1 

IN THE UNITED STATES DISTRICT COURT 

FOR THE SOUTHERN DISTRICT OF OHIO 

WESTERN DIVISION 

Allied World Surplus Lines Insurance 

Company, 

 Plaintiff/Counterclaim Defendant, 

 v. 

Richard Goettle, Inc., 

 Defendant/Counterclaim Plaintiff. 

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Case No. 1:17-cv-670 

Judge Susan J. Dlott 

Order on Cross-Motions for Summary 

Judgment

This matter is before the Court on cross-Motions for Summary Judgment. In this 

insurance case, Allied World Surplus Lines Insurance Company (“Allied World”) seeks a 

declaration that it does not owe its insured, Richard Goettle, Inc. (“Goettle”), a duty of defense or 

indemnification arising from a construction lawsuit pending in Louisiana. Goettle has filed a 

Counterclaim against Allied World for defense and indemnification. For the reasons that follow, 

the Court will DENY IN PART Allied World’s Motion for Summary Judgment (Doc. 62) and 

GRANT IN PART Goettle’s Motion for Summary Judgment (Doc. 61). 

I. BACKGROUND1

 Allied World, a subsidiary of Allied World Assurance Company Holdings, GmbH, is an 

Arkansas corporation with its principal place of business in New York. Allied World provides 

professional liability coverage to engineering and contracting firms for their liability risks. 

 Goettle is an Ohio corporation with its principal place of business in Ohio. It is an 

engineering and construction firm that provides commercial engineering, earth retention, pile 

foundation systems, and other related services. 

 

1

 The material facts are derived in part from the parties’ Proposed Undisputed Facts (Docs. 61-1, 62-2) and the 

Responses thereto (Doc. 65-1, 66-1). 
2 

 Goettle utilized USI Insurance Services (“USI Insurance”) as its insurance broker. 

(Ginter Dep., Doc. 41 at PageID 510.) USI Insurance contacted Cincinnati Intermediaries, a 

wholesale insurance brokerage firm, to assist with applying for Goettle’s professional liability 

insurance through Allied World. 

 In April 2016, Goettle applied for an architects and engineers professional liability policy 

from Allied World using an application sent to Allied World by Richard Bolan of Cincinnati 

Intermediaries. On June 15, 2016, Denise Rose, an underwriter with Allied World, emailed Mr. 

Bolan of Cincinnati Intermediaries a quote for the insurance, a copy of the draft policy, and 

various draft endorsements to the policy. Among those endorsements sent by Allied World to 

Cincinnati Intermediaries was a draft endorsement entitled “COVERED OPERATIONS—

POLLUTION COVERAGE ENDORSEMENT.” On June 24, 2016, Mr. Bolan sent to Ms. Rose 

an email suggesting an amendment to the pollution coverage endorsement which would add a 

new category to “who might also be an Additional Insured.” (Doc. 41-1 at PageID 571–572.) 

On June 27, 2016, John Savickas, a senior underwriter at Allied World, emailed Mr. Bolan an 

amended version of the pollution coverage endorsement. Later that day, Beth Malone of USI 

Insurance instructed Cincinnati Intermediaries to “bind and issue the Professional/Pollution 

Liability and Excess Professional/Pollution Liability as follows: . . . 1. With the revised Pollution 

form attached.” (Doc. 41-2 at 579.) 

A. The Professional Liability Policy 

 Allied World issued Goettle a Constructors Professional Liability and Protective Policy 

No. 0310-2122 for the Policy Period from June 28, 2016 to June 28, 2017 (“2016–2017 Policy”). 

(Doc. 41-3 at PageID 631.) Allied World is referred to as the Company and Goettle as the 

Insured in the Policy. The Declarations Page stated that “This Policy is comprised of the 
3 

Declarations Page, the Policy Form, the Schedules, the Application and [seven] endorsements.” 

(Doc. 41-3 at PageID 632; Doc. 41-7 at PageID 689.)2

 The Declarations Page stated on its face: 

THIS IS A CLAIMS MADE AND REPORTED POLICY WHICH APPLIES 

ONLY TO CLAIMS FIRST MADE DURING THE POLICY PERIOD AND 

REPORTED IN WRITING TO THE COMPANY PURSUANT TO THE TERMS 

OF THE POLICY. 

__________________________________________________________________ 

PLEASE READ THE ENTIRE POLICY CAREFULLY AND DISCUSS THE 

COVERAGE HEREUNDER WITH YOUR INSURANCE BROKER. 

(Doc. 41-3 at PageID 631; Doc. 41-7 at PageID 688.) 

 The 2016–2017 Policy provided claim limits of $5,000,000 for Each Claim Limit and for 

Policy Term Aggregate Limit. (Doc. 41-3 at PageID 631.) Goettle paid a total premium of 

$135,550 for the 2016–2017 Policy. (Id.) 

 1. The Policy Form 

 Coverage Part A of § I. INSURING AGREEMENT of the Policy Form provided in 

relevant part as follows: 

A. The Company will pay Damages and Defense Expenses that the Insured shall 

become legally obligated to pay as a result of a Claim first made during the Policy 

Period and reported in writing to the Company during the Policy Period or within 

sixty (60) days thereafter arising out of a Wrongful Act in the rendering or failure 

to render Professional Services to others by the Insured or by any person or entity 

for whom the Insured is legally liable and to which this Policy applies. 

B. For this Policy to apply, both of the following conditions must be met: 

1. The Wrongful Act must first take place on or after the Retroactive Date 

shown in Item 6. of the Declarations and prior to the end of the Policy 

Period; 

2. Prior to the Effective Date of this Policy, no officer, director, principal, 

partner, insurance manager, risk manager or in-house counsel of any 

 

2

 As will be discussed infra, Goettle renewed its policy with Allied World for the 2017–2018 term with the same 

relevant provisions. For simplicity, citations to both the 2016–2017 Policy (Doc. 41-3) and the 2017–2018 Policy 

(Doc. 41-7) are provided above. All of the defined terms in the both Policies begin with a capital letter and are in 

bold text. The Court has deleted the bold text emphasis used within the Policies for readability. 
4 

Insured had knowledge of the actual or alleged Wrongful Act or 

circumstance that reasonably could give rise to a Claim under this Policy. 

If such officer, director, principal, partner, insurance manager, risk 

manager or in-house counsel of any Insured knew, prior to the effective 

date of this Policy, of any Wrongful Act or circumstance that reasonably 

could give rise to a Claim under this Policy, then any continuation, change 

or resumption of such Wrongful Act or circumstance during or after this 

Policy Period will be deemed to have been known prior to this Policy 

Period; 

(Doc. 41-3 at PageID 652; Doc. 41-7 at PageID 715.) 

 The Defense Provisions in § I(D) required Allied World to provide a defense to Goettle 

in the following circumstances: 

The Company will have the right and duty to defend any Claim made against the 

Insured seeking Damages payable under this Policy. The Company shall 

undertake and manage the defense of such Claim even if the allegations of the 

Claim are groundless, false or fraudulent. . . . 

(Doc. 41-3 at PageID 653; Doc. 41-7 at PageID 716.) 

 The Policy Form contained the following relevant definitions in § IV. DEFINITIONS: 

B. Claim means a demand received by an Insured for money or services 

including the service of suit or institution of arbitration proceedings. Claim does 

not include a Disciplinary Proceeding. 

* * * 

Q. Potential Claim means an actual or alleged act, error or omission in the 

performance of Professional Services which may reasonably be expected to give 

rise to a Claim. 

* * * 

S. Professional Services means those services that: 

1. the Insured is qualified to perform; and 

2. are performed for others, in the Insured’s capacity as an architect, 

engineer, land surveyor, landscape architect, scientist, technical consultant 

or Construction Manager, including such services when performed on 

projects seeking LEED certification and/or utilizing Building Information 

Modeling (BIM). 

* * * 
5 

T. Wrongful Act means a negligent act, error or omission, in the rendering of or 

failure to render Professional Services by an Insured. 

 (Doc. 41-3 at PageID 659–662; Doc. 41-7 at PageID 722–725.) 

 Pursuant to the provisions above, the Policy provided coverage for wrongful acts in the 

rendering or failure to render professional services, including negligence in performing 

engineering services. However, the Policy Form contained § III. EXCLUSIONS, including a 

coverage exclusion for faulty construction services: 

This insurance does not apply to and the Company will not pay Damages, 

Defense Expenses and/or Loss for any Claim based upon or arising out of: 

* * * 

C. CONSTRUCTION 

Any actual or alleged obligation on the part of the Insured for construction means, 

methods, techniques, sequences or procedures. 

* * * 

I. FAULTY WORKMANSHIP 

The cost to repair or replace any faulty workmanship including, but not limited to 

faulty: assembly, construction, erection, fabrication, installation, remediation, 

dismantling, excavation or manufacturing by the Insured or any subcontractor of 

the Insured. 

(Doc. 41-3 at 655–657; Doc. 41-7 at PageID 718–720.) 

 The Policy Form at § VIII. CONDITIONS required Goettle to provide notice to Allied 

World of a Claim made against it as a condition precedent to coverage: 

As a condition precedent to the right of coverage under this Policy, the Insured 

must do all of the following: 

A. INSURED’S DUTIES WHEN THERE IS A CLAIM 

1. If a Claim is made against an Insured, the Insured shall give written 

notice to the Company, as soon as practicable, but in no event later than 

sixty (60) days after the expiration date or earlier termination date of the 

Policy. 
6 

Such written notice shall include all of the following: 

a. The actual or alleged Wrongful Act which is the subject of the 

Claim; 

b. A description of the Professional Services rendered by the 

Insured; 

c. The date(s) that such Professional Services were rendered; 

d. A description of the alleged injury or damage that is the subject 

of the Claim; 

e. The identities and addresses of the claimant(s); and 

f. The project(s) involved in the Claim. 

Written notice shall also include every demand, notice, summons 

or other process received by the Insured or the Insured’s 

representatives. 

(Doc. 41-3 at PageID 663–664; Doc. 41-7 at PageID 726–727.) Section VIII. also provided 

Goettle with an option to provide notice of a Potential Claim under Coverage Part A: 

B. NOTICE OF A POTENTIAL CLAIM UNDER COVERAGE PART A 

1. If during the Policy Period, any Insured becomes aware of a Potential 

Claim, the Insured may provide written notice to the Company during the 

Policy Period containing all the information listed under paragraph 2. 

below. Any Potential Claim that subsequently becomes a Claim shall be 

deemed to have been first made and reported on the date and time when 

the Company was first notified of the Potential Claim. Such Claim shall 

be subject to the terms, conditions and limits of coverage of the Policy 

under which the Potential Claim was reported. 

(Doc. 41-3 at PageID 664; Doc. 41-7 at PageID 727.) 

 2. Endorsement 7 

 The Policy included an Endorsement No. 7 entitled “COVERED OPERATIONS–

POLLUTION COVERAGE ENDORSEMENT.” (Doc. 41-3 at PageID 646; Doc. 41-7 at 

PageID 709.) It provided in relevant part as follows: 

1. Section I. INSURING AGREEMENTS, COVERAGE PART A, Subsections 

A. and B. are deleted in their entirety and replaced with the following: 
7 

A. The Company will pay those sums that the Insured shall become legally 

obligated to pay as Damages and Defense Expenses because of: 

1. A Wrongful Act in the rendering or failure to render Professional 

Services to others by the Insured or any entity for whom the Insured is 

legally liable and to which this insurance applies; and /or 

2. Covered Operations performed for others by the Insured or any entity 

for whom the Insured is legally liable which result in a Pollution 

Condition and to which this insurance applies. 

B. For this Policy to apply, all of the following conditions must be met: 

1. The Wrongful Act or Covered Operations must first take place on or 

after the Retroactive Date shown in Item 6. of the Declarations and prior 

to the end of the Policy Period; 

2. Prior to the Effective Date of this Policy, no officer, director, principal, 

partner insurance manager, risk manager or in-house counsel of any 

Insured had knowledge of any actual or alleged Wrongful Act, Pollution 

Condition or circumstance that reasonably could give rise to a Claim 

under this Policy. If such officer, director, principal, partner, insurance 

manager, risk manager or in-house counsel of any Insured knew, prior to 

the effective date of this Policy, of any Wrongful Act or Pollution 

Condition or circumstance that reasonably could give rise to a Claim 

under this Policy, then any continuation, change or resumption of such 

Wrongful Act, Pollution Condition or circumstance during or after this 

Policy Period will be deemed to have been known prior to this Policy 

Period; 

3. Any Claim must first be made against the Insured during the Policy 

Period; and 

4. The Insured must report the Claim to the Company, in writing, during 

the Policy Period or within sixty (60) days after the end of the Policy 

Period. 

* * * * 

4. Section IV. DEFINITIONS, Subsections B. and D. are deleted in their entirety 

and replaced with the following: 

B. Claim means any demand or notice received by an Insured alleging a Wrongful 

Act or Pollution Condition. A Claim does not include a Disciplinary Proceeding. 

* * * * 
8 

6. Section IV. DEFINITIONS is amended to include Subsections U. through BB., 

inclusive, as follows: 

* * * * 

V. Covered Operations means those physical construction operations and 

activities performed for others by the Insured or any entity for whom the Insured 

is legally liable[.] 

* * * * 

AA. Pollution Condition means the discharge, dispersal, release or escape of 

smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste 

materials or other irritants, contaminants or pollutants into or upon land, the 

atmosphere or any watercourse or body of water, provided such conditions are not 

naturally present in the environment. 

* * * * 

9. Except with respect to Section VIII. CONDITION, Subsection K.3. for which 

Paragraph 8. above applies, with respect to this Endorsement only, all other 

Conditions in Section VIII. CONDITIONS which use the term Wrongful Act 

shall be read as if Wrongful Act has been deleted and replaced with Pollution 

Condition for the purposes of the application of this Endorsement. 

10. With respect to this Endorsement only, all Conditions in Section VIII. 

CONDITIONS that use the term Professional Services shall be read as if 

Professional Services has been deleted and replaced with Covered Operations for 

the purposes of the application of this Endorsement. 

(Doc. 41-3 at PageID 646, 648–650; Doc. 41-7 at PageID 709, 711–713.) 

B. Application for Renewal of Insurance Policy

 On February 24, 2017, Ms. Malone from USI Insurance emailed to Goettle CFO Jeff 

Ginter an “Allied World renewal application” under the subject heading “Professional/Pollution 

Liability Renewal App.” Mr. Ginter emailed Ms. Malone on March 29, 2017 the policy renewal 

application form signed by him. (Doc. 41-4 at PageID 670–679.) The policy renewal 

application contained the following question 21: 

21. After inquiry, do any partners, principals, directors, officers, or employees of 

the firm for which coverage is sought, have knowledge of any act, error or 

omission, unresolved job dispute (including fee disputes), accident or any other 
9 

circumstance that is or could be the basis for a claim under this proposed 

insurance policy? 

If yes, please provide details on a separate sheet, including project name, and 

potential claimant, dates, and damages. 

IT IS UNDERSTOOD AND AGREED THAT IF SUCH KNOWLEDGE OR 

INFORMATION EXISTS, ANY CLAIM ARISING THEREFROM IS 

EXCLUDED FROM THIS INSURANCE. 

(Id. at PageID 676.) Mr. Ginter answered “No” to question 21 on behalf of Goettle based on 

information he knew from attending weekly meetings with Goettle officers, project managers, 

and safety personnel. (Id.; Ginter Dep., Doc. 41 at PageID 527.) The renewal application 

included a duty to update information in § 26: 

The undersigned authorized representative agrees that if the information supplied 

on this Application changes between the date of this Application and the effective 

date of the insurance, he/she will, in order for the information to be accurate on 

the effective date of the insurance, immediately notify the Insurer of such 

changes, and the Insurer may withdraw or modify any outstanding quotations or 

agreement to bind insurance. 

. . . It is agreed that this Application shall be the basis of the contract if a policy is 

issued and shall be deemed to be attached to, incorporated into and become a part 

of the policy. 

(Doc. 41-4 at PageID 677.) 

 USI Insurance requested Cincinnati Intermediaries to “bind and issue” Goettle’s 

professional liability policy renewal on June 15, 2017. (Doc. 41-5 at PageID 680.) On June 21, 

2017, USI Insurance provided Goettle with the “renewal binder and invoice for your 

Professional/Pollution Liability policy effective 6/28/17.” (Doc. 41-6 at PageID 684.) 

 The 2017–2018 Policy issued by Allied World to Goettle was effective for the period of 

June 28, 2017 through June 28, 2018. (Doc. 41-7 at PageID 688.) The 2017–2018 Policy had 

claim limits of $10,000,000 for Each Claim Limit and Policy Term Aggregate Limit. (Id.) It 

otherwise contained the same relevant policy provisions and coverages as the 2016–2017 Policy, 
10 

including the same relevant provisions in the Policy Form and Endorsement 7. (Id. at PageID 

688–732.) 

C. The Event for Which Goettle Seeks Coverage

 On November 8, 2016, Goettle prepared and submitted to Joy Global Conveyors, Inc. a 

proposal for a retaining wall at a project called the “Dolet Hills Truck Dump” at a coal mine near 

Mansfield, Louisiana. Dolet Hills is a lignite (coal) mine that powers an American Electric 

Power (“AEP”) power plant, and Goettle’s proposal involved designing retaining walls for a 

ramp for dump trucks hauling coal. Goettle proposed to “furnish and install” certain components 

of the retaining wall system and to “[p]repare and submit design drawings detailing our work for 

the wall and bearing piles signed and sealed by a Professional Engineer Licensed in the State of 

Louisiana,” for the lump sum price amount of $1,985,000. (Doc. 53-1 at PageID 3503–3506.) 

 Goettle commenced work on the project in November 2016, first with design then with 

construction and installation work. Goettle CEO Douglas Keller was the engineer of record for 

the project and oversaw the engineering and design of it. Mr. Keller supervised Aaron 

Klingshirn, a Goettle designer and licensed engineer, on the project. Part of Goettle’s design 

work for the retaining wall involved calculations of the earth’s pressure against the retaining 

walls. 

 There was a “failure incident” at the Dolet Hills mine on or about April 18, 2017. Keith 

Harrington of Joy Global advised Humphrey Barlow, a Goettle project manager, on April 21, 

2017 via email and with photographs that he had heard large noises and saw material seepage 

coming from between the wood lagging on the retaining wall. (Doc. 59-3 at PageID 3978–

3983.) When Mr. Barlow received the email and pictures, he thought it was a serious issue and 

understood that “[s]omething abnormal [is] going on with this project, with this retention wall.” 
11 

(Doc. 59 at PageID 3863, 3865.) He immediately forwarded the email and photos to Mr. Keller, 

Goettle’s CEO, and Mr. Klingshirn, the engineer. (Doc. 59-3 at PageID 3978–3983.) 

Mr. Ginter, Goettle’s CFO who completed the insurance policy renewal application, first learned 

about the Dolet Hills incident in late April 2017. (Ginter Dep., Doc. 41 at PageID 536.) 

 Personnel from Goettle, including Mr. Keller, and from Joy Global, including Larry 

Atkinson, its principal engineer, participated in telephone calls and in-person meetings about the 

failure incident in April and May 2017. Mr. Atkinson stated in an affidavit that the “focus” of 

the meetings was to determine the cause of the structural failure and to plan a repair, and not “to 

assign fault or make a claim against a particular party.” (Doc. 60-1 at PageID 4054.) On May 2, 

2017, Goettle’s project manager emailed Mr. Atkinson with three options to repair the retaining 

wall with a “brief description, estimated cost, and schedule impact” for each. (Doc. 57-5 at 

PageID 3773.) On May 9, 2017, Mr. Keller, Mr. Barlow, and Mr. Klingshirn attended a “root 

cause meeting” at the Shreveport, Louisiana offices of AEP to determine what happened. It was 

discussed at the meeting that Joy Global was going to have an independent engineering review 

conducted of the wall design estimated to take two to four weeks to complete. (Doc. 59-7 at 

PageID 3990–3992.) 

 On June 1, 2017, Mr. Atkinson for Joy Global confirmed to Goettle that it had retained an 

engineering firm called Structural Engineering, Inc. to review “the geotechnical and structural 

engineering calculations and drawings.” (Doc. 59-13 at PageID 4008.) Mr. Atkinson provided 

Goettle with a copy of the initial geotechnical review set forth in a May 27, 2017 email from 

Justin Thomey of Structural Engineering. (Id. at PageID 4010–4012.) Mr. Atkinson asked that 

Goettle’s engineer “review and address” the concerns stated in the initial geotechnical review. 

(Id. at PageID 4008.) He stated in an affidavit that the purpose of the June 1 email was to further 
12 

discussions about repairing the wall and “not to assign fault or to make a claim against any 

particular party.” (Doc. 60-1 at PageID 4054.) 

 In the initial geotechnical review email, Mr. Thomey explained his process and initial 

conclusions: 

I thoroughly reviewed the plans, testing results (in -situ and lab), and geotechnical 

calculations. I limited my evaluation to the section of wall that has failed. I did 

not look in depth at the push pocket as this area is not, to my knowledge, under 

distress. This will be evaluated during the proposed scope revisions. Overall, 

there are some errors and omissions that have me concerned. Mainly, lack of 

certain calculations and lack of control on the work in the plans. Below are some 

basic summary points for the evaluations and some recommendations for future 

work and remediation. 

(Doc. 59-13 at PageID 4010 (emphasis added).) Mr. Thomey again referred to “errors and 

omissions in the calculations and plans” in the tenth of his ten summary points. (Id. at PageID 

4011 (emphasis added).) 

 Goettle’s project manager forwarded the initial review email to other Goettle 

management that day. Mr. Keller, the CEO, read the initial review email, and Mr. Klingshirn, 

the engineer, read the email, re-examined his own design, and made comments expressing 

disagreement with some of Mr. Thomey’s initial conclusions. Mr. Barlow, the Goettle project 

manager, agreed that Thomey’s comments read as criticisms of Goettle’s original design. (Doc. 

59 at PageID 3927.) 

 Structural Engineering completed its final report on or about July 10, 2017, and Joy 

Global provided a copy of the report to Goettle on July 14, 2017. (Doc. 59-14 at PageID 4015, 

4016.) Unlike in the initial review email, the final report lists a set of structural and geotechnical 

codes and standards used “as the basis for [the] analysis and code check.” (Id. at PageID 4018.) 

Structural Engineering noted in the final report that there were “some errors and omissions that 

[were] of concern. There is a lack of certain necessary calculations and lack of control of the 
13 

work in the plans.” (Id. at PageID 4019.) Structural Engineering concluded that “[t]he original 

wall design was insufficient and/or incomplete from a geotechnical standpoint.” (Id. at PageID 

4015, 4022.) 

 On August 10, 2017, Joy Global’s attorney alleged in a formal written notice to Goettle 

that Goettle was in breach of contract because “the Retaining Wall for Truck Dump by Goettle 

(“TD-6”) is defective in both design and construction as set out in the Structural Failure Analysis 

and Report authored by Structural Engineering, Inc. which was previously provided to Goettle 

on June [sic] 14, 2017.” (Doc. 43-7 at PageID 1193–1194.)3

 

 On September 6, 2017, Joy Global filed suit in federal court in Louisiana, Joy Global 

Conveyors Inc. v. Richard Goettle, Inc., No. 5:17-cv-1121 (W.D. La.) (“Louisiana Action”), 

asserting claims against Goettle for negligent design, negligent construction, and breach of 

contract. (Doc. 1-2 at PageID 32–49.) 

D. Goettle’s Reporting of Claim to Allied World

 Mr. Ginter, Geottle’s CFO, who completed the insurance renewal application on behalf 

of Goettle on March 29, 2017, learned about the Dolet Hills failure incident at some point in 

April 2017. Mr. Ginter did not notify Goettle’s insurance broker, USI Insurance, after learning 

about the failure incident. 

 Goettle’s general counsel did not learn about the Dolet Hills failure incident until Goettle 

received the August 10, 2017 letter from Joy Global’s attorney. Thereafter, on August 30, 2017, 

USI Insurance faxed to Cincinnati Intermediaries a “General Liability Notice of 

Occurrence/Claim” on Goettle’s behalf. (Doc. 43-3 at PageID 1161–1165.) USI Insurance 

described the occurrence as follows: 

 

3

 Despite the attorney’s statement, the parties appear to agree that Joy Global gave Goettle the final report on July 

14, not June 14. 
14 

NOTICE OF POTENTIAL CLAIM—Joy Global (Gen Contractor) alleges 

Insured’s design of retaining walls for a truck dump ram was defective causing 

the walls to bow out. 

(Id. at PageID 1162–1163.) USI Insurance attached to its Notice to Cincinnati Intermediaries an 

email from Roger Healey of Goettle explaining Goettle’s position on what occurred to warrant 

the submission of the Notice: 

Doug has asked me to put you on notice of the above potential claims. Richard 

Goettle, Inc. designed two retaining walls to support the Truck Dump Ramp to be 

constructed at the AEP Dolet Hills Site . . . . Goettle contends that such action by 

the other subcontractor caused the welds on the upper portion of the struts to 

break and fail. Joy Global now maintains that Goettle’s design of the retaining 

walls is defective and that the retaining walls must be redesigned, all fill removed, 

the retaining properly reconstructed and the fill replaced. Goettle maintains that 

the design of the retaining walls was not defective . . . . 

(Id. at PageID 1164.) Allied World acknowledged receipt of the Notice the next day on August 

31, 2017. 

 David Robles, counsel for Allied World who testified as a corporate representative, 

prepared an initial draft coverage letter dated September 22, 2017 in which Allied World 

reserved its rights under the Policy and applicable law, but did not deny coverage. (Doc. 43 at 

PageID 924–925; Doc. 43-13 at PageID 1345–1356.) That initial letter was not shared with 

anyone outside of Allied World. (Doc. 43 at PageID 925.) Mr. Robles did not refer to or rely on 

Endorsement No. 7 with respect to the coverage issues in this initial draft coverage letter. (Id. at 

PageID 1083.) 

 On October 6, 2017, Allied World issued its coverage determination to Goettle denying 

indemnity and defense coverage for the Louisiana Action. (Doc. 47-19 at PageID 2942–2954.) 

Allied World summarized its reasons for denying coverage: 

Allied World concludes there is no coverage for the notified matter under the 

[2017–2018] Policy, because this matter constitutes a Claim made before the June 

28, 2017 effective date of the Policy and because the terms of the “no prior 

knowledge” condition at B.3 of the Insuring Agreement is [sic] not met. There is 
15 

also no coverage because, before the Policy’s inception date, Goettle had 

knowledge of “any act, error or omission, unresolved job dispute ...or any other 

circumstance that is or could be the basis for a claim,” which was not disclosed to 

Allied World at any point after the Application date and before the Policy’s 

inception. 

(Id. at PageID 2954.) 

E. Procedural Posture 

 On the same day it issued its coverage denial letter, Allied World filed this declaratory 

judgment action against Goettle seeking a declaration that it owes no obligation to Goettle for the 

Louisiana Action. (Doc. 1.) In the Complaint, Allied World asserted four bases for denying 

coverage to Goettle: 

1. There is no coverage under the 2017–2018 Policy because a Claim—as 

defined in Endorsement No. 7—was made no later than June 1, 2017 when Joy 

Global forwarded the Thomey initial review email to Goettle. 

2. There is no coverage under the 2017–2018 Policy because the “no prior 

knowledge” condition of coverage set forth in § 1(B)(2) of Endorsement No. 7 

was not satisfied. 

3. There is no coverage under the 2017–2018 Policy because Goettle failed to 

disclose known pre-policy circumstances that reasonably could lead to a claim as 

was required in the policy renewal application. 

4. There is no coverage under the 2016–2017 Policy because a Claim was made 

against Goettle no later than June 1, 2017, but Goettle did not report the Claim to 

Allied World within sixty days of the end of the Policy Period. 

(Id. at PageID 13–17.) Goettle responded by filing an Answer [with] Affirmative Defenses and 

Counterclaims seeking a declaration that it is entitled to a defense and indemnification under the 

2017–2018 Policy and damages for breach of contract. (Doc. 7.) 

 Following discovery, the parties filed the pending cross-Motions for Summary Judgment. 

(Docs. 61, 62.) The Motions are fully briefed and ripe for adjudication. Allied World seeks 

judgment that it was not required to provide defense or indemnification for the Claim arising 
16 

from the Dolet Hills incident. Conversely, Goettle seeks judgment that it was entitled to defense 

and indemnification. 

II. STANDARDS GOVERNING MOTIONS FOR SUMMARY JUDGMENT 

 Federal Rule of Civil Procedure 56 governs motions for summary judgment. Summary 

judgment is appropriate if “there is no genuine issue as to any material fact and the movant is 

entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The movant has the burden to 

show that no genuine issues of material fact are in dispute. See Matsushita Elec. Indus. Co., Ltd. 

v. Zenith Radio Corp., 475 U.S. 574, 585–87 (1986); Provenzano v. LCI Holdings, Inc., 663 F.3d 

806, 811 (6th Cir. 2011). The movant may support a motion for summary judgment with 

affidavits or other proof or by exposing the lack of evidence on an issue for which the 

nonmoving party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 

322–24 (1986). In responding to a summary judgment motion, the nonmoving party may not 

rest upon the pleadings but must “present affirmative evidence in order to defeat a properly 

supported motion for summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 

(1986). Because the parties have filed cross-motions for summary judgment, the Court must take 

care to consider each motion, separately placing the burden of proof on the moving party. In re 

Morgeson, 371 B.R. 798, 800–01 (B.A.P. 6th Cir. 2007) 

 A court’s task is not “to weigh the evidence and determine the truth of the matter but to 

determine whether there is a genuine issue for trial.” Anderson, 477 U.S. at 249. “[F]acts must 

be viewed in the light most favorable to the nonmoving party only if there is a ‘genuine’ dispute 

as to those facts.” Scott v. Harris, 550 U.S. 372, 380 (2007) (emphasis added); see also EEOC v. 

Ford Motor Co., 782 F.3d 753, 760 (6th Cir. 2015) (en banc) (quoting Scott). A genuine issue 

for trial exists when there is sufficient “evidence on which the jury could reasonably find for the 
17 

plaintiff.” Anderson, 477 U.S. at 252; see also Shreve v. Franklin Cnty., Ohio, 743 F.3d 126, 

132 (6th Cir. 2014) (“A dispute is ‘genuine’ only if based on evidence upon which a reasonable 

jury could return a verdict in favor of the non-moving party.”) (emphasis in original) (citation 

omitted). Factual disputes that are irrelevant or unnecessary will not be counted.” Anderson, 

477 U.S. at 248. “The court need consider only the cited materials, but it may consider other 

materials in the record.” Fed. R. Civ. P. 56(c)(3). 

III. ANALYSIS

A. Interpretation of an Insurance Policy 

 “The interpretation of an insurance contract involves a question of law to be decided by a 

judge.” Leber v. Smith, 70 Ohio St. 3d 548, 639 N.E.2d 1159, 1163 (1994); see also GenCorp, 

Inc. v. American Int’l Underwriters, 178 F.3d 804, 817 (6th Cir. 1999) (citing Leber for the same 

principle.) “[W]ords and phrases used in an insurance policy must be given their natural and 

commonly accepted meaning.” United Nat’l Ins. Co. v. SST Fitness Co., 182 F.3d 447, 449–50 

(6th Cir. 1999) (quoting U.S. Fidelity & Guar. Co. v. Lightning Rod Mut. Ins. Co., 80 Ohio St. 

3d 584, 687 N.E.2d 717, 719 (1997)). Policy terms must be read in the context of the whole 

policy. Bondex Int’l, Inc. v. Hartford Acc. and Indem. Co., 667 F.3d 669, 677 (6th Cir. 2011) 

(citing Foster Wheeler Enviresponse, Inc. v. Franklin Cnty. Convention Facilities Auth., 78 Ohio 

St. 3d 353, 678 N.E.2d 519, 526 (1997)). More specifically, courts examining whether a term or 

phrase within a policy is ambiguous must “examine the policy as a whole” and “consider the 

context in which the provision is used.” Sauer v. Crews, 140 Ohio St. 3d 314, 18 N.E.3d 410, 

413 (2014). 

 “The mere absence of a definition in an insurance contract does not make the meaning of 

[a] term ambiguous” if the term has a “plain and ordinary meaning.” Nationwide Mut. Fire Ins. 
18 

Co. v. Guman Bros. Farm, 73 Ohio St. 3d 107, 652 N.E.2d 684, 686 (1995). When policy 

provisions are susceptible to more than one meaning, “they must be construed strictly against the 

insurer and liberally in favor of the insured.” Schwartz Manes Ruby and Slovin, L.P.A. v. 

Monitor Liab. Managers, LLC, 483 F. App’x 241, 244 (6th Cir. 2012) (citing Westfield Ins. Co. 

v. Hunter, 128 Ohio St. 3d 540, 948 N.E.2d 931, 935 (2011)). Similarly, when there are 

conflicting or contradictory terms in a policy, a court must construe the terms in favor of 

coverage for the insured. See, e.g., Cont’l Ins. Co. of New York v. Fortner, 25 F.2d 398, 400 (6th 

Cir. 1928); Para-Chem So., Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Penn., Nos. 21502, 

21503, 2004 WL 344154, at *6 (Ohio App. Feb. 25, 2004); Boyle v. Great-West Life Assur. Co., 

27 Ohio App. 3d 85, 499 N.E.2d 895, 898 (1985). 

B. Summary of Arguments

1. Allied World’s Position 

 Allied World contends that it was not obligated to provide indemnity or defense coverage 

to Goettle under either the 2016–2017 Policy or the 2017–2018 Policy. To begin, Allied World 

asserts that the Insuring Agreement set forth in § 1 of Endorsement No. 7 replaced the Insuring 

Agreement set forth in § I of the Policy Form for both the 2016–2017 Policy and the 2017–2018 

Policy. It further asserts that the replacement definition of the term Claim in Endorsement No. 7 

applied to the entire 2016–2017 Policy and 2017–2018 Policy. The Endorsement No. 7 

definition of Claim included a notice received by Goettle alleging a Wrongful Act, which was 

defined in the Policy Form to be a “negligent act, error or omission, in the rendering or failure to 

render Professional Services[.]” (Doc. 41-3 at PageID 648, 662; Doc. 41-7 at PageID 711, 725.) 

Accordingly, Allied World contends that the relevant Claim here occurred on June 1, 2017 when 
19 

Joy Global sent Goettle the Thomey initial review email alleging errors and omissions in the 

designs for the wall. (Doc. 59-13 at PageID 4008–4012.) 

 Regarding the 2016–2017 Policy, Allied World argues that Goettle was entitled to 

coverage under § 1(B) of Endorsement No. 7 only if it received notice of the Claim against it 

during the Policy Period and reported it to Allied World within sixty days after the Policy Period. 

(Doc. 41-3 at PageID 646.) Because the Claim occurred during the 2016–2017 Policy Period, 

Goettle had to report the Claim to Allied World within sixty days after June 28, 2017. However, 

Goettle did not report the Dolet Hills incident to Allied World until August 30, 2017. (Doc. 43-3 

at PageID 1161–1165.) Allied World contends, therefore, that there was no coverage for the 

Dolet Hills incident under the 2016–2017 Policy because the Claim was not both made and 

reported within the Policy Period. “Because coverage in a claims-made policy is generally 

restricted to only claims made and reported during the policy period, an insurer need not 

demonstrate prejudice to deny a claim that is made outside of the policy period.” McCarty v. 

Nat’l Union Fire Ins. Co. of Pittsburgh, Penn., 699 F. App’x 464, 468 (6th Cir. 2017). 

 Allied World also contends that coverage was not provided under the 2017–2018 Policy, 

which had an effective date of June 28, 2017. Allied World contends that coverage is excluded 

under the 2017–2018 Policy under § 1(B)(2) of the Insuring Agreement stated in Endorsement 

No. 7 because Goettle’s officers had knowledge prior to the effective date about an actual or 

alleged Wrongful Act that reasonably could give rise to a Claim. Additionally, Allied World 

argues that coverage was excluded under § 1(B)(3) of the Insuring Agreement stated in the 

Endorsement No. 7 because the Claim was made before the Policy Period. (Doc. 41-7 at PageID 

709.) 
20 

 Finally, Allied World contends that coverage is excluded under the 2017–2018 Policy 

because Goettle denied in the policy renewal application at § 21 that any officers or employees 

of Goettle had knowledge of any “act, error or omission . . . accident or other circumstance that 

is or could be the basis for a claim under the proposed insurance policy.” (Doc. 41-4 at PageID 

676.) The denial was true when it initially was made because the Dolet Hills incident had not yet 

occurred. However, § 26 in the policy renewal application required Goettle to notify Allied 

World if any information supplied on the renewal application changed between the date of the 

application and the date the insurance became effective. (Id. at PageID 677.) Allied World 

contends that Goettle was put on notice of the claim on June 1, 2017 when it received the 

Thomey initial review email asserting errors and omissions in the design for the wall. Therefore, 

Allied World asserts, Goettle failed its duty to update the policy renewal application under § 26. 

2. Goettle’s Position

 Goettle responds that it does not seek coverage under the 2016–2017 Policy, but only 

under the 2017–2018 Policy. (Doc. 61 at PageID 4069 n.1; Doc. 67 at PageID 4511 n.1.) Its 

arguments for coverage are based on the premise that the Endorsement No. 7 should be 

interpreted only to add coverage for pollution events, but not to restrict coverage for nonpollution events by the insertion of inconsistent replacement terms. 

 Goettle also asserts that whether Goettle was entitled to coverage for the Claim arising 

from the Dolet Hills incident must be determined under the terms of the Policy Form. The 

Policy Form provided a narrow definition of the term Claim as a “demand received by an Insured 

for money or services.” (Doc. 41-7 at PageID 722.) According to Goettle, Allied World did not 

make a Claim—a demand for money or services—until August 10, 2017 during the 2017–2018 

Policy Period. (Doc 43-7 at PageID 1193–1194.) Goettle provided notice to Allied World about 
21 

the claim shortly thereafter on August 30, 2017. (Doc. 43-3 at PageID 1161–1165.) Therefore, 

it asserts that it was entitled to defense and indemnity under Coverage Part A of the Insuring 

Agreement of the Policy Form in the 2017–2018 Policy. (Doc. 41-7 at PageID 715.) 

C. Court’s Analysis

1. Interpretation of Endorsement No. 7 

 To determine whether the coverage existed under the Policy Form for the Dolet Hills 

incident, the Court first will address whether Endorsement No. 7 can be interpreted to apply to a 

non-pollution event. For the reasons that follow, the Court agrees with Goettle that it can not. 

To begin, Endorsement No. 7 was titled COVERAGED OPERATIONS—POLLUTION 

COVERAGE ENDORSEMENT. (Doc. 41-7 at PageID 709.) The plain meaning of that title 

was to add insurance coverage for pollution events. Endorsement No. 7 in § 1(A)(2) in fact did 

provide pollution coverage where Allied World agreed to provide Damages and Defense 

Expenses because of “Covered Operations performed for others” by Goettle “which result in a 

Pollution Condition.” (Id.) However, Endorsement No. 7 also purported to delete and replace 

the Policy’s professional liability coverage in § 1(A)(1) in a manner not suggested by, and 

therefore inconsistent with, the title. (Id.) Courts construe conflicting terms in favor of finding 

coverage for the insured. See, e.g., Fortner, 25 F.2d at 400; Para-Chem So., Inc., 2004 WL 

344154, at *6; Boyle, 499 N.E.2d at 898. For example, an Ohio appeals court refused to apply an 

endorsement in an auto insurance policy when its title—Part 1-Liability-Other Insurance—

suggested that the endorsement applied only when an outside type or policy of insurance was 

involved, but the terms of the endorsement acted to limit coverage provided to permissive users 

of a vehicle whether or not they had other insurance. Long v. Long, No. C-050567, 2006 WL 
22 

1302516, at *5–6 (Ohio App. May 12, 2016).4 The court suggested that the title of an 

endorsement should provide notice to the average reader in what circumstances the endorsement 

would apply. Id. These cases suggest that Endorsement No. 7 here should not be interpreted in a 

way that limits the professional liability coverage otherwise provided in the Policy Form because 

the title suggests that it only supplements the policy with Pollution Condition coverage. 

 Additionally, Endorsement No. 7 and the Policy Form contain an irreconcilable conflict 

in that a single event—such as an insured receiving notice of an alleged negligent act in the 

rendering of Professional Services—can constitute both a Claim under Endorsement No. 7 and a 

Potential Claim under the Policy Form. A Potential Claim at § VIII(B)(4) of the Policy Form 

was defined to be an actual or alleged act or omission in the performance of Professional 

Services which could be expected to result in a Claim, a term defined in the Policy Form as a 

demand for money or services. (Doc. 41-7 at PageID 722, 724 (emphasis added).) Professional 

Services included engineering services performed for others. (Id. at PageID 724–725.) On the 

other hand, the term Claim was broadly defined in Endorsement No. 7 to include notice alleging 

a Wrongful Act, defined as a negligent act, error or omission in the performance of Professional 

Services. (Id. at PageID 711, 725.) Allied World argues that when Joy Global forwarded the 

Thomey initial review email to Goettle on June 1, 2017 during the 2016–2017 Policy period, that 

 

4

 This Court’s decision in Miami-Luken, Inc. v. Navigators Ins. Co., No. 1:16-cv-876, 2018 WL 3424448, (S.D. 

Ohio July 11, 2018), does not compel a different result. The Court recognized in Miami-Luken that the title of an 

insurance policy is not determinative of the type of coverage provided. Id. at *7. However, the policy in MiamiLuken explicitly stated that the “headings of the various sections of this Policy are intended for reference only and 

are not to form the parts of the terms and conditions of coverage.” Id. No such language is found in the 2017–2018 

Policy. Moreover, as explained in the analysis above, applying Endorsement No. 7 to non-pollution events creates 

irreconcilable conflicts. 
23 

email amounted to receiving notice of Potential Claim for the Dolet Hills incident under the 

Policy Form and it constituted a Claim under Endorsement No. 7.5

 

 The point in time at which Goettle needed to report an incident to Allied World to receive 

coverage was different under the Policy Form and under Endorsement No. 7. Under the Policy 

Form, Goettle had the option to report a Potential Claim to Allied World immediately or to wait 

until the Potential Claim matured into an actual Claim when the claimant made a demand for 

payment or services. (Doc. 41-7 at PageID 727.) Goettle’s duty to report an incident to Allied 

World was different under ¶ 1(B)(4) of Endorsement No. 7. If Goettle received even notice of an 

alleged Wrongful Act, Goettle had to report that Claim to Allied World during that Policy Period 

 

5

 “The question of what facts [the insured] knew is a subjective inquiry, while the question of whether [the insured] 

could reasonably foresee that these facts might give rise to a claim is an objective inquiry based on a ‘reasonable 

insured’ standard, on the subjective-objective analysis.” Schwartz Manes Ruby & Slovin, 483 F. App’x at 245–46. 

The facts concerning when Goettle received notice of a Claim under Endorsement No. 7 or a Potential Claim under 

the Policy Form are not disputed. Joy Global sent Goettle the Thomey initial review email on June 1, 2017. Joy 

Global stated that it had hired Thomey’s engineering firm to “review Goettle’s original wall design.” (Doc. 59-13 at 

PageID 4008.) It requested that Goettle provide feedback to the initial conclusions. (Id.) It also stated that Joy 

Global was waiting for the final structural engineering review, which was expected to be completed two weeks later. 

(Id.) Thomey’s initial conclusion was that there were “errors and omissions” in the designs, particularly in regards 

to “lack of certain calculations and lack of control on the work in the plans.” (Id. at PageID 4010.) 

 Goettle contends that the Thomey initial review email did not put them on notice of a Claim under Endorsement 

No. 7 or of a Potential Claim under the Policy Form for two reasons. First, Goettle points out that in the initial 

review email, Thomey did not use the word negligent or identify relevant engineering duties breached by Goettle. 

Conversely, the final engineering review completed in July 2017 contained a list of engineering codes and standards 

used as the basis for the analysis. (Doc. 59-14 at PageID 4018.) 

 Second, Goettle submits an affidavit of Larry Atkinson, Joy Global’s principal engineer, and a report by T.C. 

Siegel, a civil and geotechnical engineer retained to provide expert opinion testimony in this case. (Docs. 60-1, 63-

2.) Mr. Atkinson stated he sent the Thomey initial review email to Goettle on behalf of Joy Global “for the purpose 

of furthering the discussions about the structural failure and developing a plan to repair the wall” and not for 

assigning “fault” or making a “claim against a particular party.” (Doc. 60-1 at PageID 4054.) He said he had not 

considered at that point whether Goettle was negligent in its design and engineering services. (Id. at PageID 4055.) 

Likewise, Siegel opined that a reasonable engineer would have considered Joy Global’s cover letter to the Thomey 

initial review email to be “a standard procedure to communicate informal preliminary geotechnical comments from 

an engineer who was not part of the design team but only recently engaged as a peer reviewer.” (Doc. 63-2 at 

PageID 4274.) He further states that the initial review was incomplete and that it did not state that Goettle breached 

any standard of care. (Id. at PageID 4274–4279.) 

 Allied World does not submit any evidence to rebut Mr. Atkinson or Mr. Siegel. Instead, it merely relies on the 

use of the phrase “errors and omissions” in the Thomey initial email review to support its argument that Goettle had 

notice of a Claim or a Potential Claim by June 1, 2017. The Court finds that a genuine issue of material fact remains 

as to whether a reasonable insured would have regarded the Thomey initial review email as notice that Joy Global 

considered Goettle to have been negligent in the rendering of design services. 
24 

or within 60 days after the end of the Policy Period. (Id. at PageID 709, 711.) An insurance 

policy should not be interpreted to have conflicting reporting requirements. 

 Next, Endorsement No. 7 was internally inconsistent because § 1(A)(1) purported to 

delete and replace the professional services liability coverage in the Policy Form and to apply to 

non-pollution events, but §§ 9 and 10 of Endorsement No. 7 required the insured, Goettle, to 

provide information about Pollution Conditions when it reported the Claim to the insurer, Allied 

World. (Id. at PageID 709, 713.) Sections 9 and 10 of Endorsement No. 7 stated that for the 

purposes of the reporting requirements set forth in the Policy Form at § VIII. Conditions, the 

term Wrongful Act was replaced by Pollution Conditions and the term Professional Services was 

replaced by the term Covered Operations. (Id. at PageID 713.) Thus, under § VIII(A)(1)(a) & 

(b) of the Policy Form, as modified by Endorsement No. 7, Goettle was required for each Claim 

made against it to give Allied World notice of the actual or alleged Pollution Condition that was 

the subject of the Claim and a description of the Covered Operations it rendered. (Id. at PageID 

726.) Meeting this reporting requirement was an express “condition precedent” for coverage 

under the Policy. (Id.) Goettle never could have satisfied those reporting requirements for a 

non-pollution events such as the Dolet Hills incident because there were no Pollution Conditions 

(“discharge, dispersal, release or escape of smoke, vapors, soot, fumes . . . or pollutants into or 

upon the land”) or Covered Operations (“physical construction operations and activities 

performed for others by [Goettle]”) to report. (Id. at PageID 712.) An insurance policy should 

not be interpreted in such a way that the insured can never satisfy conditions precedent to 

coverage. 

 Finally, Endorsement No. 7 conflicted with Endorsement No. 4 in their respective 

treatments of the term Claim in the Policy Form. Endorsement No. 7 in § 4(B) purported to 
25 

delete and replace the term Claim in the Policy Form. (Id. at PageID 711.) Endorsement No. 4, 

on the other hand, purported to modify and add to the definition of the term Claim in the Policy 

form but only for purposes of Endorsement No. 4. (Id. at PageID 696.) However, Endorsement 

No. 4 could not modify and add to the definition of the term Claim in the Policy Form if that 

term had been completely deleted by Endorsement No. 7. 

 In sum, the Court will not apply Endorsement No. 7 to exclude coverage for a nonpollution event like the Dolet Hills incident. Applying a coverage exclusion for a non-pollution 

event is inconsistent with what a reasonable insured would assume an endorsement with the title 

Pollution Coverage would provide. Under Allied World’s interpretation of the Policy and the 

underlying facts, Endorsement No. 7 acted as a coverage exclusion for the Claim made against 

Goettle for Dolet Hills incident. The broader definition of the term Claim in Endorsement No. 7 

would have required Goettle to report the Dolet Hills incident to Allied World during the 2016–

2017 Policy Period, even before Joy Global made a demand for money or services and despite 

the fact that the Goettle was not required to report Potential Claims to Allied World. 

Additionally, Goettle could not have satisfied the reporting condition precedent for the Dolet 

Hills incident because it could not have identified a Pollution Condition resulting from the 

incident nor the Covered Services it provided. 

 Therefore, Endorsement No. 7 does not bar coverage for the Claim arising from the Dolet 

Hills incident because it does not arise from Covered Operations creating a Pollution Condition. 

Allied World’s two bases for denying coverage for the Dolet Hills incident pursuant to 

Endorsement No. 7 of the 2017–2018 Policy—that § 1(B)(2) was not satisfied because Goettle 

had knowledge of an alleged Wrongful Act prior to the effective date of the Policy and that 
26 

§ 1(B)(3) was not satisfied because the Claim was made before the Policy Period—fail as a 

matter of law because Endorsement No. 7 is not applicable. 

2. Policy Renewal Application 

 The Court next will turn to Allied World’s third asserted basis for denying coverage 

under the 2017–2018 Policy. Allied World contends that Goettle breached an alleged duty under 

§§ 21 and 26 of the policy renewal application to inform Allied World about the alleged error or 

omission in the design of the retaining wall before the 2017–2018 Policy took effect. Section 21 

of the policy renewal application authorized Allied World to deny coverage for an error or 

omission if the Goettle had knowledge at the time of application about the error or omission that 

could give rise to a claim and failed to disclose it. (Doc. 41-4 at 676.) Section 26 provided that 

Goettle agreed to update the policy renewal application if the information supplied on the 

application changed. (Id. at PageID 677.) Goettle did not know about the Dolet Hills incident 

on March 29, 2017, the date of the renewal application, because the incident did not occur until 

April 2017. Nonetheless, Allied World argues that Goettle’s failure to update the insurance 

application after it received the Thomey initial review email was a basis to deny coverage. It 

suggests that Goettle’s agreement to update the application in § 26 operated as a warranty or a 

condition precedent to coverage. 

 “A warranty is a statement, description or undertaking by the insured of a material fact 

either appearing on the face of the policy or in another instrument specifically incorporated in the 

policy.” Allstate Ins. Co. v. Boggs, 27 Ohio St. 2d 216, 271 N.E.2d 855, 858 (1971). A breach 

of a warranty renders a contract void ab initio. Id.; see also Ohio Nat’l Life Assur. Corp. v. 

Satterfield, 194 Ohio App. 3d 405, 956 N.E.2d 866, 871 (Ohio App. 2011). A condition 

precedent calls “for the happening of some event, or the performance of some act, . . . before the 
27 

contract shall be binding on the parties.” Ramsey v. Penn Mut. Life Ins. Co., 787 F.3d 813, 822 

(6th Cir. 2015) (Mamaw v. W. & S. Life Ins. Co., 97 Ohio St. 1, 119 N.E. 132, 135 (1917)). Ohio 

law disfavors conditions precedent and warranties. See Ramsey, 787 F.3d at 822 (on conditions 

precedent); Boggs, 271 N.E.2d at 858 (on warranties). They are not read into insurance 

contracts unless the terms of the contracts make plain the intent to include them. See Ramsey, 

787 F.3d at 822; Boggs, 271 N.E.2d at 858. No such intent is evident here. 

 Section 26 contained numerous provisions, including notices to applicants from specific 

states about state insurance statutes, in addition to the applicant’s agreement to update the 

application. Significantly, § 26 did not provide a penalty for an applicant’s failure to update 

information provided on the application. Instead, § 26 of the renewal application merely stated 

that if updates were made, then the insurer could withdraw or modify any quotations or 

agreements to bind insurance.6

 Section 26 cannot be enforced as a warranty or condition 

precedent. For these reasons, Goettle’s failure to update the policy renewal application does not 

provide a basis for the denial of coverage. 

3. Coverage Under the Policy Form of the 2017–2018 Policy 

 The Court is left to consider whether coverage was provided for the Dolet Hills incident 

under the Policy Form of the 2017–2018 Policy. The Insuring Agreement in the Policy Form 

obligated Allied World to pay “Damages and Defense Expenses” that Goettle became “legally 

obligated to pay as a result of a Claim first made during the Policy Period and reported in writing 

to [Allied World] during the Policy Period or within sixty (60) days thereafter arising out of a 

Wrongful Act in the rendering or failure to render Professional Services for others.” (Doc. 41-7 

at PageID 715.) It also provided that Allied World had a “right and duty to defend any Claim 

 

6

 Allied World did not attempt to withdraw or change the quotation for the Policy after Goettle reported the Claim. 

Allied World kept the policy premium, but denied coverage. 
28 

against the Insured seeking Damages . . . even if the allegations of the Claim [were] groundless, 

false or fraudulent.” (Id. at PageID 716.) Allied World did not assert any bases in the denial 

letter or in the Complaint for denying defense and indemnity coverage to Goettle for the Dolet 

Hills incident under the Policy Form of the 2017–2018 Policy. Goettle argues that Allied World 

has waived the right to assert any additional bases for denying coverage. 

 “An insurance company must pay for the defense of actions brought against its insured as 

long as the underlying complaint contains at least one potentially covered claim.” Medpace, Inc. 

v. Darwin Select Ins. Co., 13 F. Supp. 3d 839, 844 (S.D. Ohio 2014) (citing Ohio Gov’t Risk 

Mgmt. Plan v. Harrison, 115 Ohio St. 3d 241, 874 N.E.2d 1155, 1160 (2007)). However, it need 

not “defend any action or claims within the complaint when all the claims are clearly and 

indisputably outside the contracted coverage.” Harrison, 874 N.E.2d at 1160. An insurer’s 

breach of the duty to defend is a material breach of the insurance contract and results in the 

insurer relinquishing the right to control the litigation. Sanderson v. Ohio Edison Co., 69 Ohio 

St. 3d 582, 635 N.E.2d 19, 23–24 (1994). An insurer who has breached the duty to defend 

cannot object to the insured’s decision to settle the lawsuit, absent a showing of fraud or 

collusion. Id. 

 In this case, Joy Global sent written notice that it considered Goettle to be in breach of 

contract for designing a defective wall on August 10, 2017 during the 2017–2018 Policy Period. 

(Doc. 43-7 at PageID 1193–1194.) Joy Global informed Goettle that if it did not “cure” its 

breach of contract by completing an approved remediation, then Joy Global would seek redress 

via legal action. (Id.) Joy Global shortly thereafter filed the Louisiana Suit against Goettle, 

alleging that Goettle was negligent in its design and construction of the retaining wall at Dolet 

Hills. (Doc. 1-2 at 32–49.) These acts constituted at least the assertion of a potentially covered 
29 

Claim (a demand for money or services) against Goettle arising from a Wrongful Act (a 

negligent act, error, or omission) in the rendering of Professional Services (engineering services). 

(Doc. 41-7 at PageID 722–725.) Goettle, in turn, timely reported the Claim to Allied World. 

(Doc. 43-3 at PageID 1161–1165.) Allied World was obligated, therefore, under the terms of the 

Insuring Agreement in the Policy Form to provide a defense to Goettle in the Louisiana Action. 

 However, the Court cannot determine at this time whether Allied World has an ultimate 

duty to indemnify. An insurer’s duty to indemnify is distinct from its duty to defend. Medpace, 

13 F. Supp. 3d at 847. The duty to indemnify must be based on more than the allegations of the 

complaint in the underlying lawsuit. Id. “[T]he ultimate realization of [the duty to indemnify] 

depends on disposition of the underlying litigation.” AMCO Ins. Co. v. Lauren-Spencer, Inc., 

500 F. Supp. 2d 721, 736 (S.D. Ohio 2007); see also ACE European Group, Ltd. v. Abercrombie 

& Fitch Co., No. 2:12-cv-1214, 2:11-cv-1114, 2013 WL 5180939, at *8 (S.D. Ohio 2013); Erie 

Ins. Exch. v. Colony Dev. Corp., 136 Ohio App. 3d 406, 736 N.E.2d 941, 946 (1999) 

(“[S]peculation about the insurer’s ultimate obligation to indemnify is premature until facts 

excluding coverage are revealed during the defense of the litigation and the insurer timely 

reserves its rights to deny coverage.”), reconsideration denied, 136 Ohio App. 3d 419, 736 

N.E.2d 950 (2000). As to Goettle’s contention that Allied World has waived the right to assert 

bases for non-coverage that were not asserted in the Complaint, “in Ohio, waiver and estoppel 

cannot be invoked to create coverage under an insurance policy where coverage otherwise does 

not exist.” Carolina Cas. Ins. Co. v. Canal Ins. Co., Ohio, 940 F. Supp. 2d 753, 761 (S.D. Ohio 

2013), rev’d on other grounds and remanded, 555 F. App’x 474 (6th Cir. 2014); see also Hybud 

Equip. Corp. v. Sphere Drake Ins. Co., Ltd., 64 Ohio St. 3d 657, 597 N.E.2d 1096, 1104 (1992) 
30 

(“[A]s a general proposition, the doctrine of waiver cannot be employed to expand the coverage 

of a policy.”).7

The Court will award summary judgment to Goettle, and deny it to Allied World, insofar 

as Allied World has breached its duty to provide a defense to Goettle in the underlying Louisiana 

Action. However, the Court holds in abeyance the issue of indemnification. 

IV. CONCLUSION

 For the foregoing reasons, Allied World’s Motion for Summary Judgment (Doc. 62) is 

DENIED IN PART and Goettle’s Motion for Summary Judgment (Doc. 61) is GRANTED IN 

PART, both on the issue of Allied World’s duty to provide a defense. The Court holds in 

abeyance the issue of indemnification. 

 This case is stayed pending the resolution of Joy Global Conveyors Inc. v. Richard 

Goettle, Inc., No. 5:17-cv-1121 (W.D. La.). The parties shall notify the Court when Joy Global 

Conveyors case is resolved.

IT IS SO ORDERED. 

Dated this 28th day of May, 2019. 

BY THE COURT: 

S/Susan J. Dlott 

Susan J. Dlott 

United States District Judge 

 

7

 Goettle confusingly cites to the principle of res judicata when arguing that Allied World cannot assert a new basis 

for denying indemnification. However, res judicata applies only when a first litigation has reached a final 

judgment. See Mitchell v. Chapman, 343 F.3d 811, 819 (6th Cir.2003); Rogers v. City of Whitehall, 25 Ohio St. 3d 

67, 494 N.E.2d 1387, 1388 (1986). It is, therefore, inapplicable here.