Preview:

ATTORNEYS FOR APPELLANTS James R. Fisher Debra H. Miller Indianapolis, Indiana Stacy M. Broman Jacob S. Woodard Minneapolis, Minnesota Lloyd H. Milliken Lucy R. Dollens Indianapolis, Indiana

ATTORNEYS FOR APPELLEE Richard R. Skiles Janet M. Prather Indianapolis, Indiana ATTORNEYS FOR AMICUS CURIAE PROPERTY CASUALTY INSURERS ASSOCIATION OF AMERICA Karl L. Mulvaney Martha S. Hollingsworth Barry C. Cope Indianapolis, Indiana ATTORNEYS FOR AMICUS CURIAE INSURANCE INSTITUTE OF INDIANA, INC. John C. Trimble Richard K. Shoultz Indianapolis, Indiana ATTORNEYS FOR AMICUS CURIAE COMPLEX INSURANCE CLAIMS LITIGATION ASSOCIATION Laura A. Foggan Benjamin J. Theisman Washington, DC Michael A. Dorelli Patrick J. Olmstead, Jr. Jason L. Fulk Indianapolis, Indiana

______________________________________________________________________________

FILED
of the supreme court, court of appeals and tax court

Indiana Supreme Court
_________________________________ No. 49S02-0901-CV-8 TRI-ETCH, INC., D/B/A SONITROL SECURITY SYSTEMS OF MUNCIE; JAN ETCHISON; NANCY ETCHISON; RUBY YOUNG, AS PERSONAL REPRESENTATIVE OF THE ESTATE OF MICHAEL YOUNG, DECEASED; AND SCOTTSDALE INSURANCE COMPANY,

In the

Jul 21 2009, 12:06 pm

CLERK

Appellants/Cross-Appellees (Plaintiffs below), v.

CINCINNATI INSURANCE COMPANY, Appellee/Cross-Appellant (Defendant below). _________________________________ Appeal from the Marion Superior Court, No. 49D01-0505-CT-019704 The Honorable Cale Bradford, Judge The Honorable David Shaheed, Judge _________________________________ On Petition to Transfer from the Indiana Court of Appeals, No. 49A02-0709-CV-827 _________________________________ July 21, 2009 Boehm, Justice. We hold that an alarm companys commercial general liability and umbrella insurance policies do not cover a claim against the alarm company for delays in observing or reacting to a failure of the retailer to make a scheduled setting of a night alarm. The claim does not arise from an "occurrence" as defined by the policy, and is also within an exclusion for "alarm services." We also hold that, standing alone, the fact that an insurer also denies coverage on other issues does not preclude the insurer from raising failure to give timely notice of a claim, and does not conclusively rebut the presumption that untimely notice of a claim prejudices the insurer. Facts and Procedural History On August 12, 1997, Michael Young was employed as a clerk in a liquor store in Muncie, Indiana. Shortly before the stores midnight closing time, Young was abducted by a robber, tied to a tree in a local park, and beaten. At 3:00 a.m. the next morning, the stores security service generated a report showing that the stores night alarm had not been set at midnight as scheduled. The stores general manager was called and arrived at the store at about 3:30 a.m. to find that money and Young were missing. Young was located at 6:00 a.m., still alive and tied to the tree, but he died of his injuries later that day. In August 1999, Youngs Estate brought a wrongful death action against Tri-Etch, Inc., the operator of the stores security service under the brand name Sonitrol. The complaint alleged
2

that Tri-Etch breached a duty to notify the stores manager within thirty minutes of closing if the night alarm had not been set, and that if Tri-Etch had acted promptly, Young would have been found earlier and would have survived. After extensive procedural skirmishing, the case was dismissed based on a contractual one-year limitations provision in the agreement between TriEtch and the store. We ultimately reversed that judgment and remanded for trial. Young v. TriEtch, Inc., 790 N.E.2d 456, 459 (Ind. 2003). After a mistrial, a $2.5 million jury verdict was entered against Tri-Etch, Inc. in December 2004. This case addresses the coverage of the Estates claim under three insurance policies TriEtch held at the time of Youngs death. Scottsdale Insurance Company had issued a commercial general liability (CGL) policy through the Sonitrol Dealers Association of which Tri-Etch was a member. This policy included errors and omissions coverage for "Alarm Installation and Monitoring" with a $1 million limit of liability. Tri-Etch had a second CGL policy from Cincinnati Insurance Company, also with a $1 million limit, but without an errors and omissions rider. An umbrella or excess policy from Cincinnati had an added $2 million limit above "underlying policies." One issue in this coverage dispute is whether Tri-Etch gave Cincinnati timely notice of the claim. Tri-Etch notified Scottsdale promptly after the wrongful death suit was filed, and Scottsdale undertook Tri-Etchs defense in 1999. The parties dispute when and how Tri-Etch notified Cincinnati. The documentary evidence does not establish notice to Cincinnati until March 2004, but some of the designated deposition and interrogatory answers claimed earlier notice and denial of coverage. In April 2004, Cincinnati filed a declaratory judgment action in federal court that ultimately was dismissed for lack of diversity jurisdiction. After the verdict in the wrongful death case in December 2004, Scottsdale tendered its $1 million policy limits, and in January 2005 Tri-Etch settled with the Estate by assigning its claims against Cincinnati to the Estate. In February 2005, Cincinnati attempted to intervene in the wrongful death case to file a motion to correct errors and appeal the judgment, but that effort was unsuccessful. Cincinnati Ins. Co. v. Young, 852 N.E.2d 8, 17 (Ind. Ct. App. 2006), trans. denied.

3

In May 2005, the Estate, Tri-Etch,1 and Scottsdale filed this action against Cincinnati. The Estate sought the unpaid $1.5 million balance of the wrongful death judgment plus postjudgment interest. Scottsdale requested a declaratory judgment that under both of Cincinnatis policies, Cincinnati owed Tri-Etch a defense and coverage for the wrongful death judgment. Scottsdale sought contribution from Cincinnati for Scottsdales costs of Tri-Etchs defense and the $1 million judgment it had paid. Cincinnati answered and counterclaimed, seeking a declaratory judgment that it owed no duty to defend or indemnify Tri-Etch against the wrongful death claim because (1) Young did not die as a result of an "occurrence" covered by its CGL or umbrella policy, (2) the umbrella policy excluded claims based on Tri-Etchs alarm services, and (3) Tri-Etch failed to provide timely notice as required by both policies. All parties moved for summary judgment. The trial court first granted partial summary judgment in favor of the Estate and Scottsdale. The trial court ruled that the Estates claim against Tri-Etch was covered by Cincinnatis CGL and umbrella policies, but there were genuine issues of material fact as to whether Tri-Etch had provided timely notice and whether Cincinnati suffered any prejudice from delayed notice. After that ruling, the Estate and Scottsdale moved for partial summary judgment to eliminate Cincinnatis defense based on failure to give notice of the claim. Cincinnati responded with a cross-motion for summary judgment that it had no liability under either of its policies because of late notice. The trial court granted summary judgment in favor of Cincinnati, concluding that Tri-Etchs notice to Cincinnati was unreasonably late, Cincinnati was prejudiced by the late notice, and Cincinnati therefore owed no coverage, indemnity, or defense obligation under either its CGL or umbrella policy. The Estate and Scottsdale appealed the grant of summary judgment to Cincinnati, and Cincinnati cross-appealed the partial summary judgment to the Estate and Scottsdale. The Court

1

The policies principally involved in this case seem to insure only Tri-Etch, Inc. The complaint alleges that Jan and Nancy Etchison, also plaintiffs in this case, are the sole owners of Tri-Etch, Inc., and also assigned whatever interest they have in the policies. The excess policy issued to Tri-Etch, Inc. included a personal excess liability rider for excess coverage of claims under the Etchisons homeowners and auto policies. This personal rider had an exclusion for "business." No separate arguments are raised under personal policies. Because the Etchisons present no additional issues in this appeal, for simplicity we refer to the Etchisons and Tri-Etch, Inc. collectively as Tri-Etch. 4

of Appeals reversed summary judgment in favor of Cincinnati and remanded with instructions to enter summary judgment in favor of the Estate and Scottsdale and order Cincinnati to indemnify Tri-Etch for the remaining $1.5 million. Tri-Etch, Inc. v. Cincinnati Ins. Co., 891 N.E.2d 563, 572

Download Tri-Etch, Inc., d/b/a Sonitrol Security Systems of Muncie, et al v. Cincinnati I

Indiana Law