Cincinnati Ins. Co. v. CPS Holdings, Inc., 2006 Ohio 713 (OH 2/16/2006), 85967.
| Citation | 2006 Ohio 713 |
| Decision Date | 16 February 2006 |
| Docket Number | No. 85967.,No. 85969.,85967.,85969. |
| Parties | The Cincinnati Insurance Co., Plaintiff-Appellee, v. CPS Holdings, Inc., et al., Defendants-Appellants. |
| Court | United States State Supreme Court of Ohio |
Richard M. Garner, Esq., Dennis R. Fogarty, Esq., Davis & Young, 1700 Midland Building, 101 Prospect Avenue, West, Cleveland, Ohio 44115, for plaintiff-appellee.
James Petro, Esq., Ohio Attorney General, BY: William J. Cole, Esq., James Evans, Esq., Assistant Attorneys General, State Office Building, 11th Floor, 615 West Superior Avenue, Cleveland, Ohio 44113-1899, for defendant-appellant.
Robert P. Rutter, Esq., One Summit Office Park, Suite 650, 4700 Rockside Road, Independence, Ohio 44131, for defendant-appellant, CPS Holdings, Inc. et al.
David Ross, Esq., Brian D. Sullivan, Esq., Reminger & Reminger Co., L.P.A., 1400 Midland Building, 101 Prospect Avenue, West, Cleveland, Ohio 44115-1093, for Fireman's Fund Insurance Co.
Richard D. Brooks, Esq., Tiffany C. Miller, Bailey Cavalieri, L.L.C., 10 West Broad Street, One Columbus, Columbus, Ohio 43215-3422.
Stacy N. Lilly, Esq., Janik & Dorman, L.L.P., 9200 South Hills Boulevard, Suite 300, Broadview Heights, Ohio 44147, For Gulf Underwriters Insurance Co.:
JOURNAL ENTRY AND OPINION
{¶ 1} Appellants, CPS Holdings, Inc., CPS Holding Company, Ltd., and I.Q. Solutions, L.L.C. (hereafter collectively "CPS"), along with the State of Ohio, Department of Administrative Services ("DAS"), appeal the trial court's decision in favor of appellees, Cincinnati Insurance Company ("CIC") and Gulf Underwriters Insurance Company ("Gulf"). The parties filed competing cross-motions for summary judgment/declaratory relief, and the trial court denied appellants' motion and granted appellees' motion. Upon review of the record and the arguments of the parties, we now reverse and remand the matter to the trial court for the reasons set forth below.
{¶ 2} This appeal stems from a dispute between appellants CPS and DAS. CPS, as a third-party administrator, originally contracted with DAS to provide natural gas services to state agencies. DAS claims that during the course of this relationship, CPS mismanaged state funds and breached its contractual duties. Essentially, DAS contends that CPS failed to use the money it was paid to obtain natural gas services and instead kept and commingled those funds with its own funds. DAS claims a total loss in excess of $5,771,302.
{¶ 3} On May 30, 2003, DAS filed suit in Franklin County Common Pleas Court. The original complaint set forth claims for negligence, professional negligence, breach of implied warranty, breach of contract, breach of express warranty, conversion, and unjust enrichment. On December 8, 2003, DAS filed an amended complaint, adding parties and claims for the recovery of public funds, pursuant to R.C. 117.28, and piercing the corporate veil.
{¶ 4} CPS sought a defense of the lawsuit from its liability insurers, appellees Gulf and CIC among them, and both insurers denied any defense obligation. As previously mentioned, the underlying litigation was filed and is properly located in Franklin County. However, in an unexplained tactic, CIC filed for declaratory judgment against CPS in the Cuyahoga County Court of Common Pleas. While it was acknowledged that the instant suit would probably best be litigated in Franklin County, the trial court accepted the filing and this matter went forward in Cuyahoga County. CPS then filed a counterclaim against CIC, Gulf, and other insurers. Both sides filed cross-motions for summary judgment and declaratory relief. On October 29, 2004, the trial court held a hearing to permit all parties to present arguments on the summary judgment and declaratory relief issues. The trial court issued its opinion and judgment entry against CPS and in favor of the insurers on January 24, 2005.
{¶ 5} Appeals were brought by both CPS (Cuy. App. No. 85967) and DAS (Cuy. App. No. 85969) solely against appellees CIC and Gulf. Those appeals have been consolidated in the interest of judicial economy. Both appellants assert essentially the same assignments of errors, which are listed in the appendix of this opinion.
Standard of Review
{¶ 6} In general, Civ.R. 56(C) specifically provides that before summary judgment may be granted, it must be determined that: (1) No genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to that party." Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 364 N.E.2d 267.
{¶ 7} It is well established that the party seeking summary judgment bears the burden of demonstrating that no issues of material fact exist for trial. Celotex Corp. v. Catrett (1987), 477 U.S. 317, 330, 106 S.Ct. 2548, 91 L.Ed.2d 265; Mitseff v. Wheeler (1988), 38 Ohio St.3d 112, 115, 526 N.E.2d 798. Doubts must be resolved in favor of the nonmoving party. Murphy v. Reynoldsburg, 65 Ohio St.3d 356, 1992-Ohio-96, 604 N.E.2d 138.
{¶ 8} This court reviews the lower court's granting of summary judgment de novo. Brown v. County Comm'rs (1993), 87 Ohio App.3d 704, 622 N.E.2d 1153. An appellate court reviewing the granting of summary judgment must follow the standards set forth in Civ.R. 56(C). Saunders v. McFaul (1990), 71 Ohio App.3d 46, 50, 593 N.E.2d 24; Link v. Leadworks Corp. (1992), 79 Ohio App.3d 735, 741, 607 N.E.2d 1140. However, a determination as to the duty to defend is a legal issue to be decided by the court, not a factual issue for a jury to resolve. Leber v. Smith (1994), 70 Ohio St.3d 548, 639 N.E.2d 1159; Erie Ins. Group v. Fisher (1984), 15 Ohio St.3d 380, 474 N.E.2d 320.
Policy Analysis in General
{¶ 9} In Hionis v. Nationwide Inc. Co., Cuyahoga App. No. 80516, 2003-Ohio-1333, this court held the following when construing contracts of insurance:
{¶ 10} "Where the terms of an insurance policy are clear and unambiguous, those terms must be applied to the facts without engaging in any construction. Santana v. Auto Owners Ins. Co. (1993), 91 Ohio App.3d 490, 632 N.E.2d 1308, appeal dismissed, 69 Ohio St.3d 182, 1994-Ohio-418, 631 N.E.2d 123. When the policy terms have a plain and ordinary meaning, it is not necessary or permissible for a court to construe a different meaning. Ambrose v. State Farm Fire & Cas. (1990), 70 Ohio App.3d 797, 800, 592 N.E.2d 868, jurisdictional motion overruled (1991), 60 Ohio St.3d 709, 573 N.E.2d 671. In other words, `the plain meaning of unambiguous language will be enforced as written.' Mehl v. Motorists Mut. Ins. Co. (1992), 79 Ohio App.3d 550, 607 N.E.2d 897. Nationwide Mut. Ins. Co. v. Finley (1996), 112 Ohio App.3d 712, 679 N.E.2d 1189. Further:
The Gulf Policy
{¶ 12} There were two "claims made" policies issued to CPS by Gulf. The first policy was effective from November 13, 2001 to November 13, 2002. The parties later amended the effective dates to include December 13, 2001 through December 13, 2002. The second policy renewed the first policy with effective dates of December 13, 2002 through December 13, 2003. Both policies contained a retroactive date of November 13, 1997. After review of the facts, policy language, and applicable law, the trial court, in a very extensive opinion, entered a ruling in favor of Gulf. While this court recognizes the thoroughness of the trial court in this matter as evidenced by its opinion, we respectfully disagree with its findings.
{¶ 13} The trial court's decision focused on the chronology of events in conjunction with a "claims made" policy. With "claims made" policies, "[o]nly claims made against the insured during the policy period *** will be considered within the scope of coverage, even if the acts giving rise to liability occurred before the policy went into effect." (J.E. pg. 5, citing LaValley v. Virginia Sur. Co. [2000, N.D. Ohio], 85 F.Supp.2d 740, 744.)
{¶ 14} Under the Gulf policy, a "claim" is defined as: "*** a demand or assertion of a legal right seeking Damages made against any of You." (Gulf policy, pg. 14.)
{¶ 15} The Gulf policy further reads: "We will consider a Claim to be first made against You when a written Claim is first received by any of You." (Gulf policy, pg. 10.)
{¶ 16} CPS first became aware of the accusations forming the basis of DAS' eventual complaint through a letter it received from DAS dated November 14, 2002, which was within the first...
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