IN THE SUPREME COURT OF OHIO
CHIQUITA BRANDS INTERNATIONAL, INC.
Plaintiff-Appellant
-vs-
NATIONAL UNION FIRE INSURANCECOMPANY OF PITTSBURGH, PA.
Defendant-Appellee
Case No. 6 2 2On Appeal from theCourt of Appealsof Hamilton CountyFirst Appellate District
Court of AppealsCase No. C-120019
MEMORANDUM IN SUPPORT OF JURISDICTION OFPLAINTIFF-APPELLANT CHIQUITA BRANDS INTERNATIONAL, INC.
Yvette McGee Brown (0030642)Jones Day325 John H. McConnell BlvdSuite 600Columbus, OH [email protected]
Stuart Dornette (0002955)Taft Stettinius & Hollister
LLP425 Walnut Street;Suite 1800Cincinnati, OH [email protected]
William P. Skinner (2313-2013)Covington & Burling LLP1201 Pennsylvania Ave., NWWashington, DC [email protected] of Record
Attorneys for Plaintiff-Appellant Chiquita Brands International, Inc.
Richard H. Nicolaides, Jr.Barbara I. MichaelidesAgelo L. ReppasBates Carey Nicolaides LLP191 North Wacker DriveSuite 2400Chicago, IL 60606312-762-3100
Joseph W. Borchelt (75387)Reminger525 Vine StreetSuite 1700Cincinnati, OH [email protected]
Attorneys for Defendant-Appellee National Union Fire Insurance Companyof Pittsburgh Pa.
April 18, 2013
APR ^ 8 Z013
CLkRK OF C®uRT__. .-_jSUPREME C0URIT OF OHIO
flLED
TABLE OF CONTENTS
TABLE OF AUTHORITIES . . . . . . . .. . . . . . . . . . . . . . . . ... .. . . . . . . . . .. . . . . .. .. . . .. .. . . . . . .. . . . .. . .. . ............. ii
THIS CASE PRESENTS ISSUES OF PUBLIC AND GREAT GENERAL 1NTEREST ............. 1
STATEMENT OF THE CASE AND RELEVANT FACTS ......................................................... 4
ARGUMENT IN SUPPORT OF PROPOSITIONS OF LAW ....................................................... 8
Proposition of Law No. 1: Under standard-form CGL policies and Ohio law, an insureris obligated to pay defense costs for tort claims alleging intentional conduct whenother allegations or evidence demonstrate it is possible the policyholder did notexpect or intend to cause bodily injury . .............................................................................. 8
Proposition of Law No. 2: Under standard-form CGL policies that provide coverage forbodily injury caused by an occurrence that takes place in the coverage territory,coverage depends on the location of the occurrence rather than the location of theinj ury . . . . . . . .. . . .. . . .. . . .. . . . .. . . . .. .. .. . . . . . . . . .. . . . . . . . . .. . . . .. .. .. .. . .. . . .. .. .. . . .. . . . . .. . . . .. .. .. . . . .. .. . . . .. . . .. . . ... . . 12
CONCLUSION ............................................................................................................................. 15
OPINION OF COURT OF APPEALS AND JUDGMENT ENTRY (March 8, 2013)
CERTIFICATE OF SERVICE
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TABLE OF AUTHORITIES
Page(s)
Federal Cases
Ace Am. Ins. Co. v. RC2 Corp.,600 F.3d 763 (7th Cir. 2010) ...................................................................................................14
CA CI Int'l, Inc. v. St. Paul Fire & Marine Ins. Co.,566 F.3d 150 (4th Cir. 2009) ...................................................................................................14
Drake v. Richerson,N.D. Ohio No. 5:11CV1898, 2012 WL 2681413 (Ju1y 6, 2012) .........................................1, 12
State Cases
Allstate v. Campbell,128 Ohio St.3d 186, 2010-Ohio-6312, 942 N.E.2d 1090 ..........................................1, 9, 10, 11
Buckeye Union Ins. Co. v. New Eng. Ins. Co.,87 Ohio St.3d 280, 1999-Ohio-67, 720 N.E.2d 495 ..................................................................9
City of Sharonville v. Am. Emps. Ins. Co.,109 Ohio St.3d 186, 2006-Ohio-2180, 846 N.E.2d 833 ....................................................11, 13
Littleton v. Good Samaritan Hosp. & Health Ctr.,
39 Ohio St.3d 86, 529 N.E.2d 449 (1988) ...............................................................................10
Physicians Ins. Co. v. Swanson,58 Ohio St.3d 189, 569 N.E.2d 906 (1991) ............................••...•.•••••••••••••••••••••••••••••••••.••••••••••9
Preferred Mutual Insurance Co. v. Thompson,23 Ohio St.3d 78, 491 N.E.2d 68$ (1986) ................................. . ........... ......... ..... .:. .........1 1 , 1 2
Safeco Ins. Co. v. White,122 Ohio St.3d 562, 2009-Ohio-3718, 913 N.E.2d 426 ............................................3, 9, 13, 14
State Farm Mut. Auto. Ins. Co. v. Gourley,10th Dist., No. 12AP-200, 2012-Ohio-4909 ..................................................................1, 10, 12
Federal Statutes
Alien Tort Statute, 28 U.S.C. § 1350 ...................................................................................6, 11, 13
.........................................................................................Antiterrorism Act, 18 U.S.C. § 2331 6, 10
THIS CASE PRESENTS ISSUES OF PUBLIC AND GREAT GENERAL INTEREST
This case presents important and recurring questions of insurance law: when does an
insurer have a duty to defend a policyholder against lawsuits alleging intentional conduct? The
questions arise under standard-form commercial general liability ("CGL") policies, in common
use throughout Ohio, that provide coverage for lawsuits seeking damages for "bodily injury"
caused by an "occurrence" subject to an exclusion for bodily injury "expected or intended from
the standpoint of the insured." The court of appeals held that National Union is not obligated to
pay defense costs even though: ( 1) the underlying tort suits assert both negligence and intentional
tort claims, and (2) the trial court found, based on an extensive evidentiary record, that Chiquita
did not intend to cause bodily injury, but that-as to Chiquita-any harm was "unintended and
accidental." T.d. 265, Attachment C, at pp. 2-3, 5.
In this case, the court of appeals held that allegations of intentional conduct are outcome-
determinative and that it is irrelevant that there are also negligence allegations and evidence from
which the trial court concluded that Chiquita acted for the purpose of saving lives. The First
District's approach in this case is fundamentally at odds with that of the Tenth District in State
Farm Mut. Auto. Ins. Co. v. Gourley, 10th Dist., No. 12AP-200, 2012-Ohio-4909. The Tenth
District concluded that, under this Court's decision in Allstate v. Campbell, 128 Ohio St.3d 186,
2010-Ohio-6312, 942 N.E.2d 1090, coverage for defense costs requires an evaluation of
evidence about the actual facts and that the standard is whether any reasonable jury could
conclude that the insured did not expect or intend to cause harm. Accord Drake v. Richerson,
N.D. Onio No. 5:11C V1898, 2012 WL 2681413 (July 6, 2012).
These are issues of public and great general interest because they affect almost all Ohio
companies and the people who work for them. Standard-form CGL policies provide coverage
for tort claims against both companies and their directors, officers and employees. In this case,
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the tort plaintiffs, in addition to suing Chiquita, have also sued individual defendants, including
Fernando Aguirre, Cyrus Freidman, and Keith Lindner, former CEOs of Chiquita; Roderick
Hills, a former director of Chiquita (and a former chairman of the SEC); and Robert Olson, a
former general counsel of Chiquita. The Court should grant review to provide guidance to lower
courts about these issues.
This case also presents an important and unsettled question regarding the proper
interpretation of "coverage territory" provisions found in commercial general liability policies.
From 1966 to 1986, the standard form policy stated that the "insurance only applies to bodily
injury ... which occurs ... within the policy territory." See T.d. 225, Attachments A-B. As
dictated by the plain language of these policies, courts adopted a "place of injury" test to
determine whether a policyholder was entitled to coverage. In 1986, however, the form language
was changed to require that "[t]he `bodily injury' ...[be] caused by an occurrence that takes
place in the `coverage territory."' Id., Attachment C. Finding "no Ohio cases directly on point,"
the court of appeals looked to out-of-state decisions applying the laws of other states, and held
that the "place of injury" test still applies-thus rendering the 1986 change in the form policy
language meaningless. Op. 9-12 ¶¶ 22-27.
The court's interpretation of the "coverage territory" provision will have a significant
impact on policyholders. The 1986 change in policy language shifted the focus from the location
of the injury to the location of the occurrence that caused the injury. That change reflects the
reality of modern business in which actions of companies in the United States can have effects
.,+ 1.,o,.A the tnrr nlaintiffs allege that the actions of- ..,throughout the woria. That reaiity .^^ ^dell^ 11^1^: ___
Chiquita executives in Cincinnati-deciding that the company's Colombian subsidiary should
-3-
make extortion payments to armed groups in Colombia for the purpose of saving lives-is the
proximate cause of more than 4,000 murders in Colombia.
Although this Court has not decided this question, its decisions strongly suggest that the
court of appeals reached the wrong result. The court of appeals should have begun its analysis
by looking to the policy language. That language plainly requires a "place of occurrence" test,
not a "place of injury" test. Had the court of appeals taken this approach, it would have been
clear that National Union is obligated to provide a defense because the relevant occurrence took
place within the United States. This Court recently held that when, as in this case, tort plaintiffs
allege that the policyholder's negligence resulted in a third party's committing an intentional tort,
the policyholder's allegedly negligent acts constitute the relevant occurrence. See Safeco Ins.
Co. v. White, 122 Ohio St.3d 562, 2009-Ohio-3718, 913 N.E.2d 426. The occurrence in this case
was therefore within the coverage territory because Chiquita's allegedly negligent conduct took
place in Cincinnati.
In short, the trial court found, based on an extensive evidentiary record, that "Chiquita
never intended to harm anyone," and that it is therefore entitled to coverage for defense costs
because a finder of fact in the tort suits might conclude that the adoption of the payments policy
by Chiquita executives in Cincinnati was negligent (i.e., that a reasonable and prudent company
would not have adopted such a policy). T.d 265, Attachment D, at pp. 2-3. The court of appeals
did not take issue with the trial court's factual findings, but nevertheless reversed the decision.
According to the court of appeals, evidence about the what, why, and where of Chiquita's
c+'.llr^rv"n stand, ', - iconduct is irre levant. This ,., decision, ii `;^ n^ ad t ^ wil-l have neffects on
policyholders. The Court should grant jurisdiction and decide both of these important issues;
Chiquita's ultimate right to defense coverage depends on the resolution of both issues.
-4-
STATEMENT OF THE CASE AND RELEVANT FACTS
Chiquita seeks a declaratory judgment concerning National Union's obligation to provide
insurance coverage for defense costs that it has incurred and will incur in connection with certain
tort lawsuits, and an award of damages for breach of those obligations. The underlying tort
lawsuits include both negligence and intentional tort claims alleging that Chiquita is liable for the
deaths of more than 4,000 people in Colombia who were allegedly murdered by various armed
groups because its former Colombian subsidiary, Banadex, made payments to these groups. The
groups had threatened to kill Banadex employees if the payments were not made. Chiquita
adopted the policy that Banadex should make the payments to save the lives of its employees.
In the late 1980s and early 1990s, the FARC and other left-wing guerilla groups were
engaged in violent conflict with the Colombian government and each other for control of the
banana-growing zones in Columbia. These groups posed a real threat to Banadex, as evidenced
by the instances in which they threatened, kidnapped, or killed Banadex employees. The
Colombian army and police lacked the resources to protect Banadex employees or property from
attacks by these groups.
In 1989, Banadex received its first extortion demand from the FARC. Banadex sought
instructions about how to respond from Chiquita executives in Cincinnati. Chiquita executives
discussed and decided this question in Cincinnati. It was clear to them that the FARC would kill
Banadex employees if the payments were not made, and that there would be additional demands
in the future both from the FARC and from other armed groups. Accordingly, Chiquita
^;. o^ i„ (^'inrinr^at i n^,adP the pc,licy decision that Banadex should make payments asexecu ^iJv^ ^^^ ...,.^.^.^ K
necessary to protect the lives of its employees.
Banadex made payments to several different armed groups from the time the corporate
policy was established in 1989 until the last payment in early 2004. From approximately 1989 to
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1997, the payments were typically made to the FARC and other left-wing guerilla groups.
Beginning in about 1997, the left-wing groups were gradually pushed out of the banana-growing
zones, and their demands for payment tapered off and then ended. In or about 1997, the leader
of the AUC, a right wing paramilitary group, summoned a Banadex manager to a house in
Medellin, and told him that Banadex must stop paying the guerillas and instead pay the AUC.
As the Department of Justice has acknowledged, the AUC's leader "sent an unspoken but clear
message that failure to make the payments could result in physical harm to Banadex personnel
and property." T.p. JTX 43, ¶ 21. Thereafter, Banadex made several payments to the AUC. At
about the same time, Banadex also began making payments to organizations called convivirs,
which were licensed by the government of Colombia and were supposed to provide services
analogous to a Neighborhood Watch group. Banadex later came to suspect that at least a portion
of the money paid to convivirs was being transferred to the AUC, but continued making the
payments to save the lives of its employees.
Prior to February 2003, Chiquita was repeatedly advised by both inside and outside
counsel that its payments policy was legal under the law of Colombia and was never advised that
the policy was illegal under U.S. law. In February 2003, a lawyer in Chiquita's law department
discovered that the AUC had been put on an official U.S. list of terrorist organizations on
September 9, 2001. This designation meant that payments to the AUC that were made after that
date were illegal under U.S. law. All of the payments to the AUC that were made during the
period of the National Union policies at issue in this case were made prior to July 31, 2000, and
were therefore legal under U.S. law.
Shortly after discovering that the AUC was designated a terrorist organization, Chiquita
voluntarily disclosed to senior officials of the United States Department of Justice that Banadex
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had made payments to armed groups in Colombia for the purpose of saving the lives of its
employees. In response to Chiquita's request for guidance, a senior Justice Department official
acknowledged "that the issue of continued payments was complicated." T.p. JTX 43, ¶ 62. In
January 2004, shortly before it sold Banadex, Chiquita ended the 1989 policy by instructing
Banadex to stop making payments to armed groups. In March 2007, Chiquita agreed to plead
guilty to making payments to a designated terrorist organization without having first obtained a
license from the government of the United States and to pay a fine of $25 million.
A few months after Chiquita's plea agreement, the first underlying tort lawsuit was filed
in June 2007. The record in this case includes complaints in seven underlying tort lawsuits
brought on behalf of Colombian citizens under the Alien Tort Statute, 28 U.S.C. § 1350
("ATS"), and two lawsuits brought on behalf of U.S. citizens who allege bodily injury or death
during the period of the National Union policies under the Antiterrorism Act, 18 U.S.C. § 2331
("ATA"). These lawsuits seek damages from Chiquita on behalf of more than 4,000 persons
who were allegedly murdered by armed groups in Colombia, including both left-wing guerilla
groups and right-wing paramilitary groups. All of the lawsuits are based on the payments that
Banadex made to the armed groups. The lawsuits allege that Chiquita should be liable because it
conspired with the armed groups to have people murdered; they also allege, in the alternative,
that Chiquita should be liable because payments were made to the armed groups or because
Chiquita was reckless in its dealings with such groups. See, e.g., T.p. JTX 38, ¶ 937.
In September 2008, Chiquita filed this action seeking, among other things, a declaratory
to reimburse Chiauita for defense costs in. that its primary insurers ^^a<V., a".^ obligation - ^judgment
the underlying tort lawsuits. Chiquita thereafter entered into settlement agreements with primary
insurers other than National Union under which those insurers agreed to reimburse Chiquita for a
-7-
substantial portion of its defense costs. Following (1) extensive discovery that included the
production of voluminous documents by Chiquita and the depositions of numerous Chiquita
witnesses, (2) summary judgment motions in 2009; and (3) a two-phase bench trial in 2010, the
trial court ruled that National Union has an obligation to reimburse Chiquita for all reasonable
defense costs incurred in those tort lawsuits that seek damages for any bodily injury that
allegedly occurred during the period of one of its policies. Relying on "the entirety of the record
in this case," the trial court found that the relevant "occurrence" was Chiquita's policy that
Banadex should make payments as necessary to protect the lives of its employees, and that this
occurrence took place in Cincinnati where the policy was adopted. T.d. 265, at p. 1. The trial
court also found that Chiquita adopted the payments policy for the purpose of saving lives and
did not intend to cause harm.
Chiquita had a single policy, during the coverage period ofNational Union, to make payments to the FARC, AUC, and anumber of other groups. The purpose of these payments was toprotect the property and employees of Chiquita and its subsidiaries.... The decision to make payments to these groups wasintentional but there was no intent to hurt others. Any harm thatcame from these payments was, as to Chiquita and its subsidiaries,unintended and accidental. . . . There is no evidence that Chiquitawas trying to accomplish anything with the policy of paying thesegroups but the protection of its employees and property.
Id., Attachment C, at pp. 2-3, 5.
The court of appeals reversed for two reasons. First, the court held that that National
Union has no duty to pay defense costs because "the conduct alleged in the complaints for which
Chiquita sought coverage and defense did not constitute `occurrences' within the meaning of the
policy language." Op. 8¶ 18. In reaching this result, the court acknowledged that the
underlying complaints included negligence claims, but stated that "those causes of action were
all based on Chiquita's alleged intentional conduct." Id. According to the court, "[t]he
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complaints did not allege conduct that could be reasonably construed as negligent or accidental."
Id. Because Chiquita's conduct did not constitute an "occurrence," the court reasoned, it need
not address the policy's "expected or intended" exclusion. Id. ¶ 19.
Second, the court of appeals reversed based on the policy's "coverage territory" clause.
Adopting a "place of injury" test applied by courts in other states, the court concluded that
National Union was required to pay Chiquita's defense costs only if the injuries occurred in the
United States, Puerto Rico, or Canada. Id. at 9-12 ¶¶ 20-28. Because the alleged injuries took
place in Colombia, "the events that inflicted the harm ... in Col[o]mbia ... were the
`occurrences' as defined in the policies as a matter of law." Id. at 12 ¶ 28. Accordingly,
National Union has no duty to provide a defense because "the conduct in the underlying
complaints was not within the scope of coverage." Id.
ARGUMENT IN SUPPORT OF PROPOSITIONS OF LAW
Proposition of Law No. 1: Under standard-form CGL policies and Ohio law, an insurer is
obligated to pay defense costs for tort claims alleging intentional conduct when otherallegations or evidence demonstrate it is possible the policyholder did not expect or intend
to cause bodily injury.
The court of appeals held that National Union does not have to pay Chiquita's defense
costs because the negligence claims in the underlying tort complaints "were all based on
Chiquita's alleged intentional conduct." Op. 8¶ 18. This Court should grant review to eliminate
confusion about three fundamental principles of Ohio law. First, whether a policyholder acted
intentionally is irrelevant; what matters is whether it acted with intent to harm. Second, an
insurer is obligated to provide defense coverage for tort complaints under which the plaintiffs
could recover damages without proving that the policyholder expected or intended to injure
anyone. Third, a policyholder's right to defense coverage depends on evidence about the facts
and not just on allegations made by plaintiffs' lawyers.
-9-
1. The court of appeals erred in attempting to separate the issues of whether there
was an "occurrence" under the policies and whether coverage was unavailable because Chiquita
had "expected or intended" to cause bodily injury. Id. at 8¶ 19. This Court has made clear that
the analysis for both issues is effectively the same. See, e.g., Physicians Ins. Co. v. Swanson, 58
Ohio St.3d 189, 569 N.E.2d 906 (1991) (under both policies that provide coverage for accidents
and policies that have "expected or intended" exclusions, the test is whether the insured expected
or intended to cause harm and not whether the insured committed an intentional act); accord
Allstate, 128 Ohio St.3d 186, 2010-Ohio-6312, 942 N.E.2d 1090, at ¶ 41. Indeed, National
Union has conceded that "the analysis is the same under either provision." NU Br. 18. The
analysis is the same because, as this Court has repeatedly recognized, "many unintended injuries
result from intentional acts." Allstate, at ¶ 38; see also Buckeye Union Ins. Co. v. New Eng. Ins.
Co., 87 Ohio St.3d 280, 283, 720 N.E.2d 495 (1999); Safeco, 122 Ohio St.3d 562, 2009-Ohio-
3718, 913 N.E.2d 426, at ¶ 21 ("if the injury was not intentionally caused, then it was
accidentally suffered") (internal quote omitted). Accordingly, the court should have considered
whether Chiquita intended to cause bodily harm, not just whether its actions were intentional.
In Allstate, this Court suggested that there are only two ways for an insurance company to
establish that the insured intended the relevant harm: (1) based on evidence demonstrating that
the insured-in fact-intended to cause the harm (a question that the Allstate Court remanded in
that case); or (2) based on evidence demonstrating that the insured intentionally committed an act
that is so intrinsically harmful that it necessarily resulted in the harm.
riere, the First District tried to ca ,7e a thir d path. I?el.y ing on a series of pre-Allstate
court of appeals decisions (see Op. 7, ¶ 17), the First District concluded that where the actions
are intentional and the underlying allegations constitute a "mere insinuation" of negligence, the
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acts could not have been "negligent or accidental." In other words, because there was no dispute
about the intentional nature of the acts themselves, the court of appeals determined that no
further inquiry was necessary. As pointed out above, this approach is fundamentally inconsistent
with the decision of the Tenth District in Gourley, which interpreted Allstate to require an
evaluation of evidence about the actual facts as well as the allegations.
2. Had the court properly focused on whether Chiquita intended to cause bodily
harm, it should have agreed with the trial court that the negligence claims were not all based on
allegations that Chiquita intended to harm. To be sure, the underlying complaints include
allegations that Chiquita intended to harm. But there is no dispute that some of the claims seek
to hold Chiquita liable without establishing intent to harm. Indeed, National Union conceded
this point in the court of appeals. NU Br. 20 (arguing that the "vast majority" of claims are
based on allegations that Chiquita intended harm, while acknowledging that "[t]he small balance
of remaining claims and allegations" allege only intentional conduct). Even without this
concession, the underlying complaints refute any suggestion that the tort plaintiffs allege only
that Chiquita acted with an intent to harm. For example, some of the wrongful death claims
allege that Chiquita is liable because it "paid" the armed groups who committed the murders, or
because it was "reckless in dealing with" them. See, e.g., T.p. JTX 38, ¶ 937.
Moreover, each of the underlying lawsuits includes claims under which-as a matter of
law-liability could be imposed on Chiquita on the basis of negligence rather than intentional
wrongdoing. The ATA lawsuits include wrongful death claims under the law of one or more
<^,;^^, r^,;^,,;ra could be found liable on the basis ofstates in the r.un•ted ra^ ^at es, pursuant^* ^ ^o ^^•_•^^^ ^^^-n^-^w^
negligence. See, e.g., Littleton v. Good Samaritan Hosp. & Health Ctr., 39 Ohio St.3d 86, 529
N.E.2d 449 (1988) (under Ohio law, damages for wrongful death may be imposed for
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negligence). The ATS lawsuits assert tort claims under the law of Colombia, which also imposes
liability based on negligence. As a result, the inclusion of allegations that Chiquita intended to
harm are irrelevant to the negligence claims because plaintiffs can prevail on those claims even if
they fail to prove that Chiquita intended to cause injury or death. An insurer must provide a
defense unless "the claims are clearly and indisputably outside of the contracted policy
coverage." City ofSharonville v. Am. Emps. Ins. Co., 109 Ohio St.3d 186, 2006-Ohio-2180, 846
N.E.2d 833, at ¶ 13. That demanding test cannot be satisfied based on unproven allegations that
are unnecessary to some of the causes of action asserted against the policyholder.
3. The court of appeals also focused solely on allegations in the complaints, while
ignoring the substantial evidence in the record of both the summary judgment motions and the
bench trial from which the trial court made factual findings that-as to Chiquita-any harm was
"unintended and accidental." Prior decisions of this Court strongly suggest that evidence about
the actual facts should be considered in cases concerning coverage for defense costs. See, e.g.,
Allstate, 128 Ohio St.3d 186, 2010-Ohio-6312, 942 N.E.2d 1090, at ¶ 62 (remanding case to trial
court for "a factual inquiry ... to determine whether [the insureds] intended or expected the
harm that resulted from their intentional actions"). For example, in Preferred Mutual Insurance
Co. v. Thompson, 23 Ohio St.3d 78, 491 N.E.2d 688 (1986), this Court held that the insurer had
to provide defense coverage because the policyholder testified that he shot the tort plaintiff in
self-defense. The Court acknowledged that the merits of that defense should be resolved in the
underlying tort case rather than the coverage case, but held that the existence of such evidence
meant that the insured was entitl^d to coverage for defPnSP costs because it was at least possible
that the insured was not an intentional wrongdoer. Id. at 81-82 & n.4. This is the standard that
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was applied in Gourley, 10th Dist., 2012-Ohio-4909, and Drake, N.D. Ohio, 2012 WL 2681413
(July 6, 2012).
The decision of the court of appeals is both a reflection of existing-and a source of
future-uncertainty about an area of law that is important to all Ohio corporations and citizens.
This Court should grant review to clarify Ohio law on these important points.
Proposition of Law No. 2: Under standard-form CGL policies that provide coverage for
bodily injury caused by an occurrence that takes place in the coverage territory, coverage
depends on the location of the occurrence rather than the location of the injury.
While conceding that there are "no Ohio cases directly on point," the court of appeals
held that National Union has no duty to pay defense costs based on the policy's "coverage
territory" provision. Op. 9-12 ¶¶ 22-27. Adopting a "place of injury" test, the court concluded
that Chiquita is not entitled to defense costs because the injuries for which the tort plaintiffs seek
damages occurred in Colombia, not in the United States. This ruling is contrary to the policy
language and at odds with basic principles of Ohio law.
The "place of injury" test adopted by the court of appeals conflicts with the policy
language. The National Union policies use standard-form CGL language first adopted in 1986
that provides coverage if "[t]he `bodily injury' . . . is caused by an occurrence that takes place in
the `coverage territory." See T.p. JTX 6-13; and T.d. 225, Attachment C. Prior to 1986, the
»>standard CGL form provided coverage if "bodily injury ... occurs ... in the policy territory.
T.d. 225, Attachments A-B. Two points are clear from the text of the 1986 form language used
in the National Unior. policies: (1) the occurrence is an event that causes bodily injury, not the
bodily injury itself; and (2) it is the occurrence, not the bodily injury, that must take place in the
coverage territory. The plain language of the poli cy therefore dictates a "place of occurrence"
test, not a "place of injury" test. Moreover, even if this provision were ambiguous-which it is
- 13-
not-the ambiguity must be resolved in favor of coverage for Chiquita. See Sharonville, 109
Ohio St.3d 186, 2006-Ohio-2180, 846 N.E.2d 833, at ¶ 6 (ambiguous provisions "will be
construed strictly against the insurer and liberally in favor of the insured" (internal quotation
marks and citation omitted)).
Properly interpreted, the "coverage territory" clause requires a court to determine where
the relevant "occurrence" took place. This Court's decision in Safeco makes clear that the
occurrence for the purposes of an insurance policy is the cause, viewed from the perspective of
the policyholder, of the policyholder's potential liability for the bodily injury at issue in the
underlying tort case. Safeco, 122 Ohio St.3d 562, 2009-Ohio-3718, 913 N.E.2d 426, at ¶¶ 24-27.
Thus, when the allegations are that the policyholder's conduct caused a third party to commit an
intentional tort, the relevant occurrence is the policyholder's conduct, not the conduct of the
third-party intentional tortfeasor. Id. Accordingly, the relevant occurrence in this case is the
payments policy that Chiquita executives adopted in Cincinnati in 1989 and maintained in effect
until early 2004.
The trial court found that the payments policy was the source of Chiquita's potential
liability in the tort claims and that it was adopted in Cincinnati. The court of appeals did not
suggest that these findings were clearly erroneous. Nor could it. Witnesses testified that
Chiquita adopted the payments policy in Cincinnati to save lives, but Banadex made the
payments, and neither Chiquita nor Banadex engaged in violence or asked the armed groups to
do so. There was no evidence to the contrary. Most of the complaints expressly allege that
: _..: „,,.«..^ <a 41.° r^Na,^=^^.,.^^^ mant s• The • .senior execut • ves of Cl^i^qu^ 4 aapy^.,^eu ^^^., T^-T^0-T Proffer, wh^ch the complaints
rely upon, also recites that senior executives of Chiquita approved the payments. Indeed, the
plaintiffs in the ATS cases have argued that "the conduct giving rise to the injury felt in
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Colombia occurred in Ohio" and that Ohio law may apply "because the decisions made by
Chiquita in Ohio arguably violated the conduct-regulating norms of Ohio law." T.d. 252,
Attachment A, at 18. They have also asserted that Chiquita's actions were "conducted in Ohio"
and that they "were not masterminded in Colombia." Id. at 19. As a result, had the court of
appeals properly interpreted the policy language, it should have affirmed the trial court's ruling
that the occurrence took place in the coverage territory.
Rather than following Safeco, the court of appeals attempted to distinguish it, but the
court's purported distinctions are unpersuasive. First, the court noted that, in this case, the third
party who committed the intentional tort was not an insured under the policy, whereas in Safeco
the third party was also an insured. Op. 7 ¶ 16. But the third party's status as an insured in
Safeco made it more difficult for the policyholders to show that they were entitled to coverage,
because the other insured's intentional misconduct arguably provided a basis for denying
coverage as to all insureds. As a result, the fact that Chiquita's policies do not also cover the
third parties who committed intentional torts-the armed Colombian groups-makes the
coverage determination easier in this case. Second, the court stated that "[t]he negligence claims
against Chiquita arise from its own intentional acts, not the acts of another insured party." Id.
As discussed above, the relevant question is whether Chiquita intended to cause harm, not
whether its acts were intentional. See supra pp. 9-10. Moreover, the underlying complaints
make clear that Chiquita did not murder anyone in Colombia. The allegations are that-as a
result of Chiquita's conduct in Ohio-armed groups in Colombia committed murders.
riavirig p°urpolled to distiiiguish Safeco, the co,,,'t of appeals relied on decisions of out-of-
state courts applying the laws of other states. Op. 9-12 ¶¶ 22-28 (discussing Ace Am. Ins. Co, v.
RC2 Corp., 600 F.3d 763, 767-68 (7th Cir. 2010) (applying Illinois law); CACIInt'l, Inc. v. St.
- 15-
Paul Fire & Marine Ins. Co., 566 F.3d 150 (4th Cir. 2009) (applying Virginia law)). Those
decisions assert that there is a "rule" extraneous to the language of the insurance policies that
requires that the place of an occurrence be determined by reference to the place where the injury
occurred. The courts derived this "rule" from older decisions by other courts that were
interpreting different policies with different language under the law of different states. Many of
those decisions were issued before 1986, when the standard form policies expressly provided that
the policies would only apply to bodily injury or property damage that occurred in the policy
territory. Under Ohio law, insurance policies are contracts that should be interpreted in
accordance with their terms. The language of the standard form used in the policies at issue in
this case was amended in 1986 to make clear that insurers are obligated to provide coverage for
claims for bodily injuries that take place outside the U.S. if such injuries are allegedly caused by
an occurrence that took place in the United States. In this case-as the trial court found-the
relevant occurrence took place in the United States.
CONCLUSION
For the foregoing reasons, this case involves issues of public and great general interest.
The Court should accept jurisdiction and review these important issues on the merits.
Yvette McGee Brown (0030642) Stuart Dornette (0002955)Jones Day Taft Stettinius & Hollister
325 John H. McConnell Blvd LLPSuite 600r_ i___ nu ^LOIUfflb'^15, vii 4
2Y 2 1 v
614-281-3867
425 Walnut StreetClµite 1 800
Cincinnati, OH 45202513-357-9353
Respectfully submitted,
wy^'t^r.w^ ^ J Lw^William P. Skinner (2313-2013)Robert A. Long (2358-2013)Mark W. Mosier (3833-2013)Covington & Burling LLP1201 Pennsylvania Ave., NWWashington, DC 20004202-662-5470
Attorneys for Plaintiff-Appellant Chiquita Brands International, Inc.
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
CHIQUITA BRANDS . APPEAL NO. C-120019
INTERNATIONAL, INC., TRIAI. NO. A-o8o8934
Plaintiff-Appellee,
vs.
NATIONAL UNION FIREINSURANCE COMPANY OFPITTSBURGH, PA.,
OPINION.
PRESENTED TO THE CLERKOF COURTS FOR FILING
Third-Party Defendant-Appellant,
and
FEDERAL INSURANCE COMPANY,et al.,
Defendants/Third-PartyPlaintiffs.
MAR 0 ti ZG' :3
COURT OF APPEALS
Civil Appeal From: Hamilton County Court of Common Pleas
Judgment Appealed From Is: Reversed and Cause Remanded
Date of Judgment Entry on Appeal: March 6, 2013
Jacobs, Kleinman, Seibel & McNally and Kenneth F. Seibel, and Covington &
Burling, LLP, and William P. Skinner, for Plaintiff-Appellee,
Bates Carey Nicolaides LLP, Richard H. Nicolaides, Jr., Barbara L. Michaelides,
Agelo L. Reppas, and Reminger and Joseph W. Borchelt, for Third-Party Defendant-
Appellant.
Please note: this case has been removed from the accelerated calendar.
1
OHIO FIRST DISTRICT COURT OF APPEALS
DRqMLACx.Ex, Judge.
{¶1} Plaintiff-appellee Chiquita Brands International, Inc. ("Chiquita"),
filed a declaratory judgment action against defendants/third-party plaintiffs, Federal
Insurance Company, American Motorists Insurance Company, and Lumbermens
Mutual Casualty Company. In its complaint, Chiquita asked the trial court to declare
that the insurance companies had a duty to defend Chiquita in numerous tort claims
that had been filed against it. Those claims alleged that from 1989 through 2004,
Chiquita had illegally financed terrorist groups in Columbia, and that the plaintiffs in
those suits had suffered damage as a result of the terrorists' operations. Chiquita
also contended that the insurance companies had breached the insurance contracts
for failing to provide defenses and coverage in the underlying tort actions.
{¶2} Federal, American Motorists and Lumbermens Mutual filed a third-
party complaint against third-party defendant-appellant National Union Fire
Insurance Company of Pittsburgh, PA ("National Union"), which had insured
Chiquita under a series of one-year policies from July 1992 to July 20oo. They asked
the court to declare that National Union had a duty to defend Chiquita in the
underlying tort actions, and that, to the extent the court might find. that they had a
duty to defendant Chiquita, they were entitled to contribution and indemnity from
National Union.
{13} National Union then asserted a direct claim against Chiquita, asking
n thP° __ '_ ._^_°*iithe court to d-ecl- are tn-, at. •.it ,ai ,a not hav-- a d--u^ ,^ to}o de.e^=°'.,l or ;^nif, Cl:^iq--•---^lita i--- the
underlying suits, and that if it did, it was entitled to contribution from the other three
2
OHIO FIRST DISTRICT COURT OF APPEALS
insurance companies. Chiquita then filed a counterclaim against National Union,
alleging that it, too, had a duty to defend Chiquita in the underlying suits.
{¶4} While the case was pending, Chiquita settled with Federal, American
Motorists and Lumbermens Mutual. Both Chiquita and National Union filed
motions for summary judgment. The trial court granted Chiquita's motion in part.
It held that National Union had a duty to defend Chiquita in the underlying suits as a
matter of law. The court also found that issues of fact existed as to other issues in the
case, and denied the motions for summary judgment on those issues.
{¶5} After a bench trial, the trial court determined the amount of defense
costs for which National Union was required to reimburse Chiquita. It also found
that National Union was responsible for all losses that occurred during the time its
policies were effective. National Union has filed a timely appeal from that judgment.
{4R6} National Union presents two assignments of error for review. In its
first assignment of error, it contends that the trial court erred in finding that it had a
duty to defend Chiquita in the underlying lawsuits. It argues that the underlying
actions do not allege an "occurrence" as defined in the policies because Chiquita
faced liability only for intentional conduct. It also argues that all the injuries for
which Chiquita faced liability occurred in Columbia, outside of the National Union's
policies' coverage territory. This assignment of error is well taken.
{1f7} An insurance policy is a contract, and the relationship between the
insurer and the insured is purely contractual in nature. I'Vai3onwidc'• Mu.t. i1-ts• 170• -V.
Marsh, 15 Ohio St.3d 107, 109, 472 N.E.2d io6i (1984). The interpretation and
construction of insurance policies is a matter of law to be determined by the court
3
OHIO FIRST DISTRICT COURT OF APPEALS
using rules of construction and interpretation applicable to contracts generally.
Gomolka v. State Auto. Ins. Co., 7o Ohio St.2d 166, 167-168, 436 N.E.2d 1347 (1982),
Equity Diamond Brokers, Inc. v. Transnatl. Ins. Co., i5l Ohio App.3d 747, 2003-
Ohio-1o24, 785 N.E.2d. 816, ¶ 1o (ist Dist.). Where an insurance policy's provisions
are clear and unambiguous, courts must apply the terms as written and may not
enlarge the contract by implication to embrace an object distinct from that
contemplated by the parties. Gomolka at 168; Equity Diamond Brokers at 1( ii.
{1[8} An insurer's duty to defend is broader than the duty to indemnify.
Sharonville v. Amer. Emp. Ins. Co., io9 Ohio St.3d 186, 20o6-Ohio-218o, 846
N.E.2d 833, ¶ 13; Westfield Ins. Co. v. Factfinder Mkting. Research, Inc., i68 Ohio
App=3d 391, 2oo6-Ohio-4380, 86o N.E.2d 145, 115 (ist Dist.). When the allegations
in the complaint or any allegations arising after the complaint state a claim that is
potentially within the policy coverage, the insurer must accept the defense of the
claim, regardless of the ultimate outcome or the insurer's ultimate liability.
Sharonville at ¶ 13; Willoughby Hills v. Cincinnati Ins. Co., 9 Ohio St.3d 177, 179,
459 N.E.2d 555 (1984); Westfield Ins. at ¶ 15. When an insurer must provide a
defense on a claim, it must defend the insured on all the other allegations, regardless
of whether they are related to the insurance-policy coverage. Sharonville at ¶ 13;
Westfield Ins. at 115.
{19} But a duty to defend does not attach where the conduct alleged is
1 YT- - . r ^i .,. r ^ +q ^1indisputably outside the scope of coverage. ..^r^aronuule at ¶^^, ►^^ es^r eLu ns. at ¶41 ^5=
The insured bears the burden to show that its loss was covered under the policy.
Chicago Title ins. Co. v. Huntington Natl. Bank, 87 Ohio St.3d 270, 273, 719 N.E.2d
4
OHIO FIRST DISTRICT COURT OF APPEALS
955 (1999); Fairfield Machine Co., Inc. v. Aetna Cas. & Sur. Co., 7th Dist. No. 2000
CO 14, 2001-Ohio-34o7, 1 22; Sterling Merchandise Co. v. Hartford Ins. Co., 30
Ohio App.3d 131, 137-138, 5o6 N.E.2d 1192 (9th Dist.i986).
t¶10} In this case, the policy covers "bodily injury" if the "bodily injury ***
is caused by an occurrence that takes place in the coverage territory." An
"occurrence" is "an accident, including continuous or repeated exposure to
substantially the same general harmful conditions." Thus, the policies cover only
accidental occurrences, not intentional acts. See Gearing v. Nationwide Ins. Co., 76
Ohio St.3d 34,38, 665 N.E.2d 1115 (1996).
{¶11} Further, Ohio public policy generally prohibits obtaining insurance to
cover damages caused by intentional torts. Id. Thus, inherent in a policy's definition
of "occurrence" is the concept of an incident of an accidental, as opposed to an
intentional, nature. Id.; Morner v. Giuliano, 167 Ohio APP.3d 785, 20o6-Ohio-2943,
857 N.E.2d 602, 1I 25 (12th Dist.). "Liability insurance does not exist to relieve
wrongdoers of liability for intentional, antisocial or criminal conduct." Gearing at
38.
t¶12} In finding that National Union had a duty to defend Chiquita, the trial
court examined the complaints in the underlying actions. It stated that "[t]hese
complaints all make serious allegations of intentional even malicious conduct against
Chiquita. However, each complaint, to some extent makes allegations of negligence.
- - ..^s win
,i on t tne^ir
_•_ tcia_:uu^^.. oiru^viit .,a,.^.±;....i= 1
I have no idea whether the Plaintitt prevaiva=
misconduct and/or negligent misconduct. Those are questions for a trier of fact to
determine." It went on to find that based solely on the allegations in those
5
OHIO FIRST DISTRICT COURT OF APPEALS
complaints, National Union owed Chiquita a defense. We disagree with the court's
reasoning.
{T13} In finding that National Union owed Chiquita a duty to defend, the
trial court relied on Safeco Ins. Co. of Am. v. White, 122 Ohio St.3d 562, 2oo9-Ohio-
3718, 913 N.E.2d 426. In that case, 17-year-old Benjamin White stabbed Casey
Hilmer, the 13-year-old daughter of Steven and Megan Hilmer. Id. at 1 5. The
Hilmers sued Benjamin and his parents, Lance and Diana White, raising multiple
claims, including battery against Benjamin. and negligent supervision, negligent
entrustment, and negligent infliction of emotional distress against Lance and Diana.
A jury found in favor of the Hilmers. The Whites had a homeowner's policy and a
separate umbrella policy with Safeco Insurance Company of America. Safeco argued
that it had no duty to defend Lance and Diana White because any claim against them
arose out of their son's intentional act.
{¶14} The Supreme Court held:
1. When a liability insurance policy defines an "occurrence" as an
"accident," a negligent act committed by an insured that is predicated
on the commission of an intentional tort by another person, e.g.,
negligent hiring or negligent supervision, qualifies as an "occurrence."
2. Insurance-policy exclusions that preclude coverage for injuries
expected or intended by an insured, or injuries arising out of or caused
by the insured's intentional or illegal acts, do not preclude coverage for
the negligent actions of other insureds under the same policy that are
6
OHIO FIRST DISTRICT COURT OF APPEALS
predicated on the commission of those intentional or illegal acts, e.g.
negligent hiring or negligent supervision. (Emphasis added.)
Id. at paragraphs one and two of the syllabus.
{¶15} While acknowledging that the policy exclusions relating to intentional
and illegal acts "plainly applied" to Benjamin's acts, the Supreme Court emphasized
the "separate nature" of the negligent-supervision and negligent-entrustment torts
against his parents. To succeed on those claims, the Hilmers had to show that Lance
and Diana had breached their duty to supervise Benjamin and not to entrust him
with a dangerous instrument, and that those breaches proximately caused their
injuries. Id, at 134-35• The court stated, "In this case, neither Lance nor Diane
intentionally injured Casey Hilmer. From their perspective, the injury was
accidental, and thus the act that caused her injury constitutes an "occurrence" as
defined in the policies they purchased from Safeco." Id. at ¶ 27.
{¶16} In this case, the negligence claims in the underlying suits do not stem
from the negligent actions of an insured arising from the intentional act of another
insured. The negligence claims against Chiquita arise from its own intentional acts,
not the acts of another insured party. Therefore, the holding in Safeco does not
apply. See Sanders U. Nationwide Mut. Ins. Co., 8th Dist. No. 95228, 2ols.-Ohio-
1933, ¶ 18-20.
{4f17} Further, the trial court stated that Safeco applied without examining
the nature of the underlying negligence claims. "Tne mere insinuation of negiigerice
in a civil suit complaint cannot transform what are essentially intentional torts into
something 'accidental' that might be covered by insurance." Snowden v. Hastings
7
OHIO FIRST DISTRICT COURT OF APPEALS
Mut. Ins. Co., 177 Ohio App.3d 209, 2oo8-Ohio-1540, 894 N.E.2d 336, 1 13 (7th
Dist.). Accord Motorists Mut. Ins. Co. v. Merrick, iith Dist. Nos. 98-T-o188 and
98-T-oi89, 1999 Ohio App. LEXIS 5240, *8 (Nov. 5, 1999); Snelt v. Kataflas, 2d
Dist. No.17440,1g99 Ohio App. LEXIS 997, *13 (Mar.19,1999).
{¶18} Our review of the record shows that although the underlying
complaints set forth some causes of action sounding in negligence, those causes of
action were all based on Chiquita's alleged intentional conduct. The complaints
alleged that Chiquita was both directly and vicariously liable for the deaths and
injuries of numerous people through murder, torture, kidnapping and other
atrocities. They claimed that Chiquita aided and abetted, conspired with, and
particiated in a joint criminal enterprise with the terrorists. The complaints did not
allege conduct that could be reasonably construed as negligent or accidental.
Therefore the conduct alleged in the complaints for which Chiquita sought coverage
and defense did not constitute "occurrences" within the meaning of the policy
language.
{¶19} We note that the National Union policies also contained exclusions for
"bodily injury" or "property damage„ "expected or intended from the standpoint of
the insured." We need not reach the issue of whether those exclusions apply because
we hold that the conduct alleged in the underlying cases did not constitute
"occurrences." Because the conduct in those complaints was outside the scope of
coverage, National Union did not have a duty to defend Chiquita in the underiying
suits or to indemnify Chiquita should it eventally be found to be liable for damages in
those suits.
8
OHIO FIRST DISTRICT COURT OF APPEALS.
{¶20} National Union also argues that all the injuries for which Chiquita
faced liability occurred in Columbia, outside of its policies' coverage territory. We
agree. National Union's policies stated that it would pay damages for injuries caused
by an "occurrence" in "the coverage territory." The policies defined the "coverage
territory" as "[t]he United States of America (including its territories and
possessions), Puerto Rico and Canada." Chiquita had purchased policies from the
settling insurance companies to cover its foreign liability.
{¶21} In ruling on the motions for summary judgment, the trial court stated
that "[t]he allegations of negligence in the various complaints meet the coverage
territory requirement in all the insurance policies at issue since the negligence may
well have taken place within the coverage territory." Following a bench trial, the trial
court found that the decision to pay the terrorist groups was made at Chiquita's
corporate headquarters in Cincinnati, Ohio. The employees in Columbia simply
implemented that policy with the goal of protecting Chiquita's employees and
property. Therefore, the trial court concluded, the location of the occurrence was
within the coverage territory. We disagree with that conclusion.
(¶22} We find no Ohio cases directly on point, but the "great weight of case
law" from other jurisdictions holds that "it is the location of the injury-not some
precipitating cause-that determines the location of the event for purposes of
insurance coverage." ACE Am. Ins. Co. v. RC2 Corp., Inc., 6oo F.3d 763, 768 (7th
Cir.2010). Accord CACIInternatl., Inc. v. St. Paul Fire & Nlarine Ins. Co., 666 r.3d
150, i66-i57 (4th Cir.2009).
9
OHIO FIRST DISTRICT COURT OF APPEALS
{¶23} The issue frequently arises in cases involving the place of an
"occurrence," such as where, as in the present case, an injury is sustained outside of
the United States because of some act or omission in the United States and the
disputed policy limits coverage to the United States. "The location of an `occurrence'
is determined by the place where the injury happened; it does not matter that a
precipitating event took place elsewhere." Farmers Alliance Mut. Ins. Co. v.
Salazar, 77 F.3d 1291, 1296 (loth Cir.1996). See also DeWitt v. Nationwide Mut.
Fire Ins. Co., 1o9 Ohio App.3d 716, 720-721, 672 N.E.2d 1104 (llth Dist.1996);
Flintcote Co. v. Gen. Acc. Assurance Co. of•Canada, 41o F.Supp.2d 875, 891-892
(N.D.Ca1.20o6).
{¶24} For example, in ACE, the insurance policy contained an exclusion for
occurrences that took place in the United States. The underlying suits involved
products using lead paint that were sold and used exclusively in the United States,
but manufactured in China. The insurance company argued that the "occurrence"
took place in the United States where purchasers of the products were exposed to
lead paint. The manufacturer argued that the "occurrence" took place in China
where the negligent acts that "caused" the harm took place.
{¶25} The federal district court accepted the manufacturer's argument. It
found that notwithstanding the exclusion, the policies potentially extended coverage
for injuries that occurred in the United States if some negligent act in the process of
the product's manufacturing that caused harm occurred in another country.
Therefore, it held that the insurance company had a duty to defend the
manufacturer.
10
OHIO FIRST DISTRICT COURT OF APPEALS
{1126} The Seventh Circuit Court of Appeals reversed, stating that "the
policies are clear that the `occurrence' that triggers coverage takes place where the
actual event that inflicts the harm takes place. And based on the undisputed facts in
this case, the `occurrence" here happened at the location (or locations) of the
exposure itself: within the United States," ACEAm. Ins., 6oo F.3d at 769. The court
went on to state that accepting the manufacturer's argument "would allow it to sweep
any domestic event into its international policies so long as it posited some
antecedent negligent act that occurred someplace outside the United States." Id.
{¶27} Similarly, in CACI, CACI argued that its insurance company had a duty
to defend it in lawsuits relating to claims of abuse and torture at prisons in Iraq even
though the insurance policies limited coverage to the United States and Canada. The
Fourth Circuit Court of Appeals rejected that argument, stating:
[E]ven assuming that the complaint alleges activities that happened in
the United States, the great weight of case law holds that it is the
location of the injury-not of some precipitating cause-that
determines the location of the event for purposes of insurance
coverage. The reasons for a "place of injury" test are clear. As the
district court noted, applying a "cause in fact" test would let plaintiffs
sweep any number of worldwide events into the ambit of a domestic
policy as long as the underlying complaint alleged negligent
supervision. Therefore, a causal test would create a windfaii for the
insured and render "the insurer responsible for a liability for which it
had not contracted." If domestic policies could be stretched to this
11
OHIO FIRST DISTRICT COURT OF APPEALS
extent, global policies would become superfluous and territorial
coverage limitations would lose their meaning. (Citations omitted.)
CACI Internatl., 566 F.3d at 156-157, quoting Keystone Automated Equip. Co, v.
Reliance Ins. Co., 369 Pa.Super. 472, 535 A.2d 648, 652 (Pa.Super.Ct.i988).
{1[28} We agree with the reasoning of these courts. In this case, the events
that inflicted the harm alleged in the underlying complaints took place in Columbia.
Those events were the "occurrences" as defined in the policies as a matter of law.
Chiquita's decision to pay the terrorists was merely a precipitating event.
Consequently, the "occurrences" did not happen in United States, the coverage
territory. Therefore, the conduct in the underlying complaints was not within the
scope of coverage, and National Union had no duty to provide Chiquita a defense in
the underlying suits.
{129} In sum, we find no issues of material fact. Construing the evidence
most strongly in Chiquita's favor, reasonable minds can come to but one
conclusion-that National Union did not have a duty to defend Chiquita in the
underlying suits because those suits did not allege conduct that constituted an
"occurrence" in the coverage territory. National Union was entitled to judg -mentas a
matter of law, and the trial court erred in failing to grant summary judgment in favor
of National Union. See Temple v. Wean United, Inc., 5o Ohio St.2d 317, 327, 364
N.E.2d 267 (1977); Greene v. Whiteside, i81 Ohio App.3d 253, 2oo9-Ohio-741, 9o8
N.E.2d 975, ¶ 23 (lst Dist.) The court further erred in granting partial summary
judgment in favor of Chiquita, and in holding a bench trial on the alleged factual
issues.
i2
OHIO FIRST DISTRICT COURT OF APPEALS
{¶30} Consequently, we sustain National Union's first assignment of error,
and we reverse the trial court's judgment in favor of Chiquita. We remand the matter
to the trial to enter judgment in favor of National Union, and to consider whether
National Union is entitled to repayment of any defense costs it has already paid.
{¶31} Our ruling on National Union's first assignment of error renders its
second assignment of error moot, and we decline to address it. See App.R.
12(A)(1)(c); Internatl. Assn. of Bridge, Structural, Ornamental & Reinforcing Iron
Workers, Local 372 v. Sunesis Constr. Co., 183 Ohio App.3d 438, 2009-Ohio-3729,
917 N.E.2d 343,1f 26 (i.st Dist.).
Judgment reversed and cause remanded.
Hu.nEaRAvDT, P.J., and HEvnorr, J., concur.
Please note:The court has recorded its own entry on the date of the release of this opinion.
13
CERTIFICATE OF SERVICE
The undersigned hereby certifies that he has directed that Chiquita's notice of appeal and
memorandum in support of jurisdiction, including the attached copy of the opinion and judgment
entry of the court of appeals, be served by e-mail and First Class Mail on the following:
Richard H. Nicolaides, Jr.Barbara I. MichaelidesAgelo L. ReppasBates Carey Nicolaides LLP191 North Wacker Drive, Suite 2400Chicago, IL 60606(312) [email protected]@[email protected]
Joseph W. Borchelt (0075387)Reminger525 Vine Street, Suite 1700Cincinnati, OH 45202(513) [email protected]
Counsel for Defendant-Appellee National Union Fire Insurance Co. of Pittsburgh, Pa.
William P. Skinner
April 18, 2013
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