[Cite as Lexington Ins. Co. v. DunnWell, L.L.C., 2016-Ohio-5311.]

STATE OF OHIO ) IN THE COURT OF APPEALS 

 )ss: NINTH JUDICIAL DISTRICT 

COUNTY OF SUMMIT ) 

LEXINGTON INSURANCE COMPANY 

 Plaintiff 

 v. 

DUNNWELL, LLC, et al. 

 Defendant/Appellee/Cross-Appellant 

 v. 

WEST BEND MUTUAL INSURANCE 

COMPANY, et al. 

 Defendants/Appellees/ 

Cross-Appellants 

C.A. No. 27476 

APPEAL FROM JUDGMENT 

ENTERED IN THE 

COURT OF COMMON PLEAS 

COUNTY OF SUMMIT, OHIO 

CASE No. CV 2012 03 1741 

DECISION AND JOURNAL ENTRY 

Dated: August 10, 2016 

 

CARR, Judge. 

{¶1} Appellants, West Bend Mutual Insurance Co. and ABCO Fire Protection, Inc., 

and cross-appellants, DunnWell, LLC. and Travelers Casualty Indemnity Co., appeal the 

judgment of the Summit County Court of Common Pleas. This Court affirms in part, reverses in 

part, and remands. 

I. 

{¶2} MAC Acquisition, LLC, dba Macaroni Grill, contracted with DunnWell to 

provide cleaning and inspection services to MAC’s restaurant’s kitchen exhaust systems. 

DunnWell subcontracted with ABCO to provide those services to MAC. ABCO agreed to add 
2 

 

DunnWell as an additional insured on its commercial liability insurance policy relevant to its 

work as a subcontractor for DunnWell. West Bend as ABCO’s insurance company, therefore, 

insured ABCO as its insured and DunnWell as an additional insured. Although DunnWell also 

maintained insurance coverage through its carrier Travelers, any applicable coverage through 

West Bend was designated as primary. Shortly after one of ABCO’s scheduled maintenance 

and inspections at Macaroni Grill, a fire broke out at the restaurant, causing significant property 

damage. Lexington Insurance Co., which insured MAC, paid the restaurant’s damages claim. 

Lexington then filed a complaint in case number 2012-03-1741 against DunnWell and Travelers, 

and ABCO and West Bend, alleging various negligence and breach claims, and seeking 

compensatory and consequential damages, as well as declaratory judgment. In addition to 

denying the allegations in Lexington’s complaint, DunnWell and ABCO each filed cross-claims 

against the other, alleging, among other things, claims for indemnification and contribution. In 

addition, DunnWell prayed for a judgment that ABCO defend it against all of MAC’s claims. 

{¶3} Subsequently, in case number 2013-03-1400, ABCO and West Bend filed a 

complaint against DunnWell and Travelers, seeking declaratory judgment. Specifically, 

ABCO/West Bend sought declarations that DunnWell was not entitled to a defense, 

indemnification, or contribution under the subcontractor indemnification provision; or that in the 

case of ABCO’s partial negligence, DunnWell was entitled to only partial defense, 

indemnification, or contribution; and that DunnWell was not entitled to coverage as an additional 

insured under the West Bend policy to the extent that Macaroni Grill put the oven exhaust 

systems to their intended use or because DunnWell’s acts or omissions in connection with its 

general supervision of ABCO was the sole proximate cause of the fire. DunnWell answered and 

counterclaimed for declaratory judgment, seeking declarations that (1) ABCO owes DunnWell 
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defense and indemnity pursuant to the parties’ subcontractor agreement, and (2) West Bend owes 

DunnWell defense and indemnity pursuant to the insurance policy issued by West Bend to 

ABCO describing DunnWell as an additional insured. Travelers filed a separate answer to the 

ABCO/West Bend complaint but did not raise any counterclaims. 

{¶4} The parties moved to consolidate case number 2013-03-1400 into case number 

2012-03-1741, and the court granted the consolidation. Subsequently, DunnWell/Travelers and 

ABCO/West Bend filed competing motions for summary judgment solely on the issues of 

whether ABCO and West Bend owed DunnWell a defense and indemnity. The parties opposed 

each other’s motions. The trial court issued a judgment in which it declared that the parties’ 

March 3, 2009 subcontractor agreement was operative at the time of the fire; that the 

indemnification provision contained therein did not violate North Carolina’s anti-indemnification 

statute; and that ABCO, therefore, was required to indemnify and defend DunnWell in the 

underlying litigation. The trial court declined to issue any declaration, however, regarding 

whether DunnWell was entitled to coverage (and presumably indemnity and defense) as an 

additional insured under the West Bend insurance policy. In declining to declare the parties’ 

rights and obligations under the insurance policy, the trial court concluded that there were 

genuine issues of material fact as to whether ABCO’s work caused the fire and whether one of 

the policy’s exceptions to coverage applied to bar West Bend’s duty to indemnify and defend 

DunnWell. The court certified the judgment pursuant to Civ.R. 54(B) as a final, appealable 

order. 

{¶5} ABCO appealed, raising three assignments of error for review. DunnWell and 

Travelers filed a cross-appeal, raising one assignment of error for review. 

Jurisdiction 
4 

 

{¶6} As a preliminary matter, this Court is obligated to raise sua sponte questions 

related to our jurisdiction. Whitaker-Merrell Co. v. Geupel Constr. Co., Inc., 29 Ohio St.2d 184, 

186 (1972). This Court has jurisdiction to hear appeals only from final judgments. Article IV, 

Section 3(B)(2), Ohio Constitution; R.C. 2501.02. “For a judgment to be final and appealable, 

the requirements of R.C. 2505.02 and Civ.R. 54(B), if applicable, must be satisfied.” LEH 

Properties, Inc. v. Pheasant Run Assn., 9th Dist. Lorain No. 07CA009275, 2008-Ohio-4500, ¶ 

10, citing Chef Italiano Corp. v. Kent State Univ., 44 Ohio St.3d 86, 88 (1989). R.C. 

2505.02(B)(2) states that “[a]n order that affects a substantial right made in a special proceeding” 

is a “final order that may be reviewed, affirmed, modified, or reversed[.]” Where a case involves 

multiple claims or multiple parties, Civ.R. 54(B) allows a trial court to issue a final judgment 

that can immediately be appealed “only upon an express determination that there is no just 

reason for delay.” In the absence of a final, appealable order, this Court must dismiss the appeal 

for lack of subject matter jurisdiction. Lava Landscaping, Inc. v. Rayco Mfg., Inc., 9th Dist. No. 

2930-M, 2000 WL 109108 (Jan. 26, 2000). 

{¶7} The parties in this case sought declarations regarding their respective rights and 

obligations relating to the duty to indemnify and defend. The Ohio Supreme Court has held that 

“[t]he duty to defend involves a substantial right to both the insured and the insurer.” Gen. Acc. 

Ins. Co. v. Ins. Co. of N. Am., 44 Ohio St.3d 17 (1989), paragraph one of the syllabus. The high 

court reasoned that the risk of adverse economic and other consequences arising from situations 

both (1) where the indemnitor wrongfully refuses to defend so that the indemnitee is forced to 

settle to mitigate costs or later pursue additional litigation to recoup its costs of pursuing its own 

defense, and (2) where the insurance company expends costs to defend an action later 

determined not to be within the terms of the insurance policy. Id. at 21-22. Further, the high 
5 

 

court held that “a declaratory judgment action is a special proceeding pursuant to R.C. 2505.02 

and, therefore, an order entered therein which affects a substantial right is a final appealable 

order.” Id. at paragraph two of the syllabus. 

{¶8} In this case, the trial court declared that ABCO must indemnify and assume the 

defense of DunnWell pursuant to the parties’ subcontractor agreement, and it certified the 

judgment pursuant to Civ.R. 54(B). Accordingly, ABCO has appealed from a final, appealable 

order; and this Court has jurisdiction to consider ABCO’s appeal. 

{¶9} The trial court did not issue an express declaration as to whether West Bend has 

the duty to defend DunnWell pursuant to the additional insured provision of the insurance policy; 

instead, the trial court denied the competing motions for summary judgment on this issue upon 

finding that genuine issues of material fact existed. This Court concludes that this too constitutes 

a final, appealable order from which DunnWell can appeal. 

{¶10} Normally, the denial of a motion for summary judgment is not a final, appealable 

order. Hunt v. Alderman, 9th Dist. Summit No. 27416, 2015-Ohio-4667, ¶ 9. Moreover, this 

Court has held that an order entering judgment in a declaratory judgment action which fails to 

declare the parties’ rights and obligations is not final and appealable. Bowers v. Craven, 9th 

Dist. Summit No. 25717, 2012-Ohio-332, ¶ 11. Where the denial of a motion for summary 

judgment in the context of declaratory judgment gives rise, however, to the reasonable and 

logical inference that one party has in fact prevailed, the requirements of finality are satisfied. 

See Indiana Ins. Co. v. Alloyd Insulation Co., 2d Dist. Montgomery No. 18979, 2002-Ohio-3916, 

¶ 4 (assuming jurisdiction to review the trial court’s order denying summary judgment that “in 

the process suggested that its negative ruling supported a positive inference that [the insurance 

company] had a duty of coverage.”). 
6 

 

{¶11} In this case, DunnWell/Travelers and ABCO/West Bend had competing motions 

for summary judgment, both seeking a declaration regarding whether West Bend had a duty 

under the terms of its insurance policy to defend and indemnify DunnWell. Although the trial 

court denied both motions on this issue, the court’s ruling gives rise to the reasonable, positive 

inference that West Bend need not defend DunnWell in the underlying negligence suit. 

DunnWell has no legal recourse to compel West Bend to provide a defense, even under a 

reservation of rights, leaving it in a position where it must either absorb the full cost of its own 

defense and expend additional costs to continue to pursue reimbursement after the negligence 

action is fully disposed, or be induced to settle the underlying suit to avoid the costs of a defense. 

Either scenario impacts the substantial rights recognized by the Ohio Supreme Court in Gen. 

Acc. Ins., supra, when it recognized the finality of declarations regarding an insurance 

company’s duty to defend an insured. Finally, because the trial court in this case certified its 

judgment pursuant to Civ.R. 54(B), this Court recognizes our jurisdiction to address the merits of 

the cross-appeal. See Indiana Ins. Co. at ¶ 4. 

Summary Judgment Standard of Review 

{¶12} This Court reviews an award of summary judgment de novo. Grafton v. Ohio 

Edison Co., 77 Ohio St.3d 102, 105 (1996). This Court applies the same standard as the trial 

court, viewing the facts in the case in the light most favorable to the non-moving party and 

resolving any doubt in favor of the non-moving party. Viock v. Stowe-Woodward Co., 13 Ohio 

App.3d 7, 12 (6th Dist.1983). 

{¶13} Pursuant to Civ.R. 56(C), summary judgment is proper if: 

(1) No genuine issue as to any material fact remains to be litigated; (2) the 

moving party is entitled to judgment as a matter of law; and (3) it appears from 

the evidence that reasonable minds can come to but one conclusion, and viewing 
7 

 

such evidence most strongly in favor of the party against whom the motion for 

summary judgment is made, that conclusion is adverse to that party. 

Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327 (1977). 

{¶14} To prevail on a motion for summary judgment, the party moving for summary 

judgment must be able to point to evidentiary materials that show that there is no genuine issue 

as to any material fact, and that the moving party is entitled to judgment as a matter of law. 

Dresher v. Burt, 75 Ohio St.3d 280, 293 (1996). Once a moving party satisfies its burden of 

supporting its motion for summary judgment with sufficient and acceptable evidence pursuant to 

Civ.R. 56(C), Civ.R. 56(E) provides that the non-moving party may not rest upon the mere 

allegations or denials of the moving party’s pleadings. Rather, the non-moving party has a 

reciprocal burden of responding by setting forth specific facts, demonstrating that a “genuine 

triable issue” exists to be litigated for trial. State ex rel. Zimmerman v. Tompkins, 75 Ohio St.3d 

447, 449 (1996). 

{¶15} The non-moving party’s reciprocal burden does not arise until after the moving 

party has met its initial evidentiary burden. To do so, the moving party must set forth evidence 

of the limited types enumerated in Civ.R. 56(C), specifically, “the pleadings, depositions, 

answers to interrogatories, written admissions, affidavits, transcripts of evidence, and written 

stipulations of fact[.]” Civ.R. 56(C) further provides that “[n]o evidence or stipulation may be 

considered except as stated in this rule.” 

II. 

ABCO’S ASSIGNMENT OF ERROR I

THE TRIAL COURT ERRED IN GRANTING DUNNWELL, LLC SUMMARY 

JUDGMENT ON THE ISSUE OF WHICH SUBCONTRACT AGREEMENT 

BETWEEN ABCO AND DUNNWELL WAS IN FORCE AT THE TIME OF 

THE NOVEMBER 14, 2010 FIRE. 
8 

 

{¶16} ABCO argues that the trial court erred by concluding that the March 3, 2009 

subcontractor agreement was in effect at the time of the November 14, 2010 fire. This Court 

disagrees. 

{¶17} DunnWell (the contractor) and ABCO (the subcontractor) executed a 

subcontractor agreement on March 3, 2009, whereby ABCO would perform certain work as 

delineated in Schedule A, which was attached to the contract. Schedule A, related to the 2009 

contract, contained the primary heading “Work” and the subheading “Kitchen Exhaust 

Cleaning.” On September 7, 2010, DunnWell and ABCO executed another subcontractor 

agreement, whereby ABCO would perform certain work as delineated in Schedule A, which was 

attached to that contract. Schedule A related to the 2010 contract contained the primary heading 

“Scope of Work & Pricing” and the subheading “Fire Protection Service.” Except for the 

content of the various schedules, the two contracts contained identical provisions, including an 

integration/merger clause which stated that the contracts embodied the parties’ entire agreement 

and “supersede[d] all prior negotiations, agreements and understandings relating to the subject 

matter hereof.” The contracts also each contained a choice of law provision requiring that “[a]ll 

matters relating to the validity, performance or interpretation of this Agreement shall be 

governed by the laws of the State of North Carolina[.]” The parties do not dispute the propriety 

of the application of North Carolina law to the interpretation of these contracts. This Court, 

therefore, will consider this issue within the context of North Carolina law. 

{¶18} ABCO argues that a genuine issue of material facts exists regarding whether the 

2010 contract superseded the 2009 contract based on the deposition testimony of one of its 

representatives who testified that ABCO and DunnWell only maintained one active contract at a 

time. ABCO further argues that, because the 2010 contract does not delineate the work required 
9 

 

relating to kitchen exhaust cleaning, then all kitchen exhaust cleaning performed by ABCO on 

behalf of DunnWell was done on a case-by-case basis and not subject to any written contract 

provisions. This Court is not persuaded by ABCO’s argument given the plain language of the 

contracts which negates the need to consider extrinsic evidence such as the ABCO 

representative’s testimony regarding the meaning of the contracts. 

{¶19} The Supreme Court of North Carolina recognizes that a reviewing court considers 

a lower court’s interpretation of a contract de novo. State v. Philip Morris USA Inc., 363 N.C. 

623, 631 (2009). That court set out the principles of contract interpretation as follows: 

Interpreting a contract requires the court to examine the language of the contract 

itself for indications of the parties’ intent at the moment of execution. If the plain 

language of a contract is clear, the intention of the parties is inferred from the 

words of the contract. Intent is derived not from a particular contractual term but 

from the contract as a whole. However, we are also mindful that in reviewing the 

entire agreement, our task is not to find discord in differing clauses, but to 

harmonize all clauses if possible. Furthermore, when the terms of a contract are 

plain and unambiguous, there is no room for construction. The contract is to be 

interpreted as written, and enforce[d] * * * as the parties have made it. 

(Internal quotations and citations omitted.) Philip Morris at 631-632. 

{¶20} In this case, DunnWell and ABCO entered into a subcontractor agreement on 

March 3, 2009, for the express work purpose of “kitchen exhaust cleaning.” Schedule A of the 

2009 agreement clearly details the type of duties entailed in kitchen exhaust cleaning. On 

September 7, 2010, the parties executed another subcontractor agreement for the express work 

purpose of “fire protection services.” Schedule A of the 2010 agreement clearly details the type 

of duties entailed in fire protection services, and those duties are separate and distinct from the 

duties enumerated in the 2009 agreement. Except for the work identified in Schedule A of each 

contract, the agreements are identical. Although both agreements contain integration/merger 

clauses as set out above, the “subject matter” of each contract differed in terms of the work each 
10 

 

governed. The underlying negligence complaint against DunnWell and ABCO alleges breaches 

in the parties’ duties arising out of kitchen exhaust cleaning at the Macaroni Grill. 

{¶21} Based on the plain language of the 2009 subcontractor agreement, it is clear that 

the parties intended that contract to govern work performed by ABCO on behalf of DunnWell as 

it related to kitchen exhaust cleaning. By contrast, the plain language of the 2010 agreement 

indicates the parties’ intent that that contract governs a separate and distinct type of work, 

specifically fire prevention services. As the two agreements governed different “subject 

matter[s],” by its plain and unambiguous language, the 2010 agreement did not supersede the 

2009. As a review of the plain language of the agreements resolves this matter, this Court shall 

not engage in further construction or consideration of any extrinsic evidence. Accordingly, the 

trial court did not err by concluding that the 2009 subcontractor agreement was in effect at the 

time of the fire and that the 2010 agreement had not superseded it. ABCO’s first assignment of 

error is overruled. 

ABCO’S ASSIGNMENT OF ERROR II

THE TRIAL COURT ERRED IN GRANTING DUNNWELL, LLC SUMMARY 

JUDGMENT ON THE ISSUE OF INDEMNIFICATION PURSUANT TO THE 

SUBCONTRACT. 

ABCO’S ASSIGNMENT OF ERROR III

THE TRIAL COURT ERRED IN FINDING THAT THE DUNNWELL, LLC 

CONTRACTUAL INDEMNIFICATION AGREEMENT DOES NOT VIOLATE 

NORTH CAROLINA’S ANTI-INDEMNITY STATUTE. 

{¶22} ABCO consolidates its discussion relating to the second and third assignments of 

error and argues that the trial court erred by concluding that the indemnity provision of the 2009 

subcontractor agreement does not violate North Carolina’s anti-indemnity statute and that ABCO 
11 

 

was, therefore, required to indemnify and defend DunnWell in the underlying action. This Court 

agrees in part, and disagrees in part. 

{¶23} These assignments of error implicate a two-part analysis. First, this Court must 

determine whether the indemnity provision in the parties’ subcontractor agreement is void 

because it violates the North Carolina anti-indemnity statute. Second, assuming that the 

indemnity provision is not void, this Court must determine whether it applies in this case to 

require ABCO to indemnify DunnWell. 

Anti-indemnity statute 

{¶24} North Carolina’s anti-indemnity statute is codified at N.C.G.S.A. § 22B-1 and 

states, in pertinent part: 

Any promise or agreement in, or in connection with, a contract or agreement 

relative to the * * * repair or maintenance of a building, structure, * * * or 

appliance, * * * purporting to indemnify or hold harmless the promisee * * * 

against liability for damages arising out of bodily injury to persons or damage to 

property proximately caused by or resulting from the negligence, in whole or in 

part, of the promisee * * * is against public policy and is void and unenforceable. 

Nothing contained in this section shall prevent or prohibit a contract, promise or 

agreement whereby a promisor shall indemnify or hold harmless any promisee * * 

* against liability for damages resulting from the sole negligence of the promisor 

* * *. This section shall not affect an insurance contract, workers’ compensation, 

or any other agreement issued by an insurer * * *. 

{¶25} In Bridgestone/Firestone, Inc. v. Ogden Plaint Maintenance Co. of N.C., 144 

N.C.App. 503 (2001), the North Carolina appellate court reviewed the language in two 

indemnity clauses and concluded that, based on the plain language of the provisions, they did not 

violate the state’s anti-indemnity statute. 144 N.C.App. at 507-508. In both indemnity clauses in 

Bridgestone, the promisor agreed to indemnify and hold harmless the promisee for claims, 

judgments, and the like due to injuries arising out of the promisor’s conduct or negligence. Id. 

Moreover, the first clause was held not to violate N.C.G.S.A. § 22B-1 even though it required the 
12 

 

promisor to indemnify the promisee “regardless of whether such claims are alleged to be caused 

by negligence, or otherwise, on the part of [the promisee].” Id. at 507. The appellate court 

implicitly recognized that the mere allegation of negligence by the promisee did not impute 

agreement by the promisor to indemnify the promisee for the promisee’s own negligence. 

Accordingly, that clause did not render the indemnity provision void. Moreover, the North 

Carolina courts recognize that an illegal clause or provision in a clause in a contract may be 

severed to cure the defect. Intl. Paper Co. v. Corporex Constructors, Inc., 96 N.C.App. 312, 315 

(1989). 

{¶26} The indemnity provision in the subcontractor agreement in this case states: 

9. INDEMNITY. To the fullest extent permitted by law, Subcontractor agrees to 

defend, indemnify and save harmless DunnWell and its customers and their 

respective agents, servants, officers, directors, managers, members and employees 

(the “Indemnified Parties”), from and against any and all claims, costs, expenses 

or liabilities (including attorney’s fees and expenses) (“Liabilities”), attributable 

to bodily injury, sickness, disease or death, or damage to or destruction of 

property (including loss of use thereof), caused by, arising out of, resulting from, 

or occurring in connection with the performance of the Work by Subcontractor, 

its subcontractors and suppliers, or their agents, servants or employees. 

Subcontractor further agrees to defend, indemnify and save harmless the 

Indemnified Parties from and against any all Liabilities arising out of, resulting 

from or occurring in connection with a breach or non-fulfillment by Subcontractor 

of any representation, covenant, warranty or agreement contained herein. 

Should a customer or any other person or entity assert a claim or institute a suit, 

action or proceedings against DunnWell involving the manner or sufficiency of 

the performance of the Work, Subcontractor shall upon request of DunnWell 

promptly assume the defense of such claim, suit, action or proceeding at 

Subcontractor’s expense, and Subcontractor shall indemnify and save harmless 

DunnWell as well as anyone else to be defended, indemnified and held harmless 

by DunnWell and its or their agents, servants and employees, from and against 

any liability, loss, damage, or expense arising out of or related to such claim, suit, 

action, or proceeding. 

{¶27} The subcontractor agreement defines “Work” as the work that ABCO was 

obligated to perform and complete according to Schedule A appended to the agreement. 
13 

 

{¶28} Upon review of the indemnity provision, the plain language indicates that 

DunnWell seeks indemnity and defense solely for matters arising out of ABCO’s negligence and 

acts, not its own negligence. As the provision does not require ABCO to indemnify DunnWell 

for DunnWell’s negligence, it is not void as against public policy and does not violate North 

Carolina’s anti-indemnity statute. 

{¶29} This does not end the inquiry, however. This Court must further determine 

whether the indemnity provision in the parties’ subcontractor agreement is applicable under these 

circumstances to require ABCO to indemnify DunnWell and assume its defense. 

Defense 

{¶30} The Supreme Court of North Carolina has held: 

[T]he insurer’s duty to defend the insured is broader than its obligation to pay 

damages incurred by events covered by a particular [agreement]. An insurer’s 

duty to defend is ordinarily measured by the facts as alleged in the pleadings; its 

duty to pay is measured by the facts ultimately determined at trial. When the 

pleadings state facts demonstrating that the alleged injury is covered by the 

[agreement], then the insurer has a duty to defend, whether or not the insured is 

ultimately liable. Conversely, when the pleadings allege facts indicating that the 

event in question is not covered, and the insurer has no knowledge that the facts 

are otherwise, then it is not bound to defend. Where the insurer knows or could 

reasonably ascertain facts that, if proven, would be covered by its [agreement], 

the duty to defend is not dismissed because the facts alleged in a third-party 

complaint appear to be outside coverage, or within a policy exception to coverage. 

Waste Mgt. of Carolinas, Inc. v. Peerless Ins. Co., 315 N.C. 688, 691 (1986). The North 

Carolina courts use the “comparison test,” whereby the allegations in the complaint are taken as 

true and compared to the language in the agreement regarding coverage to determine whether the 

allegations arguably implicate coverage and, therefore, the duty to defend. Kubit v. MAG Mut. 

Ins. Co., 210 N.C.App. 273, 278 (2011), citing Harleysville Mut. Ins. Co. v. Buzz Off Insect 

Shield, L.L.C., 364 N.C. 1, 6-7 (2010). In addition, North Carolina subscribes to a “hybrid” 

approach, whereby “if the ‘pleadings allege multiple claims, some of which may be covered by 
14 

 

the insurer and some of which may not, the mere possibility the insured is liable, and that the 

potential liability is covered, may suffice to impose a duty to defend.’” Kubit, 210 N.C.App. at 

278, quoting Bruce – Terminix Co. v. Zurich Ins. Co., 130 N.C.App. 729, 735 (1998) (emphasis 

added). 

{¶31} In this case, the plain language of the indemnity provision requires ABCO to 

defend DunnWell against all claims attributable to damage arising out of ABCO’s work or its 

breach of any warranty under the subcontractor agreement. Lexington/MAC alleged claims 

against DunnWell premised on negligence going to the underlying performance of the kitchen 

exhaust cleaning, i.e., the on-site work, as well as breaches of various warranties going to the 

performance of the work. Although Lexington/MAC alleged a direct claim of negligent 

misrepresentation against DunnWell, alleging that it provided reports that misrepresented the 

efficacy of the cleaning and inspections performed at the restaurant, the other four counts 

constitute derivative claims. Those counts include negligent hiring/supervision, breach of the 

warranty to perform (kitchen exhaust cleaning) in a workmanlike manner, breach of contract by 

failing to use reasonable care in the performance of the work or in overseeing the subcontractor’s 

work, and breach of the express and implied warranties of performing the work in a workmanlike 

manner. These four counts allege damage arising out of ABCO’s negligence or breaches 

associated with its performance of the underlying work. In other words, because ABCO 

performed all on-site work (including cleaning and inspection pursuant to Schedule A appended 

to the 2009 subcontractor agreement), DunnWell’s liability for damages as a result of the fire can 

only arise out of its oversight of the work. See Thomas v. Weddle, 167 N.C.App. 283, 290 

(2004) (recognizing claims of negligent supervision and respondeat superior as derivative 

claims). 
15 

 

{¶32} As Lexington/MAC alleged claims against DunnWell attributable to damage 

arising out of ABCO’s performance, ABCO is obligated to defend DunnWell pursuant to the 

plain language of the indemnity provision in the parties’ subcontractor agreement. Moreover, 

although the underlying complaint alleges a direct claim of negligence (negligent 

misrepresentation) against DunnWell, ABCO is nevertheless obligated to provide a full defense 

to DunnWell pursuant to North Carolina’s adherence to the “hybrid” approach to defense. See

Kubit, 210 N.C.App. at 278. Accordingly, the trial court did not err when it concluded that no 

genuine issues of material fact existed with regard to ABCO’s duty to defend DunnWell in the 

underlying action. 

Indemnification 

{¶33} “The difference in scope between the duty to defend and the duty to indemnify is 

based on the source of the factual narrative.” Harleysville Mut. Ins. Co., 364 N.C. at 7, citing 

Waste Mgt., 315 N.C. at 691. While the duty to defend arises out of the facts as alleged and 

taken as true, “in determining whether an insurer has a duty to indemnify, the facts as determined 

at trial are compared to the language of the [agreement]. If the [agreement] provides coverage 

for the facts as found by the trier of fact, then the insurer has a duty to indemnify.” Harleysville 

Mut. Ins. Co., 364 N.C. at 7. 

{¶34} Here, absent proof of ABCO’s liability which might give rise to DunnWell’s 

derivative liability, it is premature to determine whether ABCO has a duty to indemnify 

DunnWell pursuant to the indemnity provision of the parties’ subcontractor agreement. 

Accordingly, the trial court erred to the extent that it concluded at this time that ABCO is 

required to indemnify DunnWell. 

Conclusion 
16 

 

{¶35} As ABCO will be obligated to indemnify DunnWell only if the evidence adduced 

at trial proves that ABCO’s work caused the fire and property damage and that DunnWell is 

derivatively liable, ABCO’s second and third assignments of error as they relate to 

indemnification are sustained. As they relate to the validity of the indemnification provision 

pursuant to N.C.G.S.A. § 22B-1 and the issue of ABCO’s duty to defend DunnWell, ABCO’s 

second and third assignments of error are overruled. 

DUNNWELL/TRAVELERS CROSS-ASSIGNMENT OF ERROR

THE TRIAL COURT ERRED IN FAILING TO FIND THAT, AS A MATTER 

OF LAW, WEST BEND OWES DUNNWELL DEFENSE IN THE PROPERTY 

DAMAGE SUIT PURSUANT TO THE ADDITIONAL INSURED 

ENDORSEMENT IN THE WEST BEND POLICY ISSUED ABCO. 

{¶36} DunnWell and Travelers argue that the trial court erred by denying its motion for 

summary judgment on the issues of defense and indemnity under the West Bend insurance 

policy, and by failing to declare that West Bend has a duty to defend and indemnify DunnWell in 

the underlying negligence action. This Court agrees in part, and disagrees in part. 

{¶37} The 2009 subcontractor agreement, which this Court previously determined was 

in effect at the time of the fire, contains the following provision: 

8. INSURANCE. Before commencing the Work and until completion and final 

acceptance thereof, Subcontractor shall obtain and maintain, at its expense, at 

least the insurance coverage specified in Schedule B attached hereto, all from 

companies and in form and substance acceptable to DunnWell. Subcontractor 

agrees to name DunnWell as an additional insured on all liability insurance 

coverages and that such insurance shall be primary to any coverages of 

DunnWell. As a condition to any payment for the Work, Subcontractor shall 

furnish a certificate, satisfactory to DunnWell, from each insurance company 

showing the required insurance to be in force and stating that the insurance will 

not be canceled or changed except upon at least thirty (30) days’ prior written 

notice thereof to DunnWell. If Subcontractor fails at any time to secure or 

maintain at least the insurance coverages specified in Schedule B attached hereto, 

DunnWell may (but shall have no obligation to) obtain such insurance on behalf 

of Subcontractor, and DunnWell may either (a) receive a refund from 

Subcontractor for the full amount paid by DunnWell for such insurance or (b) 
17 

 

withhold the full amount paid by DunnWell for such insurance from any future 

payments due to Subcontractor. The foregoing remedies shall be in addition to 

any and all other remedies available to DunnWell at law or in equity. 

{¶38} West Bend’s insurance policy covering ABCO contains an additional insured – 

contractor’s blanket endorsement including “as an additional insured any person or organization 

whom you [ABCO] are required to add as an additional insured on this policy under a written 

contract or written agreement.” The additional insured endorsement contains certain limitations 

on and exceptions to coverage in pertinent part as follows: 

B. The insurance provided to the additional insured is limited as follows: 

1. That person or organization is only an additional insured with respect to 

liability arising out of: 

* * * 

b. “Your work” for that additional insured; or 

c. Acts or omissions of the additional insured in connection with the general 

supervision of “your work.” 

* * * 

3. Except when required by written contract or written agreement, the coverage 

provided to the additional insured by this endorsement does not apply to: 

a. “Bodily injury” or “property damage” occurring after: 

(1) All work on the project (other than service, maintenance or repairs) to be 

performed by or on behalf of the additional insured at the site of the covered 

operations has been completed; or 

(2) That portion of “your work” out of which the injury or damage arises has 

been put to its intended use by any person or organization other than another 

contractor or subcontractor engaged in performing operations for a principal as 

part of the same project. 

b. “Bodily injury” or “property damage” arising out of acts or omissions of the 

additional insured other than in connection with the general supervision of “your 

work.” 
18 

 

{¶39} Section I, Coverage A[:] Bodily Injury and Property Damage Liability, of the 

West Bend Commercial General Liability Coverage Form sets out the scope of certain coverage 

under the policy. The parties refer to the relevant coverage provisions under subsection 1 by the 

subheading “Insuring Agreement.” Unless some limitation or exception applies, West Bend 

promised pursuant to the Insuring Agreement in the policy that 

We will pay those sums that the insured becomes legally obligated to pay as 

damages because of “bodily injury” or “property damage” to which this insurance 

applies. We will have the right and duty to defend the insured against any “suit” 

seeking those damages. 

{¶40} As this insurance policy was issued to an Ohio company (ABCO) who performed 

the cleaning services in Ohio, which work gave rise to the subject matter of the contract (i.e., 

liability coverage for damages sustained in the fire), this Court applies Ohio law to the issues 

raised in the cross-appeal. See Nationwide Mut. Ins. Co. v. Ferrin, 21 Ohio St.3d 43, 44-45 

(1986). 

{¶41} The Ohio Supreme Court applies the following propositions of law when 

interpreting the meaning of insurance policies: 

An insurance policy is a contract whose interpretation is a matter of law. 

Sharonville v. Am. Emp. Ins. Co., 109 Ohio St.3d 186, 2006-Ohio-2180, ¶ 6. The 

fundamental goal when interpreting an insurance policy is to ascertain the intent 

of the parties from a reading of the policy in its entirety and to settle upon a 

reasonable interpretation of any disputed terms in a manner designed to give the 

contract its intended effect. Burris v. Grange Mut. Cos., 46 Ohio St.3d 84, 89 

(1989). Words and phrases must be given their plain and ordinary meaning unless 

manifest absurdity results, or unless some other meaning is clearly evidenced 

from the face or overall contents of the instrument. Alexander v. Buckeye Pipe 

Line Co., 53 Ohio St.2d 241 (1978), paragraph two of the syllabus. 

We have held that provisions in an insurance contract that are reasonably 

susceptible of more than one interpretation will be construed liberally in favor of 

the insured. King v. Nationwide Ins. Co., 35 Ohio St.3d 208 (1988), syllabus. See 

also Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216, 2003-Ohio-5849, ¶ 13. 

This rule, however, will not be applied so as to provide an unreasonable 

interpretation of the words of the policy. Cincinnati Ins. Co. v. CPS Holdings, 
19 

 

Inc., 115 Ohio St.3d 306, 2007-Ohio-4917, ¶ 8, citing Morfoot v. Stake, 174 Ohio 

St. 506 (1963), paragraph one of the syllabus. 

(Internal quotations omitted.) Laboy v. Grange Indemn. Ins. Co., 144 Ohio St.3d 234, 2015-

Ohio-3308, ¶ 8-9. 

{¶42} An additional insured endorsement in a policy is construed as part of the policy 

and interpreted according to the “plain and ordinary meaning of the words used to ascertain the 

intent of the parties to the contract.” Ward v. United Foundries, Inc., 129 Ohio St.3d 292, 2011-

Ohio-3176, ¶ 19, citing Penn Traffic Co. v. AIU Ins. Co., 99 Ohio St.3d 227, 2003-Ohio-3373, ¶ 

9. “An exclusion in an insurance policy will be interpreted as applying only to that which is 

clearly intended to be excluded.” (Internal citations and quotations omitted) Westfield Ins. Co. 

v. Hunter, 128 Ohio St.3d 540, 2011-Ohio-1818, ¶ 11. Moreover, “a defense based on an 

exception or exclusion in an insurance policy is an affirmative one, and the burden is cast on the 

insurer to establish it.” Continental Ins. Co. v. Louis Marx Co., Inc., 64 Ohio St.2d 399, 401 

(1980). 

{¶43} The trial court ruled that there were genuine issues of material fact regarding 

“whether or not DunnWell is entitled to insurance coverage under the West Bend insurance 

policy.” As the insurance coverage in this case included both the duty to defend and the duty to 

indemnify, the trial court effectively denied that West Bend had a duty to defend, while deferring 

the issue of the insurance company’s duty to indemnify for trial. 

Defense 

{¶44} It is well established that “the duty to defend is broader than and distinct from the 

duty to indemnify.” Ward, 2011-Ohio-3176, at ¶ 19, citing Ohio Govt. Risk Mgt. Plan v. 

Harrison, 115 Ohio St.3d 241, 2007-Ohio-4948, ¶ 19. “‘The test of the duty of an insurance 

company, under a policy of liability insurance, to defend an action against an insured, is the 
20 

 

scope of the allegations of the complaint in the action against the insured, and where the 

complaint brings the action within the coverage of the policy the insurer is required to make a 

defense, regardless of the ultimate outcome of the action or its liability to the insured.’” 

Willoughby Hills v. Cincinnati Ins. Co., 9 Ohio St.3d 177, 178-179 (1984), quoting Motorists 

Mut. v. Trainor, 33 Ohio St.2d 41 (1973), paragraph two of the syllabus. The inherent duty to 

defend clearly arises “where the pleadings unequivocally bring the action within the coverage 

afforded by the policy,” and it may otherwise arise where the allegations “state a claim which is 

potentially or arguably within the policy coverage, or [where] there is some doubt as to whether 

a theory of recovery within the policy coverage had been pleaded[.]” Willoughby Hills, 9 Ohio 

St.3d at 180. Therefore, the insurance company has a duty to defend its insured whenever the 

allegations in the complaint state a claim that “arguably” falls within the coverage. Harrison at ¶ 

19. However, the insurer has no duty to defend against any claim that is “clearly and 

indisputably outside the contracted policy language.” CPS Holdings at ¶ 6, citing Preferred Risk 

Ins. Co. v. Gill, 30 Ohio St.3d 108, 113 (1987); see also Harrison, 2007-Ohio-4948, at ¶ 19; 

Maxum Indemn. Co. v. Selective Ins. Co. of South Carolina, 9th Dist. No. 11CA0015, 2012-

Ohio-2115, ¶ 17 (holding that “once the insurer is able to establish that there is no set of facts 

that would bring the allegations of the complaint within coverage of its policy, its duty to defend 

is extinguished.”). 

{¶45} Moreover, where a complaint alleges multiple claims against an insured, the 

insurance company has a duty to defend against all claims based on the same occurrence, even if 

it is contractually obligated to the insured for fewer than all the claims. Am. Chem. Soc. v. 

Leadscope, Inc., 10th Dist. Franklin No. 04AP-305, 2005-Ohio-2557, ¶ 8, citing Preferred Mut. 

Ins. Co. v. Thompson, 23 Ohio St.3d 78, 80 (1986) (referring to the “one claim-all claims” 
21 

 

principle). “Only if there is no possibility of coverage under the policy based on the allegations 

in the complaint will the insurer not have a duty to defend the action.” Am. Chem. Soc. at ¶ 8, 

citing Wedge Prods., Inc. v. Hartford Equity Sales Co., 31 Ohio St.3d 65 (1987). 

{¶46} The Insuring Agreement provision is applicable to the additional insured 

endorsement, as the endorsement constitutes a part of the policy. The plain language of the 

Insuring Agreement provision imposes on West Bend a duty to defend an insured against suits 

“seeking” damages covered by the policy. By virtue of the additional insured endorsement, 

DunnWell is an insured under the policy. 

{¶47} Four of the five claims alleged by Lexington/MAC against DunnWell are based 

on property damage arising out of negligence that allegedly occurred during the kitchen exhaust 

cleaning process for which ABCO was under subcontract with DunnWell to perform. The first 

four claims against DunnWell allege claims of general negligence (including negligent hiring, 

training, and supervision), breach of warranty to perform in a workmanlike manner, breach of 

contract for failure to use reasonable care in performing the kitchen exhaust cleaning and/or 

overseeing the work, and breach of express and implied warranties to ensure that all work was 

done in a workmanlike manner. All four of these claims are premised on the quality of the work 

performed on site at the Macaroni Grill. Only ABCO’s agents performed kitchen exhaust 

cleaning on site. Accordingly, DunnWell’s liability for these claims can only be derivative, 

rather than direct. Moreover, the property damage alleged in the complaint arose out of the same 

occurrence, i.e., negligent performance of kitchen exhaust cleaning on site. The insurance policy 

expressly covers DunnWell for ABCO’s work and matters related to DunnWell’s acts or 

omissions in connection with supervision of ABCO’s work. As these claims arguably fall within 

the policy coverage, West Bend has a duty to defend DunnWell against all claims alleged against 
22 

 

it by Lexington/MAC. Accordingly, the trial court erred when it concluded that genuine issues 

of material fact existed with regard to West Bend’s duty to defend DunnWell in the underlying 

action. 

Indemnity 

{¶48} There is a significant distinction between the duty to defend and the duty to 

indemnify.1 While the duty to defend arises when the allegations in the complaint arguably fall 

within the policy’s coverage, “the duty to indemnify, on the other hand, arises only if liability in 

fact exists under the policy.” Elevators Mut. Ins. Co. v. Scassa, 9th Dist. Wayne No. 03CA0045, 

2004-Ohio-3428, ¶ 12, quoting Chemstress Consultant Co., Inc. v. Cincinnati Ins. Co., 128 Ohio 

App.3d 396, 402 (9th Dist.1998). Before the trial court can determine whether an insurance 

company has the duty to indemnify an insured, it must have proof of the facts underlying the 

complaint. Id. 

{¶49} The duty to indemnify in this case implicates two issues implicitly recognized by 

the trial court. The trial court recognized that West Bend would only have a duty to indemnify 

DunnWell if (1) no exclusion from coverage provision was applicable, and (2) ABCO’s 

negligence caused the fire. With regard to the first issue, it concluded that genuine issues of 

material fact existed as to whether “the pizza oven was put to its intended use by MAC for 

several weeks before the fire occurred[,]” i.e., whether the coverage exclusion in section 3.a.(2) 

of the additional insured endorsement applied. DunnWell argues that the trial court improperly 

relied on this exclusionary provision because it is inapplicable. 

 

1

 DunnWell is not seeking indemnification for its direct negligence, if any. Without conceding 

liability, DunnWell properly recognizes that it would not be entitled to indemnification for any 

of its own negligence. 
23 

 

{¶50} As previously stated, this Court looks to the plain language of the endorsement to 

determine whether this exclusion is clearly intended to apply in these circumstances. See

Hunter, 2011-Ohio-1818, at ¶ 11. In this case, the trial court disregarded the introductory 

language of the endorsement in section B.3., which gives rise to certain exclusions “[e]xcept 

when required by written contract or written agreement * * *.” 

{¶51} Here, ABCO was required by the terms of the parties’ subcontractor agreement to 

add DunnWell as an additional insured and provide coverage in the types and amounts 

enumerated in Schedule B of the subcontractor agreement. As there was a contractual obligation 

to provide insurance coverage for DunnWell, the exceptions to the endorsement coverage are not 

applicable. Accordingly, the trial court erred by concluding that it could not determine whether 

DunnWell was excluded from coverage in the absence of a determination as to whether or not 

Macaroni Grill had put its pizza ovens to their intended use after ABCO cleaned them and prior 

to the fire. Based on the plain language of the endorsement, the exclusion noted by the trial court 

is not applicable as a matter of law because the ABCO/DunnWell subcontractor agreement 

obviated the exclusions in the insurance endorsement and obligated West Bend to provide 

coverage to DunnWell. This does not end the inquiry, however. 

{¶52} The second issue germane to the cross-assignment of error is whether ABCO’s 

negligence caused the property damage. In this case, absent proof of ABCO’s liability which 

might give rise to DunnWell’s derivative liability, it is premature to determine whether West 

Bend is obligated to indemnify DunnWell under the terms of the insurance policy. Accordingly, 

the trial court did not err by concluding that genuine issues of material fact exist precluding a 

declaration that West Bend owes DunnWell indemnity at this time. As West Bend will be 

obligated to indemnify DunnWell if the evidence at trial proves that ABCO’s work caused the 
24 

 

fire and property damage and that DunnWell is derivatively liable, DunnWell’s cross-assignment 

of error is sustained in part and overruled in part. 

III. 

{¶53} ABCO’s first assignment of error is overruled. ABCO’s second and third 

assignments of error are overruled as they relate to the validity of the indemnification provision 

in the parties’ subcontractor agreement and the issue of the duty to defend. ABCO’s second and 

third assignments of error are sustained as they relate to the duty to indemnify DunnWell. 

DunnWell’s cross-assignment of error is sustained as it relates to West Bend’s duty to defend, 

but overruled as it relates to the issue of indemnification. The judgment of the Summit County 

Court of Common Pleas is affirmed in part, reversed in part, and the cause remanded for further 

proceedings consistent with this opinion. 

Judgment affirmed, in part, 

reversed, in part, 

and cause remanded. 

 

 There were reasonable grounds for this appeal. 

 We order that a special mandate issue out of this Court, directing the Court of Common 

Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy 

of this journal entry shall constitute the mandate, pursuant to App.R. 27. 

 Immediately upon the filing hereof, this document shall constitute the journal entry of 

judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the 

period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is 
25 

 

instructed to mail a notice of entry of this judgment to the parties and to make a notation of the 

mailing in the docket, pursuant to App.R. 30. 

 Costs taxed equally to both parties. 

 

 DONNA J. CARR 

 FOR THE COURT 

WHITMORE, J. 

SCHAFER, J. 

CONCUR. 

APPEARANCES: 

THOMAS J. CONNICK, Attorney at Law, for Appellant/Cross-Appellee. 

D. JOHN TRAVIS, GARY L. NICHOLSON, and RICHARD C.O. REZIE, Attorneys at Law, 

for Appellees/Cross-Appellants. 

ROBERT P. LYNCH, Attorney at Law, for Appellee/Cross-Appellant. 

MICHAEL R. HENRY and MATTHEW R. PLANEY, Attorneys at Law, for Plaintiff/CrossAppellee.