multiple) trigger through manifestation; manifestation = diagnosis | XL conceded continuous trigger but argues manifestation should be when disease is reasonably capable of medical diagnosis (not actual diagnosis) | Court: affirms continuous trigger (Eli Lilly) but remands to use Eagle-Picher definition—manifestation occurs when disease is reasonably capable of medical diagnosis |
| Allocation method (all-sums vs pro rata) | All-sums (once policy triggered it covers entire loss up to limits) per Dana II | Policies limit indemnity to “those sums” for injury that "occurs during the policy period" — requires pro rata allocation | Reversed: trial court used all-sums; remanded to apply appropriate pro rata allocation method (trial court discretion among pro rata methods) |
| Insured status of TCETVT and Thomson SA under XL policies | Endorsements (Additional Insured — Controlling Interest & Broad Form Named Insured IEGLE) render Thomson SA and TCETVT insureds; defense owed | XL contends endorsements don’t extend to TCETVT/SA (causal "arising out of" limitation; minority ownership) | Affirmed: TCETVT and Thomson SA are insureds under XL primary and umbrella policies (endorsements construed to provide coverage) |
| Reasonableness/necessity of defense costs & prejudgment interest | Defense costs incurred and market-tested; presumption of reasonableness where insurer breached duty to defend; interest statutory | Insurer challenges reasonableness and contends summary judgment inappropriate; disputes amount | Affirmed: market-tested presumption applies; trial court properly found costs reasonable and awarded prejudgment interest |
Key Cases Cited
- Eli Lilly & Co. v. Home Ins. Co., 482 N.E.2d 467 (Ind. 1985) (adopts continuous/multiple trigger for latent disease claims)
- Allstate Ins. Co. v. Dana Corp., 759 N.E.2d 1049 (Ind. 2001) (once an occurrence triggers, insurer liable for "all sums"—basis for all-sums allocation)
- Eagle-Picher Indus., Inc. v. Liberty Mut. Ins. Co., 682 F.2d 12 (1st Cir. 1982) (manifestation occurs when disease becomes reasonably capable of medical diagnosis)
- Nicor, Inc. v. Associated Elec. & Gas Ins. Servs. Ltd., 860 N.E.2d 280 (Ill. 2006) (discussion of cause vs. effect tests for number of occurrences)
- Taco Bell Corp. v. Continental Cas. Co., 388 F.3d 1069 (7th Cir. 2004) (market-tested presumption of reasonableness for defense fees where insurer breaches duty to defend)
- Travelers Indem. Co. v. Summit Corp. of Am., 715 N.E.2d 926 (Ind. Ct. App. 1999) (personal-injury coverage can encompass environmental "entry/invasion" claims)
- Gen. Housewares Corp. v. Nat’l Surety Corp., 741 N.E.2d 408 (Ind. Ct. App. 2000) (known-loss doctrine bars coverage when insured had actual knowledge of loss before policy inception)
- Miller v. Dilts, 463 N.E.2d 257 (Ind. 1984) (notice requirement is material; unreasonable delay may create presumed prejudice)