754 F. Supp. 2d 927
N.D. Ohio2010Background
- Insurance coverage dispute between Irondale and Virginia Surety over a workers' compensation/employer liability policy for the 2005-2006 term.
- Miguel Cantu suffered fatal injuries in April 2006 while working for Irondale; Cantu's estate sued Irondale in Ohio state court for wrongful death.
- Virginia Surety denied defense and indemnity; Irondale tendered defense and seeks coverage for the Cantu Suit under the policy.
- Ohio Endorsement (Endorsement No. 6) adds Ohio-specific exclusion (Ohio Exclusion) excluding coverage for bodily injury intentionally caused or resulting from acts with substantial certainty of injury.
- Plaintiff argues R.C. 2745.01(C) creates a rebuttable presumption of intent to injure if a safety guard is removed, potentially avoiding the exclusion; defendant argues the exclusion applies to any intentional tort as defined by Ohio law.
- Court applies Ohio law to interpret the policy and holds that the Ohio Exclusion bars coverage and illusory aspects of the endorsement do not create coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ohio Exclusion bars coverage for the Cantu claim | Irondale seeks defense/indemnity despite exclusion. | Exclusion excludes intentional torts or acts with substantial certainty; Cantu claim falls within exclusion. | Ohio Exclusion bars coverage. |
| Whether RC 2745.01(C) creates a basis to negate the exclusion | Subsection (C) provides a rebuttable presumption of intent to injure. | Subsection (C) does not create coverage; it is not a separate tort. | Exclusion remains dispositive; no coverage. |
| Whether the Ohio Endorsement is illusory and thus unenforceable | Endorsement provides some coverage and should not be illusory. | Exclusion limits coverage; endorsement not illusory given some benefits. | Endorsement not illusory; exclusion valid. |
| Whether the court should apply Ohio law for interpretation of the policy | Conflict between Ohio and Alabama law; apply Alabama? | Ohio law can interpret the Ohio-specific endorsement and exclusion. | Ohio law applies. |
| Duty to defend under the policy given the complaint | Complaint could trigger coverage; insurer must defend. | Complaint alleges intentional conduct barred by exclusion; no defense obligation. | No defense obligation under policy. |
Key Cases Cited
- Owners Ins. Co. v. Nationwide Ins. Co., 167 Ohio App. 3d 276 (Ohio Ct. App. 2006) (duty to defend extends to potentially covered claims)
- Erie Ins. Exch. v. Colony Development Corp., 136 Ohio App. 3d 406 (Ohio Ct. App. 1999) (duty to defend even if allegations are groundless or only potentially within coverage)
- Willoughby Hills v. Cincinnati Ins. Co., 26 Ohio App. 3d 146 (Ohio Ct. App. 1986) (insurer's duty to defend broad when potentially within policy)
- Sanderson v. Ohio Edison Co., 69 Ohio St. 3d 582 (1994) (court reiterates broad defense duty in coverage disputes)
- Nice v. Wheeling Pittsburgh Steel Corp., 619 F. Supp. 2d 487 (S.D. Ohio 2008) (state-law exclusion applied to deny coverage under similar policy language)
- Lakota v. Westfield Ins. Co., 132 Ohio App. 3d 138 (Ohio Ct. App. 1998) (illustrates insured not surprised by limited coverage under endorsements)