United States District Court, N.D. Indiana, Hammond Division
ATLANTIC CASUALTY INSURANCE COMPANY, Plaintiff/Counter-Claim Defendant,
JUAN AND MARIA GARCIA, Defendants/Counter-Claimants.
OPINION AND ORDER
E. MARTIN MAGISTRATE JUDGE UNITED STATES DISTRICT COURT
matter is before the Court on cross-motions for summary
judgment: (1) Plaintiff Atlantic Casualty Insurance
Company's Motion for Summary Judgment [DE 23], filed on
April 22, 2016; and (2) Defendants Juan and Maria
Garcia's Motion for Partial Summary Judgment and Response
to Atlantic Casualty's Motion for Summary Judgment [DE
25], filed on May 26, 2016.
parties have consented to the exercise of jurisdiction by a
United States Magistrate Judge, see DE 14, giving
this Court jurisdiction to decide this case under 28 U.S.C.
2004, Juan and Maria Garcia purchased property in Lake
Station, Indiana. The site was the home of an old dry
cleaning facility that had operated from around 1945 to 2000.
DE 23-6 at 10-15. In connection with the dry cleaning
operation, the site housed underground storage tanks
containing “Stoddard solvent, ” a petroleum-based
solvent used in dry cleaning; “PCE” solvent; and
heating oil. DE 23-6 at 10-18.
1999 or 2000, a site assessment had revealed that some of the
tanks containing Stoddard solvent were leaking. An
environmental consulting company reported the leak to the
Indiana Department of Environmental Management, which
requested further testing. Testing continued into 2004, the
year the Garcias bought the site. See generally DE
23-6 at 10-19. The Garcias say they had no knowledge of the
preexisting contamination when they bought the property, nor
did they for many years after.
buying the property, the Garcias leased the site to tenants
who operated an auto repair shop and a day spa. The Garcias
bought commercial general liability insurance every year, but
the relevant insurer in this case is Atlantic, from whom the
Garcias bought commercial general liability insurance in 2009
and 2010. The first policy ran for a year beginning on June
25, 2009, and the Garcias renewed for a second year, ending
on June 25, 2011. For simplicity, the Court will refer to the
pair of year-long policies as “the policy.”
September 2014, the Garcias learned of the Indiana Department
of Environmental Management's claim seeking to have the
Garcias conduct and pay for further investigation and
remediation of environmental contamination originating on the
property. In November 2014, the Garcias notified Atlantic of
the IDEM's claim.
Garcias also hired a company called Environmental Inc. to
investigate the site. Environmental reported that the
pollution consisted of chemicals from the site's old dry
cleaning operation's underground storage tanks: Stoddard
solvents, “PCE” solvents, and heating oil. DE
23-6 at 10-18; DE 23-6 at 14 (“Q: . . . The
contamination sources that we just talked about, [Stoddard
solvents, PCE solvents, and heating oil], those contamination
sources would have all predated the Garcias' purchase of
the property, correct? A: Yes.”); DE 23-12 (“The
cause of the contamination is clearly the dry cleaning
operations in which [the dry cleaners' owners] engaged
for many years . . .”).
denied the Garcias' claim and filed this lawsuit, seeking
declaratory judgment that its policy does not provide
coverage to the Garcias. Both sides now seek summary
Court must grant a motion for summary judgment “if the
movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law.” Fed.R.Civ.P. 56(a). In other words, for
summary judgment to be appropriate, “the record must
reveal that no reasonable jury could find for the non-moving
party.” Dempsey v. Atchison, Topeka, & Santa Fe
Ry., 16 F.3d 832, 836 (7th Cir. 1994) (internal
considering summary judgment, the Court must construe all
facts in a light most favorable to the non-moving party and
draw all reasonable inferences in favor of that party.
Srail v.Vill. of Lisle, 588 F.3d 940, 948 (7th Cir.
2009). The Court at summary judgment does not evaluate the
weight of the evidence, judge witnesses' credibility, or
determine the truth of the matter, but rather determines
whethere there is a genuine issue of triable fact. See
Cimino v. Fleetwood Enters., 542 F.Supp.2d 869, 873
(N.D. Ind. 2008).
state law governs the substance of the parties' coverage
dispute. See, e.g., Am. Std. Ins. Co. v. Drew, No.
08-48, 2009 U.S. Dist. LEXIS 99135, *11 (N.D. Ind. Oct. 15,
2009) (citing Harper v. Vigilant Ins. Co., 433 F.3d
521, 525 (7th Cir. 2005)). In Indiana, the construction of a
written contract is a generally question of law for which
summary judgment is “particularly appropriate.”
Plumlee v. Monroe Guar. Ins. Co., 655 N.E.2d 350,
354 (Ind.Ct.App. 1995), trans. denied. But before
granting summary judgment based on the construction of a
written contract, the Court must determine either that as a
matter of law the contract is not ambiguous or uncertain, or
that any ambiguity can be resolved without the need for
insurance contracts “are subject to the same rules of
interpretation and construction as are other
contracts.” Eli Lilly & Co. v. Home Ins.
Co., 482 N.E.2d 467, 470 (Ind. 1985). An exclusion in an
insurance policy “must clearly and unmistakably bring
within its scope the particular act or omission that will
give rise to the exclusion, ” and coverage “will
not be excluded or destroyed by an exclusion unless such
clarity exists.” Keckler v. Meridian Sec. Ins.
Co., 967 N.E.2d 18, 23 (Ind.Ct.App. 2012), trans.
insurer's duty to defend its policyholder is broader than
its contractual obligation to provide coverage. Trisler
v. Indiana Ins. Co., 575 N.E.2d 1021, 1023 (Ind.Ct.App.
1991). But while the duty is broader, it “is not
boundless.” West Bend Mut. Ins. Co. v. United
States Fid. & Guar. Co., 598 F.3d 918, 922 (7th Cir.
2010) (citing Indiana law). An insurer may properly choose
not to defend if its independent investigation of the facts
underlying a complaint against its insured “reveals a
claim patently outside of the risks covered by the
policy.” Liberty Mut. Ins. Co. v. Metzler, 586
N.E.2d 897, 901 (Ind.Ct.App. 1992), trans. denied.
The nature of the claim, not the merit, establishes the
insurer's duty to defend. Trisler, 575 N.E.2d at