Case Title: Westfield Ins. Co. v. Custom Agri Sys., Inc.

Citation: 2012-Ohio-4712

Docket Number: 2011-1486

State: ohio

Court: Ohio Supreme Court

Date: 2012-10-16T00:00:00Z

Document:
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Westfield Ins. Co. v. Custom Agri Sys., Inc., Slip Opinion No. 2012-Ohio-4712.] 
 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in 
an advance sheet of the Ohio Official Reports.  Readers are requested 
to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 
65 South Front Street, Columbus, Ohio 43215, of any typographical or 
other formal errors in the opinion, in order that corrections may be 
made before the opinion is published. 
 
SLIP OPINION NO. 2012-OHIO-4712 
WESTFIELD INSURANCE COMPANY v. CUSTOM AGRI SYSTEMS, INC. 
[Until this opinion appears in the Ohio Official Reports advance sheets,  
it may be cited as Westfield Ins. Co. v. Custom Agri Sys., Inc.,  
Slip Opinion No. 2012-Ohio-4712.] 
Insurance—Claims for defective workmanship not covered by commercial general 
liability policy. 
(No. 2011-1486—Submitted April 4, 2012—Decided October 16, 2012.) 
CERTIFIED by the United States Court of Appeals for the Sixth Circuit,  
No. 11-3213. 
__________________ 
SYLLABUS OF THE COURT 
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. 
__________________ 
 
 
SUPREME COURT OF OHIO 
2 
 
O’CONNOR, C.J. 
BACKGROUND 
{¶ 1} This cause is here on the certification of state-law questions from 
the United States Court of Appeals for the Sixth Circuit.  Thus the facts of this 
case are taken from the order of certification. 
{¶ 2} Younglove Construction, L.L.C. entered into a contract with PSD 
Development, L.L.C. for the construction of a feed-manufacturing plant in 
Sandusky, Ohio.  When PSD withheld payment, Younglove brought this diversity 
suit against PSD and three other defendants, seeking damages for breach of 
contract and related causes of action.  In its answer, PSD alleged that it had 
sustained damages as a result of defects in a steel grain bin.  The bin had been 
constructed by respondent, Custom Agri Systems, Inc., as a subcontractor, and 
Younglove filed a third-party complaint against Custom for contribution and 
indemnity.  Custom filed similar third-party complaints against the subcontractors 
it had used to construct the bin and turned to its insurer, petitioner Westfield 
Insurance Company, to defend and indemnify it in the litigation.  Westfield 
intervened in order to pursue a judgment declaring that it had no such duty under 
the terms of its commercial general liability (“CGL”) policy with Custom. 
{¶ 3} Custom was being sued under two general theories: defective 
construction and consequential damages resulting from the defective construction.  
Westfield argued that none of the claims against Custom sought compensation for 
“property damage” caused by an “occurrence” and therefore that none of the 
claims were covered under the CGL policy.  In the alternative, Westfield argued 
that even if the claims were for property damage caused by an occurrence, they 
were removed from coverage by an exclusion in the policy. 
{¶ 4} Westfield and Custom filed cross-motions for summary judgment.  
The parties agreed that the case was governed by Ohio law, and the United States 
District Court for the Northern District of Ohio acknowledged that it was an open 
January Term, 2012 
3 
 
question under Ohio law whether defective-construction claims fall under the 
auspices of a CGL policy.  Rather than decide the issue, the district court assumed 
that Custom’s policy covered defective construction and went on to find that the 
exclusion removed such claims from coverage.  After reconsideration of an earlier 
order, the district court granted summary judgment for Westfield.  Younglove 
Constr., L.L.C. v. PSD Dev., L.L.C., 767 F.Supp.2d 820 (N.D.Ohio 2011). 
{¶ 5} Custom appealed the summary judgment in favor of Westfield.  
Westfield moved to certify two questions of state law to this court.  Custom did 
not oppose the motion. 
{¶ 6} In a divided decision, the Sixth Circuit determined that the 
question of whether defective construction or workmanship constitutes an 
“occurrence” within the meaning of a CGL policy in Ohio might be determinative 
of the action in federal court.  Furthermore, the Sixth Circuit found no controlling 
precedent on the issue in our decisions.  For those reasons, the Sixth Circuit 
certified the following two questions of state law to this court pursuant to 
S.Ct.Prac.R. 18.1:   
 
(1) Are claims of defective construction/workmanship 
brought by a property owner claims for “property damage” caused 
by an “occurrence” under a commercial general liability policy? 
(2) If such claims are considered “property damage” caused 
by an “occurrence,” does the contractual liability exclusion in the 
commercial general liability policy preclude coverage for claims 
for defective construction/workmanship? 
 
{¶ 7} We agreed to answer both questions.  Westfield Ins. Co. v. Custom 
Agri Sys., Inc., 130 Ohio St.3d 1415, 2011-Ohio-5605, 956 N.E.2d 307. 
 
 
SUPREME COURT OF OHIO 
4 
 
ANALYSIS 
First Certified State-Law Question 
{¶ 8} The underlying claim is one of defective construction of or 
workmanship on the steel grain bin by Custom.  The present action is one of 
contract interpretation, as the issue is whether the claims of defective construction 
or workmanship against Custom fall within the insurance policy issued by 
Westfield. 
 
When 
confronted 
with 
an 
issue 
of 
contractual 
interpretation, the role of a court is to give effect to the intent of 
the parties to the agreement.  Hamilton Ins. Serv., Inc. v. 
Nationwide Ins. Cos. (1999), 86 Ohio St.3d 270, 273, 714 N.E.2d 
898, citing Employers’ Liab. Assur. Corp. v. Roehm (1919), 99 
Ohio St. 343, 124 N.E. 223, syllabus.  See, also, Section 28, 
Article II, Ohio Constitution.  We examine the insurance contract 
as a whole and presume that the intent of the parties is reflected in 
the language used in the policy.  Kelly v. Med. Life Ins. Co. (1987), 
31 Ohio St.3d 130, 31 OBR 289, 509 N.E.2d 411, paragraph one of 
the syllabus.  We look to the plain and ordinary meaning of the 
language used in the policy unless another meaning is clearly 
apparent from the contents of the policy.  Alexander v. Buckeye 
Pipe Line Co. (1978), 53 Ohio St.2d 241, 7 O.O.3d 403, 374 
N.E.2d 146, paragraph two of the syllabus.  When the language of 
a written contract is clear, a court may look no further than the 
writing itself to find the intent of the parties.  Id.  As a matter of 
law, a contract is unambiguous if it can be given a definite legal 
meaning.  Gulf Ins. Co. v. Burns Motors, Inc. (Tex.2000), 22 
S.W.3d 417, 423. 
January Term, 2012 
5 
 
 
Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216, 2003-Ohio-5849, 797 N.E.2d 
1256, ¶ 11. 
{¶ 9} The insurance policy here provides: 
 
COMMERCIAL GENERAL LIABILITY COVERAGE 
FORM 
* * * 
 
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 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 “bodily injury” or 
“property damage” to which this insurance does not apply.  We 
may, at our discretion, investigate any “occurrence” and settle any 
claim or “suit” that may result.  But: 
* * * 
 
(2) 
Our right and duty to defend end when we have 
used up the applicable limit of insurance in the payment of 
judgments or settlements under Coverages A or B or medical 
expenses under Coverage C. 
 
* * * 
SUPREME COURT OF OHIO 
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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;” 
 
* * * 
SECTION V – DEFINITIONS 
 
* * * 
3. 
“Bodily injury” means bodily injury, sickness or 
disease sustained by a person, including death resulting from any 
of these at any time. 
 
* * * 
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. 
 
{¶ 10} CGL policies are  
 
not intended to protect business owners against every risk of 
operating a business.  In particular, [these] policies * * * are not 
intended to insure “business risks” [see generally Franco, 
January Term, 2012 
7 
 
Insurance Coverage for Faulty Workmanship Claims under 
Commercial General Liability Policies, 30 Tort & Ins.L.J. 785 
(1994)]—risks that are the “ ‘normal, frequent, or predictable 
consequences of doing business, and which business management 
can and should control or manage.’ ” [Columbia Mut. Ins. Co. v. 
Schauf, 967 S.W.2d 74, 77 (Mo.1998), quoting James T. Hendrick 
and James P. Wiezel, The New Commercial General Liability 
Forms—An Introduction and Critique, Fedn. of Ins. & Corporate 
Counsel Quarterly 319, 322 (Summer 1986).]  Courts generally 
conclude that the policies are intended to insure the risks of an 
insured causing damage to other persons and their property, but 
that the policies are not intended to insure the risks of an insured 
causing damage to the insured’s own work.  [Id.]  In other words, 
the policies do not insure an insured’s work itself; rather, the 
policies generally insure consequential risks that stem from the 
insured’s work. 
 
Heile v. Herrmann, 136 Ohio App.3d 351, 353, 736 N.E.2d 566 (1st Dist.1999).  
See also ACUITY v. Burd & Smith Constr., Inc., 2006 ND 187, 721 N.W.2d 33, 
¶ 12 (holding that a claim of faulty workmanship that results in damage to 
property other than the work product is an accident and that “a CGL policy is not 
intended to insure business risks that are the normal, frequent, or predictable 
consequences of doing business and which businesses can control and manage. 
* * * A CGL policy does not insure the insured’s work itself; rather, it insures 
consequential damages that stem from that work. * * * As a result, a CGL policy 
may provide coverage for claims arising out of tort, breaches of contract, and 
statutory liabilities as long as the requisite accidental occurrence and property 
damage are present”); Century Indemn. Co. v. Golden Hills Builders, Inc., 348 
SUPREME COURT OF OHIO 
8 
 
S.C. 559, 565-566, 561 S.E.2d 355 (2002) (holding that under a CGL policy, an 
insurer had no duty to defend its insured in an action resulting from faulty 
workmanship and that a CGL policy “ ‘is not intended to insure business risks, 
i.e., risks that are the normal, frequent, or predictable consequences of doing 
business, and which business management can and should control or manage.’ 
[Rowland H. Long, The Law of Liability Insurance] § 10.01[1].  Specifically, ‘the 
policies do not insure [an insured’s] work itself, but rather, they generally insure 
consequential risks that stem from that work.’ Id.”). 
{¶ 11} Here, all of the claims against which Westfield is being asked to 
defend and indemnify Custom relate to Custom’s work itself, i.e., the alleged 
defective construction of and workmanship on the steel grain bin.  Although it is a 
widely accepted principle that such claims are not covered by CGL policies, our 
inquiry cannot and must not end there.  The issue we must decide is whether the 
CGL policy in the present case provides coverage to Custom for its alleged 
defective construction of and workmanship on the steel grain bin.  Specifically, 
we must decide whether Custom’s alleged defective construction of and 
workmanship on the steel grain bin constitute property damage caused by an 
“occurrence.” 
{¶ 12} In the CGL policy here, the word “occurrence” is defined as “an 
accident, including continuous or repeated exposure to substantially the same 
general harmful conditions.”  The word “accident,” however, is not defined in the 
CGL policy.  Therefore, “accident” must be given its “natural and commonly 
accepted meaning.”  Gomolka v. State Auto. Mut. Ins. Co., 70 Ohio St.2d 166, 
167-168, 436 N.E.2d 1347 (1982). 
{¶ 13} We have defined “accidental” as “unexpected, as well as 
unintended.”  Hybud Equip. Corp. v. Sphere Drake Ins. Co., 64 Ohio St.3d 657, 
666, 597 N.E.2d 1096 (1992).  In defining the ordinary meaning of “accident” in 
the context of a CGL policy that, too, did not include a definition of the word, our 
January Term, 2012 
9 
 
sister court in Kentucky held, “Inherent in the plain meaning of ‘accident’ is the 
doctrine of fortuity.  Indeed, ‘[t]he fortuity principle is central to the notion of 
what constitutes insurance * * *.’ ”  Cincinnati Ins. Co. v. Motorists Mut. Ins. Co., 
306 S.W.3d 69, 74 (Ky.2010), quoting Corpus Juris Secundum, Insurance, 
Section 1235 (2009).  Similarly, the Eleventh District has held: 
 
“ ‘Insurance coverage is bottomed on the concept of 
fortuity.  Applying this rule in the construction context, truly 
accidental property damage generally is covered because such 
claims and risks fit within the statistical abstract.  Conversely, 
faulty workmanship claims generally are not covered, except for 
their consequential damages, because they are not fortuitous. In 
short, contractors’ “business risks” are not covered by insurance, 
but derivative damages are.  The key issues are whether the 
contractor controlled the process leading to the damages and 
whether the damages were anticipated. 
“ ‘Coverage analysis largely turns on the damages sought.  
If the damages are for the insured’s own work, there is generally 
no coverage.  If the damages are consequential and derive from the 
work the insured performed, coverage generally will lie.  The 
underwriting intent is to exclude coverage for the contractor’s 
business 
risks, 
but 
provide 
coverage 
for 
unanticipated 
consequential damages.’ ”  (Emphasis added.)  [Indiana Ins. Co. v. 
Alloyd Insulation Co., 2d Dist. No. 18979, 2002-Ohio-3916] ¶ 27–
28, quoting Franco, Insurance Coverage for Faulty Workmanship 
Claims Under Commercial General Liability Policies (1994), 30 
Tort and Ins. L.J. 785, 785-787. 
 
SUPREME COURT OF OHIO 
10 
 
JTO, Inc. v. State Auto Mut. Ins. Co., 194 Ohio App.3d 319, 2011-Ohio-1452, 956 
N.E.2d 328, ¶ 32–33 (11th Dist.). 
{¶ 14} We agree that claims for faulty workmanship, such as the one in 
the present case, are not fortuitous in the context of a CGL policy like the one 
here.  In keeping with the spirit of fortuity that is fundamental to insurance 
coverage, we hold that the CGL policy does not provide coverage to Custom for 
its alleged defective construction of and workmanship on the steel grain bin.  Our 
holding is consistent with the majority of Ohio courts that have denied coverage 
for this type of claim.  The majority view is that claims of defective construction 
or workmanship are not claims for “property damage” caused by an “occurrence” 
under a CGL policy.  E.g., Bogner Constr. Co. v. Field & Assocs., 5th Dist. No. 
08-CA-11, 2009-Ohio-116, at ¶ 51 and 44 (holding that there was no coverage 
because “there was no ‘occurrence’ within the meaning of the policy” because 
“defective workmanship does not constitute an accident or an ‘occurrence’ under 
a Commercial General Liability policy”); Paramount Parks, Inc. v. Admiral Ins. 
Co., 12th Dist. No. CA2007-05-0666, 2008-Ohio-1351, at ¶ 25 (holding that “a 
CGL policy such as the one at issue here does not insure against claims for 
defective or negligent workmanship or construction because defective 
workmanship does not constitute an ‘accident,’ and therefore claims for defective 
or negligent workmanship do not constitute an occurrence under the policy”); 
Westfield Ins. Co. v. Coastal Group, Inc., 9th Dist. No 05CA008664, 2006-Ohio-
153, at ¶ 9-10 (holding that a contractor’s delay in remedying deficiencies in its 
work is a claim for economic losses and “not an ‘accident’ and therefore, not an 
‘occurrence’ ”); Heile v. Herrmann, 136 Ohio App.3d 351, 353-354, 736 N.E.2d 
566 (1st Dist.1999) (holding that “courts in Ohio, as well as the majority of courts 
in jurisdictions throughout the country, have concluded that defective 
workmanship does not constitute an ‘occurrence’ in [CGL] policies” [footnotes 
omitted]). 
January Term, 2012 
11 
 
{¶ 15} In Bogner, the insurance policy at issue defined “occurrence” as “ 
‘an accident, including continuous or repeated exposure to conditions, which 
results in bodily injury or property damage neither expected nor intended from the 
standpoint of the Insured.’ ”  Bogner, 2009-Ohio-116, at ¶ 41.  The Fifth 
Appellate District held: 
 
“[T]here is no coverage under a general comprehensive liability 
policy since defective workmanship does not constitute an 
‘accident’ and since, without an ‘accident,’ there can be no 
occurrence as such term is defined in the insurance policy. * * * 
“* * * 
“Accordingly, since there was, therefore, no property 
damage caused by an ‘occurrence,’ which the general commercial 
liability insurance policy in this matter defines as an ‘accident,’ 
[the insured] was not entitled to coverage under such policy.” 
 
Id. at ¶ 46–48, quoting Environmental Exploration Co. v. Bituminous Fire & 
Marine Ins., Co., Stark App. No. 1999CA00315, 2000 WL 1608908 at *6 (Oct. 
16, 2000). 
{¶ 16} Similarly, in Essex Ins. Co. v. Holder, 370 Ark. 465, 261 S.W.3d 
456 (2008), the Arkansas Supreme Court reached the same result.  The issue was 
“whether defective construction or workmanship is an ‘accident’ and, therefore, 
an ‘occurrence’ within the meaning of commercial general liability insurance 
policies.”  Id., 261 S.W.3d at 457.  In Essex, a couple had contracted with a 
builder to build a home.  Before the home was completed, the couple sued the 
builder, seeking damages for breach of contract, breach of an express warranty, 
breach of implied warranties, and negligence.  They alleged that they had suffered 
damages from the builder’s delays, employment of incompetent subcontractors, 
SUPREME COURT OF OHIO 
12 
 
and defective or incomplete construction.  The builder then demanded that Essex 
Insurance Company defend him in the action under his CGL policies. 
{¶ 17} Essex asserted that there was no coverage under any of the CGL 
policies for the alleged damages.  The federal district court certified this question 
of Arkansas law to the Arkansas Supreme Court to decide. 
{¶ 18} The Arkansas court held that “the contractor’s obligation to repair 
or replace its subcontractor’s defective workmanship could not be deemed 
unexpected on the part of the contractor, and therefore, failed to constitute an 
‘event’ for which coverage existed under the policy.”  Id., 261 S.W.3d at 459, 
citing Nabholz Constr. Corp. v. St. Paul Fire & Marine Ins. Co., 354 F.Supp.2d 
917, 921-922 (E.D.Ark.2005).  Therefore, the Arkansas Supreme Court held that 
“defective workmanship standing alone—resulting in damages only to the work 
product itself—is not an occurrence under a CGL policy.”  Id.  And as the court 
pointed out, to protect itself from faulty performance by a subcontractor, a 
contractor can require the subcontractor to provide a performance bond. 
{¶ 19} Based on our review of the purpose of a CGL policy and of the 
majority view of our appellate courts that have addressed this issue and the view 
of our sister court in Arkansas, we hold 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 such as the 
one in the present case. 
Second Certified State-Law Question 
{¶ 20} Because we answered the first question in the negative, the second 
certified state-law question is moot. 
CONCLUSION 
{¶ 21} We answer the first certified state-law question in the negative and 
hold that claims of defective construction or workmanship brought by a property 
owner are not claims for “property damage” caused by an “occurrence” under a 
January Term, 2012 
13 
 
commercial general liability policy.  We do not reach the second certified state-
law question, as it is unnecessary to do so. 
So answered. 
LUNDBERG STRATTON, LANZINGER, CUPP, and MCGEE BROWN, JJ., 
concur. 
O’DONNELL, J., concurs in judgment only. 
PFEIFER, J., dissents. 
__________________ 
PFEIFER, J., dissenting. 
{¶ 22} I dissent, first, because I believe this court should not be answering 
this question at this time.  The question the majority leaves unanswered is the 
only question truly at issue in this case.  Second, I dissent from the majority’s 
response to the first certified question of law. 
The Wrong Question 
{¶ 23} The district court determined that it did not have to answer the 
question of whether claims of defective construction/workmanship are claims 
created by an “occurrence” under a commercial general liability (“CGL”) policy.  
Instead, it answered the question it deemed dispositive—whether the policy’s 
contractual liability exclusion precluded coverage for claims for defective 
construction/workmanship in this case.  Even at the trial level, Westfield 
Insurance Company sought certification to this court for a determination of the 
two issues it raises here, but the district court denied the motion.  I agree with the 
dissenting judge of the court of appeals—Westfield’s revival of the motion to 
certify at the appellate level was an end run to evade abuse-of-discretion review 
of the district court’s denial of the motion for certification.  As Judge McKeague 
wrote below, “the proper course would have been for Westfield to appeal the 
district court’s denial of the motion to certify.” 
SUPREME COURT OF OHIO 
14 
 
{¶ 24} Custom Agri Systems appealed the district court’s determinative 
ruling on the policy exclusion, but Westfield again sought certification to this 
court—this time from the court of appeals—on the broader issue of whether 
defective workmanship constitutes an “occurrence” under a CGL policy.  The 
district court had concluded that it was unnecessary to even meet that question, 
and as Judge McKeague noted, “there is absolutely no reason to certify the first 
question at this stage of the litigation.”  If the appellate court first overruled the 
district court on the contractual exclusion issue, it might then become appropriate 
for the panel, or the district court on remand, to certify the question to this court.  
Until then, Judge McKeague wrote, the circuit court “should not be in the 
business of certifying questions that need not be resolved.” 
{¶ 25} The first certified question is a big question, and an open question, 
which Westfield really wants answered.  But its desire to resolve an issue that 
must arise with its policyholders fairly often does not create in this court an 
obligation to answer it in this case.  This is not “Dear Abby.” 
The Wrong Answer 
{¶ 26} I also dissent from the majority’s response to the first certified 
question, “Are claims of defective construction/workmanship brought by a 
property owner claims for ‘property damage’ created by an ‘occurrence’ under a 
commercial general liability policy?”  The majority answers in the negative.  I 
would answer that if the defective construction is accidental, it constitutes an 
“occurrence” under a CGL policy.  “[A] strong recent trend in the case law 
interprets the term ‘occurrence’ to encompass unanticipated damage to 
nondefective property resulting from poor workmanship.” Greystone Constr., Inc. 
v. Natl. Fire & Marine Ins. Co., 661 F.3d 1272, 1282 (10th Cir.2011).  That is not 
to say that an exclusion in the policy might not relieve the insurer of the duty to 
provide coverage. 
January Term, 2012 
15 
 
{¶ 27} The majority holding is too broad for the facts of this case.  
Determining that defective workmanship cannot result in a covered occurrence 
under a CGL policy forecloses too many other potential cases.  The question 
posed by the federal court concerns the initial grant of coverage; it does not relate 
to any possible exclusions.  In Zanco, Inc. v. Michigan Mut. Ins. Co., 11 Ohio 
St.3d 114, 464 N.E.2d 513 (1984), this court faced a similar CGL policy and a 
similar set of facts.  In Zanco, condominium owners alleged that the contractor, 
Zanco, breached its duty to construct the condominiums in a workmanlike 
manner, thereby causing defects in the structure.  Zanco did not deny the defects, 
but rather claimed that the fault lay with its suppliers, who allegedly furnished 
Zanco with defective materials.  Zanco sought coverage under its CGL insurance 
contract.  The court looked to the entire contract to determine the issue.  The court 
did not expressly rule on the issue of whether the damage to the condominiums 
was “property damage” caused by an “occurrence,” but did indicate support for 
the idea that at that threshold level, there was coverage but that the policy 
exclusions were ultimately determinative: 
 
Zanco maintains, and the court of appeals agreed, that the 
counterclaim 
alleged 
“property 
damage” 
caused 
by 
an 
“occurrence” as those terms are defined in the policies.  Although a 
perfectly credible argument can be made that the allegations in the 
Pinecrest counterclaim were within these initial provisions for 
coverage, the insurance contracts must be examined in their 
entirety to determine if there are any applicable exceptions to their 
coverage. A careful review of the exclusions contained in the 
policies reveals that Michigan Mutual owed no duty to defend 
under these facts. 
 
SUPREME COURT OF OHIO 
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(Footnote omitted.)  Id. at 115-116. 
{¶ 28} Again, the question we are answering does not consider 
exclusions—it deals with the initial grant of coverage.  Under the policy at issue, 
the insurance covers “ ‘property damage’ * * * caused by an ‘occurrence’ that 
takes place in the ‘coverage territory.’ ”  The policy defines an “occurrence” as 
“an accident, including continuous or repeated exposure to substantially the same 
general harmful conditions.”  The key question is whether defective workmanship 
can be considered accidental.  Given this court’s definition of “accidental,” I 
would hold that the initial grant of coverage would apply in certain instances of 
defective workmanship, those in which the damage was not intentional. 
{¶ 29} This court’s definition of “accidental” is broad, covering 
unexpected, unintentional happenings: 
 
In Hybud Equip. Corp. v. Sphere Drake Ins. Co. (1992), 64 Ohio 
St.3d 657, 666, 597 N.E.2d 1096, we stated that “[i]n its common, 
ordinary use, the word ‘accidental’ means unexpected, as well as 
unintended.” (Emphasis added.) We similarly recognized in 
Gearing v. Nationwide Ins. Co. (1996), 76 Ohio St.3d 34, 38, 665 
N.E.2d 1115, that “inherent in a policy's definition of ‘occurrence’ 
is the concept of an incident of an accidental, as opposed to an 
intentional, nature.” (Emphasis altered.) Furthermore, in Rothman 
v. Metro. Cas. Ins. Co. (1938), 134 Ohio St. 241, 247, 12 O.O. 50, 
16 N.E.2d 417, this court acknowledged that “ ‘accident,’ as the 
term is ordinarily used, is a more comprehensive term than 
‘negligence,’ and in its common signification means an unexpected 
happening without intention or design.” Id. at 247, 12 O.O. 50, 16 
N.E.2d 417, citing Commonwealth Cas. Co. v. Headers (1928), 
118 Ohio St. 429, 161 N.E. 278.  Thus, we held in Rothman that 
January Term, 2012 
17 
 
absent contrary language in a policy, “if the injury was not 
intentionally caused, then it was accidentally suffered.” Id. at 246, 
12 O.O. 50, 16 N.E.2d 417. 
 
Safeco Ins. Co. of Am. v. White, 122 Ohio St.3d 562, 2009-Ohio-3718, 913 
N.E.2d 426, ¶ 21. 
{¶ 30} Our first-level analysis should thus focus upon whether the 
defective workmanship was intentionally caused.  In Sheehan Constr. Co., Inc. v. 
Continental Cas. Co., 935 N.E.2d 160, 170 (Ind.2010), modified on rehearing, 
938 N.E.2d 685 (Ind.2010), the Supreme Court of Indiana established that intent 
is the key to determining whether a construction defect is accidental:   
 
Implicit in the meaning of “accident” is the lack of intentionality. 
* * * The question presented is whether faulty workmanship is an 
accident within the meaning of a standard CGL policy.  In our 
view the answer depends on the facts of the case.  For example, 
faulty workmanship that is intentional from the viewpoint of the 
insured cannot be an “accident” or an “occurrence.” See Lamar 
Homes [Inc. v. Mid-Continent Cas. Co., 242 S.W.3d [1] at 8–9 
[(Tex.2007)].  On the other hand if the faulty workmanship is 
“unexpected” and “without intention or design” and thus not 
foreseeable from the viewpoint of the insured, then it is an accident 
within the meaning of a CGL policy. 
 
{¶ 31} A deliberate act—such as performing construction work—can 
have accidental consequences.  “[A] deliberate act, performed negligently, is an 
accident if the effect is not the intended or expected result; that is, the result 
SUPREME COURT OF OHIO 
18 
 
would have been different had the deliberate act been performed correctly.”  
Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 8 (Tex.2007). 
{¶ 32} The majority relies on an Arkansas case and some Ohio appellate 
cases that seem to say that defective workmanship that results in damage only to 
the work product itself cannot constitute an occurrence.  But the character of the 
damage is immaterial in regard to the threshold question of whether faulty 
construction is an occurrence: “The CGL policy * * * does not define an 
‘occurrence’ in terms of the ownership or character of the property damaged by 
the act or event.  Rather, the policy asks whether the injury was intended or 
fortuitous, that is, whether the injury was an accident.” Id.  Cases that focus on the 
type of damage resulting from faulty construction do not truly address the issue of 
whether there has been an “occurrence”: 
 
The reasoning found in these cases simultaneously fails to 
evaluate the policy as a whole and collapses what should be a 
separate and specific analysis of the policy exclusions into the 
coverage grant analysis of the term “occurrence.” By focusing on 
the kind of property damage alleged to determine whether there 
has been an “occurrence,” these decisions improperly apply the 
policy exclusions to determine whether there has been an 
“occurrence.” 
 
(Emphasis sic; footnote omitted.) Clifford J. Shapiro, Point/Counterpoint: 
Inadvertent Construction Defects Are an "Occurrence" under CGL Policies, 22 
Construction Lawyer 13, 17 (Spring 2002). 
{¶ 33} The better-reasoned Ohio appellate cases recognize that a CGL 
policy is not the equivalent of a performance bond but also recognize that “the 
rationale for [that] proposition is not that the allegations of negligent construction 
January Term, 2012 
19 
 
or design practices do not fall within the broad coverage for property damage 
caused by an occurrence, but that * * * the damages resulting from such practices 
are usually excluded from coverage by the standard exclusions found in such 
policies.”  Erie Ins. Exchange v. Colony Dev. Corp., 136 Ohio App.3d 406, 414, 
736 N.E.2d 941 (1999).  In Erie Ins. Exchange v. Colony Dev. Corp., 136 Ohio 
App.3d 419, 422, 736 N.E.2d 950 (2000), fn. 1, the court pointed out the illogic of 
basing a determination of whether a defect is an occurrence on what property was 
damaged: 
 
 
The logical basis for the distinction between damage to the 
work itself (not caused by an occurrence) and damage to collateral 
property (caused by an occurrence) is less than clear.  Both types 
of property damage are caused by the same thing—negligent or 
defective work.  One type of damage is no more accidental than 
the other. * * * [T]he basis for the distinction is not found in the 
definition of occurrence but by application of the standard “work 
performed” and “work product” exclusions found in a 
[c]ommercial general liability insurance policy. 
 
{¶ 34} As pointed out by the court in Lee Builders, Inc. v. Farm Bur. Mut. 
Ins. Co., 281 Kan. 844, 856, 137 P.3d 486 (2006), exclusions for work product 
and work performed exist because the initial broad grant of coverage for 
occurrences includes damage caused by accidental defective workmanship: 
 
 
“A court need only ask why the CGL policy includes an 
exclusion for property damage to the insured’s own work and that 
of its subcontractors to understand that it would be nonsensical for 
the policy to include such a provision if this kind of property 
SUPREME COURT OF OHIO 
20 
 
damage could never be caused by an ‘occurrence’ in the first place. 
A court need only ask why the CGL policy specifically includes an 
express exception to the ‘your work’ exclusion for property 
damage arising out of the work of a subcontractor to understand 
that this kind of property damage must be included in the broad 
scope of the term ‘occurrence’ in the coverage grant, and that the 
coverage determination for this kind of property damage must be 
made based on the construction-specific policy exclusions.” 
(Emphasis added.) 
 
Id., quoting Clifford J. Shapiro, The Good, the Bad, and the Ugly: New State 
Supreme Court Decisions Address Whether an Inadvertent Construction Defect Is 
an “Occurrence” under CGL Policies, 25 Construction Lawyer 9, 12 (Summer 
2005). 
{¶ 35} If coverage were inappropriate in this case, it would be by 
operation of the policy’s exclusions, “not because a loss actionable only in 
contract can never be the result of an ‘occurrence’ within the meaning of the 
CGL's initial grant of coverage.  This distinction is sometimes overlooked, and 
has resulted in some regrettably overbroad generalizations about CGL policies 
* * *.”  Am. Family Mut. Ins. Co. v. Am. Girl, Inc., 268 Wis.2d 16, 2004 WI 2, 
673 N.W.2d 65, ¶ 39. 
Conclusion 
{¶ 36} The majority in this case makes an overbroad generalization about 
CGL policies in Ohio.  Answering a question it should not even be answering, the 
majority misinterprets the contract and misapplies Ohio law, leaving us on the 
wrong side of the divide of states that have considered this question.  
Accordingly, I dissent. 
__________________ 
January Term, 2012 
21 
 
 
Davis & Young and Richard M. Garner, for petitioner. 
______________________