AKC, Inc. v. United Specialty Ins. Co. (Slip Opinion)
187 N.E.3d 501
Ohio2021Background
- In 2014 sanitary sewage backed up into the Bank Nightclub in Akron, Ohio.
- The nightclub was insured by United Specialty Insurance Company; United Specialty denied the bar’s claim citing a policy exclusion for “water that backs up or overflows from a sewer, drain or sump.”
- The nightclub hired AKC, Inc. d.b.a. Cleantech to perform cleanup; the nightclub assigned its claims against United Specialty to AKC, which sued for breach of contract.
- The trial court granted summary judgment for United Specialty; the Ninth District Court of Appeals reversed, finding the water-backup exclusion ambiguous.
- The Ohio Supreme Court reversed the Ninth District, holding the water-backup exclusion unambiguous and that damage caused by sewage is excluded; summary judgment for United Specialty was reinstated.
Issues
| Issue | Plaintiff's Argument (AKC) | Defendant's Argument (United Specialty) | Held |
|---|---|---|---|
| Whether a policy exclusion for “water that backs up or overflows from a sewer” excludes damage caused by sewage carried into the property | The exclusion is ambiguous; "water" should not be read to plainly encompass sewage, so exclusion should be construed for the insured | The exclusion’s plain language covers "water" from a sewer, and a sewer discharge naturally includes sewage, so the loss is excluded | Court: The exclusion is plain and unambiguous; sewage damage is excluded, reversing the court of appeals and reinstating summary judgment for insurer |
Key Cases Cited
- Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm, 73 Ohio St.3d 107 (sets de novo standard for appellate review of summary judgment)
- Ohio N. Univ. v. Charles Constr. Servs., Inc., 120 N.E.3d 762 (apply plain and unambiguous contract terms)
- Hybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd., 64 Ohio St.3d 657 (exclusions read narrowly but court cannot ignore obvious intent)
- Lager v. Miller-Gonzalez, 120 Ohio St.3d 47 (court cannot create ambiguity where none exists)
- Foster Wheeler Enviresponse, Inc. v. Franklin Cty. Convention Facilities Auth., 78 Ohio St.3d 353 (court will not rewrite contracts to reach equitable result)
- Capelouto v. Valley Forge Ins. Co., 990 P.2d 414 (a sewer’s contents are commonly understood to include sewage)