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Cinergy Corp. v. St. Paul Surplus Lines Insurance Co.12/13/2005
FOR PUBLICATION
STATEMENT OF THE CASE
Appellants-Defendants, Cinergy Corporation, PSI Energy, Inc., and the Cincinnati Gas & Electric Company (collectively, Cinergy) appeal the trial court's Order denying its Motion for Partial Summary Judgment against Appellees-Plaintiffs, St. Paul Surplus Lines Insurance Co., et al. (AEGIS).
We affirm.
ISSUE
Cinergy raises two issues on appeal, which we consolidate and restate as the following issue: Whether a policyholder of a first-layer liability insurance policy is entitled to payment of defense costs as they are incurred when the insurance policy does not contain a duty to defend clause or express language authorizing a delay in payment of those costs until determination of whether the underlying claims are covered.
FACTS AND PROCEDURAL HISTORY
Prior to 1994, PSI Energy, Inc., an Indiana corporation owning and operating four Indiana power plants, and the Cincinnati Gas & Electric Company, an Ohio corporation, owning and operating two Ohio power plants, were separate companies, covered by separate insurance programs. Effective October 24, 1994, both companies became subsidiaries of Cinergy Corporation, a public utility holding company. Since the acquisition, all power plants are covered under an excess insurance policy issued by AEGIS.
On November 3, 1999, the United States, together with several States and environmental organizations, filed its Complaint against Cinergy seeking injunctive relief and civil penalties for Cinergy's alleged violations of the Clean Air Act (the Underlying Lawsuit). The Underlying Lawsuit purports to establish that after completing certain maintenance and repair projects at six Cinergy plants, Cinergy resumed operations without installing additional air emissions control equipment, and thereby caused increased emissions of various harmful substances. As a result of these excess emissions, the United States claims bodily injury , property damage, and personal injury . Based on these alleged violations of the Clean Air Act, the plaintiffs in the Underlying Lawsuit seek a judgment requiring Cinergy to remedy, mitigate, or offset the harm to public health and the environment. As of September of 2003, Cinergy had incurred over six million dollars in defending against the Underlying Lawsuit.
AEGIS is Cinergy's principal first-layer insurer of its operations. A first-layer insurance policy provides the first coverage to the policyholder after exhaustion of the deductible, or self-insured retention (SIR). By letter dated July 20, 2000, Cinergy attempted to recover its defense costs in the Underlying Lawsuit from AEGIS under three first-layer policies: (1) policy no. 004 ANJ issued to the Cincinatti Gas & Electric Company for the period from July 1, 1984 to July 1, 1985; (2) policy no. 283 ANJ issued to PSI Energy, Inc. for the period from October 31, 1984 to October 31, 1985; and (3) policy no. X0004A1A99 issued to Cinergy for the period from July 1, 1999 to July 1, 2000. On November 1, 2000, AEGIS filed a Complaint for Declaratory Judgment against Cinergy. Subsequently, on February 23, 2004, Cinergy filed its Motion for Partial Summary Judgment asking the trial court to order AEGIS to provide payment of defense costs as they are incurred by Cinergy. On June 28, 2004, the trial court heard oral arguments, and subsequently, on July 8, 2004, the trial court entered its Order denying Cinergy's Motion for Partial Summary Judgment on Legal Defense Costs. On August 4, 2004, the trial court certified the ruling on Cinergy's motion. Thereafter, on September 2, 2004, Cinergy filed its Motion For Interlocutory Appeal which was initial
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