Title: Ward v. United Foundries, Inc.

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Ward v. United Foundries, Inc., Slip Opinion No. 2011-Ohio-3176.] 
 
 
 
 
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. 2011-OHIO-3176 
WARD ET AL. v. UNITED FOUNDRIES, INC., APPELLANT, ET AL.;  
GULF UNDERWRITERS INSURANCE COMPANY, APPELLEE. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Ward v. United Foundries, Inc.,  
Slip Opinion No. 2011-Ohio-3176.] 
Stop-gap endorsement to commercial liability insurance policy — Substantial-
certainty intentional tort — Language in a commercial liability insurance 
policy stating that insurance does not apply to bodily injury resulting from 
an act that is “determined” to have been committed by an insured with the 
belief that an injury is substantially certain to occur does not require a 
final determination by a fact-finder before the insurer can refuse to defend 
a claim alleging a substantial-certainty employer intentional tort. 
(Nos. 2010-1049 and 2010-1275 — Submitted April 5, 2011 — Decided 
July 6, 2011.) 
APPEAL from and CERTIFIED by the Court of Appeals for Stark County,  
09CA-019, 2010-Ohio-6694. 
__________________ 
SUPREME COURT OF OHIO 
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LUNDBERG STRATTON, J. 
{¶ 1} This dispute involves the interpretation of a stop-gap endorsement 
to a commercial liability insurance policy that appellee, Gulf Underwriters 
Insurance Company (“Gulf”), issued to appellant, United Foundries, Inc. 
(“United”).  United seeks coverage under the policy for its defense in a 
substantial-certainty intentional tort1 lawsuit filed by a United employee.  Gulf 
has denied that it has a duty to defend United because the intentional-tort claims 
in the underlying complaint are outside the coverage of the policy.  The trial court 
held in favor of United, and the court of appeals reversed. 
{¶ 2} For the reasons that follow, we affirm the judgment of the court of 
appeals. 
Gulf Policy 
{¶ 3} Gulf issued a commercial general liability policy (“CGL policy”) 
to United with an endorsement for employer’s liability coverage, known as a stop-
gap endorsement.  Under Section I of the CGL policy, Gulf agreed to 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” and “to 
defend the insured against any ‘suit’ seeking those damages.”  However, under 
that same section of the policy, Gulf had “no duty to defend the insured against 
any ‘suit’ seeking damages for ‘bodily injury’ or ‘property damage’ to which this 
insurance does not apply.” 
{¶ 4} The CGL policy excluded coverage for injuries “expected or 
intended from the standpoint of the insured,” bodily injury to an employee arising 
in the course of employment, and injury to the family of an employee as a 
                                      
1 A substantial-certainty intentional tort occurs “when [an] employer does not directly intend to 
injure [an] employee, but acts with the belief that injury is substantially certain to occur.”  Penn 
Traffic Co. v. AIU Ins. Co., 99 Ohio St.3d 227, 2003-Ohio-3373, 790 N.E.2d 1199, ¶ 6. 
January Term, 2011 
3 
 
consequence of the employee’s injury, as well as for contribution claims and 
claims alleging liability under the dual-capacity doctrine. 
Stop-Gap Endorsement 
{¶ 5} The stop-gap endorsement modified the CGL policy by deleting 
the exclusions in Section I of the CGL policy “with respect to ‘bodily injury’ 
included within the ‘employer’s liability hazard’ ” and replacing them with the 
exclusions listed in the stop-gap endorsement. 
{¶ 6} The following exclusion in the stop-gap endorsement is the subject 
of this dispute: 
{¶ 7} “This insurance does not apply to: 
{¶ 8} “* * * 
{¶ 9} “e.  ‘Bodily injury’ intentionally caused or aggravated by you, or 
‘bodily injury’ resulting from an act which is determined to have been committed 
by you with the belief that an injury is substantially certain to occur.” 
Procedural History 
{¶ 10} David Ward (“Ward”) and his wife filed a complaint against 
Ward’s employer, United, alleging claims for employer intentional tort and 
seeking compensatory and punitive damages and damages for loss of consortium.  
While the case was pending, United filed an action against its insurance agency 
and broker for failure to obtain the coverage that United had requested and against 
Gulf for a declaration that Gulf had a duty to defend and indemnify United for the 
claims asserted by Ward.  The cases were eventually consolidated.  The trial court 
concluded that if the stop-gap endorsement excluded coverage for substantial-
certainty intentional torts, then the Gulf policy was illusory.  The court granted 
summary judgment to United on the issue of Gulf’s duty to provide a defense in 
the underlying case. 
{¶ 11} The Fifth District Court of Appeals reversed.  The appellate court 
determined that the claims alleged in the underlying complaint were not within 
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the coverage provided in the policy; thus, Gulf had no duty to defend or 
indemnify United.  The court rejected United’s argument that it is entitled to a 
defense because the underlying tort claim had not yet been “ ‘determined to have 
been committed.’ ”  Ward v. United Foundries, Inc., Stark App. No. 09CA-019, 
2010-Ohio-6694, ¶ 83, quoting United’s brief.  Instead, the court concluded that 
because the underlying claim was neither potentially nor arguably covered under 
the terms of the policy, Gulf had no duty to defend or indemnify United.  Id. 
{¶ 12} The Fifth District certified that its decision was in conflict with the 
decision of the Third District Court of Appeals in Cooper Tire & Rubber Co. v. 
Travelers Cas. & Sur. Co. (Apr. 23, 2007), Hancock App. No. 5-06-40, 2007-
Ohio-1905.  And we determined that a conflict exists.  126 Ohio St.3d 1579, 
2010-Ohio-4542, 934 N.E.2d 352. 
{¶ 13} This cause is now before this court upon our determination that a 
conflict exists (case No. 2010-1275) and pursuant to the acceptance of a 
discretionary appeal (case No. 2010-1049), 126 Ohio St.3d 1581, 934 N.E.2d 354. 
Certified Conflict 
{¶ 14} We ordered the parties to brief the issue that is stated as follows in 
the court of appeals’ entry certifying the conflict: 
{¶ 15} “Whether an exclusion in a commercial general liability insurance 
policy and/or stop/gap endorsement form, stating the insurance does not apply to 
‘bodily injury intentionally caused or aggravated by you, or bodily injury 
resulting from an act which is determined to have been committed by you with the 
belief that an injury is substantially certain to occur’ requires a final determination 
made by either a judge or a jury before the defense of a claim for a substantial 
certainty employer intentional tort can be denied.” 
{¶ 16} The parties agree that the stop-gap endorsement excludes coverage 
for a substantial-certainty intentional tort and that if United is liable to Ward in 
the underlying action, Gulf has no duty to indemnify United.  We need only 
January Term, 2011 
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determine whether the policy obligates Gulf to defend United in the underlying 
action. 
{¶ 17} United contends that the phrase “an act which is determined to 
have been committed by you with the belief that an injury is substantially certain 
to occur” in the Gulf policy requires Gulf to defend United against any complaint 
alleging a substantial-certainty intentional tort until a fact-finding judge or jury 
has “determined” whether or not United is liable for an intentional tort. 
General Insurance Principles 
{¶ 18} 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.  If we must interpret a provision in 
the policy, we 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.  We examine the contract as a whole, which 
means that an endorsement is read as though it is within the policy.  Penn Traffic, 
¶ 30. 
{¶ 19} We have held that the duty to defend is broader than and distinct 
from the duty to indemnify.  Ohio Govt. Risk Mgt. Plan v. Harrison, 115 Ohio 
St.3d 241, 2007-Ohio-4948, 874 N.E.2d 1155, ¶ 19.  The duty to defend is 
determined by the scope of the allegations in the complaint.  Id.  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., ¶ 19.  But if 
all the claims are clearly and indisputably outside the contracted coverage, the 
insurer need not defend the insured.  Id. 
Analysis of Exclusion Language 
SUPREME COURT OF OHIO 
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{¶ 20} The plain language of the exclusion at issue precludes coverage for 
substantial-certainty intentional torts.  The allegations within Ward’s complaint 
fall within this exclusion.  United agrees that if it is liable in the underlying case, 
Gulf has no duty to indemnify United.  Thus, as the court of appeals below 
concluded, because all the claims are clearly and indisputably outside the 
contracted coverage, Gulf is not required to defend United under the terms of the 
policy.  Ward, 2010-Ohio-6694, ¶ 82; Ohio Govt. Risk Mgt., ¶ 19. 
{¶ 21} Nevertheless, in the conflict case, the Third District Court of 
Appeals interpreted the identical language in a policy issued by a different 
company and concluded that the exclusion was ambiguous because it did not 
specify how or by whom the act or failure to act is to be determined.  Cooper 
Tire, 2007-Ohio-1905, ¶ 6.  The Third District acknowledged that the policy 
specifically excluded liability for substantial-certainty intentional torts, but it 
reasoned that the language implied that there must be a determination by either a 
judge or jury for the exclusion to be enforceable.  “Since no judicial determination 
can be made prior to the conclusion of the case, [the insurer] may still have a duty 
to defend without the subsequent liability.”  Id. at ¶ 8. 
{¶ 22} We do not agree with that reasoning.  There is no language in the 
exclusion that implies that a determination by a fact-finder is required before the 
exclusion can be enforced.  Furthermore, even if the phrase were ambiguous, the 
ambiguity would have no legal significance.  There is no set of facts under which 
United would be covered under the CGL policy because all potential claims fall 
with the exclusion.  Furthermore the CGL policy provides that Gulf has “no duty 
to defend the insured against any ‘suit’ seeking damages * * * to which this 
insurance does not apply.” 
{¶ 23} United argues that since the exclusion language uses the past 
tense—“an act which is determined to have been committed by you with the 
belief that an injury is substantially certain to occur—Gulf must provide a defense 
January Term, 2011 
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until it has been determined that the employer committed a tort that would be 
excluded by the policy language.  We do not find this interpretation, which was 
accepted by the Third District in the conflict case, convincing. 
{¶ 24} United contends that it intended to purchase insurance for 
substantial-certainty intentional torts and that if the stop-gap endorsement does 
not provide a defense or indemnification for substantial-certainty intentional torts, 
then the Gulf policy is illusory and unenforceable.  Although the stop-gap 
endorsement may not have added the coverage that United intended, it did add 
coverage for “employer’s liability hazards” that were expressly excluded in the 
CGL policy: coverage for consequential bodily injury (claims by relatives of an 
employee for their injuries resulting as a consequence of the employee’s injury), 
claims alleging liability under the dual-capacity doctrine (liability both as 
employer and in another capacity), and contribution or indemnification claims of 
third parties resulting from workplace injuries.  When there is some benefit to the 
insured from the face of the endorsement, it is not an illusory contract.  State Auto 
Ins. Co. v. Golden (1998), 125 Ohio App.3d 674, 678, 709 N.E.2d 529. 
{¶ 25} United contends that this was not the coverage it intended to 
purchase.  But this is an argument for United to assert against the insurance 
agency and broker who procured the policy, not against the insurer.  For purposes 
of this action, the plain language of the stop-gap endorsement that United 
purchased is plain, unambiguous and not misleading, and the policy is not 
illusory. 
Conclusion 
{¶ 26} We answer the certified-conflict question in the negative.  An 
exclusion in a commercial general liability insurance policy or stop-gap 
endorsement stating that the insurance does not apply to bodily injury 
intentionally caused or aggravated by an insured, or bodily injury resulting from 
an act that is determined to have been committed by an insured with the belief 
SUPREME COURT OF OHIO 
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that an injury is substantially certain to occur does not require a final 
determination by either a judge or a jury before the insurer can refuse to defend a 
claim alleging a substantial-certainty employer intentional tort. 
{¶ 27} We agree with the Fifth District Court of Appeals that the claims 
stated in the underlying complaint are neither potentially nor arguably covered 
under the terms of the policy, and thus, Gulf has no duty under the policy to 
defend United.  Therefore, we affirm the judgment of the court of appeals. 
Judgment affirmed. 
 
O’CONNOR, C.J., and O’DONNELL, LANZINGER, CUPP, and MCGEE 
BROWN, JJ., concur. 
 
PFEIFER, J., concurs in judgment only. 
__________________ 
Pelini, Campbell, Williams & Traub, L.L.C., Craig G. Pelini, and Kristen 
E. Campbell, for appellant. 
Zelle, Hofmann, Voelbel & Mason, L.L.P., and Michael R. Cashman; and 
Roetzel & Andress, L.P.A., and Ronald B. Lee, for appellee. 
_____________________