Coverage Analysis
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OHIO
 (6th Circuit)

  ACCIDENTS OR OCCURRENCES

  The Ohio Supreme Court has found that public policy disfavors coverage for intentional torts.  Wedge Products, Inc. v. Hartford Equity Sales Co., 31 Ohio St.3d 65, 67, 509 N.E.2d 74, 76 (1987).  In a subsequent 4-3 decision, however, the court also ruled that "in order to avoid coverage on the basis of an exclusion for expected or intentional injuries, the insurer must demonstrate that the injury itself was expected or intended.  It is not sufficient to show that the act was intentional."  Physicians Ins. Co. v. Swanson, 569 N.E.2d 906 (Ohio 1991)(despite fact that insured fired a BB in the direction of the injured person, the "injury itself was neither intended nor substantially certain to occur").  An earlier ruling of the Ohio Court of Appeals had found that an insured intends an injury if he consciously desires the result of his act or knows with substantial certainty that the loss or damage will follow from his conduct regardless of his desire.  Cincinnati Ins. Co. v. Mosley, 41 Ohio App.2d 113, 322 N.E.2d 693 (1974).

  Separate claims of negligence against innocent spouses, employers or supervisors have been held to allege an “occurrence” notwithstanding the intentional nature of the insured’s acts of assault or molestation.  Evangelical Lutheran Church in American v. Atlantic Mutual Insurance Company, 169 F.3d 947 (5th Cir. 1999); St. Paul Fire & Marine Insurance Company v. Schrum, 149 F.3d 878 (8th Cir. 1998); and American States Insurance Company v. Borbor, 826 F.2d 888, 895 (9th Cir. 1987).

  An intent to injure may be inferred in cases of sexual assaults against minors, as the insured's conduct is deemed inherently injurious as a matter of law.  Gearing v. Nationwide Ins. Co., 665 N.E.2d 1115 (Ohio 1996).  But see, Westfield Co. v. Kette, 1996 WL 139636 (Ohio App. March 29, 1996)(negligent supervision claims against spouse of child molester held covered under homeowner's policy).  Further, the Ohio Supreme Court has ruled that it would be against public policy to permit insurance coverage for sexual molestation claims.  Gearing v. Nationwide Ins. Co., 665 N.E.2d 1115 (Ohio 1996).  See also Cuervo v. Cincinnati Ins. Co., No. 9-2404 (Ohio July 3, 1996).  

  An exclusion for injuries that were expected or intended did not apply to intentional acts by an Alzheimer's patient since the insured lacked the mental capacity to form an intent to injure.  Nationwide Ins. Co. v. Estate of Kollstedt, 646 N.E.2d 816 (Ohio 1995).

  The Ohio Court of Appeals has refused to give effect to an exclusion for intentional injuries where the allegations against the insured employer were based upon claims that the insured knew or should have known that injury was substantially certain to occur.  Psrite Corp. v. Commercial Union Ins. Co., No. 68704 (Ohio App. May 16, 1996), the court ruled that such exclusions are only intended to apply to cases in which the insured actually intended for bodily injury or property damage to occur and do not extend to circumstances in which harm was "substantially certain to occur."

  Allegations that the insured negligently designed a roller coaster for the plaintiff have been held not to allege an “occurrence.”  Applying Ohio law, the District Court ruled in Custom Coaters, Inc. v. Stonewall Surplus Lines Ins. Co., 1999 U.S. Dist. LEXIS 3295 (S.D. Ala. February 24, 1999), that negligent engineering, design and construction, resulting in the failure of the product to perform as premised, was not the result of any “accident.”   See also  Environmental Expiration Company v. Bituminous Fire & Marine Insurance Company, No. 99CA 00315 (Ohio App. October 16, 2000)(faulty workmanship does not constitute an “accident”).   By contrast, the Ohio Court of Appeals has ruled that allegations that a contractor failed to properly carry out repairs to the plaintiffs home could be interpreted as alleging an “accident” within the scope of the contractor’s liability insurance.  In Owners Insurance Company v. Reyes, 1999 Ohio App. LEXIS 45557 (6th District September 30, 1999), the Sixth Appellate District ruled that a trial court had erred in finding that acts undertaken by the defendant pursuant to its contractual obligations could not be characterized as an “accident.”
 

  ALLOCATION AND SCOPE ISSUES

  Where more than one policy is potentially triggered by a claim, the Court of Appeals has ruled that defense costs should be shared equally.  Phoenix Phase One Associates v. Ginsberg, Guren & Merritt, 27 Ohio App.3d 240, 500 N.E.2d 365 (1985)(excess insurer must share equally with primary insurer that was forced to defend case after its policy became exhausted).

  Predicting that Ohio courts would follow the pro rata allocation approach that it pioneered in INA v. 48 Insulations, the Sixth Circuit ruled in   The Lincoln Electric Company v. St. Paul Fire & Marine Insurance Company,  210 F.3d 672 (6th Cir. 2000),  a toxic tort case involving welders who claimed to have suffered injury by inhaling fumes from the insured’s welding rods, that the loss must be allocated in accordance with  (1) the trigger required by the policy or, in the absence of clear language in the policy, a presumption would be deemed to exist that “all policies in effect at the time of both exposure to the offending product and actual manifestation will be construed to have been triggered”; (2) the overall period of exposure, including years for which the insured decided to “go bare” with self-insurance must be taken into account with an equal allocation to each year unless there is specific evidence that more injury occurred in one year than another; (3) the shares must be pro rated among the legal entities responsible for these policy periods although joint and several liability may be compelled if there is language in the policy requiring such a conclusion; and (4) to the extent that a claim triggers both the occurrence and later “claims made” policies, the insured is entitled to pick and choose between the policies to select the one that provides the most coverage.   Accord GenCorp., Inc. v. AIU Insurance Company, 2000 U.S. Dist. LEXIS 10302 (N.D. Ohio June 2, 2000)(pollution clean up claims).

  The Sixth Circuit’s opinion in Lincoln Electric reversed a lower court’s adoption of a “pick and choose” trigger which, in the interim, had been relied on by another federaldistrict court in a pedicle screw coverage dispute.   See Lincoln Electric Company v. St. Paul Fire & Marine Insurance Company, 10 F. Supp. 2d 856, 870 (N.D. Ohio 1998), cited in In Re Orthopedic Bone Screw Products Liability Litigation, 2000 U.S. Dist. LEXIS 1410 (E.D. Pa. February 1, 2000)( “in cases where coverage is triggered under more than one policy, the logical resolution is to allow the insured to collect the full amount of indemnity due from any triggered policy”). 

  Insurer allocation arguments were also rejected by an Ohio trial court in an asbestos case, Owens-Corning Fiberglass Corporation v. American Centennial Ins.  Co., 660 N.E.2d 770 (Ohio Misc. 1995).  Instead, the court adopted an expansive interpretation of "all sums" requiring an insurer to indemnify its policyholder in full if its obligations were triggered at all.  To similar effect is  Eaton Corp. v. Aetna Cas. & Sur. Co., Cuyahoga County Court of Common Pleas No. 189068 (Ohio August 12, 1994).

  An insurer may seek permissive intervention in the lawsuit against its policyholder for the purpose of crafting special interrogatories to permit apportionment of the damages between covered and non-covered claims. Walsh v. Patitucci, No. 77969 (Ohio App. November 2, 2000).

  State trial court ruled in AM International, Inc. v. Commercial Union Ins. Co., No. 89 CH 11602 (Ill. Cir. Ct. February 29, 1996) that the insured must horizontally exhaust all primary policies before claiming coverage under any excess policy.
 

  APPELLATE PROCEDURES

  Ohio has both an intermediate appellate court and a state Supreme Court.
 

  BAD FAITH

  Unfair or deceptive consumer practices are proscribed by Ohio Rev. Code Ann. § 1345.01 (Baldwin 1988). Unfair claims handling by insurers is regulated under Ohio Admin. Code § 3901-1-07.

  A policyholder has no private right of action to pursue a claim for unfair or deceptive trade practices in violation of Ohio Rev. Code Section 3901.21.  Elwert v. Pilot Life Insurance Company, 602 N.E.2d 1219, 1228 (Ohio App. 1991).  

  Under Ohio law, “an insurer has the duty to act in good faith in the handling and payment of the claims of its insured and a breach of that duty will give rise to a cause of action in tort against the insurer independently and without regard to the availability of insurance under the contract.  United Department Stores #1 v. Continental Casualty Company, 534 N.E. 2d 878, 880 (Ohio App. 1987).  In order to prevail, the insured must establish that the insurer acted without reasonable justification.  Zoppo v. Homestead Insurance Company, 644 N.E. 2d 397, 399 (Ohio 1994).

  A cause of action for the tort of bad faith may exist irrespective of any liability arising from a breach of the insurance contract.  Glen Falls Ins. Co., 616 N.E.2d 1123, 1126 (Ohio Ct. App. 1992). 

  An insurer’s good faith obligations do not end when coverage litigation begins.  Spadafore v. Blue Shield Ohio Medical Indem. Corp., 486 N.E.2d 1201, 1203-04 (Ohio Ct. App. Franklin County 1985)(“evidence of the breach of the insurer’s duty to exercise good faith occurring after the time of filing suit was relevant so long as the evidence related to the bad faith  handling or refusal to pay the claim”).

  An utter failure to investigate may support a bad faith claim even if it later proves that there is no coverage. Bullet Trucking, Inc. v. Glenn Falls Ins. Co., 616 N.E.2d 1129, 1126 (Ohio App. 1992).  

  Punitive damages may only be awarded against first party insurers if the carrier acts without "reasonable justification." Zoppo v. Homestead Ins. Co., 644 N.E.2d 397 (Ohio 1994).  Prior to Zoppo, Ohio courts have required proof of intent to cause injury to sustain a claim of bad faith.  Motorists Mut. Ins. Co. v. Said, 590 N.E.2d 1228 (Ohio 1992).

  Zoppo involved alleged bad faith in the insurer's handling of the claim.  The Ohio Supreme Court has left open the issue of whether Zoppo should be extended to cases involving a wrongful refusal to defend.  Roberts v. USF&G, 665 N.E.2d 664 (Ohio 1996)(refusing to apply Zoppo to case where original denial had been based on Said "intent" standard and where litigation had been in progress for years before Zoppo standard was adopted).

  The Sixth Circuit has ruled that an insured’s arson indictment was improperly considered by an Ohio District Court in agreeing to dismiss his bad faith claim against his property insurer.  In Rose v. Hartford Underwriters Ins. Co., NO. 98-4286 (6th Cir. February 14, 2000), the Court of Appeals refused to find that an insured’s indictment  was per se established that the insured had acted reasonably in denying coverage for a fire loss.  In particular, the court noted that  the fact of indictment would certainly be irrelevant to the issue of the insured’s claimed bad faith if the carrier had already denied coverage.

  A third-party tort claimant has no right to assert bad faith claims against the tortfeasor’s liability insurer.   Murrell v.  Williamsburg School District, 634 N.E.2d 263 (Ohio.  App.  1993). 

  Ohio Supreme Court refused to permit "reverse bad faith" claim against insured that committed fraud in Tokles & Son, Inc. v. Midwestern Indemn. Co., 605 N.E.2d 936, 945 (Ohio 1992) in view of the insurer's superior financial strength and bargaining power.

  Insured may not pursue claim for insurer's alleged bad faith failure to settle within policy limits unless there has been an actual adjudication of liability in excess of the insurer's limits.  Romstadt v. Allstate Ins. Co., 59 F.3d 608 (6th Cir. 1995). 
 

  "BODILY INJURY"

  Held to encompass claims for mental distress in Willoughby Hills v. Cincinnati Ins. Co., 459 N.E.2d 555 (Ohio 1984).  But see, Bowman v. Holcomb, 614 N.E.2d 358 (Ohio App. 1992).
 

  BREACH OF POLICY CONDITIONS

  Late notice will only defeat coverage if it results in prejudice to the insurer.  Undue delay in giving notice is deemed to create a presumption of prejudice that the insured must overcome.  Champion Spark Plug v. Fidelity and Casualty Co., No. L-94-374 (Ohio App. April 19, 1996); Sanborn Plastics Corp. v. St. Paul Fire & Marine Ins Co., 616 N.E.2d 988 (Ohio App. 1993).  Zurich Ins. Co. v. Valley Steel Erectors, Inc.,  233 N.E.2d 597 (Ohio 1968) and American Country Ins. Co. v. Caser, 524 N.E.2d 1016 (Ohio App. 1988).

  The Ohio Supreme Court ruled in Ormet Primary Aluminum Corporation v. Employers Insurance of Wausau, No. 98-2456 (Ohio April 5, 2000) that an aluminum manufacturer was precluded from obtaining coverage for cleanup claims involving its facility where it had delayed unreasonably in providing notice of these claims to its insurers.  The court declared that the ability of the insurers to investigate the claims and protect their own interests had been prejudiced by the insured’s delay of several years.

  The U.S. Court of Appeals for the Sixth Circuit has ruled that a policyholder's two year delay in notifying its motor vehicle liability insurer of an accident bars coverage, whether or not it prejudiced the insurer, since there was no justification offered for the delay and because the delay was so egregious as to be unreasonable as a matter of law.  American Employers Ins. Co. v. Metro Regional Transit Authority, 12 F.3d 591 (6th Cir. 1993).

  An insured's failure to give notice to its insurers before settling the government's underlying claims was held to provide both prejudicial late notice and a breach of the voluntary payment prohibition in Champion Spark Plug v. Fidelity and Casualty Co., No. L-94-374 (Ohio App. April 19, 1996).
 

  "BROAD FORM COVERAGES"

  Insured's assertion that pollution claims arising out of shipments to a landfill were a "personal injury" were rejected by the Court of Appeals in Morton Int., Inc. v. Aetna Cas. & Sur. Co., C 94 0407 (Ohio App. September 29, 1995).  The court ruled that "personal injury" coverage only extended to "purposeful acts" and offenses and therefore did not extend to private property damage resulting from exposure to pollutants.  

  Allegations of patent infringement were held not to constitute “advertising injury” in United National Insurance Company v. SST Fitness Corp., 1999 WL 427423 (6th Cir. June 28, 1999).

  In order to sustain a claim for “advertising treaty”, plaintiff must show that the underlying damages are causally connected to the insured’s advertising.  Synergystek International, Inc.  v.  Motorist Mutual Insurance Company,1994 WL395626 (Ohio App.  1994) and ABT v.  St.  Paul Fire Marine Insurance Company, 1998 U.S. Dist.  Lexis 10454 (N.D.Ohio May 27, 1998).  
 

  BURDEN OF PROOF

  Under Ohio law, the burden is on the policyholder to show that the loss is within the grant of coverage; the insurer must then demonstrate the applicability of a policy exclusion or some other basis for defeating coverage. Sterling Merchandise Co. v. Hartford Ins. Co., 30 Ohio App.3d 131, 506 N.E.2d 1192 (1986); Continental Ins. Co. v. Marx, 415 N.E.2d 315 (Ohio App. 1980) and State Farm Fire & Cas. Co. v. Hiermer, 720 F.Supp. 1310, 1314 (N.D. Ohio 1988).  In Physicians Ins. Co. v. Swanson, 569 N.E.2d 906 (Ohio 1991), the Ohio Supreme Court also ruled that an insurer seeking to avoid coverage on the issue of "occurrence" must prove that its insured expected or intended the resulting injuries.

  In Hartford Acc. & Ind. Co. v. Industrial Excess Landfill, Inc., Case No. 1:90CV0493 (N.D. Ohio May 7, 1993), aff'd mem., 47 F.3d 1168 (6th Cir. 1995), the court ruled that the insured had failed to prove the "express terms and conditions" of earlier claimed pre-pollution exclusion policies, despite affidavits, account statements and insurance certificates that purported to document this coverage.  The Sixth Circuit subsequently ruled in   The Lincoln Electric Company v. St. Paul Fire & Marine Insurance Company, No. 98-4236 (6th Cir. April 27, 2000) that a District Court had not erred in applying a “preponderance of the evidence” test.  While acknowledging that there is no clear Ohio precedent on this issue, the court declared that the “preponderance of the evidence” standard seemed to properly predict the rule that the Ohio Supreme Court would adopt and was in accordance with the majority view around the country.

  A trial court has ruled that the burden of disproving an "occurrence" is like an exclusion and should therefore rest with the insurer.   Owens-Corning Fiberglass Corporation v. American Centennial Ins.  Co., 660 N.E.2d 770 (Ohio Misc. 1995

  The Ohio Court of Appeals has ruled that the insured has the burden of demonstrating that discharges are "sudden and accidental."  Plasticolors, Inc. v. Cincinatti Ins. Co., 620 N.E.2d 856 (Ohio App. 1992).  Accord, U.S. Industries, Inc. v. INA, 110 Ohio. App. 3d 361, 674 N.E.2d 414 (1996).
 

  CHOICE OF LAWS

  In Gries Sports Enterprises v. Modell, 15 Ohio St.3d 284 (1984), cert. denied, 304 U.S. 64 (1984), the Ohio Supreme Court adopted Section 188 of the Restatement (2d) of Conflicts of Laws.  As among the various Restatement factors, Ohio courts placed particular emphasis on the place where the insurance contracts were issued.  See, Morton-Thiokol, Inc. v. Aetna Cas. & Surety Co., No. C-900283 (Ohio, 1st Appellate District, October 2, 1991); Nationwide Mutual Ins. Co. v. Ferrin, 487 N.E.2d 568 (Ohio 1986); Borden, Inc. v. Affiliated FM Ins. Co., 682 F.Supp. 927 (N.D. Ohio 1987); Lumbermen's Mutual Cas. Co. v. S-W Industries, Inc., Case No. C-86-7339 (N.D. Ohio July 13, 1987)(court adopts Rhode Island law where policies were issued in Rhode Island notwithstanding the fact that claims arose out of hazardous waste sites around the country).  But see, Morton Int., Inc. v. Aetna Cas. & Sur. Co., C 94 0407 (Ohio App. September 29, 1995)(holding that state where hazardous waste site was located had "most significant relationship" to coverage dispute).  Similarly, the Sixth Circuit ruled in International Ins. Co. v. Stonewall Ins. Co., 86 F.3d 601 (6th Cir. 1996) that Louisiana had the most significant relationship to a Louisiana products liability claim against an Ohio corporation even though the policies at issue had been negotiated in Ohio.
 

  CONFLICTS OF INTEREST

  Where a conflict of interest exists, an insurer is required to pay for independent defense counsel of the insured's choosing. St. Farm Fire & Casualty Co. v. Pildiner, 321 N.E.2d 600, 603 (Ohio 1974). 
 

  "DAMAGES"

  Although the Ohio Supreme Court has to date not ruled on this issue, the trend in lower court decisions has favored coverage for clean-up costs.  Sanborn Plastics Corp. v. St. Paul Fire & Marine Ins. Co., 616 N.E.2d 988 (Ohio App. 1993). See also Owens Illinois, Inc. v. Lehigh Valley Industries, Case No. C85-7788 (N.D. Ohio October 15, 1990); Morton International, Inc., American Cyanamid and Thiokol Corp. v. Harbor Ins. Co., 607 N.E.2d 28 (Ohio App. 1992); Stychno v. Ohio Edison Co., Case No. 5:90 CV 02096 (N.D. Ohio, August 3, 1992) and Danis Industries Corp. v. Travelers Indemnity Co., Franklin County No. 95CVH12-8904 (Ohio Court of Common Pleas March 31, 1997).

  The Ohio Court of Appeals has ruled that a property owner could not claim coverage under its liability policy for the cost of removing pollutants from its property since the insured was not yet legally obligated to pay damages to any third party.  Constantine's Nursery & Garden Center v. Florists Mut. Ins. Co., C.A. No. 16153 (Ohio App. October 20, 1993).

  The Ohio Court of Appeals gave an expansive interpretation to "ultimate net loss" in Casey v. St. Paul Fire & Marine Ins. Co., 40 Ohio App.3d 83, 531 N.E.2d 1348 (1987), ruling that an umbrella carrier would be obligated to provide coverage for punitive damages were such coverage not contrary to the public policy of Ohio.
 

  DECLARATORY JUDGMENT ACTIONS

  Ohio courts favor the use of declaratory judgment actions to resolve coverage issues.  Preferred Risk Ins. Co. v. Gill, 507 N.E.2d 1118 (Ohio 1987)(R.C. Chapter 2721).  In general, parties are collaterally estopped to relitigate fact issues that have been resolved in the liability case.   Attorneys fees may be awarded to a prevailing insured, even if the carrier has not engaged in bad faith.  Sherwin-Williams Co. v. Certain Underwriters at Lloyd's London, Case No. 1:91 CV 0597 (N.D. Ohio February 17, 1993).

  An insurer may seek permissive intervention in the lawsuit against its policyholder for the purpose of crafting special interrogatories to permit apportionment of the damages between covered and non-covered claims. Walsh v. Patitucci, No. 77969 (Ohio App. November 2, 2000).

  Under Ohio law, a trial court has discretion under R.C. 2721.09 to assess attorneys’ fees, including fees expended by an insured in pursuing its coverage claims.  A decision by a trial court to award or not award fees will not be overturned on appeal absent an abuse of discretion.  Alternatively, fees may only be awarded based on evidence of bad faith, fraud or a “stubborn propensity to needless litigation.”  Este Oils Co. v. Federated Ins. Co., 1999 Ohio App.  LEXIS 321 (1st.  Dist.  February 8, 1999).  

 Ohio Revised Code Annotated Section 2721.16(A)(1999) provides that a court of record shall not award attorney’s fees to any party on a claim for declaratory relief unless the section of the Revised Code explicitly authorizes it or unless an award of attorney’s fees is authorized by Section 2323.51 of the Revised Code, by the Civil Rules or by an award of punitive or exemplary damages against the party ordered to pay attorney’s fees.
 

  DISCOVERY ISSUES
  
   –Attorney Client Communications

  The Ohio Supreme Court has ruled 4-3 that correspondence between an insurance company and its outside coverage counsel evaluating a policyholder’s claim for coverage is discoverable in a bad faith case.  In Boone v. Vanliner Insurance Company, 91 Ohio St.3d 209 (Ohio April 4, 2001), the majority concluded that “claims file materials that show an insurer’s lack of good faith in denying coverage are unworthy of protection” much like the claim fraud exception to the attorney/client privilege.  “We hold that in an action alleging bad faith denial of insurance coverage, the insured is entitled to discover claims file materials containing attorney/client communications related to the issue of coverage that were created prior to the denial of coverage...Of course if the trial court finds that the release of this information will inhibit the insurer’s ability to defend on the underlying claim, it may issue a stay of the bad faith claim and related production of discovery pending the outcome of the underlying claim.”  Three dissenting justices criticized the “unworthy of protection rationale” was even broader than the claimed fraud exception, which only waives the attorney/client privilege in the event of proof whereas the majority’s analysis permits all such documents to be discovered in any case where bad faith is merely alleged.”

   --Claims Manuals
 

   --Drafting History
 

   --Other Policyholder Claims
 

   --Reinsurance Information
 

   --Reserves
 

  DUTY TO DEFEND

  Under Ohio law, an insurer has an obligation to defend its insured whenever the allegations of a "complaint arguably or potentially fall within the coverage afforded by the [policy]."   In considering whether it has a duty to defend, an insurer must take into account both pleadings and facts known or readily discoverable through investigation by insurer.  Even if the allegations in the complaint do not clearly spell out a claim for coverage, an insurer must defend if the issue is in doubt or there is any potential for coverage.  Willoughby Hills v. Cincinnati Ins. Co., 459 N.E.2d 555, 558 (Ohio 1984) and Sanderson v. Ohio Edison Co., 635 N.E.2d 19 (Ohio 1994).  The duty to defend continues until the claim is confined to a theory of recovery not covered by the policy.  Great American Ins. Co. v. Hartford Ins. Co., 621 N.E.2d 796 (Ohio App. 1993).  

  Although insurers may generally not consider extrinsic evidence in determining whether to defend or not, the Ohio Supreme Court ruled in Preferred Risk Ins. Co. v. Gill, 507 N.E.2d 1118 (Ohio 1987) that the actual fact of the insured's conviction for homicide overcame an allegation of negligence in a policy that did not require a defense of "groundless, false or fraudulent" claims.

  Where an insurer has wrongfully refused to defend, the insured may recover all damages "which could reasonably be considered as arising naturally from [the insurer's] breach of the duty to defend."  However, the insured may not recover damages that are "remote, speculative and not supported by the evidence."   Roberts v. USF&G, 665 N.E.2d 664 (Ohio 1996)(insured allowed to recover value of underlying judgment but could not recover loss of business through bankruptcy).

  An insurer may not terminate its defense obligation by tendering its limits. National Casualty Co. v. INA, 230 F.Supp. 617 (N.D. Ohio 1964).  

  The Ohio Court of Appeals ruled that a PRP letter is not a "suit" in  Professional Rental Inc. v. Shelby Ins. Co., 75 Ohio App.3d 365, 599 N.E.2d 423 (1991).  However, the court held that a duty to defend would arise if a Administrative Order was issued.  Accord, Detrex Chemical v. Employers Ins. of Wausau, 681 F.Supp. 438 (N.D. Ohio 1987).  In Danis Industries Corp. v. Travelers Indemnity Co., Franklin County No. 95CVH12-8904 (Ohio Court of Common Pleas March 31, 1997), the court adopted the rationale of the Court of Appeals in Professional Rental but ruled that a duty to defend existed in cases where the insured had entered into a consent decree with the EPA compelling it to undertake certain steps.  
 

  ESTOPPEL AND WAIVER

  The general rule in Ohio is that waiver and estoppel may not be used to expand the scope of coverage.  Hartory v. State Automobile Mut. Ins. Co., 50 Ohio App.3d 1 (1988);  Zechar v. All American Cas. Co., 116 Ohio App. 41, 186 N.E.2d 500 (1961) and Ayers v. Kidney, 333 F.2d 812 (6th Cir. 1964);  Turner Liquidating Co.  v.  St.  Paul Surplus Lines Ins.  Co., 638 N.E.2d 174, 179 (Ohio App.  1994).  However, estoppel may arise where the insurer voluntarily relinquishes a known right or induces the insured into changes his position in reliance on the insurer’s conduct.  Also, an insurer may be estopped to later raise coverage defenses where it has agreed to provide a defense to its insured for an extended period of time without disclosing its coverage dispute.  Socony-Vacuum Oil Co. v. Continental Casualty Co., 67 N.E.2d 836 (Ohio. 1994) and INA v. Travelers Ins. Co., 1997 Ohio App. LEXIS 394 (8th Dist. February 6, 1997).  In such circumstances, however, the insured must show that the insurer's withdrawal caused significant prejudice to the insured which had reasonably relied on the insurer's apparent willingness to defend.  

  Likewise, in Insurance Company of North America v. Travelers Insurance Co., 1997 WL 47698 (Ohio App. February 6, 1997) the Court of Appeals ruled that an insurer that knowingly paid an uncovered claim is estopped to recover from an insurer that may have owed coverage for the loss.  While acknowledging the general rule that estoppel cannot be used to expand or create coverage, it found that a reservation of rights is a sine qua non to avoiding a claim of estoppel.
 

  EXCESS INSURERS

  In general, excess insurers do not have any duty to defend absent primary exhaustion.  However, an excess policy that defined "loss" as excluding legal expense was held to be ambiguous in Affiliated FM Ins. Co. v. Owens-Corning-Fiberglass, No. 92-4116 (6th Cir. February 14, 1994), given the fact that an exception to this exclusion seemingly reinstated coverage for in-house legal expenses.

  An excess policy that defines coverage as excess of "the limits of the underlying insurance, as set forth in the attached Schedule," "the amounts specified" in the primary policy or the insured's "retained limit," will not be required to drop down. Value City, Inc. v. Integrity Ins. Co., 30 Ohio App.3d 274, 508 N.E.2d 184 (1986).  Further, in Wurth v. Ideal Mut. Ins. Co., 34 Ohio App.3d 325, 328 (1987), the Ohio Court of Appeals ruled that an excess insurer could not be compelled to "drop down" for reasons of public policy.  The Wurth court also criticized decisions that have mandated "drop down" on the basis of claimed ambiguities in isolated portions of the policy.  See also Revco D.S. v. GEICO, 791 F.Supp. 1254 (N.D. Ohio 1991), aff'd, No. 91-3897 (6th Cir. July 9, 1992)(no ambiguity in reference to "amounts recoverable").

  An excess insurer's obligation to pay defense costs was held to arise from the definition of "ultimate net loss" in American Special Risk Insurance. Co. v. A-Best Products Inc., 975 F.Supp. 1019 (N.D. Ohio 1997), appeal pending (6th Cir. 1998)(rejecting insured's argument that umbrella carrier had an independent duty to defend, in addition to policy limits, based on Defense Coverage Endorsement.  Underlying exhaustion was not the same as a claim being "not covered" by the primary).

  Where an insurer pays more than it owes, it has a right of equitable subrogation against another insurer that may owe coverage and does not act as a mere volunteer.  Aetna Casualty & Surety Co. v. Buckeye Union Casualty Co., 105 N.E.2d 568 (Ohio 1952) and INA v. Travelers Ins. Co., 1997 Ohio App. LEXIS 394 (8th Dist. February 6, 1997).  However, the insurer's right of equitable subrogation may be waived if it did act as a volunteer, as by defending without a reservation of rights where it was aware of a coverage defense that it failed to raise in a timely fashion.  Thus, the Court of Appeals has ruled that "there is not cause of action for contribution for any sum paid beyond a legal obligation to pay."   Panzica Construction Co. v. The Ohio Casualty Ins. Co., 1996 Ohio App. LEXIS 1975 (Ohio App. May 16, 1996).  
 

  KNOWN LOSS

  An Ohio trial court refused to preclude coverage for asbestos claims in Owens-Corning Fiberglass Corporation v. American Centennial Ins.  Co., 660 N.E.2d 770 (Ohio Misc. 1995), holding that the doctrine of "known loss" finds no support in Ohio law.  See also Morton Int., Inc. v. Aetna Cas. & Sur. Co., C 94 0407 (Ohio App. September 29, 1995)(suggesting under Washington law that doctrine is limited to scope of "occurrence").
 

  NUMBER OF OCCURRENCES

  Each plaintiff's exposure to the insured's asbestos products was held to be a separate "cause" in Babcock & Wilcox Co. v. Arkwright-Boston Mfg. Mut. Ins. Co., 53 F.3d 762 (6th Cir. 1995)(multiple "occurrences").  However, a U.S. District Court ruled that a cedent acted reasonably in settling an asbestos coverage dispute on a single "occurrence" basis, focusing on the insured's decision to manufacture and market asbestos products, in a reinsurance case. ISLIC v. Certain Underwriters at Lloyd's, 868 F.Supp. 917 (S.D. Ohio 1994).

  Clean up claims involving the puncture of a pipeline were held to trigger only a single “occurrence” limit in Celina Mutual Insurance Company v. Marathon Oil Company, 2000 Ohio App. LEXIS 2453 (3rd Dist. June 8, 2000).

  An Ohio trial court ruled in Morton International, Inc. and Thiokol Corp. v. Aetna Cas. & Surety Co., Hamilton County Court of Common Pleas, Case No. A-86037993 (Ohio, December 28, 1988) that various claims arising out of insured's disposal at a waste site involve once "occurrence" per policy year since they involve exposure to same conditions.  As regards asbestos claims, however, the same court ruled that all claims constitute one "occurrence since insured's liability flowed from single decision to market asbestos products.

  The statutory cap for "covered claims" of an insolvent liability insurer that must be paid by the Ohio Insurance Guaranty Association is measured by the number of individual claimants, rather than the underlying accident giving rise to these various claims.  Dickerson v. Thompson, No. 62640 (Ohio App. August 26, 1993).  
 

  POLLUTION EXCLUSION

  Despite years of unfavorable rulings from intermediate state appellate courts during the 1980s, the Ohio Supreme Court upheld the pollution exclusion in Hybud Equipment Corp. v. Sphere Drake Ins. Co., 597 N.E.2d 1096 (Ohio 1992), declaring that claims arising out of the insured's operation of a landfill for years were not "sudden."  The Supreme Court held that "sudden" was not ambiguous and that the exclusion was clearly intended to preclude coverage for gradual discharges of pollution, as was the case here. This decision is consistent with federal court decisions which had predicted that the exclusion would be found to bar coverage for gradual pollution.  See Borden, Inc. v. Affiliated FM, 682 F.Supp. 927 (S.D. Ohio 1987) and Detrex Chemical Industries v. Employers Ins. of Wausau, 681 F.Supp. 438 (N.D. Ohio 1987). See also Constantine's Nursery & Garden Center v. Florists Mut. Ins. Co., C.A. No. 16153, Ohio App. LEXIS 5307 (Ohio App. October 20, 1993)(first party claim). 

  The scope of the exclusion is still subject to review in Ohio, however.  For instance, in Lumbermens Mut. Cas. Co. v. S-W Industries, 23 F.3d 970 (6th Cir. 1994), the Sixth Circuit overturned a lower court's ruling that the exclusion barred coverage for workplace exposures to chemical fumes, holding that there had been no "release" or "discharge" into the "atmosphere" and that the exclusion should not apply in situations where "injuries caused by toxic substances are still confined within the area of their intended use."  

  Insureds are also seeking to undermine Hybud based on Morton-style "regulatory estoppel" and drafting history arguments.  Such arguments were rejected by the Ohio Court of Appeals in Goodyear Tire & Rubber Co. v. Aetna Casualty & Surety Co., No. 16993 (Ohio App. July 12, 1995) on the basis that the insured could not show that it had relied to its detriment on any claimed misstatements of the insurers.

  Earlier opinions of the Ohio Court of Appeals had ruled that the exclusion was limited to intentional polluters.  See Morton International, Inc., American Cyanamid and Thiokol Corp. v. Harbor Ins. Co., 607 N.E.2d 28 (Ohio App. 1992); Buckeye Union Ins. Co. v. Liberty Solvents, 477 N.E.2d 1227 (Ohio App. 1984); Kipin Industries, Inc. v. American Universal Ins. Co., 535 N.E.2d 334 (Ohio App. 1987).

  Efforts by an insured to avoid a pollution exclusion on the basis of a “secondary discharge” argument were rejected by the Ohio Court of Appeals in Aetna Cas. & Sur. Co. v. Goodyear Tire & Rubber Co.,   2000 Ohio App. LEXIS 4236 (Ohio App. September 20, 2000).  The court ruled that a landfill is not a “container” and that the EPA demands were to clean up the landfill, not discharges from the landfill.

  The Court of Appeals has ruled that insurers may still have a duty to defend if the underlying complaint is not conclusive as to whether the causes of pollution were "sudden and accidental" or not. Toth v. Gluck Ins. Co., 94 CA 85 (Ohio App. September 22, 1995).

  An Ohio trial court ruled in Danis Industries Corp. v. Travelers Indemnity Co., Franklin County No. 95CVH12-8904 (Ohio Court of Common Pleas March 31, 1997) that an exclusion for "expected or intended" discharges did not apply where, even though the insured had intentionally disposed of wastes at a landfill, it had not expected or intended that leachate would escape from the landfill.  In such circumstances, the court ruled that the "release" of hazardous waste had occurred when the waste leaked from the landfill, not when it was disposed of there originally. 

  In Owens Corning Fiberglass Corporation v. Allstate Insurance Company, 660 N.E. 2d 746 (Ohio Court of Common Pleas 1993), the Lucas County Court of Common Pleas declared that a pollution exclusion did not preclude coverage for the release of asbestos fibers inside the plaintiff’s building.  The court declared that the exclusion was ambiguous with respect to whether the discharge of fibers inside a building involved the release into the “atmosphere.”  
  The Ohio Court of Appeals has ruled that the insured has the burden of demonstrating that discharges are "sudden and accidental."  Plasticolors, Inc. v. Cincinatti Ins. Co., 620 N.E.2d 856 (Ohio App. 1992).

  An exclusion for oil pollution arising out of the insured's operations was upheld in Morton International, Inc., American Cyanamid and Thiokol Corp. v. Harbor Ins. Co., 607 N.E.2d 28 (Ohio App. 1992).

  The U.S. Court of Appeals for the Sixth Circuit ruled in M-G Transport Services, Inc. v. Water Quality Insurance Syndicate, 2000 U.S. App. LEXIS 31368 (6th Cir. December 12, 2000) that a pollution liability insurer had no duty to provide coverage for a qui tam action under the federal False Claims Act which alleged that the insured had knowingly falsified records to hide violations of the federal Clean Water Act so that it could obtain payment from the United States for shipments of coal to the Tennessee Valley Authority.  The court ruled that the employee’s Qui Tam claims were solely brought under the False Claims Act and that, even though violations of the Clean Water Act were a necessary predicate to such claims, the court could not conclude that the insured’s liability for the  qui tam claims “was by reason of, or with respect to, liability to the United States for cleanup costs under the Clean Water Act.  An FCA action is not converted into a Clean Water Act action simply because a violation of the Clean Water Act is a predicate to establishing the falsity of a claim, or may be used as a measure of damages under the FCA.”  In any event, the court declared that the insured’s conduct was not based upon any “sudden and accidental” discharge and plainly reflected knowing and intentional conduct, for which coverage was excluded.  The court noted that a court was free to look to facts beyond the complaint and that, here, the insured had been convicted of conspiring to commit a crime against the United States by knowingly discharging pollutants in violation of the Clean Water Act.  The court ruled that “this state of mind is inconsistent with any inadvertent, negligent, or accidental behavior.”

  "Absolute" pollution exclusions have generally been upheld in Ohio.  Such exclusions were affirmed in Park-Ohio Industries, Inc. v. The Home Indemnity Co., 785 F.Supp. 670 (N.D. Ohio 1991), aff'd, 975 F.2d 1215 (6th Cir. 1992); Manufacturers Gasket Co. v. Transcontinental Ins. Co., 9 F.3d 1548 (6th Cir. 1993) (Table)(asbestos claims); Taza Corp. v. Liberty Mutual Ins. Co., Ct. of Common Pleas (Ohio 1991) and Snyder Concrete Products, Inc. v. Fireman's Fund Ins. Co., Montgomery County Court of Common Pleas Case No. 89-4384 (Ohio 1991).

  In USF&G v.  Jones Chemical Co., No.  3:96 CV 7703 (N.D. August 5, 1998), aff’d, 194 F.3d 1315 (6th Cir. 1999)(Unpublished–full text at 1999 WL 801589) a federal district court held that the exclusion precluded coverage for claims by a worker who was burned while testing a pressurized chlorine storage tank belonging to the insured.  The court held that the claims plainly involved a discharge “into the environment.”  The Sixth Circuit affirmed, stating in an unpublished opinion that the exclusion should not be restricted to “environmental claims.”
  Several recent rulings of the Ohio Court of Appeals have declared that carbon monoxide poisoning cases resulting from defective heating units inside apartment buildings are subject to the exclusion.  See Andersen v. Highland House Company, No. 75769 (Ohio App. May 11, 2000); Air Products and Chemicals v. Indiana Insurance Company, 1999 Ohio App. LEXIS 6217 (Ohio App. December 23, 1999)(methane gas that seeped through cracks into building held excluded); Owners Insurance Company v. Baljt Singh, 1999 Ohio App. LEXIS 4734 (Ohio September 21, 1999)(carbon monoxide fumes).  By way of contrast, the court had earlier questioned in Ekleberry, Inc. v.  Motorist Mutual Ins. Co., Case No. 3-91-39 (Ohio App. July 17, 1992) whether the exclusion should apply to a personal injury claim involving an incidental chemical exposure by a USDA inspector.

  In Owners Ins.  Co.  v.  Singh, 1999 Ohio App.  LEXIS 4734 (Ohio App.  September 21, 1999), the state appeals court ruled that a trial court had erred in finding that the exclusion did not apply to allegations that a tenant was overcome by carbon monoxide fumes from a faulty furnace in the insured’s apartment building.  Further, the Court of Appeals declared that the insured had failed to prove that the claims were subject to the “hostile fire” exception to the exclusion. In order for the exception to apply, the fire itself must have become uncontrollable by  “breaking out” from its place of origin.  It was not enough for fumes to have escaped from the furnace.

  Likewise, in Longaberger v.  USF&G, 31 F.Supp.2d 595 (S.D. Ohio 1998), aff’d, 1999 U.S. App. LEXIS 34462 (6th Cir. December 15,1999), the Sixth Circuit affirmed the ruling of a U.S. District Court that carbon monoxide fumes that had leaked out of a heating plant inside  the insured’s property involved the release of a “pollutant” within the scope of USF&G’s absolute pollution exclusion.  The court refused to enforce coverage on the basis of the insured’s alleged “reasonable expectations” where, as here, the policy terms were unambiguous.  Even though the discharge did not cause environmental damage, the court ruled that carbon monoxide was a “pollutant.”  

  The Ohio Court of Appeals has ruled that fire damage to a home that occurred after gasoline that the insured had poured into a sewer caught fire several miles away arose out of a discharge of pollutants from the insured's premises within the scope of the "absolute" pollution exclusion.  West American Ins. Co. v. Hopkins C.A. 3108 (Ohio App. October 14, 1994).   the court ruled that the "hostile fire" exception did not apply, both because the fire did not occur on the insured's premises and because the property damage resulted from the fire itself, rather than from heat, smoke or fumes.

  In Weil v. Este Oils Company, 93 Ohio App.3d 759, 639 N.E.2d 1215 (1994), the Ohio Court of Appeals overturned a lower court's ruling that an "absolute" pollution exclusion in a motor vehicle policy to a loss resulting from a fuel oil dealer's mis-delivery of petroleum, holding that questions of fact precluded summary judgment on the application of the exclusion absent some stipulation by the parties or judicial notice that oil is a "pollutant."   In a subsequent proceeding, however, the court ruled that Federated had no indemnity obligation as “fuel oil” was a pollutant.   In Este Oils Co. v. Federated Ins. Co., 1999 Ohio App.  LEXIS 421 (1st.  Dist.  February 8, 1999), the court refused to find any inconsistency or ambiguity between the exclusion and “completed operations” language in the policy.  The court further held, however, that Federated had a duty to defend owing to the initial uncertainty at the outset of the litigation as to whether a covered set of claims had been pleaded. 

  On the other hand, the Ohio Court of Appeals has taken a narrow view of what constitutes a clean up “request, demand or order” so as to fall within the second part of the exclusion.  In Celina Mutual Insurance Company v. Marathon Oil Company, 2000 Ohio App. LEXIS 2453 (3rd Dist. June 8, 2000), the court ruled that an absolute pollution exclusion did not preclude coverage for costs incurred by an insured to cleanup gasoline that had escaped from a punctured pipeline where there was no evidence that an overt “request, demand or order” had ever been made to the insured by the property owner.  The court refused to adopt an “implied” view of these terms nor did it find that a pre-existing contact requiring the insured to take steps to remedy contamination on the property fell within the scope of this language in the absolute exclusion.  Even though the insurer argued that a demand would plainly have been made had the insured not voluntarily undertaken the cleanup consistent with the pre-existing contractual obligation to perform, the court refused to adopt this “implied” view of the exclusion.  

  PROPERTY DAMAGE

  Misrepresentation claims involving the sale of damage realty were held to be an "occurrence" from "property damage" despite the fact that the insured had not caused the damage itself.  In Spalding v. Aetna Casualty & Surety Co. No. CA 9429, 1994 Ohio App. LEXIS 4816 (Ohio App. October 11, 1994), appeal dismissed, 645 N.E.2d 1258 (Ohio 1995). the Court of Appeals ruled that it was sufficient that the insured's liability resulted from property damage. 
 

  PROPERTY INSURANCE

  The Ohio Court of Appeals has affirmed a lower court's ruling that a florist was not entitled to coverage for pollution that resulted from the release of heavy meals from improperly cured slag that had been stored on its property.  Although the policy provided first party coverage for the cost of extracting pollutants from soil or water if the release was caused by an "insured peril," the court held that rain damage to property stored in the open was excluded.  The court also rejected the insured's liability insurance claim since it was not legally obligated to pay damages to any third party.  Constantine's Nursery & Garden Center v. Florists Mut. Ins. Co., C.A. No. 16153 (Ohio App. October 20, 1993).
 

  PUBLIC POLICY

  Public policy precludes coverage for an insured who committed intentional torts.  See, State Farm Mut. Ins. Co. v. Blevins, 551 N.E.2d 955 (Ohio 1990); Harasyn v. Normandy Metals, Inc., 551 N.E.2d 962 (Ohio 1990); Wedge Products v. Hartford Equity Sales Co., 509 N.E.2d 74, 76 (Ohio 1987).

  The Ohio Supreme Court has ruled that it would be against public policy to permit insurance coverage for sexual molestation claims.  Gearing v. Nationwide Ins. Co., 665 N.E.2d 1115 (Ohio 1996).  See also Cuervo v. Cincinnati Ins. Co., No. 9-2404 (Ohio July 3, 1996).  
In 2000, however, the Ohio Supreme Court modified these earlier court rulings and declared in Doe v. Schaffer, No. 99-1986 (Ohio December 21, 2000) that such claims are insurable so long as  the insured was not the one directly responsible for the acts of molestation.
 

  PUNITIVE DAMAGES

  Punitive damages are uninsurable in Ohio under policies issued on or after January 5, 1988.  Ohio Rev. Code Annot. Sec. 3937.182 (1994).  Consistent with this view, earlier Ohio cases had refused to permit coverage, whether or not the policy contains an express grant of coverage for such awards, an exclusion barring coverage or no operative language at all. Lumbermens Mut. Cas. Co. v. S-W Industries, 23 F.3d 970 (6th Cir. 1994); Harasyn v. Normandy Metals, Inc., 551 N.E.2d 962 (Ohio. App. 1990); State Farm v. Blevins, 49 Ohio St.3d 165 (1990).  The Ohio Court of Appeals previously stated in Casey v. St. Paul Fire & Marine Ins. Co., 40 Ohio App.3d 83, 531 N.E.2d 1348 (1987) that the public policy of Ohio barred coverage for punitive damages, since the availability of coverage would undermine the deterrent effect of such awards.  But see, Empire Fire & Marine Ins. Co. v. Parkview Manor, Inc., No. CA-6453 (Ohio App. February 4, 1985)(in the absence of express policy exclusion for punitive damages, coverage required by "all sums" language).
 

  STANDARDS FOR POLICY INTERPRETATION

  Ohio courts have rejected the principle of "reasonable expectations."  Sterling Merchandise Co. v. Hartford Ins. Co., 506 N.E.2d 1192 (Ohio App. 1986). 

  The terms of an insurance policy are to be interpreted in accordance with their "ordinary, usual or popular sense."  Randolf v. Grange Mutual Cas. Co., 57 Ohio St.2d 166, 168, 436 N.E.2d 1347, 1349 (1982).  Unclear or ambiguous provisions should be interpreted against the insurer.  American Financial Corp. v. Fireman's Fund Ins. Co., 239 N.E.2d 33 (Ohio App. 1968).

  Expert testimony with respect to legal issues is not sufficient to raise questions of fact to create ambiguity with respect to otherwise unambiguous or clear provisions in an insurance policy.  North American Speciality Ins. Co. v. Myers, 111 F.3d 1273, 1280 (6th Cir. 1997) (Ohio law).  Similarly, the Sixth Circuit has ruled that a trial court did not err in refusing to consider the testimony of an expert concerning claimed ambiguity in a policy provision since the meaning of insurance contracts is a legal question fully within the competence of a court to determine.   Noe v. Homestead Ins. Co., No. 98-3257 (5th Cir. April 21, 1999).

  Earlier, In USF&G v.  Jones Chemical Co., No.  3:96 CV 7703 (N.D. August 5, 1998), appeal pending, No. 98-4018 (6th Cir. 1998), a federal district court refused to find that USF&G was estopped to raise the pollution exclusion as a defense to a claim involving injuries suffered by exposure to chlorine on the insurer’s premises merely because an underwriter’s report issued earlier commented that chorine leaks “could provide a hazardous exposure to individuals near the tanks.”  There is no suggestion that the underwriter’s report was a part of the policy or that it was meant to contradict the nature of the coverage.  In any event, as this was an internal USF&G document, the court refused to find that it provided any basis for expanding the insured’s coverage rights.

  Extrinsic evidence may sometimes be considered.  For instance, the U.S. Court of Appeals for the SixthCircuit has declared that “where a course of conduct removes an ambiguity in the written terms of an agreement, the rule of practical construction should take precedence over the rule that a contract of insurance is construed against its drafter.”  William C. Rony & Company v. Federal Insurance Company, 674 F.2d 587, 590 (6th Cir. 1982) and The Lincoln Electric Company v. St. Paul Fire & Marine Insurance Company, No. 98-4236 (6th Cir. April 27, 2000).
 

  THEORIES OF ALTERNATIVE LIABILITY

  The Ohio Supreme Court has rejected market share theory for asbestos cases on the theory that such products are not fungible.  Goldman v. Johns-Manville Sale Corp., 514 N.E.2d 691 (Ohio 1987).  Goldman was extended by the Sixth Circuit to DES claims in Kurczi v. Eli Lilly & Co., No. 96-4124 (6th Cir. May 12, 1997).  Alternate liability was recognized, however, in Minnich v. Ashland Oil Co., 473 N.E.2d 1199 (1984) and Jackson v. Glidden Co., 647 N.E.2d 879 (Ohio. App. 1995)(lead paint manufacturers).  The Ohio legislature enacted a statute in 1988 (Section 2307.791) eliminating industrywide or enterprise liability for products liability claims, as well as alternative liability except when all possible tortfeasors are named and subject to the jurisdiction of the court.

  In 1988, the Ohio Supreme Court refused to adopt market share liability for DES claims.  Sutowski v. Eli Lilly and Company, 82 Ohio St. 3rd 347 (Ohio 1988).

  The Sixth Circuit has determined that market share claims are in conflict with the Ohio Products Liability Code.  Kurczy v. Eli Lilly and Company, 113 F.3d 1426 (6th Cir. 1997).
 

  TRIGGER OF COVERAGE

  Under Ohio law, property damage is deemed to occur when the first visible or discoverable manifestations of damage occur.  Cleveland Board of Education v. R.J. Stickle International, 76 Ohio App. 3rd 432 (1991).  Accordingly, a policy that was issued after property damage had already been discovered was not triggered in Carney Reynolds v. Celina Mutual Insurance Co., 98 CA 007268 (Ohio App. February 16, 2000).  

 In R. J. Stickle the Ohio Court of Appeals ruled that coverage for claims arising out of a defectively installed roof that had leaked, causing property damage between 1975 and 1979, should relate back to the original appearance of the problem in 1975 and should therefore only give rise to coverage in that year.  The court found that the general rule for latent injury cases is that:

In a situation where the damage manifests itself immediately and continues unabated into a successive carrier's coverage period, there is no occurrence...because knowledge of the continuous damage is no longer unusual, unexpected or unforeseen, and therefore, not an accident.  Alternatively, in situations where the resulting damage does not manifest itself until a period of time has passed and a new carrier is on the risk, the insurer on the risk when the first visible or discoverable manifestations of damage occur must pay the entire claim.

  Relying on Stickle, the Ohio Court of Appeals ruled that a class action on behalf of young children who lived in public housing operated by the Cuyahoga Metropolitan Housing Authority between 1990 and 1995 could not trigger coverage under a liability policy issued by Imperial Casualty between 1981 and 1984.  In Cuyahoga Metropolitan Housing Authority v. Imperial Casualty & Indemnity Company, 2000 Ohio App. LEXIS 228 (Ohio App. January 27, 2000), the Eighth District of the Court of Appeals of Ohio declared that “since the injury alleged by the Wade plaintiffs neither was caused by an occurrence nor manifested itself during the time period during which the policies were in force,” the insurer had no duty to defend.

  Notwithstanding these rulings, a federal district court has since ruled in GenCorp., Inc. v. AIU Insurance Company, 2000 U.S. Dist. LEXIS 10302 (N.D. Ohio June 2, 2000) that coverage for pollution claims is not limited to the date of “manifestation.”   Judge Dowd declared that the policies were clearly triggered by the occurrence of actual injury or injury in fact.  If the incidence of injury was merely “one shot or episodic,” coverage is limited to the date of actual injury.  On the other hand, if the injury is cumulative or progressive, a “continuous trigger” should apply.  Either way, the starting point is the first date of actual injury.  The court refused to find that  the mere receipt of hazardous wastes at a site (“exposure”) is a trigger.

  Nevertheless, Ohio courts ruled in the Morton-Thiokol cases that a "continuous trigger" should be applied for pollution and asbestos claims.  Similarly, Ohio courts have tended to use an "exposure" or "continuous" trigger for latent bodily injury claims.  See e.g., Morton Int., Inc. v. Aetna Cas. & Sur. Co., C 94 0407 (Ohio App. September 29, 1995)(pollution claims under Washington law);  B.F. Goodrich Company v. American Motorists Ins. Co., No. CB4-1224A (N.D. Ohio May 22, 1986)(exposure/toxic tort claims against tire manufacturer); Sherwin-Williams Company v. Certain Underwriters at Lloyd's London, 813 F.Supp. 576 (N.D. Ohio 1993)(continuous trigger for lead paint claims).  See also NCR Corporation v. Lumberman's Mutual Casualty Company, Civil Action No. 89-654-SLR (D. Del. August 14, 1992)(opining that Ohio Supreme Court would adopt "continuous trigger");  Owens-Corning Fiberglass Corporation v. American Centennial Ins.  Co., 660 N.E.2d 770 (Ohio Misc. 1995)(asbestos) and Danis Industries Corp. v. Travelers Indemnity Co., Franklin County No. 95CVH12-8904 (Ohio Court of Common Pleas March 31, 1997)(holding that coverage for cost of cleaning up landfill is triggered at date that wastes were dumped, not when the resulting pollution was discovered).

  Toxic tort claims filed by welders who claimed to have suffered injury by inhaling fumes from the insured’s welding rods were held in  The Lincoln Electric Company v. St. Paul Fire & Marine Insurance Company, No. 98-4236 (6th Cir. April 27, 2000) to trigger coverage during the period of exposure and the policy in effect at the time of manifestation.

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