724 N.E.2d 854 | Ohio Ct. App. | 1999
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *196 Plaintiff-appellant Este Oils (Este) appeals from the decision of the trial court granting summary judgment to defendant-appellee Federated Insurance Company (Federated) on Este's claims against Federated for indemnification and the costs of a defense.
The Weils sued Este for damages. Este sought indemnity and a defense from Federated under a Business Auto Policy and a Commercial General Liability Policy (CGL Policy). Federated refused, claiming coverage was clearly excluded under the insurance policies. Este filed a third-party complaint against Federated, apparently relying only on coverage under the Business Auto Policy. Este and Federated filed cross-motions for summary judgment on the third-party complaint. The trial court ruled in favor of Federated. This court reversed that decision in Weil v. EsteOils Co. (1994),
After the appellate decision reversed the judgment in favor of Federated, Este dismissed its third-party complaint against Federated because the Weils had dismissed their claim against Este in order to pursue binding arbitration.1 Este then resolved its claims with the Weils for $21,000 in damages.
On October 12, 1995, Este filed a new action (this case) against Federated, alleging that Federated had refused to defend or indemnify Este in the lawsuit filed by the Weils. In addition to the $21,000 paid to the Weils, Este sought to recover $56,060.75 in fees and costs incurred to defend against the Weils' claim and to seek to enforce coverage under the Federated policy. Federated again denied that it owed indemnification or a defense. Each side moved for summary judgment, and the trial court again granted summary judgment to Federated, holding that Federated owed Este neither indemnity nor a defense. The trial *198 court specifically held that fuel oil is a pollutant and that the property damage suffered by the Weils was excluded from coverage under the pollution exclusion provision in the Business Auto policy. Este again appeals, arguing in two assignments of error that the trial court erred in granting summary judgment to Federated and in failing to grant summary judgment to Este.
We also agree with Federated. The remand order from this court limited the issues on remand to the Business Auto Policy. Despite the dismissal and refiling of the case, Este cannot ignore this mandate.
We review summary judgment issues de novo. Smiddy v. Wedding Party,Inc. (1987),
We will pay all sums an "insured" legally must pay as damages because of "bodily injury" or "property damage" to which this insurance applies, caused by an "accident" and resulting from the ownership, maintenance or use of a covered "auto."
We have the right and duty to defend any "suit" asking for these damages. However, we have no duty to defend "suits" for "bodily injury" or "property damage" not covered by this Coverage Form. We may investigate and settle any claims or "suits" as we consider appropriate. Our duty to defend or settle ends when the Liability Coverage Limit of Insurance has been exhausted by payment of judgments or settlements.
This coverage is subject to the following exclusion:
B. 11. Pollution
*200a. "Bodily injury" or "property damage" arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants:
(1) That are, or that are contained in any property that is:
(a) Being transported or towed by, or handled for movement into, onto or from, the covered "auto;"
(b) Otherwise in the course of transit by the "insured"; or
(c) Being stored, disposed of, treated or processed in or upon the covered "auto";
(2) Before the pollutants or any property in which the pollutants are contained are moved from the place where they are accepted by the "insured" for movement into or onto the covered "auto"; or
(3) After the pollutants or any property in which the pollutants are contained are moved from the covered "auto" to the place where they are finally delivered, disposed of or abandoned by the "insured."
[4] Any loss, cost or expense arising out of any governmental direction or request that you test for, monitor, clean up, remove, contain, treat detoxify or neutralize pollutants.
Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
Endorsement CA F 64 modifies this exclusion with the following language:
Exclusion B11 POLLUTION does not apply to the actual, alleged or threatened discharge dispersal, release or escape of pollutants, other than:
1) acids;
2) Class A or Class B explosives; and
3) radioactive materials as defined in 49 CFR 173.445
if the actual, alleged or threatened discharge, dispersal, release or escape of the pollutants is the direct and immediate result of one or more of the following:
i) collision of a covered "auto";
ii) overturn of a covered "auto";
iii) fire and/or explosion which occurs during loading or unloading to or from a covered "auto."
Under Ohio law, an insurance policy is a contract, and a court's construction of any contract is a matter of law. Alexander v. BuckeyePipeline (1978),
The definition of a pollutant in the Business Auto Policy includes a liquid contaminant. Heating oil is a liquid contaminant. See R.C. Chapter 3746; See also Sanborn Plastics Corp. v. St. Paul Fire Marine Ins. Co.
(1993),
The Business Auto Policy contains a Wrong Delivery of Liquid Products Endorsement, CA-23-05-01-87, referred to as the completed-operations endorsement, which excludes liability coverage under the following condition:
This insurance does not apply to:
"Bodily injury" or "property damage" resulting from the delivery of any liquid into the wrong receptacle or to the wrong address, or from the delivery of one liquid for another, if the "bodily injury" or "property damage" occurs after delivery has been completed.
Delivery is considered completed even if further service or maintenance work, or correction, repair or replacement is required because of a wrong delivery.
We do not agree with Federated that a pollution exclusion in the body of an insurance contract overrides a special endorsement. An endorsement must be regarded as a modification of the terms of the original contract if an inconsistency clearly appears. American Hardware Mut. Ins. Co. v.Mansfield Auto Truck Plaza (1984),
The completed-operations endorsement in the Business Auto Policy is, itself, an exclusion, and in no way conflicts with the pollution exclusion. It adds no coverage applicable to this case. The record suggests that Este could have purchased a special "unloading" product endorsement that would have covered the claim at issue. It chose not to.
Under the undisputed facts of this case, reasonable minds can reach only one conclusion: that there is no coverage under the Business Auto Policy, and that, as a matter of law, Federated is not required to indemnify Este Oil for the damages Este paid to the Weils as a result of the arbitration of the Weils' claim. Civ.R. 56(C). Accordingly, we affirm the trial court's determination that there is no *202 coverage under the Business Auto Policy, because heating oil is a pollutant under this policy and because the endorsement adds no additional coverage pertinent to this case.
Where the insurer's duty to defend is not apparent from the pleadings in the action against the insured, but the allegations do state a claim which is potentially or arguably within the policy coverage, or there is some doubt as to whether a theory of recovery within the policy coverage has been pleaded, the insurer must accept the defense of the claim.
We hold in this case that there was some doubt as to whether the Weils had pleaded a theory of recovery within policy coverage, and therefore that Federated should have accepted defense of the claims. Accordingly, Este is entitled to the cost of the defense of the lawsuit brought by the Weils against it. However, we do not agree that Este is also entitled to the costs and fees it expended in this action. An award of attorney fees must be predicated either on statutory authority or upon a finding of bad faith. Vance v. Roedersheimer, (1992)
Alternatively, to award fees other than on a statutory basis, we would have to find evidence of bad faith, fraud, or a "stubborn propensity to needless litigation" on the part of the insurer. G.S.T. v. Avon Lake
(1978),
HILDEBRANDT, P.J., GORMAN and BETTMAN, JJ.