Maxum Indem. Co. v. Selective Ins. Co. of S.C.

• Decision Date: 14 May 2012
• Docket Number: No. 11CA0015.,11CA0015.
• Parties: MAXUM INDEMNITY COMPANY, Appellant v. SELECTIVE INSURANCE COMPANY OF SOUTH CAROLINA, Appellee.
• Court: Ohio Court of Appeals

971 N.E.2d 372

2012 -Ohio- 2115

MAXUM INDEMNITY COMPANY, Appellant

v.SELECTIVE INSURANCE COMPANY OF SOUTH CAROLINA, Appellee.

No. 11CA0015.

Court of Appeals of Ohio,

Ninth District, Wayne County.

May 14, 2012.

Bret C. Perry, Keith Hansbrough, and Jason A. Paskan, Attorneys at Law, Cleveland, for Appellant.

Richard A. Williams and Susan S.R. Petro, Attorneys at Law, Columbus, for Appellee.

MOORE, Judge.

{¶ 1} Appellant, Maxum Indemnity Co. (“Maxum”), appeals from the judgment of the Wayne County Court of Common Pleas. We reverse and remand this matter to the trial court for further proceedings consistent with this opinion.

I.

{¶ 2} On June 2, 2006, McClintock Electric, Inc. (“McClintock”) hired Richard Maze to work as a subcontractor in its Orville, Ohio facility. Maze claimed that on the same day, he was riding with a McClintock employee on a manlift when the lift hit a hole in the facility's floor and tipped over, causing Maze to fall approximately twenty feet from the lift to the floor. Maze and his wife brought suit against several defendants, including McClintock and Safety Resource Co. of Ohio (“Safety Resource”), alleging their liability in causing his injuries.

{¶ 3} Safety Resource held a professional liability insurance policy with Maxum and held a business liability insurance policy with Selective Insurance Co. of South Carolina (“Selective”). Safety Resource notified both insurers of Maze's claim. Maxum commenced defense of Safety Resource after making a full reservation of Maxum's rights. Selective denied coverage and refused to defend Safety Resource.Ultimately, Maze and Safety Resource settled their claims out of court.

{¶ 4} Thereafter, Maxum filed a complaint for declaratory judgment against Selective, asking the trial court to determine that Selective had a duty to defend Safety Resource in the Maze lawsuit as the primary insurer and that Maxum, as the excess insurer, had a right of contribution or indemnification from Selective for the expenses Maxum incurred defending Safety Resource and for contribution or indemnification for the settlement amount.

{¶ 5} Maxum filed a motion for partial summary judgment and Selective filed a cross-motion for summary judgment. In its motion, Maxum argued that, based upon the allegations of the complaint, Selective had a duty to defend Safety Resource in the Maze lawsuit, and based upon the parties' respective “other insurance” provisions, Selective was the primary insurer. In its motion, Selective contended that Maze's claims against Safety Resource arose from professional services rendered by Safety Resource to McClintock, and coverage of these claims was excluded from Selective's insurance contract with Safety Resource. Based upon these arguments, Selective maintained that it had no duty to defend Safety Resource, and it was not liable for payment of the claim.

{¶ 6} On March 25, 2011, the trial court issued a judgment entry granting Selective's motion and denying Maxum's motion upon the court's determination that Selective had no duty to defend Safety Resource in the Maze lawsuit, and consequently no duty to indemnify. Maxum timely filed a notice of appeal from the judgment of the trial court and presents three assignments of error for our review. We have consolidated the first and second assignments of error for ease of discussion.

II. ASSIGNMENT OF ERROR NO. 1

THE TRIAL COURT ERRED IN CONSIDERING THE AFFIDAVIT OF RICHARD MARSHALL IN GRANTING SUMMARY JUDGMENT IN FAVOR OF SELECTIVE[.]

ASSIGNMENT OF ERROR NO. 2

THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT IN FAVOR OF SELECTIVE[.]

{¶ 7} In its first assignment of error, Maxum argues that the trial court should not have considered an affidavit of a Selective employee, Richard Marshall, in ruling on Selective's motion for summary judgment. In its second assignment of error, Maxum contends that the trial court erred in granting summary judgment in favor of Selective. We agree.

{¶ 8} We review an award of summary judgment de novo. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). We apply the same standard as the trial court, viewing the facts of the case in the light most favorable to the non-moving party and resolving any doubt in favor of the non-moving party. Viock v. Stowe–Woodward Co., 13 Ohio App.3d 7, 12, 467 N.E.2d 1378 (6th Dist.1983).

{¶ 9} Pursuant to Civ.R. 56(C), summary judgment is proper only if:

(1) No genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to that party.Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327, 364 N.E.2d 267 (1977). The party moving for summary judgment bears the initial burden of informing the trial court of the basis for the motion and pointing to parts of the record that show the absence of a genuine issue of material fact. Dresher v. Burt, 75 Ohio St.3d 280, 292–93, 662 N.E.2d 264 (1996). “If the moving party fails to satisfy its initial burden, the motion for summary judgment must be denied.” Id. at 293, 662 N.E.2d 264. If the moving party fulfills this burden, then the burden shifts to the nonmoving party to prove that a genuine issue of material fact exists. Id.

{¶ 10} In its motion for summary judgment, Selective argued that it had no duty either to defend or to indemnify Safety Resource based upon its policy's exclusions from coverage of injuries arising from “professional services” rendered by Safety Resource and based upon its determination that Maze's claims arose from these professional services. In his complaint, Maze claimed that Safety Resource “maintained, inspected, repaired, operated and/or controlled the real and personal property” described in the complaint, which Maze claimed included the manlift and the concrete floor at the facility. Maze argued that because of this, Safety Resource owed a duty of care to him, which Safety Resource breached by failing to set up adequate barriers, provide coverings, and warn of the existence of the large openings in the floor. Further Maze alleged that Safety Resource was negligent in failing to properly train or instruct employees on the safe use of the manlift and the facility.

{¶ 11} The Selective policy sets forth that “ ‘bodily injury,’ ‘property damage,’ ‘personal and advertising injury’ caused by the rendering or failure to render any professional service” is excluded from coverage. Selective argued that Safety Resource was in the business of providing safety consulting services, and it was from these professional safety services rendered to McClintock that the Maze claims arose.

{¶ 12} In support of its argument, Selective attached the affidavit of its employee, Richard Marshall. In his affidavit, Marshall averred that he had personal knowledge of the matters set forth therein. Marshall stated that, through the course of his employment, he investigated Maze's claims against Safety Resource. Through his investigation, he “learned that [Safety Resource] had entered a contract to serve as a safety consultant at the jobsite at which [ ] Maze allegedly sustained injury.” Marshall set forth that such services involved “inspecting work for and supervising workers in their adherence to safety rules, regulations, and protocols.” Further, Marshall stated that “[Safety Resource] evaluated, consulted on, advised about, instructed and reported on safety issues related to the status of the worksite, the work, and the workers.” Marshall determined that Maze's complaint alleged that Safety Resource was negligent in those services, causing Maze's damages. Because of this, Marshall “concluded that the claim was excluded from coverage under the Selective policy by the ‘professional services' and ‘errors or omissions' exclusions.”

{¶ 13} In its order, the trial court agreed with Selective and determined that Selective did not have a duty to defend. Because it found Selective did not have a duty to defend, the court did not address Maxum's argument that Selective provide coverage of Maxum's expenses. The trial court reached this conclusion after reviewing the Maze complaint, the Selective policy, and Marshall's affidavit.

{¶ 14} However, Maxum argues that the trial court erred in considering Marshall's affidavit. Maxum first argues that an insurer's duty to defend is broader than its duty to indemnify, and a court's determination as to an insurer's duty to defend is limited to a review of the complaint and the insurance contract at issue. Thus, Maxum argues that the trial court could not review Marshall's affidavit in its determination of whether Selective had a duty to defend Safety Resource. Secondly, Maxum argues that Marshall's affidavit failed to comport with the requirements of Civ.R. 56.

{¶ 15} As to Maxum's first argument, Maxum depends largely upon the Supreme Court's holding in Willoughby Hills v. Cincinnati Ins. Co., 9 Ohio St.3d 177, 459 N.E.2d 555 (1984). There, the Court held that “[t]he test of the duty of an insurance company, under a policy of liability insurance, to defend an action against an insured, is the scope of the allegations of the complaint in the action against the insured, and where the complaint brings the action within the coverage of the policy the insurer is required to make a defense, regardless of the ultimate outcome of the action or its liability to the insured.” Id. at paragraph two of the syllabus. The Court further determined that “where the insurer's duty to defend is not apparent from the pleadings in the case against the insured, but the allegations do state a claim which is potentially or arguably within the policy coverage, or there is some doubt as to whether a theory of recovery within the policy coverage had been pleaded,...