Gilbane Building Co. v. Altman Co., 2005 Ohio 984 (OH 3/8/2005)
| Citation | 2005 Ohio 984 |
| Decision Date | 08 March 2005 |
| Docket Number | Case No. 04AP-664. |
| Parties | Gilbane Building Company, Plaintiff, v. The Altman Company, Defendant-Third-Party Plaintiff-Appellant, v. ACE Property & Casualty Insurance Company, fka Cigna Casualty Insurance Company, Third-Party Defendant-Appellee. |
| Court | United States State Supreme Court of Ohio |
APPEAL from the Franklin County Court of Common Pleas, C.P.C. No. 01CVH07-6612.
Lane, Alton & Horst, Jeffrey W. Hutson, Vincent I. Holzhall, and Edward G. Hubbard, for third-party plaintiff-appellant.
Mozley, Finlayson & Loggins, Wayne Taylor and Lawrence B. Domenico; Smith, Rolfes & Skavdahl Co., L.P.A., and Thomas F. Glassman, for third-party defendant-appellee.
{¶1} Third-party plaintiff-appellant, The Altman Company ("Altman"), appeals from the judgment of the Franklin County Court of Common Pleas denying its motion for summary judgment and granting summary judgment to third-party defendant-appellee, ACE Property & Casualty Insurance Company ("ACE"). For the reasons that follow, we affirm.
{¶2} Altman and ACE filed with the trial court a stipulated statement of material facts for purposes of their respective motions for summary judgment. According to the stipulated facts, "Gilbane Building Company ('Gilbane') was hired to be the construction manager for the construction of a new facility in Columbus, Ohio for Chemical Abstract Services ('CAS')." (Feb. 28, 2003, Stipulated Facts, at 2.) Gilbane entered into a contract with Altman, "whereby Altman agreed to work as a trade contractor to provide cast-inplace concrete for the building." Id. The contract "called for Altman to 'etch' the concrete floor, which essentially involves removing the chemical agents used to cure the concrete floor and to rough the surface of the floor so it can receive the final sealant and treatment." Id. at 3. "Altman performed the concrete floor etching in January and February 2001 in the mechanical/electrical rooms of the building and the UPS rooms." Id.
{¶3} The method selected to perform the etching process was to use a muriatic acid product called E-Z Muriatic Acid. The directions on the product bottle directed the user to dilute the acid before using. Altman admitted that it "was negligent in its mixture, use and application of the E-Z Muriatic Acid in that it did not properly dilute the acid before applying it to the concrete floor." Id. at 4. "Altman's mixture, use and application of the E-Z Muriatic Acid caused an acid vapor to form in the electrical/mechanical rooms in which the concrete floor etching was performed." Id. at 5.
{¶4} In early February 2001, representatives of CAS informed Gilbane that "they had observed discoloration of the stainless steel door hardware, switch plates and copper piping" in the rooms where the concrete floor was etched. Id. "The corrosion and rust on the metal surfaces of the equipment and piping in the electrical/mechanical rooms and UPS rooms in which the etching was performed was caused by acid vapor in the air reacting with the metal surfaces of the equipment and piping, and forming corrosive reactions." Id. The equipment and piping that was damaged as a result of the rust and corrosion has either been replaced or repaired.
{¶5} Litigation ensued over the project. Gilbane filed a complaint against Altman, Ohio Farmer's Insurance Company, and Westfield Insurance Company ("Westfield"), who issued a commercial liability policy to Altman. Altman filed a third-party complaint against ACE, as an insured under a builder's risk policy issued by ACE to CAS. The parties filed various motions for summary judgment in the trial court. In a lengthy decision, the trial court resolved many of the outstanding issues between and among the parties. As a result of the trial court's decision, and before a judgment entry was filed, the parties participated in mediation and settlement negotiations, which resulted in a majority of the claims being settled. However, one of the issues not resolved by the parties was Altman's claim against ACE. By way of judgment entry, the trial court dismissed all claims with prejudice, except those by and between ACE, Altman and Westfield. In the same judgment entry, the court entered judgment in favor of ACE against Altman declaring that the builder's risk policy issued by ACE did not provide insurance coverage. Specifically, in the trial court's decision, the trial court determined that the "faulty workmanship" exclusion and the "rust and corrosion" exclusion in the policy issued by ACE barred coverage as to Altman, and thus granted summary judgment in favor of ACE.
{¶6} On appeal, Altman asserts the following assignment of error:
The trial court erred as a matter of law in granting third-party defendant ace property & casualty insurance company's motion for summary judgment and in denying third-party plaintiff the altman company, inc.'s motion for summary judgment.
{¶7} Civ.R. 56(C) states that summary judgment shall be rendered forthwith if "the pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence, and written stipulations of fact, if any, timely filed in the action, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. "
{¶8} Accordingly, summary judgment is appropriate only where: (1) no genuine issue of material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) viewing the evidence most strongly in favor of the nonmoving party, reasonable minds can come to but one conclusion and that conclusion is adverse to the nonmoving party. Tokles & Son, Inc. v. Midwestern Indemn. Co. (1992), 65 Ohio St.3d 621, 629, citing Harless v. Willis Day Warehousing Co. (1978), 54 Ohio St.2d 64, 65-66. "[T]he moving party bears the initial responsibility of informing the trial court of the basis for the motion, and identifying those portions of the record * * * which demonstrate the absence of a genuine issue of fact on a material element of the nonmoving party's claim." Dresher v. Burt (1996), 75 Ohio St.3d 280, 292. Once the moving party meets its initial burden, the nonmovant must then produce competent evidence showing that there is a genuine issue for trial. Id. Summary judgment is a procedural device to terminate litigation, so it must be awarded cautiously with any doubts resolved in favor of the nonmoving party. Murphy v. Reynoldsburg (1992), 65 Ohio St.3d 356, 358-59.
{¶9} Appellate review of summary judgments is de novo. Koos v. Cent. Ohio Cellular, Inc. (1994), 94 Ohio App.3d 579, 588; Midwest Specialties, Inc. v. Firestone Tire & Rubber Co. (1988), 42 Ohio App.3d 6, 8. We stand in the shoes of the trial court and conduct an independent review of the record. As such, we must affirm the trial court's judgment if any of the grounds raised by the movant at the trial court are found to support it, even if the trial court failed to consider those grounds. See Dresher; supra; Coventry Twp. v. Ecker (1995), 101 Ohio App.3d 38, 41-42.
{¶10} Since the parties have stipulated to the facts of this case, there is no genuine issue of material fact for this court to consider. Rather, this case turns on the stipulated facts when matched to the provisions of the builder's risk policy issued by ACE and the exclusions contained therein. "[I]nsurance contracts must be construed in accordance with the same rules as other written contracts." Hybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd. (1992), 64 Ohio St.3d 657, 665. Words and phrases used in insurance policies " 'must be given their natural and commonly accepted meaning, where they in fact possess such meaning, to the end that a reasonable interpretation of the insurance contract consistent with the apparent object and plain intent of the parties may be determined.' " Tomlinson v. Skolnik (1989), 44 Ohio St.3d 11, 12, quoting Gomolka v. State Auto. Mut. Ins. Co. (1982), 70 Ohio St.2d 166, 167-168. Ambiguities in insurance policies should be construed liberally in favor of coverage. Yeager v. Pacific Mut. Life Ins. Co. (1956), 166 Ohio St. 71, paragraph one of the syllabus.
{¶11} A builder's risk policy, like the one issued by ACE, is primarily designed to insure against catastrophic losses to the property. The types of losses contemplated are those related to events such as fire, flooding and hurricanes. Altman argues that the "rust and corrosion" exclusion in the builder's risk policy issued by ACE does not clearly and unambiguously exclude coverage for a fast-acting chemical reaction, and therefore, Altman is entitled to coverage pursuant to the policy. The "rust and corrosion" exclusion provides in pertinent part:
We will not pay for loss caused by or resulting from any of the following, except as provided under Automatic Extensions of Coverage.
* * *
d. (1) Wear and tear;
(2) Rust, corrosion, fungus, decay, deterioration, hidden or latent defect or any quality in the property that caused it to damage or destroy itself;
* * *
But if loss from Specified Causes of Loss or building glass breakage results, we will pay for that resulting loss.
{¶12} Altman argues that while the parties stipulated that the loss is due to rust and corrosion, which is excluded under the policy, the court should apply the commonsense and ordinary understanding of the terms "rust" and "corrosion," and conclude that a "fast-acting, acid-based chemical reaction," which undisputedly caused the rust and corrosion in this case, is not the type of rust and corrosion intended to be excluded under the policy. In support of its position, Altman relies on Heban v. Auto-Owners Ins. Co. Wood App. No. WD-02-264, 2003-Ohio-4218. In Heban, panes of glass were stored outside, and exposed to the elements for a period of two years. The experts agreed that the panes of glass were corroded, but disagreed as to how long it...
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