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State Auto. Mut. Ins. Co. v. Flexdar, Inc.

Supreme Court of Indiana

March 22, 2012, Decided; March 22, 2012, Filed

No. 49S02-1104-PL-199

Opinion

 [*846]  Rucker, Justice.

In this case we examine whether the language of a pollution exclusion in a commercial general liability policy is ambiguous. We hold that it is.

 [*847]  Facts and Procedural History

Flexdar, Inc. ("Flexdar") manufactured rubber stamps and printing plates at its Indianapolis facility (the "Site") from late 1994 or early 1995 through 2003. Flexdar's manufacturing process used a chemical solvent called trichloroethylene ("TCE"). In late 2003 and early 2004, Flexdar discovered that TCE was present in the soil and groundwater both on and off the Site. The Indiana Department of Environmental Management ("IDEM") informed Flexdar that Flexdar would be liable for the costs of cleanup. Flexdar maintained commercial general liability and umbrella insurance policies with State Automobile Mutual Insurance Company ("State Auto") for the period October 1, 1997 through June 2, 2002, and requested defense and indemnification from State Auto.1 State Auto agreed to defend Flexdar against IDEM's claims under a reservation of State Auto's right to deny coverage and  [**3] to file a declaratory judgment action to determine State Auto's obligations under the policies. State Auto then filed this declaratory judgment action, contending that coverage for the TCE contamination at issue was excluded pursuant to the pollution exclusion present in the policies. Both Flexdar and State Auto moved for summary judgment on the issue of coverage.

In support of its summary judgment motion, State Auto designated the insurance policies, highlighting the following "absolute pollution exclusion" language:

2. Exclusions.

This insurance does not apply to:

. . . .

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964 N.E.2d 845 *; 2012 Ind. LEXIS 47 **; 75 ERC (BNA) 1662; 42 ELR 20077; 2012 WL 966052

STATE AUTOMOBILE MUTUAL INSURANCE COMPANY, Appellant (Plaintiff below), v. FLEXDAR, INC. AND RTS REALTY, Appellees (Defendants below).

Subsequent History: Rehearing denied by State Auto. Mut. Ins. Co. v. Flexdar, Inc., 2012 Ind. LEXIS 526 (Ind., June 21, 2012)

Prior History:  [**1] Appeal from the Marion Superior Court No. F12. No. 49F12-0705-PL-018927. The Honorable Michael D. Keele, Judge. On Petition To Transfer from the Indiana Court of Appeals, No. 49A02-1002-PL-111.

State Auto. Mut. Ins. Co. v. Flexdar, Inc., 937 N.E.2d 1203, 2010 Ind. App. LEXIS 2170 (Ind. Ct. App., 2010)

CORE TERMS

pollution exclusion, pollutant, coverage, contaminant, insurer, ambiguous, Environmental, endorsement, irritant, policies, fumes, chemicals, insurance policy, exclude coverage, station's, literal, site, business operations, summary judgment, gasoline, solid, vapor, gaseous, thermal, liquid, losses, truck

Civil Procedure, Summary Judgment, Entitlement as Matter of Law, Appropriateness, Appeals, Summary Judgment Review, Standards of Review, Genuine Disputes, Legal Entitlement, Materiality of Facts, General Overview, Insurance Law, Policy Interpretation, Ambiguous Terms, Construction Against Insurers, Claim, Contract & Practice Issues, Exclusions, Question of Law, Commercial General Liability Insurance, Exclusions, Pollution, Coverage Favored, Ordinary & Usual Meanings, Governments, Courts, Judicial Precedent