862 F. Supp. 2d 719
S.D. Ohio2012Background
- PMI replaced five kiln sections on Kiln No. 5 for Carmeuse; post-restart dogleg caused damage to rollers and gear not on PMI’s work.
- Damages result from collateral/consequential effects of PMI’s workmanship, not solely the five replaced sections or welds.
- Pennsylvania state court awarded Carmeuse $978,558.41 plus delay damages (reversed on appeal to prejudgment interest) totaling $1,073,304.90.
- This federal action seeks declarations on insurance coverage under Burlington (pre-2005 policy) and Liberty (2005–2006 policy) and PMI’s defense/indemnity costs.
- Court granted Liberty leave to file surreply; otherwise, the dispositive motions were briefing-set, with PMI and Carmeuse pressing for coverage, Burlington arguing non-coverage or exclusion defenses.
- Policies at issue: Burlington July 10, 2004–Sept. 30, 2005; Liberty Sept. 30, 2005–Sept. 30, 2006; Ohio law governs interpretation of coverage and exclusions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do Burlington and PMI cover the Carmeuse judgment? | PMI/Carmeuse: damages are collateral; policy covers occurrence during period. | Burlington: faulty workmanship/non-occurrence; or damages outside policy period. | Yes; Burlington covers at least some property damage during policy period. |
| Do Liberty and PMI cover the Carmeuse judgment? | Liberty coverage triggered by occurrence during its policy period; damages within period. | Liberty: no occurrence during period or misapplied trigger; notice issues. | Yes; Liberty covers some damages; jury to resolve timely notice. |
| Are exclusions (contractual liability, impaired property, professional services, damage to work) dispositive? | exclusions do not defeat coverage for collateral damages. | exclusions bar coverage for PMI’s liability or damages. | Exclusions do not defeat coverage; several exclusions do not apply as argued. |
| Was PMI's notice of loss to Liberty timely? | Delayed notice may be justified; facts unfold over time. | Late notice is unreasonable; prejudice presumed. | jury to determine reasonableness of notice; not resolved on summary judgment. |
Key Cases Cited
- Westfield Ins. Co. v. Custom Agri Sys., Inc., 130 Ohio St.3d 1415 (Ohio 2011) (ambiguous policy terms construed in insured’s favor)
- Younglove Constr., LLC v. PSD Dev., LLC, 767 F.Supp.2d 820 (N.D.Ohio 2011) (economic losses not covered absent collateral property damage)
- Commercial Union Ins. Co. v. Basic American Medical, Inc., 703 F.Supp.629 (N.D.Ohio 1989) (contractual exclusion clarifies scope of tort liability coverage)
- Goodyear Tire & Rubber Co. v. Aetna Cas. & Sur. Co., 95 Ohio St.3d 512 (Ohio 2002) (timeliness of insurer notice under late-notice doctrine)
- Buckeye Ranch, Inc. v. Northfield Ins. Co., 134 Ohio Misc.2d 10 (Ohio Misc. 2005) (loss-in-progress doctrine rejected in Ohio; not adopted absent policy endorsement)