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Landisᦄ Inc. v. Zurich American Insurance Co.

United States District Court, N.D. Indiana, LaFayette Division

January 15, 2019

LANDISᦄ INC., a Delaware Corporation, f/k/a LANDIS & GYR METERING, INC., Plaintiff,
v.
ZURICH AMERICAN INSURANCE COMPANY, a New York Corporation, f/k/a ZURICH INSURANCE COMPANY, Defendant.

          OPINION AND ORDER

          Andrew P. Rodovich United States Magistrate Judge

         This matter is before the court on the Motion for Partial Summary Judgment on Choice of Law [DE 73] filed by the defendant, Zurich American Insurance Company, on February 2, 2018, and the Cross Motion for Partial Summary Judgment on Choice of Law [DE 122] filed by the plaintiff, Landisᬪ Inc., on June 20, 2018. For the following reasons, the Motion for Partial Summary Judgment on Choice of Law [DE 73] is GRANTED, and the Cross Motion for Partial Summary Judgment on Choice of Law [DE 122] is DENIED.

         Background

         The plaintiff, Landisᬪ Inc., initiated this matter on October 7, 2016, against the defendant, Zurich American Insurance Company. This action arises out of Zurich's alleged wrongful denial of coverage and mishandling of a long-standing environmental liability claim. Landis seeks to recover monies it expended to investigate and remediate a Resource Conservation and Recovery Act (RCRA) surface impoundment waste management unit located at 3601 Sagamore Parkway North in Lafayette, Indiana. It also has alleged that Zurich acted in bad faith in processing the claim.

         In November of 1984, Landis was required to commence an investigation under the RCRA at the Sagamore Parkway Site (Site) in Lafayette, Indiana, in response to demands from the United States Environmental Protection Agency (EPA) and the Indiana Department of Environmental Management (IDEM). The EPA identified Landis as a possible source of significant contamination at the Site. Landis asserts that the contamination resulted in property damage during the Zurich policy years. Zurich contends that it has no record of this claim. However, Landis has alleged that Zurich was notified many years ago and wrongfully denied coverage based on the pollution exclusion, which is not a bar to coverage under Indiana law. Landis has indicated that it expended millions of dollars through a lengthy RCRA Corrective Action to investigate and to remediate contamination at the site. Therefore, it seeks to hold Zurich liable and to obtain restitution and recovery.

         Zurich has argued that the court must undertake a choice-of-law analysis because there are several critical coverage issues that will depend upon which state's substantive law applies. Specifically, Zurich has indicated that Indiana law differs from New York and Connecticut law on the relevant coverage issues, including the pollution exclusion, late notice defense, and personal injury coverage. Zurich asserts that it is entitled to summary judgment that New York law applies to the 21 primary, excess, and excess umbrella policies in effect from October 1, 1977 to October 1, 1986, and that Connecticut law applies to the 6 primary, excess, and excess umbrella policies in effect from October 1, 1986 to October 1, 1988.

         Landis filed a response in opposition on June 20, 2018, and also filed a cross-motion for partial summary judgment on choice of law. Landis has argued that Indiana law applies to all insurance coverage issues, while Illinois law applies to issues of bad faith and punitive damages. Zurich filed a reply in further support and response in opposition on August 1, 2018, and Landis filed its reply on August 28, 2018.

         Discussion

         Pursuant to Federal Rule of Civil Procedure 56(a), summary judgment is proper only if it is demonstrated that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Garofalo v. Vill. of Hazel Crest, 754 F.3d 428, 430 (7th Cir. 2014); Kidwell v. Eisenhauer, 679 F.3d 957, 964 (7th Cir. 2012); Stephens v. Erickson, 569 F.3d 779, 786 (7th Cir. 2009). A fact is material if it is outcome determinative under applicable law. The burden is upon the moving party to establish that no material facts are in genuine dispute, and any doubt as to the existence of a genuine issue must be resolved against the moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 160, 90 S.Ct. 1598, 1610, 26 L.Ed.2d 142, 155 (1970); Stephens, 569 F.3d at 786.

         Where the court is faced with cross-motions for summary judgment, “the court must construe all inferences in favor of the party against whom the particular motion is made.” Maclin v. SBC Ameritech, 520 F.3d 781, 786 (7th Cir. 2008). Once a party has made a properly-supported motion for summary judgment, the opposing party may not simply rest upon the pleadings but must instead submit evidentiary materials which “set forth specific facts showing that there is a genuine issue for trial.” Maclin, 520 F.3d at 786. A choice of law issue is a matter of law appropriate for summary judgment. Flowers v. Southwest Airlines Co., 2007 WL 118874, at *8 (S.D. Ind. 2007).

         The Seventh Circuit has noted that before a court engages in a choice of law analysis, it first must determine whether a conflict of law actually exists. In re Griffin Trading Co., 683 F.3d 819, 824 (7th Cir. 2012) (citing Prudential Ins. Co. of Am. v. Kamrath, 475 F.3d 920, 924 (8th Cir. 2007)). In the present case, the court finds, and the parties agree, that Indiana courts and New York and Connecticut courts have ruled contrary to each other on coverage issues, including the pollution exclusion. Therefore, the court concludes that a choice of law inquiry is required.

         When a federal district court sits in diversity, it must determine the applicable substantive law based on the choice of law rules of its forum state. Rice v. Nova Biomedical Corp., 38 F.3d 909, 915 (7th Cir. 1994). Therefore, the court must apply Indiana choice-of-law rules. Under Indiana law, the interpretation of insurance policies is a contract action for choice of law purposes. Travelers Ins. Companies v. Rogers, 579 N.E.2d 1328, 1330 (Ind.Ct.App. 1991). In contracts cases, Indiana “applies only the law of the state with the most intimate contacts.” Nat'l Union Fire Ins. Co. v. Std. Fusee Corp., 940 N.E.2d 810, 815 (Ind. 2010) (citing W.H. Barber Co. v. Hughes, 223 Ind. 570, 63 N.E.2d 417, 423 (1945)). In determining which state has the most intimate contacts, the list of factors that courts in Indiana are to consider include: (1) the location of the subject matter of the contract; (2) the place of contracting; (3) the place where contract negotiations occurred; (4) the place of performance; and (5) the domicile, residence, nationality, place of incorporation, and place of business of the parties. Restatement (Second) of Conflict of Laws § 188 (1971). Restatement (Second) of Conflict of Laws § 193 (1971), to which subsection (1) of § 188 defers, has further guided the court's consideration of the subject matter of the contract. American Employers Ins. Co. v. Coachmen Industries, Inc., 838 N.E.2d 1172, 1176-77 (Ind.Ct.App. 2005).

         As an initial matter, the declaration pages of the Policies in effect from October 1, 1977 to October 1, 1982 identified Landis & Gyr, N.A., Inc. as the named insured, with an address of either 4 Westchester Plaza, Elmsford, New York or 101 Executive Boulevard, Elmsford, New York. The Policies in effect from October 1, 1982 to October 1, 1986 identified Landis & Gyr, Inc. as the named insured, with an address of 4 Westchester Plaza, Elmsford, New York. The Policies in effect from October 1, 1986 to October 1, 1988 identified Landis & Gyr, Inc.'s address as 100 First Stamford Place, Stamford, Connecticut. Additionally, at various times the Policies listed: Duncan Electric Co., Inc.; Landis & Gyr Metering, Inc.; Moore Systems, Inc.; Landis & Gyr Systems, Inc.; Metal Products Co.; Dayton Electronics Products Co.; and Andover, Inc. as named insureds.

         In October of 1982, Landis & Gyr of North America and Landis & Gyr New York merged to form Landis & Gyr, Inc. Landis & Gyr, Inc. would have 2 main subsidiaries, the Duncan Division, consisting of Metal Products, Dayton Electronics, and Duncan Electric, and Moore Systems. [DE 74-2 at 21]. In 1984, Landis changed the name of Duncan Electric to Landis & Gyr Metering. [DE 74-2 at 90]. Landis's Rule 30(b)(6) deponent, John Mastarone, indicated that Duncan Electric and Landis & Gyr Metering, Inc. ...


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