Late Notice / Ct. App. (IN)

Insured’s unreasonable untimely notice of environmental claims prejudicial to insurer

An appellate court in Indiana, applying Indiana law, affirmed the grant of summary judgment to an insurer after the insured waited more than a decade to notify the insurer that it had made payments in several suits brought against it.

Franke Plating Works (“Franke Plating”) is an Indiana company that has metal finishing, plating and coating operations that cover parts in zinc and other materials.  In its operations, the company generated various hazardous and nonhazardous wastes that were shipped to several waste-handling facilities for disposal.

The company was named as a potentially responsible party (“PRP”) in actions involving environmental cleanups at three landfill sites, as well as a separate citizen suit filed by an environmental nonprofit organization.  Franke Plating made contributing payments for cleanup costs in all four cases.

Franke Plating sought coverage from its insurer, Cincinnati Insurance Company (“Cincinnati”), under a 1987 comprehensive general liability policy.  The policy states that, “If claim is made or suit is brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative.”

In 2007, Franke Plating sued Cincinnati for declaratory relief and damages.  In 2015, Cincinnati filed its own motion for summary judgment and a brief in opposition to Franke Plating’s motion.  In 2016, the trial court granted summary judgment in Cincinnati’s favor.  The trial court found that Franke Plating’s failure to forward notice of the four claims and its payments of the claims before notifying Cincinnati excused the insurer from any obligations to pay the company settlement costs or interest.  Franke Plating appealed.

The appellate court concluded the trial court did not err in awarding summary judgment to Cincinnati. The appellate court explained that the plain language of the policy is clear and “unambiguously requires, that in the event of an occurrence, written notice containing particulars shall be given by or for Franke Plating to Cincinnati ‘as soon as practicable’ and that, if a claim is made or suit is brought against Franke Plating, it ‘shall immediately forward to [Cincinnati] every demand, notice, summons or other process received.’”

The appellate court noted that the first notice of any loss that Franke Plating gave to Cincinnati was in 2007, more than a decade after Franke Plating became aware that it was a PRP and subject to the separate citizen suit and well after it had made payments as a result of those claims.  The appellate court found that Franke Plating’s delay in giving Cincinnati notice was unreasonable, and because it was unreasonable it was presumed and prejudicial.  Thus, the appellate court affirmed the trial court’s entry of summary judgment.  Franke Plating Works Inc. v. Cincinnati Ins. Co., 2018 Ind. App. LEXIS 378 (Ind. Ct. App. Oct. 18, 2018).