Jeff Stiriz v. Motorists Mutual Ins. Co., 02-LW-1007

• Decision Date: 29 March 2002
• Docket Number: F-01-010,02-LW-1007
• Citation: 2002 Ohio 1521
• Parties: Jeff Stiriz, et al. v. Motorists Mutual Insurance Co., Appellee Court of Appeals
• Court: Ohio Court of Appeals

2002-Ohio-1521

Jeff Stiriz, et al. v. Motorists Mutual Insurance Co., Appellee

No. F-01-010

02-LW-1007 (6th)

Court of Appeals of Ohio, Sixth District Fulton

March 29, 2002

Trial Court No. 99-CV-000133

Stephen B. Mosier, for appellants.

David M. Stuckey, for appellee.

OPINION

KNEPPER J.

This is an appeal from the judgment of the Fulton County Court of Common Pleas which, following a jury trial, found in favor of appellee, Motorists Mutual Insurance Company ("Motorists Mutual"), with respect to appellants' causes of action. For the reasons that follow we affirm the decision of the trial court.

Appellants, Jeff and Cathy Stiriz, operated a business at 127 West Linfoot Street, Wauseon, Ohio, called Deryle's Auto Care. This business was insured with a commercial insurance policy issued by Motorists Mutual, which included both a Commercial Property Coverage Form and a Commercial Garage Coverage Form. Jeff Stiriz's father, Deryle Stiriz however, actually owned the Linfoot Street property; whereas the adjacent property, 861 North Fulton Street, was owned by appellants and insured by Frankenmuth Insurance Company ("Frankenmuth"). Frankenmuth is not a party to this action. Additionally, appellants had a homeowners' insurance policy with Motorists Mutual on their residence at 404 Superior Street, Wauseon, Ohio.

On September 19, 1997, a severe rain storm allegedly caused a petroleum substance to leak out of an underground storage tank ("UST"). The UST was located entirely on appellants' Fulton Street property. The cap to the pipe leading from the UST was later found in some bushes on the property. No one knows how the cap was removed; however, there was some speculation that a riding lawnmower with a blade attached to the front of it, which had recently leveled the driveway, could have knocked the cap off, or the cap was possibly removed by vandals.

The petroleum substance leaked onto the Fulton Street property and surrounding properties, as well as into some city owned sewer systems, which ran beneath both the Linfoot and Fulton Street properties and beyond. Appellants were ordered by the Ohio Environmental Protection Agency to clean up these properties, which included the removal of the UST, flushing of city storm lines, and removal of contaminated soil and grass. The total cost of cleanup was allegedly in excess of $73,246. Appellants received $10,000 from Frankenmuth toward the cost of cleanup. Motorists Mutual denied coverage.

For purposes of this appeal, the pertinent portion of the commercial policy, the Building and Personal Property Coverage section, states as follows. Coverage is provided for direct physical loss of or damage to covered property:

"A. COVERAGE

"We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss."

"Covered Property" includes the buildings on the Linfoot property and any type of personal property on the premises, but does not include paved surfaces, cost of excavations, grading, backfilling or filling, the land or lawn, or underground pipes and drains on the premises.

The policy also provides "Additional Coverage" for pollutant clean up and removal, which includes the expense to extract pollutants from land or water on the Linfoot property, so long as the discharge, dispersal, seepage, migration, release or escape of the pollutants was caused by or resulted from a covered cause of loss:

"d. Pollutant Clean Up and Removal

"We will pay your expense to extract 'pollutants' from land or water at the described premises if the discharge, dispersal, seepage, migration, release or escape of the 'pollutants' is caused by or results from a Covered Cause of Loss that occurs during the policy period. The expenses will be paid only if they are reported to us in writing within 180 days of the date on which the Covered Cause of Loss occurs.

"This Additional Coverage does not apply to costs to test for, monitor or assess the existence, concentration or effects of 'pollutants'. But we will pay for testing which is performed in the course of extracting the 'pollutants' from the land or water.

"The most we will pay under this Additional Coverage for each described premises is $10,000 for the sum of all covered expenses arising out of Covered Causes of Loss occurring during each separate 12 month period of this policy."

According to the policy, "Covered Cause of Loss" means risks of direct physical loss, but does not include "loss or damage caused by or resulting from" the "discharge, dispersal, seepage, migration, release or escape of 'pollutants' unless the discharge, dispersal, seepage, migration, release or escape is itself caused by any of the 'specified causes of loss'." Specified causes of loss include, in part, lightning, windstorm or hail, vehicles, vandalism, sinkhole collapse, falling objects, weight of snow, ice or sleet, and water damage (which does not include rain).

On August 16, 1999, appellants sued Motorists Mutual and claimed a right to coverage, pursuant to both the commercial policy and the homeowners' policy, for damages associated with the release of the petroleum-based pollutant. With respect to both policies, appellants claimed breach of contract and "bad faith."

Appellants filed a number of motions prior to trial. On September 6, 2000, appellants filed a motion for partial summary judgment against Motorists Mutual requesting the trial court to determine that Motorists Mutual was required to provide coverage pursuant to its commercial policy, which included coverage for "Pollution Clean Up and Removal." On December 1, 2000, appellants filed a motion in limine requesting that the trial court preclude Motorists Mutual "from offering into evidence any extrinsic evidence or argument tending to establish the meaning of any ambiguous term or condition" of the policies. Also, on December 1, 2000, appellants filed a motion requesting "judicial construction" of two clauses in the commercial policy. Specifically, appellants moved the trial court to determine whether the "Pollutant Clean Up and Removal" clause and the "Cause of Loss-Special Form" exclusion, when read in conjunction, were clear and unambiguous or whether they were ambiguous and thus needed to be construed in favor of the insureds.

Motorists Mutual filed a response to appellants' motions on December 11, 2000. Motorists Mutual argued that appellants were not entitled to coverage pursuant to the commercial policy because (1) the UST was entirely located on the Fulton Street property, not on the Linfoot property, and was not associated with the business on the Linfoot property; (2) there was no physical damage to appellants' building or any personal property located on the Linfoot property; (3) appellants failed to establish a right to recovery because they failed to allocate what portion of the cost of cleanup was incurred solely for the Linfoot property; and (4) the commercial policy excluded coverage for loss due to pollution involving property owned by appellants, i.e., the Fulton Street property. With respect to the residential/homeowners' policy, Motorists Mutual argued that there was no coverage for any liability arising out of or in connection with the businesses located on the Linfoot and Fulton Street properties. In fact, Motorists Mutual asserted that the only insured location under the homeowners' policy was the residence, located on Superior Street.

Appellants replied on December 15, 2000, and argued that they had made a claim under their homeowners' policy. Appellants also asserted that Motorists Mutual's denial of coverage letter did not cite to or rely upon any of the claimed exclusions under the homeowners' policy and, hence, Motorists Mutual should be barred from asserting any exclusion.

On December 19, 2000, the trial court entered its judgment entry regarding appellants' motions. The trial court held that appellants were not entitled to coverage pursuant to the homeowners' policy. With respect to the commercial policy, the trial court rendered the following decision:

"It appears that the Commercial Policy language, however, is broad enough to provide coverage for Plaintiffs. If there is any ambiguity, it must be construed in favor of the Stirizs and against the Defendant. Accordingly Plaintiffs will be allowed to present their case regarding covered 'extraction' costs, and any associated claims for 'bad faith,' and the Court so finds and so rules."

Following the trial court's decision, the matter proceeded to trial. The jury held that appellants were not entitled to coverage and found in favor of Motorists Mutual on appellants' claim for lack of good faith. Judgment was entered on February 1, 2001.

On February 13, 2001, appellants filed a motion for judgment notwithstanding the verdict or, alternatively, for new trial. Appellants' motion was denied on March 5, 2001. The trial court held that there was substantial evidence to support Motorists Mutual's side of the case and that appellants failed to establish any ground for relief pursuant to Civ.R. 59.

Appellants timely appealed the judgment of the trial court and raise the following assignments of error:

"1. THE TRIAL COURT ERRED IN FAILING TO CONSTRUE, AS A MATTER OF LAW, THE POLICY CLAUSE PROVIDING 'ADDITIONAL COVERAGE' FOR 'EXPENSES TO EXTRACT POLLUTANTS FROM LAND OR WATER;' ERRED FURTHER IN FAILING TO RESOLVE AMBIGUITIES IN THAT LANGUAGE IN FAVOR OF COVERAGE FOR THE INSUREDS; AND ERRED FURTHER IN WITHDRAWING AT TRIAL THE COURT'S OWN PRETRIAL COVERAGE DETERMINATION AND SUBMITTING TO THE JURY FOR ITS DETERMINATION THE ISSUE OF INSURANCE COVERAGE FOR POLLUTANT EXTRACTION EXPENSES.

"2. THE TRIAL COURT ERRED IN FAILING TO CONSTRUE

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