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Stickovich v. City of Cleveland8/2/2001
Civ.R. 15(B).
It follows that the pleadings alone may not provide sufficient factual information to determine whether the insurer has an obligation to defend the insured. It remains true that where the pleadings unequivocally bring the action within the coverage afforded by the policy, the duty to defend will attach. Motorists Mut., supra (Motorists Mut. v. Trainor , 33 Ohio St.2d 41); State Farm Fire & Cas. Co. v. Pildner (1974), 40 Ohio St.2d 101 [69 O.O.2d 509]. However, where the insurer's duty to defend is not apparent from the pleadings in the case against the insured, but the pleadings do state a claim which is potentially or arguably within the policy coverage, or there is some doubt as to whether a theory of recovery within the policy coverage has been pleaded, the insurer must accept the defense of the claim. Thus, the `scope of the allegations' may encompass matters well outside the four corners of the pleadings. (Emphasis and inserts added.)
Appellee Buckeye Union cites Wedge Products Inc. v. Hartford Equity Sales Co. (1987), 31 Ohio St.3d 65, for the proposition that an insurer is not obligated to defend or indemnify an insured when there is no possibility of coverage under the applicable policy of insurance. However, the facts herein are very complex and it is not so clear that there is no possibility of coverage. Id.at pp. 3-4.
The Lewis Court thereafter declined to invalidate the parties' indemnification agreement or the conditional duty to pay damages under the liability insurance policy, and the Ohio Supreme Court denied further review. Lewis v. Ohio Edison Co. (1991), 61 Ohio St.3d 1412.
These are standard principles governing the duty to defend determined by summary judgment in insurance coverage declaratory judgment actions. The allegations and liability coverage provisions do not unambiguously show there was no coverage in the case at bar. Under the circumstances, the two successive trial judges did not err by finding a duty to defend. Settlement
Finally, we reject Commercial Union's argument that it is not liable to pay for its $1.3 million settlement for similar reasons. Commercial Union had the exclusive contractual right to decide whether to settle the tort claims. Nevertheless, it seeks to challenge its own settlement on the grounds that its own contract violated public policy. Under the circumstances, the record does not show that the settlement was not lawfully covered by its liability insurance contract.
In granting summary judgment, the trial court held that Commercial Union had a duty to defend and was conditionally liable for any judgment depending on the verdict and evidence presented at trial. The duty to defend a claim is distinct from the duty to pay that claim and does not mean that the insurer has a duty to pay if the facts subsequently show there is no coverage or liability of its insured.
Instead of proceeding to the scheduled bench trial, when the matter could be determined once and for all, however, Commercial Union exercised its exclusive contractual right to control and settle the litigation on the eve of trial without proof of the workers' claims or damages against any of the parties. Under the circumstances, after thoroughly reviewing the record, we find that (1) Commercial Union did not satisfy its burden of proving its affirmative defense that its insurance contract violated public policy, and (2) the record does not show that its settlement was outside the scope of its liability insurance coverage or improperly covered injury or damages proximately caused by actionable negligence of Cleveland.
Conclusion
As noted above, by failing to raise in i
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