In the Supreme Court of Ohiosupremecourt.ohio.gov/pdf_viewer/pdf_viewer.aspx?pdf=... · No. 14-1161...

No.14-1161

IntheSupremeCourtofOhio____________

APPEALFROMTHECOURTOFAPPEALSTENTHAPPELLATEDISTRICTFRANKLINCOUNTY,OHIOCASENO.13AP-290____________

WORLDHARVESTCHURCH,

Plaintiff-Appellee,

v.

GRANGEMUTUALCASUALTYCOMPANY,Defendant-Appellant,

MERITBRIEFOFAPPELLANTGRANGEMUTUALCASUALTYCOMPANY

RobertP.Rutter(0021907)OneSummitOfficePark,Suite6504700RocksideRoadCleveland,OH44131Tel: 216-642-1425Fax: 216-642-0613brutter@ohioinsurancelawyer.comAttorneyforPlaintiff-Appellee

WorldHarvestChurch

IreneC.Keyse-Walker(0013143)(COUNSELOFRECORD)BenjaminC.Sasse(0072856)TUCKERELLISLLP950MainAvenue,Suite1100Cleveland,OH44113-7213Tel: 216-592-5000Fax: [email protected]@tuckerellis.com

JamesR.Gallagher(0025658)GALLAGHER,GAMS,PRYOR,TALLAN&LITTRELLL.L.P.471EastBroadSt.,19thFloorColumbus,OH43215-3872Tel: 614-228-5151Fax: [email protected]

GrangeMutualCasualtyCompany

Supreme Court of Ohio Clerk of Court - Filed February 06, 2015 - Case No. 2014-1161

i

TABLEOFCONTENTS

Page

TABLEOFAUTHORITIES........................................................................................................................iv

I. INTRODUCTIONANDSUMMARYOFTHEARGUMENT...............................................1

II. STATEMENTOFFACTS................................................................................................................3

A. TheUnderlyingAction...................................................................................................3

B. ThisLitigation....................................................................................................................7

1. TheGrangepolicies...........................................................................................7

(a) Theinsuringagreements..................................................................8

(b) TheAbuseorMolestationExclusion............................................9

2. Decisionsbelow...................................................................................................9

III. ARGUMENT....................................................................................................................................11

PropositionofLawNo.1..........................................................................................................12

A commercial liability policy containing an Abuse orMolestationExclusionwhichexcludesdamagesarisingoutofabuse“byanyone”ofanypersoninthecare,custodyorcontrol of any insured, as well as the negligentemployment or supervision of an abuser, eliminatescoverages of sums awarded based on the insured’svicariousliabilityforitsemployee’sabuseofachildintheinsured’scareandcustody........................................................................................12

A. StandardofReview.......................................................................................................12

B. This Court’s Insurance Jurisprudence Is Consistent withthe Enforcement of Subject Matter Exclusions Like theStandardizedAbuseorMolestationExclusion.................................................13

1. Gearing,ShafferandSafecofocusondamage-causing“acts” to determine whether claims are withincoverages provided by a policy, construed as awhole.....................................................................................................................14

ii

2. WHC’sadmittedvicariousliabilityforabuseisnotadamage-causingact.........................................................................................16

3. Subject matter exclusions’ focus on conductsimplifiescoveragedisputes.......................................................................18

C. Grange Had No Obligation Under the CGL or UmbrellaCoverage Forms to Reimburse WHC for Sums It Paid toSatisfyItsVicariousLiabilityforVaughan’sIIED.............................................23

1. The history, purpose and plain language of the ISOAbuseorMolestationExclusionprecludefindingsofpolicycoveragesforvicariousliabilityforabuse...............................24

2. Numerouscourtshaverejectedattemptstoskirttheplain language of the ISO Abuse or MolestationExclusion..............................................................................................................27


When attorney’s fees are awarded solely in conjunctionwithnon-coveredconduct,“compensatory”attorney’sfeesarenotcovereddamagesunderliabilityinsurancepolicies.(Neal-Pettit v. Laham, 125 Ohio St.3d 327 (2010),construed.)........................................................................................................................32


A liability insurance policy's supplementary paymentsclausecannotbereasonablyconstruedasanagreementtopaypost-judgmentinterestonnon-coveredclaims.......................................35

IV. CONCLUSION.................................................................................................................................39

CERTIFICATEOFSERVICE....................................................................................................................41

iii

APPENDIX Appx.Page

NoticeofAppealtoOhioSupremeCourt(July11,2014).........................................................1

Journal Entry , Tenth District Court of Appeals (on Reconsideration)(May29,2014)................................................................................................................................4

Memorandum Decision, Tenth District Court of Appeals (onReconsideration)(May29,2014)..........................................................................................6

JudgmentEntry,TenthDistrictCourtofAppeals(Jan.6,2014)..........................................14

Decision,TenthDistrictCourtofAppeals(Dec.24,2013).....................................................16

JudgmentEntry,FranklinCountyCommonPleasCourt(Mar.11,2013)........................37

Decision Denying in Part and Granting in Part plaintiff ’s Motion forSummaryJudgmentFiledSept.1,2011andDecisionDenyinginPart and Granting in Part Defendant’s Motion for SummaryJudgmentfiledSept.2,2011(Dec.16,2012).................................................................40

iv

TABLEOFAUTHORITIES

PageCases

AmericanEmpireSurplusLinesIns.Co.v.ChabadHouseofNorthDade,Inc.,450Fed.Appx.792(11thCir.2011)....................................................................................30

Bohrerv.ChurchMut.Ins.Co.,12P.3d854(Colo.App.2000).................................................................................37,38,39

Byrdv.Faber,

57OhioSt.3d56(1991)..........................................................................................................17

Caseyv.Calhoun,40OhioApp.3d83,531N.E.2d1348(8thDist.1987)...............................................38

Colterv.Spanky’sDollHouse,2dDist.MontgomeryNo.21111,2006-Ohio-408.......................................................21

CommunityActionforGreaterMiddlesexCounty,Inc.v.AmericanAlliance

Ins.Co.,757A.2d1074(Conn.2000)..................................................................................................29

Coventryv.SteveKoren,Inc.,1OhioApp.2d385(8thDist.),aff ’d4OhioSt.2d24(1965)............................36,38

Crowv.Dooley,3dDist.AllenNo.1-11-59,2012-Ohio-2565..........................................................20,21

Doev.Lenarz,Conn.Sup.Ct.No.CV0540129705,2007WL969610(Mar.21,2007)................28

Doev.Shaffer,90OhioSt.3d388,2000-Ohio-186............................................................................passim

EssexIns.Co.v.MichiganSkatelands,Inc.,6thCir.Nos.93-2132,93-2145,1994WL589670(Oct.21,1994).....................19

EvanstonIns.Co.v.Johns,530F.3d710(8thCir.2008)...................................................................................................19

Page

v

Faietav.WorldHarvestChurch,10thDist.FranklinNo.08AP-527,2008-Ohio-6959.....................................................4

Faietav.WorldHarvestChurch,147OhioMisc.2d51,2008-Ohio-3140,891N.E.2d370.............................................3

Gearingv.NationwideIns.Co.,

76OhioSt.3d34,665N.E.2d1115(1996)............................................................passim

Harperv.GulfIns.Co.,D.Wyo.No.01-CV-201-J,2002WL32290984(Dec.20,2002)...............20,26,27

Heinz-GertK.GRMv.GreatLakesGeneralAgency,9thDist.LorainNo.03CA008418,2004-Ohio-6269...........................................22-23

HolidayHospitalityFranchising,Inc.v.AmcoIns.Co.,983N.E.2d574(Ind.2013).....................................................................................................29

Hougv.StateFarmFire&Cas.Co.,509N.W.3d590(Minn.App.1993)...............................................................................29,31

HybudEquip.Corp.v.SphereDrakeIns.Co.,Ltd.,64OhioSt.3d657(1992).......................................................................................................13

InsightsTradingGroup,LLCv.FederalIns.Co.,

D.Md.No.RDB-10-340,2010WL2696750(July6,2010)......................................31

Jackson-Brownv.Monford,10thDist.FranklinNo.12AP-542,2013-Ohio-607.....................................................20

Kolbekv.TruckExchange,431S.W.3d900(Ark.2014)....................................................................................................28

LincolnCty.Sch.Dist.v.Doe,749So.2d943(Miss.1999).................................................................................3,19,27,30

Lundev.AmericanFamilyMut.Ins.Co.,297S.W.3d88(Mo.App.2009)..............................................................................................37

MonticelloIns.Co.v.KentuckyRiverCommunityCare,

6thCir.No.98-5372,1999WL236190(Apr.14,1999)...........................................25

Page

vi

Mt.VernonFireIns.Co.v.Hicks,871F.Supp.947(E.D.Mich.1994).................................................................................28-29

Nautilusv.OurCamp,Inc.,136Fed.Appx.134(10thCir.2005)....................................................................................30

Neal-Pettitv.Laham,125OhioSt.3d327,2010-Ohio-1829,928N.E.2d421......................................32,34

Neffv.AlterraHealthcareCorp.,271Fed.Appx.224,2008WL821070(3dCir.2008)...........................................19,30

NewWorldFrontier,Inc.v.Mt.VernonFireIns.Co.,253A.D.2d455,676N.Y.S.2d648(Sup.Ct.App.Div.1998)........................................31

Perezv.Otero,415So.2d101(Fla.App.1982)..............................................................................................36

ProSelectIns.Co.v.Levy,30A.3d692(Vt.2011)..............................................................................................................31

Robertsv.Mike’sTrucking,Ltd.,9N.E.3d483,2014-Ohio-766(12thDist.)......................................................................34

S.C.FarmBureauMut.Ins.Co.v.Oates,588S.E.2d378(S.C.App.2003)......................................................................................19,30

SafecoInsuranceCo.ofAm.v.White,122OhioSt.3d562,2009-Ohio-3718,913N.E.2d426....................................passim

SilverballAmusement,Inc.v.UtahHomeFireIns.Co.,842F.Supp.1151(W.D.Ark.),aff ’d33F.3d1476(8thCir.1994)..................passim

ThirdWing,Inc.v.ColumbiaCasualtyCo.,8thDist.CuyahogaNo.97622,2012-Ohio-2393..........................................................33

ValleyForgeIns.Co.v.Field,670F.3d93(1stCir.2011)...............................................................................................24-25

WedgeProds.,Inc.v.HartfordEquitySalesCo.,31OhioSt.3d65,509N.E.2d74(1987)...........................................................................38

Page

vii

WestfieldIns.Co.v.Galatis,100OhioSt.3d216,2003-Ohio-5849........................................................................12,36

Williamsv.UnitedStatesLiab.Ins.Group,5thDist.StarkNo.2011CA00252,2012-Ohio-1288..................................................22

Wrightv.Larschied,3dDist.AllenNo.1-14-02,2014-Ohio-3772.................................................................22

Rules

Civ.R.12(C).................................................................................................................................................17

Statutes

R.C.3937.182(B)......................................................................................................................................38

OtherAuthorities

CouchonInsurance(3ded.),§172:46.....................................................................................36-37

I. INTRODUCTIONANDSUMMARYOFTHEARGUMENT

This appeal arises out of a decision ordering Appellant Grange Mutual

InsuranceCompany(Grange) to indemnifyAppelleeWorldHarvestChurch(WHC)

for over $1million in compensatorydamages, attorney fees, and interest because

oneoftheChurch’spreschoolteacherssavagelybeatatwo-and-a-half-year-oldchild

in the school’s care and custody. While the panel concluded that the Grange

commercial general liability coverage form (CGL) and umbrella policies issued to

WHCprovidednocoveragesfordamagescausedbythebeatingassertedunderthe

label of “battery,” the court concluded that: (1) the policies did cover those same

damages asserted under the label of “intentional infliction of emotional distress”

(IIED)and(2)thatWHC’s“vicarious”liabilityforitsemployee’sIIED–liabilitythat

was the result of the church’s litigation strategy to admit that the abuser’s acts

should be “deemed” to be the acts ofWHC –was covered. The decision thereby

allowedalitigationstrategytocreatecoveragesforuncovereddamages.

Grange seeks a reversal and remand for the entry of judgment in its favor.

Considered as a whole, the policies at issue clearly and unambiguously exclude

coveragefordamagesarisingoutofateacher’shorrificabuseofayoungchild.Itis

respectfullysubmitted that thisCourt’s jurisprudencedeterminescoveragesbased

upon “acts,” not based upon legal labels appended to those acts or litigation

strategies.

2

Here, the policies in question contained an Abuse orMolestation Exclusion

that negated coverages of bodily injury arising out of: (1) the abusebyanyone of

anyone in the care and custody of the insured and (2) the negligent hiring,

supervision or retention of the abuser. While this Court has yet to construe

insurancepoliciescontainingthestandardized,ISOAbuseorMolestationExclusion,

thenumerousstateandfederalcourtsthathaveaddressedsuchpoliciesuniformly

find no coverages for bodily injury arising out of the abuse of any person in the

insured’scare,custody,orcontrol,regardlessofwhotheabuserwas,andregardless

of the legal theorypursued. Thosedecisionsare fully consistentwith thisCourt’s

insurance jurisprudence directing courts to look to the alleged unlawful conduct

ratherthanlegallabels–i.e.,“‘dealwitheachactonitsmerits’”–whenconsidering

whether a policy provides coverages for a specific alleged or adjudicated injury.

Safeco Insurance Co. of Am. v. White, 122 Ohio St.3d 562, 2009-Ohio-3718, 913

N.E.2d426,¶32,quotingSilverballAmusement, Inc.v.UtahHomeFireIns.Co.,842

F.Supp.1151,1163(W.D.Ark.),aff’d33F.3d1476(8thCir.1994).

Subject matter exclusions tailored to specific businesses or enterprises

provide parties to an insurance contract with flexibility and clear mutual

expectations. Allclaimsarisingoutofcertainconductarebarredregardlessofthe

insured’sperspectiveorstateofmind.Whenanexclusionprecludescoveragesfor

abuse ormolestation by anyone, of anyonewithin the insured’s care, custody, or

control,itisirrelevantwhethertheabuserisanemployeeoragentoftheinsuredor

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anotherstudentoracompletestranger;itisirrelevantwhethertheinsureddoesor

doesnotpotentiallyhaverespondeat superior liability forbodily injurycausedby

abuse or molestation; it is irrelevant what cause of action is asserted or what

strategicdefensedecisionsareemployedintheensuinglitigation.Regardlessofthe

legal vehicle employed, “all classifications of damages arising out of incidents of

abuseormolestation”areexcluded.LincolnCty.Sch.Dist.v.Doe,749So.2d943,946

(Miss.1999)(enbanc).

Enforcementof theclearandunambiguous languageof thepoliciesat issue

moots the second and third propositions of lawpresented in this appeal. Should

this Court affirm the finding of some coverage, however, Grange respectfully

submits that the courts below improperly ordered Grange to reimburseWHC for

$694,000 the churchwas ordered to pay in attorney fees awarded against it and

$230,000inpost-judgmentinterest. BothjudgmentswerebasedonactstheCourt

ofAppealscorrectlyheldwerenot coveredby theCGLorumbrellapolicies. They

thereforewerenotreimbursable.

II. STATEMENTOFFACTS

A. TheUnderlyingAction.

The facts of the underlying action are set forth in post-trial and appellate

decisions summarizing and analyzing the evidence uponwhich the jury based its

verdicts in favor of the plaintiffs. See Faieta v. World Harvest Church, 147 Ohio

Misc.2d51,2008-Ohio-3140,891N.E.2d370(“FaietaTr.Op.”),R.84,Exh.13,Supp.

4

at 108; Faieta v. World Harvest Church, 10th Dist. Franklin No. 08AP-527, 2008-

Ohio-6959(“FaietaApp.Op.”),R.84,Exh.14,Supp.at155.

AppelleeWorld Harvest Church (“WHC”), located in Franklin County, Ohio,

operatesapreparatoryschool,whichincludestheCuddleCarepreschoolprogram.

(FaietaTr.Op.,¶1,Supp.121;FaietaApp.Op.,¶2,Supp.at160.)OnMay30,2006,

MichaelandLaceyFaietafiledacomplaintintheFranklinCountyCourtofCommon

Pleas,individuallyandonbehalfoftheirson,AndrewFaieta,allegingthataCuddle

Careteacher(RichardVaughan)committeda“painfulandhorrificphysicalassault”

on their two-and-a-half-year-old son that “left plainly visible marks, cuts and

contusionstotherearend,backlegs,andotherparts”ofhisbody.(FaietaCompl.,p.

2,Supp.at68;seealsoFaietaApp.Op.,¶2,Supp.at160.)

Based on the assault andWHC’s refusal to investigate, the Faietas asserted

causes of action for negligence, assault and battery, negligent hiring and

supervision, respondeat superior, and intentional infliction of emotional distress

(IIED)againstVaughanandWHC.(FaietaCompl.,pp.4-7,Supp.70-73.)

Grange agreed to defend the claims under a reservation of rights. (WHC

Compl. (7/29/09), ¶8, Supp. at 61.) WHC and Vaughan’s defense team (which

includedcounselappointedbyGrangeandWHC’spersonalcounsel)pursuedajoint

defense that the incident never occurred – the marks on Andrew’s body were

“contact dermatitis” (a skin rash). (Faieta Tr. Op. ¶32, 45-46, Supp. 127, 129.)

Consistentwith that legal theory, Defendants filed joint answers to the complaint

5

andamendedcomplaint inwhich theyadmitted that “atall allegedrelevant times

defendantVaughanwasactingwithinthescopeofhisemployment”withWHC;that

Vaughan’sactions“aredeemedtobetheactionsof[WHC]”andthatWHC“isliable

for theactsof itsemployeedefendantVaughan.” FaietaApp.Op.,¶46,Supp.168

(punctuationomitted).(SeealsoFaietaJointAnswer,¶30-31,Supp.80;FaietaAm.

Answer,¶30-31,Supp.86.)

Attrial,theFaietaspresentedtestimonysupportingtheallegationofasavage

beating and emotional trauma suffered by the entire family. The testimony

describedmarks on Andrew that were “raised, red, welts, cuts, abrasions, frayed

skin, and swollen” (Faieta Tr. Op., ¶34, Supp. 128). After the attack, “Andrew’s

personalitychangedandhebecamefearfulofbeingseparatedfromhisparentsand

of being enclosed in rooms, especially bathrooms.” (Faieta App. Op., ¶36, Supp.

166.) The Faietas presented “undisputed testimony” from Andrew’s treating

psychologistthatthechildsufferedfromapost-traumaticstressdisorder.(Id.)

TheFaietas’IIEDclaimagainstWHCwasbasedonWHC’s“concertedeffortto

preventplaintiffsfromlearningthecauseofAndrew’sinjury.”(FaietaTr.Op.,¶42,

Supp.129.)The“testimonyanddemeanor”ofWHC’switnesses“demonstratedthat

WHC’s primary objective in investigating the marks was to protect itself and its

employeesratherthantoconductagoodfaithinvestigation.”(Id.,¶45,Supp.129.)

Further, the school refused to speakwith the Faietas after an initialmeeting and

sent them a letter “ordering them not to come on the church’s premises” and

6

“threatening *** that failing to comply with the order would result in WHC

prosecutingthemfortrespass.”(Id.,¶44,47,Supp.129,130.)SeealsoFaietaApp.

Op.,¶28-33,Supp.165-166. WHC’sactions“causedtheFaietasseriousemotional

distress”thatrequiredtreatmentinfamilytherapy.(FaietaTr.Op.,¶49,Supp.130.)

Following a seven-day trial, the jury was presented interrogatories and

verdict forms for battery, IIED, and negligent supervision. (Faieta Jury ‘Rogs,

Verdict Forms, R. 84, Exh. 10, Supp. 89.) Because WHC had admitted scope of

employmentandthatVaughan’sactsshouldbe“deemed”theactsofWHC,nojury

instruction or interrogatory was necessary or offered for WHC’s respondeat

superior liability for Vaughan’s abuse or for WHC’s ratification of Vaughan’s

malicious conduct. (FaietaTr.Op., ¶58-62, Supp. 131-133;Faieta App.Op., ¶49,

Supp.168.)

The jury returned interrogatories finding against Vaughan on plaintiffs’

battery claim; finding againstWHC on plaintiffs’ negligent supervision claim; and

findingthatVaughan“and/or”WHCintentionallyinflictedemotionaldistressonthe

Faietas. (FaietaTr.Op.,¶4,Supp.121;Faieta ‘Rogs1a-4,Supp.89-94.) Basedon

thosefindings,thejuryreturnedverdictsinfavortheFaietas,including:

•••• Compensatorydamagesof$134,865.00andpunitivedamagesof$100,000againstVaughan;and

•••• Compensatorydamagesof$764,235.00andpunitivedamagesof$5,000,000againstWHC.

7

(App. Op., ¶3, Appx. 17; Faieta Verdicts, Supp. 104, 105.) Those verdict forms

furtherspecifiedthattheFaietaswereentitledtoattorneyfees fromWHC,butnot

fromVaughan.(Id.,Supp.104,105.)ThetrialcourtthereafterorderedWHCtopay

theFaietas$693,861.87inattorneyfees.(FaietaTr.Op.,¶161,Supp.153.)

Damagecapsresultedintheentryofafinaljudgmentof$2,871,431.87–WHC

was solely liable for $2,789,066.87, while Vaughan was solely liable and WHC

secondarily liable, for $82,365.00. (App. Op., ¶6, Appx. 18; Faieta JE (5/23/08),

Supp. 154.) Those awardswere affirmed on appeal. (See FaietaApp. Op., Supp.

155.) WHC settledwith the Faietas in the amount of $3,101,147,which included

approximately$230,000inpost-judgmentinterest.(App.Op.,¶8-9,Appx.18.)

B. ThisLitigation.

WHCfiledthisactiononJuly29,2009,seekingadeclarationofcoveragesfor

all damages awarded againstVaughan andWHC, including attorney fees awarded

againstWHCaloneandpost-judgmentinterest.WHCfurthersoughtcompensatory

and punitive damages for Grange’s alleged “bad faith” in providing a defense but

refusing to indemnifyamountsawarded for theadjudicatedabuse. (Compl.,Supp.

60.)

1. TheGrangepolicies.

TheCGLandumbrellapoliciesunderwhichWHCsoughtreimbursementfor

its$3.1millionpaymentarereproducedinGrange’sSupplementatpages1and34.

8

(a) Theinsuringagreements.

Theinitial insuringagreementfortheCGLcoverageform,CG0001(10-01),

obligatesGrangetocover“thosesumsthattheinsuredbecomeslegallyobligatedto

pay as damages because of ‘bodily injury’ or ‘property damage’ to which this

insuranceapplies.”(CGLForm,Supp.14.)

Paragraph1.b.oftheinsuringagreementstatesthatthe“bodilyinjury”must

be “caused by an ‘occurrence’” (id., Supp. 14) and “occurrence” is defined as an

“accident.”(Id.,Supp.27.)

TheinsuringagreementintheCommercialLiabilityUmbrellaCoverageForm

similarlystatesthatGrangewillpayonlyfor“bodilyinjury”towhichtheinsurance

applies; that the “bodily injury” must be caused by an “occurrence”; and defines

“occurrence”as“anaccident.”(UmbrellaForm,Supp.42,55.)

TheInsuringAgreementsfurtherincludeanexclusiongenerallyknownasan

“intendedacts”exclusion:

2. Exclusions

ThisInsurancedoesnotapplyto:

a. ExpectedOrIntendedInjury

“Bodily injury” or “property damage”expectedor intended fromthestandpointoftheinsured.***

(Supp.at15,SectionI,2.a.;Supp.at42,SectionI,2.a.)

9

(b) TheAbuseorMolestationExclusion.

The CGL and umbrella coverage forms contain virtually identical

endorsementsentitled“AbuseorMolestationExclusion”(CG2146(07-98)andCUP

64 (09-96)), that “modif[y] insuranceprovidedunder” thepolicies. (Supp.2,35.)

Theendorsementprovides:

Thisinsurancedoesnotapplyto“bodilyinjury”,“propertydamage” or “personal and advertising injury” arising outof:

1. The actual or threatened abuse or molestation byanyoneofanypersonwhile in thecare,custodyorcontrolofanyinsured,or

2. Thenegligent:

a. Employment;

b. Investigation;

c. Supervision;

d. Reportingtotheproperauthorities,orfailuretosoreport;or

e. Retention;

of a person for whom any insured is or ever waslegally responsible and whose conduct would beexcludedbyParagraph1.above.

(Id.)

2. Decisionsbelow.

The trial court granted each party’smotion for summary judgment in part,

finding coverages for all compensatory damages, but for none of the punitive

damages, and coverages for the attorney fees paid and post-judgment interest on

10

the entire judgment. (Tr. Op., Appx. 40.) On appeal, the Tenth District Court of

Appeals agreed that the punitive damage awardswere not covered, but also held

thatnoneofthecompensatorydamageswerecoveredwithoneexception–theCGL

and umbrella coverage forms coveredWHC’s vicarious liability for compensatory

damages awarded for Vaughan’s intentional infliction of emotional distress. See

App.Op.,¶55,59Appx.33,34.

Specifically,theCourtofAppealsheldasfollows:

1. No coverages for WHC’s own, post-incident IIED (if any); coverageswere precluded by the intended acts exclusion in the insuringagreementofbothpoliciesand/orWHC’sIIEDwasnotan“occurrence”underthepolicies(App.Op.,¶40,55,Appx.28,33);

2. No coverages for Vaughan’s battery for which WHC was vicariouslyliable per Section 1 of the Abuse or Molestation Exclusion in bothpolicies(id.,¶48,Appx.30-31);and

3. NocoveragesforWHC’snegligentsupervisionofVaughan,perSection2(c)oftheAbuseorMolestationExclusion(id.,¶49,Appx.31);but

4. Coveragesexistedfor“Vaughan’sIIED,whichWHCisvicariouslyliablefor”(id.,¶55,59,Appx.33,34).

The Court thus concluded that placing a different legal label on abuse – IIED as

opposedtobattery–createdcoveragesforexcludedconduct.

Based on that erroneous premise, the Court of Appeals ordered Grange to

indemnifyWHCfor the$82,365 incompensatorydamagesawardedto theFaietas

forVaughan’sabuse.(App.Op.,¶69,Appx.36.)TheCourtfurtherorderedGrange

toindemnifyWHCfor:(1)“thatportionofthepost-judgmentinterest”thataccrued

on the $82,365, and (2) the Faietas’ attorney fees of $693,861. (Id.) On

11

reconsideration, the Court increased the post-trial interest to $229,716,

representinginterestonbothcoveredanduncoveredclaims.(Recon.App.Op.,¶23,

Appx.13.)ThepanelagreedwithWHC’sargumentonreconsiderationthatinterest

was owed on uncovered liabilities based on the CGL policy’s “supplementary

payments”provision,whichstates:

1. Wewillpay,with respect to ***any “suit”againstaninsuredwedefend:

***

g. All interest on the full amount of anyjudgment that accrues after entry of thejudgmentandbeforewehavepaid,offeredtopay, or deposited in court the part of thejudgment that is within the applicable limitofinsurance.

(Recon.App.Op.,¶16,Appx.10-11;CGLexcerpts,Supp.20-21.)

Grangetimelyappealedthefindingthatthepoliciescoveredvicariousliability

for excluded abuse (and attorney fee award and interest associated with some

coverage) to this Court, and WHC filed a cross-appeal challenging each of the

findingsofnocoverage. OnDecember3,2014, thisCourtaccepted jurisdictionof

Grange’sappealanddeniedjurisdictionofWHC’scross-appeal.

III. ARGUMENT

This Court should reverse the finding of coverages for excluded abuse and

remand for theentryof judgment inGrange’s favor. Thepolicies consideredas a

wholeclearlyandunambiguouslyprecludecoveragesofWHC’sadjudicatedliability.

Regardless of the number of legal claims asserted or creative litigation strategies

12

employed,Grange is not responsible for indemnifyingdamages resulting from the

savagebeatingofa child in the insured’s careandcustody. Sucha resultaccords

with this Court’s insurance jurisprudence and the uniform position of courts that

haveconstruedpolicieswiththestandardizedAbuseorMolestationExclusion.

PropositionofLawNo.1

Acommercial liabilitypolicycontaininganAbuseorMolestation

Exclusion which excludes damages arising out of abuse “by

anyone” of any person in the care, custody or control of any

insured,aswellasthenegligentemploymentorsupervisionofan

abuser, eliminates coverages of sums awarded based on the

insured’svicarious liability for itsemployee’sabuseofa child in

theinsured’scareandcustody

A. StandardofReview

A grant of summary judgment based on the interpretation of an insurance

contractisrevieweddenovo.Doev.Shaffer,90OhioSt.3d388,390,2000-Ohio-186.

Principles for the construction of an insurance contract were set forth in

Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216, 2003-Ohio-5849, ¶11 as follows

(citationsomitted):

When confronted with an issue of contractualinterpretation, the role of a court is to give effect to theintent of the parties to the agreement. ***We examinethe insurance contract as awhole and presume that theintent of the parties is reflected in the language used inthepolicy.***Welooktotheplainandordinarymeaningofthelanguageusedinthepolicyunlessanothermeaningis clearly apparent from the contents of the policy. ***When the languageof awritten contract is clear, a courtmay look no further than the writing itself to find theintentoftheparties.

13

See alsoHybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd., 64 Ohio St.3d 657, 665

(1992)(citationsandemphasisomitted):

In applying these rules, we have stated that the mostcritical rule is thatwhichstops this court fromrewritingthecontractwhentheintentofthepartiesisevident,i.e.,ifthe language of the policy’s provisions is clear andunambiguous, this courtmay not “resort to constructionofthatlanguage.”***[U]nderthecaselawofthisstate,anexclusion in an insurance policy will be interpreted asapplying only to that which is clearly intended to beexcluded. *** However, the rule of strict constructiondoesnotpermitacourttochangetheobviousintentofaprovisionjusttoimposecoverage.

B. ThisCourt’sInsuranceJurisprudenceIsConsistentwiththe

Enforcement of Subject Matter Exclusions Like the

StandardizedAbuseorMolestationExclusion.

This Court has yet to interpret a standardized Abuse or Molestation

Exclusion.Butinthreedecisions–Gearingv.NationwideIns.Co.,76OhioSt.3d34,

665N.E.2d1115(1996) (“Gearing”),Doev. Shaffer,90OhioSt.3d388,738N.E.2d

1243,2000-Ohio-186(“Shaffer”)andSafecoInsuranceCompanyofAmericav.White,

122 Ohio St.3d 562, 913 N.E.2d 426, 2009-Ohio-3718 (“Safeco”) – this Court

established the following general rule of policy construction: courtsmust identify

thedamage-causing“act”andconstruethepolicyasawholetodeterminewhether

theparties intendedcoverages for thatact. ThisCourt’s focusondamage-causing

actsanticipatessubjectmatterendorsementsthatbroadlyexcludecoveragesforall

classificationsofdamagesarisingoutof incidentssuchasassault,battery,criminal

acts, abuse ormolestation. Numerous decisions fromOhio appellate courts have

14

enforcedsuchendorsements,properlyrecognizingthatthepartiestotheinsurance

contracthaveclearexpectationsthatnocoveragesareprovidedforclaimsbasedon

theexcludedconduct.

1. Gearing, Shafferand Safeco focus on damage-causing

“acts” to determine whether claims are within

coveragesprovidedbyapolicy,construedasawhole.

TheruleoflawdevelopedinGearing,ShafferandSafecoresolvesthequestion

ofwhethercoveragesexistfordamagesarisingoutofmolestationorassaultunder

policiesofinsurancethatdonothaveanAbuseorMolestationendorsement,butdo

haveageneral,“intendedacts”exclusionintheinsuringagreement.

Gearingaddressedthequestionofwhethersexualmolestationbyaninsured

constitutesanaccidental“occurrence”withintheinsuringclauseofaliabilitypolicy

whentheperpetratordeniesanyintenttoharmhisvictim.ThisCourtheldthat:(1)

intent to harm will be inferred from certain acts; and (2) when that inference

applies, public policy precludes the issuance of insurance for the act. Gearing,

syllabus.

Shafferdistinguishedallegationsthataninsurednegligentlyhired,supervised

and retained a perpetrator of intentional acts from the acts themselves, and held

that insuring such acts does not contravenepublic policy. Adopting the rationale

and analysis of Silverball Amusement, Inc. v. Utah Home Fire Ins. Co., 842 F.Supp.

1151 (W.D.Ark.), aff’d, 33 F.3d 1476 (8th Cir.1994), this Court held that “’[t]he

correct method of analyzing this issue *** would deal with each act on its own

15

meritsandrecognizethatemployerswhomakenegligenthiringdecisionsclearlydo

notintendtheemployeestoinflictharm.’”Shafferat393-394,quotingSilverballat

1163.

Finally, Safeco applied Gearing and Shaffer to claims asserting negligent

supervision,negligentretentionandnegligentinflictionofemotionaldistressclaims

againsttheparentsofateenagerwhoattackedandstabbedanotherteenager. The

insurer argued that neither the parents’ homeowners nor umbrella policies

provided coverage for theparents’negligencebecause: “(1) the injury in this case

resulted froman intentional act by [their son], an insuredunder thepolicies, and

thereforetheactwasnotan‘occurrence,’whichbothpoliciesdefineasan‘accident,’

and(2)thepoliciesexplicitlyexcludecoveragefortheintentionalactsofaninsured,

and the severability clause in both policies does not render the language in the

exclusionaryclauseinbothpoliciesambiguous.Safeco,122OhioSt.3dat¶12.

First,thisCourtheldthatbodilyinjurycausedbynegligentactsconstitutedan

“occurrence”underthepoliciesbecausefromthenegligentparents’perspective,the

stabbingcommittedbytheirsonwasaccidental.Safeco,¶27.

Second, this Court declined todeterminewhether an ambiguitywas caused

by consideration of the policies’ intended acts exclusion in conjunction with the

severability clauses providing that “’[t]his insurance applies separately to each

insured.’”Id.,¶15,28.Themajorityconcludedthattheuseof“an”insuredor“any”

insured in the intended acts exclusion was irrelevant; the exclusion had no

16

application at all. Reiterating Silverball’s teaching that that the “correct” analysis

“would dealwith each act on its ownmerits,” this Court emphasized the need to

maintainthedistinctionbetween“tortslikenegligentsupervision,hiring,retention,

and entrustment,” and “the related intentional torts (committed by other actors)

thatmakethenegligenttortsactionable.”Id.at¶32-33.

In short, to determine coverages under occurrence-based liability policies

that includean intendedacts exclusion, courtsmust examineeachact allegedand

determine: (1) whether the harm resulting from the act is an accident from the

perspectiveoftheinsured;(2)whethertheinsured’sallegedconductgivingriseto

liabilityintendedtocauseharm;and(3)whetheranintenttoharmisinferredasa

matteroflawbasedonthenatureoftheallegedconduct.

2. WHC’s admitted vicarious liability for abuse is not a

damage-causingact.

Grange respectfully submits that the proper application of Gearing, Shaffer

and Safeco to the facts of this case requires a reversal of the Tenth District’s

conclusionthattheGrangepoliciesprovidedcoveragesforWHC’svicariousliability

forVaughan’sIIEDandentryofjudgmentinfavorofGrange.

Safecodeclined toapplyan intendedacts exclusion tonegligent supervision

claimsbecausetheparents’“acts”givingrisetothenegligentsupervisionclaimwere

“separate and distinct” from the intentional acts “committed by other actors.”

Safeco,122OhioSt.3dat¶33.Further,thosedistinctactsledtodistinctinjuries.Id.,

¶37: “To prevail, the [plaintiffs] had to demonstrate a separate injury from the

17

[parents’] negligent failure to monitor Benjamin, one that did not arise from

intentionalorillegalactionsascontemplatedbythepolicyexclusions.”

Here, WHC’s vicarious liability for Vaughan’s IIED is not based on any act

separateanddistinctfromVaughan’sabuse;itisbasedonWHC’slitigationstrategy

to admit that Vaughan’s acts “are deemed to be the actions of Defendant World

HarvestChurch.” (FaietaTr.Op.,¶58-62,Supp.131-133;FaietaApp.Op.,¶46-49,

Supp. 168.)1 Here, the Faietas could not (and did not have to) demonstrate any

separate injury arising from respondeat superior liability, much less a separate

injury“thatdidnotarisefromintentionalorillegalactionsascontemplatedbythe

policy exclusions.” Safeco, ¶37. Instead, the Faietas were entitled, by virtue of

WHC’s admissions alone, to a judgment that WHC was vicariously liable for the

injuriescausedbyVaughan’sabuse,whetherlabeledasbatteryorIIED.

1 A different litigation strategy would presumably have enabledWHC to obtain adismissal of the respondeat superior count under Civ.R. 12(C). See, e.g., Byrd v.Faber, 57 Ohio St.3d 56, 59 (1991) (citation omitted) (church was entitled tojudgmentonthepleadingsregardingclaimforrespondeatsuperiorliabilityarisingoutofpastor’snon-consensualsexwithparishioners:“[A]n ‘intentionalandwillfulattackcommittedbyanagentoremployee, toventhisownspleenormalevolenceagainst the injured person, is a clear departure from his employment and hisprincipaloremployerisnotresponsibletherefore’”).

18

Underthesefacts,Vaughan’sliabilityandWHC’svicariousliabilityaroseouta

singleact–intentionalabuseresultinginphysicalandemotionalharm–committed

by Vaughan and “deemed” to be committed by WHC. Under the rule of law in

Gearing,ShafferandSafeco,coveragesforthatsingleactarebarredbytheintended

actsexclusion in the insuringagreementof theCGLandUmbrella coverage forms.

TheeffectoftheTenthDistrictdecisionisthatbyadmittingtherespondeatsuperior

allegations,WHCbootstrappedcoveragesforabusethatwas itselfexcludedbythe

CGL and Umbrella coverage forms. Such bootstrapping is unsupported by public

policy.See,e.g.,Gearing,76OhioSt.3d34,paragraphtwoofthesyllabus(“thepublic

policy of the State of Ohio precludes issuance of insurance to provide liability

coverage for injuries resulting from an intentional acts of sexualmolestation of a

minor”).

In short, even without an ISO Abuse or Molestation Exclusion, the policies

provided no coverages for admitted vicarious liability. The presence of the

Exclusion, however, simplifies policy construction and provides an appropriate

platform for this Court’s consideration of the proper rules of construction for

policieswithanAbuseorMolestationorsimilarsubjectmatterexclusion.

3. Subjectmatterexclusions’focusonconductsimplifies

coveragedisputes.

While a Gearing/Shaffer/Safeco analysis can be applied here, none of the

policiesconsideredinthosecasescontainedanAbuseorMolestationExclusion–a

subjectmatterexclusionthatnegatescoveragesofalldamagesarisingoutofabuse

19

ormolestation.Numerouscourtsconstruingpolicieswithsubjectmatterexclusions

forabuseormolestation,assaultorbattery,orsimilarmisconduct,haveconcluded

that theexclusionpretermitsanalysesof “occurrence”or state-ofmindexclusions,

eliminates the need for parsing the legal theories alleged, and renders

considerationsofseparation-of-insuredsprovisionsunnecessary.Allthatmattersis

that thedamagesalleged in the complaint ariseoutof theexcluded conduct. See,

e.g.:

•••• LincolnCty.Sch.Dist.v.Doe,749So.2d943,946(Miss.1999)(enbanc) (CGLpolicywithAbuseorMolestation Exclusion “servesto exclude from coverage all classifications of damages arisingoutofincidentsofmolestation”);

•••• Evanston Ins. Co. v. Johns, 530 F.3d 710, 714 (8th Cir.2008)(applyingMinnesota law) (“Thepresenceor lackof intentdoesnotcontroltheoutcome”ofasuitseekingcoverageunderaCGLpolicywithanAbuseorMolestationExclusion);

•••• S.C.FarmBureauMut.Ins.Co.v.Oates,588S.E.2d378,384,fn.2(S.C.App.2003) (the court “need not address”whether “shakenbaby syndrome” allegations against a daycare center and itsemployee constituted an “occurrence”where claims fell withintheplainmeaningofanAbuseorMolestationExclusion);

•••• Essex Ins. Co. v.MichiganSkatelands, Inc., 6thCir.Nos.93-2132,93-2145, 1994 WL 589670, at *3 (Oct. 21, 1994) (assault orbattery exclusion barred breach of contract and negligenceclaimswhere“theunderlyingclaimsclearlyaroseoutoftortiousconduct”; the court therefore “need not resolve the remainingissues” relating to a separate exclusion “and the Policy’sdefinitionof‘occurrence’”);

•••• Neffv.AlterraHealthcareCorp.,271Fed.Appx.224,226,2008WL821070 (3d Cir.2008) (“Invoking the separation of insuredsprovision does not narrow the broad reach of an Abuse orMolestationExclusion”);

20

•••• Harper v. Gulf Ins. Co., D.Wyo. No. 01-CV-201-J, 2002 WL32290984(Dec.20,2002),at*7(“Theintentionaldesignof theISO Abuse or Molestation Exclusion is that any perceivedambiguity between the ‘intentional acts’ exclusion and theseparation-of-insuredsclauseisobviated.Itiswordedtotelltheinsured employer that he has no coverage where, as here, hisemployeeabusesormolestsanyonewhoisinanyinsured’scare,custody,andcontrol”).

Ohio appellate courts have similarly recognized that subject matter

exclusionssimplifypolicyinterpretationbybroadlyexcludingclaimsarisingoutofa

narrowcategoryofconduct.See,e.g.,Jackson-Brownv.Monford,10thDist.Franklin

No. 12AP-542, 2013-Ohio-607, ¶18 (“whether or not the shooting was an

occurrence for purposes of the policy does not matter” when subject matter

exclusionsprecludedcoverages).

The Third District Court of Appeals analyzed an abuse or molestation

exclusion in2012and foundnoduty todefendor indemnifyanyclaims, including

respondeat superior, arising out of the molestation of child by a daycare center

employee. Crowv.Dooley,3dDist.AllenNo.1-11-59,2012-Ohio-2565. TheCourt

distinguished this Court’sSafeco decisionon the grounds that the languageof the

“intended acts” exclusion in the Safeco policies required knowledge or intent to

injure on the part of the insured, while “any language regarding the necessary

knowledge or intent of the insured is remarkably absent” from the abuse or

21

molestation exclusion in the insurance policy issued to the daycare center. Id. at

¶18-20.2

Othercourtshaveconstruedadifferentsubjectmatterexclusion(assaultor

battery)andconcludedthatpolicieswithsuchendorsementsnegatecoveragesfor

allclaimsfordamagesarisingoutoftheexcludedconduct.InColterv.Spanky’sDoll

House,2dDist.MontgomeryNo.21111,2006-Ohio-408,forexample,thecourtheld

thatanassaultorbatteryexclusionnegatedcoveragesofanyclaim,whetherbased

onintentionalactsornegligence,forbodilyinjuryarisingoutofanaltercationatthe

insured’s bar.. Id. at ¶14-20. Reading the assault or battery exclusion in

conjunction with an “intended acts” exclusion, Colter court agreed with the trial

court’s reasoning that “[w]hile the first exclusion found in the main body of the

insurancepolicyonlyexcludesclaimsforbodilyinjuryexpectedorintendedbythe

insured, the latter amendment clearly modifies the policy to exclude any claim

arisingoutofanyassaultorbattery.”Id.at¶27-29(emphasisinoriginal).Seealso

¶40-41 (“By its own terms, this provision unambiguously extends to all claims

arisingoutoforrelatedtoassaultorbattery,regardlessofwhetherthemisconduct

2TheISOexclusionatissueinthiscaseisevenclearerthantheexclusionenforcedinCrow. The standardizedexclusion in theGrangepolicies (Supp. at2,35)not onlycontains a broad exclusion of any liability arising out of abuse or molestation,withoutregardtoany“requisitementalstateoftheallegedtortfeasor”(Crow,¶20),but it includes, in the second section, an explicit exclusion of damages caused bynegligenthiring,supervision,orretention.(Id.)

22

is committed by a Sparky’s employee or a third-party patron” (emphasis in

original)).

Morerecently,theThirdDistrictaddressedasimilarsubjectmatterexclusion

andheld thatbecause theunderlying complaint soughtdamagesarisingoutof an

altercationattheinsuredbar,coverageswereexcluded.SeeWrightv.Larschied,3d

Dist.AllenNo.1-14-02,2014-Ohio-3772.Thecourtrejectedtheinsured’sargument

thatitwasowedadefenseandindemnityforclaimsassertingthatthebarviolated

“policy,practiceorcustoms”andexhibiteda“deliberateindifferencetotherightsof

citizens,” holding that the subject matter exclusion “applies to any bodily injury

arising out of an assault or battery. It does not matter *** how the assault or

batteryoccurredorwhoormayormaynothavecontributedtoitsoccurrence.”Id.

at¶27-28(emphasisinoriginal).Inshort:

TheWrights in their suit could have asserted any claimthey wished against Larschied, and it still would havebeenexcludedbytheassault-or-batteryexclusionsolongas the Wrights were attempting to recover for injuriesarisingoutofassaultorbattery.

Id. at ¶31. AccordWilliams v. United States Liab. Ins. Group, 5th Dist. Stark No.

2011CA00252,2012-Ohio-1288,¶15(allegationthatbar improperlyblockedexits

oneveningofaltercationdidnotaffectbarofcoveragesof judgmentunderassault

or battery exclusion);Heinz-Gert K. GRM v. Great Lakes General Agency, 9th Dist.

LorainNo. 03CA008418, 2004-Ohio-6269,¶15-17 (exceptionproviding coverages

23

for bodily injury for liability assumed under an insured contract did not trump

assaultorbatteryexclusion).

Because they construe policies of insurance that broadly exclude a narrow

category of conduct, the above decisions are clear and easily understandable for

insurers and policyholders alike. Subject matter endorsements thus not only

provide unambiguous mutual expectations of coverages tailored to specific

enterprises,butsimplifyandstreamlinecoveragedisputes.

Here, the Court of Appeals properly concluded that “it was conclusively

determinedinthepersonalinjurycasethatVaughan’sbatteryconstitutedabuseof

theFaietas’minorchild,whichwasexcludedfromcoverageunderSection1ofthe

AbuseorMolestationExclusionoftheCGLandCUpolicies.” (App.Op.,¶48,Appx.

30-31.) The fact thatVaughan’sacts constitutedexcludedabuseends the inquiry.

Alldamagesarisingoutoftheabuse,regardlessofthecauseofactionasserted,are

excludedfromcoverages.Itisnotjusttheclaimforbatteryandassociatedvicarious

liability for abuse that is excluded; the claim for IIED and associated vicarious

liabilityisalsoexcluded.

C. Grange Had No Obligation Under the CGL or Umbrella

Coverage Forms to Reimburse WHC for Sums It Paid to

SatisfyItsVicariousLiabilityforVaughan’sIIED.

The ISOAbuseorMolestationExclusions in theCGLandUmbrella coverage

forms issued toWHCmodified coverages under the policies by broadly excluding

coverages for anybodily injuryarisingoutof: (1) theabuseormolestationof any

24

personwithin thecareorcustodyof the insuredorganization,byanyperson;and

(2) the insured organization’s negligent acts associated with the abuse or

molestation:

Thisinsurancedoesnotapplyto“bodilyinjury”,“propertydamage” or “personal and advertising injury” arising outof:

1. The actual or threatened abuse or molestation byanyoneofanypersonwhile in thecare,custodyorcontrolofanyinsured,or

2. Thenegligent***[e]mployment***[s]upervision*** or *** [r]etention of a person forwhom anyinsured is or ever was legally responsible andwhoseconductwouldbeexcludedbyParagraph1.above.

(Supp.at2,35.)Boththehistoryandpurposeofthestandardizedendorsement,as

interpretedbynumerouscourtsaroundthecountry,demonstrateitsapplicabilityto

all liabilities adjudicated in Faieta v. World Harvest Church, including WHC’s

admittedliabilityforVaughan’sIIED.

1. The history, purpose and plain language of the ISO

Abuse or Molestation Exclusion preclude findings of

policycoveragesforvicariousliabilityforabuse.

ThehistoryandpurposeofthestandardizedAbuseorMolestationExclusion

further support enforcement of its plain language. The ISOAbuse orMolestation

Exclusionwas adopted in1987, and is “not uncommon” in insurancepolicies “for

thosewho have care of others,” including “medical or therapeutic care providers,

healthcarecenters,summercamps,schoolsandpreschools, job trainingprograms,

25

churches, and the like.” Valley Forge Ins. Co. v. Field, 670 F.3d 93, 97-98 (1st

Cir.2011)(citationomitted).

TheAbuseorMolestationExclusion,likeassaultandbatteryandcriminalact

exclusions,“aresensible,routine,unambiguous,andspecific.” MonticelloIns.Co.v.

Kentucky River Community Care,6th Cir. No. 98-5372, 1999WL236190 (Apr. 14,

1999)at*3(punctuationandcitationomitted).“[I]tisperfectlysensibletoexclude

coverage for immoral or illegal acts to avoidmoral hazard problems. *** In fact,

severalcasesestablishesastrongpublicpolicyagainstcoverageforsexualabuse.”

Id.

Further, “[e]xclusions of this sort have generally been found to be

unambiguousinthefaceofattacksonvariouspartsofthe languageused[.]” Field,

670 F.3d at 98, 101. The plain language of such exclusions firmly establish the

reasonablepolicycoverageexpectationsofbothinsurerandinsured:

TheExclusionprecludescoverageonthelimitedoccasionswherethedamagesflowfromsexualorphysicalabusebyanother of someone in the care of the insured. Asexplainedearlier,thatistheverypurposefortheAbuseorMolestation Exclusion since its creation. *** Since theExclusion was not ambiguous, the [insureds] had noreasonableexpectationofcoverage.

Id.at105.

The Exclusion’s history further demonstrates that the endorsement was

developed to prevent coverages for damages arising out of abuse or molestation

regardlessofthelegaltheoryallegedtorecoverdamagesforabuseormolestation,

26

andregardlessofwhethertheassertedliabilityisdirectorderivative.SeeHarperv.

GulfIns.Co.,U.S.D.C.Wyo.No.01-CV-201-J(Dec.20,2002),2002WL32290984,at

fn.9:

The International Risk Management Institute (“IRMI”)publishes a multi-volume insurance reporter seriesentitledCommercialLiabilityInsurance.Itprovides:

AbuseorMolestationExclusion

Abuse andmolestation, as intentional acts, do notcome within the CGL coverage of bodily injuryarising out of an “occurrence,” with respect to aninsured who actually commits the abuse ormolestation. Organizations that have care orcustody of others – schools, hospitals, nursinghomes,daycare centers, etc.– are likely tobeheldvicariously liable for abuse committed by theiremployees; the CGL intentional acts exclusionwouldnot interferewith coverage for an insured’svicariousliabilityinsuchcircumstances.

This endorsement eliminates coverages for aninsured organization’s liability in connection withabuseormolestationcommittedbysomeoneotherthan that insured. It applies to abuse andmolestation incidentsagainst “anypersonwhile inthe care, custody, and control of the insured”committedby“anyone.”That“anyone”couldbetheinsured’semployee,agent, independentcontractor,customer,clientorpersoncompletelyunconnectedwiththeinsuredorganization.

Thisexclusiongoesontoremovecoverageforotherrelated claims that are sometimes brought againstan organization as alternative grounds of actionwhen an incident of abuse or molestation hasoccurred. Theserelatedallegationsaresometimesmade toavoidargumentsoverwhether theactsofabuse or molestation were an occurrence(“accident”), and thus to suggest a separate

27

occurrence with respect to the employer (thenegligent act of employment or supervision). ***Such claims would be different from purelyvicarious liability claims since they allege actualnegligenceonthepartof the insuredorganization.Suchclaimsareaddressedinthesecondpartoftheexclusion. That part applies to negligent“employment, investigation, supervision, orretention” of persons who commit abuse ormolestationand forwhoseconduct the insured “isoreverwaslegallyresponsible.”

Neither the Faietas’ labeling of Vaughan’s abuse as both a “battery” and

“IIED,”norWHC’slitigationstrategytoadmitthatVaughan’sactsaretobe“deemed”

tobetheactsofWHC,changesthefactthattheFaietas’complaintsoughtdamages

arising out of abuse. The Abuse or Molestation Exclusion “is worded to tell the

insuredemployer thathehasnocoveragewhere,ashere,hisemployeeabusesor

molestsanyonewhoisinanyinsured’scare,custody,andcontrol.”Harper,supra,at

*7. “The molestation exclusion accordingly serves to exclude from coverage all

classificationsofdamagesarisingoutofincidentsofmolestation.”LincolnCty.Sch.

Dist.v.Doe,749S.W.2d943,946(Miss.1999).

2. Numerous courts have rejected attempts to skirt the

plain language of the ISO Abuse or Molestation

Exclusion.

Decisionsfromotherjurisdictionsuniformlyinterpretthebroadlanguageof

thestandardizedAbuseorMolestationExclusionasapplyingtoallcausesofaction

asserted against insured businesses and institutions when the injuries for which

damagesaresoughtariseoutofphysicalabuseorsexualmolestation.

28

In 2014, theArkansas SupremeCourt construed insurance policieswith an

Abuse or Molestation Exclusion and found no duty to defend or indemnify

allegations (including allegations of vicarious liability) arising out of abuse. See

Kolbek v. Truck Exchange, 431 S.W.3d 900 (Ark.2014) at 907 (plaintiffs alleged

negligent hiring, supervision and retention and vicarious liability against abuser’s

employer),910,fn.8(settingforththestandardizedAbuseorMolestationExclusion

atissuehere)and909-910:

WhiletheKolbekcomplaintwasamendedseveraltimestoaddandalterclaims***[t]heinjuriesanddamagesintheKolbek case truly stem from the abuse suffered by theplaintiffsbelow. Nocourt couldhelpbutbesympatheticto those individuals and the injuries they suffered.However,the***contractissuedbyTIE/FIEsimplydoesnot exist to provide an insured coverage for this type ofallegedharm.

Arkansas law was the source of this Court’s “’examine each act on its merits’”

approachadopted inShaffer andSafeco. SeeShaffer at393-94andSafecoat¶32,

quoting Silverball Amusement, Inc. v. Utah Home Fire Ins. Co., 842 F.Supp. 1151

(W.D.Ark.),aff ’d 33F.3d1476 (8thCir. 1994). Applying that state’s insurance law

hereresultsinjudgmentforGrange.

Otherjurisdictionshavesimilarlyfoundnocoveragesforclaimsofvicarious,

derivativeliabilityarisingoutofabuseormolestationwhenthepolicycontainsan

Abuse or Molestation Exclusion. See, e.g., Doe v. Lenarz, Conn.Sup.Ct. No.

CV0540129705,2007WL969610(Mar.21,2007)(applyingAbuseorMolestation

Exclusion to claims of “derivative liability”);Mt. Vernon Fire Ins. Co. v. Hicks, 871

29

F.Supp. 947, 952 (E.D.Mich.1994) (insurer had no duty to defend or indemnify

claims against nursing home after aide beat patient into a comatose state while

actinginthecourseandscopeofhisemployment:“Theclaimofassaultandeachof

the claims that are derivative of it are directly excluded by the molestation and

abuseprovisionsoftheinsurancepolicy”).AccordHougv.StateFarmFire&Cas.Co.,

509 N.W.3d 590, 593 (Minn.App.1993) (applying sexual assault exclusion to

respondeatsuperiorclaimsarisingoutofemployee’ssexualconduct).

Courtshavealsorejectedotherattemptstoavoidtheclearandunambiguous

language of the standardized Abuse or Molestation Exclusion when the damages

soughtariseoutofabuseormolestation.See,e.g.:

•••• HolidayHospitalityFranchising, Inc. v.Amco Ins. Co., 983N.E.2d574,578 (Ind.2013) (barringcoveragesof claimsarisingoutofhotelemployee’smolestationofaminor)(emphasisinoriginal):

We think it obvious that the plain and ordinarymeaning of the abuse/molestation exclusion as awholeisthatbothpartiesintendedtoexcludefromcoverage those claims arising from conduct likeForshey’s. *** In fact, if these facts didnot reflectthe contemplated exclusion, we would struggle toimagine what reasonably could and still remainwithintheconfinesofanordinarymotelbusiness.

•••• CommunityAction forGreaterMiddlesexCounty, Inc.v.American

Alliance Ins. Co., 757 A.2d 1074, 1083 (Conn.2000) (“[T]heplaintiffhasnotidentifiedanycase,andweareawareofnone,inwhich a policy exclusion for abuse or molestation has beendeemedambiguous”;nodutytodefendorindemnifyoperatorofpreschool where complaint alleged sexual molestation of oneminor by another at the school, “irrespective of the boys’subjectivestateofmind”);

30

•••• LincolnCty.Sch.Dist.v.Doe,749So.2d943,946(Miss.1999)(enbanc) (rejecting argument that Abuse orMolestation Exclusionwasambiguous;theExclusionbarredallclaimsassertedagainstschool where claimed damages arose of molestation of onestudentbyanother);

•••• AmericanEmpireSurplusLinesIns.Co.v.ChabadHouseofNorth

Dade, Inc., 450 Fed.Appx. 792, 794 (11th Cir.2011) (applyingFlorida law)(regardlessof the legal labelappendedto insured’salleged liability for damages causedwhen employee of insuredhome“tormentedandabused”specialneedschild(i.e.,negligentmisrepresentation, failure towarn), the “plain language” of theExclusionprecludedanydutytodefendorindemnify);

•••• Neffv.AlterraHealthcareCorp.,271Fed.Appx.224,226,2008WL821070 (3d Cir. 2008) (under Pennsylvania, Wisconsin orMassachusetts law, Abuse or Molestation Exclusion precludeddefenseorindemnityofallclaimsagainstinsuredassistedlivingfacility where claims arose out of employee abuse of patientresultinginbrokenribs:“Theplainandordinarymeaningoftheexclusionisthatthereisnocoverageifaplaintiff ’sinjuryarisesoutofabuseormolestation”(footnoteomitted)).

•••• Nautilus v. Our Camp, Inc., 136 Fed.Appx. 134 (10th Cir.2005)(applyingWyominglaw)(AbuseorMolestationExclusionbarredallclaimsagainstcamparisingoutofonecamper’smolestationof another: “The express language of the exclusion is wordedbroadly*** thepartiestoan insurancecontract, likeanyothercontract, or free to incorporate therein whatever lawful termstheydesireandthecourtsarenotatlibertytorewritethepolicyunder the guise of judicial construction (punctuation andcitationsomitted));

And courts similar exclusions have found no coverages, notwithstanding creative

pleadingandargumentsbycounselforinsureds.See,e.g.:

•••• S.C. Farm Bureau Mut. Ins. Co. v. Oates, 588 S.E.2d 643(S.C.App.2003) (abuse exclusion barred coverages of all claimsagainstdaycarecenterarisingoutofemployeeacts resulting in“shakenbaby”syndrome);

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•••• InsightsTradingGroup,LLCv.FederalIns.Co.,D.Md.No.RDB-10-340,2010WL2696750,at*5-*6(July6,2010)(allclaimsbasedon sexual assault of jobprograms enrollee by co-enrolleewereexcluded by subject matter exclusion: “litigants cannot skirtaround an exclusion clause merely by relying on certainalternative theories *** Insights is a sophisticated party thatclearly had notice of the plain language of the exclusionclauses”);

•••• NewWorld Frontier, Inc. v. Mt. Vernon Fire Ins. Co., 253 A.D.2d455, 455-456, 676 N.Y.S.2d 648 (Sup.Ct.App.Div.1998) (Where“no cause of action would exist ‘but for’ the alleged sexualmolestation,” insured had no duty to defend or indemnifyinsured preschool against complaint based on one student’smolestationofanother);

•••• ProSelect Ins. Co. v. Levy, 30 A.3d 692 (Vt.2011) (allegations of“malpractice”incomplaintinadditiontosexualassaultcouldnotcreate coverages in contravention of policy’s sexual assaultexclusionwhereallegedactsofmalpracticewereforthepurposeofisolatingpatienttopreserveimpropersexualrelationship);

•••• Houg v. State Farm Fire & Cas. Co., 509 N.W.2d 590, 593(Minn.App.1993) (insurer had no obligation to indemnifychurch’ssettlementofclaimsagainst itarisingoutofminister’ssexualassaultofchurchmember):

M.C.’s detailed complaint and her version of thefacts brings the allegedwrong squarelywithin themeaning of [the sexual conduct] exclusion, andthereforesquarelyoutofStateFarm’sobligationtoindemnify.

Creativepleadinginthiscasesimilarlycannotchangethecontractofinsurancethat

doesnotprovidecoverageforabuse.AsimplereviewofboththeCGLandUmbrella

policies – byWHC or anyone – shows conspicuously titled Abuse or Molestation

Exclusions. Grange therefore respectfully requests reversal of that portion of the

decisionbelowthat findscoveragesforvicarious liability forabuse,alongwiththe

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associated award of indemnity for the Faietas’ attorney fees and post-judgment

interest, and enter judgment for Grange on all claims for indemnity and

reimbursement.


Whenattorney’sfeesareawardedsolelyinconjunctionwithnon-

coveredconduct, “compensatory”attorney’s feesarenot covered

damagesunderliabilityinsurancepolicies. (Neal-Pettitv.Laham,

125OhioSt.3d327(2010),construed.)

ThisCourtneednot addressPropositionsofLawNo.2or3should itagree

that the policies issued to WHO preclude reimbursement of WHC’s admitted

vicarious liability forVaughan’s savagebeating. Should thisCourtagree thatsuch

coveragesexist,however,thenitshouldalsoconcludethatGrangehasnoobligation

toreimburseWHCfor$693,861inattorneyfeesawardedtotheFaietas.

AtissuehereistheproperapplicationofthisCourt’sdecisioninNeal-Pettitv.

Laham,125OhioSt.3d327,2010-Ohio-1829,928N.E.2d421,totheTenthDistrict’s

conclusion that Grange was obligated to indemnify WHC for the attorney’s fee

judgmentagainstit.Neal-Pettitheldthatattorney’sfeespredicatedonanawardof

punitive damages could be considered additional “compensatory” damages for

purposesofpolicycoverages.Butinthatcase,therewasonlyonedefendantactor,

and the defendant’s acts giving rise to compensatory and punitive damageswere

withinpolicycoverages.

Here, there are two defendant actors, only one of the two was liable for

attorney’s fees,andthatdefendant’sactsgivingrisetocompensatoryandpunitive

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damages were not covered under the policies at issue. Under that scenario, the

reasoning ofNeal-Pettit precludes coverages of the “compensatory” attorney’s fee

award.

First, it isundisputedthattheFaieta juryawardeddistinctpunitivedamage

awards for the distinct malicious acts of each defendant. The jury awarded

$100,000 in punitive damages against Vaughan for his savage beating of Andrew,

and $5 million in punitive damages against WHC for its own post-incident IIED

and/or negligent supervision of Vaughan. (See Faieta Verdict Forms, Supp. 104,

105.)

Second, it isundisputed that the juryexpresslydetermined that theFaietas

were entitled to attorney fees fromWHC alone. Thus, the verdict form against

VaughanexpresslyprovidedthattheFaietaswerenotentitledtoattorneyfeesfrom

Vaughan,while the verdict formagainstWHCexpressly provided that the Faietas

wereentitledtoattorneyfeesfromWHC.(Id.)

Finally,itisundisputedthattheTenthDistrictfoundthattheGrangepolicies

issued toWHC did not cover compensatory damages awarded forWHC’s IIED or

negligent supervision of Vaughan. (App. Op., ¶40, 49, 55, Appx. 28, 31, 33.)

Therefore,thecompensatoryattorney’sfeesareexcluded.See,e.g.,ThirdWing,Inc.

v.ColumbiaCasualtyCo.,8thDist.CuyahogaNo.97622,2012-Ohio-2393,¶7(Neal-

Pettitdoesnotapplywhenattorneyfees“werenotawardedforaninjurythatwas

coveredbytheColumbiapolicy”).

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NordidtheCourtofAppealsconstrueNeal-Pettitasrequiringcoveragesfor

attorney’s fees arising out of uncovered conduct. Instead, the Court held: (1) the

fact that onlyWHCwas to pay attorney feeswas irrelevant because, underNeal-

Pettit, attorney fees “‘are distinct from punitive damages’”; and (2) “because the

attorneyfeescannotnowbeallocatedbetweenthecoveredandnon-coveredclaims,

Grangeisliablefortheentireamount.”(App.Op.,¶59,Appx.34.)Bothconclusions

areflawed.

Contrary to the Court’s first conclusion, the fact that onlyWHCwas to pay

attorneyfeesisextremelyrelevant.AstheTwelfthDistrictrecentlyobserved,Neal-

Pettitdoesnotaffectthetwo-prongedpredicateforawardingattorneyfees:(1)the

jurymustfindthatthedefendantactedwithmalice;and(2)thejurymustmakean

actualawardofpunitivedamagesforthatmaliciousconduct. SeeRobertsv.Mike’s

Trucking,Ltd.,9N.E.3d483,2014-Ohio-766(12thDist.),¶28-29andfn.2.Here,the

jury found that Vaughan’s conduct (the battery and associated IIED, if any) was

malicious, and thatWHC’s conduct (its negligent supervision and IIED, if any, in

stonewalling and threatening the Faietas) was malicious, and returned separate

punitivedamageawardsforeachdefendant’smaliciousconduct.Theseparateand

distinctpunitivedamageawardagainstWHCcouldonlybebasedonWHC’sactsand

a finding of malice related to one or both of those acts. The jury’s award of

“compensatory” attorney fees againstWHCcouldequally only bebasedonWHC’s

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acts;itisirrelevantthatthefeesare“distinctfrom”thepunitivedamagesawarded

forthoseacts.

Forsimilarreasons,theTenthDistrict’sconclusionthatitcouldnot“allocate”

the jury’s attorney fee award between covered and uncovered claims is flawed.

Since the only conclusion to be drawn from these facts is that the jury awarded

attorneyfeesasfurthercompensatorydamagesforuncoveredconduct(WHC’sIIED

and/or negligent supervision), those attorney fees cannot be covered under the

policy. No allocation is needed. Absent a nexus between covered conduct and

attorney’sfees,thefindingofcoveragesforattorneys’feesshouldbereversed.


A liability insurance policy's supplementary payments clause

cannot be reasonably construed as an agreement to pay post-

judgmentinterestonnon-coveredclaims.

TheGrangeCGLpolicyprovides:

Wewill pay,with respect to any claimwe investigate orsettle,orany"suit"againstaninsuredwedefend:***

g. all interestearnedon the full amountofany judgmentthat accrues after entry of the judgment and before wehavepaid,offeredtopay,ordepositedincourtthatpartofthe judgment that is within the applicable limits ofinsurance.

(Supp.20-21.)

TheTenthDistrict’sinitialdecisioninthiscasecorrectlyheldthatGrangewas

only obligated to reimburseWHC for post-judgment interest that accrued on the

covered damages of $82,365. (App. Op., ¶69, Appx. 36.) On reconsideration,

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however, thecourtagreedwithWHC’sargument that thesupplementarypayment

provisionandCoventryv.SteveKoren,Inc.,1OhioApp.2d385(8thDist.),aff’d4Ohio

St.2d 24 (1965), obligated Grange to pay post-judgment interest on uncovered

liabilities.(Recon.App.Op.,¶23,Appx.13.)Thereconsideredrulingisinerroron

bothcounts.

Thesupplementarypaymentsclausemustbeconstruedinthecontextofthe

policyasawholeandinamannerconsistentwiththeriskinsuredagainst.Westfield

Ins.Co.v.Galatis,100OhioSt.3d216,2003-Ohio-5849,111111,14,20.Thepolicies

Grange issued toWHCagree topay "those sums that the insuredbecomes legally

obligatedtopayasdamagesbecauseof'bodilyinjury'or`propertydamage'towhich

thisinsuranceapplies.”(Supp.at14,42,emphasisadded.)Grangecanonlyagreeto

pay post-judgment interest for a "covered" judgment because the insurance only

applies to covered liabilities. Any other interpretation is unreasonable and

increases the scopeof coverages towhich theparties agreed. Perez v. Otero, 415

So.2d101(Fla.App.1982).

Further,Coventryv.SteveKoren,Inc.doesnotsupportaninterpretationofthe

supplementarypayments clause to include thepaymentofpost-judgment interest

onuncoveredportionsofajudgment.ThedisputeinCoventryisonethatmostoften

arises in an interpretations of the supplementary payments clause – the insurer

argued that the provision could not require the payment of interest in excess of

policy limits forcovered claims. Asnoted in a leading insurance treatise, “[m]any

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policies written on a primary basis require that the insurer pay post-judgment

interestonthetotalamountofthejudgmentuntiltheinsurerpaysitspolicylimits

in satisfaction of the judgment.” Couch on Insurance (3d ed.), §172:46 (footnote

omitted). The omitted footnote explains that the principle does not apply to

uncoveredclaims(emphasisadded):

The post-judgment interest clause in an insurancecontractservesthepurposeofencouragingtheinsurertoexpeditiouslypaytheportionofthejudgmentthatisnotsubjecttodisputewiththeincentivethatifitdoes,itwillbeprotectedfromtheaccrualofinterestonanypartofthejudgment while the coverage issue is being litigated;however, once a judgment is entered, the insurer mustoffertheamountitowestohalttherunningofinterest.

Id., fn. 89, citing Lunde v. American Family Mut. Ins. Co., 297 S.W.3d 88

(Mo.App.2009).

ArgumentssimilartothosemadebyWHCinthiscasewerefirmlyrejectedon

bothcontractandpublicpolicygroundsinBohrerv.ChurchMut.Ins.Co.,12P.3d854

(Colo.App. 2000). The underlying judgment in Bohrer was comprised of a

compensatory andpunitivedamages award arising out of a churchmember’s six-

year counseling relationship that evolved into sexual conduct. A prior decision

determinedthatnoneofthepunitivedamageswerecoveredbytheinsurancepolicy

at issue, and a sexual assault exclusion barred coverages of the 30% of the

compensatorydamages allocated to sexualmisconduct. The insurednevertheless

arguedthatasupplementarypaymentsprovisionrequiredtheinsurertopaypost-

judgmentinterestontheentirejudgment.Thecourtofappealsdisagreed.

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First, the court held that public policy precluded awarding post-judgment

interest on punitive damages or compensatory damages arising out of sexual

assault: “[E]ven ifwewere to assume,without deciding, that the languageof the

insurancepolicywouldrequiregarnisheetopayallinterestontheentireamountof

the judgment *** including the uncovered portion of the compensatory damages

andthepunitivedamages,suchaprovisionwouldviolateColoradopublicpolicyand

would,therefore,beunenforceable.”12P.3dat856-857(citationomitted).Ohio’s

public policy, like Colorado’s, prohibits insuring intentional conduct or punitive

damages.SeeGearingv.NationwideIns.Co.,supra,76OhioSt.3d34,paragraphtwo

ofthesyllabus;WedgeProds.,Inc.v.HartfordEquitySalesCo.,31OhioSt.3d65,67,

509N.E.2d74(1987);R.C.3937.182(B).

Second, Bohrer held that “even if” public policy permitted post-judgment

interestonjudgmentsfordamagesarisingoutofsexualassault:

*** we cannot ignore the purpose and nature of theunderlying damage award. To accept plaintiff ’scontentionwouldproducetheillogicalresultofpenalizingtheinsurancecompanyfornotpayingajudgmentitisnotlegallyobligatedtopay.

Id.at857,citing(amongothercases),Caseyv.Calhoun,40OhioApp.3d83,88,531

N.E.2d1348(8thDist.1987).

Finally, the Bohrer court rejected the plaintiff’s attempt to rely on cases

which,likeCoventry,heldthatinterestoncoveredclaimscouldexceedpolicylimits:

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Those cases, however, involved money judgments thatwerecoveredbytheprovisionsoftheinsurancepolicybutexceededtheinsured’spolicylimits.Theyareinapplicableinacaseinwhich,ashere,plaintiff isseekinginterestondamages that are not only not covered under theinsurancepolicy,butareuninsurableasamatterofpublicpolicy.

Bohrer,12P.3dat857.Aninterpretationofthesupplementarypaymentsprovision

thatwouldpunishGrangeforprovidingadefenseforuncoveredclaimsisnotonly

unreasonable and illogical, but contrary to public policy that encourages broadly

construinganinsurer'sdutytodefend.TheTenthDistricterredwhenitdeclinedto

limitpost-judgmentinteresttothoseamountsrepresentingcoveredclaims.

IV. CONCLUSION

Subject matter exclusions like the ISO Abuse or Molestation Exclusion

construedbythecourtsbelowareapprovedbyregulatorsandwidelyincorporated

inpoliciesof insurance issuedtoorganizations thathavecareofothers. Theyare

necessaryforeffectiveinsuranceunderwritingandpricingofinsurancepoliciesand,

becausetheyallowOhiobusinessestoseekthe insurancetheywant(andonlythe

insurance they want), subjectmatter endorsements foster competition and niche

marketsintheinsuranceindustry.BecausethestandardizedAbuseorMolestation

Exclusion eliminates all coverages for abuse or molestation incidents, this Court

should reverse the decision of the Tenth District Court of Appeals and enter

judgmentforGrangeMutualCasualtyCompany.

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Alternatively, should thisCourtaffirm theTenthDistrict’s findingof limited

coverage forWHC’sadmittedvicarious liability, it shouldnevertheless reverse the

court’s conclusion thatGrange isobligated to reimburseWHC for theattorney fee

awardandlimitanypost-trialinterestobligationtothe$82,365awardforcovered

damages.

JamesR.Gallagher(0025658)GALLAGHER,GAMS,PRYOR,TALLAN&LITTRELLL.L.P.471EastBroadSt.,19thFloorColumbus,OH43215-3872Tel: 614-228-5151Fax:[email protected]

Respectfullysubmitted,

s/IreneC.Keyse-Walker IreneC.Keyse-Walker(0013143)(COUNSELOFRECORD)BenjaminC.Sasse(0072856)TUCKERELLISLLP950MainAvenue,Suite1100Cleveland,OH44113-7213Tel: 216-592-5000Fax:[email protected]@tuckerellis.com

AttorneysforDefendant-AppellantGrangeMutualCasualtyCompany

41011472\000002\2188394.1

CERTIFICATEOFSERVICE

I certify that a copy of the foregoing Merit Brief of Appellant Grange

Mutual Casualty Company was served on February 6, 2015, per S.Ct.Prac.R.

3.11(B),bysendingitbyregularU.S.Mailto:

RobertP.RutterOneSummitOfficePark,Suite6504700RocksideRoadCleveland,OH44131

AttorneyforPlaintiff-Appellee

WorldHarvestChurch

s/IreneC.Keyse-Walker OneoftheAttorneysforDefendant-

AppellantGrangeMutualCasualty

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