Mosser Construction, Inc. v. The Travelers Indemnity Co
430 F. App'x 417
| 6th Cir. | 2011Background
- Mosser Construction seeks defense and indemnity from Travelers in Port Clinton underlying suit; district court granted Travelers’ summary judgment on the ground that the subcontractor exception does not apply.
- Policy provides a your-work exclusion barring damage to your work, with a subcontractor exception that preserves coverage if the damaged work was performed by a subcontractor; “subcontractor” is undefined.
- Port Clinton contracted Mosser as general contractor for wastewater facility improvements; backfill material included #57 aggregate meeting AASHTO specs; Gerken Materials supplied the backfill.
- Gerken produced the #57 aggregate at its own facility and sold it to Mosser via a purchase order; Gerken did not perform on-site work but stockpiled standard inventory.
- Mosser notified Travelers of the Port Clinton claim; Travelers denied coverage; Port Clinton sued Mosser for property damage; Mosser then filed suit in state court seeking declaratory relief and damages; this action was removed to federal court and cross-motions for summary judgment were litigated.
- The court reverses the district court’s grant of summary judgment, holding that Gerken is ambiguous under the subcontractor term and should be construed in Mosser’s favor, leading to Travelers’ duty to defend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gerken is a subcontractor under the policy’s subcontractor exception. | Mosser argues Gerken is a subcontractor; the backfill was supplied for the project and tailored to the master contract. | Travelers contends Gerken is not a subcontractor; it merely supplied standard inventory materials with no on-site work or customization. | Ambiguity requires favorable construction to Mosser; Gerken qualifies as subcontractor under the circumstances. |
| Whether the subcontractor exception to the your-work exclusion applies as a matter of law. | Ambiguity favors coverage; the exception should apply to material suppliers that perform part of the contract. | The exception is narrow and should be interpreted against the insured; not all suppliers qualify. | Because ambiguous, interpretation favors Mosser; Gerken’s status as subcontractor supports coverage. |
| What is the proper interpretive standard under Ohio law for insurance contract terms absent explicit definitions? | Unclear terms should be construed in favor of the insured when ambiguity exists. | Only clear terms may be applied; insurer benefits from narrow readings. | Ambiguities construed strictly against the drafter and in favor of the insured; standard for insurance disputes applies. |
| Does the district court apply the correct standard for determining insurer duty to defend given the underlying facts? | Allegations sufficiently implicate coverage for backfill-related damage; insurer should defend. | If exclusion or lack of subcontractor status removes coverage, duty to defend may not arise. | Insurer has a duty to defend the Port Clinton action based on Gerken as subcontractor and potential coverage. |
Key Cases Cited
- Hybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd., 597 N.E.2d 1092 (Ohio 1992) (contract interpretation; unambiguous terms not resorted to when clear)
- Karabin v. State Auto. Mut. Ins. Co., 462 N.E.2d 403 (Ohio 1984) (plain meaning governs contract terms; ambiguity treated against drafter)
- Gomolka v. State Auto. Mut. Ins. Co., 436 N.E.2d 1347 (Ohio 1982) (insurance contracts construed narrowly in favor of insured when ambiguous)
- Willoughby Hills v. Cincinnati Ins. Co., 459 N.E.2d 555 (Ohio 1984) (duty to defend depends on allegations potentially within coverage; carve-outs)
- Miller Act cases cited: United States for the Use and Benefit of Consol. Pipe & Supply Co. v. Morrison-Knudson Co., 687 F.2d 129 (6th Cir. 1982) (subcontractor definition context; labor/materials distinction)