Richmond Indiana Plastics Recycling Warehouse Fire Claims

The property damage and injury attorneys at Parr Richey are continuing to monitor the aftermath of the devastating fire at the plastics recycling facility in Richmond, Indiana that started on April 11, 2023 and continued for an extended period of time to cause large volumes of toxic, hazardous materials to spew into the air. 

As has been widely reported, the EPA has collected samples and has found dangerous chemicals and even asbestos in debris widely distributed by the huge fire. As reported by the Associated Press (Flesher, April 14, 2023), “[m]onitors in the evacuation zone detected hydrogen cyanide, benzene, chlorine, carbon monoxide and volatile organic compounds” in the debris from this fire.

Property owners and citizens who have been or may later be affected by this preventable disaster should not delay in contacting legal counsel to help them protect their rights. In some cases, it will be critically important to document and preserve evidence, give timely notice of claims, and take other steps to make certain that victims of this fire have the best chance of securing fair and just compensation. 

For updated information, the U.S. EPA has set up a website for the My Way Trading Warehouse Fire – available at this link.

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.

Frozen Pipe Prevention and Water Damage Insurance Claims

With the recent biting cold, many property owners are taking steps to protect their investments to the best of their ability.  Some great information on how best to prevent disasters caused by freezing water pipes can be found in the Resource Links at the bottom of this article.

Recent research suggests a strong correlation between the loss of arctic sea ice and a particular pattern of the jet stream that causes the more frequent cold spells we feel here in Indiana.  But wherever you may fall on the never ending debate over global warming, one thing is beyond debate:  recent temperatures in Indiana have been unbearably and dangerously cold.  It is reasonable to expect that despite our best efforts a great deal of property damage will result from frozen and burst pipes.

Insurance claims involving frozen pipes, ice dams, and other cold-weather-related disasters can prove to be particularly frustrating for homeowners and businesses.  For example, many commercial policies include provisions that may limit or even exclude coverage for the catastrophic damage that can occur when pipes freeze, then burst.  If you have a dispute or potential dispute with your insurance company about coverage for frozen pipes or water damage, the time to seek advice and representation is now.  The property damage attorneys at Parr Richey are experienced with all aspects of these sometimes difficult claims and there is no fee charged for initial consultation.

The last time Indiana experienced the “polar vortex” the number of insurance claims for frozen and burst pipes skyrocketed.  Some estimated the cost to the US economy of such claims to exceed $5 billion.  Much of this loss is borne by individual homeowners and business owners who are not properly reimbursed for the loss and damage.  If you need help with your claim, Contact Us.

Resource links:

https://www.in.gov/oucc/2421.htm

http://disastersafety.org/wp-content/uploads/Freezing-Bursting-Pipes_IBHS-White.pdf

http://www.redcross.org/get-help/how-to-prepare-for-emergencies/types-of-emergencies/winter-storm/frozen-pipes

https://www.wikihow.com/Prevent-Frozen-Water-Pipes

Do You Have Flood Coverage?

Hurricanes Harvey and Irma have brought catastrophic flooding to parts of Florida and Texas, and the storm surge has affected other areas such as Charleston, South Carolina where high tides hit almost 10 feet on September 11^th, about 3 feet above flood stage.  Flooding is everywhere in the news.

Some water losses are not excluded in typical homeowners policies

What happens when you have a flood – particularly in areas not typically prone to flooding?  Do you have coverage under your homeowner’s insurance policy?

Probably not.  The typical homeowner’s policy excludes damage caused by what we typically consider to be a “flood”.  This includes water pushed over the land by waves or tides.  But flood insurance is available through the National Flood Insurance Program (“NFIP”).  There is a wealth of information available here. Unfortunately, not many affected homeowners are enrolled in NFIP.

Does this mean that if you suffer a water-related loss that you are automatically out of luck?  Not necessarily.  There may be many situations where damage that is covered by your policy occurs at or around the same time as the flood damage occurs, and it is necessary to carefully analyze the language in your policy to determine whether and under what circumstances there may be coverage for your water-related loss.  And, if the policy is unclear, that can benefit you as the policyholder.  For example, in Indiana, the law clear that ambiguities in insurance contracts are resolved in favor of the insured. See Erie Ins. Exch. v. Sams, 20 N.E.3d 182, 187 (Ind. Ct. App. 2014) (citing Meridian Mut. Ins. Co. v. Auto-Owners Ins. Co., 698 N.E.2d 770, 773 (Ind. 1998)). This is particularly true with unclear provisions that limit or exclude coverage. Id. Where provisions limiting coverage are not clearly and plainly expressed, the policy will be construed most favorably to the insured. Id. This strict construal against the insurer is driven by the fact that the insurer drafts the policy and foists its terms upon the customer. Am. States Ins. Co. v. Kiger, 662 N.E.2d 945, 947 (Ind. 1996), reh’g denied. (quoting American Economy Ins. Co. v. Liggett, 426 N.E.2d 136, 142 (Ind. Ct. App. 1981)).

The bottom line is this:  If you have suffered a water-related loss, it may be important to seek a legal interpretation of your policy before communicating with the insurance company.

Tornado Damage Insurance Claims: The Twist May Be in the Policy Language

Indiana has just been clobbered – again – by fierce, widespread tornadoes. The website of the National Weather Service has excellent data you can review to track the history of the storms and the damage they caused in your area. For example, visit: http://www.weather.gov/ind/august242016severeWhen the time comes to finalize your claim with your commercial or homeowners insurance carrier for the damage caused to your property by these strong storms, there are some common pitfalls to be aware of about what is or may be covered.

For example, depending on the scope or extent of the damage to your property, there may be additional dollars over and above the limits of your property coverage available to pay for the cost of debris removal. Policies provide this coverage in different ways and it is important to read and understand how your policy works when you are negotiating with your insurer. Here is one example of how a property policy may provide debris removal coverage:

Language like this appears simple enough on first reading, but look again.  Let’s say you incurred expense removing debris following a storm, and assume the cost of removing the debris was actually more than the damage caused to your structure.  This policy appears to limit the available dollars for debris removal to 25% of the “amount we pay for the direct physical loss of or damage to Covered Property.”  The capital letters means “Covered Property” is defined somewhere else in the policy.  Defined as what?  The building?  The building and outbuildings?  It is important to know.  Also, when this policy provides 25% of the amount of direct loss or damage “plus” the “deductible in this policy applicable to that loss or damage” does that mean 25% of the deductible or 100% of the deductible?  Again — this is important to know when you are settling with your insurance company.

What if all you have is trees down, but (thankfully) they missed your house?  Homeowners policies often provide limited coverage for damage to trees and shrubs. The straight-line winds that accompanied recent storms brought down many, many trees – both living and dead – and the cleanup cost can be staggering. Yet, your homeowner’s policy from that “good neighbor” company that is “on your side” may only provide you with very limited policy proceeds for the cleanup of trees, and then only under very limited circumstances.

Here is some typical language from a standard homeowner’s policy:

We will also pay your reasonable expense, up to $1000, for the removal from the “residence premises” of:

1)  Your tree(s) felled by the peril of Windstorm or Hail or Weight of Ice, Snow or Sleet; or 


2)  A neighbor’s tree(s) felled by a Peril Insured Against under Coverage C; 
provided the tree(s):

3) Damage(s) a covered structure;

4) Does not damage a covered structure, but:  a) Block(s) a driveway on the “residence premises” which prevents a “motor vehicle”, that is registered for use on public roads or property, from entering or leaving the “residence premises”; or  b) Block(s) a ramp or other fixture designed to assist a handicapped person to enter or leave the dwelling building.

The $1000 limit is the most we will pay in any one loss regardless of the number of fallen trees. No more than $500 of this limit will be paid for the removal of any one tree.

Say that again?!

If you need assistance untangling the language of your policy and working to resolve your claim with your insurance company, the policyholder attorneys of Parr Richey are always ready to help. Call Mike Schultz or Jim Buddenbaum toll free at 888-337-7766.

The Business Activity Exclusion

What happens if you operate a business – say an auto repair shop – as a means of making a living, and then suffer a fire loss to personal property located in that business? Assume the fire occurs as a result of working on a car in your repair shop, but that at the time of the fire you were not actually engaged in business; rather, you were working on your own car, or perhaps helping a friend to work on her car as a favor. Would the business activities exclusion in your homeowner’s insurance policy preclude you from recovering for the loss of your personal property?

The rule in Indiana is that “an insured is engaged in a business pursuit only when he pursues a continued or regular activity for the purpose of earning a livelihood. American Family Mutual Ins. Co. v. Bentley, 352 N.E.2d 860, 865 (Ind. Ct. App. 1976) (emphasis added); see also Asbury v. Indiana Union Mut. Ins. Co., 441 N.E.2d 232, 239 (Ind. Ct. App. 1982) (same). Further, “[w]hether an activity is a ‘business’ or property is ‘business property’ under an insurance policy is almost always a factual question presented for determination by the trier of fact or jury.” Id., at 243. The question, then, should turn on what you were doing at the time, and not just on the fact that the loss occurred at your business.

In a 2012 decision the district court for the Northern District of Indiana rejected the argument that personal property that is the same as an insured’s business property automatically means a business exclusion applied to preclude coverage for the loss. In Bachman v. AMCO Insurance Company, 2012 WL 4322746 (N.D.Ind. Sept. 20, 2012), the insured sued AMCO for breach of contract after the insurance company applied a $10,000 limitation in its policy applicable to property located in the residence premises used mainly for “business” purposes. Following a theft, the insured, who sold sports cards out of his home, made a claim under his homeowner’s policy for some $150,000 worth of Fleer basketball cards. The cards had been purchased with money from his business, but the insured considered the particular cards stolen to be his “personal collection”. Id. at *1-2. The insured even admitted that he considered his personal collection to be “investments” that he planned to sell one day when he was “ready to retire.” Id., at *1.

The insurance company argued that the $10,000 business property limitation in its policy applied to the stolen basketball cards and, “[r]elying on excerpts from [the insured’s] examination under oath, . . . contend[ed] that the subject property was business property because it was stored in a manner indistinguishable from the business inventory and was acquired with resources from [the business] with the intention of eventually being sold through the company.” Id., at *5. The insurance company relied on Asbury v. Ind. Union Mut. Ins. Co. (and two other cases) to support its argument. Id.

The district court first noted that the cases relied on by the insurance company (including Asbury) “actually support the denial of summary judgment.” Id. The district court went on to reason as follows:

To the extent that AMCO argues that the Fleer basketball cards automatically fit within the business property limitation at issue simply because Mr. Bachman operated a sports memorabilia business out of his home on a consistent basis at the time of the burglary, the argument cannot result in the granting of summary judgment in AMCO’s favor. No one disputes that Spectator Sportscards, Inc. constituted a “business” and that Mr. Bachman regularly and continually sold sports memorabilia from his home office to third persons for the purpose of earning a livelihood. . . . However, the limitation in AMCO’s policy plainly depends on the use of the property at issue.

Id., at *7 (emphasis in original; internal citation omitted).

Issues like this can arise in many contexts.  The application of exclusions in policies is not necessarily simple or obvious, and sometimes the coverage is actually more broad than it seems.  If you have suffered a loss and are involved in a dispute with your insurance company about what is covered and what is excluded by your policy, whether it is a homeowners policy or a commercial policy, you should contact an attorney with experience reading and interpreting the coverages, conditions, limitations and exclusions. Sometimes the insurance company takes a position that looks correct at first glance, but they may not be looking at the whole picture.

The Importance of Preserving Evidence after an Explosion or Fire

In the aftermath of a catastrophic explosion or fire, it is not surprising when victims or their family members do not think about the need to preserve evidence.  But in those cases where there is litigation to determine who or what may bear fault for causing the incident the efforts, or lack of efforts, to preserve and protect the evidence taken in the immediate aftermath of the fire or explosion will prove to be critical to the parties.  

Preserving the evidence is in everyone’s interest because the ultimate goal of any litigation is to determine the truth of what happened.  If it can be shown that the evidence was in the control of one party or another and the party in control failed to take appropriate steps to preserve the evidence so that other interested parties could examine it, the party in control may be accused of “spoliation” of evidence.  In that case, the court may ultimately instruct the jury that had the evidence been preserved and made available it would have been adverse to the party who could have preserved it — the so-called “adverse inference instruction”.

An enormous amount of information can be gleaned from what may appear to be unlikely sources.  Care must be taken to preserve even some materials that may seem to be inconsequential.  For example, lithium ion batteries such as those used in phones, tablets and laptops have a very high energy density. Although the electronic circuitry in chargers are supposed to prevent overcharging, those circuits can fail allowing the batteries to overheat and catch fire.  Yet, some fire investigators, focused on more obvious causes, can miss this evidence, which gets scooped up with all the other fire debris after the initial scene investigations have been concluded.

It is important for the victims of fires and explosions to have their own experts and investigators review the scene and not rely solely on those sent to the scene by their insurance company.  It is also important to act quickly, before the critical evidence is gone.

If you have questions regarding the need to preserve or protect evidence after a fire or explosion, contact an experienced attorney for help.