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Wednesday, July 25, 2007
Ind. Decisions - "Insured's coverage passes to acquirer, court rules"
Yesterday's Indiana Court of Appeals decision in Travelers Casualty and Surety Co., et al. v. United States Filter Corp., et al (see ILB entry here) is the subject of a brief story by Jeff Swiatek today in the Indianapolis Star:
A company's insurance coverage carries over to the acquirer, the Indiana Court of Appeals has ruled.
In a decision published Tuesday, the court cleared up a murky legal issue surrounding acquisitions.The decision came in a two-year-old lawsuit involving U.S. Filter Corp., a former Mishawaka maker of industrial blast machines.
U.S. Filter, now Veolia Water, bought the Wheelabrator blast business in 1996 and found itself facing 22,000 claims from people alleging they suffered lung problems from the silica dust the cleaning machines use. The claims dated back 50 years.
Most of the companies that insured Wheelabrator over those 50 years banded together to fight U.S. Filter's attempt to get them to cover the claims.
"Anybody in the business of acquiring assets . . . will be very interested in what the court ruled here," said Robert MacGill, lead attorney for U.S. Filter.
It's a setback for the insurance industry, which argued that insurers must consent to corporate coverage passing on to an acquiring company.
"Insurance must be broad to serve its function. It would be reckless to undertake an acquisition if it were impossible for a business to insure against historic liabilities that may come with the new asset," the court ruled.
Posted by Marcia Oddi on July 25, 2007 08:02 AM
Posted to Ind. App.Ct. Decisions