onebeacon - supreme court of ohio onebeacon insurance company, on appeal from the hamilton county...
TRANSCRIPT
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IN THE SUPREME COURT OF OHIO
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THE WILLIAM POWELL COMPANY, Case No.
Appell ee,
vs.
ONEBEACON INSURANCE COMPANY,
On Appeal from the HamiltonCounty Court of Appeals, FirstAppellate District, Case No.C1300681
Appellant.
MEMORANDUM IN SUPPORT OF JURISDICTION OFAPPELLANT ONEBEACON INSURANCE COMPANY
RICHARD M. GARNER (0061734)Email: [email protected] & YOUNG655 Metro Place South, Suite 200Dublin, Ohio 43017Phone: (614) 901-9600Fax: (614) 901-2723
Counsel for Appellant
OneBeacon Insurance Company
DANIEL F. GOURASH (0032413)Email: [email protected] D. ANDERLE (0064582)Email: [email protected], SAVIDGE, EBERT & GOURASH26600 Detroit RoadCleveland, Ohio 44145Phone: (216) 566-8200Fax: (216) 566-0213
Counsel for IntervenorFederal Insurance Company
DANIEL J. BUCKLEY (0003772)Email: [email protected] M. BRUNNER (0085485)Email: jmbrunner a vorys,comROBERT C. MITCHELL (0043742)Email: [email protected], SATER, SEYMOUR & PEASE301 East Fourth StreetGreat American Office Tower, Suite 3500Cincinnati, Ohio 45202Phone: (513) 723-4000Fax: (513) 723-4056
Counsel for AppelleeThe William Powell Company
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TABLE OF CONTENTS
Page
EXPLANATION OF WHY THIS CASE IS A CASE OF PUBLICOR GREAT GENERAL INTEREST .............................................................................................. I
STATEMENT OF THE CASE AND FACTS ................................................................................7
ARGUMENT IN SUPPORT OF PROPOSITION OF LAW ..........................................................9
PROPOSITION OF LAW -When issuing a declaratory judgment affecting an insurer'sduty to defend and indemnify its insured against progressive injury claims under multipleliability insurance policies, a trial court may use Civ. R. 54(B) to render its declaratoryjudgment as final and appealable while reserving judgment on allocation . . ......................9
CONCLUSION ..............................................................................................................................14
CERTIFICATE OF SERVICE ......................................................................................................15
Appx. Pages
The William Powell Co. v. OneBeacon Ins. Co., lst Dist. No. C-130681,2014-Ohio-3528 ........................................................................................................00001 - 00010
The William Powell Co. v. OneBeacon Ins. Co., lyt Dist. No. C-130681,2014-Ohio- (denial of post-dismissal motions) ...............................................................00011
The William Powell Co. v. OneBeacon 1-ns. Co., No. A1109350,in the Court of Common Pleas for Hamilton County, Ohio (Sept. 16, 2013)(trial court ruling) .............................................................................:..........................00012 - 00025
11
EXPLANATION OF WHY THIS CASE IS A CASE OF PUBLICOR GREAT GENERAL INTEREST
This appeal is about whether a trial court issuing a declaratory judgment with respect to
whether an insurer has a duty to defend and indemnify its insured from progressive injury claims
potentially implicating multiple liability policies issued. over a period of years must resolve
allocation before an appeal may be taken. "Allocation deals with the apportionment of covered
loss across triggered insurance policies." Goodyear Tire & Rubber Co. v. Aetna Cas. & Sur. Co.,
95 Ohio St.3d 512, 2002-Ohio-2842, at T5. It does not deal with the existence of damages, but
with how fixed damages and defense costs are spread over triggered liability policies. In
Goodyear, this Court adopted the "all sums" approach to allocation in progressive injury claims,
which allows the insured to choose the triggered policies against which it will allocate such
damages and defense costs. 2002-Ohio-2842, at ¶12.
Allocation is a part of this case because of the nature of the parties' dispute. More than a
decade ago, Appellant OneBeacon Insurance Company ("OneBeacon") began defending and
indemnifying Appellee The William Powell Company ("WPC") against mass tort, progressive
bodily injury claims allegedly caused by the asbestos in WPC's products ("WPC's Asbestos
Liability"). To date, OneBeacon has expended well over $30 million under various primary and
excess liability insurance policies issued to WPC between 1955 and 1977. While the Trial Court's
12-page declaratory judgment (Appx. 00014 to 00025) compelled OneBeacon to continue
defending and indemnifying against WPC's Asbestos Liability and included Civ. R. 54(B)
certification, the First Appellate District held that it did not have jurisdiction to hear OneBeacon's
appeal because the Trial Court, at the parties' request, had withheld judgment on the issue of
allocation (Appx. 00001 to 00010).
1
For reasons known only to itself, WPC delayed making its Goodyear allocation election
for over a decade.' When the Trial Court issued its declaratory judgment, it found that there were
genuine issues of material fact that precluded summary judgment on the issue of whether WPC
could retroactively reallocate years of payments made by OneBeacon. While OneBeacon and
WPC disagreed on what policies were issued and to what extent, they agreed that the Trial Court
should certify its declaratory judgment as a final, appealable order pursuant to Civ. R. 54(B) to
allow an immediate appeal that would resolve the pool of triggered policies and prevent multiple
reallocations if that pool changed after appeal. Thereafter, OneBeacon appealed to the First
Appellate District.
The First Appellate District held that the declaratory judgment order did not constitute a
final appealable order because, notwithstanding Civ. R. 54(B) certification, the Trial Court had not
decided the issue of allocation (Appx. 00001 to 00010).
For the reasons that follow, OneBeacon submits that the First Appellate District's decision
creates an issue of public or great general interest warranting review by this Court.
First, the First Appellate District's decision runs counter to the underlying judicial
economy premise of "all sums" allocation in Goodyear. Goodyear, at ¶11. In this regard, under
Goodyear, an insured "should be permitted to choose, from the pool of triggered primary policies,
a single primary policy against which it desires to make a claim. In the event that this policy does
not cover [the insured's] entire claim, then [the insured] may pursue coverage under other primary
or excess insurance policies." 2002-Ohio-2842, at ¶12 (Emphasis added). Accordingly, allocation
1 One plausible reason WPC may have delayed was to wait until after the Trial Court issued itsdeclaratory judgment so that WPC could determine which policies would be triggered and to whatextent.
2
generally only takes place after it is detennined which policies are triggered. Id., at ¶6 ("This `all
sums' approach allows [the insured] to seek fiill coverage for its claims from any single policy, up
to that policy's coverage limits, out of the group of policies that has been tNiggeNed") (Emphasis
added). See also Pa. Gen. Ins. Co. v. Park-Ohio Industries, 126 Ohio St.3d 98, 2010-Ohio-2745,
at ¶¶11-12. Because Goodyear allocation only permits insureds to pick from "triggered" policies,
it is often important to resolution of allocation disputes that the parties be able to fully resolve the
pool of triggered policies on appeal before proceeding to allocation. This minimizes the risk of an
insured allocating to a policy that is later determined to not be triggered. It also minimizes the risk
of an insurer having to perform multiple multi-million dollar allocations as different courts at
different levels provide their respective interpretations of what constitutes the pool of triggered
policies. This does not mean that the parties can never address allocation before an appeal; it
simply means they should not be required to. Thus, in appropriate cases, Civ. R. 54(B) can be
used as an effective tool to reserve allocation in the trial court while defense and indemnity issues
are appealed.
Second, because of its rich, industrial history, Ohio has more than its share of large,
complicated insurance coverage actions arising out of progressive injury claims in which multiple
liability policies issued over a period of years are subject to defense, indemnity, and allocation
disputes. Thus, this case is not an isolated case. In recent years, Ohio courts have wrestled with a
myriad of cases involving such issues. See e.g. Goodyear, 2002-Ohio-2842, at ¶¶1-2 (addressing
continuous pollution claims); Park-Ohio, 2010-Ohio-2745, at ¶¶1-6 (addressing progressive injury
claims from asbestos); The Cincinnati Ins. Co. v. ACE INA Holdings, Inc., 175 Ohio App.3d 266,
2007-Ohio-5576, at ¶¶1-7 (addressing progressive injury claims from asbestos). While the volume
3
of such cases may not be great, they have a disproportionate impact on Ohio's judicial system
because they often last for years, involve vast sums of money, and impose heavy burdens upon
litigants and courts. See e.g. Goodrich Corp. v. Comm. Union Ins. Co., 9th Dist. Nos. 2358, 23586,
2008-Ohio-3200, at ¶¶1-8 (describing nine years of litigation for continuous pollution claims
involving over $60 million in coverage and attorneys' fees). Throughout the state, Ohio courts are
constantly looking for ways to handle these massive and complicated undertakings and should
have guidance from this Court on whether the new rule promulgated by the First Appellate District
will become the law of Ohio. This will be particularly true for cases handled in Ohio's federal
courts, where so many of these cases originate, which will look to the First Appellate District's
decision as authoritative in absence of a n.zling on the issue from this Court. Without comment
from this Court, the approach taken by the First Appellate District's decision, which is apparently
the first of its kind, is likely to spread.
Third, the First Appellate District's decision confounds the issue of allocation with the
existence of damages in a way that seems certain to confuse and muddy Ohio insurance coverage
law. In this regard, the First Appellate District held that "determination of the allocation of
coverage is akin to a determination of damages." (Appx. 00007). It then purported to follow
Walburn v. Dunlap, 121 Ohio St.3d 373, 2009-Ohio-1221, at syllabus, to hold the Trial Court's
declaratory judgment "is a determination of liability, but not a determination of how much will be
paid out of each insurance policy." (Appx. 00007). Therefore, even with Civ. R. 54(B)
certification, in the First Appellate District's view there was not a final, appealable order.
Respectfully, this was incorrect. In this case, the amounts in controversy with respect to allocation
(defense costs, settlements, and/or judgments) were fixed as incurred. They could only be
4
allocated after they were incurred (there is nothing to allocate if they were not incurred). Thus,
unlike possible damages for first-party uninsured/underinsured motorist ("UM/UIM") coverage as
in WalbuNn, these were fixed amounts. Under Goodyear, WPC could allocate these amounts to
the triggered policy of its choice provided, in this case, so long as it was not barred by waiver,
estoppel or laches. Accordingly, the actual act of allocation, if permitted, is essentially ministerial
for the insured, and the amounts to be allocated are more akin to the determined, but not yet
clarified, foreclosure damages in CitiMortgage, Ibzc. v. Roznowski, 139 Ohio St.3d 299, 2014-
Ohio-184, at ¶¶13-22, than they are to the mere possibility of damages at concern in Walbz-irn.
Roznowski, at ¶22.
Finally, in a manner that unfairly prejudices insurers and insureds alike, the First Appellate
District's decision failed to properly evaluate the effect that the Trial Court's declaratory judgment
had upon OneBeacon's responsibility to defend WPC under its policies. In this regard, OneBeacon
and WPC stipulated to the terms and provisions of the policies (with the exception of the limits of
two early policies), but disputed their meaning. If WPC prevailed on its arguments, then years of
"exhausted" OneBeacon policies would once again be required to provide defense and indemnity
to WPC. If OneBeacon prevailed on its arguments, then OneBeacon's primary policies would
mostly be "exhausted" and no longer required to provide defense and indemnity. While the Trial
Court did not use the term "duty to defend," it did not have to. There was no dispute between
WPC and OneBeacon that if OneBeacon's policies were exhausted by payments, OneBeacon had
no obligation to defend or indemnify WPC under such policies. (First Amended Complaint,
T¶45(b), 49(c), 53(b), 57(b), 65(b); Counterclaim, J(18.) Both sets of summary judgment motions
addressed the principal issues with respect to their impact on OneBeacon's duty to defend and
5
indemnify WPC with respect to WPC's Asbestos Liability. There can be no reasonable
interpretation of the parties' pleadings, motions, and the Trial Court's declaratory judgment under
which the "duty to defend" was not materially "affected." Consequently, the Trial Court's
declaratory judgment should have been considered a final, appealable order because it compelled
OneBeacon to defend WPC under policies that had previously been exhausted. Gen. Acc. Ins. Co.
v. Ins. Co. ofN. Am., 44 Ohio St.3d 17, 22, 540 N.E,2d 266 (1989); K'alburn, 2009-Ohio-1221, at
¶¶26-27. To the extent the First Appellate District's decision is permitted to stand, it will
negatively impact the ability of both insurers and insureds to obtain timely review of duty-to-
defend issues in similar cases.
In summary, the parties and the Trial Court spent several years, thousands of hours, and
hundreds of thousands of dollars in legal fees to bring this case to the First Appellate District for
review. They entered into lengthy stipulations that resolved most of the factual issues over what
the disputed policies actually said. They presented a limited number of issues to the Trial Court
for resolution in compliance with the purpose of Ohio's Declaratory Judgment Act, and the Trial
Court resolved those issues, while correctly reserving judgment on the issue of allocation until
such time as the underlying coverage issues are resolved on appeal (which may obviate the need
for any further proceedings on allocation). The Trial Court's declaratory judgment clearly
"affects" OneBeacon's obligation to defend WPC under multiple policies. If there was any
question of remaining issues, the Trial Court entered Civ. R. 54(B) certification. This case should
have fallen squarely within Gen. Accident and, therefore, the Trial Court's declaratory judgment
should have been recognized as a final, appealable order. Instead, the First Appellate District
issued a hitherto unknown mechanical rule to hold that such declaratory judgments could never be
6
reviewed without a decision on allocation. OneBeacon submits that the import of such a rule will
have a profoundly adverse impact on the manner in which such insurance coverage cases are
handled. Therefore, this Court should find that this case presents an issue of public or great general
interest, and accept jurisdiction of this appeal.
STATEMENT OF THE CASE AND FACTS
For more than a decade, OneBeacon has been defending and indemnifying WPC from
WPC's Asbestos Liability. As OneBeacon's primary policies began to exhaust, WPC began to
engage in increasingly aggressive tactics to compel OneBeacon to pay more than its policies
actually provided-culminating in the filing of this action. WPC commenced this action seeking
declaratory relief with respect to the OneBeacon policies.
declaratory relief.
OneBeacon counterclaimed for
After a lengthy discovery period, WPC and OneBeacon were able to conipile a stipulation
of facts setting forth the policy periods, limits, and essential coverage provisions for all of the
OneBeacon policies from 1955 to 1977 OneBeacon and WPC then filed cross-motions for
summary judgment.
WPC argued that: (1) the aggregate limits of all policies issued by OneBeacon should be
applied annually (effectively tripling the limits of most policies) and (2) WPC's Asbestos Liability
should be considered as being caused by more than one occurrence (thereby accessing the
aggregate limits). It also claimed that it was retroactively "entitled to direct the allocation" of all
defense and indemnity payments pursuant to Goodyear.
OneBeacon, on the other hand, argued that:
(1) WPC failed to prove that any of OneBeacon's pre-1968 primarypolicies and any of OneBeacon's excess policies were triggered by
7
WPC's Asbestos Liability.
(2) WPC failed to prove that OneBeacon's 1955-1958 and 1958-1960primary policies had higher limits than the parties' stipulation.
(3) OneBeacon's pre-1965 primary policies do not provide forannualization of aggregate limits.
(4) OneBeacon's post-1968 primary policies expressly provide forannualization of aggregate limits only where such policies wereissued and in effect for a period of three years.
(5) WPC's Asbestos Liability arose from a single "occurrence" basedupon WPC's conduct.
In a 12-page ruling, the Trial Court partially granted WPC's motion for summary judgment,
but denied the rest of the parties' motions, declaring that: (1) the aggregate limits of all the policies
were annualized; and (2) WPC's Asbestos Liability was caused by multiple occurrences.
However, with respect to allocation, the Trial Court found questions of fact-presumably based
upon WPC's failure to make a timely Goodyear allocation election. When the Trial Court issued
its declaratory judgment, at the request of the parties, it included Civ. R. 54(B) certification.
(Appx. 00012 to 00013 ).
Thereafter, OneBeacon appealed to the First Appellate District. The appeal was fully
briefed and set for oral argument. At oral argument, the First Appellate District sua sponte raised
the issue of whether the declaratory judgment constituted a final, appealable order. Both WPC
and OneBeacon argued that it did, and offered to file supplemental memoranda supporting such
argument. However, ruling from the bench, the First Appellate District declined to accept any
supplemental memoranda on the final appealable order issue.
Approximately two months later, the First Appellate District dismissed the appeal for lack
of final appealable order, stating, in pertinent part:
8
{¶10} When a trial court enters ajudgment in a declaratory-judgment action,the order must declare all of the parties' rights and obligations to constitutea final, appealable order. The trial court does not fulfill its function if itdoes not construe the documents at issue ... A judgment entry that does notcompletely construe the documents is not a final, appealable order eventhough the entry contains Civ. R. 54(B) language.
{¶11 } In this case, the trial court did not grant summary judgment on theissue of allocation.
{¶15} The determination of the allocation of coverage is akin to adetermination of damages. In Walburn v. Dunlap, 121 Ohio St.3d 373,2009-Ohio-1221, 904 N.E.2d 863, syllabus, the Ohio Supreme Court heldthat "[a]n order that declares that an insured is entitled to coverage but doesnot address damages is not a final order as defined in R. C. 2505.02(B)(2),because the order does not affect a substantial right even though made in aspecial proceeding." Therefore, that order is not a final, appealable ordereven if it includes a Civ. R. 54(B) certification. Id., at ¶4.
{¶18} Consequently, the court has not completely declared the rights of theparties under the insurance policies at issue ... Consequently, we have nochoice but to dismiss the appeal, and the appeal is hereby dismissed.
(Appx. 00005 to 00008).
OneBeacon timely filed a motion for reconsideration and other post-dismissal motions on
the issue of whether the declaratory judgment constituted a final appealable order. Those motions,
although unopposed, were summarily denied without explanation. Thereafter, OneBeacon timely
appealed to this Court.
9
ARGUMENT IN SUPPORT OF PROPOSITION OF LAW
PROPOSITION OF LAW -When issuing a declaratory judgment affecting an insurer'sduty to defend and indemnify its insured against progressive injury claims under multipleliability insurance policies, a trial court may use Civ. R. 54(B) to render its declaratoryjudgment as final and appealable while reserving judgment on allocation.
At ¶I[6-9 of its decision, the First Appellate District correctly held that: (1) its appellate
jurisdiction is limited to review of final, appealable orders as determined by R. C. 2505.02 and
Civ. R. 54(B); (2) a final, appealable order includes an order "that affects a substantial right made
in a special proceeding" under R.C. 2505.02(B)(2); (3) a declaratory judgment action is a special
proceeding; and (4) the Trial Court's declaratory judgment was certified pursuant to Civ. R. 54(B).
The sole remaining element necessary to trigger appellate jurisdiction was determining whether
the declaratory judgment "affects a substantial right" of the parties. Because the declaratory
judgment affected OneBeacon's obligation to defend and indemnify WPC, it affected a
"substantial right."
In this regard, in Gen. Accident, this Court held that "the duty to defend involves a
substantial right to both the insured and the insurer." 44 Ohio St.3d at 22. Twenty years later, in
Walburn, this Court reiterated its holding: "Cases in which an insured seeks both a defense and
indemnification are controlled by Gen. Acc." 2009-Ohio-1221, at ¶27. However, Walburn
clarified that first-party insurance cases, like uninsured/underinsured motorists ("UM/UIM")
coverage, "present[] a different scenario" because:
...[the insureds] must still establish damages in order to receive UMbenefits. [The insurer] is obligated to pay [the insureds] only if they areawarded damages. Thus, a declaration that an insured is entitled to coveragebut does not address damages does not affect a substantial right as that termis defined in R. C. 2505.02(A)(1).
2009-Ohio- 122 1, at ¶26. Thus, Gen. Accident and Walburn are controlling legal authority holding
10
that a declaratory judgment which "affects" the duty to defend "affects a substantial right" within
the meaning of R. C. 2505.02(B)(2). As stated above, there can be no reasonable interpretatioii of
the parties' pleadings, motions, and the declaratory judgment under which the "duty to defend" is
not materially "affected." That is, OneBeacon had exhausted years of policies by payments, and
the declaratory judgment "unexhausted" them, re-triggering OneBeacon's duty to defend and
indemnify under those policies.
Despite this, the First Appellate District found that the declaratory judgment was not a final
order because the issue of allocation had not been decided, but was retained by the Trial Court
through the Civ. R. 54(B) certification process. However, OneBeacon respectfully submits this
was an erroneous conclusion. As previously explained, allocating damages over triggered policies
is not the sanle as determining whether any damages exist in the first place. Roznowski, at ¶22.
Indeed, claims for declaratory relief are not viewed as claims for damages:
"* * * When a plaintiff seeks solely declaratory relief, the weight ofauthority does not view him as seeking to enforce a claim against thedefendant. Instead, he is seen as merely requesting a judicial declaration asto the existcnce and nature of a relation between himself and the defendant.The effect of such a declaration, under this approach, is not to merge a claimin the judgment or to bar it. Accordingly, regardless of the outcome, theplaintiff or defendant may pursue further declaratory or coercive relief in asubsequent action.
* * * A declaratory judgment is entitled to provide a remedy that is simplerand less harsh than coercive relief, if it appears that a declaration mightterminate the potential controversy."
Gilkey v. Gilkey, 10th Dist. Nos. OOAP-135/OOAP-146, 2000 Ohio App. LEXIS 4421, at *6-8
(citing 1 Restatement of the Law 2d, Judgments 335 (1982), §33, Comment c);2 Jamestown Village
2 As further explained by 1 Restatement of the Law 2d, Judgments 335 (1982), §33, Comment c:"[A] declaratory action determines only what it actually decides and does not have a claim
11
Condo Owners Ass'n v. Market Media Research, Inc., 96 Ohio App.3d 678, 684-686, 645 N.E.2d
1265 (8th Dist. 1994); Ketchel v. Bainbridge Twp, 79 Ohio App.3d 174, 177-179, 607 N.E.2d 22
(I lth Dist. 1992). In this regard, this Court has observed that an action for a declaratory judgment
is a "sui generis," which is neither one strictly in equity nor one strictly at law; it possesses
attributes of both, and is designed to "fill the gap between law and equity." Gen. Accident, 44
Ohio St.3d at 22. Accordingly, on its face, Walburn would not have any application to this case
because there was no question of damages between the parties.
While the dispute between WPC and OneBeacon clearly involved money, all of the claims
between them were declaratory in nature and all of them affected OneBeacon's duty to defend and
indemnify WPC under OneBeacon's policies. This was made manifest in the opening lines of
WPC's First Aniended Complaint-which stated simply that the purpose of the lawsuit was "to
confirm and enforce OneBeacon's obligations under multiple policies of insurance to indemnify
and defend Powell in ongoing, nationwide asbestos litigation." (First Amended Complaint, ¶1).
Thereafter, WPC divided its claims for declaratory relief into six specific claims/counts. Counts
1-4 and 6 sought declaratoiy relief under specific policies. (Id., ¶¶42-57, 62-65.) Count 5 sought
declaratory relief with respect to WPC's right to retroactively reallocate amounts paid by
OneBeacon. (Id., ¶¶58-6I.)
Consistent with the purpose of Ohio's declaratory judgment statutes, when briefing the
Trial Court on summary judgment, the parties focused on the coverage issues on which they
disagreed. This is the whole point of the declaratory judgment process--to provide "a mechanism
preclusive effect on other contentions that might have been advanced."
12
by which the parties can potentially avoid full-fledged litigation on a number of claims, by initially
focusing on a single case-dispositive issue" or issues. Gilkey, at *6-8. When resolving these
issues: "The declaration required is not some detailed analysis; rather, it is a conclusory statement
declaring the rights under the construction of the law at issue." John Fithian Contracting, Co. v.
City of Salem, 7th Dist. No. 07 CO 33, 2008-Ohio-5055, ¶16. The declaratory judgment need only
provide "sufficient detail so as to fully infonn the parties of the basis for its judginent." Nichols
v. Leader Nat'llns. Co., lst Dist. No. C-860215, 1987 WL 6364, at *2. If an appellate court agrees
with the trial court's judgment, but finds that a more thorough declaration could be made, it has
jurisdiction to do so. Harris, Jolliff& Michel, Inc. v. Motorists Mut. Ins. Co., 21 Ohio App.2d 81,
88, 255 N.E.2d 302 (3rd Dist. 1970). After all, with respect to construction of contracts, an
appellate court's review of the trial court's declaration is de novo-no deference must be given to
the trial court analysis. Arnott v. Arnott, 132 Ohio St.3d 401, 2012-Ohio-3208, at ¶¶14-16. All of
the foregoing manifests the streamlined nature of declaratory judgments explained by this Court
in Heasley, 2007-Ohio-1248, at ¶8:
A declaratory judgment action provides a means by which parties caneliminate uncertainty regarding their legal rights and obligations. TravelersIndemn. Co. v. Cochrane (1951), 155 Ohio St. 305, 312, 44 0.0. 302, 98N.E.2d 840 .., The declaratory judgment action may be brought evenbefore any contract breach. R. C. 2721.04. The purpose of a declaratoryjudginent action is to dispose of "tincertain or disputed obligations quicklyand conclusively, and to achieve that end, the declaratory judgment statutesare to be construed "liberally." Ohio Farmers Indemn. Co. v. Chames(1959), 170 Ohio St. 209, 213, 10 0.0.2d 164, 163 N.E.2d 367.
While OneBeacon disagrees with the Trial Court's declaratory judgment and seeks review
of the same, there is no question that the 12-page decision fulfills all of the requirements of a final,
13
appealable order.3 Thus, the First Appellate District's conclusion that "the trial court has not
decided any claim in its entirety, but has instead partially decided all the claims" (Appx. 00008)
was simply wrong. The Trial Court decided all claims between the parties except Count 5
(allocation). Then, at the request of the parties, the Trial Court certified its declaratory judgment
pursuant to Civ. R. 54(B) to allow an immediate appeal of the fully litigated claims. Under such
circumstances, the First Appellate District committed reversible error by dismissing OneBeacon's
appeal for lack of jurisdiction..
CONCLUSION
Some cases are simple. All of their constituent parts can be easily resolved in a single trial,
judgment, or settlement. Others are cumbersome and complicated, and need to be staged in an
appropriate manner in order to do justice to the litigants and avoid overburdening the trial court.
This case, like so many post-industrial mass tort, progressive injury cases, falls into the latter
category.
The First Appellate District's decision to decline review of this matter puts an undue,
unwarranted, and unfair burden upon trial courts and litigants seeking to resolve such cases--by
requiring trial courts to always address allocation before appeal is possible. OneBeacon submits
that such an approach is unreasonable, and, if followed elsewhere, threatens to greatly complicate
and prolong such cases to the detriment of trial courts and litigants across the state. Accordingly,
OneBeacon requests this Court to accept this appeal and reverse the judgment of the First Appellate
District.
3 The Trial Court's declaratory judgment did not simply grant or deny a party's dispositive motion,but instead explained construction of the policies in dispute in detail.
14
Respec
Counsel foY AppellantOneBeacon Insurance Company
CERTIFICATE OF SERVICE
The foregoing has been forwarded by email upon the following on this 26th day of
September, 2014:
DANIEL J. BUCKLEY (0003772)Email: [email protected] M. BRUNNER (0085485)Email: [email protected] C. MITCHELL (0043742)Email: [email protected], SATER, SEYMOUR & PEASE301 East Fourth StreetGreat American Office Tower, Suite 3500Cincinnati, Ohio 45202
Counselfor AppelleeThe William Powell Company
DANIEL F. GOURASH (0032413)Email: [email protected] D. ANDERLE (0064582)Email: [email protected], SAVIDGE, EBERT &GOURASH26600 Detroit RoadCleveland, Ohio 44145
Counsel for IntervenorFederalIn.surance Con2pany
15
Email: rZarner(a davisyoung,cornDAVIS & YOUNG655 Metro Place South, Suite 200Dublin, Ohio 43017(614)901-9600 * Fax: (216) 621-0602
^-- --rr-----•--
OneBeacon Insurance Company
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
THE WILLIAM PC)WELI. COMPAI^,4Y, APPEAL NO. C-13o681TRIAL NO. A.-iio935o
Plaintiff-Appellee,
vs.
ONEBEACON INSURANCECOMPANY,
Defendant-Appellant,
and
FEDERAL INSURANCE COMPANY,
Defendant-Intervenor.
^^^,..,^.,.,..^...^...^,...^..,,,
^.....,.,^^,.^N.^..^.w
JUDGIvI'ENTENTRYGRAIVTIIVG APPLIt;A?7O.NFOR RECONSIDERATION,
i //!ii!/^1074149N
This cause was heard upon the apfsellants' application for reconsideration to correct
a factual misstatement in the opinion.
The Court finds that the application is well taken and is granted, The Court vacates
its Judgment Entry and Opinion filed on July g, 2014. Tlie appeal from the judgment of the
trial court is dismissed for the reasons set forth in the Opinion filed this date.
Fucther, the court holds that there were reasonable grounds for this appeal, allows
no penalty and orders that costs are taxed under App. R. 24.
The cour-t further orders that 1) a copy of this Judgment with a copy of the Opinion
attached constitutes the mandate, and 2) the mandate be sent to the trial court for execution
under App. R. :^'7,
i'o the clerk:
Ent+er cxpon ^:.^r^th^ c^a ^.: E^ i'^xaguz;t l 7 20^4
1^ 4.r1 order of the a„(^i ^ r^v . ..r /// i^d•«,/` . 7&-
Presiding Judge
APPX0000'I
THE WILLIAM POWELL COMPANY,
Plalntiff-Appelled,
V'S.
ONEBEACON INSURANCECOMPANY,
Defendant-Appellant,
and
FEDERAL INSURANCE COMPANY,
Defendant-Intervenor.
L-NTERED
AUG 15 2014
APPEAL NO. C-13o681TRIAL NO. A-1109350
OFINI(JM
Civil Appeal Fronl: Hamilton County Court of Common Pleas
Judgment Appealed From Is: Appeal Dismissed
Date of Judgment Entry on Appeal: August 15, 2014
Vorys, Sater, Seyinoa.ar, and Pease LLP, Daniel J. Buckley, Robert C. Mitchell andJoseph M. Brunner, for Plaintiff-Appellee,
Davis & Young and Ricltarc11V1. C'ctrner, for Defendant-Appellant.
Please noteo this case has been removed from the accelerated calendar.
IN THE COURT OF "PEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
APPX00002
0 FIRST DISTRICT COURT OF.APP^',ALS B . R E DAUG 15 2014
Dirnc.nx.ACKER, Judge.
{¶11 Defendant-appellant OneBeacon Insurance Company ("QneBeacon")
appeals the decision of the trial court granting partial surnmary judgment in favor of
plaintiff-appellee The William Powell Company ("Powell"). We cannot reach the
merits of OneBeacon's two assignments of error, because we have no jurisdiction to
hear the appeal, and we must, therefore, dismiss it.
{TI2} Powell is a manufacturer of industrial valves sorne of which may have
included one or more components made of asbestos. It has been involved in asbestos
litigation all over the country for a number of years. Between a96o and 1977, Powell
carried liability insurance under a series of primary and excess policies issued by
OneBeacon's predecessor.
{¶3) Powell filed a complaint seeking a declaratory judgment of its rights
under the policies, OneBeacon filed a counterclaim in which it also asked the court
to declare the parties' rights under the policies. Subsequently, Powell filed a motion
for partial summary judgment in which it argued that (i) it had proved the existence
and terms of several missing palicies; (2) all the policies, both primary and excess,
contained a`nnualized limits of liability; (3) the stub periods (a period of coverage
beyond a full year's coverage) in three of the policies contained full annual limits> (4)
the asbestos exposures and resulting claims constituted multiple occurrences under
the policiesa and (,) Powell had a right to direct the allocation of indemiaity and
settlement payments to its policies.
{^4} OneBeacon also filed a motion for summary judgment. Its overriding
argument was that the asbestos claims against Powell were caused by a single
nccurrence: ` It also argued that if the court found that there were multiple
2
APPX00003
FIRST DISTR.IC'! COURT OF A.P^ENTE^^RE&
'i-I ; 15 2014
occurrences, Powell was not entitled to aggregate annualized limits under the
existing policies, the missing policies, or any stub periods in the policies, and that the
annual aggregate limits for the 1972-1975 primary and excess policies had been
impaired or exhausted.
(15) In its decision granting Powell's motion in part and denying
QneBeacon's motion, the trial court specifically stated that "[t]he dispute involves
three questions: i) whether the aggregate lirnitatxon of liability applies annually or
for the terrri; 2) what constitutes an 'occurrence'; and 3) whether Plaintiff can direct
the allocation of funds." The court decided the first two issues in Powell's favor. As
to the allocation issue, the court found that issues of fact existed that precluded
sunirnary judgment.
{^16} In an "Order Granting and Denying Motions for Summary Judgment,"
the court stated that OneBeacon's motion for summary judgment was denied in all
respects. It'stateci that Powell's motion for sumrnaryjigdgnnent "'Arill be, and hereby
is, granted zn all respects except on the issue of allocation, which the court reserves
for further proceedings[.)" The coiirt then added that "there is no just reason for
delay" undet Civ.TZ. 54(B), OneBeacon has appealed from that,judgment.
{$7}` The Ohio Constitution limits an appellate court's jurisdiction to the
review of final, appealable orders. Hooten v. Safe Auto Ins. Co., ist Dist. Hamilton
No. C-o61o65, 2007-Ohio-6o9o, ¶ xo. An order is final and appealable only if it
meets the requirements of both R.C. 250,.o2 and Civ.R. 54(B), if applicable. Noble
u. Colwell, 44 Ohio St.3d 92, 54o N.E.2d 13$1 (1989), syllabus; Icon Consfir., Inc. v.
SYaPrnan, Harris, Siegel &Eyrtcft, LLC, 1st Dist, Hamilton No. C-o90458, 2010-
Ohio-2457,1 7. Civ.R. 54(B) certification cannot transform a nonfinal order into an
appealable order. Wisintainer v. ,Irleert Power°Strut Co., 67 Ohio St.3d 352, 354, 617
3
APPX00004
OHIO FIRST I^ISTR,ICT C^}UItT C?F ^11'PEAI.S ENTERE®
G 75 201
4 ,-
N.E.2d 1136 (1993); 1VIRKEr2ts. z,a. Rochester, ist Dist. Hamilton No. C-990819, 2000
OhioApp. LEXIS 36od, *5 (Aug. 11, 20oo),
{^8} , R.C. 2505.o2(B)(2) provides that an order "that affects a substantial
right made in a special proceeding" is a final order. A declaratory judgment action is
a special proceeding. Gen Acc. 1-ns. Co. v. Ins. Co; of N. Arn., 44 Ohio St.3d 17, 540
N.E.2d 265 f 1989), paragraph hvo of the syllabus; Konold u. R.W. Sturge, I,td., io8
Ohio App.3a 309, 311, 670 N.E.2d 574 (ast Dist.1996).
{^;91 A substantial right is "a right that the United States Constitution, the
Ohio Constitution, a statute, the common law, or a rule of procedure entitles a
person to enforce or protect." R.C. 2505.o2(A)(1) An order affects a substantial
right if, in the absence of an immediate appeal, it forecloses appropriate relief in the
future. Bell t,. Mt. Sinai Med. Ctr., 67 Ohio St.3d 6o, 63, 616 1N.E.2d i81 (1993);
Konezld at 3i`t.
{¶10)' When a trial court enters a judgment in a declaratory-judgment action,
the order must declare all of the parties' rights and obligations to constitute a final,
appealable '€`irder. The trial court does not fulfill its function if it does not construe
the docurnents at issue, Midwestern IrtdLm. Co. rs: Nierlach, 8th Dist. Cuyahoga No.
92526, 20o9-OhgO-3472, 11 8; Owner Operators Indep. Drivers Risk Retention
Grorlp v. Stafford, 3d Dist.1Vlarion No. 9-o6-65, 2007-C)hi®-3135, T ro. A judgment
entry that does not completely construe the documents is not a final, appealable
order even though the entry contains Civ.R. 54(B) language. Midwestern Indem. Co,
at ¶ 9.
[T19I In this case, the trial court did not grant summary judgment on the
issue of allocation. The court relied on Goodyear Tire & Rubber Co. V. Aetna Cas. &
Sua°, Co., 95 Ohio St.3d 512, 2002-C)hio-2842, 769 N.E.2d 835, in which the Ohio
4
APPX00005
OHIC} FIRST IJISTRICT COURT OF APPEALS. -r RED
AUG 1 r% ZQi4Supreme Court discussed the issue of allocation "which deals
apportionment of a covered loss across multiple triggered insurance policies." Id, at
15. It stated that 6d[t1he issue of allocation arises in situations involving long-term
injury or damage, such as environmental cleaniip claims where it is difficult to
determine which insurer must bear the loss." Id.
{T,12}. The Supreme Court explained:
There are two accepted methods for allocating ctzverage. One
approach, favored by Goodyear, permits the policyholder to seek
coverage from any policy in effect during the time period of injury or
datrzage. This "all suins" approach allo`vs Goodyear to seek full
coverage for its claims from any single policy, up to that pola`cy's
coverage limits, out of the group of policies that has been triggered. In
contr'ast, the insurers urge us to apply the pro rata allocation scheme
implicitly adopted by the court of appeals. Under the pro rata
approach, each insurer pays only a portion of a claim based on the
duration of the occurrence during its policy period in relation to the
entir'e duration of the occurrence. It divides "a loss 'horizontally"
among all triggered policy periods, with each insurance company
paying c,nly a share of the policyholder's total darnagese
(Citation ozr:itted.) Id. at116.
{$13) The Supreme Court stated that the starting point for determining the
scope of coverage was the language of the insurance policies. Id. at t 7. After
examining the policies in question, the court held that "[wlhen a continuous
occurrence of environmental pollution triggers claims under multiple primary
insurance policies, the insured is entitled to secure coverage from a single policy of
5
APPX00006
T DISTRICT COURT C)F.t17PPF.AI.,S
J..its choice that covers `all sums' i.ncurred as damages 'during the policy p(
:NTEREDAUG 15 2014
subject to that policy's limit of coverage." Id. at paragraph one of the syllabus.
{¶14} In ruling on the allocation issue, the trial court stated:
Un.der the authority of Goodyear, generally an"all surns" approach
would apply. OneBeacon argues however, that Plaintiff cannot
retroactively apply this approach. It argues that Plaintiff has been
operating under a "pro rata" approach and cannot now apply a
different method. The CoLart finds that questions of fact exist
predludialg either party from summary judgment at this point.
{^,lS} The determination of the allocation of coverage is akin to a
determination of damages. In Walburn v. Dunlap, 721 Ohio St.3d 373, 20n9-Ohio-
1221, 904 N.E.2d 863, syllabus, the Ohio Supreme Court held that "[aln order that
declares that an insured is entitled to coverage but does not address dacnages is not a
final order as defined in R.C. 2505.02(E)(2), because the order does not affect a
substantial right even though made in a special proceeding." I'herefore, that order is
not a final, appealable order even if it includes a Civ.R. 54(B) certification. Id. at 14.
1$16,t The court pointed out that unlike a case that involves a duty to defend
tivhich daes'affect a substantial right, when a determination is made that an insured
is entitled to coverage, the insurer is obligated to pay only if the insured is awarded
damages. .F^d. at126. The court further stated that "even where the issue of liability
has been detern3ined, but a factual adjudication of relief is unresolved, the finding of
liability is not a final appealable order even if Rule 54(B) language was employed."
Id. at ¶31, quoting Noble, 44 Ohio St.3d at 96, 54o N.E.2d 13$1.
{1117} Similarly, in this case there is a determination of liability, but not a
determination of how mu.ch will be paid out of each insurance policy. The results
6
APPX00007
[I0 FIRST l»STIUC'I' COURT OF APPFALS ENTEF2 ED
AUG 15 2014
will differ dramatically depending on whether the trial court applies the "vertical" all-
sums approach or the "horizontal" pro-rata approach. The trial court has not
decided any claim in its entirety, but has instead partially decided all the claims. See,
Lucio u. ;rzfeAuto Iras: Co., x88 Ohio App.3d igo, 2o1.o-C7hio-2528, 935 N.E.zd 53=T
16-17 (7th Dist.).
{¶18}. Consequently, the court has not completely declared the rights of the
parties under the insurance policies at issue. Further, the absence of an appeal
would not foreclose relief in the future. Therefore, the trial court's judgment does
not affect 'a substantial right made in a special proceeding. It is not a final,
appealable order under R.C. 2505.02, and this court does not have jurisdiction to
hear the appeal. Gen. Acc. Ins. Co., 44 Ohio St.3d at 20, 540 N.E.2d 266; Empousea,
tlvintion, LLC v. Butler Cty. Bd; of C©rrzmrs., 185 Ohio App.3d 477, 20o9-Oh;o°63319
924 N.E.2d=862, 119(1st Dist.). Consequently, we Izave no choice but to dismiss the
appeal, and the appeal is hereby dismissed.
Appeal dismissed,
14ENmON, P,,J., concurs.AE'L"ITyNE, J., concurs separately.
DEWirE-, J., concurring separately.
{¶13} Although I agree with the majority that the appeal must be dismissed
for lack of a final, appealable order, I arrive there by a somewhat different path.
{¶20} As the majority points out, to be final and appealable an order must
raeet the retluirements of R.C. 2505.02(B) and, if applicable, Civ.R. 54(B). 'i'here are
t`vo provisions of 2505.02(B) that merit consideration here: R.C. 2505.02(8)(1) and
2505.02(I3)(2).
7
APPX00008
FIRST r CO'UI^ EN°Tl^FtE6'
AUG 1 5 Z014
(¶21) To meet the requirements of R.C. 2503.o2(B)(1), azx order must
"affect[] a substantial right in an action that in effect determines the action and
prevent[] a judgment." On its face, the trial court's order does not fall ti9rithin R.C.
2505.02(B)(i) because it does not determine the actinn. The trial court left other
issues to be decided.
{t22} The trial court's inclusion of Civ.R. 54(B) language does not overcome
this deficiertcy. Civ.R. 54(B) only allows a court to enter "final judgment as to one or
more but fewer than all of the claims or parties." (Emphasis added.) Here, the
court's order does not purport to enter judgrnent as to one or more claims or parties.
Powell filed a complaint for declaratory judgment. As amended, the complaint
incli-ided six "claims for relief." Each claim for relief sought a declaration of rights
under specificaZly enumerated insurance policies. (For example, the first claim
sought a declaration of rights under policies CC249982 and CG304557.) The
de.cision issued by the trial court didn't decide any of Powell's claims; that is, it didn't
fully declare the parties' rights under any of the enumerated policies. Rather, the
court decided certain issues and left others to be decided later.
{123{ There is no provision in Civ.R. 54(B) that allows a court to enter
judgment as to assues. Rather, the court can only enter judgment under Civ.R. 54(I;)
as to "claims or parties." Thus, the certification is of no effect. And because the
order did not determine the action, it is not final under R.C: 2505.o2(B)(1).
{^24} A.r, order that does not meet the requirements for finality under R.C.
2505.02(B)(1) rnay still be final under R.C. 2505.a2(B)(2). That provision applies to
an order that affects "a substantial right made in a special proceeding." An order
affects a substantial right if it has immediate consequences, Walburn v. Dunlap, 121
Ohio St.3d. 373, 2oog-Ohio-1221, 904 N.E.2d 863, ¶ 24, or if appropriate relie:f in the
8
APPX00009
OI-3[IO FIRST D OF EtdT'ERED
AUG 15 Z014 °
ftzture would be foreclosed in the absence of an immediate appeal. Bell u. Mt. Sirtai
Med. Ctr., 67 Ohio St.3d 6o, 63, 6151V.E.2d a$Z (1993), Here, there are no immediate
consequences of the court's order, and appropriate relief may be obtained by way of
appeal upon the trial cotart's conclusion of the case. As a result, a substantial right is
not affected, and the order is not final under. R.C. 2505.02(B)(2),
{^25} For these reasons, I concur with the decision to dismiss the case for
lack of jurisdiction.
Please note:
The court has recorded its own entry on the date of the release of this opinion.
9
APPX00010
^.^^.,.,p,..^...IleI 'I'HE COURT OF APPEALS - 7"ERED ^
FIRST AI'PELIAi'E DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
THE WILLIAM POWELI. APPEAL NO. C-13o681COMPANY,
Appellee,
ENTRY OVERRULING P4ST-DISMISSAL MOTIONS
vs.
ONE BEACON INSURANCE C®MPANY,
Appellant.
This cause came on to be considered upon the appellants' post-dismissal
motions.
The Court finds that the motions are not well taken and are overruled.
D107417816
To the clerk:
iEs1 the court on AUS 15 2014Exzi"< the our.^ J per order of the court,
^y. ^ (Copies sent to all counsel)
Presiding Judge
APPX00011
`it'iIE WILLIAM T'OWELly COMPANY, Case No, A1109350
I?daintifi; Judge 13et12 A. Myers
v.
COURT OF COMMON 1'Ld?,f1,STiA1V1'TIL;TUN COUNTY, OHIO
COMMERCIAL DOCKET
t)NEBEACON INSIJC'OM1?ANY,
Defcndant.
ORDER GRANTING Aj;
- - - (_
DENYING MOTIONS FOR SUMMARY JUDGMENT
_ --- -'f'17is i72attet, llaa, int; cyts7e ai i for ealtry oI'partial sztttlmary jttdgtnctlt, aildtize cotiirt liavit7g
considca-ed the wt-ittet) atid o^^alpresentatiuils oi`t;Uunsel for all parlies oti the ca-c;ss nlotions of
p!aitltifl1'IZe VJil'liat72 1'owcl^ Company ("1'owell°')artd defendant OneneacojI Insurattce
Compruty ("OneBeacon"), a'id the cot.it•t ilavit2g considered the pleadings, clepositiatis, answt;rs to
it;terrcrgatories, afiidavits, trt^nscripts of evidence atad wnitten stipulations offa.ct and the court,
heingftally advised in the pr6nises, rendered its written Decisitst2 oa2 September 11, 2013, wbie(3
Decision is incorporated i2 it tllis order as i:'litlly rewa-itten hereit2 iiicluciing all oi'its ftlidi^igs
and cottclitsiotls, it is, iheref re,
ORDERED, AD.1U G170 AND DECREED tllat,
1. The nlotion of 1'owcli for sutntilary jticlgtllent will be, and lzet•eby is, grat3ted in all
t'C',speG1:s except {)II the t:islie of Wc111C?Catlotl, WIIiCil the court t'eseiV(:s for I'u3•l 11eI'
pi'oceed}tIl;s; ak1d;
1 "1`he motiot2 of QneBeacon foc° sitnln-tary,ji.adl;tnent will be, and liei•eby is, denied in all
resl;ec#;s.
APPX00012
`I'lae Cottrfi fjazds that Oere is no,jx.zst reasori for delay, a2iti certifies tlierel'ore that this is a
fiYial and appealable order p^t°suatlt to Rulc 54(B) of t17e C?Ilio Rules ofC;ivil I'roceclul'e,
r ^ ^ ^^ f 4.,. ,^ . ^Y^ ^ , 'fi^-^'i i ^3't. ^-•- ^
Jutlge 13etIi A. Myers
Li.fiereri this clay of Septembel°, 2013.E T'E
SIP ! 6 1013.II^ VE S^11i ,,: FIf)€U r3r"•rti A. (Ui`r Ef^^^
^ ^ , ^• ^ ^ -;
Daniel ir. I3zic1<fey (G0J32 Riclla ci M. Gainc i;,^:)6173^)rZoby^tfC. iviitcllekl (OC ^ David W, Gt•laiidini (0064850)Jas^ph M. Brujaiaer DAVIS a YOUNG
VORYS SA'1'i'SR SE'y GUI.1 140 C;ommerce Park Z.7rive, Suite C301 East Eourth utreet { Colunzbus, 014 43082Suite 3500, Great Americaii ^o`rret• Tef: (614) 9t.11-9600Cincii,nati, QI-I 45202 Fax: (614) 901-2723Te1: (513) 723-4000 Enlail: rl;[email protected]:l^ax; (513) 723-4056 d©rlandirii@davisyoun8,c;omEniail: djt)uekley(^' vorys.cci
rc1-'1itc'hell@vorys,eo 11 Couns,el,lbr CJrr.el3eacon Im, Co,[email protected] 11
CozFrrselfor The Olln, I'vweIl G`o,
Datiial F. Gourash (0032413)IZobert D. Ai-iclerle (0064582)Jazyllyn J. Stover (0085580)Seelcy, Savidge, Ebert & Gourash Cca, I.,I'ih26600 Detroit RoadC;1evel-and, C3TI 44145Tel: (216) 566-8200Fax: (216) 566-0213T'srnail; [email protected]^ni
rcian^`lerle cusseg-law.con^
Attorne3's,1^1- I'cclern! Insurance C'orapany
APPX00013
COURT OF COMMON PLEASHAMILTt7N COUNTY, OHIO rHd[3f4 SHALL SERVE NOTICE:
E^S PURSUANT TO CIVILN7-fECi.-f S€-lAU:BE TAXE[)
THE WILLIAM POWELL COMPANY Case No. A-11C}9350
Plaintiff Judge Beth A. MyersSEP 12 2013
v.
ONEBEACON INSUItANC;11 COMPANY DECISIOiQd
Defetidant ^D16-33Z4]147
"fhis case is before the Court on the cross motions for sunimary judgment of Plaintiff The
William Powell.Compa.ny and Defendant t7neL3eacon Insurance. I'he Court permitted Federal
Insurance to intervene and it has submitted a brief on the pending issues. For the reasons
discussed below, Plaintiffs nitition is granted in part and denied in part, and Defendaxit's motion
is denied.
STANDARD
Sumrnaryjudgment is appropriate when there are no genuine issues of material fact that
remain to be litigated and the moving party is entitled to judgment as a matter of law. Civ. R.
56(C); Celotex C'orp. v. Catrett, 477 U.S. 317 (1986). Summary judgment shoufd be granted if
the pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts
of evidence in the pending case, if any, timely filed in the action and construed most strongly in
favoi• of the non-moving party, show that there is no genuine issue as to any material fact. Civ.
R. 56(C). The burden of establishing that the material facts are not in dispute, and that no
genuine issue of fact exists, is on the party nioving for sumitaary judgment. Vahila v. Hall, 77
Ohio St.3d 421, 674 N.E.2d 1164 (1997). Yf the moving party asserts that there is an absence of
APPX00014
evidence to establish an essential eletnent of the non-anoving party's claim, the rrrovijig party
cannot discharge this burden with a conclusory allegation, but must specifically point to some
pat-t of the record which affirmatively demonstrates this absence of evideitce, Dresher v. Baar°t, 75
Ohio St3d 280, 662N.E;2d 264 (1996).
The Ohio Stxprerae Court has established three factors to be considered upon a Ynotion for
summary judgment. Tliesc three factors are:
(1) That there is no genuine issue as to any material fact; (2) that the movingparty is entitled to ,jttdgment as a matter of taw; and (3) that reasonable mindscan come to but one conc(Lasion, and that the conclusion is adverse to the partyagainst whom the motion for summary judgment is made, vvho is entitled tohave ttze evidence construed most strongly in his favor,
Bostic v. Conrior, 37 Ohio St.3d 144, 146 N.E?d 88l (1988) (quoting Harless v, Mllis Day
Warehousing Co., 54 Ohio St.2d 64, 375 N.E.2d 46 (1978)).
Once a motion for summary.judgment has beeai made and supported as provided in Civ.
R. 56(C), the nrantnoving party t,heri has a reciprocal burdeai to set forth specific evidentiary facts
showic;g the existence of a genuine issue for trial and cannot rest on the allegations or denials in
the plead'zrzgs. Wirzg v. Anchor Media, Ltd. Of 7'exas, 59 Ohio St.3d 108, 111, 570 N.E.2d 1095
FACTS
This case involves a coverage dispute between Plaintiff The William Powell Company
and its priniary Iiability irlst2rarace carrier Defendant One:T3eacon (successor to prior carrier).
Plaintiff faces laiysuits and potential liability for injuries to individuals exposed to products it
ma,nufa.ctured containittg asbestos. The dispute involves three questions: 1) whether the
2
APPX00015
aggregate litasitatitari of liability applies annually or for the tea7-h; 2) what ccsnstitutes an
"nccurrence"; and 3) whether Plaintiff can direct the allocation of the funds.
Plaintiff argues that the limitation applies annually and that "occurrence" means an
individual exposure to asbestos. Defendant argues that the limitation is not anttual for certain
policies and that titere is only one occurrence - the decisioaz to manufacture and sell products
coritaining asbestos without adequate wartzing.
Interverting Defendant Federal Insurance provides excess covcrage. It agrees with
Plaintiff as to the interpretation of "occurrence,," but agrees with Defendant on the issue of
allocation afloss:
The parties have stipulated to certain acts for purposes of their cross-motions for
siimm.aryjudgcnent. See Stipulation of Facts, These incltide the policies at issue,
Tl.e early policies were tnulti-year policies with stated limits per person and per
ctecUrrence. Untii I968, "occurrence" was ttot defined in the policies. In addition, the policies
did not specifically state that the limits were annual; Later policies made it clear that the limits
in those policies were annual liiraits.
DI sOUSSIC1N
This case presents questions of interpretations of insurance policies. The Court begins
with some general guiding priraciples under Ohio Iaw. The startirg point for cleterminiiig the
scope of coverage is the language of the insurance policies. Goodyear 7it•e and Rztbber
Company v. ffetntr Ccxsualty & Surety Ccampany, 95 Ohio St.3d 512 (2002). Where the
provisions are clear and unambiguous, courts must enforce the contract as written and cannot
enlarge or change the terms, Id. When a portion of the insurance contract is reasonably
susceptible to more than one interpretation, it will be strictly construed against tne insurer and in
3
APPX00016
I favor of the insasred. Lzak Clutch SystePn v. Century Indemnity Company, 805 F.Supp.2d 370
(N,I7. Ohio 2011).
1. Annual limits or noIicy terrsi?
Beginning in 1965, every policy tliereafter contained express language that the policy's
limit applied annually. For pre-1965 policies, no such language was located.. Many of these
policies are missing or incomplete, and the parties have stipulated their existence and terms.
These policies were issued for a period of three years, contained aggregate limits and had
premiums that were paid annually. The question is whether the aggregate limit applies to the
entire policy period or annually. Plaintiff argues, and the Court agrees, that without clarifying
lan^uage, the use of "aggregate" is ambiguous,
The First District Court of Appeals addressed tiais issue in Ctncinnati Irasurance Contpany
v. 4CE N,4 1-foldings, 175 Ohio App.3d 266 (1" Dist. 2007). In that case, an excess caYxier
sought additional funds from the primary carrier to cover asbestos claims of its insured. Like the
policies here, the primary insurer (ACE) insured the policy holder under consecutive three year
policies. The first issue was whether the aggregate limits applied annually or to the policy term.
Finding the term to be ambiguous uiader the circumstances, the Court allowed extrinsic evidence
to be considered. The Court stated:
We are convinced that "aggregate" as used in the partial multi-year policies wasambiguous aaid that extrinsic evidence had to be used to decipher the contractingparties' intent.
an multi-year insurance policies where the policies are incomplete, the veryabsence of a limiting modifier is precisely what makes the word "aggregate"ambiguous as to how the limits should be applied.
An aggregate limit is "the maxirnum lirr5;t of coverage available under a limitedpolicy during a specified period of time degardless of the number of claimsthat may be made" Where a multi-year a;;licy is incomplete and is without
4
APPX00017
language specifying a period of time, "aggregate" is reasoiiably susceptible toeither modifier and is essentially a^nnbiguvus as it relates to the policy Iiin.its.
'I'he ambiguity is especially apparent ' there are, as here, a series of multi-year policies. The very existence of muift , ear policies likewise cuts against theargument that "aggregate" standing along #vdithout adding "annual" or "terrra'°) isunanibigubus as to the policy tim[ts,
The Court went on to state:
Policy 2 and Policy 3 are incomplete or partially lost. Utdr review of the availablesecondary eviderace helps little in determining whether `aggregate" refers to termaggregate or annual aggregate. Four factors contribute to the permissibility ofextrinsic evidences ( 1) these were anutti-year policies, (2) the policies wereincomplete, (3) aggregate was not defined, and (4) the available segments wereambiguous and unclear as to whether "aggregate" was contemplated to meanannual aggregate or term aggregate. Said1otherwise, in these incomplete multi-year policies in the context of the four corilers of the available docrintents, thenoun "aggregate" is equally susceptible to 'either a ternl or an annual ntoditier.Had these policies been single-year, rather than muiti-year, the meaning of"aggregate" would have been unambiguous m- but that was not the case. In thisinstance,; the trial eourt correctly admitted extrinsic evidence to clarify theambiguity:
After con-sidering the extrinsic evidence, the Court held that the term "aggregate" meant
"atzizuafl" aggregate coverage. The Court frst relied on ACE's performance after the policies
were issued that indicated it viewed the aggregate as "anntial." The Court stated:
CIC asserted that ACE's ciainzs handlers had treated the limits as annualaggregates for over a decade. When an ambiguity exists, the court may considerthe parties' course of performance in deterrrzining their intent. If the words usedin a contract are susceptible to more than one meaning, and the signatories incarrying out the contract have by subsequent acts placed their own interpretationon the meaning of the words, courts may adopt the interpretation that tltesignatorips to the contract have themselves made. An insurer's course ofperforma^ce in carrying out its policy is instructive on the contracting parties'intent: "If a court is genuinely interested in what the part:es to a contract meant,`there is no surer way to find out than to see what they have done.' " We areniindful that neither appealing party was present when the policies were created,but they stand in the shoes of their predecessors - an.d we believe that both ACEand its predecessors' subsequent performance is helpful.
The Court found ,evidence that ACE treated the limits as annual.
APPX00018
The Court zaext considered irtdustry norms and concluded that these norms supported
treating multi-year policies as annual aggregates.
Finatly, the Court considered the premiums paid and found them to be consistent with an
annual aggregate. Subsequent policies specifically stated the aggregate limit was artnual - the
prenriums for these policies were comparable to the premiums for the policies at issue.
The Court filds the same factors applicable here. The evidence shows that QneBeacon
treated the polici , es as annual-aggregate limits, While it is true that some of the decisions were
made before thepolicies were located, and under a reservation of rights, the Court finds no issues
of material fact.
While he did not have the older policies at the time, Gene Waymon, who managed
William Powell's asbestos claims on behalt'of4ndBeacon, testified by affidavit that;
15. Purtheria7ore, virtually all of Powell's policies were multiyear policies. It wasCGU, Commercial Union, and General Accident's custom and practice to tr•eatmultiyear: policies as having separate annual limits of liability, rather than havinga single .non-annualized per policy period iimit. In my experience as a claimsmareager,,tlie purpose of a muttiyear policy was to ldck in coverage for three oneyear periods, I inteipreted Powell's policies this way when evaluating Powell'scoverage and when setting up the deferise of the asbestos claims;
18. During this meeting, we discussed the above topics. The meeting was verycordiai, and we were able to resolve many issues, Although no written agreementwas sigraed, we all agreed that Powell's coverage was exte.nsive; that the multiyearpoiicies ccantained separate annual limits of liability, and that Onel3eaconlRandallAmerica would be responsible for lt?G% of defense atid settleirzent costs for theduration 9f the asbestos litigation.
19. After this meeting, Powell's account operated smoothly and there were noissues. T'tze coverage was establis&ted, and Mr. It.ome was overseeing the defense.I do i3ot recall any issues with respect to Powell's coverage, includi ►rg the issue ofwhether the multiyear,policies contained annual or single limits, ever being raiseduith respect to Powell's policies.
6
APPX00Q19
Moreover, Douglas Tally, Plaintiff's expert, has testified that based on his review of the
documents, the limits of diability were intended to apply on an annual basis. OneBeacon has not
subniitted any evidence to the contrary.
Moreover, an exanxination of the premiurns show the pre-1955 premiums consistent with
post-1955 wheii the policies specifically provided for annual aggregates. Finally, there is no
evidence of industry custom or practice one way or the other.
OneBeacon argues that the addition of specific language post-19S5 shows that the parties
did not intend th,e earlier policies to contain annual aggregate limits. The Court does not agrrce.
Tha fact that the,prior policies were silent inakes the term "aggregate" ambiguous and leads the
Court to consider the factors above,
The Cotirt finds that cdnstruing the evidence most strongly in OneBeacon's favor, no
genuine issue ofmaterial fact exists and the policies provide for annual aggregate limits.
2. Occurrence
The next question is whether "occurrence" Means individual exposure or one event (the
decisIon to manufacture and sell products containing asbestos), Again, the First District gives
guidance in the CiticinnaBi Itastrrcrnce case, Like OneBeacon in this case, Defendant in
Cincinncrti Ins;rr•^ztace argued that the manufacture and sale of the defective product cot^stittated ax
single occurrence giving rise to asbestos suits. In that case, unlike this case, the product did not
contain asbestos; rather it was a rnask, designed to protect the wearer from exposure,
The,policy provided that an occurrence was "an accident, including injurious exposure to
conditions, which results, during the policy period, in bodily injury ^** neither expected not
intended frorn the standpoint ofthe injured." The Court found that this language indicated that
each exposure to, asbestos was a separate occurrence,
7
APPX00020
In reaching tilis conclusion, the Court relied on Babcock & Wilcox G'v. v. Arkwright
Boston, 53 F.3d 762 (S`" Cir. 1995):
ln Babcock & Wilcox, the eotirt concluded that each boilerworker's exposure toasbestos was a separate occurrence and rejected the manufacturer's claim that itsdecision to use asbestos in its boilers was the occurrence. The court in Babcock &Wftcox quoted and i•elied on Pittsbzrrgh Cor•nirrg Corp. v. Travalers Inden7ra Co,Pittsburgh Corning was another asbestos case, where Pittsburgh Corningmanufactured a product called Unibestos. The policy defined "occurrence" as"one happening or a series of happenings arising out of or resulting from oneevent taking place during the terin of this policy." Travelers argued that the causeof all injuries was Pittsburgh Comirig's manufacture and sale of asbestos, Thecourt rejected that argument, stating this: "Pittsburgh Corning is being sued bythousands of claimants alleging exposure to Unibestos on hundreds of job sites,on thousands of different dates, and under a variety of conditions over a period ofsix years. Not everyone exposed to asbestos is affected and i2 ot all claimants wereexposed,tinder the same circumstances or to the same lot of asbestos. I hold thatthe `cause' of the iniuries in question is the exposure of each individual toasbestos. That exposure tllus constitutes an occurrence for the purposes ofdeterrriinizig the number of occurrences."
The Cour't next addressed the deemer clause. 'l:he Court stated:
ACE als^; argues that its liability was limited by its deenier ctause. ACE's CGI,Forni contained a deemer clause that stated, "[A]:l bodily injury and propertydamage arising out of continuous or repeated exposure to substantially the samegeneral condptions shall be considered as arising out of one occurrence." Thequestion we rnust answer is whether the multiple exposures constituted the "saniegeneral conditions" under the deemer clause. We hold that they did not.
The Couit went on to discuss distinction between a case with a product containirtg
asbestos and a case where the product itself was not irtherently harrnful;
In most asbestos-related cases, the courts have considered and upheld sirnilardeerner clauses' under a scenario where a company has been sued forrnanufact_uring a product containing asbestos - making the product intrinsicailyharrnful. 'But our case is factually distinguishablc. Here, Flexo's masks were notintrinsically harmful; they failed to protect, and that failure to protect led to arnultitude' of physically and temporally distinct injuries under a multitude ofdiffering factazal scenarios that did not constitute the "same general conditions"contemplated under the piain language of the deemer clause. For example,exposure occttrred in myriad circumstances exposure to differing levels and indiffering times, in many locations, and from many sources. Some undoubtedly
APPX00021
experienced a single exposure to a single continuous source. Others were injuredfrom repeated exposure to the same source, and yet others became ill fromperiodic and frequent exposure to various separate sources.
Moreover, even under the cause test, ACE is liable in full becausc Flexomanufactured different kinds of defective masks and distributed the masks inmultiple shipments to multiple cust©njers -- if 1;'lexo had not shipped the masks, noliability could have been incurred because, as mentioned, the masks were notintrinsically harrnful. Under these countless factually distinguishable conditions,we are convinced that the differing injuries did not occur under the "same generalcondiTions," and consequently the deerner clause does not limit Ace's liability --- itremains $1,800,000, just as ACE had originally asserted.
In this t:ase, prior to 1968, none of the policies defined "occurrence" After that, the
policy defined "occurrence" as:
an accident, includinp, injurious exnnsure to conditiozis, which results, during thepolicy ptiriod, in bodily injury or property danlage neither expected nor intendedfrom the, standpoint of the insured.
This is identical I'anguage to that in the Crracanizati Insurance case,
Begiluning in 1375> the language changed slightly to define an occurrence as "an accident
including continyous or repeated exposure to conditions."
The Caurt finds that these defitiitions make clear that there were multiple occurrences,
rlot just one (the decision to rnanufacttire and sell}, As to the pre-1968 policies, becailse there is
no definition, ari`aznbiguity exists. This arnb'sguity must be construed against One}3eacon, and
since coverage is not clearly excluded, the Court finds that no question of fact exists and the
policies cover multiple occurren.ces,
This leaves the issue of the deemer clatsse as to the post-196$ policies. OneBeacon
argues that Ctsacinnati Insurance does not apply because 7iere the product itself contains the
asbestos. While the Cincinnati Insurance case did talk about this distinction, the Court finds it
does not change the result This case is similar to LarK Clutch Systems v. Century Itademnaiy, 805
AP PX00022
F. Supp.2d 370 (N.D. Ohio 2011), which examined this issue. In LuK, the insured sought a
declaration of its rights under poiicies with respect to asbestos related bodily injury claims.
Defendant in that case made many of the same arguments Defendant makes here. Ttze Court first
concluded that there was more than one "occurrence" (each claimant's exposure to asbestos) vs.
nne (decision to tise asbestos in product). The Court next examined how anaaiy "necurroiaces"
there were. The policy contained language similar to the language discussed above in Ctnninnatf
Insurance:
For the pucpose of determining the limit of the company's liability, all bodilyinjury a+.ld property damage arising out of continuous or repeated exposure tosubstantzally the sanZ e general conditions shall be considered as arising out ofone occurrence.
The policies in this case contain identical language.
Like OneBeacon, Defendant argued that pursuant to the cause test under Ohio law, the
c:ause that resulted in the injury was the company's decision to use asbestos in its products. The
Court rejected this argument and concluded:
Looking to the language of the Policies; the facts of this case and appiying thecause test, the Court finds that the underlying cause that resulted in the claimants'persottal,irijuraes is each individual claimants' continued and repeated exposure toLuK CIutch's asE;estos-containing product. Thus, each claimant's exposure is aseparate ;occurrence. Under the Policies' terms, however, each individualexposure; i.e., the continuous and repeated exposure, to LuK Ciutch's asbestos-containing product by any one claimant is considered a single occurrence:
Based orn Cincinnati Insiardnce and LuK, the Court reaches the same conclusion in this
case.
10
APPX00023
3. Alldcatz®r$
Plaintiff claims it has the ability to direct allocation of the funds, It relies on the Supreme
Court of Ohio case Goodyear Tire &,li'zibber Coinpany v. Aetna Casualty &:,5'ut°ety Company, 35
Ohio St, 3d 512 (2002), which adopted an "a!l sums" approach and held.
When a continuous occttz°rence of ertvironanerital pollution triggers claims under multipleprimary insurance policies, the insured is entitled to secure coverage from a single policyof its choice that covers "all sums" incurred as damages "during the policy period,"subject to that policy's limit of coverage.
Id. at Syllabus, he Coairt stated:
However, jthe parties] disagree as to the appropriate method for distributing losses acrossthe triggered policies. There are two accepted tnethods for allocating caverage. Qneapproach, favored by Goodyear, permits the policyholder to seek coverage from anypolicy in, effect during the time period of injury or darnage. This "alI sums" approachallows Goodyear to seek full coverage for its claims from any single policy, up to tl atpolicy's coverage limits, out of the group of policies that has been triggered. rn aontrast,the irisurers urge us to apply the pro rata allocation scheme irnp{icitly adopted by thecourt of appeals. Under the pro rata approach, each insurer pays only a porticati of a claimbased on the duration of the occurrence during its policy period in relation to the entireduration of the occurreaice. It divides "a loss `horizorttalty' among all triggered policyperiods, with each insurance company payirxg only a share of the policyhoider's totaldarnages." Id. at 217. For the reasons that follow, we agree with Goodyear's position andadopt the "all sums" method of allocation.
Under the authority of Garadveas•, generally an "all sums" approach would apply,
OneBeacon argues, however, that Plaintiff cannot retroactively apply this approach. It argues
that Plaintiff has been operatiztg under a"pro rata" approach and cannot now apply a* different
iiiethod. The Court finds that questions of fact exist precluding either party frorn summary
judgmeiit at this,point.
4. Other Issues
Defendant seeks declaratory judgment on several other issues. The Court finds that these
are not yet ripe for decision and declines to consider them.
I1
APPX00024
s . .. . . . . . .
5. C®ncleis6ora
The Court grants in part and denies in part Plaintzff's Motion for Partial Sttmmary
Judgment and denies Defendant's Motion for Summary Judgment. The parties are referred to
Local Rule 17 for preparation of an entry.
Copies to:
Daniel J. Buckley, Esq.
Fax: (513) 723-4056
Richard M. C'rarner, Esq.David W. t}rlarsdini, Esq.Fax: (614) 901-2723
Robert C; Ivlitchell, Esq.Fax: (614) 464=6350
Daniel F. Gouraslt
Fax: (216) 566-0213
,...^-^
Judge Beth A. 4rs
ENTERSEP 11 2013
Nf}N BETH R. MYERS
12
APPX00025