Sherwin-Williams Co. v. Certain Underwriters at Lloyd's London

1

2024-Ohio-5773

Sherwin-Williams Company, Appellee, v. Certain Underwriters at Lloyd's London et al., Appellants.

No. 2023-0255

Supreme Court of Ohio

December 10, 2024

Submitted October 24, 2023

Appeal from the Court of Appeals for Cuyahoga County, No. 110187 2022-Ohio-3031.

Jones Day, Leon F. DeJulius, Mark J. Andreini, Amanda R. Parker and Anderson T. Bailey; and Hilow & Spellacy and James R Wooley, for appellee.

McCarthy, Lebit, Crystal & Liffman Co., L.P.A., David A. Schaefer, and Nicholas R. Oleski; and Zuckerman Spaeder L.L.P., Carl S. Kravitz, Jason M. Knott, and Nicholas M. DiCarlo, for appellants Certain Underwriters at Lloyd's, London; World Marine and General Insurance Corporation Ltd.; World Auxiliary Insurance Company Ltd.; The Victory Insurance Company Ltd.; New London Reinsurance Company Ltd.; Scottish Lion Insurance Company Ltd.; Winterthur Swiss Insurance Company; Yasuda Fire & Marine Insurance Company (UK) Ltd.; Yasuda, UK; Government Employees Insurance Company; and Berkshire Hathaway Direct Insurance Company, f.k.a. American Centennial Insurance Company.

Weston Hurd, L.L.P., and Gary W. Johnson; Aronberg Goldgehn Davis & Garmisa, Mitchell S. Goldgehn, and Daniel J. Berkowitz, for appellant Allstate Insurance Company.

Reminger Co., L.P.A., Clifford C. Masch, and Brianna M. Prislipsky; and Dentons US, L.L.P., Keith Moskowitz, and Shannon Y. Shin, for appellants American Casualty Company of Reading Pennsylvania; Columbia Casualty Company; Continental Casualty Companies; and The Continental Insurance Company.

Roetzel & Andress, L.P.A., Ronald B. Lee, and Laura M. Faust; and Chaffetz Lindsey, L.L.P., Charles J. Scibetta, and Ted DeBonis, for appellants American Home Assurance Company; Lexington Insurance Company; National Union Fire Insurance Company of Pittsburgh, Pa.; and The Insurance Company of the State of Pennsylvania.

Seeley, Savidge, Ebert & Gourash Co., L.P.A., Daniel F. Gourash, and Robert D. Anderle; and O'Melveny & Myers, L.L.P., and Jonathan D. Hacker, for appellants Century Indemnity Company; Westchester Fire Insurance Company; and Federal Insurance Company.

Kohrman, Jackson & Krantz, L.L.P., and Maribeth Meluch; and Mendes & Mount, L.L.P., and Matthew B. Anderson, for appellants Certain London Market Companies; Fidelidade Insurance Co. of Lisbon; Guildhall Insurance Co. Ltd.; Helvetia-Accident Swiss Insurance Co.; London & Edinburgh Per HUA Pool and Per Tower X; National Casualty Co.; National Casualty Co. of America Ltd.; River Thames Insurance Co. Ltd.; The Royal Scottish Insurance Co. Ltd.; Southern Insurance Co. Ltd.; Swiss National Insurance Co. Ltd.; Swiss Re International; Terra Nova Insurance Co. Ltd.; Trent Insurance Co. Ltd.; and Cavello Bay Reinsurance Ltd.

Willman & Silvaggio, and Anna M. Sosso, for appellant Employers Mutual Casualty Company.

McCarthy, Lebit, Crystal & Liffman Co., L.P.A., and David A. Schaefer; and Rivkin Radler, Lawrence A. Levy, and Michael Kotula, for appellants National Surety Corporation; Allianz Global Risks U.S. Insurance Company, f.k.a. Allianz Insurance Company; and American Insurance Company.

Cavitch Familo & Durkin, and Gregory E. O'Brien; and Ruggeri Parks Weinberg, L.L.P., James P. Ruggeri, Joshua D. Weinberg, and Joshua P. Mayer, for appellants First State Insurance Company; Nutmeg Insurance Company; and Twin City Fire Insurance Company.

Burns White, L.L.C., and Kevin C. Alexandersen, for appellant Great American Insurance Co.

Weston Hurd, L.L.P., and Gary W. Johnson, for appellant American Alternative Insurance Corporation.

Weston Hurd, L.L.P., and Gary W. Johnson; and Crowell & Moring, L.L.P., and Laura A. Foggan, for appellants North River Insurance Company; TIG Insurance Company; Mount McKinley Insurance Co.; and United States Fire Insurance Co.

Sutter O'Connell Co. and Matthew C. O'Connell, for appellant Royal Indemnity Company.

Roetzel & Andress, L.P.A., Ronald B. Lee, Laura M. Faust, and Phillip M. Sarnowski; and Simpson Thacher & Bartlett, L.L.P., and Bryce L. Friedman, for appellants Travelers Casualty and Surety Company; St. Paul Fire & Marine Insurance Company; and Gulf Insurance Company.

Janik, L.L.P., and Crystal L. Maluchnik; and Skarzynski Marick & Black, L.L.P., and James H. Kallianis Jr., for appellant Zurich American Insurance Company.

Roetzel & Andress, L.P.A., Emily K. Anglewicz, and Bradley L. Snyder; and Walker Wilcox Matousek, L.L.P., Alla Cherkassky Galati, and Arthur J. McColgan, for appellant Westport Insurance Corporation, f.k.a. Employers Reinsurance Corporation.

Rutter & Russin, L.L.C., Robert P. Rutter, and Robert A. Rutter, urging affirmance on behalf of amicus curiae United Policyholders.

McCarter & English, L.L.P., Sheila Kles, Sherilyn Pastor, and Jennifer Black Strutt, urging affirmance on behalf of amici curiae Product Liability Advisory Council, Inc.; and the National Association of Manufacturers.

Calfee, Halter & Griswold, L.L.P., Matthew A. Chiricosta, K. James Sullivan, and Robert F. Sohm, urging affirmance on behalf of amici curiae The Ohio Manufacturers' Association; Avient Corporation; Cleveland-Cliffs, Inc.; Eaton Corporation; GOJO Industries, Inc.; The Goodyear Tire & Rubber Company; Greif, Inc.; The Lincoln Electric Company; Materion Corporation; TimkenSteel Corporation; and Worthington Industries, Inc.

Collins Roche Utley & Garner, and Richard M. Garner, urging reversal on behalf of amicus curiae The Ohio Insurance Institute.

Plunkett Cooney, and Patrick E. Winters, urging reversal on behalf of amici curiae American Property Casualty Insurance Association; Complex Insurance Claims Litigation Association; and National Association of Mutual Insurance Companies.

Deters, J., authored the opinion of the court, which Kennedy, C.J, and Fischer, DeWine, Donnelly, and Brunner, JJ, joined Stewart, J, concurred, with an opinion.

Deters, J.

{¶ 1} This case is about whether a paint company's insurers must indemnify it for money the company was ordered to pay into an abatement fund to mitigate the hazards of lead paint. The trial court determined that the insurers did not have to indemnify the paint company, but the court of appeals reversed. We conclude that because the abatement-fund payment was ordered to prevent future harm to children's health from lead paint, the payment to the fund did not constitute "damages" under the insurance contracts. The Eighth District Court of Appeals erred when it concluded that the insurers were obligated to indemnify the paint company. We therefore reverse the judgment of the court of appeals and reinstate the trial court's entry of summary judgment in favor of the insurers.

I. BACKGROUND

A. The California Lawsuit

{¶ 2} In 2000, Santa Clara County, California, sued Sherwin-Williams and other paint companies. The initial complaint alleged claims for strict liability, negligence, fraud and concealment, unjust enrichment, indemnity, and unfair business practices related to the companies' role in selling and promoting the use of lead-based paint. See Santa Clara Cty. v. Atlantic Richfield Co., 137 Cal.App.4th 292, 299 (2006). Other California governmental entities joined Santa Clara County ("the governmental entities") in the lawsuit, and ultimately, the lawsuit moved forward on only one claim-a public-nuisance claim "on behalf of the People of the State of California."^[1] In the fourth amended complaint, the governmental entities alleged:

As a direct and proximate result of [the paint companies'] conduct, large numbers of people throughout the State of California, and particularly children, have been exposed and/or are being exposed and/or will be exposed to [l]ead in, on and around the contaminated homes, buildings, and other property throughout the State of California, thereby affecting the health, safety, and welfare of each of those children.

{¶ 3} In 2013, the case was tried to the Superior Court of California in Santa Clara County. At the conclusion of the trial, the trial court held that Sherwin-Williams and two other paint companies, NL Industries and ConAgra, ("the paint companies") had created a public nuisance as claimed by the governmental entities, and it ordered the companies to pay jointly and severally $1.15 billion into an abatement fund to be administered by the State of California. People v. Atlantic Richfield Co., 2014 WL 1385823, *61 (Cal.Super.Ct. Mar. 26, 2014). The California trial court explained that the abatement plan would require:

• Testing of interior surfaces in homes to identify both the presence of lead-based paint and the presence of lead-based paint hazards; • Remediation of lead-based paint on friction surfaces (including windows, doors, and floors) by either replacement of the building component or by encapsulation or enclosure of the lead-paint;

• Remediation of lead-based paint hazards in excess of actionable levels on all other surfaces through paint stabilization (as opposed to paint removal, enclosure or encapsulation);

• Dust removal, covering of bare contaminated soil, proper disposal of waste, post-hazard control cleanup and dust testing, and occupant and worker protection;

• Repair of building deficiencies that might cause the corrective measures to fail (e.g. water leaks) to ensure durability of the lead hazard control measures; and

• Education of families and homeowners on lead poisoning prevention and paint-stabilization techniques to remediate lead based paint hazards on non-friction surfaces.

Id. at *56-57.

{¶ 4} The paint companies were to deposit payments into a fund for disbursement by the State of California's Childhood Lead Poisoning Prevention Branch. Id. at *61. The governmental entities would then apply for grants from the fund. Id. at *62. Under the abatement...