Granger v. Auto-Owners Ins. (Slip Opinion)
144 Ohio St. 3d 57
| Ohio | 2015Background
- Steve Granger (and co-trustee Steigerwald) own a multi-unit rental and allegedly told an African‑American caller with a child he would not rent to children; emails and tester contacts repeated “no children” and racially disparaging remarks.
- Valerie Kozera and Fair Housing Contact Service (FHCS) sued under the Fair Housing Act and Ohio law claiming out‑of‑pocket costs and emotional distress; FHCS alleged harm to its mission.
- Two insurer policies were at issue: a dwelling/landlord policy (narrower “personal injury” definition) and an umbrella policy (broader definition including humiliation, mental anguish).
- Auto‑Owners denied coverage under the dwelling policy; after settlement of the federal suit for $32,500, Granger sought defense/coverage under the umbrella policy; insurer refused and moved for summary judgment.
- The Ninth District reversed the trial court, holding Kozera’s claim of emotional distress arguably alleged humiliation (a covered personal injury) and that inferred intent to cause humiliation was not appropriate as a matter of law.
- The Ohio Supreme Court affirmed: emotional‑distress allegations reasonably include humiliation (triggering duty to defend), and inferred‑intent doctrine does not apply because humiliation is not an injury necessarily resulting from pre‑leasing discrimination.
Issues
| Issue | Plaintiff's Argument (Kozera/FHCS) | Defendant's Argument (Auto‑Owners) | Held |
|---|---|---|---|
| Whether "emotional distress" in the complaint triggers umbrella coverage for "humiliation" | Emotional distress encompasses humiliation; policy expressly covers humiliation and mental anguish, so duty to defend is triggered | The complaint states only general emotional distress; coverage requires specific covered conduct and not mere inference | Held for plaintiff: broad allegation of emotional distress arguably alleges humiliation, a covered "personal injury," so duty to defend may be triggered |
| Whether the intentional‑acts exclusion bars coverage via inferred‑intent doctrine | Insurer must prove intent to cause the covered personal injury; inferred intent in this case is inappropriate because emotional harm is not inherent in discrimination | Pre‑leasing discrimination implies intent to injure; inferred intent should apply and bar coverage under the exclusion | Held for plaintiff: inferred‑intent doctrine does not apply because the harm (humiliation) is not necessarily or intrinsically the inevitable result of the act; insurer did not establish intent as a matter of law |
| Standard for invoking inferred intent to defeat a duty to defend | Not applicable absent intrinsic tie between act and harm; factual determination should be left to trier of fact | Inferred intent can be applied when insured’s conduct logically implies intent to cause the alleged harm | Held: follows Campbell — inferred intent applies only where act and harm are intrinsically tied so harm necessarily results; that test is not met here |
| Scope of insurer's duty to defend where an umbrella policy has broader "personal injury" terms than an underlying policy | Umbrella policy’s broader definitions (humiliation, mental anguish) can create a duty to defend even if underlying dwelling policy does not | Insurer contends absence of coverage under underlying policy forecloses umbrella duty when injuries are intentional | Held: umbrella policy’s broader terms may create a separate duty to defend; the intentional‑acts exclusion must be analyzed with the inferred‑intent standard rather than presumed from discriminatory act |
Key Cases Cited
- Allstate Ins. Co. v. Campbell, 942 N.E.2d 1090 (Ohio 2010) (adopts "intrinsically tied" test limiting inferred‑intent doctrine for policy exclusions)
- Gearing v. Nationwide Ins. Co., 665 N.E.2d 1115 (Ohio 1996) (discusses inferred intent where insureds denied intent to harm)
- Preferred Risk Ins. Co. v. Gill, 507 N.E.2d 1118 (Ohio 1987) (inferred intent applied in extreme fact pattern involving homicide)
- Physicians Ins. Co. of Ohio v. Swanson, 569 N.E.2d 906 (Ohio 1991) (insurer must show the injury itself was expected or intended to avoid coverage)
- Sharonville v. American Employers Ins. Co., 846 N.E.2d 833 (Ohio 2006) (duty to defend is broad; insurer need not defend only when claims are clearly outside coverage)