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Huntzinger v. Hastings Mut. Ins. Co.

Citation: 28 ELR 21283
No. 96-4163, 143 F.3d 302/(7th Cir., 04/28/1998)

The court holds that an insurance company does not owe a duty to defend and indemnify policyholders in an action arising out of the policyholders' maintenance of a solid waste dump on property subsequently sold to a developer. The court first holds that the policyholders have preserved only the owned property exclusion argument for appellate review. The policyholders asked the court to consider two arguments on appeal that were not raised in district court, and as such, they are waived. The court next holds that the developer's complaint failed to allege an occurrence that caused property damage, and, therefore, the policyholders are not entitled to coverage pursuant to the contract of insurance. The policy triggers coverage for either bodily injury or property damage that results from an occurrence. The policy defines occurrence as an accident, and, under Indiana law, an accident means an unexpected or unintended happening. It logically follows then that, for coverage to lie, the property damage had to have been caused by an unexpected or unintended act or event. The property damage in this case certainly was not caused by the policyholders' alleged fraudulent misrepresentation with respect to the condition of the land they sold to the developer. Rather, being that the nonhazardous, nonmigratory glass and brick posed no threat to the environment, the cause of the resulting economic loss was the policyholders' intentional conduct in establishing and maintaining the solid waste dump. The record in this case makes crystal clear that the policyholders failed to secure the glass shards, fire bricks, and red bricks in either an artificial container or an earthen pit that an objectively reasonable person would have believed insusceptible to rupturing or leaking. Accordingly, even if those materials were covered with a toxic chemical or otherwise hazardous, the policyholders were just dumping wastes onto land, thereby rendering as intentional whatever leeching and environmental damage would have followed. As a result, it cannot reasonably be said that the developer's complaint alleged property damage caused by an accidental occurrence. The court then notes that even if the developer's complaint had alleged property damage caused by an occurrence, the owned-property exclusion would bar any and all coverage available to the policyholders. Under both theories that Indiana law recognizes as triggering policy coverage, the policyholders lose because the site was damaged before the policyholders transferred title in the land to the developer.

Counsel for Plaintiffs
Jeffrey D. Featherstun
Plews, Shadley, Racher & Braun
1346 N. Delaware St., Indianapolis IN 46202
(317) 637-0700

Counsel for Defendant
Mark R. Smith
Smith & Bemenderfer
8440 Woodfield Crossing Blvd., Ste. 320, Indianapolis IN 46240
(317) 469-6060

Before Cummings and Wood, JJ.