PCI, Insurance Institute of Indiana File Brief

August 27, 2004

The Property Casualty Insurers Association of America (PCI) and the Insurance Institute of Indiana recently filed an amicus brief in The City of South Bend, Ind. vs. Century Indemnity Company et. al., to be heard by the Indiana Court of Appeals.

“By filing this brief, the insurance industry hopes to provide the Indiana Appellate Court with the industry’s perspective on two important issues,” said Robert Hurns, legislative database manager and counsel for PCI. “The issues are whether a receiver should be appointed for a non-existent corporation to bring barred suits against insurers for coverage for barred claims, and whether the Indiana Code requires insurers to pay third-party claims even though the insured is non-existent.”

The original case was filed by the City of South Bend and the South Bend Redevelopment Commission, which sought a declaration that insurers of the long-defunct Studebaker Corporation were required to provide insurance coverage for environmental damages at the former Studebaker factory site that is now owned by South Bend.
The trial court dismissed the case, explaining that South Bend’s declaratory judgment action is barred by the direct action rule and falls outside the exceptions created by Indiana common law.

South Bend subsequently filed a motion to appoint a receiver for Studebaker Corp., for itself and as successor to Studebaker-Packard Corp., seeking to have a receiver represent Studebaker’s interests, particularly to pursue coverage under the company’s insurance policies for environmental claims.

On Feb. 5, the trial court denied that motion on the grounds that South Bend had failed to comply with Indiana statute because Studebaker had not appeared or been given notice of the application for the appointment of a receiver. South Bend filed an appeal on March 1.

“We believe the trial court correctly refused to appoint a receiver for a dissolved corporation, which can no longer sue or be sued, when claims by or against it have been barred for 33 years,” added Hurns. “There are no claims or actions which the corporation could bring or defend and the appointment of a receiver would have been a useless act which the trial court properly refused to undertake. Also, the Indiana code has no application to non-existent policyholders which ceased to have any liabilities 33 years ago.”

PCI members write more than 43 percent of homeowners’ insurance and 52 percent of the personal automobile insurance policies issued in Indiana.

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