The Sherwin-Williams Co. v. Certain Underwriters at Lloyd's London

• Decision Date: 01 September 2022
• Docket Number: 110187
• Citation: 2022 Ohio 3031
• Parties: THE SHERWIN-WILLIAMS COMPANY, Plaintiff-Appellant/ Cross-Appellee, v. CERTAIN UNDERWRITERS AT LLOYD'S LONDON, ET AL., Defendants-Appellees/ Cross-Appellants.
• Court: Ohio Court of Appeals

2022-Ohio-3031

THE SHERWIN-WILLIAMS COMPANY, Plaintiff-Appellant/ Cross-Appellee, v. CERTAIN UNDERWRITERS AT LLOYD'S LONDON, ET AL., Defendants-Appellees/ Cross-Appellants.

No. 110187

Court of Appeals of Ohio, Eighth District, Cuyahoga

September 1, 2022

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-06-585786

Jones Day, Mark J. Andreini, and John E. Iole, pro hac vice; Hilow & Spellacy and James R. Wooley, for appellant.

Burns White L.L.C., Kevin C. Alexandersen, Daniel J. Michalec, and Brooke L. Hamilton; Charles E. Spevacek, for appellee and cross-appellant Great American Insurance Company.

Cavitch, Familo & Durkin Co., LPA and Gregory E O'Brien Shipman & Goodwin LLP, James P. Ruggeri, Joshua D. Weinberg, and Joshua P. Mayer, pro hac vice, for appellees and cross-appellants First State Insurance Company, Nutmeg Insurance Company, and Twin City Fire Insurance Company.

Isaac Wiles & Burkholder & Teetor, LLC, and Jay B. Eggspuehler; Mendes & Mount, LLP, Matthew B. Anderson, and Daniel J. Wityk, pro hac vice, for appellee and cross-appellant Certain London Market Companies.

Kaufman, Drozdowski & Grendell LLC and Arthur Kaufman; CNA Coverage Litigation Group and Edward J. Tafe, pro hac vice: Dentons U.S. L.L.P., M. Keith Moskowitz, Kristen C. Rodriguez, and Shannon Y. Shin, pro hac vice, for appellees and cross-appellants Columbia Casualty Company, Continental Casualty Company, The Continental Insurance Company.

Marshall, Dennehey, Warner, Coleman & Goggin and David J. Fagnilli; Clyde & Co US, Paul Koepff, pro hac vice, and Ryan Winchester; O'Malveny & Myers and Jonathan Hacker, pro hac vice, for appellees and cross-appellants Century Indemnity Company, Westchester Fire Insurance Company, and Federal Insurance Company.

McCarthy, Lebit, Crystal & Liffman Co., LPA and David A. Schaefer; Zuckerman, Spader LLP, Carl S. Kravitz, Caroline E. Reynolds, and Nicholas M. DiCarlo, pro hac vice; Kohrman, Jackson & Krantz, LLP, and Maribeth Meluch, for appellees and cross-appellants Certain Underwriters at Lloyd's London; World Marine and General Insurance Corporation Ltd.; World Auxiliary Insurance Company Ltd.; The Victory Insurance Company Ltd.; New London Reinsurance Company Ltd.; Scottish Lion Insurance Company Ltd.; Winterthur Swiss Insurance Company; Yasuda Fire & Marine Insurance Company (UK) Ltd.; Yasuda UK; Lamorak Insurance Company; Government Employee Insurance Company; and Berkshire Hathaway Direct Insurance Company.

Roetzel & Andress, LPA, Emily K. Anglewicz, and Bradley

L. Snyder; McCarthy, Lebit, Crystal & Liffman Co., LPA and David A. Schaefer; Zuckerman Spader LLP, Carl S. Kravitz, Caroline E. Reynolds, and Nicholas M. DiCarlo; Walker Wilcox Matousek LLP, Robert P. Conlon, and Alla Cherkassky Galati, for appellee and cross-appellant Westport Insurance Corporation.

Weston | Hurd LLP and Gary W. Johnson; Crowell & Moring LLP and Laura A. Foggan, pro hac vice, for appellees and cross-appellants TIG Insurance Co., North River Insurance Company, Mt. McKinley Insurance Co., and United States Fire Insurance Co., and American Alternative Insurance Corporation.

Aronberg Goldgehn Davis & Garmisa, Lisa J. Brodsky and Mithcell S. Goldgehn, pro hac vice, for appellee and cross-appellant Allstate Insurance Company.

William & Silvaggio and Anna M. Sossa, for appellee and cross-appellant, Employers Mutual Casualty Company.

Roetzel & Andress, LPA, and Ronald B. Lee; Chaffetz Lindsey LLP, Charles J. Scibetta, and Theordore R. DeBonis, pro hac vice, for appellee and cross-appellant American Home Assurance Company, Lexington Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA, and The Insurance Company of the State of Pennsylvania.

JOURNAL ENTRY AND OPINION

MARY J. BOYLE, PRESIDING JUDGE

{¶ 1} The crux of this insurance coverage case is whether The Sherwin-Williams Company's ("Sherwin-Williams") insurers^[1] (collectively "Insurers") will cover Sherwin-Williams' liability arising from litigation in Santa Clara County, California for the abatement of lead paint used in California residences. Sherwin-Williams and two other paint manufacturers, NL Industries, Inc. ("NL") and ConAgra Grocery Products Company ("ConAgra"), were ordered to pay over $400 million into an abatement fund ("the Abatement Fund") to be used by California cities and counties to mitigate the hazards caused by lead paint in homes predating 1951, including identifying lead hazards, removing lead dust, and preventing further deterioration of lead paint.^[2] Cty. of Santa Clara v. Atlantic Richfield Co., 137 Cal.App.4th 292, 40 Cal.Rptr.3d 313 (2006) ("Santa Clara I") and People v. ConAgra Grocery Prods. Co., 17 Cal.App.5th 51, 227 Cal.Rptr.3d 499 (2017) ("Santa Clara II") (collectively the "Santa Clara Action"). The insurance coverage issue has not yet been litigated in Ohio but has been litigated in two other jurisdictions - Certain Underwriters at Lloyd's London v. ConAgra Grocery Prods. Co., LLC, 77 Cal.App. 5th 729, 292 Cal.Rptr.3d 712 (2022) ("the ConAgra Action") in California and Certain Underwriters at Lloyd's London v. NL Industries, Inc., N.Y. App.No. 650103/2014, 2020 N.Y. Misc. LEXIS 10905 (Dec. 29, 2020) ("NL I") and Certain Underwriters at Lloyd's, London v. NL Industries, Inc., 164 N.Y.S.3d 607, 203 A.D.3d 595 (2022) ("NL II ") (collectively the "NL Action") in New York.

{¶ 2} In the case at hand, Sherwin-Williams filed a motion for partial summary judgment against National Union Fire Insurance Company of Pittsburgh, Pa. ("National Union"), asking the court to declare coverage for liability in the Santa Clara Action under a single insurance policy. According to Sherwin-Williams, it chose this single policy to "respond first" under the authority of Goodyear Tire & Rubber Co. v. Aetna Cas. & Sur. Co., 95 Ohio St.3d 512, 2002-Ohio-2842, 769 N.E.2d 835, ¶ 12 (The plaintiff "should be permitted to choose, from the pool of triggered primary policies, a single primary policy against which it desires to make a claim. In the event that this policy does not cover [the plaintiffs] entire claim, then [the plaintiff] may pursue coverage under other primary or excess insurance policies.").

{¶ 3} The Insurers also filed for summary judgment, asking the court to declare that there is no coverage under the multiple policies issued to Sherwin-Williams for liability in the Santa Clara Action. Additionally, the parties filed a joint statement of undisputed facts. On December 4, 2019, the trial court granted summary judgment in favor of the Insurers. We find the decisions in the NL Action more persuasive and conclude that the trial court erred by granting the Insurers' motions for summary judgment. Therefore, we reverse and remand.

I. Relevant Background

A. The Santa Clara Action

1. Santa Clara I

{¶ 4} In March 2000, Santa Clara County brought an action against Sherwin-Williams and other manufacturers and promoters of lead paint, including NL and ConAgra, in Santa Clara I. Multiple California governmental entities joined the lawsuit, and the complaint was amended on several occasions, alleging claims for strict product liability, negligence, and fraud. The plaintiffs also alleged two public nuisance claims (1) on behalf of a class of California municipalities ("the class public nuisance claim") and (2) on behalf of people of the state of California ("the representative public nuisance claim").^[3] The plaintiffs sought damages and abatement of the public nuisance. Eventually, the Santa Clara I Court granted summary judgment for Sherwin-Williams and the other companies that produced lead paint on the majority of the claims and granted the defendants' demurrer as to the two public nuisance claims.^[4] The plaintiffs appealed.

{¶ 5} On appeal, the court affirmed the dismissal of the class public nuisance claim, but reversed the grant of the demurrer as to the representative public nuisance claim. The appellate court ordered the lower court to "(1) vacate its order sustaining the demurrer to the representative public nuisance claim in the third amended complaint and enter a new order overruling the demurrer to that cause of action, and (2) vacate its order granting summary judgment and enter a new order granting summary adjudication on the [unfair business practices] cause of action and denying summary adjudication on the negligence, strict liability and fraud causes of action." Santa Clara I at 333.

{¶ 6} In reinstating the representative public nuisance claim, the Santa Clara I Court differentiated the representative claim from the class claim. The court stated, "[h]ere, the representative cause of action is a public nuisance action brought on behalf of the People seeking abatement. Santa Clara, [San Francisco], and Oakland are not seeking damages for injury to their property or the cost of remediating their property." Id. at 309. The court then distinguished a representative public nuisance claim, which seeks "future abatement," from a products liability claim, which "does not provide an avenue to prevent future harm from a hazardous condition." Id. at 310. The court noted that the actionable conduct for the representative public nuisance claim is "distinct from and far more egregious than simply producing a defective product or failing to warn of a defective product." Id. at 309. The court likened a nuisance claim "to instructing the purchaser to use the product in a hazardous manner." Id.

{¶ 7} In January 2014, after a trial on the sole claim the lower court issued a decision finding Sherwin-Williams and codefendants, ConAgra and NL, jointly and severally liable and ordering them to abate the nuisance. In March 2014, the court amended its decision and issued a judgment requiring...