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Wednesday, December 29, 2010

Ind. Decisions - Supreme Court rules Maryland law applies in environmental insurance case

In National Union Fire Insurance Co. of Pittsburgh, PA., et al. v. Standard Fusee Corp., an 11-page, 5-0 opinion in a many-lawyered, environmental insurance law case, Justice Sullivan writes:

Insurance companies question whether they have a duty to defend an insured in environ-mental remediation proceedings under policies alleged to cover risks in Indiana and California. Predicate to answering that question is determining whether the law governing the policies' interpretation is “site-specific” (whereby Indiana law governs the policies' interpretation with respect to the Indiana site and California law with respect to the California site) as held by the Court of Appeals or “uniform” (whereby a single state's law governs) as argued by both parties. But while agreeing that the interpretation should be uniform, the insurance companies argue that Maryland law applies; the insured argues for Indiana law.

The uniform approach has long been Indiana law and we reaffirm it here. Under that approach, we find that Maryland is the state with the most intimate contacts to the facts and that its law should therefore be applied to resolve this dispute. * * *

The Court of Appeals reversed the trial court's determination that Indiana law governed the entire dispute. Instead, the Court of Appeals adopted a “site-specific” approach to choice of law, whereby Indiana law governed the interpretation of the policies with respect to the Indiana site and California law with respect to the California site. Nat'l Union Fire Ins. Co. v. Standard Fusee Corp., 917 N.E.2d 170, 181 (Ind. Ct. App. 2009). * * *

Courts faced with these cases have generally addressed choice-of-law issues in one of two ways – either by what is called a “uniform-contract-interpretation” approach or by a “site-specific” approach. Id. at 362. The uniform-contract-interpretation approach applies the law of a single state to the whole contract even though it covers multiple risks in multiple states; the site-specific approach applies the law of the state or states where the insured risks are located, unless another state has a more significant relationship to the particular issue. Id. * * *

The Indiana Court of Appeals has faced cases similar to the present one at least four times in the recent past and in each case has applied the uniform-contract-interpretation approach to resolve choice-of-law issues. [cites omitted by ILB] Indeed, the Court of Appeals in this case recognized the prior practice of generally following the uniform-contract-interpretation approach but nevertheless applied the site-specific approach. * * *

Having concluded that the uniform-contract-interpretation approach should be followed in cases like the present one, we now turn our attention to its application in this case. Although both SFC and Insurers petitioned for application of the uniform approach, they disagree as to which state's law – Indiana or Maryland – should be applied. As discussed in part I, supra, the law of the state with the most intimate contacts applies. In analyzing the respective contacts with Indiana and Maryland, the trial court in this case found that four of the five factors listed in Restatement (Second) section 188 were inconclusive but that one factor, the place of performance, clearly pointed to Indiana. We reach a different result. * * *

Although none of factors are determinative, “the overall number and quality of contacts” favor Maryland over Indiana. Coachmen Indus., 838 N.E.2d at 1181. As the state in most inti-mate contact, we hold that the substantive law of Maryland applies to the entire dispute.

Because Maryland is the state in most intimate contact, we reverse the trial court and remand this case for application of Maryland law to the entire dispute.

Posted by Marcia Oddi on December 29, 2010 01:00 PM
Posted to Ind. Sup.Ct. Decisions