William Powell Co. v. Onebeacon Ins. Co.

• Decision Date: 18 November 2020
• Docket Number: NOS. C-190199,C-190212,S. C-190199
• Citation: 2020 Ohio 5325,162 N.E.3d 927
• Parties: The WILLIAM POWELL COMPANY, Plaintiff-Appellant/Cross-Appellee, v. ONEBEACON INSURANCE COMPANY, Defendant-Appellee/Cross-Appellant, and Federal Insurance Company, Defendant-Intervenor-Appellee.
• Court: Ohio Court of Appeals

162 N.E.3d 927

2020 Ohio 5325

The WILLIAM POWELL COMPANY, Plaintiff-Appellant/Cross-Appellee,

v. ONEBEACON INSURANCE COMPANY, Defendant-Appellee/Cross-Appellant,andFederal Insurance Company, Defendant-Intervenor-Appellee.

NOS. C-190199

C-190212

Court of Appeals of Ohio, First District, Hamilton County.

Date of Judgment Entry on Appeal: November 18, 2020

Vorys, Sater, Seymour, and Pease LLP, Daniel J. Buckley and Joseph M. Brunner, Cincinnati, for Plaintiff-Appellant/Cross-Appellee.

Collins, Roche, Utley, and Garner, LLC, Richard M. Garner and Sunny L. Horacek, Dublin, for Defendant-Appellee/Cross-Appellant.

Seeley, Savidge, Ebert and Gourash Co., LPA, Daniel F. Gourash, and Robert D. Anderle, Westlake, for Defendant-Intervenor-Appellee.

OPINION.

Zayas, Judge.

{¶1} Having vacated the previously issued opinion in this case, William Powell Co. v. OneBeacon Ins. Co. , 1st Dist. Hamilton No. C-190199, 2020-Ohio-3270, 2020 WL 3076571, we issue the following opinion upon motion for reconsideration.

{¶2} This is another appeal in a years-long insurance-coverage dispute involving asbestos-related liabilities. The insured, plaintiff-appellant/cross-appellee The William Powell Company ("Powell"), appeals the portions of the trial court's judgment favorable to the insurers, defendant-appellee/cross-appellant OneBeacon Insurance Company ("OneBeacon") and defendant-intervenor-appellee Federal Insurance Company ("Federal").

{¶3} The threshold issue before us is whether excess-liability insurance policies (hereinafter, "excess policies") issued by OneBeacon and Federal to cover periods between 1969 and 1977 support a vertical-exhaustion or a horizontal-exhaustion method of insurance coverage. "Horizontal exhaustion reflects the idea that all triggered primary policies must be exhausted before any excess policy will be triggered. Vertical exhaustion, on the other hand, means that, based on the policy language, an excess policy is considered excess only to the primary policy directly below it." Viking Pump, Inc. v. Century Indemn. Co. , Del.Super. No. 10C-06-141 FSS CCLD, 2014 WL 1305003, *6 (Feb. 28, 2014). Following a three-week bench trial, the trial court concluded that horizontal exhaustion applies and ruled against Powell. We disagree and reverse the trial court's judgment.

I. Background and Procedural History

{¶4} Powell is a manufacturer of industrial valves based in Cincinnati, Ohio. Some valves manufactured before 1987 included one or more components made of asbestos. As a result, Powell began receiving bodily-injury claims from plaintiffs all over the country related to asbestos exposure involving its products. Confronted with thousands of claims, Powell sought defense and indemnification under its various insurance policies.

{¶5} Powell had purchased primary and excess comprehensive general-liability insurance to cover its operations. "Primary insurance refers to the first layer of coverage, whereby liability attaches immediately upon the happening of an occurrence that gives rise to liability. Excess insurance, by contrast, refers to indemnity coverage that attaches upon the exhaustion of underlying insurance coverage for a claim." (Internal citations and quotations omitted.) Montrose Chem. Corp. v. Superior Court of Los Angeles Cty. , 9 Cal.5th 215, 260 Cal.Rptr.3d 822, 460 P.3d 1201 (2020). An excess insurer's coverage obligation typically begins once a certain level of loss or liability is reached, which is referred to as the "attachment point" of the excess policy. Id.

{¶6} This appeal concerns policies that were written by a predecessor to OneBeacon and by Federal. OneBeacon's policies consist of ten different primary-liability insurance policies and three excess policies covering various periods from 1969 to 1976 (policies XC5424, XC6867, and XC10362). Federal's policy consists of one excess policy covering from 1976 to 1977 (policy 7932-95-55).

{¶7} Powell's litigation against OneBeacon originally began in 2011. After years of working to resolve the mounting asbestos-related claims, Powell and OneBeacon reached an impasse over the interpretation of available insurance coverage. Powell filed a complaint in which it sought a declaratory judgment of its rights under the OneBeacon policies. OneBeacon filed a counterclaim in which it also asked the court to declare the parties' rights under the policies at issue. Both parties subsequently moved for summary judgment. The trial court granted Powell's motion for summary judgment in part, denied OneBeacon's motion, and left undecided an issue regarding the allocation of losses among the various insurance policies. OneBeacon appealed.

{¶8} Because the trial court left the allocation issue undecided, we dismissed the appeal for lack of a final appealable order. See William Powell Co. v. OneBeacon Ins. Co. , 1st Dist. Hamilton No. C-130681, 2014-Ohio-3528, 2014 WL 4057432. After this dismissal, the trial court dismissed Powell's claims relating to the allocation issue, in addition to a claim involving excess-liability insurance. OneBeacon had sought a declaratory judgment that its excess policies had not been triggered because Powell had other "collectible and underlying insurance," relying on a clause in its insurance policies. Powell had sought a declaratory judgment that in the event the underlying policies were triggered, OneBeacon was required to pay all of the defense costs and settlement costs under its excess policies under Ohio law. The trial court concluded that it lacked subject-matter jurisdiction because these issues were not ripe for review. The trial court granted Powell's motion for summary judgment for the remaining claims and dismissed OneBeacon's claims. OneBeacon appealed.

{¶9} In William Powell Co. v. OneBeacon Ins. Co. , 2016-Ohio-8124, 75 N.E.3d 909 (1st Dist.) (" Powell I "), OneBeacon challenged a number of the trial court's decisions. Specifically, it challenged the determination that Powell's asbestos-exposure liability arose from multiple occurrences, that the aggregate limits of the insurance policies should apply annually, that the aggregate limits of two of the policies had been increased from their initial amounts, and that the issue of whether the excess policies had been triggered was not ripe for review. It also challenged an award of attorney fees on a motion to compel. We affirmed the trial court's judgment in all but one respect. We determined that the trial court erred in finding that two "stub period" policies applied annually when each policy should have received a single aggregate limit. See Powell I at ¶ 40-42.

{¶10} We upheld the trial court's determination that Powell's liability arose from multiple occurrences, which was detrimental from OneBeacon's perspective as the insurance policies it issued to Powell were occurrence-based policies. "[T]hat is, they provided coverage for any covered incident that ‘occurs’ during the policy period, regardless of when a claim is filed." Powell I at ¶ 6. OneBeacon argued that Powell's liability stemmed from its singular decision to manufacture and sell asbestos-containing products without providing adequate warnings, while Powell argued that each individual claimant's exposure to asbestos constituted an occurrence. Relying on earlier asbestos-exposure caselaw, this court held that the "triggering-event" theory and the policy language supported Powell's argument. See Powell I at ¶ 17-25, citing Cincinnati Ins. Co. v. ACE INA Holdings, Inc. , 175 Ohio App.3d 266, 2007-Ohio-5576, 886 N.E.2d 876 (1st Dist.). Accordingly, the trigger for liability for bodily-injury claims is the exposure to asbestos, rather than a more remote cause, such as the decision to use asbestos or the failure to warn. See Powell I at ¶ 21, citing Babcock & Wilcox Co. v. Arkwright-Boston Mfg. Mut. Ins. Co. , 53 F.3d 762 (6th Cir. 1995).

{¶11} We also upheld the trial court's determination that the question of whether OneBeacon's excess policies had been triggered was not yet ripe. We found that OneBeacon's request for declaratory relief—that its defense obligations to Powell under its excess policies are not triggered if there is other triggered primary insurance—remained hypothetical without a determination as to the existence of other primary insurance. See Powell I at ¶ 47 ("To be ripe, a declaratory judgment cannot be dependent on the occurrence or nonoccurrence of future events.").

{¶12} OneBeacon petitioned the Ohio Supreme Court for review of Powell I , but the court declined. See William Powell Co. v. OneBeacon Ins. Co. , 151 Ohio St.3d 1426, 2017-Ohio-8371, 84 N.E.3d 1063.

{¶13} The case returned to the trial court yet again, where Powell filed its second amended complaint. On December 8, 2017, Powell added two claims for breach of contract against OneBeacon, alleging (1) that OneBeacon improperly allocated claim payments and refused to honor Powell's allocation selections and (2) that OneBeacon failed to pay 100 percent of the defense and indemnity costs under its excess policies. This effectively ripened the claims that were previously dismissed by the trial court in Powell I . OneBeacon filed an amended counterclaim, cross-claim and third-party complaint on February 22, 2018, in which it brought claims against Powell regarding allocation, exclusions in its excess policies, and contribution. OneBeacon added other insurers that had issued policies to Powell as third-party defendants in order to bring contribution claims against them. Federal entered the case on March 19, 2018, by filing a counterclaim and a cross-claim, in which it alleged contribution claims against Powell and the third-party defendants named by OneBeacon.

{¶14} Powell, OneBeacon and Federal ultimately moved for summary judgment. The trial court denied these motions, finding that factual disputes precluded summary judgment. The trial court granted summary-judgment motions filed by certain third-party defendants that in the interim had reached a settlement...