Where the insured faces environmental suits in several states, should the law governing the liability policy be "site-specific," meaning the law of each state in which allegations of injury or property damage arise governs the policy's interpretation, or "uniform," whereby a single state's law governs? In Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Standard Fusee Corp., No. 49S04-1006-CV-318 (Ind., Dec. 29, 2010) (opinion here), the court favored a uniform interpretation.
Standard Fusee Corporation (SFC) manufactured emergency signaling flares. The company was incorporated in Delaware and headquartered in Maryland. SFC had operations in Maryland, Indiana, and Pennsylvania. In 2002, SFC learned that a chemical it used in the production of flares had been discovered in groundwater samples at its former California facility. More than 200 lawsuits were filed against SFC in California, but they were ultimately dismissed when it was determined that SFC never discharged the chemical there. After SFC voluntarily tested its Indiana facility in 2004, however, it found potential contamination. SFC then applied for and was granted inclusion in the state's voluntary remediation program.
SFC had CGL, excess and umbrella policies from various insurers. SFC requested defense and indemnification from the insurers with respect to the proceedings in California and Indiana. The insurers refused to provide coverage.
SFC sued for declaratory judgment and moved for partial summary judgment, arguing that Indiana law governed the interpretation of the policies and that the insurers had a duty to defend. The trial court granted the motion. The Court of Appeals reversed, adopting a "site-specific" approach to choice of law, whereby Indiana law governed the interpretation of the policies with respect to the Indiana site and California law with respect to the California site.
The Indiana Supreme Court reversed the Court of Appeals. The uniform approach was more consistent with Indiana's choice-of-law jurisprudence and applied in cases involving multi-site, multi-state insurance policies. In insurance contract cases, Indiana courts first attempted to determine the principal location of the insured risk. If no such location existed, a determination was made as to which state had the most intimate contacts.
Here, SFC was headquartered in Maryland. This suggested that Maryland was the principal location of the insured risk. As the state with the most intimate contact, the court held that the substantive law of Maryland applied to the entire dispute.