William Sult sued the Manta and Alphas Corporations, the co-lessors of a building owned by the Lake County Trust Jcompany. Sult was suing for damages he suffered when he fell though a skylight while attempting to repair an air conditioning unit that was located on a roof. Sult fell through the portion of the building that was leased by Manta. CNA Insurance insured Alpha with a CGL policy. The CGL protected Alpha for loss arising out of the portion of the building it leased and it named Manta as an additional insured. However, Manta was an insured ONLY in respect to any loss arising out of the portion of the building leased and occupied by Alpha. CNA also insured the Lake County Trust Co. CNA investigated the loss and assumed responsibility for the claim. Further, CNA, without issuing a reservation of rights, contacted Sult and told him that they were defending against the suit since Manta was an additional insured under Alpha's CGL policy.

During the course of the legal action, CNA was told that the loss occurred on the portion of the building leased and occupied by Manta. CNA did not respond to this information until, finally, nearly a year and a half after assuming the defense of the suit, CNA withdrew its defense on the grounds that the accident location did not qualify for coverage under its CGL policy. Shortly after CNA withdrew, Sult was awarded $540,000 in damages. Manta sought a declaratory judgment that CNA was responsible for both defense costs and the subsequent settlement. The trial court found in favor of Manta and CNA appealed.

The appellate court heard CNA's argument that the trial court should have ruled that their withdrawal was valid since the policy did not apply to the location where the accident occurred and that Manta's contention that they should be estopped from asserting their right to deny the claim was incorrect. After reviewing the actions of the trial court and the evidence submitted by both parties, the higher court agreed that CNA's control of the defense, its failure to make a reservation of rights and its long-held knowledge that the accident occurred at an uninsured location resulted in barring Manta from handling its own defense and investigation of the claim and waiving their own right to deny coverage. The appellate court affirmed the lower courts decision in finding that CNA was estopped from denying the claim and was responsible for both the defense costs and the damage award.

Transcontinental Insurance Company, Appellant v. J.L. Manta, Incorporated, Appellee. IndCtApp. No. 45A03-9811-CV-484. Filed August 24, 1999 Affirmed. CCH 1999 Fire and Casualty Cases, Paragraph 7163.