Earlier this year, a trial court in Indiana ordered IBM to post a $25 million appeal bond staying execution of a $78 million judgment. The litigation arose from IBM’s breach of a contract requiring it to automate much of Indiana’s welfare services. The amounts of both the judgment and appeal bond are perhaps extraordinary. Still, the IBM case highlights lessons for attorneys requesting stays in more commonplace civil cases. 

This Article begins by explaining why a party would need to request an appeal bond and the requirements for doing so.  It then addresses how courts determine the amount to fix for such a bond. It concludes by offering some practical considerations for both defendants (judgment-debtors) and plaintiffs (judgment-creditors).

by Ryan T. Leagre (Attorney Profile) [i]
Associate
Plews Shadley Racher & Braun LLP
1346 N. Delaware St.
Indianapolis, IN 46202-2415
(317) 637-0700
rleagre@psrb.com


The ability of a policyholder to recover pre-tender costs is an evolving area of insurance coverage law. In Dreaded, Inc. v. St. Paul Guardian Insurance Company, the Indiana Supreme Court held that, under the facts of that case, a policyholder could not recover the legal expenses it incurred defending itself from a claim asserted by the Indiana Department of Environmental Management (“IDEM”) prior to giving notice of or tendering the claim to its insurer. [1]. And while Dreaded was limited to the facts of that case, the Indiana Court of Appeals in Travelers Insurance Company v. Maplehurst Farms, Inc. interpreted Dreaded to mean that pre-tender costs are simply not recoverable. [2]. The courts’ decisions in Dreaded and Maplehurst rested, in part, on two grounds: (1) an insurer’s duty to defend its policyholder does not arise until the policyholder provides notice of the claim; [3] and (2) the insurance policy provision requiring a policyholder to give notice of a claim to the insurer is a condition precedent to coverage. [4].

Indiana courts should reconsider the holdings in Dreaded and Maplehurst. [5]. These holdings result in the forfeiture of coverage, which is unfair and disfavored under Indiana law, [6] and ignore the realities of long-tail environmental claims. [7]. To begin, Dreaded’s explanation of the duty to defend is incomplete. An insurer’s duty to defend its policyholder is not triggered by notice of the claim, but rather by the existence of a potentially covered claim. [8]

Hannah Kaufman Joseph (Attorney Profile)
Marc A. Menkveld (Attorney Profile)
Katz & Korin, P.C.
334 N. Senate Avenue
Indianapolis, IN 46204
More info on the firm’s BlogFacebook, and Twitter


On November 14, 2014, the Indiana Court of Appeals upheld a $1.44 million jury verdict against Walgreen Company (“Walgreen”) for a pharmacist’s breach of privacy obligations. [1]. The opinion began, “[i]n this case, a pharmacist breached one of her most sacred duties by viewing the prescription records of a customer and divulging the information she learned from those records to the client’s ex-boyfriend.” [2]. That brief summary of the case’s fact pattern provides the foundation of what ultimately led to a large jury verdict against Walgreen, derived solely from the acts of its employee.