[Cite as Chiquita Brands Internatl., Inc. v. Fed. Ins. Co., 2013-Ohio-759.]
IN THE COURT OF APPEALS FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO
CHIQUITA BRANDS : APPEAL NO. C-120019 INTERNATIONAL, INC., TRIAL NO. A-0808934 : Plaintiff-Appellee, : vs. O P I N I O N. : NATIONAL UNION FIRE INSURANCE COMPANY OF : PITTSBURGH, PA., : Third-Party Defendant- Appellant, :
and :
FEDERAL INSURANCE COMPANY, : et al., : Defendants/Third-Party Plaintiffs. :
Civil Appeal From: Hamilton County Court of Common Pleas
Judgment Appealed From Is: Reversed and Cause Remanded
Date of Judgment Entry on Appeal: March 6, 2013
Jacobs, Kleinman, Seibel & McNally and Kenneth F. Seibel, and Covington & Burling, LLP, and William P. Skinner, for Plaintiff-Appellee,
Bates Carey Nicolaides LLP, Richard H. Nicolaides, Jr., Barbara L. Michaelides, Agelo L. Reppas, and Reminger and Joseph W. Borchelt, for Third-Party Defendant- Appellant.
Please note: this case has been removed from the accelerated calendar. OHIO FIRST DISTRICT COURT OF APPEALS
DINKELACKER, Judge.
{¶1} Plaintiff-appellee Chiquita Brands International, Inc. (“Chiquita”),
filed a declaratory judgment action against defendants/third-party plaintiffs, Federal
Insurance Company, American Motorists Insurance Company, and Lumbermens
Mutual Casualty Company. In its complaint, Chiquita asked the trial court to declare
that the insurance companies had a duty to defend Chiquita in numerous tort claims
that had been filed against it. Those claims alleged that from 1989 through 2004,
Chiquita had illegally financed terrorist groups in Columbia, and that the plaintiffs in
those suits had suffered damage as a result of the terrorists’ operations. Chiquita
also contended that the insurance companies had breached the insurance contracts
for failing to provide defenses and coverage in the underlying tort actions.
{¶2} Federal, American Motorists and Lumbermens Mutual filed a third-
party complaint against third-party defendant-appellant National Union Fire
Insurance Company of Pittsburgh, PA (“National Union”), which had insured
Chiquita under a series of one-year policies from July 1992 to July 2000. They asked
the court to declare that National Union had a duty to defend Chiquita in the
underlying tort actions, and that, to the extent the court might find that they had a
duty to defendant Chiquita, they were entitled to contribution and indemnity from
National Union.
{¶3} National Union then asserted a direct claim against Chiquita, asking
the court to declare that it did not have a duty to defend or indemnify Chiquita in the
underlying suits, and that if it did, it was entitled to contribution from the other three
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insurance companies. Chiquita then filed a counterclaim against National Union,
alleging that it, too, had a duty to defend Chiquita in the underlying suits.
{¶4} While the case was pending, Chiquita settled with Federal, American
Motorists and Lumbermens Mutual. Both Chiquita and National Union filed
motions for summary judgment. The trial court granted Chiquita’s motion in part.
It held that National Union had a duty to defend Chiquita in the underlying suits as a
matter of law. The court also found that issues of fact existed as to other issues in the
case, and denied the motions for summary judgment on those issues.
{¶5} After a bench trial, the trial court determined the amount of defense
costs for which National Union was required to reimburse Chiquita. It also found
that National Union was responsible for all losses that occurred during the time its
policies were effective. National Union has filed a timely appeal from that judgment.
{¶6} National Union presents two assignments of error for review. In its
first assignment of error, it contends that the trial court erred in finding that it had a
duty to defend Chiquita in the underlying lawsuits. It argues that the underlying
actions do not allege an “occurrence” as defined in the policies because Chiquita
faced liability only for intentional conduct. It also argues that all the injuries for
which Chiquita faced liability occurred in Columbia, outside of the National Union’s
policies’ coverage territory. This assignment of error is well taken.
{¶7} An insurance policy is a contract, and the relationship between the
insurer and the insured is purely contractual in nature. Nationwide Mut. Ins. Co. v.
Marsh, 15 Ohio St.3d 107, 109, 472 N.E.2d 1061 (1984). The interpretation and
construction of insurance policies is a matter of law to be determined by the court
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using rules of construction and interpretation applicable to contracts generally.
Gomolka v. State Auto. Ins. Co., 70 Ohio St.2d 166, 167-168, 436 N.E.2d 1347 (1982);
Equity Diamond Brokers, Inc. v. Transnatl. Ins. Co., 151 Ohio App.3d 747, 2003-
Ohio-1024, 785 N.E.2d. 816, ¶ 10 (1st Dist.). Where an insurance policy’s provisions
are clear and unambiguous, courts must apply the terms as written and may not
enlarge the contract by implication to embrace an object distinct from that
contemplated by the parties. Gomolka at 168; Equity Diamond Brokers at ¶ 11.
{¶8} An insurer’s duty to defend is broader than the duty to indemnify.
Sharonville v. Amer. Emp. Ins. Co., 109 Ohio St.3d 186, 2006-Ohio-2180, 846
N.E.2d 833, ¶ 13; Westfield Ins. Co. v. Factfinder Mkting. Research, Inc., 168 Ohio
App.3d 391, 2006-Ohio-4380, 860 N.E.2d 145, ¶ 15 (1st Dist.). When the allegations
in the complaint or any allegations arising after the complaint state a claim that is
potentially within the policy coverage, the insurer must accept the defense of the
claim, regardless of the ultimate outcome or the insurer’s ultimate liability.
Sharonville at ¶ 13; Willoughby Hills v. Cincinnati Ins. Co., 9 Ohio St.3d 177, 179,
459 N.E.2d 555 (1984); Westfield Ins. at ¶ 15. When an insurer must provide a
defense on a claim, it must defend the insured on all the other allegations, regardless
of whether they are related to the insurance-policy coverage. Sharonville at ¶ 13;
Westfield Ins. at ¶ 15.
{¶9} But a duty to defend does not attach where the conduct alleged is
indisputably outside the scope of coverage. Sharonville at ¶ 13; Westfield Ins. at ¶ 15.
The insured bears the burden to show that its loss was covered under the policy.
Chicago Title Ins. Co. v. Huntington Natl. Bank, 87 Ohio St.3d 270, 273, 719 N.E.2d
4 OHIO FIRST DISTRICT COURT OF APPEALS
955 (1999); Fairfield Machine Co., Inc. v. Aetna Cas. & Sur. Co., 7th Dist. No. 2000
CO 14, 2001-Ohio-3407, ¶ 22; Sterling Merchandise Co. v. Hartford Ins. Co., 30
Ohio App.3d 131, 137-138, 506 N.E.2d 1192 (9th Dist.1986).
{¶10} In this case, the policy covers “bodily injury” if the “bodily injury * * *
is caused by an occurrence that takes place in the coverage territory.” An
“occurrence” is “an accident, including continuous or repeated exposure to
substantially the same general harmful conditions.” Thus, the policies cover only
accidental occurrences, not intentional acts. See Gearing v. Nationwide Ins. Co., 76
Ohio St.3d 34, 38, 665 N.E.2d 1115 (1996).
{¶11} Further, Ohio public policy generally prohibits obtaining insurance to
cover damages caused by intentional torts. Id. Thus, inherent in a policy’s definition
of “occurrence” is the concept of an incident of an accidental, as opposed to an
intentional, nature. Id.; Morner v. Giuliano, 167 Ohio App.3d 785, 2006-Ohio-2943,
857 N.E.2d 602, ¶ 25 (12th Dist.). “Liability insurance does not exist to relieve
wrongdoers of liability for intentional, antisocial or criminal conduct.” Gearing at
38.
{¶12} In finding that National Union had a duty to defend Chiquita, the trial
court examined the complaints in the underlying actions. It stated that “[t]hese
complaints all make serious allegations of intentional even malicious conduct against
Chiquita. However, each complaint, to some extent makes allegations of negligence.
I have no idea whether the Plaintiffs will prevail on their claims of intentional
misconduct and/or negligent misconduct. Those are questions for a trier of fact to
determine.” It went on to find that based solely on the allegations in those
5 OHIO FIRST DISTRICT COURT OF APPEALS
complaints, National Union owed Chiquita a defense. We disagree with the court’s
reasoning.
{¶13} In finding that National Union owed Chiquita a duty to defend, the
trial court relied on Safeco Ins. Co. of Am. v. White, 122 Ohio St.3d 562, 2009-Ohio-
3718, 913 N.E.2d 426. In that case, 17-year-old Benjamin White stabbed Casey
Hilmer, the 13-year-old daughter of Steven and Megan Hilmer. Id. at ¶ 5. The
Hilmers sued Benjamin and his parents, Lance and Diana White, raising multiple
claims, including battery against Benjamin and negligent supervision, negligent
entrustment, and negligent infliction of emotional distress against Lance and Diana.
A jury found in favor of the Hilmers. The Whites had a homeowner’s policy and a
separate umbrella policy with Safeco Insurance Company of America. Safeco argued
that it had no duty to defend Lance and Diana White because any claim against them
arose out of their son’s intentional act.
{¶14} The Supreme Court held:
1. When a liability insurance policy defines an “occurrence” as an
“accident,” a negligent act committed by an insured that is predicated
on the commission of an intentional tort by another person, e.g.,
negligent hiring or negligent supervision, qualifies as an “occurrence.”
2. Insurance-policy exclusions that preclude coverage for injuries
expected or intended by an insured, or injuries arising out of or caused
by the insured’s intentional or illegal acts, do not preclude coverage for
the negligent actions of other insureds under the same policy that are
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predicated on the commission of those intentional or illegal acts, e.g.
negligent hiring or negligent supervision. (Emphasis added.)
Id. at paragraphs one and two of the syllabus.
{¶15} While acknowledging that the policy exclusions relating to intentional
and illegal acts “plainly applied” to Benjamin’s acts, the Supreme Court emphasized
the “separate nature” of the negligent-supervision and negligent-entrustment torts
against his parents. To succeed on those claims, the Hilmers had to show that Lance
and Diana had breached their duty to supervise Benjamin and not to entrust him
with a dangerous instrument, and that those breaches proximately caused their
injuries. Id. at ¶ 34-35. The court stated, “In this case, neither Lance nor Diane
intentionally injured Casey Hilmer. From their perspective, the injury was
accidental, and thus the act that caused her injury constitutes an “occurrence” as
defined in the policies they purchased from Safeco.” Id. at ¶ 27.
{¶16} In this case, the negligence claims in the underlying suits do not stem
from the negligent actions of an insured arising from the intentional act of another
insured. The negligence claims against Chiquita arise from its own intentional acts,
not the acts of another insured party. Therefore, the holding in Safeco does not
apply. See Sanders v. Nationwide Mut. Ins. Co., 8th Dist. No. 95228, 2011-Ohio-
1933, ¶ 18-20.
{¶17} Further, the trial court stated that Safeco applied without examining
the nature of the underlying negligence claims. “The mere insinuation of negligence
in a civil suit complaint cannot transform what are essentially intentional torts into
something ‘accidental’ that might be covered by insurance.” Snowden v. Hastings
7 OHIO FIRST DISTRICT COURT OF APPEALS
Mut. Ins. Co., 177 Ohio App.3d 209, 2008-Ohio-1540, 894 N.E.2d 336, ¶ 13 (7th
Dist.). Accord Motorists Mut. Ins. Co. v. Merrick, 11th Dist. Nos. 98-T-0188 and
98-T-0189, 1999 Ohio App. LEXIS 5240, *8 (Nov. 5, 1999); Snell v. Katafias, 2d
Dist. No. 17440, 1999 Ohio App. LEXIS 997, *13 (Mar. 19, 1999).
{¶18} Our review of the record shows that although the underlying
complaints set forth some causes of action sounding in negligence, those causes of
action were all based on Chiquita’s alleged intentional conduct. The complaints
alleged that Chiquita was both directly and vicariously liable for the deaths and
injuries of numerous people through murder, torture, kidnapping and other
atrocities. They claimed that Chiquita aided and abetted, conspired with, and
particiated in a joint criminal enterprise with the terrorists. The complaints did not
allege conduct that could be reasonably construed as negligent or accidental.
Therefore the conduct alleged in the complaints for which Chiquita sought coverage
and defense did not constitute “occurrences” within the meaning of the policy
language.
{¶19} We note that the National Union policies also contained exclusions for
“bodily injury” or “property damage” “expected or intended from the standpoint of
the insured.” We need not reach the issue of whether those exclusions apply because
we hold that the conduct alleged in the underlying cases did not constitute
“occurrences.” Because the conduct in those complaints was outside the scope of
coverage, National Union did not have a duty to defend Chiquita in the underlying
suits or to indemnify Chiquita should it eventally be found to be liable for damages in
those suits.
8 OHIO FIRST DISTRICT COURT OF APPEALS
{¶20} National Union also argues that all the injuries for which Chiquita
faced liability occurred in Columbia, outside of its policies’ coverage territory. We
agree. National Union’s policies stated that it would pay damages for injuries caused
by an “occurrence” in “the coverage territory.” The policies defined the “coverage
territory” as “[t]he United States of America (including its territories and
possessions), Puerto Rico and Canada.” Chiquita had purchased policies from the
settling insurance companies to cover its foreign liability.
{¶21} In ruling on the motions for summary judgment, the trial court stated
that “[t]he allegations of negligence in the various complaints meet the coverage
territory requirement in all the insurance policies at issue since the negligence may
well have taken place within the coverage territory.” Following a bench trial, the trial
court found that the decision to pay the terrorist groups was made at Chiquita’s
corporate headquarters in Cincinnati, Ohio. The employees in Columbia simply
implemented that policy with the goal of protecting Chiquita’s employees and
property. Therefore, the trial court concluded, the location of the occurrence was
within the coverage territory. We disagree with that conclusion.
{¶22} We find no Ohio cases directly on point, but the “great weight of case
law” from other jurisdictions holds that “it is the location of the injury—not some
precipitating cause—that determines the location of the event for purposes of
insurance coverage.” ACE Am. Ins. Co. v. RC2 Corp., Inc., 600 F.3d 763, 768 (7th
Cir.2010). Accord CACI Internatl., Inc. v. St. Paul Fire & Marine Ins. Co., 566 F.3d
150, 156-157 (4th Cir.2009).
9 OHIO FIRST DISTRICT COURT OF APPEALS
{¶23} The issue frequently arises in cases involving the place of an
“occurrence,” such as where, as in the present case, an injury is sustained outside of
the United States because of some act or omission in the United States and the
disputed policy limits coverage to the United States. “The location of an ‘occurrence’
is determined by the place where the injury happened; it does not matter that a
precipitating event took place elsewhere.” Farmers Alliance Mut. Ins. Co. v.
Salazar, 77 F.3d 1291, 1296 (10th Cir.1996). See also DeWitt v. Nationwide Mut.
Fire Ins. Co., 109 Ohio App.3d 716, 720-721, 672 N.E.2d 1104 (11th Dist.1996);
Flintcote Co. v. Gen. Acc. Assurance Co. of Canada, 410 F.Supp.2d 875, 891-892
(N.D.Cal.2006).
{¶24} For example, in ACE, the insurance policy contained an exclusion for
occurrences that took place in the United States. The underlying suits involved
products using lead paint that were sold and used exclusively in the United States,
but manufactured in China. The insurance company argued that the “occurrence”
took place in the United States where purchasers of the products were exposed to
lead paint. The manufacturer argued that the “occurrence” took place in China
where the negligent acts that “caused” the harm took place.
{¶25} The federal district court accepted the manufacturer’s argument. It
found that notwithstanding the exclusion, the policies potentially extended coverage
for injuries that occurred in the United States if some negligent act in the process of
the product’s manufacturing that caused harm occurred in another country.
Therefore, it held that the insurance company had a duty to defend the
manufacturer.
10 OHIO FIRST DISTRICT COURT OF APPEALS
{¶26} The Seventh Circuit Court of Appeals reversed, stating that “the
policies are clear that the ‘occurrence’ that triggers coverage takes place where the
actual event that inflicts the harm takes place. And based on the undisputed facts in
this case, the ‘occurrence” here happened at the location (or locations) of the
exposure itself: within the United States.” ACE Am. Ins., 600 F.3d at 769. The court
went on to state that accepting the manufacturer’s argument “would allow it to sweep
any domestic event into its international policies so long as it posited some
antecedent negligent act that occurred someplace outside the United States.” Id.
{¶27} Similarly, in CACI, CACI argued that its insurance company had a duty
to defend it in lawsuits relating to claims of abuse and torture at prisons in Iraq even
though the insurance policies limited coverage to the United States and Canada. The
Fourth Circuit Court of Appeals rejected that argument, stating:
[E]ven assuming that the complaint alleges activities that happened in
the United States, the great weight of case law holds that it is the
location of the injury—not of some precipitating cause—that
determines the location of the event for purposes of insurance
coverage. The reasons for a “place of injury” test are clear. As the
district court noted, applying a “cause in fact” test would let plaintiffs
sweep any number of worldwide events into the ambit of a domestic
policy as long as the underlying complaint alleged negligent
supervision. Therefore, a causal test would create a windfall for the
insured and render “the insurer responsible for a liability for which it
had not contracted.” If domestic policies could be stretched to this
11 OHIO FIRST DISTRICT COURT OF APPEALS
extent, global policies would become superfluous and territorial
coverage limitations would lose their meaning. (Citations omitted.)
CACI Internatl., 566 F.3d at 156-157, quoting Keystone Automated Equip. Co. v.
Reliance Ins. Co., 369 Pa.Super. 472, 535 A.2d 648, 652 (Pa.Super.Ct.1988).
{¶28} We agree with the reasoning of these courts. In this case, the events
that inflicted the harm alleged in the underlying complaints took place in Columbia.
Those events were the “occurrences” as defined in the policies as a matter of law.
Chiquita’s decision to pay the terrorists was merely a precipitating event.
Consequently, the “occurrences” did not happen in United States, the coverage
territory. Therefore, the conduct in the underlying complaints was not within the
scope of coverage, and National Union had no duty to provide Chiquita a defense in
the underlying suits.
{¶29} In sum, we find no issues of material fact. Construing the evidence
most strongly in Chiquita’s favor, reasonable minds can come to but one
conclusion—that National Union did not have a duty to defend Chiquita in the
underlying suits because those suits did not allege conduct that constituted an
“occurrence” in the coverage territory. National Union was entitled to judgment as a
matter of law, and the trial court erred in failing to grant summary judgment in favor
of National Union. See Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327, 364
N.E.2d 267 (1977); Greene v. Whiteside, 181 Ohio App.3d 253, 2009-Ohio-741, 908
N.E.2d 975, ¶ 23 (1st Dist.) The court further erred in granting partial summary
judgment in favor of Chiquita, and in holding a bench trial on the alleged factual
issues.
12 OHIO FIRST DISTRICT COURT OF APPEALS
{¶30} Consequently, we sustain National Union’s first assignment of error,
and we reverse the trial court’s judgment in favor of Chiquita. We remand the matter
to the trial to enter judgment in favor of National Union, and to consider whether
National Union is entitled to repayment of any defense costs it has already paid.
{¶31} Our ruling on National Union’s first assignment of error renders its
second assignment of error moot, and we decline to address it. See App.R.
12(A)(1)(c); Internatl. Assn. of Bridge, Structural, Ornamental & Reinforcing Iron
Workers, Local 372 v. Sunesis Constr. Co., 183 Ohio App.3d 438, 2009-Ohio-3729,
917 N.E.2d 343, ¶ 26 (1st Dist.).
Judgment reversed and cause remanded.
HILDEBRANDT, P.J., and HENDON, J., concur.
Please note: The court has recorded its own entry on the date of the release of this opinion.