Owens-Corning Fiberglas Corp. v. Am. Centennial Ins. Co.

• Decision Date: 22 February 1995
• Docket Number: No. CI90-2521,OWENS-CORNING,CI90-2521
• Citation: 74 Ohio Misc.2d 183,660 N.E.2d 770
• Parties: FIBERGLAS CORPORATION v. AMERICAN CENTENNIAL INSURANCE COMPANY et al. *
• Court: Ohio Court of Common Pleas

Page 183

74 Ohio Misc.2d 183

660 N.E.2d 770

OWENS-CORNING FIBERGLAS CORPORATION v. AMERICAN CENTENNIAL INSURANCE COMPANY et al. ^*

No. CI90-2521.

Court of Common Pleas of Ohio,

Lucas County.

Decided Feb. 22, 1995.

Connelly, Soutar & Jackson, William M. Connelly and Steven Smith, Toledo, Covington & Burling, Mitchell F. Dolin, Jackson Sharman and Eric Lasker, Washington, DC, Davis & Young Co., L.P.A., and Martin J. Murphy, Cleveland, for Owens-Corning Fiberglas Corporation.

Shumaker, Loop & Kendrick, Peter Silverman and William Heywood, Toledo, Chadbourne & Park, Peter Hillman and Debra Petalkis, New York City, for American Centennial Insurance Company.

Sullivan, Ward, Bone, Tyler, Fiott & Asher, Thomas Slavin and Thomas Auth, Southfield, MI, Mayer, Brown & Platt and Michael Gill, Chicago, IL, Joseph Walsh, Toledo, for Protective National Insurance Company.

Weston, Hurd, Fallon, Paisley & Howley and Warren Rosman, Cleveland; Harrington, Foxy, Dubrow & Canter, Mark Flory and Melissa Harnett, Los Angeles, CA, for Associated International Insurance Company.

RICHARD W. KNEPPER, Judge.

This matter is before the court on the parties' motions for partial summary judgment. The motions were filed pursuant to the pretrial order dated May 16, 1994. The remaining parties in the suit, all of which moved for summary judgment on various issues, are Owens-Corning Fiberglas Corporation ("OCF"), the plaintiff, and American Centennial Insurance Company ("ACIC"), Protective National Insurance Company ("PNIC"), and Associated International Insurance Company ("Associated"), the defendants.

I

OCF was a manufacturer and distributor of products containing asbestos material. As a result of this business activity, OCF sustained losses arising from product liability suits filed against it. On July 27, 1990, OCF filed the instant action seeking declaratory relief. To date, all defendants have settled, been dismissed, or been defaulted, except for ACIC, PNIC, and Associated.

Pursuant to the pretrial held April 13, 1994, the parties agreed that motions for partial summary judgment would be filed on August 2, 1994, with responses being filed on August 30, 1994. The parties moved on a total of eleven separate issues. Those issues regard the following: (1) the Policy Binder submitted by OCF; (2) the "known loss doctrine"; (3) fraud and misrepresentation; (4) timeliness of notice to the defendants regarding the number of asbestos claims pending against OCF; (5) trigger of coverage; (6) scope of coverage; (7) the amount of underlying insurance which needs to be exhausted before ACIC's and PNIC's coverage takes effect; (8) defense expenses regarding Associated's policy; (9) the timeframe within which the underlying insurance must be exhausted before Associated's coverage takes effect; (10) coverage of expected or intended losses; and (11) coverage of punitive damages awards.

Oral arguments were held on September 8, 1994. The court heard arguments on five of the eleven issues. Each of the eleven issues will be decided separately.

II

The general rules governing motions for summary judgment filed pursuant to Civ.R. 56 are well established. In Harless v. Willis Day Warehousing Co. (1978), 54 Ohio St.2d 64, 66, 8 O.O.3d 73, 74, 375 N.E.2d 46, 47, the Supreme Court of Ohio stated the requirements that must be met before a motion for summary judgment can be granted:

"The appositeness of rendering a summary judgment hinges upon the tripartite demonstration: (1) that there is no genuine issue as to any material fact; (2) that the moving party is entitled to judgment as a matter of law; and (3) that reasonable minds can come to but one conclusion, and that conclusion is adverse to the party against whom the motion for summary judgment is made, who is entitled to have the evidence construed most strongly in his favor."

A motion for summary judgment may force the nonmoving party to produce evidence on an issue for which she bears the burden of production at trial. Wing v. Anchor Media, Ltd. of Texas (1991), 59 Ohio St.3d 108, 570 N.E.2d 1095, paragraph three of the syllabus. The moving party has the burden of demonstrating, through the pleadings, depositions, answers to interrogatories, and

admissions on file, together with affidavits, if any, that with respect to every essential issue, there is no genuine issue of fact. Mitseff v. Wheeler (1988), 38 Ohio St.3d 112, 114-115, 526 N.E.2d 798, 800-801.

III

At oral arguments, OCF objected to ACIC and PNIC having filed a cross-motion regarding the trigger of coverage issue. The cross-motion was filed contemporaneously with ACIC and PNIC's response to OCF's motion on the same issue. The court ruled in open court, and it is hereby memorialized, that ACIC and PNIC's cross-motion is untimely, as it was filed on August 30, 1994. The court refused to grant ACIC and PNIC leave to file their cross-motion because all parties agreed to the sequence for filing motions, as set forth in the pretrial order. ACIC and PNIC's brief on trigger of coverage will, therefore, be treated only as a response, and not as a motion.

A. POLICY BINDER

As a preliminary matter, the structure of OCF's insurance coverage should be discussed. The three remaining defendants are excess carriers. As such, they are not liable to provide coverage until the underlying insurance has been exhausted.

The timespan of coverage concerning the remaining defendants is March 9, 1979 to September 1, 1984. During that period, the defendants insured for different amounts and during various policy periods. To illustrate, Associated's policy period is from March 9, 1979 to September 1, 1979. It is not liable to provide coverage until $100,000,000 of underlying insurance is exhausted. (Policy Binder, Exhibit A at 6.) ACIC's policy periods are from September 1, 1979 to September 1, 1982 and from September 1, 1983 to September 1, 1984. ACIC is not liable to provide coverage until $150,000,000 of underlying insurance has been exhausted. (Policy Binder, Exhibits B at 134 and 136; C at 212 and 213; D at 273 and 274; F at 446.) PNIC's policy periods are from September 1, 1982 to September 1, 1983, with liabilities attaching after $25,000,000 as to one policy and after $150,000,000 as to the other (Policy Binder, Exhibit E at 337 and 361), and from September 1, 1983 to September 1, 1984, with liability attaching after $100,000,000. (Policy Binder, Exhibit F at 437.)

During the relevant timespan, OCF had primary coverage, insured or self-insured, ranging from $25,000,000 to $85,000,000. In addition, OCF had umbrella policies with Northbrook Excess and Surplus Insurance Company ("Northbrook") Because the coverage provided by these defendants' policies is at issue, OCF moved for the Policy Binder ¹ to be admitted into evidence in toto. ACIC objected to the inclusion of pages 499, 501, 502, and 503, which relate to policies of ACIC.

from September 1, 1979 to September 1, 1982, and with Transit Casualty Company ("Transit"), from September 1, 1982 and September 1, 1984.

In accordance with this court's holding in open court, OCF's motion is found well taken, with the exception that pages 499, 501, 502, and 503 be stricken from the court's consideration. The Policy Binder will, therefore, be admitted into evidence for the court's consideration. This ruling does not prohibit amendments to the Policy Binder that may be admitted by stipulation of the parties or by further leave of court.

B. KNOWN LOSS DOCTRINE

This matter is before the court on OCF's and Associated's motions regarding the "known loss doctrine." Upon consideration of the pleadings, memoranda of counsel, evidence and applicable law, the court grants OCF's motion and denies Associated's motion.

Associated, in its motion, and ACIC and PNIC, in their brief in opposition, urge the court to adopt the "known loss doctrine" as a defense to coverage. In support of its motion, Associated cites various cases which implemented the doctrines of "known loss," "known risk," and "progressive loss." In its argument, Associated uses these terms synonymously and refers to them collectively as the "known loss doctrine." OCF, on the other hand, argues that the doctrine should not be adopted. OCF reasons that it is not recognized in Ohio's insurance law and it does not afford any greater defense than is already available within the policy. Specifically, the policy provides that losses which are either "expected" or "intended" will not be covered.

In order to determine whether to adopt the doctrine, this court must first determine what the "known loss doctrine" provides. Generally, the "known loss doctrine" is a compilation of law gathered from various jurisdictions. The basic premise of the doctrine is that insurance coverage is only permitted for fortuitous ² or accidental events. Hence, "[t]he concept of insurance is that * * * the A review of some of the jurisdictions that apply the "known loss doctrine" illustrates the broad spectrum of standards applied, when determining whether coverage is prohibited because of a foreseen or known loss. Initially, one analysis sets forth that the "known loss doctrine" can be invoked and coverage prohibited "[i]f the insured knows or has reason to know, when it purchases [insurance], that there is a substantial probability that it will suffer or has already suffered a loss * * *." (Emphasis added.) Outboard Marine Corp.v. Liberty Mut. Ins. Co. (1992), 154 Ill.2d 90, 103, 180 Ill.Dec. 691, 697, 607 N.E.2d 1204, 1210. ⁴ See, also, City of Carter Lake v. Aetna Cas. & Sur. Co. (C.A.8, 1979), 604 F.2d 1052. An alternative analysis of the "known loss doctrine" states that "insurers whose policy terms commence after initial manifestation of the loss are not responsible for any potential claim relating to the previously discovered and manifested loss." (Emphasis added.) Prudential-LMI Commercial Ins. v. Superior Court of San Diego Cty. (1990), 51 Cal.3d 674, 699, 274 Cal.Rptr....