Court Opinion

ID: 2701297
Source: CourtListenerOpinion
Date Created: 2014-08-04 19:31:35.479115+00
Date Added: 2024-06-11T13:24:56.672912
License: Public Domain

[Cite as Boatwright v. Penn-Ohio Logistics, 2011-Ohio-1006.]

                            STATE OF OHIO, MAHONING COUNTY

                                  IN THE COURT OF APPEALS

                                        SEVENTH DISTRICT

LAWRENCE BOATWRIGHT                               )
                                                  )
        PLAINTIFF,                                )       CASE NO.   10 MA 80
                                                  )
ERIE INSURANCE EXCHANGE,                          )
                                                  )
        INTERVENING                               )
        PLAINTIFF-APPELLEE,                       )
                                                  )       OPINION
        - VS -                                    )
                                                  )
PENN-OHIO LOGISTICS,                              )
                                                  )
        DEFENDANTS,                               )
                                                  )
AMERICAN STEEL CITY                               )
INDUSTRIAL LEASING, et al.,                       )
                                                  )
        DEFENDANTS-APPELLANTS.                    )

CHARACTER OF PROCEEDINGS:                             Civil Appeal from Common Pleas Court,
                                                      Case No. 08CV3171.

JUDGMENT:                                             Affirmed.

JUDGES:
Hon. Joseph J. Vukovich
Hon. Gene Donofrio
Hon. Mary DeGenaro

                                                      Dated: February 25, 2011
                                                                         -2-

APPEARANCES:

For Plaintiff:                        Attorney Gary Kisling
                                      3412 West Market Street
                                      Akron, Ohio 44333
                                      (Amicus Curiae, Lawrence Boatwright)

                                      Attorney Nomiki Tsarnas
                                      970 Windham Court, Suite 7
                                      Youngstown, Ohio 44512
                                      (Amicus Curiae, Lawrence Boatwright)

For Intervening Plaintiff-Appellee:   Attorney Mark Greer
                                      Attorney Timothy Fitzgerald
                                      Attorney Gary Nicholson
                                      6th Floor, Bulkley Building
                                      1501 Euclid Avenue
                                      Cleveland, Ohio 44115

For Defendants-Appellants:            Attorney Kevin Murphy
                                      Attorney Matthew Vansuch
                                      108 Main Avenue, SW, Suite 500
                                      Warren, Ohio 44481
[Cite as Boatwright v. Penn-Ohio Logistics, 2011-Ohio-1006.]

VUKOVICH, J.

          ¶{1}   Defendants-appellants American Steel City Industrial Leasing and
William Marsteller (collectively referred to as American) appeal the decision of the
Mahoning County Common Pleas Court granting intervening-plaintiff-appellee Erie
Insurance Exchange’s motion for summary judgment. The grant of summary judgment
is a finding that the insurance policy Erie Insurance issued to defendant Penn-Ohio
Logistics does not afford coverage for independent claims of negligence asserted by
plaintiff Lawrence Boatwright against American as the additional insured under the
policy.
          ¶{2}   In seeking reversal, American asserts that the policy language in the
Additional Insured Endorsement does provide coverage for its independent acts of
negligence. According to it, the insurance policy’s phrase “liability arising out of your
operations or premises owned by or rented by you” provides coverage for both
independent acts of negligence and for its vicarious liability. Specifically, it asserts that
while the phrase “liability arising out of your operations” only extends coverage to
American for its vicarious liability, the other phrase, “liability arising out of * * *
premises owned by or rented to you” covers independent acts of negligence on the
part of American.
          ¶{3}   Erie Insurance disputes the above contention and claims that the
language only provides coverage for American’s vicarious liability. It asserts that Ohio
courts have consistently held that additional insured endorsements provide limited
coverage for only vicarious liability.            Furthermore, it contends that the Eleventh
Appellate District has already reviewed this same policy language as it pertains to Erie
Insurance and American, and has determined that the language does not offer
coverage to American for its independent acts of negligence. Currier v. Penn-Ohio
Logistics, 186 Ohio App.3d 249, 2010-Ohio-195, ¶20-31.               Thus, according to Erie
Insurance, the doctrine of res judicata is applicable and also warrants affirming the trial
court’s grant of summary judgment.
          ¶{4}   We agree with the reasoning and analysis provided in the Currier
decision. Thus, the policy language extended coverage only for American’s vicarious
liability, not for its independent acts of negligence.         Furthermore, we note that as
                                                                                       -2-

between American and Erie, res judicata is another basis to affirm the trial court’s
decision. The exact issue between the exact same parties has been decided by the
Eleventh District Court of Appeals. For those reasons and the ones elaborated below,
the judgment of the trial court is hereby affirmed.
                              STATEMENT OF THE CASE
       ¶{5}   On August 29, 2006, Boatwright was employed by Penn-Ohio and while
working at a warehouse located at 3710 Hendricks Road, Austintown, Mahoning
County, Ohio, which Penn-Ohio rented from American, the floor of the warehouse
collapsed, causing Boatwright to sustain injuries.        Thereafter, Boatwright filed a
complaint against Penn-Ohio and American. 08/05/08 Complaint.
       ¶{6}   The complaint contained five counts.          The first count alleged that
American “negligently and in breach of their duty of care to Lawrence Boatwright, and
other employees of H&R Penn Ohio Logistics LLC failed to notify Penn-Ohio Logistics
* * * of the structural load capacity of the flooring of [the warehouse], failed to post the
structural load capacity of said floor, and failed to inform Penn-Ohio Logistics * * * of
the lack of solid earth foundation below said floor and of the existence of a room below
said floor which rendered the structural load capacity of said floor far less than was
apparent, and made the danger of collapse of said floor far more dangerous.” The
next three counts in the complaint alleged negligence and intentional torts against
Penn-Ohio. The last count alleged that as a result of the negligent and intentional acts
of Penn-Ohio and American, Boatwright sustained “serious and permanent injuries,
incurred medical expenses and has or will incur loss of income and earning capacity.”
It is undisputed that the complaint did not plead vicarious liability against American
rather, it only alleged independent acts of negligence on the part of American.
       ¶{7}   American answered the complaint admitting it owned the warehouse and
that Penn-Ohio leased part of the premises. 09/09/08 Answer.
       ¶{8}   Thereafter, Erie Insurance moved to intervene.          09/16/08 Motion to
Intervene. Erie Insurance asserted that it issued a comprehensive general liability
policy to Penn-Ohio and in that policy American was listed as an additional insured.
Attached to the motion to intervene was a declaratory judgment complaint seeking a
                                                                                     -3-

determination from the trial court as to whether Erie Insurance had a duty to
defend/indemnify any defendant.
      ¶{9}      On March 11, 2010, Erie Insurance filed a motion for summary judgment
against American. It asserted that based on the Currier decision, the doctrine of res
judicata warranted a grant of summary judgment. It also argued that the additional
insured endorsement only afforded American coverage for vicarious liability and as
there was no allegation of vicarious liability in the complaint, summary judgment was
warranted.
      ¶{10} American responded to the motion for summary judgment asserting that
the language of the endorsement provided coverage and the doctrine of res judicata
was inapplicable because there was no identity of parties.           03/24/10 Motion in
Opposition.
      ¶{11} After reviewing the motions, the trial court granted Erie Insurance’s
motion for summary judgment. The trial court found:
      ¶{12} “Furthermore, the policy does not afford coverage for the independent
claims of negligence asserted by Plaintiff against Defendants American Steel City
Industrial Leasing, Inc. and Bill Marsteller in its complaint, all as a matter of law.”
04/27/10 J.E.
      ¶{13} It did not render a ruling on the application of the doctrine of res judicata.
                               ASSIGNMENT OF ERROR
      ¶{14} “THE TRIAL COURT ERRED TO THE PREJUDICE OF DEFENDANTS-
APPELLANT AMERICAN STEEL CITY INDUSTRIAL LEASING, INC. AND WILLIAM
MARSTELLER         IN   GRANTING     SUMMARY       JUDGMENT        TO    INTERVENING-
PLAINTIFF ERIE INSURANCE EXCHANGE.”
      ¶{15} A declaratory judgment action allows a court of record to declare the
rights, status, and other legal relations of the parties. Civ.R. 57 and R.C. 2721.01 et
seq. This type of action is an appropriate mechanism for establishing the obligations
of an insurer in a controversy “between it and its insured as to the fact or extent of
liability” under a policy. Lessak v. Metro. Cas. Ins. Co. of N.Y. (1958), 168 Ohio St.
153, 155. When a declaratory judgment action is disposed of by summary judgment,
our review of the trial court's resolution of legal issues is de novo. King v. W. Res.
                                                                                      -4-

Group (1997), 125 Ohio App.3d 1, 5. Thus, we employ the same standard used by the
trial court.   Pursuant to Civ.R. 56(C) summary judgment is proper when “(1) [n]o
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 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.” Welco Industries, Inc. v. Applied Cos. (1993),
67 Ohio St.3d 344, 346.
       ¶{16} Penn-Ohio’s lease with American required Penn-Ohio to have a
comprehensive general liability insurance policy that listed American as an additional
insured. Penn-Ohio acquired such a policy from Erie Insurance which contained the
following relevant provisions:
       ¶{17} “Throughout this policy the words ‘you’ and ‘your’ refer to the Named
Insured shown in the ‘Declarations’.”
       ¶{18} The Commercial General Liability Coverage Part provided:
       ¶{19} “WHO IS AN INSURED (Section II) is amended to include as an insured
the person or organization shown in the Schedule as an insured but only with respect
to liability arising out of your operations or premises owned by or rented to you.”
       ¶{20} If American and Penn-Ohio is inserted in the appropriate places in the
above sentence, American is included as an insured but only with respect to the
liability arising out of Penn-Ohio’s operations or premises owned by or rented by Penn-
Ohio. The premises rented by Penn-Ohio in this instance is the warehouse located at
3710 Hendricks Road.
       ¶{21} The Eleventh Appellate District has looked at this exact policy as it
pertains to Erie Insurance and its duty to offer coverage to American for any alleged
independent acts of negligence at the warehouse located at 3710 Hendricks Road.
Currier, 186 Ohio App.3d 249, 2010-Ohio-195, appeal not allowed by 125 Ohio St.3d
1448, 2010-Ohio-2510. It determined that the language only provided coverage for
American’s vicarious liability and since the complaint only alleged independent acts of
negligence, American was entitled to summary judgment. Id.
                                                                                       -5-

       ¶{22} Currier involved the same August 29, 2006 accident at issue in this case,
the collapse of the floor at the warehouse located at 3710 Hendricks Road,
Austintown, Mahoning County, Ohio, that Penn-Ohio rented from American. However,
in Currier, the plaintiff who brought the action was Julianna Currier, administrator of
the estate of Raymond McQueen, who died as a result of the floor collapsing;
Boatwright was not a plaintiff. Similar to the instant action, Erie Insurance intervened
and filed a declaratory judgment action claiming that it did not have a duty to defend or
indemnify Penn-Ohio or American.
       ¶{23} In finding for Erie Insurance, the Eleventh Appellate District began its
analysis by stating that an insurance policy is a contract and that in determining the
intent of the parties we look to the plain and ordinary language used in the policy. Id.
at ¶14. The court explained that while the policy did not define the phrase “liability
arising out of [Penn-Ohio's] operations or premises * * * rented to [Penn-Ohio]” the
purpose of additional insured endorsements is to protect the additional insured from
vicarious liability:
       ¶{24} “‘Often the purpose of the additional insured endorsements is to protect
the additional insured against claims of vicarious liability, i.e., liability based entirely
upon the relationship between the parties, as opposed to any active negligence on the
part of the additional insured.’ [Ohio Insurance Coverage (2008) 184.] This makes
sense for both the named insured and the additional insured.            A negligence-free
commercial landlord, for instance, invariably is concerned about being held liable for
the negligence of its tenant. That landlord should be able to demand coverage from
the tenant's insurer because that insurer can offer the coverage either at no additional
cost or by a modest increase in premium, since covering the landlord's vicarious
liability does not increase the insurer's liability exposure. The amount of the loss
remains the same regardless of the number of parties contributing to it. Id.
       ¶{25} “’[A]n “additional insured” provision is intended to protect the additional
party from liability for the acts or omissions of the primary insured - that is, [the
additional insured] is protected in situations where it is secondarily liable for [the
named insured's] conduct.        Secondary liability arises when one party is held
                                                                                     -6-

responsible based solely on its relationship with the responsible actor.’ (Citations
omitted.) Sprouse, 2004-Ohio-353, at ¶16.” Id. at ¶21-22.
       ¶{26} The court then discussed its decision in Davis v. LTV Steel Co., Inc.
(1998), 128 Ohio App.3d 733, which found that the policy language at issue in that
case only extended coverage to the additional insured for vicarious liability. Id. at ¶23-
24. In finding that Davis’ reasoning was applicable, the court provided four reasons
that it believed strongly supported its decision that as to American the policy language
only offered coverage its vicarious liability. Id. at ¶26-30.
       ¶{27} The first reason was based on the term “arising out of” that is found in
the policy. Id. at ¶27. The Eleventh District explained that that phrase modifies both
the premises and operations. Id. According to it, the phrase provides that liability
arises out of American’s relationship with Penn-Ohio and, as such, only covers
vicarious liability. Id.
       ¶{28} Secondly, the court stated that given the nominal amount Erie Insurance
charged to include American as an additional insured indicates that the parties did not
intend to insure American or its independent acts of negligence. Id. at ¶28. The total
premium for Penn-Ohio’s insurance policy was $14,062, however, Erie Insurance only
charged Penn-Ohio $30 to include American as an additional insured. Id.
       ¶{29} Thirdly, the court noted that if the policy was to include coverage for
American’s independent acts of negligence, the endorsement would have indicated
that American “was to be an insured ‘with respect to its independent acts of
negligence’ that ‘occur on Penn-Ohio's leased premises.’” Id. at ¶29. However, the
endorsement did not contain those phrases and the court noted that it would read
those additional terms into the endorsement. Id.
       ¶{30} Lastly, the court noted that “plaintiff's claim against American was based
on its independent acts of negligence, not the leased premises, and therefore the
plaintiff's claim against American is not within the scope of the additional-insured
endorsement.” Id. at ¶30. See, also, Currier v. Penn-Ohio Logistics, 187 Ohio App.3d
32, 2010-Ohio-198, ¶60-73 (companion case to Currier, 186 Ohio App.3d 249, where
Currier appealed the grant of summary judgment for Erie Insurance); Buckeye Union
                                                                                       -7-

v. Zavarella (1997), 121 Ohio App.3d 147 (addressing an additional insured clause in
a construction contract).
        ¶{31} We find the Eleventh Appellate District’s decision to be sound persuasive
authority for finding that the policy language only extends coverage to American for its
vicarious liability, not for independent acts of negligence.         Vicarious liability by
definition is based solely on the relationship between the two parties; it is indirect or
imputed legal responsibility for the acts of another. Black’s Law Dictionary (6 Ed.1990)
1566. Examples include liability of an employer for the acts of an employee or liability
of the principal for torts and contracts of the agent. The additional insured provision as
it is written provides American “is included as an insured but only with respect to the
liability arising out of [Penn-Ohio’s] operations or premises * * * rented by” Penn-Ohio.
“‘Arising out of’ means generally ‘flowing from’ or ‘having its origin in.’“ Nationwide Mut.
Fire Ins. Co. v. Turner (1986), 29 Ohio App.3d 73, 77, citing Ins. Co. of North America
v. Royal Indemn. Co. (C.A.6, 1970), 429 F.2d 1014. Thus, language indicates that
liability is based on the relationship of the parties and thus, American, the additional
insured, can only be liable if Penn-Ohio, the insured, is.
        ¶{32} We do not agree with American’s assertion (which incidentally is the
same position it took in Currier) that “arising out of premises” provides coverage for
independent acts of negligence by the additional insured, while “arising out of
operations” only provides coverage for the additional insured’s vicarious liability. The
policy language states that American “is included as an insured but only with respect
to the liability arising out of [Penn-Ohio’s] operations or premises * * * rented by” Penn-
Ohio.    Admittedly the two phrases are connected by “or.”          However, the “or” is
indicating that liability can arise from two situations, one being operations and the
other being premises. While it is true that operations and premises are two different
things, that does not mean that the phrase “is included as an insured but only with
respect to liability arising out of” means something different when it is used to modify
operations as opposed to when it is used to modify premises rented by the insured.
That phrase means it only extends coverage for vicarious liability. Both Davis and
Currier appear to support such a conclusion. Davis, 128 Ohio App.3d at 736 (court
was asked to determine whether the phrase “arising out of operations” provided
                                                                                      -8-

additional insured coverage for its independent acts of negligence or solely its
vicarious liability).
        ¶{33} A research of case law indicates that other general commercial liability
policies include language that “excludes coverage for liability arising out of the sole
negligence of the additional insured.” Lubrizol Corp. v. Lichtenberg & Sons Constr.,
Inc., 11th Dist. No. 2004-L-179, 2005-Ohio-7050, ¶34-35 (although referencing the
Davis case, stating that both the general commercial liability policy and umbrella policy
excluded coverage for “liability arising out of the sole negligence of the additional
insured” and, as such, the clear language only covered vicarious liability, not
independent acts of negligence); Liberty Mut. Ins. Group v. Travelers Property Cas.,
8th Dist. No. 80560, 2002-Ohio-4280, ¶19 (stating the additional insured endorsement
states that it “does not include liability arising out of the independent acts or omissions
of such person or organization,” and, as such, the clear wording of the endorsement
only provides coverage for secondary and vicarious liability). While that language may
be more direct than the language provided in the policy at hand, we still find that the
policy issued by Erie Insurance provides coverage only for the additional insured’s
vicarious liability.    In this instance, as to Boatwright’s injury that arose out of his
employment, American can only be liable if Penn-Ohio, the employer, is liable for an
intentional tort.
        ¶{34} American does cite this court to a case from an Illinois appellate court to
support its position that the policy language offers coverage for independent acts of
negligence on the part of American. Maryland Cas. Co. v. Chicago and North Western
Transp. Co. (1984), 126 Ill.App.3d 150, 153. The policy in that case stated that the
additional insured was insured “but only with respect to liability arising out of the
ownership, maintenance or use of that part of the premises designated below leased
to the named insured * * *.” The Illinois Appellate Court found that the policy provided
coverage for the additional insured’s independent acts of negligence partly because of
the ambiguity in the “arising out of” language in the policy. Id. That case, however, is
not binding on this court. Furthermore, it is contrary to the position of Ohio courts
which have not found the phrase “arising out of” to be ambiguous in the context of the
insurance policy at issue here.
                                                                                      -9-

         ¶{35} Accordingly, for those reasons, we find no merit with American’s
arguments.       The policy language does not provide coverage for American’s
independent acts of negligence; it only provides coverage for American’s vicarious
liability.   Thus, since the complaint alleged independent negligence on the part of
American, and not vicarious liability, there is no coverage for the complained of acts.
Summary judgment was appropriately granted for Erie Insurance.
         ¶{36} In addition to the above espoused reasons, we also note that the
doctrine of res judicata is also applicable based on the Currier decision and provides
another basis for affirming the trial court’s decision. Under the doctrine of res judicata,
“A valid, final judgment rendered upon the merits bars all subsequent actions based
upon any claim arising out of the transaction or occurrence that was the subject matter
of the previous action.” Grava v. Parkman Twp. (1995), 73 Ohio St.3d 379, syllabus.
         ¶{37} All the elements of res judicata are met in this case.         The Currier
decision is a valid final judgment from a competent court that decided the exact same
issue presented to this court, i.e. whether the language in Erie Insurance’s policy
issued to Penn-Ohio offered coverage for independent acts of negligence on the part
of the additional insured American for injuries/deaths caused by the August 29, 2006
floor collapse at the warehouse owned by American that was rented to Penn-Ohio.
Furthermore, the parties involved are the same. Erie Insurance intervened and filed a
declaratory judgment action claiming that it did not have a duty to defend or indemnify
defendants Penn-Ohio or American in both the Trumbull County Common Pleas Court
and Mahoning County Common Pleas Court cases. Both the Mahoning County and
Trumbull County Common Pleas Courts found for Erie Insurance. The only difference
between the Trumbull County and Mahoning County cases is the plaintiffs; Boatwright
was the plaintiff in the Mahoning County case, while Currier as administrator of the
estate of McQueen was the plaintiff in the Trumbull County case. However, despite
the opportunity to, Boatwright did not appeal the Mahoning County Common Pleas
Court’s decision but instead filed an amicus curiae brief. But see Currier, 187 Ohio
App.3d 32, 2010-Ohio-198, (Currier appealed the Trumbull County Common Pleas
Court’s decision limiting the insurance policy to covering only American’s vicarious
liability). Consequently, our focus is only on the party appealing the decision and the
                                                                                    - 10
                                                                                -

party defending that appeal, which in this case is respectively American and Erie
Insurance. Thus, as the trial court cases and appeals in both cases involve American
and Erie Insurance and their positions concerning whether the insurance policy offered
coverage to American for its independent acts of negligence, the doctrine of res
judicata is applicable.
                                    CONCLUSION
       ¶{38} In conclusion, the sole assignment of error lacks merit. The language in
the additional insured does not provide coverage for American’s independent acts of
negligence.    Rather it solely provides coverage for American’s vicarious liability.
Furthermore, the claims asserted in this appeal as between American and Erie
Insurance are barred by res judicata.
       ¶{39} For the foregoing reasons, the judgment of the trial court is hereby
affirmed.

Donofrio, J., concurs.
DeGenaro, J., concurs.