Bluemile, Inc. v. Atlas Indus. Contractors, Ltd.
102 N.E.3d 579
Ohio Ct. App.2017Background
- Bluemile operates a data center and suffered a ~2-hour service interruption on Feb. 10, 2011 when an Atlas technician caused an electrical short; Bluemile lost voice and cloud business income.
- Bluemile had a Hartford insurance policy; Hartford paid some business-income benefits but refused additional EBI payments, disputing the duration of Extended Business Income (EBI) coverage.
- Trial court granted Bluemile partial summary judgment holding the policy as written (EBI lasts until operations are restored or 90 days after restoration, whichever is earlier) and denied Hartford's motion seeking to correct an alleged scrivener's error that would limit EBI to 90 days after repair.
- An appraisal panel later awarded Bluemile $1,861,450; after pre- and post-appraisal payments the trial court entered judgment for Bluemile for $1,485,226 plus interest; Hartford had paid $718,202 total ($545,282 voice, $172,920 cloud).
- Hartford sued Atlas subrogated; Hartford settled with Atlas for $315,000 (releasing all subrogation claims). Bluemile separately tried Atlas; jury returned $1,000,000 for voice damages and $0 for cloud damages.
- Trial court granted Atlas's JNOV/setoff reducing Bluemile's $1,000,000 verdict by the full $718,202 Hartford had paid; the appeals court affirmed the EBI ruling but held the proper setoff is the settlement amount Atlas paid Hartford ($315,000).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Construction of EBI duration in the policy | Bluemile: enforce policy as written — EBI runs until operations restored or 90 days after that (so effectively until made whole) | Hartford: policy contains a typographical error; (2)(b) should refer to subsection (1), limiting EBI to 90 days after repair | Court: enforce the written policy; not an obvious scrivener's error; ambiguity resolved for insured — Hartford’s assignment of error overruled |
| Right to setoff insurer payments against jury verdict (proof of overlap) | Bluemile: Atlas failed to prove the jury award matched the damages Hartford paid (Hartford’s payments included cloud losses, but jury awarded only voice) | Atlas: entitled to setoff for the full $718,202 Hartford paid to prevent double recovery | Court: Atlas failed to prove full overlap; trial court erred to the extent it set off amounts not shown to match the verdict — Bluemile’s first assignment overruled |
| Amount of setoff after insurer settlement | Bluemile: if any setoff, it must be limited to amounts proven to match verdict | Atlas: entitled to setoff up to insurer’s entire subrogation claim (or full payments) | Court: setoff limited to the amount Atlas paid Hartford to settle subrogation ($315,000); remand to apply that setoff |
Key Cases Cited
- Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216 (2003) (interpret insurance policies by plain and ordinary meaning; construe ambiguities for insured)
- Buckeye Union Ins. Co. v. Price, 39 Ohio St.2d 95 (1974) (ambiguities in insurance contracts construed against insurer)
- Farmers' Natl. Bank v. Delaware Ins. Co., 83 Ohio St. 309 (1911) (give effect to every contractual provision if possible)
- Pryor v. Webber, 23 Ohio St.2d 104 (1970) (describing the collateral source rule)
- Holeton v. Crouse Cartage Co., 92 Ohio St.3d 115 (2001) (addresses limits and constitutional aspects of collateral-benefit offsets)
- Hayes Sight & Sound, Inc. v. ONEOK, Inc., 281 Kan. 1287 (2006) (setoff limited to amount the defendant paid to settle subrogation claim rather than full insurer subrogation claim)