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Thursday, January 20, 2005
Ind. Decisions - More on the South Bend insurance decision
The South Bend Tribune today has the back story on the Court of Appeals ruling in The City of South Bend, Indiana, et al v. Century Indemnity Co., et al (1/18/05 IndCtApp)[ILB entry here, 2nd opinion]. The story, headlined "Studebaker cleanup effort gets a boost: Ruling lets city lawsuit against former automaker's insurance proceed," was written by Jeff Parrott. Some quotes:
SOUTH BEND -- Enter downtown South Bend from the south and you can't help but notice them. The dilapidated eyesores stubbornly sit there. Thousands of tons of weathered bricks, rotting wood, crumbling concrete, rusting metal and broken glass. Decades ago they were vibrant, productive -- a source of community pride. Today they waste 140 acres of prime urban land, erode surrounding property values and serve as a constant reminder of the city's once-glorious industrial past.Mayor Stephen Luecke wants his legacy to include toppling the former Studebaker and Oliver Plow Works factory buildings, ridding the land of contamination and successfully marketing it to light industrial and high-tech ventures. From blight and ruins would spring jobs with solid paychecks, the kind that generate taxes, feed families, finance vacations, put kids through college and finance comfortable retirements.
But the city's budget is tight. Demolishing the structures could cost $21 million, money the city is seeking in federal government loans. It could cost another $20 million to clean up the contamination. Luecke would like to do it all with as few city tax dollars as possible, and he got a little help Tuesday from the Indiana Court of Appeals.
The court ruled that the city's lawsuit against the former Studebaker Corp.'s liability insurance companies can proceed in court. The city aims to make the companies pay to clean up pollution left behind when the automaker shut down in 1963.
Marion Superior Court Judge Michael Keele, who presides over environmental cases, had tossed the suit out, finding the city lacked legal grounds to bring it. Keele cited the state's "direct action" common law rule, which bars an allegedly injured party from seeking damages directly against the insurers of the party causing the injury -- before a judgment is obtained.
But the appeals court determined the complaint should be allowed to proceed because the city is not yet seeking any direct payment from the insurance companies, thus there is no "direct action." It is only seeking a declaration that the insurance companies would be obligated to provide coverage under the policies it issued to Studebaker -- if the city can prove Studebaker caused the contamination in its underlying case. * * *
Handling the case for the city is the Indianapolis law firm of Plews, Shadley, Racher and Braun. The firm is waging another legal battle -- with even more money at stake -- on the city's behalf in a U.S. Bankruptcy Court in Chicago, where it has entered a claim in the bankruptcy case of Allied Products Corp. Allied occupied some former Oliver Plow Works properties, plus a nearby stamping plant on South Franklin Street.
[The firm's Jeff] Featherstun said South Bend is not the first city to try funding brownfield redevelopment by holding polluting companies or their insurers accountable, but he was not certain whether any such lawsuits have succeeded. But in the interest of city taxpayers, the city thinks it's worth a try. "We wouldn't have brought the cases if we didn't think they were good cases," Featherstun said.
Posted by Marcia Oddi on January 20, 2005 08:41 PM
Posted to Ind. App.Ct. Decisions