Fairless v. Acuity, A Mut. Ins. Co.

1

2022-Ohio-10

JOSEPH FAIRLESS, and BAYBERRY CROSSING, LLC, Plaintiffs-Appellees/Cross-Appellants, v. ACUITY, A MUTUAL INSURANCE COMPANY, Defendant-Appellant/Cross-Appellee.

No. C-210165

Court of Appeals of Ohio, First District, Hamilton

January 5, 2022

Hamilton County Court of Common Pleas Trial No. A-1800263

Judgment Appealed From Is: Affirmed

Stagnaro, Saba, & Patterson Co., LPA, Jeffrey M. Nye and Joshua Smith, for Plaintiffs-Appellees/Cross-Appellants,

Lewis Brisbois, Bisgard & Smith LLP, Judd R. Uhl and Katherine L. Kennedy, for Defendant-Appellant/Cross-Appellee.

OPINION

ZAYAS PRESIDING JUDGE

{¶1} This case concerns an insurance coverage dispute in the context of the duty to defend. Defendant-appellant/cross-appellee Acuity, A Mutual Insurance Company, ("Acuity") brings this appeal to challenge the trial court's grant of summary judgment in favor of plaintiffs-appellees/cross-appellants Bayberry Crossing, LLC, ("Bayberry") and Joseph Fairless ("Fairless"), arguing in a sole assignment of error that the trial court erred in determining that it had a duty to defend the underlying action. Plaintiffs-appellees/cross-appellants Bayberry and Fairless bring their cross-appeal to challenge the trial court's award of damages, arguing in a sole assignment of error that the trial court erred in declining to award them their reasonable attorney fees and costs for the present litigation. For the following reasons, we overrule both assignments of error and affirm the judgment of the trial court.

Facts

Background Information

{¶2} In 2016, Gavin Connor filed a complaint against Brookmeadow, LTD., ("Brookmeadow") alleging that, on or about November 3, 2014, he fell and suffered injury due to a dangerous condition on the premises at 15 Montgomery Way, Amelia, Ohio.

{¶3} On July 5, 2017, Brookmeadow filed a third-party complaint against Bayberry and Fairless, alleging claims for indemnity, contribution, and negligence. The relevant allegations from the complaint are:

3. [Conner] filed his complaint against Defendant/Third Party Plaintiff Brookmeadow, Ltd., * * * in the Clermont County Court of Common Pleas, * * * claiming damages resulting from personal injuries allegedly sustained at the property located at 15 Montgomery Way, Amelia, Ohio, 45102 (hereinafter "Premises").

4.[Conner's] Complaint alleges that on or about November 3, 2014 he sustained personal injuries as the result of the failure of Defendant/Third-Party Plaintiff's [sic] to properly maintain the Premises at 15 Montgomery Way, Amelia, Ohio 45102.

5.On or about June 5, 2013, Third Party Plaintiff entered into a Lease with Option to Purchase Agreement with Third-Party Defendant, Joe Fairless. A true and accurate copy of the Lease with Option to Purchase Agreement (hereinafter "Lease") is attached hereto as Exhibit 1.

6. Upon information and belief, on or about July 12, 2013, Third-Party Defendant Joe Fairless assigned his interest in the Lease to Bayberry Crossing, LLC. (See Contract for Sale attached hereto as Exhibit 2).

7. The Lease required Third-Party Defendants Bayberry Crossing, LLC and Joe Fairless to maintain the Premises in good repair and condition. (See Exhibit 1).

8. The Lease required Third-Party Defendants Bayberry Crossing, LLC and Joe Fairless to perform all necessary repairs and maintenance in order to bring the Premises in compliance with all laws, ordinances and regulations and other governmental orders.

9. Upon information and belief, Bayberry Crossing, LLC, was the Lessor, operator and manager of Bayberry Apartments, 15 Montgomery Way, Amelia, Ohio 45102 at the time Plaintiff alleges he sustained personal injuries on the Premises.

{¶4} The "Lease with Option to Purchase Agreement" and the contract for sale, entitled "Purchase, Sale, and Assignment Agreement," were attached and incorporated into the complaint.

{¶5} The "Lease with Option to Purchase Agreement" shows that, on June 5, 2013, Brookmeadow, as lessor and Fairless, as lessee, entered into a 53-month- and-two-day lease agreement for the property located at 15 Montgomery Way, Amelia, Ohio. The property was a 168-unit apartment complex known as Bayberry Crossing. Under the agreement, Fairless was to pay monthly rent to Brookmeadow and was to assume "all obligations under all leases and rental agreements with existing tenants at the Premises." The lease had the following relevant provisions:

11. Maintenance and Repair: Lessee, at its sole discretion, shall keep and maintain the Premises and buildings and improvements and all other portions of the Premises (including, but not limited to, all heating, air conditioning, plumbing and electrical equipment and apparatus, driveways, parking areas and landscaping) in good repair and condition and shall make all repairs, replacements and renewals, whether structural or non-structural, foreseen or unforeseen, ordinary or extraordinary, interior or exterior, necessary to put or maintain the Premises in that state of repair and condition. Lessee expressly waives the right to (a) require lessor to maintain, repair or rebuild all or any part of the Premises, or (b) to make repairs at the expense of Lessor pursuant to any legal requirement, contract, agreement, covenant, condition or restriction at any time in effect.

** *

14. Insurance: Lessee shall, during the Term, keep in force and effect such insurance as Lessee deems appropriate, with coverage and limits no less than as required under the mortgage. The policy shall name Lessor and Lender as additional insureds, and shall provide that the insurer may not cancel or change the insurance coverage in any respect without first giving Lessor and Lender ten (10) days prior written notice. Lessee shall pay for all insurance coverage related to the Premises. A copy of the policy or a certificate of insurance shall be delivered to Lessor on or before the Commencement Date and whenever replaced. In the event of loss, any insurance proceeds payable by reason of such loss shall be paid pursuant to the Loan Documents. Lessee covenants and agrees that it will neither do nor permit to be done any act or thing on the Premises or elsewhere which will invalidate any insurance on the Premises or increase the premiums for insurance thereon.

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23. Conditional Assignment of Rents and Leases: Beginning on the Commencement Date and continuing during the Term so long as Lessee is not in default under the Lease, Lessor authorizes Lessee to assume the management and operation of the Premises, including collection of rents and income under all currently existing and future tenant leases, rents, and security deposits for apartments located on the Premises during the entirety of the Term. Lessee's rights under this Section shall immediately terminate upon any default by Lessee.

38. Miscellaneous: b. Heir and Assigns: This lease with Option to Purchase Agreement shall not be assigned by Lessee without the prior consent of the Lessor, such consent shall not be unreasonably withheld. This Lease with Option to Purchase Agreement shall be binding on and inure to the benefit of Lessee and Lessor and their respective heirs and assigns, successors, administrators, trustees, representatives and executors.

{¶6} The "Purchase, Sale and Assignment Agreement," shows an agreement from 2016 which purports to sell the property to "15 Montgomery Way LLC." The agreement listed Bayberry as the "seller," Fairless as the "original lessee," and Brookmeadow as the "fee owner." Of relevance, the agreement asserted that Fairless assigned all his interest in the "Lease Option Agreement" to Bayberry on or about July 12, 2013. Additionally, the agreement stated that the property was "operated" by Bayberry.

The Insurance Policy

{¶7} A "Commercial General Liability Coverage" policy was in place with Acuity at the time of the alleged injury. On the first page of the policy, the Renewal Declarations page, it lists "BROOKMEADOW LTD AN OHIO LLC DBA BAYBERRY CROSSING" as the "First Named Insured."

{¶8} Per the policy, the words "you" and "your" refer to the "Named Insured shown in the Declarations, and any other person or organization qualifying as a Named Insured under this policy." The words "we," "us," and "our" refer "to the Company providing the insurance.

{¶9} Section I concerns coverages under the policy. In relevant part, the coverage A section states:

We will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies. We will have the right and duty to defend the insured against any suit seeking those damages. However, we will have no duty to defend the insured against any suit seeking damages for bodily injury or property damage to which this insurance does not apply.

(Emphasis sic.)

{¶10} Section II concerns who is an insured under the policy. In relevant part, this section lists the following as insured:

1.c. If you are designated in the Declarations as: A limited liability company, you are an insured. Your members are also insureds, but only with respect to the conduct of your business. Your managers are insureds, but only with respect to their duties as your managers.

2.b. Any person (other than your employee) or volunteer worker or any organization while acting as your real estate manager.

(Emphasis sic.)

{¶11} "Real estate manager" is not defined in the policy. Later in the policy, there are two amendments to Section II which are entitled "Additional Insured." The first is for the "mortgagee," Union Central Life Insurance Company. The second is for the "Co-Owner of Insured Premises," "Bayberry Inc." The address listed for "Bayberry Inc" is 15 Montgomery Way Amelia, Ohio. It states that Section II is "amended to include...