Appeals Court Applies New York Law to Environmental Site Located in Indiana

By Mark W. Zimmerman and Mitchel D. Torrence

The Indiana Court of Appeals recently held that New York law, and thus pro rata allocation, applied to an excess policy covering a policyholder seeking reimbursement for remediation costs at a site located in Lafeyette, Indiana.

In North River Ins. Co. v. Landis + Gyr Tech., Inc., 2026 Ind. App. LEXIS 164, the Indiana Court of Appeals reversed and remanded the trial court’s grant of summary judgment in favor of the policyholder, Landis + Gyr Technology, Inc. (“Landis”) and award of $10,860,423.10, consisting of $7.6 million in remediation costs plus interest, against North River Insurance Company (“North River”).

Facts

The policyholder, Landis, sought to recover approximately $7.6 million in remediation costs related to historical manufacturing operations at the Lafeyette site from insurers who issued policies between 1973 until 1983. North River issued three excess liability policies to Landis between 1976 and through 1978. During the application process Landis consistently identified multiple insured premises and it was undisputed that most of these were in New York.

The North River policies set forth that the insurer would pay “ultimate net loss in excess of the retained limit…arising out of an occurrence” “Ultimate net loss” was defined, in relevant part, as follows:

1. All sums which the insured…is legally obligated to pay as damages,…because of personal injury, property damage…

The North River policies separately defined “Occurrence” to mean “either an accident or happening or event or a continuous or repeated exposure to conditions which unexpectedly and unintentionally causes injury to persons or tangible property during the policy period.” (emphasis added).

North River sought summary judgment arguing that because under New York law a pro rata time-on-risk allocation model would apply, whereas Indiana would apply an all-sums allocation model, that a choice of law analysis was required. Further,that under New York law, North River would owe nothing to Landis and would have no liability under the North River policies because the total remediation costs spread across the 10-year contamination period would result in $760,000 of costs allocable to each year which is less than the $1,000,000 attachment point of the North River policies. Landis argued that there was no conflict between Indiana and New York law and thus no choice-of-law analysis was necessary. The trial denied North River’s Motion and granted Landis’s cross motion and awarded the judgment of $10,860,423.10. North River appealed.

Analysis

In unanimous panel decision authored by Hon. Nancy H. Vaidik, the Indiana Court of Appeals reversed the trial court and remanded for entry of summary judgment in favor of North River finding that New York law applied and thus under a pro-rata allocation of damages Landis’s remediation costs would not reach the attachment point of the North River policies.

The Court began by finding s a conflict between Indiana and New York law regarding  application of an “all sums” or “pro rata” allocation of damages. It held that although the North River policies contained “all sums” language, the presence of “during the policy period” within the policies’ definition of occurrence would lead to different outcomes based on the application of each state’s law. The Court observed that under New York law where a policy has “all sums” language but also contains “during the policy period” language, a pro rata approach generally applies. In reaching this conclusion, the court rejected Landis’s arguments relying on In Re Viking Pump, Inc., 27 N.Y. 3d 244 (N.Y. 2016), on the basis that unlike Viking Pump, the North River policies did not incorporate or include a non-cumulation clause. Thus, the Court concluded that if New York law applied, North River would owe nothing because the remediation costs would never reach North River’s attachment points, which conflicts with the all sums approach embraced by Indiana law.

The Court then undertook a choice of law analysis to identify the state with the “most intimate contacts” with the facts of the case as set forth in Fusee Corp., 940 N.E. 2d 810 (Ind. 2010). The Court began its analysis by looking to the location of the subject matter of the contract and specifically the “principal location of the insured risk during the term of the policy.” The Court also addressed the remaining Fusee factors, specifically: 1.) the place of contracting; (2) the place of negotiation of the contract; (3) the location of the subject matter of the contract; and (4) the domicile, residence, nationality, place of incorporation and place of business of the parties.

The Court held that because Landis had the most sites in New York, New York was the principal location of the insured risk and further that the place of contracting and negotiation also favored application of New York law because Landis was incorporated and headquartered in New York.

Notably, the Court also observed that the sole factor which favored Indiana law – the place of performance, or where insurance funds will be put to use – was to be given little weight because at the time of contracting, Landis had operations throughout the United States and Canada and that the place of performance was uncertain at the time of contracting.

As a result, the Court concluded that New York law applied and based on its determination that New York would apply a pro-rata allocation, Landis’s alleged damages would not reach the North River excess policies because the $7.6 million in remediation costs would be allocated equally across the 10-year contamination period and would thus never reach North River’s attachment point. The Indiana Court of appeals therefore reversed the trial court’s grant of summary judgment in favor of Landis and remanded for entry of summary judgment in favor of North River.

Key Point

When applying a choice of law analysis under Standard Fusee, in cases involving a multisite, multistate insurance policy, Indiana courts will determine the principal location of the insured risk by first looking to whether one state has more insured sites than others. Further, Indiana courts will give little weight to the location of performance where  at the time of contracting the place of performance was uncertain.