458 F.Supp.3d 736
S.D. Ohio2020Background:
- Plaintiffs Fujitec (insured) and Travelers (primary carrier) sued AXIS (excess carrier) after AXIS refused to reimburse/pay defense and indemnity for post-exhaustion claims arising from an elevator accident (Shannon) on Dec. 30, 2011.
- Fujitec had a Master Service Agreement to maintain Elevator P14 at the New York Times Building; Fujitec performed monthly maintenance/inspections but no documented repairs of that elevator in the months before the accident.
- Travelers’ CGL policy contained a $1M each-occurrence limit, a $15M general aggregate, and a $2M Products-Completed Operations aggregate; Travelers says the $2M products-completed aggregate was exhausted and tendered remaining defense/indemnity to AXIS.
- AXIS refused, arguing Shannon falls under the $15M general aggregate because Fujitec’s contractual maintenance/inspection obligations meant its “work” was not ‘‘completed’’ for products-completed operations coverage.
- The dispositive legal question: under Ohio law and the policy’s defined terms, whether Fujitec’s work on the elevator was “completed” (including subsection (2)(c): when part of the work has been put to its intended use), thereby making Shannon a products-completed-operations claim subject to the $2M aggregate.
- Court applied Ohio law, followed a state court decision construing similar policy language, held Fujitec’s work was “completed” (even if maintenance obligations remained), granted plaintiffs’ summary judgment, and ordered AXIS to reimburse/defend going forward.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Shannon falls under the Travelers policy’s Products-Completed Operations hazard (i.e., was Fujitec’s “work” "completed" so the $2M products-completed operations aggregate applies) | Shannon is a products-completed-operations claim because the elevator had been put to its intended use and policy language treats work that "may need service, maintenance, correction, repair or replacement, but which is otherwise complete," as completed | Shannon is not a products-completed-operations claim because Fujitec’s ongoing contractual obligations to inspect, maintain, repair and replace equipment mean the work was not "completed" and thus the $15M general aggregate applies | Court ruled work was "completed" under subsection (2)(c) and policy language; Shannon is a products-completed-operations claim subject to the $2M aggregate. AXIS must reimburse prior defense costs and defend/pay future defense costs. |
Key Cases Cited
- Perry v. Allstate Indem. Co., 953 F.3d 417 (6th Cir. 2020) (choice-of-law and contract-interpretation principles under Ohio law govern insurance-policy disputes in diversity cases)
- McNally v. Am. States Ins. Co., 308 F.2d 438 (6th Cir. 1962) (analyzed completed-operations language in elevator-service context; court found the policy ambiguous there—distinguished by this court)
- Bituminous Cas. Corp. v. R & O Elevator Co., 293 F.2d 179 (8th Cir. 1961) (similar elevator-service decision not persuasive here because its policy language and analysis differ)
- Bondex Int’l, Inc. v. Hartford Acc. & Indem. Co., 667 F.3d 669 (6th Cir. 2011) (when policy language is unambiguous, courts must enforce it according to its plain meaning)
- Liberty Surplus Ins. Corp. v. Norfolk S. Ry. Co., [citation="684 F. App'x 788"] (11th Cir. 2017) (treats the contract’s definition of "work" uniformly across completed-operations provisions; supports reading maintenance/inspections as "work")