Indiana Lumbermens lost a summary judgment after it was sued by Evergreen Recycle, L.L.C. Evergreen suffered a fire at its pallet manufacturing and recycling business. It reported a fire loss in February ’09 involving mulch that was contained outdoors. The agent chose not to report a loss at that point. Evergreen monitored its mulch piles, taking steps over several weeks to have its employees (assisted by the local fire department) monitor, soak with water, and redistribute its mulch piles in order to extinguish burning materials and to control future fire outbreaks. Nearly a month after the initial fire discovery, Evergreen’s owner insisted that a claim be made to Lumbermens.

Lumbermens denied the claim and Evergreen sued for breach of contract. Eventually the dispute was presented to a jury which found in favor of Evergreen and the insurer appealed.

In its appeal, Lumbermens argued that, based on its four points for denial (late notice, failure to protect property, failure to exhibit damaged property and neglect), it had no obligation to insure the mulch for the roughly $230,000 amount awarded by the lower court. The higher court reviewed the situation in light of the insurer’s additional argument that the policy should be reformed. Lumbermens contended that the wording and intent of its policy was only to treat the mulch as “Stock in Open.” This argument was due to the lower court also ruling that the mulch qualified for coverage under the policy’s separate limits for both “Stock in Open” and “Stock” (which was covered both within and outside of buildings).

The higher court reviewed the matter and was unpersuaded by Lumbermens reasoning. It decided that there was no justification to reform the Evergreen policy. In its view, the mulch qualified as stock as well as stock in open and the policyholder was entitled to recover under both policy limits. It also decided that Evergreen’s notice to its agent constituted notice to the insurer and was made in a timely manner. Several other insurer arguments including material misrepresentation were also reviewed and dismissed.

The lower court’s findings and its award was affirmed in favor of Evergreen. Evergreen Recycle, L.L.C., Appellee/Cross-appellant, v. Indiana Lumbermens Mutual Insurance Co., Appellant/Cross-appellee, v. Eck Agency, Inc., Appellee/Cross-appellant. Kansas Court of Appeals, No. 110,329. Filed May 1, 2015 downloaded July 31, 2019 from https [colon]//caselaw[dot]findlaw[dot]com/ks-court-of-appeals/1699563.html