2023 East Palestine Ohio Rail Disaster

The February 3, 2023 catastrophic derailment of a Norfolk Southern freight train at East Palestine Ohio is a prime example of the need to properly characterize and declare hazardous materials for shipment. When accidents happen during transportation, first responders and affected citizens have an urgent need – and a statutory right – to know what chemicals were involved, what emergency response procedures should be followed, and what risks are posed by the hazardous materials in transport.

The lawyers at Parr Richey are experienced in handling cases involving personal injuries, damage to homes and business property, and other losses caused by the failure of offerors or transporters of hazardous materials to properly characterize and document shipments of HazMat, and/or caused by negligent operations of transportation equipment. They also routinely handle personal injury and property damage cases of all kinds on behalf of businesses and individuals in Indiana and other states.  

Vinyl chloride (CAS # 75-01-4, chemical formula C₂H₃Cl) is associated with an increased risk of certain cancers, including liver cancer, brain and lung cancers, leukemia and lymphoma. Exposure by inhalation is, therefore, very concerning. As has been widely reported, several of the derailed cars involved in the accident were transporting vinyl chloride, and the chemical was involved in the controlled release as shown in various news reports.

Already in the case of the East Palestine derailment we are learning that some of the initial information provided by authorities in the critical early hours following the catastrophe was incomplete or incorrect. Attorneys at Parr Richey continue to monitor the developments in the ongoing investigation.  

Insurance Companies Should Promptly Pay Undisputed Claims

In the numerous depositions of claims handlers our firm has conducted, adjusters frequently testify that they have been trained that the duty of good faith and fair dealing requires them to make prompt payment of the “undisputed portion” of covered insurance claims. Even if the insurer and the insured disagree on the total amount of a particular claim, the insurer is supposed to promptly pay what it believes it owes on covered claims to its insureds.

But when the insurer is making this undisputed claim payment, can they condition it on making the insured sign a release that would eliminate the insured’s right to claim more is due? We have always believed the answer to this is obviously “no”, because that would mean the insurance company could essentially force the insured to give up important legal rights in exchange for receiving at least some payment from their policy.

The Indiana Court of Appeals, in an opinion handed down on July 12, 2022, found that when Erie Insurance Exchange (“Erie”) refused to pay the undisputed portion of a claim for uninsured/underinsured motorist benefits under an automobile insurance policy, Erie may have acted in bad faith. Erie Insurance Exchange v. Olivia Craighead, 21A-CT-2871, July 12, 2022. This holding necessarily means that the Court of Appeals believed Erie’s actions in refusing to pay the undisputed portion of the claim without a release from the insured demonstrated the requisite “state of mind reflecting dishonest purpose, moral obliquity, furtive design, or ill will.”

Policyholders who have suffered losses should be mindful of the insurance company’s duty to treat them fairly, to handle claims promptly, and to pay what is owed under the policy without imposing conditions on the payments.

Understanding the Appraisal Clause in Your Insurance Policy

Nearly all insurance policies contain what is commonly called an “appraisal clause.” While the specific language differs from one policy to another, the idea is generally the same. This provision is designed to provide a mechanism to resolve disputes about insurance claims — but not all disputes are subject to being resolved by appraisal.

Typical language will say something like this:

“If you and we do not agree on the amount of the loss, including the amount of actual cash value or replacement cost, then, on the written demand of either, each shall select a competent and disinterested appraiser and notify the other of the appraiser selected within 20 days of such demand . . . . The appraisers shall then appraise the loss, stating separately the actual cash value or replacement cost of each item, and, failing to agree, shall submit their differences, only, to the umpire. An award in writing, so itemized, of any two of these three, when filed with the company shall determine the amount of loss.”

If you read this language carefully, it is clear that only disputes about the amount of the loss are subject to appraisal. But sometimes that is not the dispute. Sometimes the dispute involves whether the policy actually provides coverage for the claimed loss, or some part of the claimed loss. Disputes about coverage are not appropriately resolved by the appraisal clause.

If you have suffered a loss and have a dispute with your insurance company, it is very important to understand the difference between disputes over the amount of loss versus disputes about coverage. And, sometimes, it is difficult to tell the difference. If your insurance company demands appraisal, or if you are considering doing so, you should always consult with a knowledgeable insurance coverage attorney before making the demand or responding to one. If the appraisal clause is invoked when it shouldn’t be, it can cause unnecessary delay and can even jeopardize your right to recover under your policy.

Preservation of Evidence in Vehicle Collisions with Bikers or Pedestrians

Jim Buddenbaum and lawyers at Parr Richey are currently investigating and prosecuting claims against a speeding driver using his mobile phone who struck a Monon Trail user. It is critical to sequester and preserve evidence early in the aftermath of such incidents, including mobile phone and automobile “black box” data, in order to make a claim.

Indiana law requires the preservation of evidence when the need for that evidence can be reasonably anticipated. Failure to preserve such evidence is called “spoliation.” Spoliation of evidence is “`the intentional destruction, mutilation, alteration, or concealment of evidence.'” Cahoon v. Cummings, 734 N.E.2d 535, 545 (Ind.2000) (quoting Black’s Law Dictionary 1409 (7th ed.1999)). If spoliation by a party to a lawsuit is proved, rules of evidence permit the jury to infer that the missing evidence was unfavorable to that party. Id.

Seventh Circuit affirms dismissal of coverage suit based on clearly excluded statutory claims

In a recent decision, the United States Court of Appeals for the Seventh Circuit affirmed the dismissal of a coverage suit after the insurer filed a motion for judgment on the pleadings. In the case of Mesa Laboratories, Inc. v. Federal Insurance Co., (Appeal No. 20-1983), the insured argued that even though the applicable policy clearly excluded coverage for the defense of claims arising under the Telephone Consumer Protection Act (“TCPA”), 37 U.S.C. 227(b)(1)(C), the common law claims asserted in the underlying action should not be excluded and Federal should have been required to provide defense and indemnity.

The Seventh Circuit affirmed judgment on the pleadings in favor of Federal. The policy’s “Information Laws Exclusion” provided that the policy “does not apply to any damages, loss, cost or expense arising out of any actual or alleged or threatened violation of “ TCPA “or any similar regulatory or statutory law in any other jurisdiction.” The court held that this exclusion barred all of the claims because the common-law claims arose out of the same conduct underlying the statutory claims.

A full copy of the opinion is available here. For questions regarding the exclusions in your business policy, contact the policyholder attorneys at Parr Richey.

The Importance of “Insurable Interest”

The time to be certain that your insurance policy has been issued correctly so that it actually insures what you intend it to insure is before you have a loss and make a claim.  An insurance policy is a contract, and as with all contracts, it is important to make sure the key provisions are written in a way that reflects the actual intentions of the parties.

A recent decision by the Indiana Court of Appeals demonstrates, in stark detail, what can happen if an insurance customer is not careful about how the policy is issued.  In the case of Nuell, Inc v. Property-Owners Insurance, the Court of Appeals affirmed the decision of the trial court which had found that the insurance policy did not cover damage to the building caused by a car that had driven into it.  Cars colliding with buildings is precisely the sort of thing a business owner wants to have insurance coverage for, so the question is why didn’t the Property-Owners policy provide coverage to Nuell?  The ultimate answer to this question was based on simple contract interpretation, and the fact that the insurance policy was issued to a company that did not in fact have an “insurable interest” in the building.

The Court of Appeals described the basic facts this way:

In 2015, Nuell, Inc. (“Nuell”) purportedly entered into a lease agreement as a tenant on a commercial property. Nuell obtained an insurance policy from Property-Owners Insurance Company (“Property-Owners”), and coverage under the policy required that Nuell have a financial interest in the property. Shortly thereafter, Timothy Marsillett drove his car through a concrete barrier wall and partially into the building on the property. Nuell filed a claim with Property-Owners. Property-Owners ultimately denied the claim on the ground that Nuell did not have a financial interest in the property as required by the policy. Specifically, Property-Owners concluded that Nuell lacked a financial interest in the property because Nuell had neither a legal or equitable interest nor a valid lease with the trust that owned the property.

Nuell, Inc v. Property-Owners Insurance, Feb. 16, 2021

The trial court and the Court of Appeals both agreed with Property-Owners that the company that bought insurance for the property — Nuell — “had neither a legal or equitable interest nor a valid lease with the trust that owned the property.”  Why not?  Because although the property was owned by a trust, there was no lease agreement signed between the trust and Nuell.  Instead, the lease was signed by a husband and wife as (allegedly) “owners” of the property and by Nuell as the tenant.  The lease required the tenant to buy insurance, and the tenant complied with this provision, but that fact was not enough for the court to find that Nuell had an insurable interest.  And, since the policy was issued only to Nuell and (apparently) did not include the trust as an additional insured, there was no coverage.

The result seems harsh in this case, particularly because Nuell was a closely-held corporation.  The owner of Nuell was also the trustee of the trust that owned the property, and there can be no doubt the intention was to insure the property against damage just like what occurred.  But since Nuell did not technically own the property and because the lease was held to be invalid, Nuell had no legal or equitable interest in the property and, thus, no insurable interest.To avoid bad outcomes like this, it is very important to work closely with your insurance agent to make sure the policy is written properly and to make sure the named insured on the policy is the correct named insured.  For help in situations like this, reach out to the insurance coverage litigation attorneys at Parr Richey.

Coverage for Riot and Civil Commotion

The recent riots in Minneapolis, Atlanta, Detroit, Indianapolis and elsewhere have caused some business owners and homeowners to be concerned about insurance coverage for losses caused by violent acts of destruction of property.  The short answer is that many standard insurance forms do include coverage for such losses, but determining exactly what is covered is a matter of reviewing each individual policy in light of the circumstances of the actual loss and damage.

If your home or business (or auto) is damaged by a riot or “civil commotion”, there is usually coverage for such losses subject to important limitations contained in standard policy forms.  In one standard business coverage form, for example, “riot and civil commotion” are included within the definition of “Specified Causes of Loss”, and coverage for things like building damage and business interruption are available accordingly.

The same policy does not define what constitutes a “riot”.  Courts have reached differing conclusions on what constitutes a “riot” or “civil commotion.”  A riot is defined by Black’s Law Dictionary (9^th ed. 2009) as:

An assemblage of three or more persons in a public place taking concerted action in a turbulent and disorderly manner for a common purpose (regardless of the lawfulness of that purpose).

An unlawful disturbance of the peace by an assemblage of usually three or more persons acting with a common purpose in a violent or tumultuous manner that threatens or terrorizes the public or an institution. 

The main thing to remember is that most business policies will provide coverage for building damages, business losses and extra expenses incurred as a result of a riot.  In the event of such losses, it is important to have your policy reviewed carefully by an insurance coverage professional.

Yes. Parr Richey is open for business. We are here for you.

Yes. Parr Richey IS open for business; and yes, we are taking on COVID-19 related cases.

The attorneys at Parr Richey want you to know we are ready to help you and your business recover from government-ordered shutdowns and the resulting significant interruption to your revenues and productivity.

The sooner you ask, the sooner we can help you get back on track.

Founded in 1899 in Lebanon, Indiana, by W. H. Parr, Sr. the lawyers at Parr Richey have served individuals, businesses and institutions for over 100 years – our strengths are your advantage.

Here are some of the ways we can help:

1. Insurance policies and contracts review to determine whether and to what extent COVID-19 related business losses may be covered or mitigated through insurance or other contractual claims.  We represent policyholders each and every day in claims of all types and sizes and have the ability to answer your questions effectively and efficiently.
2. Legislative relief determination and eligibility. The United States Congress has made an historic stimulus package available to qualifying businesses and individuals.  We can help you determine your eligibility and navigate the legal aspects of the process for getting help.
3. Employment law. Parr Richey attorneys have been helping businesses and individuals resolve employment and labor related issues for decades and we stand ready to answer your questions about how to handle workforce issues large or small.

Contact Mike Schultz at mschultz@parrlaw.com or 317- 501-2233

Contact Jim Buddenbaum at jbuddenbaum@parrlaw.com or 317-439-1181

Insurance Companies Owe Duty of Good Faith and Fair Dealing to Additional Insureds

In a recent opinion, the Indiana Court of Appeals decisively ruled that insurers owe a duty of good faith and fair dealing to all insureds, even if an insured is not the policyholder.

Many insurance policies extend coverage to individuals other than the person or persons specifically listed in the policy. For example, a driver’s automobile insurance policy may cover bodily injury to passengers in her vehicle, or a homeowner’s insurance policy may provide hazard coverage to the homeowner’s mortgage lender if the home suffers damage. In these instances, the individual or entity receiving coverage under another’s insurance policy is referred to as an “additional insured.”

In Schmidt v. Allstate Property and Casualty Insurance Company, Schmidt was injured while riding with a friend, who was insured by Allstate. She sued her friend and the driver of the other vehicle for negligence. Schmidt qualified as an insured under her friend’s Allstate policy, which defined “Insured Person(s)” as “any person while in, on, getting into or out of, or getting on or off of an insured auto with your permission[.]”

After Allstate refused to pay Schmidt the policy limits for underinsured motorist coverage, she amended her lawsuit to include a bad faith claim against Allstate. Allstate argued that it did not owe a duty of good faith and fair dealing to Schmidt since she was not named in the applicable insurance policy.

The Indiana Court of Appeals rejected Allstate’s argument. When a policyholder enters into an insurance contract, the court reasoned, they expect that their family and friends will be treated fairly by their insurance company. The court channeled Gertrude Stein to declare that “an insured is an insured is an insured is an insured” for purposes of an insurance company’s duty of good faith and fair dealing. The court therefore affirmed that additional insureds may be entitled to compensation if an insurance company fails to deal with them in good faith.

Indiana Court of Appeals Addresses Damages for Inherent Diminished Value of Personal Property

On February 19, 2020, the Indiana Court of Appeals issued an opinion that clarified whether plaintiffs can recover damages for the inherent diminished value of personal property caused by the negligence of a tortfeasor. In Shield Global Partners-G1, LLC v. Lindsay Forster, the defendant rear-ended a pickup truck and admitted the accident was her fault. The truck was repaired after the accident occurred and was appraised twice in order to determine its diminished value. The plaintiff then filed a negligence action against the defendant to recover damages for the inherent diminished value of the truck following repairs.

The trial court initially denied the plaintiff’s claim for damages for the diminished value of the truck by equating these damages to “stigma” damages, which are not recoverable unless the property is permanently damaged. However, the Indiana Court of Appeals interpreted the case relied on by the trial court, Wiese-GMC, Inc. v. Wells, to reach a different conclusion.

The Wells case established, among other things, that diminished value damages are recoverable when “repair will not restore the item of personal property to its fair market value before the causative event.” The Indiana Court of Appeals therefore read this case to mean that, “even if the repair restores the property to its previous condition, damages may still be recovered if there is a resulting loss of fair market value to the property as a result of it having been damaged and then repaired.”

The Court of Appeals went on to discuss how property that has been damaged is likely to have a lesser fair market value even if repaired. In other words, recovering the cost of repair is not always sufficient to make an injured party whole again. Even after repairs, an owner may not be able to sell the vehicle at its fair market value before the accident. The Indiana Court of Appeals therefore clarified that when the cost of repair will not restore personal property to its fair market value, the diminution in value may be recovered as well.