IN THE SUPREME COURT OF OHIO CASE NO THE OHIO CASUALTY INSURANCE COMPANY, Plaintiff-Appellant, vs. JOSEPH HANNA, et al.

Transcription

1 IN THE SUPREME COURT OF OHIO CASE NO THE OHIO CASUALTY INSURANCE COMPANY, Plaintiff-Appellant, vs. JOSEPH HANNA, et al. Defendants-Appellees. ON APPEAL FROM THE MEDINA COUNTY COURT OF APPEALS, NINTH JUDICIAL DISTRICT CASE NOS. 07CA0016-M and 07CA0017-M MEMORANDUM IN RESPONSE OF PLAINTIFF-APPELLEE MOTORISTS MUTUAL INSURANCE COMPANY A.D BATCIiLLDER. LLP 9 WEST LIBERTV STREET p0 6W( 394 Plurnvn.OU.442G8 33O1i JEFFREY L. BRAMLEY, ESQ. 105 West Liberty Street Medina, OH (330) Motorists Mutual Insurance Company DENNIS R. SPIRGEN, ESQ. 75 Public Square, Suite 1200 Cleveland, OH (216) Attorney for Plaintiff Appellant The Ohio Casualty Insurance Company GREGORY W. HAPP, ESQ. 238 West Liberty Street Medina, OH (330) Attorney for Defendants-Appellees Joseph and Vanessa Hanna QUALITY HOME CONSTRUCTION and SEAN S. ALTON c/o Sean S. Alton, Inmate No Marion Williamsport Road East Marion, OH Defendants a ppe LE0 SEP 08 20^3 CLERK OF COURT SUPREME COURT OF OHIO

2 STATEMENT OF PUBLIC AND GREAT GENERAL INTERESTS In this case a property owner acting as his own general contractor sued a sub-contactor for losses resulting from defects in the construction of his home. A declaratory action was filed by the sub-contractor's insurance companies to determine whether the alleged losses are covered by the contractor's general liability insurance. Ohio Courts have held that general liability commercial insurance does not cover the faulty workmanship of the contractor, but may cover any consequential damages caused by the faulty workmanship. Indiana Ins. Co. v. Alloyd Insulation Co. 2d Dist. No , 2002-Ohio-3916; Westfteld Ins. Co. v. Coastal Group, Inc., 9`h Dist. No. 05CA008664, 2006-Ohio-153. In the instant case, the Ninth District Appellate Court found Indiana and Westfaeld, supra persuasive. The insurance at issue in this case requires an "occurrence" or "accident" within the coverage period of the policy before coverage is triggered. As in Indiana and Westfield, supra, both the trial court and the Ninth District Court of Appeals in the instant case treated the initial contractors' faulty workmanship as an occurrence, even though the contractor's insurance policy "your work" exclusion for coverage applied. The trial court ruled that the faulty workmanship caused an "accident", which was the continuous or repeated exposure to the same harmful conditions (improper framing), triggering coverage for the structures out of plumb drywall, wood trim, doors, ceiling and roof shingles. Contrary to Ohio Casualties' assertion, the Court of Appeals did draw a distinction between the initial faulty workmanship in the framing of the house and the subsequent damage caused by the installation of the aforesaid fixtures. Citing Westfield, the Court of Appeals stated that a commercial general liability policy "will not provide coverage if faulty workmanship is the {l'ili.lat15,^vn BATCNPI.DRRLLP accident but will provide coverage if faulty workmanship causes the accident." Thus, an 105 WEST LIBEBTY STREET Nen^Bn.OV/u 44 ue 334/>

3 insurance company's duty to indemnify against claims occurring outside its coverage period can be triggered by the happening of an "accident" or "occurrence" during the policy period. This result makes sense as one would reasonably expect coverage to be provided by insurance that was in effect at the time of the initial harmful occurrence. To provide otherwise, would allow the insurer dealing with the wrongdoer to avoid liability for all claims, placing the burden on innocent third party insurers unaware of the initial triggering occurrence. Consequently, there is no significant public and general interest in having this Court reverse the current Ohio case law on this issue. ARGUMENT PLAINTIFF-APPELLANT'S PROPOSITION OF LAW I: COVERAGE FOR CONSEQUENTIAL PROPERTY DAMAGE IS NOT TRIGGERED UNDER A GENERAL LIABILITY POLICY UNTIL THE CONSEQUENTIAL DAMAGE ACTUALLY OCCURS. The question of whether the initial faulty workmanship (improper framing) was an "occurrence" was not at issue in this case during the appeal before the court of appeals. Both the trial court and the court of appeals found that the improper framing was an "occurrence" under Ohio Casualty's insurance policy. No party appealed this portion of the trial court's order. Ohio Casualty's Proposition of Law I is not properly before this Court and should be overruled. Additionally, pursuant to Indiana and Westfeld, supra, an occurrence can trigger coverage of damage which occurs outside an insurance policy period due to a continuous or ^^^[LLIAD^S repeated exposure to the same initial harmful condition. The fact that an exclusion in the AND DAT4HELUEE. ].,.Y 105 WEST LI6ERN Sl'HEE! [.fgdina Ouia 4iL3b 33O/^G5-eti66 3

4 insurance policy does not provide coverage for the insured's faulty workmanship does not change the classification of the same as an occurrence under the terms of the policy. CONCLUSION For the foregoing reasons, this Court should not accept jurisdiction over the Proposition of Law I set forth herein, as it does not raise an issue of public and great general importance. Respectfully submitted, /L Jeffre yljgr"ley (# ) Willials and $atchelder, LLP 105 West Liberty Street P.O. Box 394 Medina, OH Phone: (330) Fax: (330) E-mait:jbramley@wblawmedina.com IVILLIAMS AND DATCH S.DEN. I.LP D5 WEST LI9ERTY STREEf VO BOX 394 \II:U[N A.O`i^O94Y58 330(/L5-89fi6 4

5 PROOF OF SERVICE A copy of the foregoing Memorandum in Response of Plaintiff-Appellee Motorists Mutual Insurance Company was served this ql^) day of September, 2008, by regular U.S. Mail Service, postage pre-paid, to: Dennis R. Spirgen, Esq. 75 Public Square, Suite 1200 Cleveland, Ohio The Ohio Casualty Insurance Company Gregory W. Happ, Esq. 238 West Liberty Street Medina, Ohio Attorney for Defendants-Appellants Joseph and Vanessa Hanna Quality Home Construction and Sean S. Alton c/o Sean S. Alton, Inmate No Marion Correctional Institution 940 Marion Williamsport Road East Marion, Ohio Defendants-Appellees Jeffrey L. mle (# ) Williams and Bat elder, LLP Motorists Mutual hisurance Company 1VILr.[AN19 ANII BATCI{,+I.llR`R.LL1' l5 WES! LIBERTV STREET Dleu^n'n. nx^u YdY58 3ityi