Canady v. Ohio Cas. Ins. Co. , 2014 Ohio 596 ( 2014 )

[Cite as Canady v. Ohio Cas. Ins. Co., 2014-Ohio-596.]
COURT OF APPEALS
MUSKINGUM COUNTY, OHIO
FIFTH APPELLATE DISTRICT
WAYMON R. CANADY, ET AL. : JUDGES:
: Hon. Sheila G. Farmer, P.J.
Plaintiffs-Appellees : Hon. John W. Wise, J.
: Hon. Craig R. Baldwin, J.
-vs- :
:
THE OHIO CASUALTY : Case No. CT2013-0020
INSURANCE COMPANY, ET AL. :
:
Defendants-Appellants : OPINION
CHARACTER OF PROCEEDING: Appeal from the Court of Common
Pleas, Case Nos. CH2006-0419 and
CH2007-0791
JUDGMENT: Affirmed
DATE OF JUDGMENT: February 18, 2014
APPEARANCES:
For Appellant Ohio Casualty For Appellee Time Warner
W. JOHN SELLINS TIFFANY C. MILLER
125 West Central Parkway One Columbus
Cincinnati, OH 45202-1006 10 West Broad Street
21st Floor
For Appellee John Raytis Columbus, OH 43215-3422
DAVID W. HILKERT For AppelleeTravelers
PATRICK J. HART
Blair L. Magaziner JAMES J. ENGLERT
3475 Ridgewood Road 600 Vine Street
Akron, OH 44333-3163 Suite 2650
Cincinnati, OH 45202
Muskingum County, Case No. CT2013-0020 2
Farmer, P.J.
{¶1} On January 5, 2001, Waymon Canady was working for
Telecommunications Cable Corporation (hereinafter "TCC"). TCC was hired by
appellee, Time Warner, Inc., to perform digital cable service work in Zanesville, Ohio.
While working on said date, Mr. Canady fell from a ladder and sustained serious
injuries.
{¶2} On January 6, 2003, Mr. Canady filed a complaint against TCC and
appellee Time Warner, alleging negligence (Case No. CC2003-0009). TCC was
insured under a combined workers' compensation and employers liability policy issued
by Lumbermens Mutual Casualty Company with a policy limit of $1,000,000.00, and a
comprehensive general liability policy issued by appellant, Ohio Casualty Insurance
Company, with a policy limit of $1,000,000.00. Appellee Time Warner was purportedly
covered under appellant's policy and was also covered under a commercial general
liability policy issued by appellee, Travelers Property Casualty Insurance Company of
America. TCC was also covered under a $5,000,000.00 umbrella policy issued by
appellant that contained employers liability coverage if the primary policy issued by
Lumbermens so provided.
{¶3} Per an agreed final judgment entry filed June 16, 2006, Mr. Canady and
appellee Time Warner agreed to a settlement in the amount of $850,000.00, $50,000.00
to be paid by appellee Time Warner and the remaining $800,000.00 to be paid by
appellant if appellee Time Warner was found to be an additional insured under the
policy. By default judgment entry filed November 13, 2006, the trial court awarded Mr.
Canady as against TCC $4,000,000.00.
Muskingum County, Case No. CT2013-0020 3
{¶4} On July 21, 2006 and June 29, 2009, respectively, Mr. Canady filed a
complaint and an amended supplemental petition against appellant and Lumbermens to
recover the unsatisfied portion of the judgments (Case No. CH2006-0419). On October
30, 2007, appellant filed a companion case requesting declaratory relief (Case No.
CH2007-0791). The two cases were consolidated.
{¶5} On August 12, 2010, Mr. Canady passed away. Substituted for Mr.
Canady was appellee, John Raytis, Administrator of the Estate of Waymon Canady.
{¶6} All parties filed motions for summary judgment and joint stipulations on
September 8 and 10, 2010. On January 23, 2013, the trial court filed its findings and
decision and issued its final judgment entry on March 26, 2013, finding appellee Time
Warner was an additional insured under appellant's policy issued to TCC, ordered
appellant to pay the $800,000.00 due and owing, and determined appellee Travelers
was not responsible to contribute to the payment. The trial court also ordered
Lumbermens to pay the first $1,000,000.00 owed by TCC under its employers liability
policy, and ordered appellant to pay the remaining $3,000,000.00 judgment against
TCC under its umbrella policy.
{¶7} Appellant filed an appeal and this matter is now before this court for
consideration. Assignments of error are as follows:
I
{¶8} "THE TRIAL COURT ERRED IN ITS DETERMINATION THAT THE OHIO
CASUALTY UMBRELLA LIABILITY POLICY PROVIDED COVERAGE FOR THE
JUDGMENT FOR DAMAGES IN THE UNDERLYING ACTION AND THE TRIAL
Muskingum County, Case No. CT2013-0020 4
COURT'S JUDGMENT REGARDING OHIO CASUALTY'S DECLARATORY
JUDGMENT."
II
{¶9} "THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT IN
FAVOR OF APPELLEE CANADY AND AGAINST OHIO CASUALTY ON ITS
DECLARATORY JUDGMENT ACTION HOLDING THAT CANADY WAS ENTITLED TO
DAMAGES AWARDED AGAINST TIME WARNER, INC. UNDER THE PRIMARY
LIABILITY POLICY ISSUED BY OHIO CASUALTY TO TCC."
III
{¶10} "THE TRIAL COURT ERRED IN AWARDING SUMMARY JUDGMENT IN
FAVOR OF TIME WARNER AND AGAINST OHIO CASUALTY FOR ATTORNEY FEES
INCURRED BY TIME WARNER IN THE DECLARATORY JUDGMENT ACTION."
IV
{¶11} "THE TRIAL COURT ERRED IN DENYING OHIO CASUALTY
CONTRIBUTION FOR ANY AMOUNT DETERMINED TO BE OWED BY OHIO
CASUALTY TO WAYMON CANADY PURSUANT TO THE AGREED JUDGMENT
ENTRY EXECUTED BETWEEN TIME WARNER AND WAYMON CANADY."
{¶12} The assignments of error challenge the trial court's determination on the
motions for summary judgment. It is clear there is no factual dispute in this appeal. The
issues presented are clear legal questions and can be resolved by an interpretation of
the insurance contracts and the law as it is applied.
Muskingum County, Case No. CT2013-0020 5
{¶13} Summary Judgment motions are to be resolved in light of the dictates of
Civ.R. 56. Said rule was reaffirmed by the Supreme Court of Ohio in State ex rel.
Zimmerman v. Tompkins, 75 Ohio St. 3d 447, 448, 1996-Ohio-211:
Civ.R. 56(C) provides that before summary judgment may be
granted, it must be determined that (1) no genuine issue as to any
material fact remains to be litigated, (2) the moving party is entitled to
judgment as a matter of law, and (3) it appears from the evidence that
reasonable minds can come to but one conclusion, and viewing such
evidence most strongly in favor of the nonmoving party, that conclusion is
adverse to the party against whom the motion for summary judgment is
made. State ex. rel. Parsons v. Fleming (1994), 68 Ohio St. 3d 509, 511,
628 N.E.2d 1377, 1379, citing Temple v. Wean United, Inc. (1977), 50
Ohio St. 2d 317, 327, 4 O.O3d 466, 472, 364 N.E.2d 267, 274.
{¶14} As an appellate court reviewing summary judgment motions, we must
stand in the shoes of the trial court and review summary judgments on the same
standard and evidence as the trial court. Smiddy v. The Wedding Party, Inc., 30 Ohio
St.3d 35 (1987).
{¶15} It is important to note that a companion case, App. No. CT2013-0024, has
been dismissed by the appellant therein, Lumbermens. The issue raised by that appeal
was the trial court's March 26, 2013 judgment against Lumbermens under its employers
liability policy:
Muskingum County, Case No. CT2013-0020 6
6. Judgment for John Raytis (Executor of the Estate of Waymon
Canady) and against Lumbermens under its employer liability policy in the
amount of $1 million because its policy covered the first $1,000,000 of the
judgment rendered against TCC, together with 32 percent interest totaling
$320,000.00; together with any post-supplemental judgment interest. The
Court expressly finds that Lumbermens had notice directly and through its
agent of the Zanesville project and the Waymon Canady lawsuit.
It also expressly finds that the policy issued by Lumberman's (sic)
Mutual – particularly under the "Other State" Employers Liability Insurance
covered TCC for bodily injury in the State of Ohio***because of ambiguous
policy language. Further the Court finds that this ambiguity must be
construed in favor of the coverage for the incident where Waymon Canady
was injured and that no exclusions applied. (Footnote omitted.)
{¶16} Appellant's first assignment of error challenges the validity of this decision
in light of it being liable under its umbrella policy which was dependent on the
Lumbermens policy. Therefore, the issue of coverage under the Lumbermens policy
remains a viable issue.
I
{¶17} Appellant claims the trial court erred in determining it was liable to cover
the judgment for damages against TCC under its umbrella policy. Appellant claims no
Muskingum County, Case No. CT2013-0020 7
coverage because the Lumbermens policy did not cover intentional tort claims and there
is no coverage under the out-of-state workers' compensation language.
INTENTIONAL TORT COVERAGE
{¶18} Appellee Raytis claims he is entitled to coverage for a judgment his
decedent obtained in an intentional tort case against his employer, TCC. The
underlying complaint filed January 6, 2003 alleged the following:
12. Knowing that Plaintiff was not properly trained on proper ladder
placement in the process of installing digital cable connection.
Defendant(s)' actions constituted willful and wanton misconduct and
reflected a reckless disregard for Plaintiff's safety.
13. Defendant TCC and/or Defendant WDI knew that if an
employee was subjected by his employment to such dangerous process
or procedure that harm to the employee was a substantial certainty.
14. Defendant TCC and/or Defendant WDI, under such
circumstances, with such knowledge, did act to require Plaintiff, Waymon
Canady, to continue to perform the dangerous task.
15. As a direct and proximate result of the negligence,
nondelegable duties and intentional tort of Defendants, AOL Time Warner,
Inc. and/or Time Warner, Inc., and/or Defendant TCC and/or Defendant
WDI, Plaintiff was severely injured on January 5, 2001, when he cut a
messenger wire which propelled him from a ladder to the ground in
Muskingum County, Ohio. Plaintiff's injuries are severe and permanent;
Muskingum County, Case No. CT2013-0020 8
medical expenses are significant and will continue in the future; has lost
wages and will continue to lose wages in the future; has incurred great
pain, suffering and disability which will continue for the remainder of his
lifetime.
{¶19} These claims parallel Ohio's definition of an intentional tort:
Within the purview of Section 8(A) of the Restatement of the Law
2d, Torts, and Section 8 of Prosser & Keeton on Torts (5 Ed.1984), in
order to establish "intent" for the purpose of proving the existence of an
intentional tort committed by an employer against his employee, the
following must be demonstrated: (1) knowledge by the employer of the
existence of a dangerous process, procedure, instrumentality or condition
within its business operation; (2) knowledge by the employer that if the
employee is subjected by his employment to such dangerous process,
procedure, instrumentality or condition, then harm to the employee will be
a substantial certainty; and (3) that the employer, under such
circumstances, and with such knowledge, did act to require the employee
to continue to perform the dangerous task. (Van Fossen v. Babcock &
Wilcox Co. [1988], 36 Ohio St. 3d 100, 522 N.E.2d 489, paragraph five of
the syllabus, modified as set forth above and explained.)
Fyffe v. Jeno's Inc., 59 Ohio St. 3d 115 (1991), paragraph one of the syllabus.
Muskingum County, Case No. CT2013-0020 9
{¶20} Lumbermens insured TCC which had defaulted in the underlying case.
Mr. Canady obtained a default judgment and after hearing, was awarded
$4,000,000.00. See, Default Judgment Entry filed November 13, 2006 in Case No.
CC2003-0009. TCC defaulted to the intentional tort claims therefore, the default
judgment was granted on a "substantial certainty" intentional tort.
{¶21} Appellant argues its umbrella policy excludes coverage for "substantial
certainty" intentional tort claims, citing in support McGuffin v. Zaremba Contracting, 166
Ohio App. 3d 142, 2006-Ohio-1734, ¶ 16-17:
Similarly, in Altvater v. Ohio Cas. Ins. Co., Franklin App. No. 02AP-
422, 2003-Ohio-4758, 2003 WL 22077728, the Tenth District found that a
policy that excludes coverage for expected or intended acts excludes
coverage for substantially certain injuries or acts. The court held:
"Although the language in the present policies does not expressly
exclude coverage for substantial-certainty employer intentional torts, as
did the policy in Penn Traffic [Co. v. AIU Ins. Co., 99 Ohio St. 3d 227,
2003-Ohio-3373, 790 N.E.2d 1199], these policies do contain the same
proscription against coverage for any bodily injury 'expected or intended.'
Thus, we apply the following concepts from Penn Traffic to the present
case: (1) where substantial certainty exists, intent to harm will be inferred
as a matter of law, and (2) there is no coverage for substantial-certainty
employer intentional torts where an insurance policy excludes coverage
Muskingum County, Case No. CT2013-0020 10
for bodily injury 'expected or intended' from the standpoint of the insured."
Id. at ¶ 16.
{¶22} Appellant argues in the Lumbermens policy under Part Two – Employers
Liability Insurance, Section C, Exclusions, Subsection 5, the policy excludes coverage
for "[b]odily injury intentionally caused or aggravated by you."
{¶23} Appellant's umbrella policy under Section I, Coverages, Subsection A
states the following:
The policy contains EXCLUSIONS which provides that this
insurance does not apply to:
A. "Bodily injury" or "property damage" expected or intended from
the standpoint of the "Insured." This exclusion does not apply to "bodily
injury" resulting from the use of reasonable force to protect persons or
property.
{¶24} Because of the Lumbermens exclusion for intentional tort liability,
appellant's umbrella policy does not cover intentional torts which are also specifically
excluded in its policy. As to any judgment arising from Lumbermens employers liability
policy and appellant's umbrella policy for the intentional tort claims, we find the trial
court erred in finding coverage.
Muskingum County, Case No. CT2013-0020 11
WORKERS' COMPENSATION COVERAGE
{¶25} The information page of the Lumbermens policy for workers'
compensation coverage at Item 3.A. specifically states the policy applies to CT and NY.
Item 3.C. specifically states the policy applies to the states listed here: "ALL EXCEPT
THOSE LISTED IN ITEM 3A AND ND, OH, WA, WY AND WV." The policy also
includes "Other States Insurance" under Part Three which states the following:
A. How This Insurance Applies:
1. This other states insurance applies only if one or more states are
shown in Item 3.C. of the Information Page.
2. If you begin work in any one of those states after the effective
date of this policy and are not insured or are not self-insured for such
work, all provisions of the policy will apply as though that state were listed
in Item 3.A. of the Information Page.
***
4. If you have work on the effective date of this policy in any state
not listed on Item 3.A. of the Information Page, coverage will not be
afforded for that state unless we are notified within thirty days.
B. Notice
Tell us at once if you begin work in any state listed on Item 3.C. of
the Information Page.
Muskingum County, Case No. CT2013-0020 12
{¶26} The question is whether appellee TCC notified Lumbermens of its
intended work in Ohio within the cited provisions. Appellee Time Warner hired appellee
TCC to do work in Ohio, and required appellee TCC to obtain workers' compensation
coverage as a condition precedent to working. See, Stipulation No. 14, filed September
8, 2010. The parties' stipulations also included the following:
17. Leo Miller, an underwriter for Ohio Casualty, reviewed the
request for a Certificate of Insurance forwarded to Ohio Casualty by Shoff
Darby. By return facsimile correspondence, Mr. Miller advised that Ohio
Casualty would accept only changes noted on the reply to Shoff Darby
and no other changes to the form Acord Certificate of Insurance.
18. Shoff Darby through its agent William Pierz, issued to Time
Warner a Certificate of Insurance on May 10, 2000 for Commercial
General Liability and Umbrella Coverage with Great American (Ohio
Casualty) and Workers' Compensation and Employers Liability Coverage
with Lumbermens. A copy of the Certificate of Insurance issued on May
10, 2000 is identified as Exhibit 15.
{¶27} Exhibit 15 referenced in the stipulations is the Acord Certificate of Liability
Insurance which provided workers' compensation coverage from March 19, 2000 to
March 19, 2001 in the amount of $1,000,000.00. The certificate is signed by an
"Authorized Representative," and lists appellant as an insurer affording coverage,
appellee TCC as the insured, and appellee Time Warner as an additional insured: "Time
Muskingum County, Case No. CT2013-0020 13
Warner Communications, its agents, affiliates and subsidiaries are named as Additional
Insureds as respects work being performed by or on behalf of Insured."
{¶28} Because this certificate alters the "Ohio" state exclusion, we find the
Lumbermens policy had $1,000,000.00 in workers' compensation coverage, thereby
triggering coverage under appellant's umbrella policy.
{¶29} Upon review, we find umbrella coverage for the workers' compensation
claims, but not the intentional tort claims.
{¶30} Assignment of Error I is denied.
II
{¶31} Appellant claims the trial court erred in finding appellee Raytis was entitled
to recover damages against appellee Time Warner under appellant's policy insuring
appellee TCC. We disagree.
{¶32} In its final judgment entry filed March 26, 2013, the trial court determined
the following:
2. This Court renders judgment in favor of underlying Defendant,
Time Warner, and against Ohio Casualty and finds that Ohio Casualty had
notice of the Zanesville TW project; had notice of the Certificate of
Insurance and authorized its agent to issue it; that TW relied upon the
certificate that coverage exists for TW as an Additional Insured on the
Ohio Casualty policies issued to TCC; that Ohio Casualty is estopped from
denying this fact; that no exclusions applied. Thus, Ohio Casualty had a
duty to defend TW and breached that duty. As a direct and proximate
Muskingum County, Case No. CT2013-0020 14
cause, Ohio Casualty is obligated to pay TW's attorney fees and costs,
and has a duty to indemnify TW for any liability, judgment, or settlement
arising out of the lawsuit filed by Plaintiff against TW. Accordingly,
judgment to Time Warner and against Ohio Casualty on the cross-claim
filed by Defendant, Time Warner, for the $50,000 paid by Time Warner on
the $850,000 judgment. This judgment also includes 32 percent interest
on the $50,000 claim – to wit $16,000 – along with statutory post-judgment
interest.
{¶33} Appellant argues the Acord Certificate of Liability Insurance was non-
binding. In Assignment of Error I, we found it to be binding upon appellant because it
specifically listed appellant as an insurer, listed appellees Time Warner and TCC as
insureds, and designated an insurance contract number.
{¶34} Upon review, we find the trial court did not err in finding appellee Raytis
was entitled to recover damages against appellee Time Warner under appellant's policy.
{¶35} Assignment of Error II is denied.
III
{¶36} Appellant claims it had no duty to defend appellee Time Warner and
therefore the award of attorney fees to appellee Time Warner was not warranted. We
disagree.
{¶37} Stipulation No. 9 clearly establishes appellee Time Warner's demand for a
defense and for participation by appellant:
Muskingum County, Case No. CT2013-0020 15
9. On May 3, 2006, W. Evan Price, counsel for Time Warner sent a
letter to Robert Brockman, litigation specialist at Ohio Casualty advising
that Time Warner was in the process of negotiating a settlement with
Plaintiff [Waymon Canady] whereby Time Warner would agree to a
judgment of approximately $850,000.00 and Plaintiff would agree to
pursue collection against applicable policies issued to Telecommunication
Cable Corp. that named Time Warner as an additional insured. The letter
further advised that Time Warner wanted to notify Ohio Casualty of the
proposed settlement and offer Ohio Casualty a final opportunity to agree
to defend and indemnify Time Warner with respect to the litigation. A copy
of this letter is identified as Exhibit 7. On June 16, 2006, an Agreed Final
Judgment Entry was signed by the Judge. The Judgment Entry was in
favor of Waymon Canady in the sum of $850,000 and against Time
Warner. Time Warner has paid $50,000.00 to Waymon Canady. A copy
of the Agreed Final Judgment Entry is identified as Exhibit 8.
{¶38} Appellant refused to defend or participate in the settlement. In Steffen v.
Erie Insurance Company, 5th Dist. Stark No. 99CA00022, 1999 WL 668865, *3 (August
9, 1999), we explained the following:
When an insurer such as appellee refuses to defend its insured as
required by the terms of the insured's policy, the insured may recover from
the insurer attorney fees "which the insured incurs in the action brought to
Muskingum County, Case No. CT2013-0020 16
enforce the duty to defend and in the defense of the claims for which the
duty to defend exists." Blount v. Kennard (1992), 82 Ohio App. 3d 613,
617, 612 N.E.2d 1268.
{¶39} Appellant also argues attorney fees are not proper in a declaratory
judgment action, citing R.C. 2721.16. We agree, however, this is a consolidated case
with Case No. CH2007-0791 wherein fees would be appropriate, and appellant's
October 30, 2007 declaratory judgment action included a claim for monetary damages:
(D) In the alternative, if the court determines that Time Warner, Inc.
is entitled to coverage under the policy of insurance issued by Great
American Insurance Company, Travelers Property Casualty Company of
America shares liability in equal amounts for defense and indemnification
for any judgment or settlement in favor of Waymon Canady.
(E) A money judgment in favor of the Plaintiffs for any amounts in
excess of their proportionate share of liability for defense and
indemnification costs for any judgment or settlement in favor of Waymon
Canady.
{¶40} Upon review, we find the trial court did not err in awarding attorney fees to
appellee Time Warner.
{¶41} Assignment of Error III is denied.
Muskingum County, Case No. CT2013-0020 17
IV
{¶42} Appellant claims the trial court erred in denying its request for contribution
from appellee Travelers. We disagree.
{¶43} Appellee Travelers insured appellee Time Warner under a commercial
general liability policy. In denying appellant contribution from appellee Travelers, the
trial court determined the following in its final judgment entry filed March 26, 2013:
4. Judgment against Ohio Casualty and for Travelers on Ohio
Casualty's Third-Party Complaint against Travelers as to all relief
requested therein, including the claim that Ohio Casualty was entitled to
pro rata or other contribution from Travelers, the CGL carrier for Time
Warner, in payment of Ohio Casualty's liability to pay any portion of the
Agreed Final Judgment Entry against Time Warner because of Time
Warner's status as an Additional Insured under the Ohio Casualty policies
issued to Time Warner.
5. Judgment for Travelers and against Ohio Casualty on Travelers'
Counterclaim against Ohio Casualty. The Court finds that underlying
Defendant, Time Warner, is an Additional Insured under the Ohio Casualty
policies issued to TCC; that Ohio Casualty is stopped from denying such
fact; that no exclusions applied; that Ohio Casualty had a duty to defend
TW and breached that duty, that Ohio Casualty is obligated to pay TW's
attorney fees and costs, and that Ohio Casualty has a duty to indemnify
TW for any liability, judgment, or settlement arising out of the lawsuit filed
Muskingum County, Case No. CT2013-0020 18
by Plaintiff against TW. Accordingly, judgment is hereby entered in favor
of Time Warner and against Ohio Casualty for the monetary amounts set
forth in Paragraph 2, above.
{¶44} As determined in Assignment of Error I, appellee Time Warner was an
additional insured under appellant's policy with appellee TCC. In the Summary of
Insurance Requirements issued by appellee Time Warner to appellee TCC, Exhibit 13
to the Stipulations, Subsection 7(d) specifically states, "[a]ll policies of insurance will
contain a statement that said policy is primary coverage to Time Warner Cable and its
agents, affiliates and subsidiaries and that any coverage maintained by Time Warner
Cable is non-contributory." The intent of the summary language was to place the
insurance risk on appellee TCC's insurer, appellant herein. Appellant's argument
regarding "other insurance" provisions is inapplicable given the summary language.
Further, appellant was asked to participate in the settlement negotiations involving
appellee Time Warner, but refused to do so. See, Stipulation No. 9, supra; Exhibit No.
7.
{¶45} Upon review, we find the trial court did not err in denying appellant's
request for contribution from appellee Travelers.
{¶46} Assignment of Error IV is denied.
Muskingum County, Case No. CT2013-0020 19
{¶47} The judgment of the Court of Common Pleas of Muskingum County, Ohio
is hereby affirmed.
By Farmer, P.J.
Wise, J. and
Baldwin, J. concur.
SGF/sg