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Northern Insurance Company of New York v. Travelers Insurance Co.

United States District Court, S.D. Indiana, Indianapolis Division

December 14, 2016

NORTHERN INSURANCE COMPANY OF NEW YORK as subrogee of Koch Originals, Inc., Plaintiff,
v.
TRAVELERS INSURANCE COMPANY, CNA INSURANCE COMPANY, HARTFORD INSURANCE COMPANY, TRAVELERS INDEMNITY COMPANY, CHARTER OAK FIRE INSURANCE COMPANY, TRAVELERS INDEMNITY COMPANY OF ILLINOIS n/k/a Travelers Property Casualty Company of America, and HARTFORD CASUALTY INSURANCE COMPANY, Defendants.

          ORDER ON DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S SECOND AMENDED COMPLAINT

          LARRY J. McKINNEY, JUDGE

         This cause is before the Court on Defendants The Travelers Indemnity Company, The Charter Oak Fire Insurance Company, and Travelers Property Casualty Company of America's (collectively “Travelers”), combined Motion to Dismiss (“Motion”) Plaintiff Northern Insurance Company's (“Northern”) Second Amended Complaint (“Amended Complaint”) pursuant to Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”) for failure to state a claim. Dkt. 50. Northern alleged in its Amended Complaint that Travelers must contribute a pro rata share of the costs and fees for cleaning up a contamination caused by Northern's Insured.[1] Dkt. 1.

         For the reasons set forth below, the Court GRANTS Defendants' Motion to Dismiss.

         I. BACKGROUND

         Northern alleged in its Amended Complaint that Travelers, along with Northern, CNA Insurance Company (“CNA”), and Hartford Insurance Company (“Hartford”), at all relevant times, [2] insured the property located at 1401 N. Park Street, Evansville, Indiana (“Real Estate”). Dkt. 1 ¶ 5. Northern stated that Traveler's insured George Koch Sons, Inc. and/or George Koch and Sons, Inc. (collectively “George Koch Sons”), on the Real Estate. Id. ¶ 6. Northern claims that for several years, Koch Originals, Inc., owned the Real Estate and for several years prior to that, George Koch Sons owned the Real Estate. Id. ¶¶ 7, 8. At all times relevant, the owners of the Real Estate engaged in metal working and plating processes that involved chemicals considered contaminants or pollutants upon contact with soil. Id. ¶ 9.

         In October 2008, Koch Originals entered into an Agreed Order with the Indiana Department of Environmental Management (“IDEM”) for payment of costs to clean up pollution on the Real Estate. Id. ¶ 10. Northern, CNA, and Hartford have paid, and continue to pay a portion of the cleanup costs (Northern 70.5%, CNA 19.7%, and Hartford 9.8%) based on the various policies in effect for the Real Estate. Id. ¶ 11. Northern does not possess the Travelers policy issued to George Koch Sons, but asserts that for nine years, Travelers issued sixteen policies for Commercial General Liability Insurance on the Real Estate. Id. ¶ 12.

         Northern claims that “[t]he three (3) Koch entities may be responsible for the cleanup costs at 1401 N. Park Street pursuant to I.C. 13-25-4-5 and I.C. 13-25-4-8, but in fact, their insurers, Northern, CNA, and Hartford are making the actual payments and Travelers should be doing the same.”[3] Id. ¶ 18. Northern alleges that it is entitled to subrogate against Travelers for Travelers' pro rata share of the cleanup costs. Id. ¶ 19. In support, Northern cites Ind. Code § 13-25-5-20, which states that “this chapter does not affect an action or a claim, including a claim for contribution, that a person who implements or completes an approved response action has or may have against a third party.” Id. ¶ 20.

         II. FAILURE TO STATE A CLAIM

         Rule 12(b)(6) permits the dismissal of an action for failure to state a claim upon which relief can be granted in the pleadings. Under Rule 12(b)(6), the Court must accept as true all well-pleaded factual allegations and draw all reasonable inferences in favor of the plaintiff. See Esekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995). A pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Federal Rule of Civil Procedure 8(a)(2). Detailed factual allegations are not required, but a plaintiff's complaint may not simply state “an unadorned, the defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The “allegations must be enough to raise a right to relief above the speculative level[.]” Bell Atlantic Corp. v. Twombly, 550, U.S. 544, 555 (2007). “[A] complaint must contain sufficient factual matter … to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged[, ]” not when the plaintiff only raises a “sheer possibility that the defendant has acted unlawfully.” Id. “[T]he height of the pleading requirement is relative to the circumstances[, ]” Cooney v. Rossiter, 583 F.3d 967, 971 (7th Cir. 2009), and “[d]etermining the plausibility of a claim is a context-specific task that requires [the Court] to draw on [its] judicial experience and common sense.” Brown v. JP Morgan Chase Bank, 334 Fed.Appx. 758, 759 (7th Cir. 2009).

         Travelers argues five separate grounds for dismissal of Northern's Amended Complaint. Dkt. 51. First, Travelers argues that Travelers and Northern do not cover the same Insured, which is a prerequisite for a contribution claim as between insurers. Id. at 6-7. Second, Travelers claims that Northern has alleged no basis for which it may pursue a direct action against an insurance company under Indiana law. Id. at 7-9. Third, Travelers asserts that Northern fails to allege that Travelers shared a common burden or common liability with Koch Originals, which is required to pursue a claim for contribution. Id. at 9-10. Fourth, Travelers claims that Northern fails to allege any facts that demonstrate Travelers' Insured, George Koch Sons, was responsible for the contamination at the Real Estate. Id. at 10-12. Finally, Travelers maintains that Northern has failed to allege any facts for which recoverable damages would be permissible under Indiana law. Id. at 12-13. The Court assesses each of these arguments in turn.

         A. Same Insured

         Travelers first argues that Northern cannot sue Travelers because Travelers did not insure Koch Originals, the party that entered into the Agreed Order with IDEM. Travelers claims, and Northern does not dispute, that it only represented George Koch Sons, which is a completely different entity. Travelers contends that, under Indiana law, for an insurer to seek contribution from another insurer for coverage, both insurers must cover the same parties. The Court agrees.

         In Indiana, to seek contribution from another insurer to recover a pro rata share of environmental cleanup costs, the policies must cover: “(1) the same parties, (2) in the same interest, (3) in the same property, (4) against the same casualty.” Ind. Ins. Co. v. Granite State Ins. Co., 689 F.Supp. 1549, 1558 (S.D. Ind. 1988). See also State Auto. Ins. v. DMY Realty Co., LLP, 977 N.E.2d 411, 431 (Ind. Ct. Ap. 2012). Northern's Amended Complaint concedes that Travelers and Northern do not represent the same parties. Dkt. 1 ¶¶ 5-8. It also states that it was Northern's client, Koch Originals, that entered into the Agreed Order that gave rise to the obligation to pay for the environmental contamination and for which Northern seeks contribution from Travelers. Id. ¶¶ 10, 11. Absent a showing that Travelers also represented the responsible party, Northern cannot bring a claim for contribution against Travelers under Indiana law.

         B. ...


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