[Cite as Myers v. United Ohio Ins. Co., 2012-Ohio-340.]
COURT OF APPEALS
GUERNSEY COUNTY, OHIO
FIFTH APPELLATE DISTRICT
CHARLES MYERS aka CHUCK MYERS, et al.,
Plaintiffs-Appellees
-vs-
UNITED OHIO INSURANCE CO.
Defendant-Appellant
: JUDGES:
: William B. Hoffman, P.J.
: Sheila G. Farmer, J.
: Julie A. Edwards, J.
:
: Case No. 11CA000009
:
:
: OPINION
CHARACTER OF PROCEEDING: Civil Appeal from Guernsey County
Court of Common Pleas Case No.
09-CV-665
JUDGMENT: Vacated; Final Judgment Entered
DATE OF JUDGMENT ENTRY: January 26, 2012
APPEARANCES:
For Plaintiffs-Appellees For Defendant-Appellant
DANIEL G. PADDEN MICHAEL R. HENRY
Tribble, Scott, Plummer & MATTHEW R. PLANEY
Padden Crabbe, Brown & James, LLP
139 West 8th Street 500 South Front Street, Suite 1200
P.O. Box 640 Columbus, Ohio 43215
Cambridge, Ohio 43725-0640
Edwards, J.
{¶1} Appellant, United Ohio Insurance Co., appeals a judgment of the
Guernsey County Common Pleas Court awarding appellees Charles and Valerie Myers
damages in the amount of $51,576.00.
STATEMENT OF FACTS AND CASE
{¶2} In 2006, appellees decided to build a home on their property on Rough
and Ready Road in New Concord, Ohio. While driving around the area, they saw a
home built by Perry Miller. They walked through the home and eventually entered into a
contract with Miller to build a home on their property. The home was built on a slab and
consisted of one bedroom, one bathroom, a kitchen and a living room.
{¶3} Appellees decided to add on to the original home. Because Miller was
familiar with their home, they entered a contract with him on July 7, 2007, to build a
twenty by forty-eight foot addition including a full basement and interior and exterior
staircases. The contract called for a separate sixteen by twenty-four foot addition
including a full bathroom, bedroom and hallway. Miller was also to construct a garage
with two overhead doors.
{¶4} Late in 2007, one of the basement walls constructed by Miller began to
crack and bow. Miller used wood boards to support the wall and eventually had to
replace the wall in December of 2007.
{¶5} Miller began showing up at the construction site less and less. By spring
of 2008, he stopped working on the project. When efforts to contact Miller by telephone
failed, appellees went to his house. Miller advised appellees that he had another job
and did not have time to complete the work on their home.
{¶6} Appellees had a number of contractors look at the work in order to have
the work finished. One noted that there was a “bath tub effect” on the roof and the roof
was leaking. He also noted that a second basement wall constructed by Miller was
bowing.
{¶7} In the spring and summer of 2008, this second basement wall began to
bow and crack, allowing water into the basement. Appellees attempted to use wood to
brace the wall, but eventually the wall was replaced by James Flesher at a cost of
$18,576.00. According to Flesher, if the wall had not been replaced it would have
collapsed.
{¶8} Also in the spring and summer of 2008, the roof over the addition of the
home began to leak in five or six places before they could paint the drywall in the
addition. The leaking caused water stains on the drywall and caused the drywall to
separate and tear. Flesher inspected the roof and noted that there is not enough pitch
on the roof, causing it to hold water like a bowl instead of allowing it to run off. In his
opinion, the roof needed to be replaced.
{¶9} J.D. Jones, housing inspector for Guernsey County, inspected the addition
for mold and moisture issues. He noted that the roof system does not allow for proper
ventilation, causing moisture and mold damage.
{¶10} Appellees filed the instant action against Miller, alleging that he failed to
complete the work called for in their contracts with him concerning the construction of
the addition and garage. The complaint also alleged that the completed work was done
in an unworkmanlike manner.
{¶11} On July 29, 2010, appellees filed an amended complaint including the
same claims against Miller but adding appellant as a defendant based on a general
liability policy of insurance appellant had issued to Miller. Appellant filed a counterclaim
and cross claim seeking a declaratory judgment clarifying the scope of coverage under
the policy based on appellees’ claims against Miller.
{¶12} The case proceeded to bench trial in the Guernsey County Common
Pleas Court on February 16, 2011. Appellees voluntarily dismissed Miller because he
had received a discharge in bankruptcy applicable to all claims asserted against him by
appellees.
{¶13} Following trial, the court found that the policy of insurance appellant
issued to Miller does not provide coverage for defective or faulty workmanship, but did
provide coverage for consequential damages related to repairs for mold and water
damage caused by repeated exposure to the elements. Appellant had conceded
liability under the policy in the amount of $2,000.00 to repair water damage to the
drywall. The trial court found appellant liable to appellees under the policy for damages
in the amount of $51,576.00, which included $12,000.00 to re-work the main roof and
ceiling over the original structure, $19,000.00 to replace the roof and ceiling in the
addition, and $18,576 to replace the basement wall.
{¶14} Appellant assigns five errors on appeal:
{¶15} “I. THE TRIAL COURT ERRED BY FINDING AN ‘OCCURRENCE’
WHICH CAUSED ‘PROPERTY DAMAGE’ FOR WHICH UNITED OHIO HAD A DUTY
TO INDEMNIFY MILLER WHEN THE DAMAGES ALLEGED WERE RELATED TO
FAULTY WORKMANSHIP OF UNITED OHIO’S INSURED.
{¶16} “II. THE TRIAL COURT ERRED AS A MATTER OF LAW IN AWARDING
ANY DAMAGES RELATED TO THE REPLACEMENT OF THE BASEMENT WALL
CONSTRUCTED BY MILLER RELATED TO MOLD OR OTHERWISE.
{¶17} “III. THE TRIAL COURT ERRED IN AWARDING DAMAGES AND
FINDING COVERAGE UNDER THE UNITED OHIO POLICY WHEN A VALID FUNGI
OR BACTERIA EXCLUSION TO COVERAGE IN THE UNITED OHIO POLICY WOULD
ALSO APPLY.
{¶18} “IV. THE TRIAL COURT ERRED IN AWARDING DAMAGES RELATED
TO ANY DEFECTS AFFECTING THE ROOF OVER THE MYERS’ MAIN HOME AND
THE GARAGE CONSTRUCTED BY MILLER.
{¶19} “V. THE TRIAL COURT ERRED IN AWARDING JUDGMENT AGAINST
UNITED OHIO FOR CONSEQUENTIAL DAMAGES IN THE AMOUNT OF $51,576.00
WHEN ANY POTENTIALLY COVERED CONSEQUENTIAL DAMAGES RELATED TO
UNITED OHIO’S INSURED’S WORK WAS LIMITED TO $2,000.00.”
I
{¶20} In the first assignment of error, appellant argues that the court erred as a
matter of law in finding that repeated exposure to rain and snow in the home was an
“occurrence” within the meaning of the policy.
{¶21} The court made the following findings concerning whether the damage
was an “occurrence” that is covered under the policy:
{¶22} “4. The Court concludes as a matter of law that the legal issue of the
construction within the insurance policy contract of the term ‘occurrence’ was addressed
by the Fifth District Court of Appeals in the case of Bogner Construction Co. vs. Field &
Associates, Inc. case no. 08-CA-11, Knox Co., January 13, 2009, 2009 WL 91300. The
Fifth District Court of Appeals has stated that when defective workmanship results in
collateral damage, an ‘occurrence’ under the terms of the general liability policy occurs.
{¶23} “5. The Court concludes that the damages suffered by the Plaintiffs herein
are consequential damages stemming from the contractor (Miller’s) work.
{¶24} “6. The Court concludes from the facts of this case that these damages
occurred due to a repeated exposure to the moisture leaking into the home through the
roof, walls and basement. Thus, the property damage herein was caused by an
‘occurrence’, which the policy defines as ‘an accident, including continuous or repeated
exposure to substantially the same harmful conditions.’
{¶25} “7. The Court, therefore, concludes as a matter of law, in accord with the
principle applied with Ohio Courts and the Fifth District Court of Appeals that the
defective workmanship herein does not constitute an ‘occurrence’ or an accident.
However, the repeated exposure to the elements has resulted in consequential
damages and this property damage is caused by an ‘occurrence’ which is not excluded
in the policy.
{¶26} “8. The Court further concludes that the Plaintiffs’ home is now damaged
by mold which is growing in the home due to the repeated exposure to moisture. There
is no evidence that the mold was in existence in the home prior to the occurrence due to
harmful conditions which have caused the mold to grow. This occurrence has resulted
in the Plaintiffs’ home being damaged in the sum of $51,576. pursuant to Plaintiffs’
Exhibits 11 and 12.” Judgment Entry, March 23, 2011, Conclusions of Law 4-8.
{¶27} This court's standard of review concerning questions of law is de novo.
Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm (1995), 73 Ohio St.3d 107, 108, 652
N.E.2d 684; Cleveland Elec. Illum. Co. v. Pub. Util. Comm. (1996), 76 Ohio St.3d 521,
523, 668 N.E.2d 889.
{¶28} In the instant case, the policy issued to Miller provides coverage for
property damage only if it is caused by an occurrence that takes place in the coverage
territory. The policy defines occurrence as “an accident, including continuous or
repeated exposure to substantially the same general harmful conditions.”
Businessowners Coverage Form, Defendants Exhibit A, p. 39.
{¶29} In Bogner Construction Company v. Field & Associates, Inc., Knox App.
No. 08 CA 11, 2009-Ohio-116, City of Mount Vernon school board had contracted with
Bogner for the construction of a new middle school. The school board asserted breach
of contract claims against Bogner based on Bogner’s failure to construct a roof that
conformed to the project specifications. The complaint alleged that the roof leaked,
causing property damage not only to the roof but also to tangible property other than the
roof itself, including ceiling tiles and furnishings.
{¶30} Bogner was insured by a comprehensive general liability policy issued by
USF&G which provided coverage for property damage caused by an “occurrence,” and
defined “occurrence” as “an accident, 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.” Id. at ¶41.
{¶31} This Court noted that the language of the policy was “clear and plain,
something only a lawyer’s ingenuity could make ambiguous.” Id. at ¶42, quoting Royal
Plastics v. State Auto. Mut. Ins. Co. (1994), 99 Ohio App.3d 221, 225. We then turned
to the issue of whether any of the claims fell within the scope of the insurance policy
coverage.
{¶32} Citing Environmental Exploration Company v. Bituminous Fire & Marine
Insurance Co., (October 16, 2000), Stark App. No. 1999CA00315, we held that
defective workmanship does not constitute an accident or occurrence under a
commercial general liability policy. Id. at ¶44. If the policy is construed as protecting a
contractor against defective workmanship, the insurer becomes a guarantor of the
insured’s performance under the contract, and the policy becomes a performance bond.
Id. at ¶48. The policy does not insure an insured’s work itself, but rather insures the
consequential risks that stem from the insured’s work. Id. at ¶49. General commercial
liability policies are not intended to insure the normal, frequent or predictable costs of
doing business. Id. Such policies are intended to insure the risks of an insured causing
damage to other persons and their property, but are not intended to insure the risks of
an insured causing damage to the insured’s own work. Id. We found that there was no
“occurrence” within the meaning of the policy, and therefore, no coverage.
{¶33} As to the roof, the trial court awarded damages for repair and replacement
of the roof, finding that the snow and rain that accumulated on the roof was an
“occurrence” within the meaning of the policy. However, the claim and all of the
evidence presented at trial was that the roof was not properly constructed by Miller,
causing a “bowl” type effect on the roof which allowed water and rain to collect rather
than run off. The very purpose of a roof is to prevent rain and snow from entering the
interior of the home and causing damage. The repeated exposure of the roof to rain
and snow is not a separate cause of roof failure, but is the means by which the faulty
construction of the roof became apparent to appellees. The damages awarded for
repair of the roof were not damages for consequential or collateral damage caused to
the interior of the home, but rather were for damage to the work product itself and thus
did not qualify as an occurrence under the plain language of the policy.
{¶34} Similarly, the court awarded damages for replacement of the basement
wall. The evidence presented at trial was undisputed that the reason the wall bowed,
cracked and ultimately allowed water to seep in was because it was improperly
constructed by Miller. Again, the replacement of the basement wall was not collateral or
consequential damage, but rather was damage to the work product itself caused by
faulty construction.
{¶35} Appellees argue that their trial exhibit 13, a letter from appellant to their
attorney, concedes liability for the damages awarded by the trial court. The letter
provides in pertinent part:
{¶36} “As we discussed on the telephone prior, workmanship and the actual
work product of our insured is excluded under policy coverage. Resulting damage from
the work of our insured is determined as follows:
{¶37} “Water has entered the roof structure resulting in water leaks and stains in
the family room ceiling and portions of the finished side of the exterior south wall.
{¶38} “The resulting damage is not workmanship, or work product, and would be
afforded coverage for the repairs of the resulting damage only. Please provide your
contractor estimate for repair of the resulting damage for review and payment.”
{¶39} This letter recognizes that appellant is not liable for the workmanship and
work product of Miller. Appellant states that coverage is provided only for resulting
water damage, such as stains in the ceiling of the family room, and not for the faulty
work itself. Appellant conceded $2,000.00 in repairs for water damage at trial.
However, this letter does not inform appellees that there is coverage for replacement of
the roof and basement wall, and limits coverage to resulting damage from the leaks in
the roof.
{¶40} The first assignment of error is sustained.
II
{¶41} Appellant argues that the court erred in awarding damages for
replacement of the basement wall as mold remediation when there was no evidence
presented that the problems with the basement wall contributed to the mold problem in
the home.
{¶42} A judgment supported by some competent, credible evidence going to all
the essential elements of the case will not be reversed by a reviewing court as against
the manifest weight of the evidence. C.E. Morris Co. v. Foley Construction Co. (1978),
54 Ohio St.2d 279, 376 N.E.2d 578. As the trier of fact, the judge is in the best position
to view the witnesses and their demeanor in making a determination of the credibility of
the testimony. “[A]n appellate court may not simply substitute its judgment for that of
the trial court so long as there is some competent, credible evidence to support the
lower court's findings.” State ex rel. Celebrezze v. Environmental Enterprises, Inc.
(1990), 53 Ohio St.3d 147, 154, 559 N.E.2d 1335.
{¶43} While appellant Valerie Myers testified that there was mold in the
basement, there is no evidence that replacement of the basement wall was necessary
because of mold damage. Flesher testified that the basement was going to cave in if
the wall wasn’t replaced because of cracking and bowing. J.D. Jones testified
concerning mold issues caused by the roof leaking, but did not present any evidence
about the basement wall.
{¶44} The second assignment of error is sustained.
III
{¶45} Appellant argues that the exclusion in the insurance policy related to
property damage caused by fungi or bacteria precludes recovery of damages for mold.
The policy provides in pertinent part:
{¶46} “q. Fungi or Bacteria
{¶47} “(1) . . . ‘property damage’ . . . which would not have occurred, in whole or
in part, but for the . . . existence of, or presence of, any ‘fungi’ . . . on or within a building
or structure, including its contents, regardless of whether any other cause, event,
material or product contributed concurrently or in any sequence to such injury or
damage.
{¶48} “(2) Any loss, cost or expenses arising out of the abating, testing for,
monitoring, cleaning up, removing, containing, treating, detoxifying, neutralizing,
remediating or exposing of, or in any way responding to, or assessing the effects of,
‘fungi’ or bacteria, by any insured or by any other person or entity.”
{¶49} J.D. Jones testified that mold is a type of fungus. By the clear language of
this policy exclusion, coverage is not provided for any property damage which is
attributable to mold.
{¶50} The third assignment of error is sustained.
IV
{¶51} Appellant argues that the court erred in awarding damages for repair of
the original roof because such repairs are not an “occurrence” under the policy.
{¶52} For the reasons stated in assignment of error one above, the moisture
problems with the house which required re-working and replacement of the roof are due
to faulty workmanship by Miller. Faulty workmanship on the roof is not an “occurrence”
within the meaning of the policy and damages awarded to repair the incompetently
constructed roof are not authorized by the insurance policy.
{¶53} The fourth assignment of error is sustained.
V
{¶54} Appellant argues that its liability is limited to the $2,000.00 they conceded
at trial for water damage on to the drywall. For the reasons stated in assignments of
error one through four, we agree. The fifth assignment of error is sustained.
{¶55} The judgment of the Guernsey County Common Pleas Court is vacated.
Pursuant to App. R. 12(B), we hereby enter final judgment in favor of appellees Charles
and Valerie Myers in the amount of $2,000.00.
By: Edwards, J.
Hoffman, P.J. and
Farmer, J. concur
______________________________
______________________________
______________________________
JUDGES
JAE/r1121
IN THE COURT OF APPEALS FOR GUERNSEY COUNTY, OHIO
FIFTH APPELLATE DISTRICT
CHARLES MYERS aka CHUCK :
MYERS, et al., :
:
Plaintiffs-Appellees :
:
:
-vs- : JUDGMENT ENTRY
:
UNITED OHIO INSURANCE CO. :
:
Defendant-Appellant : CASE NO. 11CA000009
For the reasons stated in our accompanying Memorandum-Opinion on file, the
judgment of the Guernsey County Court of Common Pleas is vacated. Pursuant to
App.R. 12(B) we hereby enter final judgment in favor of appellees Charles and Valerie
Myers in the amount of $2,000.00. Costs assessed to appellees.
_________________________________
_________________________________
_________________________________
JUDGES
Myers v. United Ohio Ins. Co.
Combined Opinion