Indiana Appellate Court Rules Case Management Order Controls
January, 2003
Consistent with an emerging trend, the Indiana Appellate Court recently held that the terms of a Case Management Order (“CMO”), created in collective agreement by the parties, is to be given the same weight as a settlement agreement or contract between the parties. Such agreement between the parties may trump the application of procedural rules which may have dictated a different result had the CMO not been in effect. In Cinergy Corp. v. St. Paul Surplus Lines Ins. Co., the Indiana Court of Appeals affirmed the dismissal of Cinergy’s declaratory judgment action filed in Marion County, as another declaratory action had already been filed by St. Paul in Hendricks County, Indiana.
Facts
The battle over which court had the proper jurisdiction was premised upon Cinergy’s claim that its action should be considered the first filed, since it named all of the carriers and was more comprehensive than the original action filed by St. Paul in Hendricks County. However, the CMO entered in the Hendricks County case provided a period of time to add parties and amend the pleadings. St. Paul complied with the deadlines agreed to by the parties in the CMO. Thereafter, Cinergy moved to dismiss St. Paul’s action in favor of Cinergy’s own action filed in Marion County, arguing that the St. Paul amendments and the additional parties introduced new policies and claims which did not relate back to the original St. Paul complaint. While the court agreed that the newly added policies and claims did not relate back to the original action filed by St. Paul, it determined that the procedural rule would not apply as the CMO was to be given greater weight.
Analysis
Citing Travelers Indemnity Co. v. P.R. Mallory & Co., 772 N.E.2d 479 (Ind. App. 2002), the court affirmed that the CMO was the product of an agreement between the parties, and was viewed as the “functional equivalent” of a settlement agreement, in the nature of a contract, sanctioned by the court. Such agreement would give no effect to the application of Trial Rule 12 (B)(8), the relation back rule.
Significantly, the court also rejected Cinergy’s argument that service of suit clauses require the insurers to submit to the jurisdiction selected by the policy holder. Citing two out-of-state opinions, Whirlpool Corp. v. Certain Underwriters at Lloyd’s London, 662 N.E.2d 467 (Ill. App. 1996), and Price v. Brown Group, Inc., 206 A.D.2d 195, (N.Y. App. Div. 1994), the court determined that a service of suit provision did not give the policy holder the unilateral right to choose a new venue after St. Paul had filed a valid declaratory judgment action. It is noteworthy that the court did distinguish the application of the service of suit clause where the insurer, rather than the insured, was the first to file the action.
Learning Point:
To minimize potential “procedural maneuvering” by opposing counsel, craft a CMO which anticipates future pleading issues as well as discovery issues. Also note that service of suit clauses will not entitle the policy holder to unilaterally select the jurisdiction, especially where an action has already been filed by the insurer in a proper venue.
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