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Stickovich v. City of Cleveland8/2/2001
ts denial of coverage letter and to plead its affirmative defense of illegality concerning its own contract as required by Civ.R. 8(C), Commercial Union waived the claim. If Commercial Union believed the claims were not covered, it should have litigated them to judgment before the trial judge rather than voluntarily settling them on the eve of trial. Ins. Co. of N. America v. Traveler's Ins. Co. (1997), 118 Ohio App.3d 302, held an insurer liable for its own settlement despite the fact that the settlement involved claims of an additional insured's own negligence on a construction site. See also Nationwide Ins. Co. v. Harvey (1976), 50 Ohio App.2d 361, 364; Taylor v. American Economy Ins. Co. (June 24, 1987), Summit App. No. 12753, unreported at 2. Even if failing to properly raise this defense and authorizing settlement of the claims did not preclude review of its coverage arguments as these cases suggest, Commercial Union has not shown the trial court improperly construed or applied its liability insurance contract.
Commercial Union has not shown that public policy precludes either liability on its settlement or liability insurance coverage in the case at bar. As noted above, the public works contracts were authorized by the Ohio Constitution, Cleveland Charter, the Ohio Revised Code, and Cleveland ordinances. R.C. 2305.31 does not prohibit liability insurance coverage for this public works bridge project. Public liability insurance coverage was a mandatory prerequisite. C.C.O. 185.26. R.C. 2744.08(A)(1) expressly permits Cleveland to secure insurance * [to cover] its * potential liability for damages * for injury * allegedly caused by an act or omission of the political subdivision or any of its employees *. Construing R.C. 2744.08(A)(1) in pari materia with R.C. 2305.31 renders the public liability insurance lawful in the case at bar.
Even if the trial court construed the additional insured endorsement to cover Cleveland's own negligence as Commercial Union argues, it has shown no error. Public policy does not prohibit a public agency from obtaining liability insurance to protect the public on public works projects. Ohio courts have held insurers liable for settlements when they raise unfounded public policy arguments to avoid coverage, for example, in cases involving employers liability endorsements covering substantial certainty intentional torts as the case at bar. E.g., Presrite Corp. v. Commercial Union Ins. Co. (1996), 113 Ohio App.3d 38; Baker v. Aetna Cas. & Surety Co. (1995), 107 Ohio App.3d 835; Ward v. Custom Glass & Frame, Inc. (1995), 105 Ohio App.3d 131.
Finally, even if Commercial Union were correct that coverage of liability for negligence by Cleveland were against public policy, it has not shown that the trial court applied its insurance contract to cover damages proximately caused by actionable negligence of Cleveland. The injured workers did not prosecute their claims or damages against Cleveland or the other parties.
They dismissed their complaint against Cleveland without any finding or stipulation of liability or negligence by Cleveland. It is not clear who, if anyone, was liable, negligent, or proximately caused any injury or damage they may have suffered. The settlement relieved them of their burden of proving negligence, proximate cause, and damages concerning any party. Construction Supplies alleged negligence by ICC and ultimately recovered for damage to its crane. By agreeing to pay the workers to dismiss their complaint without proof Commercial Union prevented any finding against its named insured, ICC, which would have triggered coverage under the policy.
The settlement also compromised without adjudication all
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