2019 Ohio 364
Ohio Ct. App.2019Background
- In May 2017 a landslide in Cincinnati’s Mt. Adams damaged private homes and public infrastructure after excavation work by Metropolitan Design & Development, LLC (MDD) at 406 Baum Street. The city sued MDD seeking a temporary restraining order and injunctive relief to compel immediate stabilization and repair of the hillside.
- MDD notified its commercial general liability insurer, Frankenmuth Mutual (Frankenmuth), which initially investigated but refused to provide defense counsel for the city’s original injunction-focused complaint; MDD retained private counsel (Droder & Miller).
- Frankenmuth later agreed to defend certain intervenors and an amended city complaint (which added a monetary claim) but denied coverage for the court-ordered re-stabilization costs and for criminal-defense work, citing policy exclusions.
- MDD sued Frankenmuth for breach of contract (failure to defend), declaratory relief (duty to indemnify), and bad faith; the trial court granted partial summary judgment that Frankenmuth had a duty to defend the city’s original complaint, awarded MDD attorney and expert fees, and later held Frankenmuth must indemnify MDD for the stabilization costs.
- On appeal Frankenmuth challenged (1) the duty-to-defend ruling, (2) attorney-fee awards, (3) expert-fee award, and (4) the applicability of exclusion j.6 (damage to the part of property where insured performed work). The appellate court affirmed except it reversed the award of fees for MDD’s criminal-defense counsel.
Issues
| Issue | Plaintiff's Argument (MDD) | Defendant's Argument (Frankenmuth) | Held |
|---|---|---|---|
| Duty to defend city’s original injunction-only complaint | City alleged property damage to public infrastructure; injunction ordering stabilization effectively seeks monetary damages (cost to repair) and is arguably covered, so insurer must defend | Original complaint sought injunctive relief, not compensatory damages, so it was not a "suit for damages" under the CGL and thus outside coverage | Duty to defend found: allegations of property damage and requested injunction to pay stabilization costs make the claim arguably covered; insurer owed defense |
| Attorney fees for MDD’s retained civil defense counsel (Droder & Miller) | Frankenmuth wrongfully refused to defend; fees incurred defending the injunction claim are recoverable | Frankenmuth contended it had provided a defense by July 1, 2017 and voluntary-payment clause bars recovery | Award affirmed: insurer wrongfully refused to defend; fees limited to time spent on the city’s original complaint were reasonable and recoverable |
| Attorney fees for MDD’s criminal-defense counsel (Cohen, Todd, Kite & Stanford) | Fees incurred to assess potential criminal exposure were part of defense costs | Policy excludes coverage for loss caused by insured criminal acts; criminal-defense work not covered | Award reversed: fees for criminal-defense counsel excluded by the policy’s criminal-acts exclusion |
| Coverage for stabilization costs under exclusion j.6 ("that particular part...your work was incorrectly performed on") | Stabilization sought repair of third-party parcels not subject of MDD’s work; exclusion should not bar coverage for damage to other parcels | The hillside is an integrated singular property; insured performed work on the contiguous property so j.6 excludes repair costs | Exclusion j.6 does not apply: exclusion construed narrowly and insurer failed to show it clearly applies; MDD sought coverage for third-party parcels not part of insured’s contracted work |
Key Cases Cited
- Grafton v. Ohio Edison Co., 77 Ohio St.3d 102 (summary-judgment standard)
- Willoughby Hills v. Cincinnati Ins. Co., 9 Ohio St.3d 177 (insurer’s duty to defend is broader than duty to indemnify; duty attaches if claim is even arguably within coverage)
- Motorists Mut. Ins. Co. v. Trainor, Ohio St.2d 41 (wrongful refusal to defend permits recovery of attorney fees)
- Hybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd., 64 Ohio St.3d 657 (insurance exclusions must be clear and specific; construing exclusions narrowly)