Hastings Mut. Ins. Co. v. Village Communities Real Estate, Inc.
2014 Ohio 2916
Ohio Ct. App.2014Background
- Two homeowners, Karen Macrina and Barb Gifford, sued Traditions at Polaris, LLC and Village Communities Real Estate, Inc. for contract, misrepresentation, fraud/concealment, negligent construction, warranty, and CSPA claims related to water intrusion in their basements.
- Gifford and Macrina alleged the problems began before occupancy and were known or known to the defendants; Village Communities provided homeowners’ warranties.
- Hastings Mutual Insurance Company issued Contractors Policy CPP 9792143 (Mar 1, 2010 – Mar 1, 2011) and Umbrella Policy ULC 9774539 (Mar 1, 2010 – Oct 1, 2010), each with exclusions for contracted liability and for damages caused by the insured’s work, and with a loss/known-risk provision.
- Hastings assumed defense on Nov 23, 2010 and sent reservation-of-rights letters.
- Hastings filed a declaratory-judgment action in Feb 2012 seeking a ruling that the underlying claims were not within coverage.
- Trial court granted summary judgment in Dec 2013, holding the claims were outside coverage because they predated the policy period or were known before, and some claims were intentional actions excluded from coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the fraud and CSPA claims excluded as intentional acts? | Hastings argues intentional-act exclusion applies to those claims. | Appellants contend the claims do not fit the exclusion or are not solely intentional. | Moot; resolution of timing issues ends need to decide. |
| Do breach of contract, breach of express warranty, negligent misrepresentation, and negligent construction fall within policy coverage? | Hastings contends these claims fall outside 'property damage' or 'occurrence'. | Appellants argue some may be within coverage. | Excluded; court holds these claims are outside coverage as a matter of law. |
| Did the claims occur prior to the policy dates, triggering exclusion via the loss-in-progress/known-risk clause? | Hastings asserts knowledge pre-dates policy means no 'occurrence' within period. | Appellants dispute the interpretation and timing of knowledge. | Affirmed; claims began before policy dates and knowledge pre-dated the policy, so not covered. |
Key Cases Cited
- Cardiothoracic & Vascular Surgical Specialists, Inc. v. Travelers Indemn. Co., 2006-Ohio-6947 (10th Dist. 2006) (insurer's duty to defend exists if any claim could be within policy, but not if none are potentially within coverage)
- Motorists Mut. Ins. Co. v. Natl. Dairy Herd Improvement Assn., Inc., 141 Ohio App.3d 269 (10th Dist. 2001) (duty to defend can extend to all claims if one arguably within coverage)
- Willoughby Hills v. Cincinnati Ins. Co., 9 Ohio St.3d 177 (1984) (control of the duty to defend and scope of coverage in policy interpretation)
- Cincinnati Indem. Co. v. Martin, 85 Ohio St.3d 604 (1999) (no duty to defend if pleadings cannot show coverage under policy)
- Mansfield Plumbing Prods., LLC, 2011-Ohio-4523 (5th Dist. 2011) (loss in progress/known risk interpretation of policy language)
- Hybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd., 64 Ohio St.3d 657 (1992) (contract interpretation governs insurance policy construction)
- State Farm Mut. Auto Ins. Co. v. Gourley, 2012-Ohio-4909 (10th Dist. 2012) (construing ambiguities against the insurer to reach coverage where reasonable)