Acuity, A Mut. Ins. Co. v. Siding & Insulation Co.
62 N.E.3d 937
Ohio Ct. App.2016Background
- The Siding and Insulation Co. (defendant/appellant) sued to recover the remaining ~$2 million balance of a ~$4 million TCPA class-action judgment entered against Beachwood Hair Clinic (the insured) after Acuity (Beachwood’s insurer) funded ~$1.956 million under the policy.
- The underlying class action in federal court found 37,219 unsolicited fax advertisements were sent on Beachwood’s behalf and entered a judgment totaling $3,956,650, leaving a coverage dispute over the remainder.
- The parties first litigated coverage in federal court; the Sixth Circuit later vacated the federal declaratory judgment for lack of jurisdiction, prompting this state-court declaratory action in Cuyahoga County.
- Acuity moved for summary judgment contending it had paid all applicable limits and the policy’s property-damage coverage was excluded because the fax-related property damage was intentional or expected; The Siding Company argued property-damage coverage (including the products-completed operations aggregate) applied and an “occurrence” existed.
- The Acuity policy provided separate $2 million limits for (1) products-completed operations aggregate and (2) general aggregate (other than products-completed operations), defined “property damage” to include loss of use of tangible property, and excluded expected or intended injury.
- The trial court granted Acuity’s motion and denied The Siding Company’s; the court held the property damage was not caused by an “occurrence” and was excluded as expected/intended, so no additional coverage was available.
Issues
| Issue | Acuity (Plaintiff) Argument | The Siding Company (Defendant) Argument | Held |
|---|---|---|---|
| Whether unsolicited-fax claims trigger "property damage" under the policy | Property damage (loss of paper/toner/use) may exist but is excluded because it was expected/intended (no "occurrence"). | The fax claims caused property damage and were accidental/"occurrence," so remaining policy limits apply. | Held for Acuity: property damage was expected/intended; no occurrence; exclusion bars coverage. |
| Whether the property damage falls within the "products-completed operations hazard" aggregate limit | The damage is inherent to sending faxes and not covered by products-completed operations hazard. | Property damage arises from insured’s work/product and should be covered under the products-completed operations $2M aggregate. | Held for Acuity: property damage does not fall within the products-completed operations hazard; no separate $2M coverage. |
| Construction of "occurrence" and "accident" under the policy | "Accident"/"occurrence" requires unexpected conduct; sending faxes foreseeably depletes recipients’ consumables, so not accidental. | The insured lacked intent to harm (believed consent existed); therefore an occurrence is possible. | Held for Acuity: intent to cause the harm is inferred because sending faxes naturally and foreseeably causes the loss; not an occurrence. |
| Whether the intentional-acts exclusion applies | Exclusion applies because the intentional act (sending faxes) and the resulting property harm are intrinsically tied and foreseeable. | Insured’s reliance on a third-party broadcaster and belief in consent negates expectation/intention to cause harm. | Held for Acuity: exclusion applies despite use of a third party or asserted belief of consent; no coverage. |
Key Cases Cited
- Siding & Insulation Co. v. Acuity Mut. Ins. Co., 754 F.3d 367 (6th Cir. 2014) (federal appellate decision addressing jurisdiction and coverage issues)
- Palm Beach Golf Ctr.-Boca, Inc. v. John G. Sarris, D.D.S., P.A., 781 F.3d 1245 (11th Cir. 2015) (unsolicited faxes cause property damage via depletion/loss of use)
- Res. Bankshares Corp. v. St. Paul Mercury Ins. Co., 407 F.3d 631 (4th Cir. 2005) (unsolicited fax recipients suffer property damage but coverage may be barred by intent exclusion)
- Am. States Ins. Co. v. Capital Assocs. of Jackson Cty., Inc., 392 F.3d 939 (7th Cir. 2004) (loss of use/consumables from unsolicited faxes constitutes property damage)
- Auto-Owners Ins. Co. v. Websolv Computing, Inc., 580 F.3d 543 (7th Cir. 2009) (sending faxes is not an "occurrence"; intentional-acts exclusion applies)
- Park Univ. Enters. v. Am. Cas. Co., 442 F.3d 1239 (10th Cir. 2006) (contrasting view that an occurrence may exist where insured reasonably believed recipient consented)
- Allstate Ins. Co. v. Campbell, 942 N.E.2d 1090 (Ohio 2010) (intent inferred when an insured’s intentional act is intrinsically tied to the resulting harm)