W. Lyman Case & Co. v. Natl. City Corp.
| Decision Date | 14 August 1996 |
| Docket Number | No. 95-247,95-247 |
| Court | Ohio Supreme Court |
| Parties | W. LYMAN CASE & COMPANY, Appellant, v NATIONAL CITY CORPORATION, Appellee. |
Appellant, W. Lyman Case & Company ("Case"), is an Ohio corporation providing, inter alia, real estate advisory services. Appellee, National City Corporation ("National City"), owned all of the stock in Case until November 15, 1991, when National City sold all of the issued and outstanding shares of Case to W.L. Case Holding Company. The terms of this sale were set forth in a stock purchase agreement.
In Section 8.01 of the stock purchase agreement, National City assumed the following duties:
" * * * [T]o defend, indemnify and hold Buyer, and the Company [Case] after the Closing, and their respective affiliates, officers, directors, shareholders, agents and employees, harmless from and against any and all loss or liability accrued, absolute, contingent or otherwise, in respect of any and all losses, suits, proceedings, demands, judgments, damages, expenses and costs (including reasonable attorney's fees and litigation expenses) (collectively 'Damages') which any of them may suffer or incur by reason of (a) the breach of any of the representations and warranties of Seller contained in this Agreement or the Related Documents, excepting Excluded Claims as defined in Section 8.03 hereof; (b) the breach by Seller of any of the covenants (other than those waived in writing by Buyer) or agreements made by it in this Agreement or the Related Documents; and (c) the conduct of the Business by Seller or any other activity of Seller occurring on or prior to the Closing Date, excepting Excluded Claims."
National City argues that the claims at issue in this case are "Excluded Claims" pursuant to Section 8.03(c) of the agreement. Section 8.03 limits National City's duty to indemnify and reads, in pertinent part:
On May 25, 1993, Dr. George C. Roush and Dr. Thomas W. Roush, on behalf of themselves and the beneficiaries of certain Roush Trusts, instituted a lawsuit in federal district court against Case, as well as a number of other defendants, including National City Bank, Northeast, and the law firm Buckingham, Doolittle & Burroughs Co., L.P.A. The Roush complaint, which sought to recover damages allegedly resulting from the mismanagement of the funds of the Roush Trusts, included numerous allegations against Case.
On May 27, 1993, Case notified, in writing, National City of the Roush complaint. Case requested that National City provide counsel, as well as indemnify and hold Case harmless with respect to the claims in the Roush complaint. On June 8, 1993, National City informed Case that it refused to indemnify or hold Case harmless in the Roush action.
On July 2, 1993, Case filed this declaratory judgment action in the Franklin County Court of Common Pleas. Case seeks a declaration that National City has a duty to defend Case in the Roush litigation. On September 28, 1993, the trial court held a hearing on cross-motions for summary judgment, and granted Case's motion for summary judgment on its claim for declaratory relief. The trial court issued findings of fact and conclusions of law supporting its ruling. Among these were findings that the allegations in the Roush complaint were "potentially or arguably" within National City's duty to defend, and that National City presented no evidence of actual facts which controverted those allegations.
National City appealed to the Franklin County Court of Appeals, which reversed the judgment of the trial court on December 20, 1994. The court of appeals held that because Section 8.03 of the stock purchase agreement excluded indemnification coverage for the allegations in the Roush complaint, any duty of National City to defend Case in the Roush litigation became "insignificant."
The cause is now before this court upon the allowance of a discretionary appeal.
Crabbe, Brown, Jones, Potts & Schmidt, Charles E. Brown, Steven B. Ayers and John P. Kennedy, Columbus, for appellant.
Baker & Hostetler, Paul P. Eyre, Ronald S. Okada, Cleveland, and Thomas L. Long, Columbus, for appellee.
Because the specific terms of the stock purchase agreement impose upon National City a duty to defend Case in the Roush litigation, we reverse the judgment of the court of appeals.
The duty to defend is separate and distinct from the duty to indemnify. In Section 8.01 of the stock purchase agreement, National city agrees " * * * to defend, indemnify and hold [Case] * * * harmless * * * against any and all * * * suits * * *." In contrast, Section 8.03 provides only that "no indemnification" shall be made with respect to "Excluded Claims." Therefore, since the present declaratory action seeks to enforce the duty to defend contained in Section 8.01 of the agreement, the exclusions in Section 8.03(c) are inapplicable, since they only apply to the duty to indemnify.
The court of appeals erred when it concluded that any duty to defend under Section 8.01 of the stock purchase agreement became "insignificant," since indemnification was specifically excluded by Section 8.03(c) for the damages alleged in the Roush complaint. This holding was contrary to the contracted responsibilities explicitly included in the stock purchase agreement. Parties may contract for a duty to defend broader than the duty to indemnify, and the parties to this stock purchase agreement did so. The contractual right to have another party provide a defense in a civil action is by no means "insignificant"--it is a valuable right, and therefore may very well be sought in contract negotiations, even if it does not come with the further right to obtain indemnification.
Since National City's duty to defend applies to "any and all" claims, this court's decision in Willoughby Hills v. Cincinnati Ins. Co. (1984), 9 Ohio St.3d 177, 9 OBR 463, 459 N.E.2d 555, controls. In Willoughby Hills, this court held in the syllabus:
"Where the insurer's duty to defend is not apparent from the pleadings in the action 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...
To continue reading
Request your trial
-
Schuetz v. State Farm Fire & Cas. Co.
...Mut. Ins. Co. v. Scassa, Wayne App. No. 03CA0045, 2004-Ohio-3428, 2004 WL 1463040, at ¶ 12, citing W. Lyman Case & Co. v. Natl. City Corp. (1996), 76 Ohio St.3d 345, 347, 667 N.E.2d 978. "While a duty to defend arises if the allegations in the pleadings state a claim `potentially and arguab......
-
85 Hawai'i 286, Pancakes of Hawaii, Inc. v. Pomare Properties Corp.
...provision broader than duty to indemnify), review denied, 423 Mass. 1108, 671 N.E.2d 951 (1996); W. Lyman Case & Co. v. National City Corp., 76 Ohio St.3d 345, 667 N.E.2d 978 (1996) (using insurance case law to apply broad duty to defend in dispute between corporation and seller of stock); ......
-
Chiquita Brands Int'l, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh PA
...may have a duty to defend even if the insurer is not ultimately liable on the underlying claim. See W. Lyman Case & Co. v. Natl. City Corp., 76 Ohio St.3d 345, 347, 667 N.E.2d 978 (1996) ; Socony–Vacuum Oil Co. v. Continental Cas. Co., 144 Ohio St. 382, 59 N.E.2d 199 (1945), paragraph one o......
-
Amco Ins. Co. v. Lauren-Spencer, Inc.
...Cas. Co. (1945), 144 Ohio St. 382, 29 O.O. 563, 59 N.E.2d 199, paragraph one of the syllabus; W. Lyman Case & Co. v. Natl. City Corp. (1996), 76 Ohio St.3d 345, 347, 667 N.E.2d 978. An insurer has an absolute duty to defend an action when the complaint contains an allegation in any one of i......
-
Chapter 5
...1997); Auriemma v. Biltmore Theatre, L.L.C., 82 A.D.3d 1, 917 N.Y.S.2d 130 (2011). Ohio: W. Lyman Case & Co. v. National City Corp., 667 N.E.2d 978, 979–980 (Ohio 1996). Oregon: Ledford v. Gutoski, 877 P.2d 80 (Or. 1994). Pennsylvania: General Accident Insurance Co. v. Allen, 692 A.2d 1089,......
-
CHAPTER 6 Duty to Defend and Insured Litigation
...1997); Auriemma v. Biltmore Theatre, L.L.C., 82 A.D.3d 1, 917 N.Y.S.2d 130 (2011). Ohio: W. Lyman Case & Co. v. National City Corp., 667 N.E.2d 978, 979–980 (Ohio 1996). Oregon: Ledford v. Gutoski, 877 P.2d 80 (Or. 1994). Pennsylvania: General Accident Insurance Co. v. Allen, 692 A.2d 1089,......