2017 Ohio 8808
Ohio Ct. App.2017Background
- July 19–20, 2013 storm caused heavy regional rainfall; next day appellants discovered a cracked, heaved concrete basement slab.
- State Farm inspected, denied the claim citing policy exclusions for (a) water below the surface of the ground (subsurface/hydrostatic pressure) and (b) damage from settling/cracking/bulging/expansion and defects in workmanship/compaction.
- State Farm retained engineer David Mallory who concluded saturated subgrade and hydrostatic pressure forced the slab upward; lack of rebar and no sump pump were contributing factors.
- Appellants’ engineer Joseph Nyzen agreed subsurface water pressure caused the slab failure but disputed Mallory’s theory about how the pressure developed (e.g., rainfall data, drainage misalignment).
- Appellants sued for breach of contract, declaratory relief, and wrongful cancellation/nonrenewal; State Farm moved for summary judgment based on the policy exclusions and its contractual right not to renew.
- Trial court granted summary judgment to State Farm (loss excluded; nonrenewal lawful); appellants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the slab damage is covered or excluded as "water below the surface of the ground" (hydrostatic/subsurface water) | Puljic: Damage was a sudden catastrophic vertical heave/eruption not contemplated by the exclusions; expert language differences create doubt | State Farm: Both experts agreed water pressure beneath the slab caused the loss, which falls squarely within the policy's subsurface water/water damage exclusion | Held: Exclusion applies; both experts attributed cause to subsurface water pressure, so loss is excluded as a matter of law |
| Whether conflicting expert opinions create a genuine issue of material fact | Puljic: Mallory and Nyzen differed on timing/mechanism (sudden vs. gradual, rainfall analysis), so summary judgment is improper | State Farm: Differences are immaterial because both experts identified subsurface hydrostatic pressure as the cause | Held: Differences immaterial; no genuine factual dispute on causation relevant to coverage |
| Whether the policy language (e.g., omission of terms like "hydrostatic") is ambiguous so as to afford coverage | Puljic: Policy does not use "hydrostatic" or "subsurface" and excludes only "cracking, bulging, expansion," not vertical heave/eruption | State Farm: The policy expressly excludes water below the surface that exerts pressure or seeps/ leaks through structures; technical terms are synonymous with the excluded peril | Held: No ambiguity; policy excludes the loss caused by subsurface water pressure |
| Whether State Farm wrongfully cancelled or retaliatorily nonrenewed the policy | Puljic: Nonrenewal was retaliatory response to claim dispute and thus wrongful | State Farm: Policy expressly permits nonrenewal; it provided timely written notice and a permissible nonrenewal reason | Held: Nonrenewal was contractual and lawful, not a cancellation or wrongful retaliation |
Key Cases Cited
- Davis v. Loopco Indus., 66 Ohio St.3d 64 (summary judgment should be entered with caution)
- Dupler v. Mansfield Journal Co., 64 Ohio St.2d 116 (trial court may not weigh evidence on summary judgment)
- Murphy v. Reynoldsburg, 65 Ohio St.3d 356 (questions on summary judgment must be resolved in nonmoving party’s favor)
- Grafton v. Ohio Edison Co., 77 Ohio St.3d 102 (appellate review of summary judgment is de novo)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard—whether evidence requires jury resolution)