Great Am. Ins. Co. of N.Y. v. Phila. Indem. Ins. Co.

• Decision Date: 06 April 2022
• Docket Number: C-200353
• Citation: 2022 Ohio 1160
• Parties: GREAT AMERICAN INSURANCE COMPANY OF NEW YORK, Plaintiff-Appellee, v. PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendant-Appellant.
• Court: Ohio Court of Appeals

2022-Ohio-1160

GREAT AMERICAN INSURANCE COMPANY OF NEW YORK, Plaintiff-Appellee, v. PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendant-Appellant.

No. C-200353

Court of Appeals of Ohio, First District, Hamilton

April 6, 2022

Civil Appeal From: Hamilton County Court of Common Pleas Trial No A-1804599

Judgment Appealed From Is: Reversed and Final Judgment Entered

Frost Brown Todd, LLC, and David W. Walulik, for Plaintiff-Appellee,

Collins Roche Utley & Garner and Richard M. Garner, for Defendant-Appellant.

OPINION

Crouse, Judge

{¶1} Defendant-appellant Philadelphia Indemnity Insurance Company ("Philadelphia") appeals from the trial court's judgment allowing plaintiff-appellee Great American Insurance Company of New York ("Great American") to assert a claim for equitable contribution and recover partial costs of defending their common insured, Satellite Affordable Housing Association ("SAHA"). Because Great American had primary liability for SAHA's defense costs, we reverse the judgment of the trial court and enter final judgment in favor of Philadelphia.

I. Facts and Procedure

{¶2} Great American was SAHA's primary commercial general-liability insurer from 2013 to 2018. The commercial general-liability ("CGL") policies provided coverage for accidental bodily injury, accidental property damage, and personal and advertising injury, and imposed on Great American a duty to defend SAHA against any lawsuit seeking damages covered under the policies.

{¶3} Philadelphia was SAHA's primary employment-practices-liability insurer from 2015 to 2016. The claims-made policy provided coverage for civil-rights violations and obligated Philadelphia, upon tender, to defend SAHA against any lawsuit seeking those damages.

{¶4} From 2015 to 2016, 16 residential tenants brought three California lawsuits against SAHA and six others. The tenants alleged that several substantial defects rendered the defendants' premises unfit for human occupancy. As relevant to this appeal, the plaintiffs sought damages for bodily injury and civil-rights violations. SAHA forwarded the complaints to Great American, seeking indemnity and defense. Great American agreed and retained counsel to represent SAHA. SAHA subsequently notified Philadelphia of the California lawsuits. Philadelphia issued a reservation of rights, agreeing to participate in the defense to the extent it was required to do so under its policy. By July 10, 2018, all of the California plaintiffs had settled. Great American incurred a total of $367, 487.90 in defense costs.

{¶5} On August 22, 2018, Great American filed the underlying complaint to obtain contribution from Philadelphia.^[1] The parties submitted the case for a decision by the trial court. The court subsequently entered judgment in favor of Great American for Philadelphia's proportionate share of $153, 855.32 in defense costs. Philadelphia appealed, raising two assignments of error for our review.

II. Law and Analysis

(¶6} In its first assignment of error, Philadelphia argues that Great American cannot seek contribution for costs incurred defending SAHA. The key issue presented is whether Great American and Philadelphia provided the same level of coverage for defense costs to SAHA. Philadelphia asserts that Great American's policy provided primary defense costs coverage, which obligated it to defend the California lawsuits, while Philadelphia's policy provided secondary coverage, which limited its obligation to defense costs in excess of Great American's coverage. On the other hand, Great American contends that the policies were coprimary insurance policies and provided equal defense cost coverage with respect to the relevant lawsuits.

1. Choice of Law

{¶7} As a preliminary matter, Philadelphia argues that California law, rather than Ohio law, governs Great American's contribution claim.

{¶8} We review de novo a trial court's choice-of-law determination. Griffith v. MacAllister Rental, LLC, 1st Dist. Hamilton No. C-200311, 2021-Ohio-1800.

{¶9} Before engaging in a choice-of-law analysis, a court must determine whether there exists an actual conflict between Ohio law and the law of another state. ISCO Industries, Inc. v. Great Am. Ins. Co., 2019-Ohio-4852, 148 N.E.3d 1279, ¶ 14 (1st Dist). If the competing states would use the same rule of law or would otherwise reach the same result, it is unnecessary to make a choice-of-law determination because there is no conflict of law. Id. The party seeking to apply non-Ohio law bears the burden of showing a genuine conflict between Ohio law and the law of the foreign jurisdiction. Id. Where the party seeking application of non-Ohio law fails to demonstrate such a conflict, Ohio law governs. Id.

{¶10} Philadelphia contends that Ohio law and California law differ as to whether an "other insurance" clause can bar a coinsurer's right to contribution. However, Philadelphia has failed to show that the competing states would reach different results. In fact, Philadelphia contends that it is not obligated to pay defense costs under either Ohio or California law. Thus, Philadelphia has not shown that a conflict of laws exists, and we will apply Ohio law to Great American's contribution claim.

2. Contribution

{¶11} "Contribution is an insurer's right to recover amounts paid in excess of its fair share of an obligation shared by others." Resco Holdings, LLC v. AIU Ins. Co., 2018-Ohio-2844, 112 N.E.3d 503, ¶ 11 (8th Dist.), citing Travelers Indem. Co. v. Trowbridge, 41 Ohio St.2d 11, 321 N.E.2d 787 (1975), paragraph two of the syllabus, overruled on other grounds, Motorists Mut. Ins. Co. v. Huron Rd. Hosp., 73 Ohio St.3d 391, 653 N.E.2d 235 (1995). Contribution is an equitable doctrine that focuses on whether one party "has discharged a debt or obligation which others were equally bound with him to discharge, and thus removed a common burden, [and] the others who have received a benefit ought in good conscience to refund to him a ratable proportion." Pennsylvania Gen. Ins. Co. v. Park-Ohio Indus., Inc., 179 Ohio App.3d 385, 2008-Ohio-5991, 902 N.E.2d 53, ¶ 21, citing Baltimore & Ohio R.R. Co. v. Walker, 45 Ohio St. 577, 588, 16 N.E. 475 (1888).

{¶12} Thus, in order to decide this case, we must decide whether Great American and Philadelphia were equally bound to defend SAHA in the California lawsuits.

3. Duty to Defend

{¶13} Under Ohio law, "[a]n insurer has an absolute duty to defend an action when the complaint contains an allegation in any one of its claims that could arguably be covered by the insurance policy." City of Sharonville v. Am. Emp Ins. Co., 109 Ohio St.3d 186, 2006-Ohio-2180, 846 N.E.2d 833, ¶ 13. "An insurer's duty to defend is broader than and distinct from its duty to indemnify." Id. "Once a liability insurer must defend one claim within a complaint, it must defend the insured on all the other claims within the complaint, even if they bear no relation to the insurance-policy coverage." Id., citing Preferred Mut. Ins. Co. v. Thompson, 23 Ohio St.3d 78, 80, 491 N.E.2d 688 (1986). "These principles apply equally to situations where the allegations set forth in the complaint could arguably be covered by two insurers." Maxum Indem. Co. v. Selective Ins. Co. of South Carolina, 2012-Ohio-2115, 971 N.E.2d 372, ¶ 16 (9th Dist), citing Ins. Co. of N. Am. v. Travelers Ins. Co., 118 Ohio App.3d 302, 314, 692 N.E.2d 1028 (8th Dist.1997).

{¶14} In this case, Great American and Philadelphia are coprimary insurers with regard to indemnity because the policies covered different claims. Great American was SAHA's primary commercial general-liability insurer and Philadelphia was SAHA's primary employment-practices-liability insurer.

{¶15} Great American's policy details a broad duty to defend. Great American's policy provides: "We will pay those sums that the Insured becomes legally obligated to pay as damages because of 'bodily injury' * * * to which this insurance applies. We will have the right and duty to defend the Insured against any 'suit' seeking those damages." Great American's policy continues: "This insurance is primary except when paragraph b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary." It is undisputed that "paragraph b." does not apply in this case.

{¶16} In pertinent part, Philadelphia's policy defines "Defense Costs" as: Any reasonable and necessary legal fees and expenses incurred in the defense of a Claim, whether by the Insured with the Underwriter's consent or directly by the Underwriter, in the investigation, adjustment, defense and appeal of a Claim, except that defense costs shall not include:

a. Any amounts incurred in defense of any Claim for which any other insurer has a duty to defend, regardless of whether or not such other insurer undertakes such a duty[.]

{¶17} Under the Philadelphia policy, a "claim" is defined as "[a]ny civil proceeding * * * against an Insured for a Wrongful Act."

{¶18} Unlike the Great American policy, Philadelphia's policy does not require Philadelphia to control the defense. Rather, the insured has the option of tendering the defense to Philadelphia, or electing counsel of its choice and having Philadelphia "advance Defense Costs prior to the final disposition of a Claim."^[2] There are specific requirements that come with each option and Philadelphia's duty to defend is also limited by several provisions in the contract.^[3]

{¶19} Great American argues that because it and Philadelphia are coprimary insurers, both had a duty to defend SAHA. However, Philadelphia contends that language in its policy limits its duty to defend in situations where another insurer, like Great American, has a duty to defend.

{¶20} Thus, in order to...