Court affirms judgments in pollution case, remands for determination of credit due

The Indiana Court of Appeals found no errors in a trial court’s ruling in a dispute over insurance coverage to clean up a pollution spill at a westside Indianapolis business, but it sent the case back to the trial court for a determination of credit due an insurer.

In State Automobile Ins. Co., Meridian Security Ins. Co., and Indiana Farmers Mutual Ins. Co. v. DMY Realty Co., LLP and Commerce Realty, LLC, 49A05-1109-PL-486, the appellate court unanimously affirmed the trial court’s order granting summary judgment in favor of DMY and denying summary judgment in favor of State Auto, which had agreed to indemnify DMY, the owner of a retail building in the 7200 block of West 10th Street that once housed a dry cleaning business.

The court said that a recent Indiana Supreme Court decision, State Auto. Mut. Ins. Co. v. Flexdar, Inc., 964 N.E.2d 845 (Ind. 13 2012) spoke to whether pollution exclusions are ambiguous. “Flexdar is precisely on point on this issue, and consequently we conclude that the pollution exclusions and endorsements contained in DMY’s insurance policies with State Auto are ambiguous. Thus State Auto may not deny DMY the coverage it seeks based upon such language,” Judge Elaine Brown wrote for the unanimous panel.

But State Auto prevailed on another argument: that it was entitled to credit on compensation it paid when another insurer had already indemnified DMY, which reached a settlement with Indiana Farmers.

“We conclude that remand is warranted for the trial court to review any settlement agreement between DMY and Indiana Farmers and consider any valid contribution or credit issues,” due to State Auto.