242 F. Supp. 3d 599
N.D. Ohio2017Background
- JTO, Inc., an Ohio construction contractor, performed two road projects (Riverside Commons Drive and Apollo Parkway Extension) in Ohio and purchased Commercial General Liability policies from Travelers covering 2002–2004 policy periods.
- The U.S. Army Corps ordered construction stopped in 2004; in 2011 the U.S. and Ohio environmental agencies sued JTO alleging Clean Water Act and state-law violations for dredging/filling protected wetlands without permits. Government complaints sought injunctive relief and statutory penalties and alleged discharge of dredged/fill materials (dirt, rock, sand) harming wetlands.
- JTO tendered defense and indemnity to Travelers; Travelers twice denied coverage. JTO sued for breach of contract and declaratory relief that Travelers must defend/indemnify.
- Travelers moved for judgment on the pleadings, arguing (1) no “occurrence” because the claims arise from intentional/affirmative acts (failure to obtain permits, intentional discharges), (2) underlying suits seek no compensatory property damages, and (3) an absolute pollution exclusion bars coverage.
- The district court applied Ohio law (governing the policies) and Rule 12(c) standards, accepting JTO’s complaint allegations as true for purposes of the motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the alleged conduct constitutes an “occurrence” (i.e., accidental) under the policies | JTO: contamination was accidental; intent is a factual question unsuited for resolution on Rule 12(c) | Travelers: JTO’s affirmative, intentional acts (failure to obtain permits, deliberate discharges) are not accidental and thus not an occurrence | Denied for Travelers as to occurrence — whether conduct was accidental is a factual issue for later proceedings |
| Whether the government complaints allege “property damage” triggering coverage | JTO: environmental injury to wetlands qualifies as property damage under Ohio law | Travelers: government seeks only injunctive relief and statutory penalties, not compensatory property damages, so no coverage | Court: environmental harm as alleged can constitute property damage and may trigger coverage |
| Whether the pollution exclusion bars coverage | JTO: dredged/fill material are not "pollutants" under the policy definition; Andersen supports narrowing exclusion application | Travelers: dredged/fill materials squarely fit statutory and policy definitions of pollutants and the exclusion was intended for traditional environmental contamination | Granted for Travelers — the absolute pollution exclusion applies because allegations involve traditional environmental contamination (dredge/fill) falling within statutory definitions of pollutants |
| Whether Travelers is obligated to defend or indemnify JTO | JTO: complaint alleges potentially covered occurrences and property damage, so defense obliged | Travelers: no occurrence, no property damage, and pollution exclusion applies — no duty to defend or indemnify | Final: Judgment for Travelers on all claims — pollution exclusion negates duty to defend/indemnify despite factual disputes about occurrence |
Key Cases Cited
- Owens-Illinois, Inc. v. Aetna Cas. & Sur. Co., 990 F.2d 865 (6th Cir. 1993) (ordinary meaning of undefined insurance terms governs)
- Lumbermens Mut. Cas. Co. v. S W Indus., Inc., 39 F.3d 1324 (6th Cir. 1994) (intent/expectation is a factual question; injury must be intended to exclude coverage)
- Physicians Ins. Co. of Ohio v. Swanson, 58 Ohio St.3d 189 (Ohio 1991) (both act and resulting injury must be intended to trigger intentional-act exclusion)
- Andersen v. Highland House Co., 93 Ohio St.3d 547 (Ohio 2001) (narrow reading of pollution exclusion where hazard did not resemble traditional environmental contamination)
- Ohio Gov’t Risk Mgmt. Plan v. Harrison, 115 Ohio St.3d 241 (Ohio 2007) (insurer’s duty to defend is measured by underlying complaint’s allegations)
- Bell Atlantic v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading standard requires plausibility)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (Twombly plausibility applied; courts need not accept legal conclusions)