W. Lyman Case & Co. v. National City Corp.

76 Ohio St. 3d 345

• Court: Ohio Supreme Court
• Decided: August 14, 1996
• Docket: No. 95-247
• Status: Published

Opinions

Pfeifer, J.

Because the specific terms of the stock purchase agreement impose upon National City a duty to defend Case in the Roush litigation, we reverse the judgment of the court of appeals.

The duty to defend is separate and distinct from the duty to indemnify. In Section 8.01 of the stock purchase agreement, National city agrees “ * * * to defend, indemnify and hold [Case] * * * harmless * * * against any and all * * * suits * * In contrast, Section 8.03 provides only that “no indemnification” shall be made with respect to “Excluded Claims.” Therefore, since the present declaratory action seeks to enforce the duty to defend contained in Section 8.01 of the agreement, the exclusions in Section 8.03(c) are inapplicable, since they only apply to the duty to indemnify.

The court of appeals erred when it concluded that any duty to defend under Section 8.01 of the stock purchase agreement became “insignificant,” since indemnification was specifically excluded by Section 8.03(c) for the damages alleged in the Roush complaint. This holding was contrary to the contracted responsibilities explicitly included in the stock purchase agreement. Parties may contract for a duty to defend broader than the duty to indemnify, and the parties to this stock purchase agreement did so. The contractual right to have another party provide a defense in a civil action is by no means “insignificant” — it is a valuable right, and therefore may very well be sought in contract negotiations, even if it does not come with the further right to obtain indemnification.

Since National City’s duty to defend applies to “any and all” claims, this court’s decision in Willoughby Hills v. Cincinnati Ins. Co. (1984), 9 Ohio St.3d 177, 9 OBR 463, 459 N.E.2d 555, controls. In Willoughby Hills, this court held in the syllabus:

“Where the insurer’s duty to defend is not apparent from the pleadings in the action against the insured, but the allegations do state a claim which is potentially or arguably within the policy coverage, or there is some doubt as to whether a theory of recovery within the policy coverage has been pleaded, the insurer must accept the defense of the claim.”

The trial court found that the allegations against Case in the Roush complaint were “potentially or arguably” within National City’s duty to defend, and that National City presented no evidence of actual facts which controverted those allegations. Because the allegations were sufficient to establish coverage for the duty to defend under Section 8.01, and because the 8.03(c) exceptions are inapplicable to that duty under the specific terms of the stock purchase agreement, we find that National City has a duty to defend Case in the Roush litigation. We accordingly reverse the judgment of the appellate court and reinstate the trial court’s judgment in all respects.

Judgment reversed.

Moyer, C.J., Douglas, T. Bryant, Resnick and F.E. Sweeney, JJ., concur. Cook, J., dissents. Thomas F. Bryant, J., of the Third Appellate District, sitting for Wright, J.