Davis v. LTV Steel Co.

• Decision Date: 29 June 1998
• Docket Number: No. 97-T-0184 and 97-T-0185.,97-T-0184 and 97-T-0185.
• Citation: 716 NE 2d 766,128 Ohio App.3d 733
• Parties: DAVIS et al. v. LTV STEEL CO. 733 Insurance Company, New-Party Appellee.
• Court: Ohio Court of Appeals

128 Ohio App.3d 733

716 NE 2d 766

DAVIS et al. v. LTV STEEL CO. 733 Insurance Company, New-Party Appellee.^*

Nos. 97-T-0184 and 97-T-0185.

Court of Appeals of Ohio, Eleventh District, Trumbull County.

Decided June 29, 1998.

Anthony J. Divenere and Tyler L. Mathews, for appellant.

Merle D. Evans III, for new-party appellee.

CHRISTLEY, Presiding Judge.

This is an accelerated appeal taken from a final judgment of the Trumbull County Court of Common Pleas. Appellant LTV Steel Company ("LTV") appeals from a declaratory judgment in which the trial court ruled that appellant was not entitled to coverage as an additional insured under a policy issued by appellee, Motorists Mutual Insurance Company ("Motorists"). We affirm.

The facts giving rise to this appeal are as follows. LTV entered into a contract with Shafer Commercial and Industrial Services ("Shafer"), an independent contractor. Pursuant to this contract, Shafer was to perform industrial cleaning at an LTV coke plant in Warren, Ohio. Specifically, Shafer contracted to use high-pressure water hoses to clean two tar sump pumps and to vacuum out the tar sump.

On June 7, 1995, two Shafer employees, Daniel W. Davis ("Davis") and Michael J. Booker ("Booker"), were engaged in the cleaning process. Davis was blasting the tar sump pumps with water, while Booker was vacuuming the tar pit itself. The area of the plant where Davis and Booker were working was approximately fifteen feet away from an ammonia storage dike in which a steam siphon was located.

From time to time, the steam would build up within the siphon. When this happened, an LTV employee would have to turn a valve on the siphon manually in order to let it cool down. On June 7, William Mills ("Mills"), a process engineer at the LTV plant, noticed that the steam siphon had overheated and needed to be turned off. However, rather than turning the valve himself or ordering an LTV employee to do so, Mills directed Davis to shut off the siphon.

Davis attempted to comply with Mills's instructions, but while walking toward the steam siphon, he fell into an open dike siphon sump and injured himself. Booker was injured in the same manner when he ran over to provide assistance to Davis. Subsequently, it was discovered that a grate that was supposed to cover the dike siphon sump had been removed.

In the contract between Shafer and LTV, there was an indemnification clause by which Shafer agreed to defend and indemnify LTV against most claims arising out of the performance of the industrial cleaning work. In addition, Shafer also agreed to purchase comprehensive general liability insurance naming LTV as an additional insured. At the time of the accident, Shafer was insured under such a commercial general liability policy issued by Motorists. Pursuant to this policy, LTV was declared to be an additional insured.

Davis and Booker subsequently filed personal injury actions against LTV. Since the actions involved common questions of law and fact, they were consolidated in the trial court under the authority of Civ.R. 42(A). On March 25, 1997, Motorists filed a motion to intervene as a new-party defendant pursuant to Civ.R. 24. The motion was granted on May 21, 1997. Motorists then counterclaimed against Davis and Booker and cross-claimed against LTV. In the cross-claim, Motorists sought a declaratory judgment stating that LTV was not entitled to coverage under the general liability policy issued by Motorists to Shafer.

LTV and Motorists extensively briefed the insurance issues raised by the declaratory judgment request. In addition, the parties submitted various products of discovery, including the depositions of Davis, Booker, and Mills.

On September 12, 1997, the trial court issued a judgment entry in which it found the following: (1) Motorists had no contractual duty to defend LTV because the liability, if any, of LTV did not arise out of the operations of Shafer; (2) LTV was not entitled to coverage as an additional insured under the policy issued by Motorists to Shafer; and (3) the indemnification clause in the contract between Shafer and LTV was void as a matter of law pursuant to R.C. 2305.31. Because the judgment did not dispose of all the claims or parties to the litigation, the trial court included an express determination that there was no just reason for delay, as authorized by Civ.R. 54(B).

From this judgment, LTV filed a timely appeal with this court, in which it asserts the following assignment of error:

"The trial court erred as a matter of law when it granted declaratory relief in favor of Motorists Mutual Insurance Company and against LTV Steel Company, Inc."

Although LTV assigned only one error, two issues are subsumed within its argument that the trial court erred by granting declaratory relief favoring Motorists. Consequently, we will address each issue individually.¹

The first issue is whether LTV is entitled to coverage as an additional insured under the language used in the policy endorsement. The general liability policy issued by Motorists to Shafer contained the following definition:

"The word `insured' means any person or organization qualifying as such under WHO IS AN INSURED (SECTION II)."

LTV was not originally an "insured" under Section II of the policy. Pursuant to the contract between LTV and Shafer, however, Shafer secured an additional-insured endorsement naming LTV as an additional insured entity. The scope of coverage afforded by the endorsement was defined in this way:

"WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule as an insured but only with respect to liability arising out of your operations or premises owned by or rented to you." (Emphasis added.)

The words "you" and "your" refer to the named insured in the overall policy, to wit, Shafer. The policy, however, did not define what was meant by "arising out of Shafer's operations.

LTV argues that the language of the additional-insured endorsement should be construed broadly so that LTV was protected from all liability arising out of or connected to the operations of Shafer, regardless of whether the liability was attributable to the negligence of LTV, Shafer, a third party, or some combination thereof. We disagree with this interpretation of the additional-insured endorsement.

The plain language of the endorsement extended coverage to LTV only with respect to liability arising out of Shafer's operations or premises owned by or rented to Shafer. The phrase "arising out of your operations" in the endorsement was intended to protect LTV from any liability for the negligence of Shafer's employees who would be performing the industrial cleaning at the LTV plant. See, e.g., Buckeye Union Ins. Co. v. Zavarella Bros. Constr. Co. (1997), 121 Ohio App.3d 147, 151-152, 699 N.E.2d 127, 130-131. In other words, the purpose of the additional-insured endorsement was to protect the additional insured (i.e., LTV) from being vicariously liable for the tortious acts of the named insured (i.e., Shafer).

The evidence adduced during discovery was uncontroverted that the dike siphon sump into which Davis and Booker fell was located in an area of the industrial plant that was under the exclusive control of LTV on the day of the accident. There is no serious issue that the closing of the valve in question was not contemplated as part of Shafer's duties pursuant to its contract with LTV. Further, the need to close the valve on the day of the accident was coincidental to the cleaning services being performed by Shafer's employees. There was no dispute that...