The Indiana Court of Appeals, applying Indiana law, affirmed a trial court decision finding coverage for attorneys' fees related to defending the second of two Taiwanese class actions relating to the same underlying toxic exposures. Allianz Global Risks US Ins. Co. v. Technicolor USA, Inc., 2025 WL 1921809 (Ind. Ct. App. July 14, 2025). The Court of Appeals affirmed that neither the known-loss doctrine nor the policies' deemer clause barred coverage for the second Taiwanese class action. The Court also affirmed coverage for attorneys' fees prosecuting two arbitrations seeking indemnification from third parties.
The Taiwanese affiliate of the insured electronics manufacturer operated a facility in Taiwan, where chemicals used in the manufacturing process contaminated local soil and groundwater, resulting in employee illness. In 2004, approximately 600 former employees of the affiliate initiated a class action against several of the insured's affiliates and its parent company. Ultimately, the class won a judgment of 7.3 billion Taiwanese dollars in 2015 (about $234 million USD). The first class group closed in 2016. A second class action was then initiated in 2016 comprising 1,147 other injured former employees. The second class action named the insured, along with several of its affiliates and its parent company, as defendants.
The insured tendered the second class action to its insurer that had issued three commercial general liability policies and three umbrella policies for policy periods beginning in 2014 and ending in 2017 and, ultimately, commenced an action seeking coverage for the second class action under those policies. In its defense, the insurer argued that the known loss doctrine and the umbrella policies' deemer clause barred coverage because the insured had pre-policy knowledge of the loss based on its involvement in the first class action.
Despite the considerable relationship between the underlying cause of the injuries to the first class action litigants and the second class action litigants a decade later, the appellate court upheld the trial court's decision, concluding that the known-loss doctrine—which bars coverage when a loss is substantially certain to occur—did not apply because the insurer failed to demonstrate that the insured had pre-policy knowledge of its liability for bodily injuries to the second, discrete group of class action litigants. The appellate court also determined that the umbrella policies' deemer provisions did not apply to bar coverage. This provision barred coverage for bodily injury deemed to have been known by the insured before policy inception. The court reasoned that the insurer failed to prove that the insured had pre-policy knowledge of injuries suffered by any of the individual members of the second class, the composition of which was mutually exclusive with members of the first class.
The appellate court also noted that coverage for defense costs extended to attorneys' fees for two separate affirmative arbitrations brought by the insureds seeking to recoup defense costs and indemnity from discrete third parties. The court relied on evidence demonstrating that the arbitrations were pursued to limit the insured's liability in the second class action.
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