2020 Ohio 5417
Ohio Ct. App.2020Background:
- The King Trust (landlord) sought to retake possession of a Pennsylvania restaurant leased to tenant KRG Kings, LLC; KRG disputed the landlord’s right in separate litigation (the King Litigation).
- Weirton Medical Center agreed to lease the space and contacted Cincinnati contractor Al Neyer, LLC to perform interior demolition and renovations, but no signed contract was executed between Neyer and Weirton.
- A Neyer project manager, without senior-management authorization or knowledge of KRG’s identity in the lease dispute, obtained permits and proceeded to demolish the restaurant interior.
- KRG amended its claims in the King Litigation to assert tort claims against Neyer (trespass, conversion, negligence, tortious interference); King Trust and Weirton asserted cross-claims against Neyer for contribution and indemnity.
- Neyer tendered the defense and sought indemnity under commercial general liability (CGL) policies issued by Westfield (primary) and Berkley (excess); Westfield defended under reservation but refused indemnity for Neyer’s settlement, prompting Neyer to sue the insurers for declaratory relief and breach.
- The trial court granted summary judgment to Neyer, holding the demolition was an "occurrence" (an accident) under Westfield’s CGL policy; the First District reversed, holding the demolition was not accidental and directing entry of summary judgment for Westfield.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Neyer’s unauthorized demolition was an “occurrence” (an "accident") under the CGL policy, triggering Westfield’s duty to indemnify | Neyer: Damage was unintended/unanticipated; senior management didn’t know the project manager would start demolition and no one anticipated damage to KRG, so an "accident" occurred | Westfield: Demolition was voluntary, within Neyer’s control, and foreseeable business risk (premature performance), so not an "accident" and not covered | Court: Demolition was not an "occurrence"; Neyer controlled and anticipated the risk; coverage denied; trial-court judgment reversed and remanded to enter summary judgment for Westfield (policy exclusions not reached) |
Key Cases Cited
- Westfield Ins. Co. v. Custom Agri Sys., 979 N.E.2d 269 (Ohio 2012) (contractor-controlled damage from its own work is not an "accident" under CGL; fortuity doctrine)
- Ohio Northern Univ. v. Charles Constr. Servs., 120 N.E.3d 762 (Ohio 2018) (applies Custom Agri to subcontractor activity; damages not fortuitous)
- Westfield Ins. Co. v. Galatis, 797 N.E.2d 1256 (Ohio 2003) (principles for interpreting "occurrence" and insurer duties under CGL policies)
- JTO, Inc. v. State Auto. Mut. Ins. Co., 956 N.E.2d 328 (Ohio Ct. App. 2011) (discusses ordinary meaning of "accident" and fortuity in construction contexts)