[Cite as G & K Management Servs., Inc. v. Owners Ins. Co., 2014-Ohio-5497.]
COURT OF APPEALS FAIRFIELD COUNTY, OHIO FIFTH APPELLATE DISTRICT
G & K MANAGEMENT SERVICES, : JUDGES: INC., ET AL. : : : Hon. William B. Hoffman, P.J. Plaintiffs-Appellants : Hon.Patricia A. Delaney, J. : Hon. Craig R. Baldwin, J. -vs- : : Case No. 14-CA-33 : OWNERS INSURANCE COMPANY : : : Defendant-Appellee : OPINION
CHARACTER OF PROCEEDING: Appeal from the Fairfield County Court of Common Pleas, Case No. 2012 CV 1134
JUDGMENT: AFFIRMED
DATE OF JUDGMENT ENTRY: December 11, 2014
APPEARANCES:
For Plaintiffs-Appellants: For Defendant-Appellee:
THOMAS J. MULVEY SHAWN W. MAESTLE Curry, Roby & Mulvey Co., LLC JOHN G. FARNAN 30 Northwoods Blvd., Suite 300 MARTHA ALLEE Columbus, OH 43235 Weston Hurd, LLP The Tower at Erieview 1301 E. 9th St., Suite 1900 Cleveland, OH 44114 Fairfield County, Case No. 14-CA-33 2
Delaney, J.
{¶1} Plaintiffs-Appellants Guy Schiavone and G&K Management Services, Inc.
appeal the April 14, 2014 judgment entry of the Fairfield County Court of Common
Pleas.
FACTS AND PROCEDURAL HISTORY
{¶2} Plaintiff-Appellant Guy Schiavone is the president of Plaintiff-Appellant
G&K Management Services, Inc. G&K is a franchisor of the Fred Astaire Dance System
for the State of Ohio. In 1990, G&K granted a Fred Astaire franchise to Christopher
Cloud. Cloud operated his dance studio in Lancaster, Ohio under the name, "In Time
LLC."
{¶3} On December 29, 2010, Peggy and Rick Lavinsky filed a complaint in the
Fairfield County Court of Common Pleas. The complaint named Fred Astaire Dance
Studios, Inc., Fred Astaire Dance of North America, Inc., Megadance USA Corp., G&K,
Can-Am Championships, Inc., Schiavone, Christopher Cloud, and In Time LLC as
defendants. The complaint alleged Peggy and Rick Lavinsky took ballroom dancing
lessons at Cloud's dance studio. Peggy Lavinsky enrolled in additional ballroom dance
lessons with Cloud. Over a three-year period, Peggy Lavinsky signed multiple student
enrollment agreements and Cloud accepted pre-payment of over $500,000 for dance
lessons, practice sessions, coaching, competitions, dance camps, individual entries,
and solo performances. On July 2, 2010, Cloud closed the dance studio without any
notice to his students.
{¶4} The complaint alleged fourteen causes of action. As against all
defendants, the Lavinskys alleged a violation of the Ohio Consumer Sales Practices Fairfield County, Case No. 14-CA-33 3
Act, fraud, negligent misrepresentation, violation of Ohio's Pattern of Corrupt Activity
Statute, civil conspiracy, and negligent infliction of emotional distress. Against G&K and
Schiavone, the Lavinskys alleged respondeat superior. The Lavinskys brought claims
for breach of contract, judgment on cognovit note, invasion of privacy, intentional
infliction of emotional distress, breach of contract, unjust enrichment, and promissory
estoppel against Cloud and In Time LLC.
{¶5} From December 5, 2009 through December 5, 2010, G&K and Schiavone
were the named insureds under a commercial general liability ("CGL") policy issued by
Defendant-Appellee Auto-Owners Insurance Company under policy no. 004603-
05621846-09. Auto-Owners also insured In Time LLC under a commercial general
liability policy no. 084603-5519802 where G&K and Schiavone were named as
additional insureds.
{¶6} Upon receipt of the summons and complaint, Schiavone notified his
insurance agent of the suit. G&K and Schiavone were informed no coverage was
available under the commercial general liability policies.
{¶7} G&K and Schiavone filed a declaratory judgment action against Auto-
Owners in the Fairfield County Court of Common Pleas. The complaint alleged Auto-
Owners owed a duty to defend under the G&K and In Time LLC commercial general
liability policies, as well as raised claims for breach of contract and bad faith.
{¶8} G&K and Schiavone filed a motion for partial summary judgment on their
claim for declaratory judgment on the issue of duty to defend. Auto-Owners filed a
motion for summary judgment against G&K, Schiavone, Cloud, and In Time LLC.
Megadance USA filed a motion for summary judgment on the issue of duty to defend. Fairfield County, Case No. 14-CA-33 4
{¶9} On March 24, 2014, the trial court ruled on the pending motions for
summary judgment. The trial court determined there was no genuine issue of material
fact that Auto-Owners did not owe G&K or Schiavone a duty to defend under the terms
of the commercial general liability policies. The judgment was finalized on April 14,
2014.
{¶10} It is from this decision G&K and Schiavone now appeal. In this Opinion,
G&K and Schiavone will be referred to a "G&K" for ease of discussion.
ASSIGNMENTS OF ERROR
{¶11} G&K raises two Assignments of Error:
{¶12} "I. THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY FAILING
TO GRANT PARTIAL SUMMARY JUDGMENT TO APPELLANTS AND FAILING TO
DECLARE THAT AUTO OWNERS INSURANCE COMPANY HAD A DUTY TO
DEFEND CLAIMS ASSERTED IN FAIRFIELD COUNTY COMMON PLEAS CASE
NUMBER 10 CV 1584.
{¶13} "II. THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY
GRANTING AUTO OWNERS INSURANCE COMPANY'S MOTION FOR SUMMARY
JUDGMENT AND DECLARING THAT THE CLAIMS ASSERTED IN FAIRFIELD
COUNTY COMMON PLEAS CASE NUMBER 10 CV 1584 DO NO TRIGGER ANY
COVERAGE UNDER INSURANCE POLICIES ISSUED BY AUTO OWNERS
INSURANCE COMPANY." Fairfield County, Case No. 14-CA-33 5
ANALYSIS
{¶14} G&K argues in its first and second Assignments of Error that the trial court
erred in denying its motion for summary judgment and granting summary judgment in
favor of Auto-Owners. We disagree.
Standard of Review
{¶15} We refer to Civ.R. 56(C) in reviewing a motion for summary judgment
which provides, in pertinent part:
Summary judgment shall be rendered forthwith if the pleading,
depositions, answers to interrogatories, written admissions, affidavits,
transcripts of evidence in the pending case and written stipulations of fact,
if any, timely filed in the action, show that there is no genuine issue as to
any material fact and that the moving party is entitled to judgment as a
matter of law.* * * A summary judgment shall not be rendered unless it
appears from such evidence or stipulation and only from the evidence or
stipulation, 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, such party being entitled to have the
evidence or stipulation construed most strongly in the party's favor.
{¶16} The moving party bears the initial responsibility of informing the trial court
of the basis for the motion, and identifying those portions of the record before the trial
court, which demonstrate the absence of a genuine issue of fact on a material element
of the nonmoving party's claim. Dresher v. Burt, 75 Ohio St.3d 280, 292, 662 N.E.2d
264 (1996). The nonmoving party then has a reciprocal burden of specificity and cannot Fairfield County, Case No. 14-CA-33 6
rest on the allegations or denials in the pleadings, but must set forth “specific facts” by
the means listed in Civ.R. 56(C) showing that a “triable issue of fact” exists. Mitseff v.
Wheeler, 38 Ohio St.3d 112, 115, 526 N.E.2d 798, 801 (1988).
{¶17} Pursuant to the above rule, a trial court may not enter summary judgment
if it appears a material fact is genuinely disputed. Vahila v. Hall, 77 Ohio St.3d 421, 429,
674 N.E.2d 1164 (1997), citing Dresher v. Burt, 75 Ohio St.3d 280, 662 N.E.2d 264
(1996).
General Insurance Principles
{¶18} As established by the Ohio Supreme Court, an insurance company has
the duty to defend an action against an insured when the "scope of the allegations of
the complaint * * * brings the action within the coverage of the policy." City of Willoughby
Hills v. Cincinnati Ins. Co., 9 Ohio St.3d 177, 459 N.E.2d 55, 557 (1984). "The scope of
the allegations in the complaint against the insured determines whether an insurance
company has a duty to defend the insured. The insurer must defend the insured in an
action when the allegations state a claim that potentially or arguably falls within the
liability insurance coverage. However, an insurer need not defend any action or claims
within the complaint when all the claims are clearly and indisputably outside the
contracted coverage." (Citations omitted.) Ohio Govt. Risk Mgt. Plan v. Harrison, 115
Ohio St.3d 241, 2007-Ohio-4948, 874 N.E.2d 115, ¶ 19. An insurer need not provide a
defense "if there is no set of facts alleged in the complaint which, if proven true, would
invoke coverage." Cincinnati Indemn. Co. v. Martin, 85 Ohio St.3d 604, 710 N.E.2d 677,
678 (1999). Fairfield County, Case No. 14-CA-33 7
{¶19} An insurance policy is a contract between the insurer and the insured.
Pilkington N. Am., Inc. v. Travelers Cas. & Sur. Co., 112 Ohio St.3d 482, 2006-Ohio-
6551, 861 N.E.2d 121, ¶ 23. Whether a claim is covered under the terms of the
insurance policy, it is a question of law for the court to decide. Generally, courts
interpret insurance policies in accordance with the same rules applied in interpreting
other types of contracts. Hybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd., 64 Ohio
St.3d 657, 665, 597 N.E.2d 1096 (1992). To interpret a provision in the policy, the court
must look to the policy language and rely on the plain and ordinary meaning of the
words used to ascertain the intent of the parties to the contract. Penn Traffic Co. v. AIU
Ins. Co., 99 Ohio St.3d 227, 2003-Ohio-3373, 790 N.E.2d 1199, ¶ 9; Cincinnati Ins. Co.
v. CPS Holdings, Inc., 115 Ohio St.3d 306, 2007-Ohio-4917, 875 N.E.2d 31, ¶ 7.
Auto-Owners Commercial General Liability Policy Language
{¶20} Auto-Owners argues it has no duty to defend against the claims in the
Lavinskys' lawsuit based on the terms of the G&K and In Time LLC CGL policies. G&K
and Schiavone are named as additional insureds under the In Time LLC CGL policy.
The G&K CGL policy and the In Time LLC CGL policy contain the same relevant policy
language. Pertinent to this appeal, the policy language of the CGL policy is as follows:
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 "bodily injury" or "property
damage" to which this insurance applies. We will have the right and Fairfield County, Case No. 14-CA-33 8
duty to defend the insured against any "suit" seeking those
damages. We may at our discretion investigate any claim or
"occurrence" and settle any claim or "suit" that may result. * * *
***
b. This insurance applies to "bodily injury" and "property damage"
only if:
(1) The "bodily injury" or "property damage" is caused by an
"occurrence" that takes place in the "coverage territory";
(3) Prior to the policy period, no insured listed under
Paragraph 1 of Section II -- Who Is An Insured and no
"employee" authorized by you to give or receive notice of an
"occurrence" or claim, knew that the "bodily injury" or
"property damage" had occurred, in whole or in part. * * *
2. Exclusions
This insurance does not apply to:
o. Personal Injury and Advertising Injury
"Bodily injury" arising out of "personal injury" or "advertising injury."
COVERAGE B. PERSONAL INJURY AND ADVERTISING INJURY
LIABILITY
1. Insuring Agreement Fairfield County, Case No. 14-CA-33 9
obligated to pay as damages because of "personal injury" or
"advertising injury" to which this insurance applies. We will have the
right and duty to defend the insured against any "suit" seeking
those damages. We may at our discretion investigate any claim or
offense and settle any claim or "suit" that may result. * * *
SECTION V -- DEFINITIONS
4. "Bodily injury" means bodily injury, bodily sickness or bodily disease
sustained by a person, including death resulting from any of these at any
time.
14. "Occurrence" means an accident, including continuous or repeated
exposure to substantially the same general harmful conditions.
18. "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 shall be deemed to occur at the time of the "occurrence"
that caused it. Fairfield County, Case No. 14-CA-33 10
{¶21} The Auto-Owners' policy issued to G&K contains a CGL Plus
Endorsement which amends the CGL coverage form's definition of "personal injury" and
replaces it with the following:
5. PERSONAL INJURY EXTENSION
15. "Personal Injury" means, other than "bodily injury", arising out of one
or more of the following offenses:
a. False arrest, detention or imprisonment;
b. Malicious prosecution;
c. The wrongful eviction from, wrongful entry into, or invasion of the
right of private occupancy of a room, dwelling or premises that a
person occupies by or on behalf of its owner, landlord or lessor;
d. Oral or written publication of material that slanders or libels a
person or organization or disparages a person's or organization's
goods, products or services;
e. Oral or written publication of material that violates a person's
right of privacy; or
f. Discrimination, humiliation, sexual harassment and any violation
of civil rights caused by such discrimination, humiliation or sexual
harassment. Fairfield County, Case No. 14-CA-33 11
Does Auto-Owners owe G&K a Duty to Defend Pursuant to the CGL Policy?
Emotional Distress
{¶22} G&K argues that pursuant to the allegations of the Lavinskys' complaint,
Auto-Owners owes G&K a duty to defend against those allegations. G&K argues the
various claims made in the Lavinskys' complaint are arguably within the scope of policy
coverage for "personal injury." In Count VI of the Lavinskys' complaint, the complaint
alleges a claim of the negligent infliction of emotional distress by all defendants. Count
VI states:
174. All Defendants were negligent in their conduct towards Mrs. Lavinsky
by violating the 1989 FTC Order which established for the second time
that Fred Astaire Dance Studios were involved in the pervasive deceptive
practices designed to lure and cheat customers.
175. Mrs. Lavinsky suffered serious emotional distress as a direct result of
the negligence of Mr. Cloud in his direct actions and the remaining
Defendants in their lack of oversight of Mr. Cloud.
176. All of the Defendants could reasonably forsee that Mrs. Lavinsky or
any similarly situated elderly woman with a love of ballroom dance would
suffer emotional distress to have her own trusted, long-time dance partner
and instructor cheat her out of her precious and limited time and money.
{¶23} The G&K CGL policy provides coverage for claims based on "personal
injury." The policy states, "[w]e will pay those sums that the insured becomes legally
obligated to pay as damages because of 'personal injury' or 'advertising injury' to which
this insurance applies." The CGL policy defines "personal injury" as: Fairfield County, Case No. 14-CA-33 12
c. The wrongful eviction from, wrongful entry into, or invasion of the
right of private occupancy of a room, dwelling or premises that a
person occupies by or on behalf of its owner, landlord or lessor;
d. Oral or written publication of material that slanders or libels a
person or organization or disparages a person's or organization's
e. Oral or written publication of material that violates a person's
f. Discrimination, humiliation, sexual harassment and any violation
of civil rights caused by such discrimination, humiliation or sexual
harassment.
{¶24} In support of its argument that Auto-Owners owes G&K a duty to defend
based on the Lavinskys' claim of negligent infliction of emotional distress, G&K relies
upon the decision in Granger v. Auto Owners Ins., 2013-Ohio-2792, 991 N.E.2d 1254
(9th Dist.) discretionary appeal accepted, 137 Ohio St.3d 1440, 2013-Ohio-5678, 999
N.E.2d 695. In Granger, the Ninth District Court of Appeals considered a declaratory
judgment action brought by an insured against his insurance provider, Auto-Owners.
The insured was named in a complaint alleging federal and state fair housing claims
premised on discrimination based on familial status and race. The insured notified Auto-
Owners, his insurance provider, that he had been accused of discrimination but was told
that the dwelling policy definition of personal injury in his umbrella policy did not include Fairfield County, Case No. 14-CA-33 13
discrimination. Id. at ¶ 3. The insured settled the federal case and brought a declaratory
judgment action against Auto-Owners alleging breach of contract and estoppel for Auto-
Owners' refusal to provide coverage and a defense in the federal suit. Id. at ¶ 4.
{¶25} The complaint in the federal suit alleged a claim for emotional distress due
to the alleged pre-leasing discrimination. The insured argued emotional distress was a
claim covered under the umbrella policy issued by Auto-Owners to the insured based on
the umbrella policy’s definition of “personal injury:”
(a) bodily injury, sickness, disease, disability or shock;
(b) mental anguish or mental injury
(c) false arrest, false imprisonment, wrongful eviction, wrongful detention,
malicious prosecution or humiliation; and
(d) libel, slander, defamation of character or invasion of rights of privacy;
including resulting death, sustained by any person.
Id. at ¶ 12.
{¶26} The Ninth District Court of Appeals determined the umbrella policy
provided coverage pursuant to the definition of “personal injury” and the complaint’s
claim for emotional distress. It held:
As is evident from the above language, Auto–Owners defined personal
injury both in terms of certain claims, such as malicious prosecution, and
in terms of resulting harms, such as humiliation or mental anguish. * * *
because Ms. Kozera claimed in her complaint that she suffered emotional
distress, she arguably suffered humiliation, which is a personal injury
covered under the policy. We agree. Emotional distress has been defined Fairfield County, Case No. 14-CA-33 14
as “[a] highly unpleasant mental reaction (such as anguish, grief, fright,
humiliation, or fury) that results from another person’s conduct[.]”
(Emphasis added.) Black’s Law Dictionary 563 (8th Ed. 2004). Thus, it
would appear that the federal complaint alleges a personal injury as
contemplated by the umbrella policy.
Id. at ¶ 13, 14.
{¶27} G&K argues the logic of Granger applies to the present case. First, the
Lavinskys’ complaint alleges a claim of negligent infliction of emotional distress similar
to that in the underlying complaint in Granger. Second, G&K states that its CGL policy
with Auto-Owners uses the word “humiliation” in the definition of “personal injury" as did
the policy language in Granger. Therefore, G&K argues the Lavinskys’ complaint
alleges a personal injury as contemplated by the CGL policy.
{¶28} When interpreting an insurance contract, we look to the plain and ordinary
language of the contract to determine the intent of the parties. We compare the
language of the Granger umbrella policy to the language of the CGL policy in the
present case and we find that we must disagree with G&K’s conclusion that emotional
distress is contemplated with the definition of “personal injury” in the CGL policy.
{¶29} Relevant to G&K's argument, the CGL policy defines "personal injury:"
"Personal Injury" means, other than "bodily injury", arising out of one or
more of the following offenses:
f. Discrimination, humiliation, sexual harassment, and any violation of civil
rights caused by such discrimination, humiliation or sexual harassment. Fairfield County, Case No. 14-CA-33 15
{¶30} We find the Granger policy language and the CGL policy language
differently employ the word "humiliation" within the definition of "personal injury." In the
Granger policy, the Ninth District found the Granger insurance policy defined "personal
injury" both in the terms of certain claims, such as malicious prosecution, and resulting
harms, such as humiliation or mental anguish. The CGL policy in the present case,
however, states that a personal injury is the offense of discrimination, humiliation,
sexual harassment and any violation of civil rights caused by such discrimination,
humiliation, or sexual harassment. "Offense" is not defined by the CGL policy but the
dictionary definition of "offense" is "a breach of moral or social conduct" or "an infraction
of law." Webster's Third New International Dictionary (1993). The CGL policy lists the
offenses of discrimination, humiliation, and sexual harassment in conjunction with a
violation of civil rights. Humiliation under the CGL policy is not a resulting harm as found
in the Granger policy, but a breach of conduct or an infraction. A review of the
Lavinskys' complaint shows there is no mention of a breach of conduct or infraction of
humiliation or a violation of the Lavinskys' civil rights caused by humiliation. The
Lavinskys' complaint alleges emotional distress that, as the Granger court held and is
now on appeal before the Ohio Supreme Court, may include a mental reaction of
humiliation. Because of the difference in the definition of "personal injury" in the Granger
and the CGL policy, we find the holding of the Granger case to be inapplicable to the
facts of the present case.
{¶31} G&K also argues in Count I of the Lavinskys' complaint, the Lavinskys
allege a violation of the Ohio Consumer Sales Practices Act against all defendants. The
Lavinskys claimed economic and noneconomic damages based on the violations of the Fairfield County, Case No. 14-CA-33 16
CSPA. The Ohio Supreme Court held that noneconomic damages can be included in
awards of actual damages under the CSPA. Whitaker v. M.T. Automotive, Inc., 110
Ohio St.3d 177, 2006-Ohio-5481, 855 N.E.2d 825, ¶ 20. Noneconomic damages could
include emotional distress. Id. at ¶ 31. G&K argues therefore, the "personal injury"
language that includes "humiliation" would provide coverage under the Lavinskys' claim
for a violation of the CSPA. Based on our determination as to the definition of "personal
injury", we disagree with G&K's argument.
Count VII -- Respondeat Superior
{¶32} Count VII of the Lavinskys' complaint alleges under the theory of
respondeat superior, G&K is liable for Counts I through VI against Cloud. In the
underlying motions for summary judgment, G&K conceded no coverage under the CGL
policy was available for Counts II, III, IV, and V of the Lavinskys' complaint. In Count IX
of the Lavinskys' complaint, the Lavinskys alleged a claim of intentional infliction of
emotional distress by Cloud. Paragraph 226 of the Lavinskys' complaint stated Cloud's
actions proximately caused psychic and/or physical injury to Mrs. Lavinsky.
{¶33} We find the theory of respondeat superior does not extend coverage to
G&K under the CGL policy. First, we have determined there is no coverage under
Counts I and VI of the Lavinskys' complaint because the claims do not fall within the
definition of a "personal injury" as argued by G&K. Second, the Lavinskys' complaint
alleges respondeat superior for Counts I through VI. G&K conceded the CGL policy did
not provide coverage for Counts II through V. Third, the Lavinskys' complaint
contemplates physical injury to Mrs. Lavinsky in Count IX, which is outside of the claim
for respondeat superior. Fairfield County, Case No. 14-CA-33 17
CONCLUSION
{¶34} An insurer need not provide a defense to an insured against a cause of
action if there is no set of facts alleged in the complaint which, if proven true, would
invoke coverage. In order to make that determination, we must consider the scope of
the allegations in the underlying complaint and the plain language of the insurance
contract. Considering the insurance language and the Civ.R. 56 evidence in a light most
favorable to the non-moving parties, we find that reasonable minds could only conclude
there are no genuine issues of material fact there is no coverage under the G&K or In
Time LLC commercial general liability policies for the claims raised in the Lavinskys'
complaint. Accordingly, Auto-Owners does not owe G&K a duty to defend against the
claims in the Lavinskys' complaint.
{¶35} The first and second Assignments of Error of the G&K and Schiavone are
overruled.
{¶36} The judgment of the Fairfield County Court of Common Pleas is affirmed.
By: Delaney, J.,
and Baldwin, J., concur.
Hoffman, P J., dissents. Fairfield County, Case No. 14-CA-33 18
Hoffman, P.J., dissenting
{¶37} I respectfully, dissent from the majority opinion.
{¶38} The policy at issue defines "Bodily injury" as "bodily injury, bodily sickness
or bodily disease…". I find a claim for emotional distress constitutes a claim for bodily
injury for the reason set forth in my dissent in Hawthorne v. Migoni, 5th Dist. App. No.
2003AP0054, 2004-Ohio-378. See also Judge Tyack's dissent in Bernard v. Cordle
(1996), 116 Ohio App. 3d 116.
________________________________ HON. WILLIAM B. HOFFMAN