Opinion ID: 6325956
Heading Depth: 1
Heading Rank: 8

Heading: The umbrella policy covers Ironics’s claim

Text: {¶ 77} The only question before this court is whether the umbrella policy covers Ironics’s claim. The plain language of the insurance contract supplies the answer. A. By its terms, the umbrella policy covers the damage {¶ 78} Under the umbrella policy, Motorists Mutual agreed to insure against a loss resulting from an “occurrence” that causes “property damage.” This coverage extends only to a loss not covered by Ironics’s “underlying insurance.” {¶ 79} The quoted terms are defined as follows: • Occurrence: 1. An accident, or a happening or event, including continuous or repeated exposure to conditions, which results in “bodily injury” or “property damage” neither expected nor intended from the standpoint of the insured. • Property damage: 1. Physical injury to or destruction of tangible property which occurs during the policy period, including all resulting loss of use of that property; 2. Loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an “occurrence” during the policy period. 35 SUPREME COURT OF OHIO • Underlying insurance: policies listed in the Schedule of Underlying Insurance and other policies available to the Insured applicable to the “occurrence.” “Accident,” as used in the definition of “occurrence,” is not defined, so it takes on its ordinary meaning. An “accident” is an “unintended and unforeseen injurious occurrence; something that does not occur in the usual course of events or that could not be reasonably anticipated.” Black’s Law Dictionary 18-19 (11th Ed.2019); see also Hybud Equip. Corp. v. Sphere Drake Ins. Co., 64 Ohio St.3d 657, 666, 597 N.E.2d 1096 (1992) (“In its common, ordinary use, the word ‘accidental’ means unexpected, as well as unintended”). {¶ 80} The facts fit neatly into this collection of definitions. First, the law of the case is that no “underlying insurance”—namely, the CGL policy—covers this claim. {¶ 81} Second, the tube scale was accidentally manufactured to contain a contaminant ruinous to the bottles. The contamination of the glass with chrome particulate was unintended and unforeseen. Relying on Westfield Ins. Co. v. Custom Agri Sys., Inc., 133 Ohio St.3d 476, 2012-Ohio-4712, 979 N.E.2d 269, ¶ 13, Motorists Mutual maintains that “accident” is a term of art that incorporates what insurance law calls the fortuity principle—the idea that damage must be “ ‘truly accidental’ ” to be covered, not a consequence of “ ‘faulty workmanship.’ ” Custom Agri, quoting JTO, Inc. v. State Auto. Mut. Ins. Co., 194 Ohio App.3d 319, 2011-Ohio-1452, 956 N.E.2d 328, ¶ 32 (11th Dist.); see also Ohio N. Univ. v. Charles Constr. Servs., Inc., 155 Ohio St.3d 197, 2018-Ohio-4057, 120 N.E.3d 762, ¶ 17. But here, unlike in Custom Agri, the loss was truly accidental. Owens scrapped its glass bottles because a subcontractor had inadvertently contaminated the tube scale. Ironics did not intend and could not have foreseen such a mishap, 36 January Term, 2022 and the loss was not a result of Ironics’s faulty craftsmanship. Thus, there was an occurrence (i.e., an accident that resulted in property damage). {¶ 82} This occurrence rendered the glass bottles in question unusable. Motorists Mutual contends that the bottles were not destroyed. But the definition of property damage includes the “[l]oss of use of tangible property.” Here, 3.7 million pounds of glass bottles could not be put to their intended use. Thus, the defective tube scale inflicted property damage. Ironics’s claim is within the sweep of the umbrella policy. Straightforward enough. {¶ 83} But that does not complete the analysis because the umbrella policy contains “exclusions.” Motorists Mutual offers three as relevant. The policy excludes coverage for “[p]roperty damage” (1) to “your product,” (2) to “your work,” and (3) to “impaired property.” {¶ 84} Start with the exclusion for property damage to “your product.” “Your product” is defined as “[a]ny goods or products, other than real property, manufactured, sold, handled or distributed or disposed of by    [y]ou.” “You” in the definition of “your product” refers to Ironics, the insured. Ironics’s product is the tube scale. The damaged product is the glass bottles manufactured by Owens. Motorists Mutual argues that the bottles are an integrated system of which the tube scale is a component and, therefore, the bottles should be considered Ironics’s product too. But Ironics has not “manufactured, sold, handled or distributed or disposed of” the bottles made by Owens. Thus, the “your product” exclusion does not exclude coverage for damage to the bottles. {¶ 85} Next, turn to the exclusion for property damage to “your work.” The relevant definition is as follows: • Your work: 1. Work or operations performed by you or on your behalf; and 37 SUPREME COURT OF OHIO 2. Materials, parts or equipment furnished in connection with such work or operations. Ironics did not perform “work” for Owens. It did not, for example, participate in the implementation of the tube scale into the other glass ingredients. Ironics simply supplied a product. Ironics did “furnish[]” “materials,” but not “in connection with” any “work.” {¶ 86} Finally, there is the “impaired property” exclusion. That exclusion defines “impaired property” as tangible property, other than “your product” or “your work” that cannot be used or is less useful because: 1. It incorporates “your product” or “your work” that is known or thought to be defective, deficient, inadequate or dangerous; or 2. You have failed to fulfill the terms of a contract or agreement; if such property can be restored to use by: 1. The repair, replacement, adjustment or removal of “your product” or “your work”; or 2. Your fulfilling the terms of the contract or agreement. Here, the glass bottles are “tangible property” that “incorporates” Ironics’s “product”—the tube scale. But the exclusion does not apply, because the property cannot “be restored to use.” The bottles were necessarily scrapped. {¶ 87} Thus, it is clear from the four corners of the umbrella policy that Motorists Mutual agreed to cover Ironics’s liability and that no exclusion applies. 38 January Term, 2022 B. There is no need to venture beyond the language of the policy {¶ 88} The majority opts to use this case to write something of a treatise on insurance law. It invokes various insurance doctrines and cites numerous cases from other jurisdictions. But while it may conceivably interest some to know that the economic-loss doctrine “prevents ‘the tortification of contract law,’ ” majority opinion at ¶ 28, quoting Annett Holdings, Inc. v. Kum & Go, L.C., 801 N.W.2d 499, 503 (Iowa 2011), or that the integrated-systems rule preserves the “ ‘ “distinction between warranty and strict products liability,” ’ ” id. at ¶ 30, quoting E. River Steamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 867, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986), quoting N. Power & Eng. Corp. v. Caterpillar Tractor Co., 623 P.2d 324, 330 (Alaska 1981), none of this is necessary to resolve this dispute about the meaning of a contract. The majority’s musings are simply dicta.