NOT RECOMMENDED F OR F ULL-TEXT PUBLICATION File Na me: 12a0699n.06 No. 11-3818 UNITED STAT ES COURT OF AP P EALS F OR THE S IXTH CIRCUIT EXP RESS P ACK

AG ING OF OH, INC., P laintif f-App ellant,

v. AMERICAN STATE S INSURANCE CO., Defendan t-Appellee. / O N AP P EAL F ROM THE UNITED STATE S DISTRICT COURT F OR THE NORTHERN DISTRICT O F OHIO

BEFORE: DAUG HTREY and CLAY, Circ uit Jud ges; CLELAND, Distr ict Judge. * CLAY, Circuit Judge. Plaintiff Ex press Packag ing of OH, I nc. appea ls an order g ranting
summary judgme nt t o P l aintiff’s insurer, Def endant Americ an States I nsuranc e Company , on its claim that Def

endant brea ched its duty to indemnify Plaintiff under the terms of its insurance policy

. For the re asons that follow, we AF F IRM

. BACK GR OUND Plaintiff is an Ohio corpor ation “eng ag ed in th e b u s in e s s o f wra pping and packa g ing products for various food producers.” Plaintiff insured it s business throug h a commercial ge nera l liability (CGL ) insuranc e policy

with Defe ndant. I n 2008, Plaintiff was hired to pa ckag e ca ns of dog food for its customer, Mars Petcar e US (“Ma rs”)

. Plaintiff was invited to Mars’ fac tory , wh er e it was gi v en a portion of the fac tory to set up its equipment and perf orm its packa g ing service s. M ar s
The Honor able Rober

t H. Cleland, United States District J udg e for the Eastern District of * Michig an, sitting by

desig nation.No. 11-3818

prepa red and canne d the dog food, g rouped the food into case s consisting of a single lay er of twenty

four ca n s , wr apped the case s in cellophane to preve nt the cans from shifting, and transporte d the

case s to Plaintiff’s workspac e. On ce P l ai ntiff rec eived the case s, it would first remove the cellophane overla

y with a machine it cre ated and owned, call ed the “automate d cutting convey or sy stem.” The machine opera ted as a table fitted with blades on eac h side that wer e desig ned to cut

awa y the cellophane but leave the cans untouched. Plaintiff’ s co n t ra cted employ ees would then

remove the ca

ns from the c ases, c ombine the ca ns into variety -flavor ed pac kag es, and r e-w rap the packa g es with consumer -re ady plastic wra

p containing Mars’ br and and a dvertising information. Sometime betwee n J uly to September 2008, Plaintiff’s automated cutting convey or sy stem malfunctioned and puncture d Mars’ cans in the course of removing the cellophane from around the

cans. Once cut open , t h e d o g food spoiled and the cans exploded. Mars rec alled approximately 821,424 case s of dog food and de stroy ed 13,261 of them. Plaintiff voluntarily compensa ted Mars for the $241,524 loss it suffe red, though the parties never deter mined the cau s e o f t h e machine’ s malfunction. Prior to compensa ting Mars, Plaintiff notified Def endant of Mars’ liability claim and ultimately soug ht full indemnification under its insurance policy for the amount it had paid to Mars. When Def

endant ref used to indemnify Plaintiff on the g round that Mars’ claim was not cover ed in the policy , Plaintiff filed the prese nt action. The case was rem o v ed t o fede ral court based on diversity jurisdiction, wher e the court g rante d summa ry j u d gm en t to Def endant. Plaintiff timely
appea led.

2No. 11-3818 DISCUSSIO N We revie w de novo a district court’s order g ranting summary judgme nt. Holloway v. Brush , 220 F.3d 767, 772 (6th Cir. 2000) (en banc)

. Summary judgme nt is appropr iate wher e “ther e is no g enuine dispute as to a

ny materia l f

act and the movant is e ntitled to judgme nt a s a matter of law.” Fe d. R. C i v . P

. 56(a)

. We view the fac ts and rea sonable infere nces in the light most favor able to Plaintiff as the nonmoving party

. Holloway , 220 F.3d a t 772. Under Ohio law, which the parties ag ree g overns this case , the interpre tation of an insurance
contra ct is a question of law. United Nat’l Ins. Co. v. SST Fitness Corp ., 182 F.3d 447, 449 (6th Cir. 1999); Lager v. Mi l l er -G o n z a l ez , 896 N.E.2d 666, 669 (Ohio 2008). “A policy of insurance is a contra ct and like any other contra ct is to be g iven a rea sonable construction in c onformity with the intention of the parties as g ather ed from the ordinary and co mmonly understood meaning of the lang uag e employ ed.” Dealers Dairy Prods. Co. v. Royal Ins. Co. , 164 N.E.2d 745, 747 (Ohio 1960); Andersen v. Highland House Co. , 757 N.E.2d 329, 332 (Ohio 2001). Po l i cy exclusions must be clea r to combat the g ener al presumption that a claim is included in a policy

. Andersen , 757 N.E.2d
at 332 (citing Home Indem n. Co. of N.Y

. v. Plymouth , 64 N.E.2d 24 8 (O h i o 1 945)). “Where provisions of a contra ct of insurance are rea sonably susceptible of more than one interpre tation, they will be construed strictly ag ainst the insurer and liberally in f avor of the insured.” Lane v. Grange Mut. Cos. , 543 N.E.2d 488, 490 (Ohio 1 9 8 9 ). “[ I ] n order to defe at cover ag e, the insurer must establish not mere ly that the pol icy is capa ble of the construction it favor s, but rathe r t hat s uch an interpre tation is the only one that can fairly be place d on the lang uag e in question.” Andersen , 757 N.E.2d at 332 (interna l quota tion marks omitted). “Ambig uity exis ts only wher e a term cannot be

3No. 11-3818

deter mined from the four corne rs of the ag ree ment or wher e contra ct lang uag e is susceptible to two

or more rea sonable in t er p re t at i ons.” Potti v. Duramed Pharm., Inc. , 938 F.2d 641, 647 (6th Cir. 1991); see Sunoc o, Inc. v . Toledo Edison Co. , 953 N.E.2d 285, 292 (Ohio 2011)

. Plaintiff arg ues that De fenda nt must i ndemnify

it for the losses it suffer ed in the Mar s dog food incident, beca

use that acc ident is cover ed under Coverag e A of the insurance policy for “p roper ty damag e cause d by an occur renc e that takes place within the cover ag e territ o ry . ” Def endant, howev er , points to Coverag e A exclusions j (subsec tions 4 and 6), k, l , and n. The district court found that Plaintif f’ s cl ai m initially fell within Coverag e A, but that exclusion j(6) ultimately

prec luded its recove ry . Ex clusion j(6) of the policy provides, in rele vant part, that Def endant will not indemnify loss for “ proper

ty damag e” to: [t ]hat particula

r part of any proper

ty that m u s t b e restore d, repa ired, or repla ced beca use “y our work” was incor rec tly perf ormed on it. “Proper t y d am age” is define d in rele vant part as “[ p]hy sical i njury to tang ible proper ty , including all resulting loss of use of that proper ty .” The policy also define s the term “y our work” to mean “(1) [w] ork or opera tions perf ormed by y ou o r o n y our behalf ; and (2) [m ]aterials, parts or equipment furnished in c onnection with such wor k or oper ations.” We find that the ca

ns of dog food were tangible pr operty that was phy sically

injured whe n
t h ey were nicked, thus fitting within the “prope rty damag e” require ment. We also find that Plaintiff’s work involved the service of handling the cans and removing the cellophane casing from the cans. I n the proce ss of perf orming this service , Plaintiff’s equip ment malfunctioned and damag ed the cans. I ts work on the cans was thus “inco rr ec t l y p erformed.” The policy lang uag e 4No. 11-3818

appea rs unambig uous as applied to the fac ts of Plaintiff’s claim, and a straig htforwa rd rea ding of that lang uag e demonstrates that the damag e to the cans is excluded from cover ag e by exclusion j(6). See Andersen , 757 N.E.2d at 332. As noted by the district court, sever al decisions of the Ohio C o u rt of Appea ls support our holding. Most analog ous is the decision in W elfle, Inc. v. Motorist Insurance Group , which held that

a CGL j(6) exclusion applied wher e, in the course of removing asphalt from a bridg e surfa ce, the insured’s rotomill malfunctioned and damag ed the u n d e r ly in g b r id g e c o n c r e te deck. No. 06CA0063- M, 2007 WL 1174652, at *3 (Ohio Ct. App. Apr. 23, 2007) (explaining that the exclusion applied beca use the insured “misused its rotomill while using it to remove asphalt fr om the bridg e deck there by damag ing the bridg e deck” ). I n another fac tually simil ar case , LISN, Inc. v. C o mm er cial Union Insurance Cos. , the Ohio Court of Appea ls found that a CGL j(6) exclusion applied wher e, in the course of removing old cable wires, the insured acc identally cu t n ew cable wires in the
proce ss. 615 N.E.2d 650, 653–54 (Ohio Ct. App. 1992) (noting that the j(6) exclusion is a “business risk” exclusion, and the possibili ty of damag ing some wires while removing o t h er s wa s a risk “inher ent to perf

orming a particula

r ty pe of work” ). I n the case befor e us, Plaintiff was hired to work with the cans, did in fac t work on the cans by removing the cellophane around them and repa ckag ing them, and improperly perf ormed its service when its machine came into direc t contac t with the cans, nicked the cans, and damag ed the cans. I n light of W elfle and LISN

, we find unpersua sive Plaintiff’s
arg ument that the exclusion cannot apply beca use it was not hired to “ work on” the cans, but only
to work on the cellophane around the cans. See W elfe , 2007 WL 1174652, at * 3 (hol ding that an insured who misuses a tool to remove something from around an object and there by damag es the

5No. 11-3818

object leads to the conclusio n t h at the insured “wor ked on” the object itself). I n confor mity with these persua sive Ohio ap p ell ate court decisions, we conclude that the j(6) exclusion applies and
prec ludes Plaintiff’s rec overy . Other Six th Circuit and Ohio decisions cited by Plaintiff are distinguishable. I n Beav erdam Contracting, Inc. v. Erie Insurance Co. , an insured was hired to clea r a parc el of land but mistakenly clea red land belong ing to a third p ar ty who was not the insured’s client. No. 1-08-17, 2008 WL 4378153, at *1 (Ohio Ct. App. Sept. 29, 2008). The court reje cted the insurance company ’s claim that the CGL j(6) exclusion applied, beca use the claim involved “ac cidental damag e to the proper ty of a third party who was not in any way involved with the contra cted work projec t.” Id. at *10. The court uphe ld but dist inguishe d LISN and W elfle , beca

use, in those ca ses: the contra ctors wer e in the proce ss of doing the job they wer e hired to do, they wer e working on their cu s tomers’ proper ty , and the damag es wer e sustained by the customer—not a third pa

r ty

. E s s e n ti a lly , the insured parties incorre ctly perf ormed the work they wer e hired to do for their customers, and the customers soug ht compensa tion for damag es. Id. at *8. We believe that the prese nt case is more analog ous to LISN and W elfle , beca use Plaintiff

was perf orming th e wo rk t h at i t was hired to do, but perf ormed it improperly

. Plaintiff was not perf orming work on proper

ty belong ing to a non-client, third party as was the case in Beav erdam

. Plaintiff also cites our decision in Fortney & W eygandt, Inc. v. Ameri ca n Ma n ufacturers Mutual Insurance Co. , wher e an insured had laid a defe ctive foundation, resulting in damag e to the foundation and underg round utilit y lines as well as the structure later built above. 595 F.3d 308, 309 (6th Cir. 2010). We found that the CGL j(6) exclusion barr ed the insured’s rec overy for damag e to the founda tion, but permitted recove ry for damag e to the bui lding, because the ex clusion “applies

6No. 11-3818

only to the cost of repa iring or repla cing distinct c omponent parts on which the insured perf ormed defe ctive work.” Id. at 311 (citing Mid-Continent Cas. Co. v. JHP Dev ., Inc. , 557 F.3d 207, 215–17 (5th Cir. 2 0 0 9 ))

. Be ca u se the work on the structure was perf ormed corr ectly , cover ag e was not excluded even though the insured’s “incor rec t work” on the foundation was the proxi mate cause of the damag e to the building. Id

. Fortney ’s holding is in harmony with the Ohio case s, but is fac tually distinguishable from those case s and the case befor e us. As discussed above, Plaintiff’s work on the
actua l cans was defe ctive, so this case falls on the other s ide of the fac tual distinction draw n by Fortney

. Be cause we ag ree th at ex clusion j(6) applies to Plaintiff’s claim, we need not decide the applicability

of other e x clusions or the issue of c overa g e, g ener ally

. CONCLUSION Fo r the rea sons discussed above, we AF F IRM the district court order g ranting su m m ar y judgme nt to Defe ndant.

7