[Cite as Blue Water Condominium Assn., Inc. v. Motorists Mut. Ins. Co., 2025-Ohio-772.]
IN THE COURT OF APPEALS OF OHIO SIXTH APPELLATE DISTRICT SANDUSKY COUNTY
Blue Water Condominium Association, Inc., et al. Court of Appeals Nos. S-24-009 S-24-010 Appellants Trial Court No. 23 CV 249
v.
Motorists Mutual Insurance Company, et al. DECISION AND JUDGMENT
Appellee Decided: March 7, 2025
*****
Steven M. Ott and Ari M. Goldstein, for appellant, Blue Water Condominium Association, Inc.
Dennis R. Fogarty, Matthew P. Baringer, Ryan J. Kun, for appellant, Zimmerman Remodeling and Construction, LLC
Jennifer K. Norstrom and Jacob A. Lentsch, for appellee
***** MAYLE, J.
{¶ 1} In this consolidated appeal, plaintiff-appellant, Blue Water Condominium
Association, Inc., and defendant-appellant, Zimmerman Remodeling and Construction,
LLC, appeal the March 20, 2024 judgment of the Sandusky Court of Common Pleas, granting summary judgment in favor of defendant-appellee, Motorists Mutual Insurance
Company. For the following reasons, we affirm.
I. Background
{¶ 2} According to the amended complaint filed by Blue Water Condominium
Association, Blue Water hired Zimmerman Remodeling and Construction, LLC “to
perform weatherization activities” on the siding of 18 of its buildings. Zimmerman
agreed to remove the existing siding and install CertainTeed WeatherBoard, a concrete
fiber lap board siding. The project was completed in July of 2011. At some point after
the project was completed, Blue Water identified what it claims was defective
workmanship relating to the siding installation, including “but not limited to” the
“improper storage of materials, improper attachment of cement fiber lap board siding,
improper nailing of the concrete fiber lap siding, incorrect lap board spacing, incorrect
nails used, improper caulking, improper or nonexistent flashing around windows, and
failure to cut holes in the building wrap for vents.”
{¶ 3} On August 20, 2008, in contemplation of the work that was going to be
performed, Blue Water and Zimmerman agreed that Zimmerman would purchase a
commercial general liability insurance policy naming Blue Water “an additional insured
for claims caused in whole or in part by [Zimmerman’s] acts or omissions during
[Zimmerman’s] completed operations.” Zimmerman procured a CGL policy with
Motorists Mutual Insurance Company. According to Blue Water’s amended complaint,
coverage is available under that Motorists policy for the damages it allegedly sustained.
2. Its amended complaint seeks a declaration to that effect. The amended complaint also
alleges claims for damages against Zimmerman under theories of both negligence and
breach of contract.
{¶ 4} Blue Water and Motorists filed cross-motions for summary judgment. As
set forth in its motion and in its response to Motorists’ motion, Blue Water claimed that
by agreement with Zimmerman, it was named an additional insured under the CGL
policy purchased by Zimmerman. It explained that Zimmerman’s faulty installation of
siding repeatedly exposed the condominiums to the harsh winds and rain of the Lake Erie
Shore and caused water intrusion that resulted in damage to the condominiums. Blue
Water acknowledged that Zimmerman’s work itself was not an accident and, therefore,
not an “occurrence” covered by the CGL policy. However, it insisted that the water
intrusion that resulted from Zimmerman’s faulty workmanship was accidental and gave
rise to consequential risks and derivative damages that are covered under the policy as an
occurrence. It maintained that water caused its damages—not the improper siding—
however, it acknowledged that proper installation would have prevented the collection of
rainwater. Blue Water denied that any exclusion applied to preclude coverage.
Zimmerman also argued in favor of coverage, and its position was largely consistent with
Blue Water’s.
{¶ 5} Motorists argued that Blue Water’s complaint alleged that Zimmerman’s
workmanship was faulty, and under the policy, claims for faulty workmanship are not
claims for “property damage” caused by an “occurrence.” It claimed that because
3. coverage under the policy is triggered by an “occurrence,” Blue Water cannot recover
under the policy. It maintained that Blue Water’s motion for summary judgment was
devoid of any allegation or evidence of consequential damages. Motorists denied that
Blue Water was an additional insured for purposes of making a first-party property
damage claim and emphasized that additional insured status applied only for liability
alleged by third parties. It argued alternatively that even if additional insured status
applied here, Blue Water still could not recover under the policy because of applicable
policy exclusions. Finally, Motorists insisted that it owed no duty under the policy to
indemnify or defend Zimmerman.
{¶ 6} In its reply in support of its motion for summary judgment, Blue Water
insisted that it presented evidence of its damages in discovery. In its reply, Motorists
reiterated that Blue Water had not provided actual, admissible evidence of its damages.
{¶ 7} The trial court concluded that this case is controlled by Westfield Ins. Co. v.
Custom Agri Sys., 2012-Ohio-4712, where the court held that claims of defective
construction or workmanship brought by a property owner are not claims for property
damage caused by an occurrence under a commercial general liability policy. It found
that “[t]here is nothing compelling argued by Plaintiff or Defendant Zimmerman in this
case that differentiates the issues here.” In a subsequent judgment, it concluded that
Motorists owed no duty to defend or indemnify Zimmerman under its commercial
insurance policy No. 33.276956-10E for the claims asserted by Blue Water.
4. {¶ 8} Blue Water and Zimmerman appealed. Blue Water assigns the following
errors for our review:
I. The Trial Court erred by failing to consider Blue Water’s consequential damages resulting from Zimmerman-Remodeling and Construction, LLC’s (hereinafter Zimmerman”) faulty workmanship an occurrence under the commercial general liability policy issued by Motorists.
II. The Trial Court erred when it held that a claim of defective workmanship was not an occurrence.
{¶ 9} Zimmerman assigns the following errors for our review:
(1) The trial court erred by granting Appellee’s Motion for Summary Judgment because Appellant Blue Water is an additional insured under Motorists’ policy with Zimmerman.
(2) The trial court erred by granting Appellee’s Motion for Summary Judgment because Motorists has a duty to defend Zimmerman.
II. Law and Analysis
{¶ 10} In its assignment of errors, Blue Water argues that in granting summary
judgment to Motorists and against Blue Water, the trial court erred in failing to consider
its claim that it was seeking insurance coverage for consequential damages that resulted
from Zimmerman’s faulty workmanship and by holding instead that defective
workmanship was not an “occurrence” under the policy. Zimmerman argues that the trial
court erred in granting summary judgment to Motorists because Blue Water was an
additional insured under the policy. It further claims that the trial court erred in finding
that Motorists owed no duty to defend it.
5. {¶ 11} Appellate review of a summary judgment is de novo, Grafton v. Ohio
Edison Co., 77 Ohio St.3d 102, 105 (1996), employing the same standard as trial courts.
Lorain Natl. Bank v. Saratoga Apts., 61 Ohio App.3d 127, 129 (9th Dist. 1989). The
motion may be granted only when it is demonstrated:
(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. Harless v. Willis Day Warehousing Co., 54 Ohio St.2d 64, 67 (1978), Civ.R. 56(C).
{¶ 12} When seeking summary judgment, a party must specifically delineate the
basis upon which the motion is brought, Mitseff v. Wheeler, 38 Ohio St.3d 112 (1988),
syllabus, and identify those portions of the record that demonstrate the absence of a
genuine issue of material fact. Dresher v. Burt, 75 Ohio St.3d 280, 293 (1996). When a
properly supported motion for summary judgment is made, an adverse party may not rest
on mere allegations or denials in the pleadings, but must respond with specific facts
showing that there is a genuine issue of material fact. Civ.R. 56(E); Riley v.
Montgomery, 11 Ohio St.3d 75, 79 (1984). A “material” fact is one which would affect
the outcome of the suit under the applicable substantive law. Russell v. Interim
Personnel, Inc., 135 Ohio App.3d 301, 304 (6th Dist. 1999); Needham v. Provident Bank,
110 Ohio App.3d 817, 826 (8th Dist. 1996), citing Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986).
{¶ 13} This matter involves the interpretation of an insurance policy. “An
insurance policy is a contract between the insurer and the insured.” Ward v. United
6. Foundries, Inc., 2011-Ohio-3176, ¶ 18, citing Pilkington N. Am., Inc. v. Travelers Cas. &
Sur. Co., 2006-Ohio-6551, ¶ 23. “Generally, courts interpret insurance policies in
accordance with the same rules applied in interpreting other types of contracts.” G & K
Mgt. Servs., Inc. v. Owners Ins. Co., 2014-Ohio-5497, ¶ 19 (5th Dist.), citing Hybud
Equip. Corp. v. Sphere Drake Ins. Co., Ltd., 64 Ohio St.3d 657, 665 (1992). We must
give effect to the parties’ intent as reflected by the language used, considering the
contract as a whole. Motorists Mut. Ins. Co. v. Ironics, Inc., 2022-Ohio-841, ¶ 8. “We
apply the plain meaning of the policy’s language ‘unless another meaning is clearly
apparent from the contents of the policy.’” Id., quoting Westfield Ins. Co. v. Galatis,
2003-Ohio-5849, ¶ 11, citing Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241
(1978), paragraph two of the syllabus. “‘[W]here the terms in an existing contract are
clear and unambiguous, this court cannot in effect create a new contract by finding an
intent not expressed in the clear language employed by the parties.’” Ironics at ¶ 14,
quoting Alexander at 246.
{¶ 14} The party seeking coverage bears the burden of showing both loss and
coverage under a contract of insurance. Sharonville v. Am. Emps. Ins. Co., 2006-Ohio-
2180, ¶ 19. The insurer bears the burden of proving that an exclusion applies. Neal-
Pettit v. Lahman, 2010-Ohio-1829, ¶ 19. Whether a claim is covered under the terms of
an insurance policy is a question of law for the court. G & K Mgt. Servs. at ¶ 19 (5th
Dist.).
7. {¶ 15} With these principles in mind, we address Blue Water and Zimmerman’s
assignments of error, but we do so out of order.
A. Defective Workmanship
{¶ 16} In its second assignment of error, Blue Water argues that damage caused by
defective workmanship is an “occurrence” under the CGL policy. It maintains that as
recognized by the dissent in Westfield Ins. Co., 2012-Ohio-4712, ¶ 31 (Pfeiffer, J.,
dissenting), “a deliberate act, performed negligently, is an accident if the effect is not the
intended or expected result; that is, the result would have been different had the
deliberate act been performed correctly.” Blue Water claims that faulty workmanship
falls directly into the category of a deliberate act performed negligently. And here, it
insists, no one intended or expected that Zimmerman would perform subpar work that
would allow water to intrude into the buildings. Blue Water points to cases from Illinois,
Indiana, and the Tenth Circuit that are consistent with its position, but acknowledges that
those cases are not binding here. It claims, however, that if the policy is interpreted in a
manner consistent with Motorists’ position, the exclusions that address business risks
would be rendered superfluous.
{¶ 17} Motorists responds that the Ohio Supreme Court determined in Westfield
Ins. Co. v. Custom Agri Sys., 2012-Ohio-4712, ¶ 19, that a property owner’s claims for
defective construction or faulty workmanship are not claims for “property damage”
caused by an “occurrence.” It maintains that there is coverage under the policy for
property damage only when the property damage is caused by an “occurrence.”
8. {¶ 18} Motorists explains that under the policy, an “occurrence” is “an accident,
including continuous or repeated exposure to substantially the same general harmful
conditions.” It contends that the gravamen of Blue Water’s amended complaint is that
Zimmerman’s faulty workmanship caused damage to Blue Water’s buildings. Motorists
points to the allegations in the amended complaint, which identified several examples of
“Zimmerman’s defective workmanship,” and stated claims against Zimmerman for (1)
failure to perform in a workmanlike manner; (2) breach of contract for failing to properly
install the siding; (3) negligence arising out of Zimmerman’s failure to use proper
construction techniques and failure to provide labor, materials, and related services free
of material defects in a workmanlike manner”; and (4) negligence per se for failing to
secure the siding with the proper nails. It insists that Blue Water’s claims are for faulty
workmanship, and are, therefore, not an “occurrence” under the policy.
{¶ 19} The CGL policy contains the following terms relevant to the claims here:
SECTION I - COVERAGES
COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of . . . “property damage” to which this insurance applies . . . . We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “property damage” to which this insurance does not apply.
...
9. b. This insurance applies to . . . “property damage” only if
(1) The . . . “property damage” is caused by an “occurrence” that takes place in the “coverage territory”;
(2) The . . . “property damage” occurs during the policy period.
SECTION V — DEFINITIONS
13. “Occurrence” means an accident, including continuous or repeated exposure to substantially the same general harmful conditions. ...
17. “Property damage” means
a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or
b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the “occurrence” that caused it.
{¶ 20} In Westfield, 2012-Ohio-4712, the Ohio Supreme Court interpreted a CGL
policy with terms identical to the policy at issue and considered whether a claim of
defective construction or workmanship brought by a property owner is a claim for
“property damage” caused by an “occurrence.” The Court observed that CGL policies
“do not insure an insured’s work itself.” Id. at ¶ 10. It recognized that the definition of
an “occurrence” reflects principles of fortuity and found that faulty workmanship claims
generally are not covered because they are not fortuitous. It concluded that the policy did
not provide coverage for a claim of defective construction or workmanship. The Court
reaffirmed Westfield in Ohio N. Univ. v. Charles Constr. Services, Inc., 2018-Ohio-4057,
10. ¶ 35, and clarified that property damage caused by a subcontractor’s faulty work is also
“not fortuitous and does not meet the definition of ‘occurrence’ under a CGL policy.”
{¶ 21} Because Westfield is controlling and is directly on point concerning
coverage for claims of defective construction or workmanship, we conclude that the
Motorists CGL policy did not provide coverage for Zimmerman’s faulty workmanship
because it was not an “occurrence” under the policy. Although Blue Water has pointed to
cases with contrary holdings, those cases are from other jurisdictions. We are obligated
to follow the Ohio Supreme Court’s holding in Westfield. Because Blue Water cannot
show that there is coverage under the policy for faulty workmanship, we need not
procced to interpret the policy’s exclusions.
{¶ 22} We find Blue Water’s second assignment of error not well-taken.
B. Consequential Damages
{¶ 23} In its first assignment of error, Blue Water argues that Zimmerman’s faulty
workmanship caused consequential damages that are covered as an “occurrence” under
the CGL policy. It maintains that the faulty workmanship performed by Zimmerman left
its buildings continuously exposed to harsh wind and rain, allowing water to collect in the
exterior and interior walls of the buildings, directly causing damage to its property. Blue
Water insists that Zimmerman’s faulty workmanship “created the opportunity for this
accident to occur” and caused “derivative damages” that are covered under the CGL
policy. It maintains that the trial court focused only on the faulty workmanship and
11. ignored the accidental consequences of that faulty workmanship, which it claims
constituted an “occurrence” under the policy.
{¶ 24} Motorists does not dispute that under some circumstances, consequential
damages may be covered by the CGL policy. It agrees that while a CGL policy will not
provide coverage if faulty workmanship is the accident, it may provide coverage if faulty
workmanship causes the accident and there is collateral damage to property other than
the insured’s work product. It claims, however, that Blue Water did not plead a claim for
consequential damages. Rather, it claimed for the first time in its motion for partial
summary judgment that “the improper installation of the siding is an occurrence which
caused the condos to have continuous and repeated exposure to the harsh winds and rain
of Lake Erie Shore” and “the water intrusion was accidental and led to damages
described in the Complaint.” Motorists insists that Blue Water offered no affirmative
evidence to support its argument about water intrusion—it cited no expert report, no
deposition testimony, and no interrogatory answers, and it provided no photos to support
its claim that the buildings were damaged by water intrusion.
{¶ 25} First, we agree with Motorists that the gravamen of Blue Water’s amended
complaint is that Zimmerman’s faulty workmanship itself produced the damage to Blue
Water’s buildings. Blue Water did not specifically plead a claim for consequential
damages or describe damages other than the faulty workmanship itself. It alleged that
Zimmerman improperly installed the siding, breached implied warranties and
representations by failing to employ proper construction techniques, breached the parties’
12. contract by failing to properly install the siding, performed work that fell below the
requisite standard of care, and failed to properly install the siding by using the wrong
nails. Its only reference to consequential damages is in paragraph 26 of the amended
complaint, where it alleged that “the Motorists Policy affords comprehensive general
liability for claims or suits arising of [sic] out of their insureds’ and additional insureds’
operations, the operations of their employees and agents, and consequential damages
relating to their work at the Project site.” Even then, it did not claim consequential
damages or describe damages that may be deemed consequential. It stated merely that
the defective workmanship in installing the siding caused the siding to fail at an
accelerated rate.
{¶ 26} Blue Water cites JTO v. State Auto. Mut. Ins. Co., 2011-Ohio-1452 (11th
Dist.) as support for its position that water intrusion caused by defective workmanship is
an “occurrence” under a CGL policy. We do not disagree with this proposition. JTO, in
fact, held that “[u]nder an appropriate set of facts, the water infiltration can be an
“occurrence[.]” Id. at ¶ 35. But JTO is distinguishable for at least two reasons. First, the
complaint in JTO specifically alleged that “shortly after opening, the hotel ‘began to
experience water infiltration in numerous places throughout the structure, including in
entrance ways and guest rooms, resulting in damages to walls and ceilings.’” Id. at ¶ 5.
It sought damages in the amount of $609,000—the cost of repairing the damage caused
by the water infiltration. Second, procedurally, it was a 12(C) motion testing the legal
claims—not a motion for summary judgment. Id.
13. {¶ 27} Blue Water’s complaint lacks allegations describing consequential
damages. The summary-judgment briefing was the first time it described water
infiltration resulting from Zimmerman’s work.
{¶ 28} Ohio requires only notice pleading. Maternal Grandmother v. Hamilton
Cnty. Dept. of Job & Family Services, 2021-Ohio-4096, ¶ 10, citing Wells Fargo Bank
N.A. v. Horn, 2015-Ohio-1484, ¶ 13. This means that with few exceptions, a party is not
expected to plead a claim with particularity. Id., citing Civ.R. 8(A). But the insurer’s
“duty to defend is determined by the scope of the allegations in the complaint.” Ward,
2011-Ohio-3176, at ¶ 19. “If the allegations state a claim that potentially or arguably
falls within the liability insurance coverage, then the insurer must defend the insured in
the action.” Id. As such, the initial hurdle Blue Water faced here was to demonstrate to
Motorists that it owed indemnity and defense obligations by pleading a claim that would
trigger those obligations. While perhaps not required under Ohio’s civil rules, from a
practical perspective, pleading with additional specificity may have benefited Blue Water
here.
{¶ 29} But even ignoring the fact that consequential damages were not specifically
pled or described in the complaint, to defeat Motorists’ motion for summary judgment or
to prevail on its own summary-judgment motion Blue Water needed to put forth
summary-judgment-quality evidence to show that its claims fall within the policy’s
coverage.
14. {¶ 30} “When a motion for summary judgment is made and supported as provided
in this rule, an adverse party may not rest upon the mere allegations or denials of the
party’s pleadings, but the party’s response, by affidavit or as otherwise provided in this
rule, must set forth specific facts showing that there is a genuine issue for trial.” Civ.R.
56(E). Moreover, a plaintiff cannot survive summary judgment by relying on the bare
allegations in its pleadings and responsive memoranda. Knoke v. State Aerial Farm
Statistics, Inc, 1983 WL 6949, *2 (6th Dist. Sept. 23, 1983).
{¶ 31} Here, Blue Water, the party advocating for coverage (or Zimmerman, the
insured) bore the burden of showing that there was insurance coverage applicable to Blue
Water’s claims. Ironics, Inc., 2022-Ohio-841, at ¶ 14. Once Motorists challenged
coverage with support from the insurance contract, reference to the language of the
amended complaint, and citation to binding case law, Blue Water could not simply rely
on the arguments of counsel to show that in addition to the faulty workmanship itself, it
suffered consequential damages (specifically, water damage) caused by the faulty
workmanship—it was required to present evidence. The only evidence attached to Blue
Water’s summary-judgment briefing was the contract between Blue Water and
Zimmerman and the insurance policy. Blue Water referenced an expert report in its
briefing, but we have reviewed the record carefully and determined that the expert report
(properly authenticated or otherwise) is not contained in the record. Nor is any other
Civ.R. 56(C) evidence, such as affidavits, deposition transcripts, or stipulations. As such,
Blue Water failed to set forth specific facts—supported by summary-judgment-quality
15. evidence—showing that there was a genuine issue for trial that coverage was available
under the CGL policy. And because Blue Water failed to show that coverage was
available, we need not consider whether any exclusion applied to preclude coverage.
{¶ 32} We find Blue Water’s first assignment of error not well-taken.
C. Additional Insured
{¶ 33} In its first assignment of error, Zimmerman argues that Blue Water is an
“additional insured” under the CGL policy.1 The crux of Zimmerman’s argument is that
limiting coverage to Blue Water only for claims of vicarious liability would destroy the
purpose of the agreement between Blue Water and Zimmerman. The purpose of the
agreement, Zimmerman explains, was to provide additional coverage to Blue Water.
Zimmerman disputes Motorists’ contention that Blue Water’s “additional insured” status
“does not apply to property damage occurring after all work has been performed.”
Zimmerman also contends that Blue Water’s damages do not constitute “property
damage” as defined in the policy.
{¶ 34} Motorists responds that its coverage obligation to additional insureds is
limited by the language in the insurance policy issued to Zimmerman. It maintains that
the clear and unambiguous policy language states that additional insured status is limited
to claims asserted by third parties under the CGL coverage—Blue Water is not a first-
1 Although not assigned as a separate error, Zimmerman also argues that the trial court erred in finding that there was no “occurrence” that triggered coverage here. We addressed this issue in discussing Blue Water’s assignments of error and will not repeat it here.
16. party insured for property damage covered under the policy. Motorists insists that the
“additional insured” provision protects the additional party from liability for the acts or
omissions of the named insured. In other words, the additional insured is protected where
it may be secondarily liable for the named insured’s conduct. Here, Motorists argues,
Blue Water’s claim for coverage as an additional insured does not arise from a claim that
it is liable for property damage arising from the acts or omissions of Zimmerman,
therefore, Blue Water is not entitled to coverage as an additional insured for the claims
asserted in this litigation.
{¶ 35} Coverage for an “additional insured” is described in the following
provision of the CGL policy:
IX. ADDITIONAL INSURED — AUTOMATIC STATUS BY CONTRACT, AGREEMENT OR PERMIT
This coverage modifies insurance provided under the Commercial General Liability Form.
A. Who is an insured (Section II) is amended to include as an additional insured any person . . . when you and such person have agreed, because of a written contract, written agreement, or permit that such person . . . be added as an additional insured on your policy. Such person . . . is an additional insured only with respect to liability for “bodily injury,” “property damage” or “personal and advertising injury” caused, in whole or in part, by:
1. Your acts or omissions or the acts or omissions of those acting on your behalf in the performance of your ongoing operations; or
2. In connection with your ownership, maintenance or use of premises owned by you.
17. (Emphasis added.) As used in the policy, “your” refers to the named insured—
Zimmerman.
{¶ 36} The policy further sets forth exclusions with respect to the insurance
afforded to additional insureds:
B. This insurance does not apply to:
... a. “[P]roperty damage” occurring after:
(1) All work, including materials, parts, or equipment furnished in connection with such work, on the project (other than service, maintenance, or repairs) to be performed by or on behalf of the additional insured(s) at the location of the covered operations has been completed; or
(2) That portion of “your work” from which the . . . damage results has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project.
(Emphasis added.)
{¶ 37} First, in an effort to avoid the exclusion for work that has been completed,
Zimmerman claims that Blue Water’s damages do not constitute “property damage.”
Zimmerman maintains that “property damage” is defined in the CGL policy under
Exclusion J, at page 4, paragraph (j) to mean “[t]hat particular part of real property on
which you or any contractors or subcontractors working directly or indirectly on your
behalf are performing operations, if the ‘property damage’ arises out of those operations.”
It argues that Blue Water’s damages are not “property damage” because the damage to its
18. property “occurred over the years from water damage from allegedly faulty installation of
siding, not damage to the actual siding itself.”
{¶ 38} Exclusion J does not define “property damage.” “Property damage” is
defined in the section of the CGL policy entitled “DEFINITIONS” (pages 15-16,
paragraph 17 of the policy, recited above in our discussion of Blue Water’s second
assignment of error). What Zimmerman cites to is an exclusion in the policy for certain
kinds of property damage. We reject Zimmerman’s assertion that the damages alleged by
Blue Water are not “property damage” for purposes of the exclusion contained in
IX(B)(2)(c)(1).
{¶ 39} Second, in an effort to overcome the fact that IX(A) provides coverage only
for liability claims brought against the “additional insured,” Zimmerman claims that
Motorists’ application of this provision destroys the purpose of the agreement between
Blue Water and Zimmerman.
{¶ 40} “An additional insured endorsement in a policy is construed as part of the
policy” under the usual principles of contract interpretation. Lexington Ins. Co. v.
DunnWell, LLC, 2016-Ohio-5311, ¶ 42 (9th Dist.). Ohio courts have described an
additional-insured provision as one “intended to protect the additional party from liability
for the acts or omissions of the primary insured.” Sprouse v. Kall, 2004-Ohio-353, ¶ 16
(8th Dist.).
{¶ 41} In Davis v. LTV Steel Co., 128 Ohio App.3d 733, 737 (11th Dist.1998), for
instance, LTV was named an “additional insured” under a policy maintained by Shafer.
19. Two Shafer employees were injured while working at LTV’s facility, and they sued LTV.
LTV maintained that as an additional insured under Shafer’s policy, that policy provided
coverage for the employees’ claims. The Eleventh District disagreed. It explained that
“[t]he plain language of the endorsement extended coverage to LTV only with respect to
liability arising out of Shafer’s operations or premises owned by or rented to Shafer.” Id.
It found that “[t]he phrase ‘arising out of your operations’ in the endorsement was
intended to protect LTV from any liability for the negligence of Shafer’s employees who
would be performing the industrial cleaning at the LTV plant.” Id. “In other words, the
purpose of the additional-insured endorsement was to protect the additional insured (i.e.,
LTV) from being vicariously liable for the tortious acts of the named insured (i.e.,
Shafer).” Id.
{¶ 42} Here, notwithstanding the agreement between Blue Water and Zimmerman,
the policy language and Ohio case law make clear that the “additional insured” provision
protected Blue Water from liability to third parties for the acts or omissions of
Zimmerman— that is, Blue Water was protected from secondary liability for
Zimmerman’s conduct. Blue Water was an additional insured only under the CGL policy
and only as specifically described in section IX(A). The provision did not enable Blue
Water to make a claim for first-party property damage.
{¶ 43} We find Zimmerman’s first assignment of error not well-taken.
20. D. Duty to Defend
{¶ 44} In its second assignment of error, Zimmerman argues that Motorists Mutual
owes a duty to defend it against the action filed by Blue Water. It maintains that the
allegations in Blue Water’s amended complaint triggered the duty to defend. It further
claims that because the issue of coverage is an issue of fact, it must be submitted to a jury
and not disposed of on summary judgment.
{¶ 45} Motorists acknowledges that the scope of the allegations in a complaint
determines whether the insurance company owes a duty to defend its insured, but it
claims that the insurer may be absolved of its duty if the facts uncovered during
discovery demonstrate that there is no possibility of coverage under the policy. For the
reasons discussed above, Motorists insists that Blue Water’s claims fall outside the scope
of coverage, therefore, it owes no duty to defend Zimmerman.
{¶ 46} The scope of Motorists’ duty to defend is set forth in the CGL policy as
follows:
SECTION 1-COVERAGES
COVERAGE A BODILY INJURY AND PROPERTY DAMAGE
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of . . . “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for . . . “property damage” to which this insurance does not apply. We may, at our discretion, investigate
21. any “occurrence” and settle any claim or “suit” that may result. . . . {¶ 47} As we alluded to earlier in this decision, “[t]he duty to defend is determined
by the scope of the allegations in the complaint.” Ward., 2011-Ohio-3176, at ¶ 19. “If
the allegations state a claim that potentially or arguably falls within the liability insurance
coverage, then the insurer must defend the insured in the action.” Id. If, however, “all
the claims are clearly and indisputably outside the contracted coverage, the insurer need
not defend the insured.” Id. And even once a defense is accepted, an insurer may seek to
clarify the nature of the claim to determine whether it falls within the coverage provided
in the policy. Helman v. Hartford Fire Ins. Co., 105 Ohio App.3d 617, 625 (9th Dist.
1995), citing Willoughby Hills v. Cincinnati Ins. Co., 9 Ohio St.3d 177, 180 (1984). If it
is determined that there is no longer a possibility of coverage under the policy, the insurer
will be absolved of its duty to defend. See id.; Fireman’s Fund Ins. Co. v. Hyster-Yale
Group, Inc., 2019-Ohio-1522, ¶ 19 (8th Dist.); Agee v. Hofelich, 1995 WL 695087, *3
(3d Dist. Nov. 22, 1995).
{¶ 48} Here, regardless of whether the amended complaint stated a claim that
potentially or arguably fell within the liability insurance coverage, it has now been
determined that the claim is not covered under the policy. Once that determination was
made, Motorists’ duty to defend ceased.
{¶ 49} Accordingly, we find Zimmerman’s second assignment of error not well-
taken.
22. III. Conclusion
{¶ 50} Although consequential damages may be covered under a CGL policy, in
its summary-judgment briefing, Blue Water failed to proffer the type of evidence
required under Civ.R. 56(C) and (E) to show that it incurred potentially-covered
consequential damages. We find its first assignment of error not well-taken.
{¶ 51} Binding Ohio Supreme Court precedent interpreting identical policy
language makes clear that faulty workmanship is not an “occurrence” covered by a CGL
policy. We find Blue Water’s second assignment of error not well-taken.
{¶ 52} Blue Water was an “additional insured” under the CGL policy only with
respect to third-party claims for liability caused by Zimmerman’s acts or omissions. It
was not an “additional insured” that could make a claim for first-party property damage.
We find Zimmerman’s first assignment of error not well-taken.
{¶ 53} Once it was determined that coverage was not available under the CGL
policy, Motorists’ duty to defend ceased. We find Zimmerman’s second assignment of
error not well-taken.
{¶ 54} We affirm the March 20, 2024 judgment of the Sandusky Court of
Common Pleas. Blue Water and Zimmerman are ordered to pay the costs of their appeals
under App.R. 24.
Judgment affirmed.
23. Blue Water Condominium Assoc. v. Motorists Mutual Insurance Co. C.A. Nos. S-24-009, S-24-010
A certified copy of this entry shall constitute the mandate pursuant to App.R. 27. See also 6th Dist.Loc.App.R. 4.
Thomas J. Osowik, J. ____________________________ JUDGE Christine E. Mayle, J. ____________________________ Myron C. Duhart, J. JUDGE CONCUR. ____________________________ JUDGE
This decision is subject to further editing by the Supreme Court of Ohio’s Reporter of Decisions. Parties interested in viewing the final reported version are advised to visit the Ohio Supreme Court’s web site at: http://www.supremecourt.ohio.gov/ROD/docs/.
24.