1 RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit I.O.P. 32.1(b) File Name: 16a0160p.06 

### UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

_________________

C ONSTRUCTION C ONTRACTORS E MPLOYER G ROUP , LLC, Plaintiff-Appellant ,

v

.

F EDERAL I NSURANCE C OMPANY , Defendant-Appellee

. ┐ │ │ │ │ │ │ │ │ ┘ No. 15-4352

Appeal from the United St ates District Court for the Northern District of Ohio at Toledo. No. 3:14-cv-01468—David A. Katz, District Judge. Argued: June 15, 2016 Decided and Filed: July 11, 2016 Before: GIBBONS, GRIFFIN, and DONALD, Circuit Judges.

_________________ COUNSEL
ARGUED: Steven R. Smith, CONNELLY & COLLI ER LLP, Toledo, Ohio, for Appellant. Tyler L. Mathews, MCDONALD HOPKINS LLC, Cleveland, Ohio, for Appellee. ON BRIEF: Steven R. Smith, Janine T. Avila, CONNELLY & COLLIER LLP, Toledo, Ohio, for Appellant. Tyler L. Mathews, Christopher G. Dean, MCDONALD HOPKINS LLC, Cleveland, Ohio, for Appellee.

_________________ OPINION

_________________ BERNICE BOUIE DONALD, Circuit Judge. Construction Contractors Employer Group (“Construction Contractors”) disc overed that an employee had mi sappropriated certain funds and 

### >No. 15-4352 Constr. Contractors v. Federal Ins. Co. Page 2

that another $1 million was missing. It then pu rchased an employee-theft insurance policy with Federal Insurance Company (“Federal Insurance”). After Federal Insura nce executed the policy, Construction Contractors determined that th e same employee had misappropriated the missing $1 million. Federal Insurance denied Construc tion Contractors’ claim for the $1 million, and Construction Contractors filed suit. The distri ct court granted Federa l Insurance’s motion for summary judgment, concluding th at any loss caused by one employ ee is considered a “single loss” under the policy and that Co nstruction Contractors had “disc overed” the loss before the execution of the policy. Construc tion Contractors appeals, but we AFFIRM the district court’s judgment.

I.

Associated General Contractors of Northwest Ohio (“Associated Ge neral”) is a non-profit corporation and trade or ganization for commercial constructi on contractors. In December 2001, Associated General formed a subsidiary, Constr uction Contractors, whic h carried out various employment functions for regi onal construction employers calle d “subscribers.” Subscribers would transfer funds into Cons truction Contractors’ accounts to cover gross payroll, taxes, benefits, and administrative costs. Construction Contractors would then disburse the funds to satisfy subscribers’ various obligations.
In April 2002, Construction Contractors outs ourced its daily operations to AlphaCare Services, Inc. (“AlphaCare”), which was owne d and managed by William H. Cook, III, Gerald L. Tillman, and John E. Moon (“Moon”). Per an agreement between the two companies, AlphaCare would manage Constructi on Contractors’ subscribers’ payr oll as well as issue payroll checks to subscribers’ employees. The rela tionship between Construction Contractors and AlphaCare continued successfully for a number of years. However, in July 2012, Moon informed Construction Contractors’ president Ke vin Smith that Construc tion Contractors did not have enough assets to meet its obligations even though the subs cribers had paid Construction Contractors enough money to fulfil l their respective oblig ations. Moon later explained that he had been falsifying Construction Contractors’ fi nancial statements and that the company had substantial unpaid tax liabilities.No. 15-4352 Constr. Contractors v. Federal Ins. Co. Page 3

On July 31, 2012, Construction Contractors te rminated its agreement with AlphaCare. The next day, it hired Peter VanDenBerghe as in terim Chief Financial Officer and Treasurer. VanDenBerghe began reviewing Construction Contra ctors’ accounts. His investigation revealed that the Internal Revenue Servi ces (IRS) had started levying Constr uction Contractors’ accounts in 2011. On July 20, 2012, the IRS filed a Notice of Levy that demonstrated that Construction Contractors owed more than $1.25 million, plus pena lties, in unpaid taxes dating back to 2005. VanDenBerghe also discovered th at AlphaCare had failed to remit Ohio unemployment taxes for the first quarter of 2012, which amounted to $715,000.
Because Moon was responsible for remittin g and reporting taxes, VanDenBerghe suspected that Moon was the reas on for the loss. Focusing his investigation on Moon, in October 2012, VanDenBerghe determined that Moon had committed wire fraud by transferring over $900,000 from Construction Contractors’ accoun t to AlphaCare’s account between May 2009 and June 2012. In November 2012, the investig ation further revealed that Moon had charged Construction Contractors for $30,000 worth of hea lth care premiums and health savings account deposits for AlphaCare employees. VanDen Berghe continued his investigation, as approximately $1 million was still unaccounted for.
On or about January 10, 2013, Construction Co ntractors applied for a crime-coverage insurance policy, which included coverage for em ployee theft, from Federal Insurance. The application instructed Constructi on Contractors to list “all empl oyee theft, forgery, computer fraud or other crime losses discovered . . . in the last five years, itemizing each loss separately.” Construction Contractors disclosed the following: Since 2002, [Construction Contractors] was in contract with AlphaCare [] to provide specific management duties for [it]. Those duties included the direct management of the corporate bookkeeping a nd payroll processing. Effective July 31, 2012, [Construction Contractors] terminated its contract with [AlphaCare] for breach of contract. [Alpha Care] was contractually res ponsible for processing our participants’ payroll and remitting payroll taxes to the proper taxing authorities. A subsequent review of [AlphaCare’s] pe rformance has indicated [its] failure to report, reconcile and rem it certain payroll taxes. A subsequent review of [Construction C ontractors’] accounti ng records indicated unauthorized transfers from [Constructi on Contractors] owned accounts to ACSNo. 15-4352 Constr. Contractors v. Federal Ins. Co. Page 4

owned accounts from 2009 to 2012. Further investigation is in process, and the potential for criminal prosecution is bei ng evaluated by our company attorneys.
Federal Insurance issued the policy to Construction Contract ors, extending coverage from March 22, 2013, through July 1, 2013, and insuring up to $1 million in covered losses. Three provisions of the policy are releva nt to this case. First, Cons truction Contractors purchased a “Loss Discovered” option, which excludes “any loss that an Insured is aware of prior to the inception date of [the] Policy.”
Second, under the “Limits of Liability” sect ion, the policy stated the following: All loss resulting from a single act or any number of acts of the same Employee or Third Party, and all loss whether such act or acts o ccurred before or during the Policy Period, will be treated as a single loss and the applicable Limit of Liability set forth in Item 2 of the Crime Declar ations will apply, subject to Section X, Liability for Prior Losses. Third, the section entitled “Liability for Prior Losses” provided that, for the Loss Discovered option, “coverage will be available for loss sustained at any time and Discovered during the Policy Period.” For purposes of the policy, “discovered” is defined as “knowledge acquired by an Executive or Insurance Represen tative of an Insured which would cause a reasonable person to believe a c overed loss has occurred or an occurrence has arisen that may subsequently result in a covered loss.” The de finition continues by stating that losses excluded from coverage are those “sustained prior to the inception date of any coverage” as well as where “the exact amount or details . . . are unknown.”

After the execution of the policy, in May 2013, Constructi on Contractors detected the method by which Moon had misappropriated the missing $1 million. VanDenBerghe determined that from 2002 until May 2009, Moon had committed check theft by having subscribers write checks to Construction Contractors using AlphaCare’s account number.
Based on this discovery, Construction Contractors submitted a claim for the $1 million check theft to Federal Insurance, which denied the claim. Cons truction Contractors then filed suit in the district court, seeking declaratory an d monetary relief for br each of contract. Both parties filed motions for summary judgment. Th e district court granted Federal Insurance’s motion, concluding that any loss caused by one employee was a single loss under the policy andNo. 15-4352 Constr. Contractors v. Federal Ins. Co. Page 5

that Construction Contractors was aware of the loss before the policy’s inception date. Construction Contractors appeals.

II.

We review a district court’ s grant of summary judgment de novo

. Winningham v. N. Am. Res. Corp. , 42 F.3d 981, 984 (6th Cir. 1994 ). Summary judgment is proper where “the movant shows that there is no genuine is sue as to any material fact a nd the movant is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(a). In reviewing a motion for summary judgment, we must determine “whether the ev idence presents a suffi cient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 251-52 (1986). We draw all reasonable inferences and construe all eviden ce in favor of the nonmoving party. FDIC v. Jeff Miller Stables , 573 F.3d 289, 294 (6th Cir. 2009).
Ohio state law dictates that interpretations of insurance contracts ar e questions of law for
a court to answer. Costanzo v. Nationwide Mut. Ins. , 832 N.E.2d 71, 77 (Ohio Ct. App. 2005). Ohio courts “examine the insurance contract as a whole and presume that the intent of the parties is reflected in the language used in the policy.” Westfield Ins. v. Galatis , 797 N.E.2d 1256, 1261 (Ohio 2003). The scope of insura nce coverage is de termined by construi ng the contract “in conformity with the intention of the parties as gathered from the ordinary and commonly understood meaning of the language employed.” Allstate Ins. v. Eyster , 939 N.E.2d 1274, 1280 (Ohio Ct. App. 2010) (quoting King v. Nationwide Ins. , 519 N.E.2d 1380, 1383 (Ohio 1988)). When reviewing provisions regard ing coverage exclusions, Ohio presumes that anything not clearly excluded from th e policy is covered. Home Indem. Co. of N.Y. v. Vill. of Plymouth , 64 N.E.2d 248, 250 (Ohio 1945). Therefore, “if a po licy does not plainly exclude a claim from coverage, then an insured may infer that the claim will be covered.” Andersen v. Highland House Co. , 757 N.E.2d 329, 332 (Ohio 2001).
When analyzing similar loss-discovered provi sions to the one at issue here, we have noted that “discovery of loss does not occur until the insured discovered facts showing that dishonest acts occurred and appreciate s the significance of those facts.” FDIC v. Aetna Cas. &No. 15-4352 Constr. Contractors v. Federal Ins. Co. Page 6

Sur. Co. , 903 F.2d 1073, 1079 (6th Cir. 1990). Mere suspicion of loss is not sufficient to demonstrate that an insu red discovered the loss. Id. The Third Circuit no ted that a “reasonable person” component permits “the tr ier of fact to analyze the full range of information the insured knew so as to determine whether a reasonabl e person would assume, based on all of the circumstances, that a covered lo ss had or would be incurred.” Resolution Trust Corp. v. Fidelity & Deposit Co. , 205 F.3d 615, 631 (3d Cir. 2000).

Construction Contractors claims that if th e policy is narrowly construed as required by Ohio law, the check-theft loss is a covered loss unde r its policy with Federal Insurance. First, it asserts that the check-theft loss is covered under the “Employee Theft Coverage” provision of the policy because Moon was a covered employee when he misappropriated funds. Second, it argues that the Loss-Discovered provision applies because it did not “discover” the check-theft loss until it determined that Moon misappropria ted the $1 million through check theft and that there was no operational loss. Lastly, Construc tion Contractors argues that the single-loss provision of the “Limits of Liabil ity” section does not op erate to limit the definition of “loss” because it is only triggered under th e policy if the policy already cove rs the loss. In other words, in Construction Contractors’ view, the “Limits of Liability” section only operates to limit covered losses to $1 million, not to de fine whether the policy covers a loss.
Federal Insurance counters, arguing that Moon was not a c overed employee. It further claims that even if Moon was an employee, the check theft is excluded from coverage under the single-loss provision of the Limits of Liability section. Both th e check-theft loss and the wirefraud loss were the result of a single actor, Moon , and the provision provides that all actions of a single actor constitute a single loss for purposes of the policy. Federal In surance contends that because Construction Contractors had already disc overed the wire fraud before the inception of the policy, it derivatively “discovered” the check th eft, as both constitute a single loss. Finally, even if Moon was a covered employee and even if the check theft was separate from the wire fraud, Federal Insurance asserts that the definition of “discovered” applies to the check-theft loss, as the policy considers loss “discovered” even if “the exact amount or details . . . are unknown.” It claims that Construction Contractors knew of the check theft based on the surrounding circumstances—i.e., (1) that it had negative e quity of over $2 million; (2) that $1 million wasNo. 15-4352 Constr. Contractors v. Federal Ins. Co. Page 7

due to Moon’s fraudulent schemes; (3) that an other $1 million was unaccounted for; (4) that Moon had falsified Construction Co ntractors’ financial records; (5) and that Moon had failed to pay federal and state taxes.

Given that Ohio courts read insurance contracts as a whole and “give effect to each provision of the contract,” Cincinnati Ins. v. CPS Holdings, Inc. , 875 N.E.2d 31, 35 (Ohio 2007), the district court properly determ ined that all of the loss attri butable to Moon was a single loss under the policy and that Construction Contractor s had “discovered” that loss prior to the execution of the policy. Contrary to Constructi on Contractors’ asserti on that the “Limits of Liability” provision does not affect whether a partic ular loss is covered, the provision directly implicates coverage considerations in its text. The single-loss provision states that a single loss is “subject to Section X, Liability for Prior Losses.” The “Liability for Prior Losses” section includes the “Loss Discovered” option—i.e., the c overage option for losses “sustained at any time and Discovered during the Policy Period.” R. 25-4, PageID #174, 176. Thus, if a loss arises under the “Loss Discovered” option, the single-loss provision a pplies. Here, the undisputed facts demonstrate that Construction Contractors knew of the wire-fraud loss before executing the insurance policy with Federal In surance. Because C onstruction Contractors discovered the wire fraud prior to the policy’s execution and the check theft and wire fraud constitute a single loss, the check-theft loss is excluded from coverage under the policy.

III.
For the foregoing reasons, we AFFIRM the district court’s judgment.