INSURANCE COMPANY OF THE WEST v. HIGH PERFORMANCE ALLOYS, INC et al
Filing
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ORDER ON PENDING MOTIONS - Plaintiff's Motion for Judgment on the Pleadings [Dkt. 31 ] is GRANTED and Defendant's Motion for Summary Judgment 33 on its counterclaim is DENIED. All other pending motions are DENIED AS MOOT. Final judgment shall issue accordingly. (SEE ORDER.) Signed by Judge Sarah Evans Barker on 1/29/2025. (TPS)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
INSURANCE COMPANY OF THE WEST,
Plaintiff,
v.
HIGH PERFORMANCE ALLOYS, INC., et
al.,
Defendants.
HIGH PERFORMANCE ALLOYS, INC.,
Counter Claimant,
v.
INSURANCE COMPANY OF THE WEST,
Counter Defendant.
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No. 1:23-cv-01875-SEB-MG
ORDER ON PENDING MOTIONS
Now before the Court are the Motion for Judgment on the Pleadings [Dkt. 31],
filed by Plaintiff and Counter Defendant Insurance Company of the West ("ICW") and
the Motion for Summary Judgment [Dkt. 33], filed by Defendant and Counter Claimant
High Performance Alloys, Inc. ("High Performance"). This is an insurance coverage
dispute in which ICW seeks a judgment that it has no duty to defend or indemnify High
Performance against claims asserted against it in an underlying wrongful death lawsuit.
High Performance has filed a counterclaim seeking a declaration that ICW owes a duty to
defend and indemnify it because the factual basis of the underlying lawsuit falls within
1
ICW's coverage of High Performance. For the reasons detailed below, we GRANT
Plaintiff and Counter Defendant's (ICW) Motion for Judgment on the Pleadings and
DENY Defendant and Counter Claimant's (High Performance) Motion for Summary
Judgment.
Factual Background
I.
The ICW Policy
ICW issued a Workers Compensation and Employers' Liability Insurance Policy to
High Performance under policy number WIN 5057361 01 with an effective period of
October 1, 2021 to October 1, 2022 (the "Policy"). The Policy provides for two kinds of
coverage, Workers Compensation Insurance and Employers Liability Insurance. As
relevant to this litigation, Part Two of the Policy applies to bodily injury caused by an
accident, including bodily injury resulting in death, and in relevant part states as follows:
A. How This Insurance Applies
This employers liability insurance applies to bodily injury by accident or
bodily injury by disease ….
B. We Will Pay
We will pay all sums that you legally must pay as damages because of bodily
injury to your employees, provided the bodily injury is covered by this
Employers Liability Insurance ….
C. Exclusions
This insurance does not cover:
***
2
4.
Any obligation imposed by workers compensation, occupational
disease, unemployment compensation, or disability benefits law, or
any similar law;
5.
Bodily injury intentionally caused or aggravated by you;
***
11.
Fines or penalties imposed for violation of federal or state law; ….
Dkt. 1-5.
II.
The Underlying Litigation
On August 11, 2023, Sara Sullivan, as Wife and Representative of the Estate of
Elliot Sullivan, filed a lawsuit in Tipton Circuit Court against High Performance and
other entities not involved in this litigation, alleging that her husband, Elliot Sullivan, was
employed as a plant manager for High Performance at its facility located in Tipton
County, Indiana, when he sustained personal injuries while working, resulting in his
death (the "Sullivan Lawsuit"). In summary, the complaint in the Sullivan Lawsuit
alleges as follows: 1
On August 12, 2022, High Performance employees were running configuration
tests on a 750-Ton Large Erie Forge Press (the "Erie Forge Press") inside High
Performance's Tipton facility. Dkt. 1-5 ¶ 7; ¶ 25. The Erie Forge Press is equipped on
each corner of its bolster plate with metal bars, referred to as "shims" or "hard-stops",
1
ICW attached the original complaint filed in the Sullivan Lawsuit to its complaint in this case.
High Performance attached the amended complaint filed in the Sullivan Lawsuit to its motion for
summary judgment. The parties have not pointed us to any differences relevant to our
determination of the issues before us. Accordingly, we have cited to the original complaint as
that was the version attached to the pleadings.
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which are used to configure the machine. Id. at 2 ¶ 8. During the August 12 testing, the
Erie Forge Press operator lowered the head of the press, bringing it into contact with the
shims, and as pressure was applied to the device, the southwest corner shim shot out from
underneath the bolster plate at a high rate of speed toward the control panel and struck
Mr. Sullivan in the abdomen. Id. ¶ 10, ¶ 25. Mr. Sullivan died as a result of the injuries
sustained from the impact. Id. ¶ 25.
Prior to the incident, High Performance had received a "serious" violation from the
Indiana Occupational Safety and Health Administration for having "ineffectively
guarded" equipment and thus is alleged to have had actual knowledge that its employees
were in danger of being struck by and caught in hazards due to its policy and practice of
operating machinery without protective shields to properly safeguard its employees. Id.
¶¶ 74–75. Also prior to the incident, High Performance is alleged to have had actual
knowledge of a software or system update that provided Erie Forge Press operators the
level of precision needed to complete the calibration and measuring process without
using shims or hard-stops, but High Performance failed to install the update, forcing its
employees to continue to use the shims and hard-stops to configure the machines. Id.
¶¶ 77–78.
Based on these allegations, the Sullivan Lawsuit asserts a gross negligence claim
against High Performance, alleging that High Performance acted "with gross negligence
and in a willful and wanton manner, without regard to the safety of others" as well as
"with actual intent to cause injury to [Mr. Sullivan]" and that Mr. Sullivan died "as a
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direct and proximate result" of High Performance's "grossly negligent and careless acts
and omissions." Id. ¶¶ 73, 79, 80.
III.
The Instant Litigation
ICW filed the instant complaint on October 18, 2023, seeking a declaratory
judgment that it has no duty to defend or indemnify High Performance in the Sullivan
Lawsuit. High Performance filed a counterclaim on December 20, 2023, seeking a
declaration from the Court that ICW does have a duty to defend and indemnify it in the
underlying lawsuit. Now before the Court are ICW's motion for judgment on the
pleadings and High Performance's motion for summary judgment, both filed on June 7,
2024. Those motions are fully briefed and ripe for ruling.
Legal Analysis
I.
Applicable Legal Standards
ICW's motion for judgment on the pleadings asks the Court to rule as a matter of
law that it owes no duty to defend or indemnify High Performance in the Sullivan
Lawsuit. High Performance's responsive motion for summary judgment on its
counterclaim asks, in turn, that the Court find that ICW is required to defend and
indemnify High Performance in that lawsuit.
Federal Rule of Civil Procedure 12(c) permits a party to move for judgment after
the complaint and answer have been filed. Fed. R. Civ. P. 12(c). Where, as here, "the
movant seeks to 'dispose of the case on the basis of the underlying substantive merits[,]
… the appropriate standard is that applicable to summary judgment, except that the court
may consider only the contents of the pleadings.'" United States Specialty Ins. Co. v. Vill.
5
of Melrose Park, 455 F. Supp. 3d 681, 687 (N.D. Ill. 2020) (quoting Alexander v. City of
Chicago, 994 F.2d 333, 336 (7th Cir. 1993)). Accordingly, the court applies "the same
standard to each of the pending motions, except that [we] may consider undisputed facts
outside of the pleadings and their attachments to resolve [the] summary judgment
motion." Admiral Ins. Co. v. Anderson, 529 F. Supp. 3d 804, 810 (N.D. Ill. 2021). Thus,
the motions will be granted only if "no genuine issues of material fact remain to be
resolved and … the [movant] is entitled to judgment as a matter of law." Pro Assurance
Speciality Ins. Co. v. Imperial Realty Co., 545 F. Supp. 3d 618, 620 (N.D. Ill. 2021)
(citation and quotation marks omitted).
II.
Interpretation of Insurance Contracts Under Indiana Law
There is no dispute that Indiana law governs the outcome and analysis of the
issues presented in this case. In an insurance policy dispute under Indiana law, “the
insured has the burden of proving that the coverage applies, and the insurer, if relying on
an exclusion to deny coverage, has the burden of demonstrating that the exclusion is
applicable.” Bowman, Heintz, Boscia & Vician, P.C. v. Valiant Ins. Co., 35 F. Supp. 3d
1015, 1023 (N.D. Ind 2014) (quotation marks and citation omitted). The interpretation of
an insurance policy entails matters of law. Westfield Companies v. Knapp, 804 N.E.2d
1270, 1273–74 (Ind. Ct. App. 2004). Insurance contract provisions are subject to the
same rules of construction as other contracts. Thus, courts must construe insurance
policies "as a whole, rather than considering individual words, phrases or paragraphs."
Id. at 1274. If the contract language is clear and unambiguous, it should be given its
plain and ordinary meaning. Newman Mfg., Inc. v. Transcon. Ins. Co., 871 N.E.2d 396,
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401 (Ind. Ct. App. 2007). Additionally, “[i]nsurance companies are free to limit their
liability, so long as they do so in a manner consistent with public policy as reflected by
case or statutory law.” Gheae v. Founders Ins. Co., 854 N.E.2d 419, 423 (Ind. Ct. App.
2006). Thus, “[a]n insurance policy that is unambiguous must be enforced according to
its terms, even those terms that limit an insurer’s liability.” Haag v. Castro, 959 N.E.2d
819, 824 (Ind. 2012) (quoting Property-Owners Ins. Co. v. Ted's Tavern, Inc., 853 N.E.2d
973, 978 (Ind. Ct. App. 2006)).
Under Indiana law, "an insurer's duty to defend its insureds is broader than its
coverage for liability or duty to indemnify." Indiana Farmers Mut. Ins. Co. v. Ellison,
679 N.E.2d 1378, 1381–82 (Ind. Ct. App. 1997), trans. denied. In order to determine
whether an insurer has a duty to defend, Indiana courts look to the allegations contained
within the complaint as well as to those facts known or ascertainable by the insurer after a
reasonable investigation. Jim Barna Log Sys. Midwest, Inc. v. General Cas. Ins. Co. of
Wisconsin, 791 N.E.2d 816, 823 (Ind. Ct. App. 2003). The complaint's allegations "give
rise to a duty to defend whenever, if proved true, coverage would attach." Federal Ins.
Co. v. Stroh Brewing Co., 127 F.3d 563, 566 (7th Cir. 1997). However, “[w]hen the
underlying factual basis of the complaint, even if proved true, would not result in liability
under the insurance policy, the insurance company can properly refuse to defend.”
Wayne Twp. Bd. of Sch. Comm’rs v. Indiana Ins. Co., 650 N.E.2d 1205, 1208 (Ind. Ct.
App. 1995).
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III.
Discussion
The question before us here is whether the Sullivan Lawsuit alleges facts that, if
proved true, could result in coverage under the Employers Liability Insurance part of the
Policy. As we explain below, we hold that it does not, and thus, that ICW is entitled to a
declaratory judgment that it has no duty to defend or indemnify High Performance.
The Sullivan Lawsuit alleges a single count against High Performance for "gross
negligence" based on High Performance's alleged failure to enact certain safety
precautions to protect its employees, including Mr. Sullivan, from harm. The Sullivan
Lawsuit further alleges that, in failing to enact those safety precautions, High
Performance acted "with gross negligence and in a willful and wanton matter, without
regard to the safety of others" as well as "with actual intent to cause injury" to Mr.
Sullivan. Mr. Sullivan is also alleged to have died while on the job as a result of High
Performance's "grossly negligent, and careless acts and omissions."
Indiana's Workers' Compensation Act "provides an employee's sole remedy
against an employer for injuries occurring by accident, which arise out of and in the
course of his employment." Summers v. Crossroads Galvanizing, LLC, No. 4:21-CV074-PPS-JEM, 2023 WL 7109695, at *3 (N.D. Ind. Oct. 27, 2023) (citing Sims v. United
States Fid. & Guar. Co., 782 N.E.2d 345, 349–50 (Ind. 2003); Tippmann v. Hensler, 716
N.E.2d 372, 374–75 (Ind. 1999)). There is no dispute here that the Sullivan Lawsuit
alleges that Mr. Sullivan was employed by High Performance and that he died while on
the job as a result of High Performance's careless acts and omissions. ICW and High
Performance agree that the gross negligence claim alleged in the Sullivan Lawsuit
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therefore falls under the exclusive jurisdiction of Indiana's Worker's Compensation Act
and should be dismissed on those grounds. 2 The parties dispute, however, whether ICW
nonetheless has a duty to defend and/or indemnify High Performance in the underlying
litigation, regardless of the claim's ultimate futility under the clear terms of the statute
and the contract.
ICW argues that it has no duty to defend or indemnify because the Policy's
worker's compensation exclusion, which precludes coverage for "any obligation imposed
by workers compensation … law … or any similar law" applies, barring any possibility
of coverage for the gross negligence claim alleged against High Performance in the
Sullivan Lawsuit. High Performance, on the other hand, argues that the worker's
compensation exclusion does not bar coverage here because the plaintiff in the
underlying litigation is not claiming any entitlement to benefits under the workers'
compensation law and thus is not seeking a remedy excluded under the Policy. High
Performance contends that, under Indiana law, the fact that the underlying plaintiff's
attempt to bypass obviously applicable workers' compensation laws is unlikely to succeed
does not relieve ICW of the duty to defend that civil claim on behalf of its insured when,
as pled, the underlying plaintiff's claim for damages falls within the scope of the Policy.
Under Indiana law, the mere fact that a claim is unlikely to succeed does not
obviate the insurer's duty to defend that claim as the duty to defend applies even to
2
To the extent the allegations in the Sullivan Lawsuit could be read to allege an intentional tort
not governed by worker's compensation exclusivity, the Policy's intentional harm exclusion
would preclude coverage for any such claim. This case therefore turns on the applicability of the
worker's compensation exclusion and we do not discuss the intentional harm exclusion further.
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"unfounded, false or fraudulent suits based upon risks it has insured." Cincinnati Ins. Co.
v. Mallon, 409 N.E.2d 1100, 1105 (Ind. Ct. App. 1980). However, "when the underlying
factual basis of the complaint, even if proved true, would not result in liability under the
insurance policy, the insurance company can properly refuse to defend." Id. Therefore,
while an insurer is not "entitled to ignore the relief the claimant actually seeks against its
insured and to refuse to defend on the theory that the claimant cannot possibly prevail as
a matter of law," an insurer can refuse to defend in cases where there is a "policy
exclusion[] that would have applied even if the underlying claim had been valid." Home
Fed. Sav. Bank v. Ticor Title Ins. Co., 695 F.3d 725, 732 (7th Cir. 2012).
Here, even assuming all factual allegations in the Sullivan Lawsuit to be true, to
wit, that High Performance was aware of a highly dangerous condition faced by its
employee, Mr. Sullivan, yet still exposed him to that condition, resulting in his untimely
death while on the job, such allegations would not result in liability under the Policy
because the underlying complaint specifically alleges that Mr. Sullivan was employed by
High Performance, that he was engaged in work at the time of his death, and that High
Performance's negligent acts and omissions caused his death. The parties agree that the
only recourse for the underlying plaintiff is through Indiana's workers compensation
laws. We find, therefore, that the Policy's workers compensation exclusion, which
excludes from coverage "any obligation imposed by workers compensation … or any
similar laws" unambiguously bars coverage for the sole claim brought against High
Performance in the Sullivan Lawsuit, thus relieving ICW of the duty to defend.
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We are not persuaded by High Performance's contention that, because the Sullivan
Lawsuit is a wrongful death suit and the remedy sought is not workers compensation
benefits, the Policy's workers compensation exclusion does not apply. High Performance
has not cited, nor have we found, any case "holding that exclusionary language like that
used here—'any obligation imposed' by workers' compensation—comes into play only
where an employee has actually applied for or obtained benefits…." Culligan v. State
Compensation Ins. Fund, 81 Cal. App. 4th 429, 439 (Cal. Ct. App. 2000).
To the contrary, the only cases cited by either side specifically interpreting
workers compensation exclusions in employers' liability policies with analogous
language to that at issue here have held that "[t]he 'obligation imposed' by the workers'
compensation law is readily understood to mean the obligation as an employer, under
workers' compensation, to provide benefits. That inchoate obligation exists whether or
not an employee actually chooses to seek benefits." Id. (emphasis added). Thus, so long
as the underlying lawsuit concerns an employee subject to the remedy of workers
compensation laws, courts have interpreted workers compensation exclusions similar to
the exclusion at bar to exclude the employees' claims from coverage, regardless of
whether they were pursuing a remedy under a workers compensation scheme. See, e.g.,
Id. at 439–40; Seneca Ins. Co. v. Cybernet Entertainment, LLC, 760 Fed. App'x 541,
544–45 (9 Cir. 2019) (holding that provision in employer's liability portion of the
insurance policy excluding coverage for "any obligation imposed by a workers'
compensation … law" barred coverage for negligence claims alleging that the insured
failed to maintain a safe workplace); Employers Assurance Co. v. Ford Store Morgan
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Hill, Inc., 608 F. Supp. 3d 930, 942 (N.D. Cal. 2022) (concluding as a matter of law that
"the sole claim asserted against [the insured] in the Underlying Action—for negligent and
grossly negligent breach of [the insured's] duty to provide [the employee plaintiff] with a
safe work environment—falls within the scope of workers' compensation law and thus
falls within the scope of the Policy's workers' compensation exclusion" set forth in the
employer liability part of the insurance policy that excluded from coverage "[a]ny
obligation imposed by a workers compensation … or any similar law"); Stephenson v.
Argonaut Ins. Co., 125 Cal. App. 4th 962, 974 (Cal. Ct. App. 2004) (holding that workers
compensation exclusion in employer liability part of the insurance policy
"unambiguously eliminated any potential of coverage" for the insured in the underlying
breach of contract action).
In addition to its comporting with the plain language of the exclusion, we find that
this interpretation best aligns with the purpose of the two-part workers compensation and
employer liability coverage provided by the Policy. As the Seventh Circuit has
recognized:
A workers compensation and employer liability policy is a standard liability
insurance policy designed to insure an employer primarily for liability under
workers' compensation laws, but secondarily for liability for workplace
accidents not covered by such laws—for example, liability for a claim by an
employee's family member injured by a workplace injury to the employee
(as when an injury to a pregnant employee injures her fetus as well), or for
claims for workplace injuries not covered by workers' compensation, such as
injuries to farm employees or an injury to an employee by a fellow employee
motivated by spite. … Such insurance coverage fills gaps in workers'
compensation law that sometimes allow an employee to sue his employer in
tort, bypassing the limits on workers' compensation relief.
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Hayes Lemmerz Int'l, Inc. v. Ace Am. Ins. Co., 619 F.3d 777, 778–79 (7th Cir. 2010)
(internal citations omitted). Under High Performance's construction, the "structural
distinction" of the Policy "would be lost, for an employee required by the exclusivity rule
to use only workers' compensation could simply choose not to use it and consequently
create a duty to defend. The cost limits of the compensation bargain would be lost, all at
the whim of the employee." Culligan, 81 Cal. App. 4th at 439.
The cases cited by High Performance in support of its position, namely, TKK USA,
Inc. v. Safety National Casualty Corporation, 727 F.3d 782 (7th Cir. 2013), Home
Federal Savings Bank v. Ticor Title Insurance Company, 696 F.3d 725 (7th Cir. 2012),
and Hayes Lemmerz International, Inc. v. American Insurance Company, 619 F.3d 777
(7th Cir. 2010), do not alter our analysis as none of these cases dealt with the application
of a workers compensation exclusion that purportedly barred coverage as that issue is
presented here. Rather, these cases recognize only that, regardless of the merits of the
underlying claim, an insurance company still has a duty to defend its insured against risks
covered by the policy unless policy exclusions exist that, assuming the validity of the
claim, nonetheless unambiguously bar coverage. As set forth above, we find that such an
exclusion exists here.
ICW and High Performance agree that any asserted "bodily injury" claim against
High Performance in the Sullivan Lawsuit concerns an employee subject to the remedy of
the Indiana's Workers' Compensation Act. Accordingly, as a matter of law, even
assuming the factual basis of the underlying litigation to be true, coverage is precluded by
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the Policy's workers compensation exclusion and ICW has no duty to defend or
indemnify High Performance in the Sullivan Lawsuit.
IV.
Conclusion
For the reasons detailed above, we hold that Plaintiff does not owe a duty to
defend or indemnify Defendant under Part II of the Workers Compensation and
Employers Liability Policy for the gross negligence claim alleged against Defendant in
the Sullivan Lawsuit. Accordingly, Plaintiff's Motion for Judgment on the Pleadings
[Dkt. 31] is GRANTED and Defendant's Motion for Summary Judgment [33] on its
counterclaim is DENIED. All other pending motions are DENIED AS MOOT. Final
judgment shall issue accordingly.
IT IS SO ORDERED.
1/29/2025
Date: __________________________
_______________________________
SARAH EVANS BARKER, JUDGE
United States District Court
Southern District of Indiana
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Distribution:
Matthew James Anderson
TABOR LAW FIRM
manderson@maylorber.com
Trevor J. Crossen
CROSSEN LAW FIRM, LLC
trevor@crossenlawfirm.com
Mary E. McClellan
Quintairos, Prieto, Wood & Boyer
mary.mcclellan@qpwblaw.com
William Kilburn McVisk
Tressler LLP
wmcvisk@tresslerllp.com
Robert J. Palmer
MAY OBERFELL AND LORBER
rpalmer@maylorber.com
Colleen N Savage
Sgro and Roger
csavage@sgroandroger.com
Anthony Sgro
Sgro & Roger
tsgro@sgroandroger.com
Georgianne Marie Walker
MAY OBERFELL LORBER
gwalker@maylorber.com
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