EATON CORPORATION v. ALLSTATE INSURANCE COMPANY, ET AL.
No. 101654
Court of Appeals of Ohio, EIGHTH APPELLATE DISTRICT, COUNTY OF CUYAHOGA
May 28, 2015
2015-Ohio-2034
BEFORE: Blackmon, J., Keough, P.J., and Laster Mays, J.
Civil Appeal from the Cuyahoga County Court of Common Pleas, Case No. CV-13-802476. [Appeal by First State Insurance Company Defendants-Appellants]
Timothy D. Johnson
Gregory E. O’Brien
Cavitch, Familo & Durkin Co., L.P.A.
1300 East Ninth Street, 20th Floor
Cleveland, Ohio 44114
James P. Ruggeri
Shipman & Goodwin, L.L.P.
1875 K Street, N.W., Suite 600
Washington D.C. 20006
ATTORNEYS FOR APPELLEES
Eaton Corporation
Julie A. Perkins
Anthony J. Lacerva
Tim L. Collins
Collins & Scanlon, L.L.P.
3300 Terminal Tower
50 Public Square
Cleveland, Ohio 44113
Kay M. Brady
Samantha L. Brutout
John T. Waldron
K & L Gates Center
210 Sixth Avenue
Pittsburgh, Pennsylvania 15222
Allstate Insurance Company
Michelle J. Sheehan
Reminger Co., L.P.A.
101 West Prospect Avenue, Suite 1400
Midland Building
Cleveland, Ohio 44115
Alba General Insurance Co., et al.
c/o Mendes & Mount L.L.P.
750 Seventh Avenue
New York, New York 10019
Arrowood Indemnity Company
John I. Grossbart
Sonnenschein Nath & Rosenthal, L.L.P.
8000 Sears Tower
Chicago, Illinois 60606
David Ross
Holly M. Wilson
Reminger Company, L.P.A.
1400 Midland Building
101 West Prospect Avenue
Cleveland, Ohio 44115
Century Indemnity Company
Michael J. Baughman
Cohn & Baughman
333 W. Wacker Drive, Suite 900
Chicago, Illinois 60606
David J. Fagnilli
Davis & Young
1200 Fifth Third Center
600 Superior Avenue, E.
Cleveland, Ohio 44114
Richard C.O. Rezie
Gallagher Sharp
Bulkley Building, Sixth Floor
1501 Euclid Avenue
Cleveland, Ohio 44115
John R. Gerstein
Merril J. Hirsh
Steven W. McNutt
Troutman Sanders, L.L.P.
401 9th Street, N.W., Suite 1000
Washington, D.C. 20004
Employees Mutual Casualty Company
Anna Marie Sosso
5500 Corporate Drive, Suite 150
Pittsburgh, Pennsylvania 15237
Executive Risk Indemnity, Inc.
Gary W. Johnson
Weston Hurd, L.L.P.
The Tower at Erieview
1301 East Ninth Street, Suite 1900
Cleveland, Ohio 44114
Federal Insurance Company
Robert D. Anderle
Daniel F. Gourash
Jazmyn J. Stover
Seeley, Savidge, Ebert & Gourash Company, L.L.P.
26600 Detroit Road, 3rd Floor
Cleveland, Ohio 44145
Fireman’s Fund Insurance Company, et al.
James R. Murray
Todd Rowe
Trressler, L.L.P.
233 South Wacker Drive, 22nd Floor
Chicago, Illinois 60606
McCarthy, Lebit, Crystal & Liffman Company
101 West Prospect Avenue
1800 Midland Building
Cleveland, Ohio 44115
Granite State Insurance Company, et al.
Dennis J. Bartek
Natalie M. Niese
Bartek Law Office
2300 East Market Street, Suite E
Akron, Ohio 44312
Hartford Accident & Indemnity Company
Corrine O. Lane
James P. Ruggeri
Shipman & Goodwin, L.L.P.
1875 K. Street, N.W., Suite 600
Washington, D.C. 20006
Edward B. Parks, II
Danielle S. Rosborough
1133 Connecticut Avenue, N.W.
Third Floor, Suite A
Washington, D.C. 20036
National Casualty Company
National Casualty Company
8877 North Gainey Center Drive
Scottsdale, Arizona 85258
New Hampshire Insurance Company
New Hampshire Insurance Company
175 Water Street, 18th Floor
New York, New York 10038
Seth M. Jaffe
Laura S. McKay
Two Prudential Plaza
180 North Stetson Avenue, Suite 3400
Chicago, Illinois 60601
TIG Insurance Company
Carlos Del Carpio
James J. Hickey
Carroll, McNulty & Kull, L.L.C.
100 North Riverside Plaza, 21st Floor
Chicago, Illinois 60606
Larry C. Greathouse
Gallagher Sharp
Bulkley Building, 7th Floor
1501 Euclid Avenue
Cleveland, Ohio 44115
Travelers Casualty & Surety Company
Arthur M. Kaufman
Hahn, Loeser & Parks, L.L.P.
200 Public Square, Suite 2800
Cleveland, Ohio 44114
Oliver J. Dunford
Thompson Hine, L.L.P.
3900 Key Center
127 Public Square
Cleveland, Ohio 44114
{¶1} Appellant First State Insurance Company (“First State”) appeals the trial court’s denial of its motion for stay and assigns the following error for our review:
I. The trial court erred in denying First State’s motion under
R.C. § 2711.02 to stay the case pending arbitration.
{¶2} Having reviewed the record and pertinent law, we affirm the trial court’s decision. The apposite facts follow.
{¶3} In 1979, appellee Eaton Corporation (“Eaton”) acquired Cutler-Hammer, Inc., a manufacturer of electrical products. Thereafter, as a result of the acquisition, Eaton was named in claims alleging exposure to asbestos in products manufactured, distributed or sold by Cutler-Hammer or by Eaton in continuation of Cutler-Hammer’s business. These claims were covered under insurance policies issued to Cutler-Hammer from 1940 through 1979, and under insurance policies issued to Eaton from 1979 through 1985. The insurance policies issued to Eaton from 1979 through 1985 cover claims for Cutler-Hammer as well as claims flowing from Eaton’s separate axle-brake and airflex business.
{¶4} In 1990, following years of coverage litigation for asbestos-related bodily injury claims arising out of the operation of its predecessor, Eaton, First State, and a number of other Continental insurers (“Continental”), reached what became known as the Cutler-Hammer Agreement (“the Agreement”). The Agreement was struck to settle all
{¶5} On March 4, 2013, Eaton filed a declaratory judgment action against 22 domestic insurers, including First State and Continental, as well as against dozens of foreign insurers, seeking a declaration that the insurers were obligated to defend and indemnify the underlying claims. In the complaint, Eaton alleged that the underlying action did not encompass coverage issues relating to Cutler-Hammer claims or any matter that would implicate the Agreement.
{¶6} On May 10, 2013, First State filed its answer to Eaton’s complaint. In the answer, First State, who issued secondary insurance policies, contended it had no duty to defend or indemnify unless the underlying Continental policies had exhausted their coverage limits.
{¶7} On February 26, 2014, Eaton filed a motion for partial summary judgment against Arrowood Indemnity Company (“Arrowood”) and Continental with respect to their duty to defend or indemnify in pending claims alleging bodily injury as a result of exposure to asbestos or asbestos containing products sold by Eaton. In the motion, Eaton stated that Arrowood issued two primary comprehensive general liability policies that were in effect from December 31, 1964 through September 1969. Eaton also stated that
{¶8} On April 28, 2014, following Eaton’s filing of its motion for partial summary judgment against Arrowood and Continental, First State filed a motion to stay pending arbitration. In its motion, First State alleged that Eaton’s declaratory action involves Cutler-Hammer claims, and thus triggers the arbitration provision in the Agreement.
{¶9} On June 25, 2014, the trial court denied First State’s motion for stay pending arbitration.
Motion for Stay Pending Arbitration
{¶10} In the sole assigned error, First State argues the trial court erred when it denied its motion to stay pending arbitration.
{¶11} Generally, absent an abuse of discretion, a reviewing court should not disturb a trial court’s decision regarding a motion to stay proceedings pending arbitration. Maclin v. Greens Nursing, 8th Dist. Cuyahoga No. 101085, 2014-Ohio-2538, citing K.M.P., Inc. v. Ohio Historical Soc., 4th Dist. Jackson No. 03CA2, 2003-Ohio-4443, ¶ 14. The term abuse of discretion connotes more than an error of law or judgment; it implies that the court’s attitude is unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217, 450 N.E.2d 1140 (1983).
{¶12} However, when addressing whether a trial court has properly granted a
{¶13} Arbitration is a creature of contract, see North Park Retirement Community Ctr., Inc. v. Sovran Cos., 8th Dist. Cuyahoga No. 96376, 2011-Ohio-5179, citing United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960), so we are guided by “the principle that a party can be forced to arbitrate only those issues it specifically has agreed to submit to arbitration[.]” Id., citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 945, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). This requires an examination of the agreement to arbitrate, which has always been considered a review as a “matter of law”; in other words, a de novo review.
{¶14} Ohio courts recognize a presumption favoring arbitration when the issue of the parties’ dispute falls within the scope of the arbitration provision. Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 27. In light of this strong presumption favoring arbitration, all doubts should be resolved in its favor. Hayes v. Oakridge Home, 122 Ohio St.3d 63, 2009-Ohio-2054, 908 N.E.2d 408, ¶ 15.
{¶15} Arbitration is favored because it provides the parties thereto with a relatively expeditious and economical means of resolving a dispute. Schaefer v. Allstate Ins. Co., 63 Ohio St.3d 708, 712, 590 N.E.2d 1242 (1992). Thus, if a dispute even arguably falls within the parties’ arbitration provision, the trial court must stay the proceedings until arbitration has been completed. Fields v. Herrnstein Chrysler, Inc., 4th Dist. Pike No. 12CA827, 2013-Ohio-693, ¶ 15, citing Tomovich v. USA Waterproofing & Found. Servs., Inc., 9th Dist. Lorain No. 07CA9150, 2007-Ohio-6214, ¶ 8.
{¶16} Ohio’s strong public policy favoring arbitration is codified in Chapter 2711 of the Revised Code. Westerfield v. Three Rivers Nursing & Rehab. Ctr., L.L.C., 2d Dist. Montgomery No. 25347, 2013-Ohio-512, ¶ 17. Under
If any action is brought upon any issue referable to arbitration under an agreement in writing for arbitration, the court in which the action is pending, upon being satisfied that the issue involved in the action is referable to arbitration under an agreement in writing for arbitration, shall on application of one of the parties stay the trial of the action until the arbitration of the issue has been had in accordance with the agreement, provided the applicant for the stay is not in default in proceeding with arbitration.
{¶17} Thus,
{¶18} In the instant case, First State argues that the claims for asbestos-related bodily injuries that are the subject of Eaton’s declaratory judgment action are subject to the arbitration provision in the Agreement.
{¶19} It is undisputed that an arbitration provision was included in the post-acquisition Agreement struck between Eaton and the various insurers to deal with the pending and future asbestos-related bodily injury claims against Cutler-Hammer. It is also undisputed that in its complaint for declaratory judgment, Eaton specifically indicated that the action was limited to non-Cutler -Hammer claims. In that regard, the complaint stated at paragraph 13 that:
Eaton also has been named in various lawsuits in which the claimants allege, among other things, continuous or progressive bodily injury arising from exposure to asbestos allegedly contained in products manufactured, distributed or sold by Cutler-Hammer, Inc. (“C-H”) and/or by Eaton in its continuation of the business of C-H (the “C-H Claims”). Coverage issues relating to the C-H Claims are governed by a coverage-in-place agreement. This action does not encompass coverage issues relating to the C-H Claims or such coverage-in place agreement, and the term “Claims” as used in this Complaint does not include “C-H Claims.”
{¶20} Thus, from the outset of the underlying action, Cutler-Hammer claims were excised from the relief being sought.
{¶21} Nonetheless, after Eaton filed its motion for partial summary judgment against Arrowood and Continental, First State claimed that its inspection revealed that more than 1,100 of the 1,600 underlying claims identified in Eaton’s motion were
{¶22} However, in its motion for partial summary judgment, Eaton stated in pertinent part as follows:
Continental also complains that, in certain of the Pending Claims, Eaton has been sued in two capacities — both “individually and as successor-in-interest to Cutler-Hammer.” Continental Brief at 18-20. For such lawsuits, the claim against Eaton as successor-in-interest to Cutler-Hammer alleging exposure to Cutler-Hammer products is governed by the 1990 agreement, and Eaton’s Complaint expressly carves such Cutler-Hammer claims out of this case. See Complaint for Declaratory Relief and Damages (filed March 4, 2013) (“Complaint”), ¶ 13. However, as Continental concedes, the 1990 agreement plainly does not govern the claim against Eaton alleging exposure to products other than Cutler-Hammer’s. See Continental Brief at 5 (“the 1990 Agreement covers only claims arising from exposure to Cutler-Hammer products (i.e. electrical product claims) and does not purport to address any other Eaton asbestos liability (e.g., the Eaton axle brake claims).”
Eaton’s motion for partial summary judgment.
{¶23} Here, it is clear from the above excerpt that Eaton’s prayer for relief only concerns non-Cutler-Hammer asbestos claims. The excerpt reveals a meticulously crafted motion that eliminates any doubt that Eaton was only seeking a ruling on the insurer’s duty to defend non-Cutler-Hammer claims.
{¶24} Further, despite the sheer volume of asbestos-related bodily injury claims that are pending and undoubtedly will be brought against Eaton, both in an individual capacity and as successor to Cutler-Hammer, we cannot imagine that each case would not
{¶25} Finally, although both parties devote considerable time discussing whether First State waived its right to arbitrate, that question need not be our focus because the underlying claims — the subject of Eaton’s declaratory judgment action — did not implicate the arbitration provision in the Agreement.
Consequently, based on our review, we conclude that First State’s motion for stay pending arbitration was properly denied. Accordingly, we overrule the sole assigned error.
{¶26} Judgment affirmed.
It is ordered that appellees recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to
PATRICIA ANN BLACKMON, JUDGE
KATHLEEN ANN KEOUGH, P.J., and
ANITA LASTER MAYS, J., CONCUR