Third Wing, Inc. v. Columbia Casualty Co.Third Wing, Inc. v. Columbia Casualty Co.
Robert P. Rutter
ATTORNEYS FOR APPELLEE
Marianne K. Barsoum Stockett Martin T. Galvin Reminger Co., L.P.A. 1400 Midland Building 101 Prospect Avenue, West Cleveland, OH 44115
{¶1} Plaintiff-appеllant Third Wing, Inc. appeals from a summary judgment in favor of defendant-appellee Columbia Casualty Company on its complaint seeking a deсlaration that Columbia was legally obligated to reimburse attorney fees that Third Wing paid to Buffalo Wild Wings International, Inc. (“BWWI“). Third Wing, a BWWI franchisee, and BWWI were dеfendants in a lawsuit alleging that Third Wing violated the Dram Shop Act. As relevant to this appeal, Third Wing paid BWWI‘s attorney fees in the action under an indemnification clause of their franchise agreement. It then filed this declaratory judgment action claiming that those attorney fees were “damages” that Columbia, its liquor liability insurer, was legally obligated to pay. The court held that the franchisor‘s attorney fees were not damages because they did not involve an “injury” to which the franchisee‘s insurance policy applied. The sole assignment of error contests the court‘s refusal to award attorney fees. Columbia filed a cross-assignment of error relating to certain expert costs that were awarded but failed to file a notice of cross-appeal as required by
I
{¶2} The issue was joined on cross-motions for summary judgment and stipulated facts, so the question presented on аppeal is one we decide as a matter of law, with no
{¶3} Third Wing operates a Buffalo Wild Wings restaurant franchise under license from BWWI. The franchisе agreement contains an indemnity clause in which Third Wing agreed to hold BWWI harmless against all claims and costs arising from the operation of the restaurant, “including attorneys’ fees[.]” The franchise agreement also required Third Wing to carry liability insurance. To that end, Third Wing took out a liquor liability policy with Columbiа.
{¶4} In 2005, a customer left the Third Wing franchise and crashed his car. Tracey Glasney, a passenger in that car who suffered injuries in the crash, brought suit against Third Wing and BWWI. She alleged that Third Wing violated the Dram Shop Act,
{¶5} Third Wing forwarded the suit to Columbia. Columbia provided a defense for Third Wing, but refused to provide a defense for BWWI because it was not an insured under the policy. The Glasney action ultimately settled with Columbia agreeing to pay her $300,000 on behalf of Third Wing and BWWI agreeing to pay $7,500.
{¶6} Following settlement, BWWI demanded indemnification from Third Wing for the $7,500 it paid to Glasney in addition to $2,740 for expert‘s fees and $64,732 in attorney fees that it expended during the action. Third Wing paid BWWI according to its
{¶7} The court acknowledged Neal-Pettit v. Lahman, 125 Ohio St.3d 327, 2010-Ohio-1829, 928 N.E.2d 421, as precedent for the proposition that attorney fees may constitute damages under an insurance policy, but distinguished that case because the attorney fees in that case were incurred and awarded to the plaintiff, who was also the injured party. The court found that the attorney fees sought by Third Wing were incurred solely as a result of BWWI defending itself in the Glasney litigation and were not awarded fоr an injury that was covered by the Columbia policy.
II
{¶8} We construe insurance policies as a matter of law, Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241, 374 N.E.2d 146 (1978), paragraph one of the syllabus, and give them their plain and ordinary meaning. Dairyland Ins. Co. v. Finch, 32 Ohio St.3d 360, 362, 513 N.E.2d 1324 (1987). We cannot crеate ambiguity where none exists, but if a policy is ambiguous and susceptible to more than one reasonable interpretation, the ambiguity must be resоlved in favor of the insured. Hacker v. Dickman, 75 Ohio St.3d 118, 119, 661 N.E.2d 1005 (1996).
{¶9} The Columbia policy states in pertinent part:
We will pay those sums that you become legally obligated to pay as damages because of injury to which this insurance applies sustained by any person if liability for injury arises out of the selling, serving, or furnishing of any alcoholic beverage.
{¶10} The policy defines “injury” as “all damages, including damages because of bodily injury and property damage, and including damages for care, loss of services or loss of support.”
{¶11} Third Wing аrgues that the Columbia policy did not define the word “damages” in the liquor liability policy, so that term must be expansively construed against Columbia (the draftеr of the policy) to include any form of damages. Because attorney fees can sometimes be considered damages as held in Neal-Pettit, Third Wing arguеs that the attorney fees expended by BWWI in litigating the Glasney claim fell within the Columbia policy.
{¶12} Regardless of whether we “expansively” construe the Columbia policy in a manner suggested by Third Wing, we cannot consider the issue of damages unless and until there has been a compensable injury suffered by the insured. The Columbia policy states that Columbia will pay damages because of an “injury to which this insurance applies.” The policy states that it applies only to an injury arising from the sale, service, or furnishing of alcoholic beverages. Third Wing‘s contractual obligation to indemnify BWWI was not an “injury” under the Columbia policy because it arose solely from the terms of the franchise agreement with BWWI. The duty to indemnify thus existed separate and apart frоm the liquor liability policy. In other words, the “injury” claimed
{¶13} In Erie Ins. Group v. Grange Mut. Cas. Co., 176 Ohio App.3d 7, 2008-Ohio-1295, 889 N.E.2d 585 (6th Dist.), the court considered a similar legal proposition. A guarantor co-signed an apartment lеase that required the tenant to return the premises in the same condition as that received. A fire caused by the tenant‘s negligence destroyed the premises. After receiving an insurance pay-out, the owner of the apartment sued the tenant and the guarantor. The guarantor sought a legal defense from the insurance company that issued her homeowner‘s policy. The guarantor‘s insurer refused. The guarantor then negotiated а settlement with the owner of the apartment building. The owner of the apartment building then filed a claim against the guarantor‘s insurer, seeking compensаtion under her policy. The court affirmed a summary judgment for the insurance company, stating that the only connection between the insurance policy and the damages resulting from the fire was the contract entered into by the guarantor as cosigner of liability under the lease. Id. at ¶ 25. The court held that “the claims advanced here are contractual and not within the scope of the coverage granted in the policy.” Id.
{¶14} As in Erie Ins. Group, the clаim made by Third Wing was a contractual claim arising from a third party contract — the franchise agreement — with BWWI. It was not within the scope of coverаge granted by the liquor liability policy so any claim
{¶15} Judgment affirmed
It is ordеred that appellee recover of appellant its costs herein taxed.
The court finds there were reasonable grounds for this aрpeal.
It is ordered that a special mandate issue out of this court directing the Cuyahoga County Court of Common Pleas to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to
MELODY J. STEWART, PRESIDING JUDGE
MARY J. BOYLE, J., and KENNETH A. ROCCO, J., CONCUR