David v. Nationwide Mut. Ins. Co.

• Decision Date: 29 September 1995
• Docket Number: C-940729,Nos. C-940697,s. C-940697
• Citation: 665 N.E.2d 1171,106 Ohio App.3d 298
• Parties: , 68 Fair Empl.Prac.Cas. (BNA) 1824 DAVID, a.k.a. Daoud, et al.; Daoud Investments, Inc., Appellee and Cross-Appellant, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Appellant and Cross-Appellee.
• Court: Ohio Court of Appeals

Page 298

106 Ohio App.3d 298

665 N.E.2d 1171, 68 Fair Empl.Prac.Cas. (BNA) 1824

DAVID, a.k.a. Daoud, et al.; Daoud Investments, Inc., Appellee and Cross-Appellant, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Appellant and Cross-Appellee.

Nos. C-940697, C-940729.

Court of Appeals of Ohio First District, Hamilton County.

Decided Sept. 29, 1995.

John E. Rockel and Theodore J. Froncek, Cincinnati, for appellee and cross-appellant.

McCaslin, Imbus & McCaslin, Douglas E. King and Peter J. Miller, Cincinnati, OH, for appellant and cross-appellee.

PAINTER, Judge.

I. Facts

Daoud Investments, Inc. ("DII"), an Ohio corporation, was a partner in an Ohio partnership that owned and operated a Gold Star Chili restaurant at the Beechmont Mall in 1991. Between March 25, 1991, and May 8, 1991, Jami Comello worked at DII's Gold Star restaurant, as did Shirko Miro. Miro made "repugnant" sexual remarks to Comello, on one occasion grabbed her breast, and on one occasion exposed his penis to her. Comello denied any physical injury as a result of the incidents. Comello's suit against DII was tried separately. At that trial, Comello testified that she suffered emotional distress and received counseling from a psychologist.

In this declaratory judgment action, DII sought to have Nationwide Mutual Insurance Company ("Nationwide") pay for DII's defense and for any judgment entered as a result of Miro's conduct, pursuant to a commercial general liability policy issued to DII and Mwafag Gammoh Partnership, d.b.a. Gold Star Chili. Nationwide refused to defend DII or to pay any judgment under the policy.

Judgment was awarded to Comello for her harassment claim. Fahad S. David, a.k.a. Daoud, and Gold Star Chili were dismissed in the underlying action and are not part of this appeal. In the declaratory judgment action, the trial court held that Nationwide had a duty to defend DII, but no obligation to pay the judgment entered against it. Nationwide appealed and DII cross-appealed.

II. Assignments of Error

In its sole assignment of error, Nationwide argues that the trial court erred in declaring that Nationwide owed a defense to DII in the Comello action. In its first assignment of error on cross-appeal, DII asserts that the trial court erred in ruling that Nationwide owed no defense or coverage to DII under the "personal injury" claim provisions. In its second assignment of error, DII asserts that the trial court erred in holding that Nationwide had no duty to pay the judgment entered in the Comello action.

III. Whether Nationwide Owed a Defense to DII in Comello

In Willoughby Hills v. Cincinnati Ins. Co. (1984), 9 Ohio St.3d 177, 9 OBR 463, 459 N.E.2d 555, the Ohio Supreme Court held that an insurer owes a duty to defend an insured any time the allegations in an action against the insured fall "arguably" within the coverage of the insurance policy in question. Therefore, to sustain Nationwide's assignment of error and to hold that Nationwide did not owe a defense to DII in the Comello action, we must be convinced that her allegations do not even arguably fall under the Nationwide policy.

Nationwide makes four arguments that it did not owe a defense to DII in the Comello action: (1) that Comello suffered no "bodily injury" and therefore her claims are not covered by the policy, (2) that Comello's action did not stem from an "occurrence" and therefore her claims are not covered by the policy, (3) that because Comello's injuries arose out of her employment at Gold Star Chili, policy exclusion provisions preclude Comello's claims, and (4) that Comello's claims are not "personal injury" claims and, therefore, are not covered by the policy. If Nationwide prevails on any one of these issues, then there is no coverage. We hold that Nationwide prevails on all four.

Comello stated at trial that she sustained emotional distress, but not physical injuries. Section V of the policy defines "bodily injury" as "bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time." Therefore, we must determine whether the policy definition of "bodily injury" arguably covers emotional distress.

DII contends that emotional distress arguably falls under Nationwide's definition of "bodily injury" because either emotional distress is included in the definition, or the modifier "bodily" does not apply to "sickness" or "disease."

The Ohio Supreme Court has held that "bodily injury" usually indicates an injury brought on by external violence. Tomlinson v. Skolnik (1989), 44 Ohio St.3d 11, 540 N.E.2d 716. A number of Ohio appellate courts have interpreted this holding to exclude emotional distress from insurance policy claims for "bodily injury" where the definition in the policy is "bodily injury, sickness or disease." Vance v. Sang Chong, Inc. (Nov. 9, 1990), Lake App. No. 88-L-13-188, unreported, 1990 WL 174121; Bowman v. Holcomb (1992), 83 Ohio App.3d 216, 614 N.E.2d 838; Reichard v. Nationwide Mut. Fire Ins. Co. (Dec. 10, 1992), Montgomery App. No. 91-755, unreported, 1992 WL 361829; Heinze v. Liberty Mut. Ins. Co. (June 7, 1993), Butler App. No. CA92-10-205, unreported, 1993 WL 192909. See, also, State Farm Fire & Cas. Co. v. Hiermer (S.D.Ohio 1988), 720 F.Supp. 1310. The view expressed by these cases follows the national judicial trend conclusively excluding emotional distress from the insurance definition "bodily injury, sickness or disease." ¹

In our view, whether the word "bodily" modifies "sickness" or "disease" is irrelevant. Neither sickness nor disease arguably includes emotional distress. Bowman, supra; Reichard, supra. We are persuaded by these cases that emotional distress, in the absence of some physical harm, does not even arguably constitute a "bodily injury" as contemplated by this insurance definition.

Even if it is assumed that the definition of "bodily injury" in the policy arguably would cover emotional distress, Nationwide argues that Comello's action did not stem from an "occurrence" and therefore her claims are not covered by the policy. Section V of the policy defines "occurrence" as "an accident, including continuous or repeated exposure to substantially the same harmful conditions." Therefore, we must determine whether the policy definition of "occurrence" arguably covers Miro's actions and DII's inaction.

Comello alleged that DII acted negligently, and therefore "accidentally." However, in Randolf v. Grange Mut. Cas. Co. (1979), 57 Ohio St.2d 25, 11 O.O.3d 110, 385 N.E.2d 1305, the Supreme Court of Ohio held that an intentional act by the agent of an insured was not an "accident" within the terms of the insurance policy for purposes of liability coverage. The court determined that the nature of whether an act was accidental or whether an act was intentional must be taken from the agent/actor's viewpoint, and not from the principal's viewpoint. Id. at 26, 11 O.O.3d at 112, 385 N.E.2d at 1307. See Rothman v. Metro. Cas. Ins. Co. (1938), 134 Ohio St. 241, 12 O.O. 50, 16 N.E.2d 417. Therefore, we must look to whether Miro acted accidentally, not whether DII acted accidentally in allowing Miro's acts to occur. Clearly, Miro acted intentionally when exposing himself, grabbing Comello and uttering vulgarities. Therefore, his acts are not even arguably contemplated by the policy definition of "occurrence."

Even if it is assumed, arguendo, that the definition of "bodily injury" in the policy arguably covers emotional distress and Comello's action did stem from an "occurrence," Nationwide argues that the policy exclusion provisions preclude Comello's claims because Comello's injuries arose out of her employment at Gold Star Chili.

Under Section I, paragraph 2, the policy states:

"This insurance does not apply to: * * * e. 'Bodily injury' to: (1) An employee of the insured arising out of and in the course of employment by the insured * * *. This exclusion applies whether the insured may be liable as an employer or in any other capacity * * *."

We must decide whether the exclusion arguably does not apply to Comello's injuries. If emotional distress is a bodily injury, the insurance does not apply to bodily injury to an employee of the insured arising out of and in the course of employment by the insured. The trial court evaluated Miro's conduct and determined that his conduct did not arise out of the course of his employment with DII. No artful twisting of the exclusion provision can make the words "bodily injury to an employee of the insured" mean Miro's conduct. See, e.g., Natl. Ben Franklin Ins. Co. v. Harris (1987), 161 Mich.App. 86, 409 N.W.2d 733.

When read as written, the exclusion unambiguously states that the insurance does not apply to Comello's emotional distress (i.e., "bodily injury to an employee of the...