Westfield Insurance v. Hunter

[Cite as Westfield Ins. Co. v. Hunter, 128 Ohio St.3d 540, 2011-Ohio-1818.]

WESTFIELD INSURANCE COMPANY, APPELLEE, v. HUNTER ET AL.; GRINNELL

MUTUAL REINSURANCE COMPANY, APPELLANT.

[Cite as Westfield Ins. Co. v. Hunter, 128 Ohio St.3d 540, 2011-Ohio-1818.]

Homeowner’s insurance — Liability coverage — Exclusion for claims arising out

of other premises owned by insured that are not insured under the policy.

(Nos. 2009-2214 and 2010-0024 — Submitted January 19, 2011 — Decided

April 20, 2011.)

APPEAL from and CERTIFIED by the Court of Appeals for Butler County,

Nos. CA2009-05-134 and CA2009-06-157, 2009-Ohio-5642.

__________________

SYLLABUS OF THE COURT

An exclusion in a homeowner’s insurance policy for claims “arising out of”

premises owned by the insured other than the insured location excludes

coverage for premises-based liability claims, such as claims that arise

from the quality or condition of the premises. Moreover, although the

exclusion does not bar coverage of claims that arise from the insured’s

alleged negligence if that negligence is unrelated to the quality or

condition of the premises, it does exclude coverage for claims based upon

the insured’s ownership of the property upon which the injury occurred.

__________________

O’CONNOR, C.J.

{¶ 1} In this appeal, we interpret an exclusion in a homeowner’s policy

that denies coverage for claims “arising out of” premises that are owned by the

insured but are not an insured location under the policy. We hold that an

exclusion in a homeowner’s insurance policy for claims “arising out of” premises

owned by the insured other than the insured location excludes coverage for claims

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that arise from the quality or condition of the premises and claims based merely

upon the insured’s ownership of the property upon which the injury occurred.

{¶ 2} Because the barren record before us does not sufficiently establish

whether the claims raised in the underlying action are claims related to the quality

or condition of the premises or whether the claims are based on another theory of

negligence, we remand the cause to the trial court to make that determination and

then apply our holding.

Relevant Background

{¶ 3} Michael and Marilyn Hunter are Ohio residents who reside in a

home in Hamilton. The Hunters’ Ohio premises are insured by a homeowner’s

policy issued by appellee, Westfield Insurance Company. Westfield’s policy also

provides the Hunters with personal liability coverage for damages arising from

bodily injury or property damages.1 It excludes, however, coverage for claims

“arising out of” premises owned by an insured that are not an insured location.2

1. {¶ a} The policy issued by Westfield states:

{¶ b} “If a claim is made or a suit brought against an insured for damages because of bodily

injury * * * caused by an occurrence to which this coverage applies, we will:

{¶ c} “1. Pay up to our limit of liability for the damages for which the insured is legally liable

* * * ; and

{¶ d} “2. Provide a defense at our expense by counsel of our choice, even if the suit is

groundless, false or fraudulent.” (Boldface sic.)

{¶ e} Thus, the liability coverage provided to the Hunters was for damages they might become

legally obligated to pay if those damages were caused by an “occurrence.” An occurrence is

defined in Westfield’s policy as an accident that results in bodily injury. The parties stipulated

that the accident at issue is an “occurrence” under Westfield’s policy.

2. {¶ a} The exclusion provides:

{¶ b} “1. Coverage E – Personal Liability and Coverage F – Medical Payments to Others

do not apply to bodily injury or property damage:

{¶ c} “ * * *

{¶ d} “ e. Arising out of a premises:

{¶ e} “(1) Owned by an insured;

{¶ f} “(2) Rented to an insured; or

{¶ g} “(3) Rented to others by an insured;

{¶ h} “that is not an insured location.” (Boldface sic.)

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January Term, 2011

{¶ 4} The Hunters own a farm in Indiana that is not a named insured

location under the Westfield policy. Rather, the Hunters purchased liability

insurance from appellant, Grinnell Mutual Reinsurance Company, to insure the

farm.

{¶ 5} On July 7, 2001, the Hunters’ minor grandchild, Terrell Whicker,

and another minor relative, Ashley Arvin, were riding all-terrain vehicles

(“ATV”) on the farm. Terrell was injured in an accident that he alleged was

caused when Ashley drove her vehicle toward Terrell but failed to turn away in

time, thereby running over him and his vehicle. Terrell alleges that he suffered

fractures to his femurs, ankle, and skull, as well as other injuries, as a result of the

accident.

{¶ 6} Terrell and his parents brought suit against Ashley, her mother and

stepfather (who were present at the farm during the incident), and the Hunters.

Insofar as the complaint pertains to Ashley’s mother and stepfather, it pleads a

cause of negligent entrustment. And as pleaded against the Hunters, it alleges that

they knew of Ashley’s “reckless and/or negligent tendencies” and “had the ability

and duty to exercise control” over Ashley, but breached that duty, and that as “a

proximate and foreseeable result of the negligence” of the Hunters, Terrell

sustained injuries. The complaint is devoid of any allegation that a condition on

the property contributed to the incident giving rise to the accident.

{¶ 7} Westfield brought a declaratory-judgment action against Grinnell,

the Hunters, and the Whickers, seeking a declaration that it had no duty to defend

or indemnify the Hunters for the claims asserted in Terrell’s lawsuit. Grinnell

answered and counterclaimed, asserting that both insurers were obligated to

provide coverage, on a pro rata basis, to the Hunters.

{¶ 8} On cross-motions for summary judgment, the trial court granted

Westfield’s motion and denied Grinnell’s and the Whickers’. The court reasoned

that the claims raised by the Whickers “arose out of” premises that were not

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insured by Westfield, i.e., the farm, and therefore that Westfield had no obligation

to defend or indemnify the Hunters for the Whickers’ claims.

{¶ 9} On appeal by Grinnell and the Whickers, the court of appeals

affirmed. Like the trial court, it held that there was no coverage for the Hunters

under the Westfield policy for the Whickers’ claims because the Hunters’ farm

was not an “insured location” under the Hunters’ homeowner’s policy and,

therefore, that coverage was precluded by the “other premises” exclusion. 2009-

Ohio-5642, 2009 WL 3415894, ¶ 36. Grinnell appealed to us for discretionary

review and secured an order from the court of appeals certifying that its decision

in this case is in conflict with that of another court of appeals. We granted

discretionary review, 124 Ohio St.3d 1492, 2010-Ohio-670, 922 N.E.2d 227, and

recognized the conflict, 124 Ohio St.3d 1490, 2010-Ohio-670, 922 N.E.2d 226,

which presents the following question: “When construing an insurance policy

exclusion, does an injury ‘arise out’ of a premises only if some dangerous

condition exists on the premises that caused or contributed to the injury, or must

the injury only originate in or have a causal connection with the premises?” We

answer that question by holding that an exclusion in a homeowner’s insurance

policy for claims “arising out of” premises owned by the insured other than the

insured location excludes coverage for premises-based liability claims, such as

those that arise from the quality or condition of the premises. Moreover, although

the exclusion does not bar coverage of claims that arise from the insured’s alleged

negligence if that negligence is unrelated to the quality or condition of the

premises, it does exclude coverage for claims based upon the insured’s

ownership of the property upon which the injury occurred. Accordingly, we

reverse the court of appeals.

Analysis

A

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{¶ 10} At the outset, we reiterate some well-settled principles of insurance

law that guide us here.

{¶ 11} Ambiguous provisions in an insurance policy must be construed

strictly against the insurer and liberally in favor of the insured. See, e.g., King v.

Nationwide Ins. Co. (1988), 35 Ohio St.3d 208, 519 N.E.2d 1380, syllabus. This

is particularly true when considering provisions that purport to limit or qualify

coverage under the policy. Am. Fin. Corp. v. Fireman’s Fund Ins. Co. (1968), 15

Ohio St.2d 171, 174, 44 O.O.2d 147, 239 N.E.2d 33. “ ‘[A]n exclusion in an

insurance policy will be interpreted as applying only to that which is clearly

intended to be excluded.’ (Emphasis sic.) Hybud Equip. Corp. v. Sphere Drake

Ins. Co., Ltd. (1992), 64 Ohio St.3d 657, 665, 597 N.E.2d 1096.” Sharonville v.

Am. Emps. Ins. Co., 109 Ohio St.3d 186, 2006-Ohio-2180, 846 N.E.2d 833, ¶ 6.

{¶ 12} With those guiding principles set forth, we proceed with our

review of the courts’ decisions on summary judgment. We apply the de novo

standard of review to a decision granting or denying summary judgment based on

interpretation of an insurance contract. Nationwide Mut. Fire Ins. Co. v. Guman

Bros. Farm (1995), 73 Ohio St.3d 107, 108, 652 N.E.2d 684.

B

{¶ 13} The issue here is to what degree a negligence claim must be

connected to the premises in order for the exclusion to be triggered. As the

Massachusetts Appeals Court phrased the inquiry, “[t]he question is whether the

exclusion ought to be read as pertaining to anything that occurs on the off-policy

premises or whether the exclusion is limited to accidents that occur because of a

condition of the off-policy premises, such as a hole in the walkway, a loose step,

defective plumbing, or faulty electric wiring.” Callahan v. Quincy Mut. Fire Ins.

Co. (2000), 50 Mass.App.Ct. 260, 261, 736 N.E.2d 857.

{¶ 14} As the court of appeals in this case recognized, we have not

interpreted the exclusion for claims “arising out of” other property in the context

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of homeowner’s policies. And the Ohio appellate courts that have considered the

question have reached different results.

{¶ 15} The Eighth District Court of Appeals interprets the exclusion

broadly. It holds that “ ‘[a]rising out of’ means generally ‘flowing from’ or

‘having its origin in’ ” and that in order for coverage to be excluded, there need

only be some causal link to the property rather than a showing that the premises

were the proximate cause of the injury. Nationwide Mut. Fire Ins. Co. v. Turner

(1986), 29 Ohio App.3d 73, 77, 29 OBR 83, 503 N.E.2d 212, quoting Ins. Co. of

N. Am. v. Royal Indemn. Co. (C.A.6, 1970), 429 F.2d 1014, 1017. The court of

appeals in this case followed the rationale of Turner.

{¶ 16} A narrower view of the exclusion was adopted by the Second

District Court of Appeals in a more recent case, Am. States Ins. Co. v. Guillermin

(1996), 108 Ohio App.3d 547, 671 N.E.2d 317. Guillermin holds that an injury

arises out of the premises, and coverage is therefore excluded, only if there is a

dangerous condition on the premises that causes or contributes to the bodily injury

for which coverage is sought. Id. at 565.

{¶ 17} Although both approaches are understandable, for the reasons that

follow, we hold that the Guillermin rule is better reasoned and that the exclusion

in Westfield’s policy is narrow enough to permit coverage for claims like that

presented here.

C

{¶ 18} The broader rule set forth in Turner is based on the belief that the

term “ ‘[a]rising out of’ means generally ‘flowing from’ or ‘having its origin in.’

Ins. Co. of North America v. Royal Indemn. Co. (C.A.6, 1970), 429 F.2d 1014

[1017]. The phrase generally indicates a causal connection with the insured

property, not that the insured premises be the proximate cause of the injury.”

Turner, 29 Ohio App.3d at 77, 29 OBR 83, 503 N.E.2d 212. We think that the

understanding of the exclusion set forth in Turner is too sweeping. Indeed, under

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the construction adopted in Turner, any claim for injury that occurs on premises

owned by the insured other than the insured homeowner’s primary residence

would be denied, and the insured would not have liability coverage.

{¶ 19} The better-reasoned interpretation of the exclusion is that adopted

by the court in Guillermin and, before it, by the Kentucky Supreme Court in Eyler

v. Nationwide Mut. Ins. Co. (Ky.1992), 824 S.W.2d 855.

{¶ 20} In Eyler, the court faced an exclusion similar, but not identical, to

the one at issue here. It recognized that the phrase “arising out of” is one that

“suggests the necessity for a causal connection between the premises and the

injury. Ordinarily, ‘arising out of’ does not mean merely occurring on or slightly

connected with but connotes the need for a direct consequence or responsible

condition. As we view it, to satisfy the ‘arising out of’ exclusion in the policy, it

would be necessary to show that the premises, apart from the insured’s conduct

thereon, was causally related to the occurrence.” Id. at 857. We agree, as do

other courts that have considered the issue.

{¶ 21} For example, in Lititz Mut. Ins. Co. v. Branch (Mo.App.Ct.1977),

561 S.W.2d 371, the court confronted an exclusion that denied coverage for

bodily injuries “arising out of any premises, other than [the] insured premises,

owned, rented or controlled by any insured.” Id. at 373, fn. 1. After the insured’s

dog bit a child while both the dog and the child were on the insured’s commercial

property, the child’s parents sought coverage for the injuries. The court found

that the exclusion did not apply. In so concluding, it recited the dictionary

definition of “premises” and stated:

{¶ 22} “It is apparent that ‘premises’ in common parlance and in the

policy itself contemplates the land and more or less permanently affixed

structures contained thereon. * * * A dog, whether permanently kenneled or

tethered on the property, is not part of the premises.

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{¶ 23} “It cannot therefore be said that a dog bite arises out of[,]

originates from, grows out of, or flows from the premises. That it occurs upon the

premises does not establish a causal connection between the bite and the

premises.” Id. at 373.

{¶ 24} More recently, the Massachusetts Appeals Court reached the same

conclusion in a case that is apposite here. In Callahan, the insureds kept a dog,

Harley, for protection. 50 Mass.App.Ct. at 263, 736 N.E.2d 857. The insureds

had a homeowner’s policy for property they owned in New Hampshire, and

Harley traveled with his masters between New Hampshire and another home they

kept in Marshfield, Massachusetts, which was insured by an insurer different from

the insurer that covered the New Hampshire property. Harley bit an invitee on the

Marshfield property, and the insurer for the New Hampshire property denied

coverage and a defense to the homeowners, asserting that the exclusion for claims

for bodily injury “ ‘arising out a premises[] owned by an insured * * * that is not

an insured location’ ” applied. Id. at 261. The trial court agreed, but the appellate

court reversed. It stated, “The point is, Harley was not a condition of the

Marshfield premises, as a protective electric fence would be. Harley’s bite was

no more connected to the Marshfield real estate than had Callahan spilled hot

coffee on a guest on those premises. It happened there, but did not ‘arise out of,’

as the phrase is understood.” Id. at 263. The appellate court concluded that

Callahan’s liability stemmed from his “personal” tortious conduct in harboring

Harley, not from any condition of the Marshfield property. Id.

{¶ 25} We believe that the rationale of Branch and Callahan is the better

reasoned one for analyzing claims alleging that the injury occurred as a result of

the insured’s negligence when the negligence is unrelated to the quality or

condition of the property, solely because the insured owned the property where

the injury occurred. We therefore hold that an exclusion in a homeowner’s

insurance policy for claims “arising out of” premises owned by the insured other

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than the insured location excludes coverage for premises-based liability claims,

such as those that arise from the quality or condition of the premises. Moreover,

although the exclusion does not bar coverage of claims that arise from the

insured’s alleged negligence if that negligence is unrelated to the quality or

condition of the premises, it does exclude coverage for claims based upon the

insured’s ownership of the property upon which the injury occurred.

{¶ 26} The Whickers’ claims in this case appear to be grounded on the

theory that the Hunters failed to exercise control over Ashley’s use of an ATV on

the property. The complaint is devoid of any mention of the quality or condition

of the land upon which the accident took place. Necessarily then, our inquiry

must focus on the insureds’ alleged negligence in permitting Ashley to operate the

ATV in a negligent or reckless manner, which has no causal link to the quality or

condition of the premises.

{¶ 27} The simple fact that Ashley’s misconduct took place on land is a

matter of the law of gravity, not the law of insurance. As the court recognized in

Eyler, “[w]hile most of the endeavors of mankind occur upon the surface of the

earth and without it, harm could not occur, the law nevertheless imposes liability

for negligent personal conduct upon the recognition that, in most cases, human

behavior is the primary cause of the harm and the condition on earth only

secondary.” 824 S.W.2d at 857. If the Whickers’ complaint is based on the

theory that the Hunters failed to properly supervise Ashley while she was on the

Hunters’ property and that that failure gave rise to Terrell’s injuries, then the

exclusion does not bar coverage in this case. But if the theory of negligent

supervision is a subterfuge to avoid the “other premises” exclusion because the

Whickers’ claims are based on the Hunters’ ownership of the property, then the

coverage is not available. On the scant record before us, we cannot make that

determination. Accordingly, we remand this cause to the trial court for further

proceedings to ascertain the nature and factual basis for the Whickers’ claims

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against the Hunters. On remand, the trial court should determine whether the

Whickers’ theory of liability is that the Hunters breached a personal duty that the

Hunters assumed for the care and control of Terrell and Ashley, in which case the

exclusion would not apply, or whether the Whickers’ claims are based only on the

fact that the Hunters owned the property where the injuries occurred, in which

case the exclusion does apply. We do not believe that our holding in this case

leaves insurers without means to restrict coverage. An insurer can use other

exclusionary language to effectuate a broader bar to coverage. Indeed, other

insurers evidently have done so for decades. Hanson v .Gen. Acc. Fire & Life Ins.

Corp. (Fla.App.1984), 450 So.2d 1260, 1261 (“For instance, it was noted in

Jackson v. Lajaunie, 270 So.2d 859 (La.1972), that a clause excluding accidents

that happen ‘in connection with’ owned, but uninsured, premises excludes more

broadly than a clause excluding accidents that ‘arise of out of’ such premises”).

Insurers are free to draft exclusions to more fully preclude coverage for

occurrences like that at issue in this litigation, but the use of the causal phrase

“arising out of” in the exclusion is insufficient to do so.

Judgment reversed

and cause remanded.

PFEIFER and MCGEE BROWN, JJ., concur.

CUPP, J., concurs in syllabus and judgment.

LUNDBERG STRATTON, O’DONNELL, and LANZINGER, JJ., dissent.

__________________

CUPP, J., concurring.

{¶ 28} I agree with some but not all of the majority opinion’s analysis. I

therefore concur only in the syllabus and judgment and write separately to explain

my view of this case.

{¶ 29} In their decision-making, each of the lower courts relied heavily on

the Eighth District’s decision in Nationwide Mut. Fire Ins. Co. v. Turner (1986),

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January Term, 2011

29 Ohio App.3d 73, 29 OBR 83, 503 N.E.2d 212, to support the determination

that in the policy at issue in this case, the exclusion for claims “arising out of” the

Hunters’ Indiana premises applies to relieve appellee, Westfield Insurance

Company, of the obligation to defend or indemnify the Hunters.

{¶ 30} In my opinion, however, Turner is distinguishable from the

situation presented here in a fundamental way. Rather than interpreting a policy

exclusion, as exists in this case, Turner interpreted as a coverage provision a

similar phrase at issue therein: “arising out of the ownership, maintenance or use

of the real * * * property.” Id.

{¶ 31} In the area of liability-insurance law, very different standards apply

to the interpretation of a coverage provision than apply to the interpretation of an

exclusion, although both are construed against the insurer. A liability coverage

provision is interpreted broadly, and a general presumption in favor of coverage

must be overcome in order for coverage to be denied. See, e.g., Stickovich v.

Cleveland (2001), 143 Ohio App.3d 13, 37, 757 N.E.2d 50 (recognizing that the

phrase “ ‘arising out of’ in a liability insurance policy affords very broad

coverage” and citing Turner as one of the cases that reached that conclusion).

{¶ 32} On the other hand, an exclusion is interpreted narrowly in order not

to defeat coverage that would apply absent the exclusion. The general

presumption in favor of coverage operates to make an exclusion barring coverage

applicable only if it is clearly expressed. Sharonville v. Am. Emps. Ins. Co., 109

Ohio St.3d 186, 2006-Ohio-2180, 846 N.E.2d 833, ¶ 6. See 7 Russ and Segalla,

Couch on Insurance (3d Ed.2010), Section 101:52, which explains that when an

insurance policy employs language such as “arising out of” in describing the

coverage provided, the phrase is given a broad and comprehensive meaning, but if

the phrase is used “in an exclusionary provision rather than a grant of coverage,”

it “will be interpreted narrowly against the insurer.”

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{¶ 33} Because the situation in Turner differs from the situation in this

case (coverage in Turner versus exclusion of coverage here), I view Turner as

inapposite to the case we now decide. Neither the trial court nor the court of

appeals recognized this coverage-versus-exclusion distinction when each relied on

Turner’s analysis to support its ruling. In fact, Turner is inapplicable to the

resolution of this case. In addition, the cases on motor vehicle insurance relied on

by the lower courts are also inapposite for reasons that include the fact that they

involved the interpretation of coverage provisions rather than exclusions.

{¶ 34} Because of the coverage-versus-exclusion distinction, the Turner

decision, which involves an issue of coverage, and the Second District’s decision

in Am. States Ins. Co. v. Guillermin (1996), 108 Ohio App.3d 547, 671 N.E.2d

317, which involves an exclusion, are not in conflict with each other. The bottom

line, then, is that it is evident that the courts below have relied on cases clearly

distinguishable from the one now before this court.

{¶ 35} Because Turner and Guillermin are not conflicting decisions, the

appellate decision in this case (which erroneously followed Turner) and

Guillermin are not truly in conflict either. I therefore do not approach this case

from the perspective of answering the conflict issue as certified. However, any

obstacles to resolving the issues of this case are obviated by the fact that this court

accepted a discretionary appeal as well as the certified conflict, and therefore the

issues are properly presented to us for review.

{¶ 36} The key question to be resolved is whether the exclusion for claims

arising out of the premises should apply to exclude coverage for the claims at

issue under the Hunters’ policy with Westfield. If the exclusion is inapplicable in

the facts and circumstances involved here, then coverage exists under that policy

pursuant to its terms.

{¶ 37} A Missouri appellate court in Lititz Mut. Ins. Co. v. Branch

(Mo.App.1977), 561 S.W.2d 371, 374, succinctly explained the proper scope of

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this exclusion as it relates to the essentials of a homeowner’s policy in the

following often cited passage:

{¶ 38} “The personal liability insured against [by a homeowner’s policy]

is of two kinds: first, that liability which may be incurred because of the

condition of the premises insured; secondly, that liability incurred by the insured

personally because of his tortious personal conduct, not otherwise excluded,

which may occur at any place on or off the insured premises. The insurance

company may well limit (and has by [the relevant exclusion]) its liability for

condition of the premises to the property insured for which a premium has been

paid. It is reasonable that the company may not provide for liability coverage on

‘conditions’ which cause injury on other uninsured land. * * * It is to be expected,

therefore, that the company’s liability for condition of the premises would be

restricted to accidents happening on or in close proximity to the insured premises,

and that premiums would be charged with that in mind. It would be unreasonable

to allow an insured to expand that coverage to additional land and structures

owned, rented or controlled by him which are unknown and not contemplated by

the company.

{¶ 39} “The company has not chosen to geographically limit the coverage

provided for tortious personal conduct of the insured. If it had so intended, it

could simply have provided that the exclusion ran to an accident ‘occurring on’

other owned premises. There appears to be little reason to exclude personal

tortious conduct occurring on owned but uninsured land, as little correlation exists

between such conduct and the land itself.”

{¶ 40} As this passage accurately points out, a standard homeowner’s

insurance policy, such as the Westfield policy at issue in this case, includes at

least two essential types of liability coverage. One type is for occurrences that

happen on or in close proximity to insured premises owned by the insured. A

second type of liability coverage, distinct from the first type, is for tortious

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personal conduct. This second type not only applies to occurrences related to the

insured premises, but also provides liability coverage to the insured anywhere,

unless an exclusion in the policy clearly limits this broad personal liability

coverage.

{¶ 41} This second type of homeowner’s liability coverage covers “a

broad range of liabilities which have nothing to do with the insured’s residence

but to which most individuals are exposed as a matter of their routine existence. *

* * [M]ost non-automobile related accidents * * * occurring away from the

insured’s residence, for which an insured is liable on account of negligence, will

be covered under the liability provisions of a homeowners policy.” 2 Rowland H.

Long and Peter M. Lencsis, The Law of Liability Insurance (2008), Section 9.01.

{¶ 42} I agree with the logic underlying the analysis in Lititz Mut. Ins. Co.

v. Branch, which is consistent with the analysis in Guillermin. I am therefore in

agreement with the majority’s conclusion that the exclusion for claims arising out

of the premises does not serve to defeat coverage for all occurrences on an

insured’s other owned property. Rather, it is the character or nature of the claim

asserted for which coverage is sought that determines the scope of coverage. If

coverage is sought for a claim that has no connection to a particular property other

than that it happened to occur there, then the exclusion for claims arising out of

the premises does not apply, because the claim does not “arise out of the

premises” but, instead, arises out of the unrelated conduct of the policyholder. On

the other hand, if coverage is sought for a claim that has a direct causal

relationship to the property, then the exclusion does apply. In the latter situation,

the claim is essentially one of premises-based liability and falls within the scope

of the exclusion.

{¶ 43} In addition to the considerations regarding the quality or physical

condition of the premises discussed in the above-quoted passage, the duties

arising from ownership of the property can also, in some situations, correlate

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sufficiently with the claim asserted to support the exclusion’s applicability. If the

claim for which coverage is sought directly flows from or has its foundation in the

ownership of the property for which the exclusion is asserted, then it may be said

that the claim arises out of that property in such situations, too. A useful question

to ask is: If the circumstances giving rise to the claim had taken place off both the

other owned property and the policy’s listed “insured location,” would the

exclusion apply to bar coverage? If the claim in such circumstances would not be

excluded from coverage, then it also is likely that the exclusion would not apply

to prevent coverage for the event that, by coincidence, occurred on the other

owned property rather than someplace else.

{¶ 44} The trial court resolved this case based on an overly expansive

interpretation of the exclusion in the homeowner’s policy for claims arising out of

the other owned premises, and the court of appeals erroneously affirmed that

overly expansive interpretation. The majority of this court, in reversing, correctly

concludes that the exclusion should be interpreted more narrowly.

{¶ 45} On the meager record in this case, it is impossible to determine

whether the exclusion should apply here to bar coverage. The plaintiffs in the

underlying lawsuit, the Whickers, assert in their merit brief before this court that

the location of the accident was irrelevant to their claims and that “[t]he accident

could have happened anywhere other than the farm property and the claims

against the Hunters would still be the same,” in support of their argument that the

exclusion at issue here does not bar coverage. Appellant, Grinnell Mutual

Reinsurance Company, makes similar assertions in its merit brief, including

stating that the allegations in the underlying complaint “go to the Hunters’

conduct and status as people able to control a minor tortfeasor, not to their status

as landowners.” Conversely, appellee Westfield repeatedly asserts in its merit

brief that the claims against the Hunters exist only because the Hunters owned the

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property where the accident occurred and that the exclusion should therefore

apply.

{¶ 46} The parties raised these same points before the trial court, but that

court did not address this disagreement in granting summary judgment in favor of

Westfield based on its overly broad interpretation of the exclusion. This case

turns on that question, i.e., whether the claims arise out of the ownership of the

premises. But the question is unanswerable from a review of the record before us.

Therefore, upon remand, the record must be further developed to allow for

consideration of the exclusion’s applicability, under the standards that properly

govern the exclusion’s reach.3

__________________

O’DONNELL, J., dissenting.

{¶ 47} This matter is presented to us as a conflict between appellate

districts on the following question: “When construing an insurance policy

exclusion, does an injury ‘arise out’ of a premises only if some dangerous

condition exists on the premises that caused or contributed to the injury, or must

the injury only originate in or have a causal connection with the premises?”

{¶ 48} The Second District Court of Appeals held in Am. States Ins. Co. v.

Guillermin (1996), 108 Ohio App.3d 547, 671 N.E.2d 317, that an injury arises

3. Appellant, Grinnell Mutual Reinsurance Company, attempts to argue through its second

proposition of law in its merit brief in this court that the Indiana farm is an “insured location”

under the Westfield policy. However, this argument is outside the scope of the issue that the court

of appeals certified a conflict on and that this court agreed to review, and it is also outside the

scope of the only proposition of law raised by Grinnell in its memorandum in support of

jurisdiction that this court accepted for review. Grinnell could have raised this issue for this

court’s jurisdictional consideration, but did not do so. Consequently, Grinnell has not properly

preserved the issue regarding whether the farm is an insured location. It must therefore be

accepted, as an established fact, that the farm is not an insured location for purposes of this appeal.

Cf. Meyer v. United Parcel Serv., Inc., 122 Ohio St.3d 104, 2009-Ohio-2463, 909 N.E.2d 106, ¶ 8,

fn. 3. Moreover, this fact should also be taken as established for purposes of the trial court’s

consideration upon remand.

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out of a premises only if some dangerous condition exists on the premises that

caused or contributed to the injury.

{¶ 49} In conflict with that holding, the Twelfth District Court of Appeals

here cited a case from the Eighth Appellate District, Nationwide Mut. Fire Ins.

Co. v. Turner (1986), 29 Ohio App.3d 73, 77, 29 OBR 83, 503 N.E.2d 212, which

held, “ ‘Arising out of’ means generally ‘flowing from’ or ‘having its origin in.’

The phrase generally indicates a causal connection with the insured property, not

that the insured premises be the proximate cause of the injury.” (Citation

omitted.) After recognizing federal court authority to the same effect, the Twelfth

District used the causal connection test and determined that the ATV accident

arose out of the premises.

{¶ 50} The majority opinion correctly characterizes this case as one of

contract interpretation of the phrase “arising out of”; in my view, the Twelfth

District Court of Appeals properly interpreted this phrase in this policy. That

court stated, “As the policy reads, the exclusion applies to bodily injury ‘arising

out of a premises,’ not arising out of a condition on a premises.” (Emphasis sic.)

Westfield Ins. Co. v. Hunter, Butler App. Nos. CA2009-05-134 and CA2009-06-

157, 2009-Ohio-5642, ¶ 20. The court emphasized that the view taken in

Guillermin changes the language in the policy to require that the injury must arise

out of a condition on the premises, here, a dangerous condition. But these words

are not part of the policy and not part of the contract—in effect, the court in

Guillermin added additional language to the policy that is not part of the policy;

the better view is as expressed by the appellate court here, citing the Eighth

Appellate District and the federal district court of appeals, employing the causal

connection test.

{¶ 51} Although this is a matter of first impression for our court in the

context of a homeowner’s insurance policy, we have previously considered the

phrase “arising out of” in Kish v. Cent. Nat. Ins. Group of Omaha (1981), 67 Ohio

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St.2d 41, 21 O.O.3d 26, 424 N.E.2d 288, and in Lattanzi v. Travelers Ins. Co.

(1995) 72 Ohio St.3d 350, 650 N.E.2d 430, and in both instances interpreted

“arising out of” to require a causal connection. In my view, we should adhere to

our precedent and make a similar interpretation in this instance.

{¶ 52} Because the majority strays from this path, I respectfully dissent

and would affirm the judgment of the court of appeals.

LUNDBERG STRATTON, J., concurs in the foregoing opinion.

__________________

LANZINGER, J., dissenting.

{¶ 53} I respectfully dissent. The exclusion within the insurance contract

plainly states that there will be no coverage for “bodily injury or property

damage: * * * e. Arising out of a premises: (1) Owned by an insured * * * that is

not an insured location.” By modifying the phrase to read “aris[ing] from the

quality or condition of the premises” owned by an insured, the majority rewrites

the contract, circumvents the parties’ intent, and creates an illogical result for

similar language within the contract.

I. Expressed Intent of the Parties

{¶ 54} Michael and Marilyn Hunter purchased two policies. Westfield

Insurance Company insured the Hunters’ residence along with a rental property.

Grinnell Mutual Reinsurance Company insured the Hunters’ Indiana farm.

Westfield’s policy contained an exclusion from liability coverage for bodily

injuries “[a]rising out of a premises * * * [o]wned by an insured * * * that is not

an insured location.” Grinnell’s policy contained a similar exclusion. The very

existence of the two policies, each obtained by the Hunters to provide coverage

for their respective premises, makes clear that the parties intended to exclude

coverage for injuries occurring at premises they own that are not insured locations

under the respective policies.

{¶ 55} We have held:

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January Term, 2011

{¶ 56} “When confronted with an issue of contractual interpretation, the

role of a court is to give effect to the intent of the parties to the agreement. We

examine the insurance contract as a whole and presume that the intent of the

parties is reflected in the language used in the policy. We look to the plain and

ordinary meaning of the language used in the policy unless another meaning is

clearly apparent from the contents of the policy. When the language of a written

contract is clear, a court may look no further than the writing itself to find the

intent of the parties. As a matter of law, a contract is unambiguous if it can be

given a definite legal meaning.

{¶ 57} “On the other hand, where a contract is ambiguous, a court may

consider extrinsic evidence to ascertain the parties' intent. A court, however, is not

permitted to alter a lawful contract by imputing an intent contrary to that

expressed by the parties.” (Citations omitted.) Westfield Ins. Co. v Galatis, 100

Ohio St.3d 216, 2003-Ohio-5849, 797 N.E.2d 1256, at ¶ 11-12.

{¶ 58} I do not agree that the term “arising out of” is ambiguous. The

court of appeals and two other courts have stated that “ ‘ “[a]rising out of” means

generally “flowing from” or “having its origin in” ’ ” and that in order for

coverage to be excluded, there need only be some causal link to the property

rather than a showing that the premises were the proximate cause of the injury.

Westfield Ins. Co. v. Hunter, 2009-Ohio-5642, 2009 WL 3415894, ¶ 12, quoting

Nationwide Mut. Fire Ins. Co. v. Turner (1986), 29 Ohio App.3d 73, 77, 29 OBR

83, 503 N.E.2d 212, quoting Ins. Co. of N. Am. v. Royal Indemn. Co. (C.A.6,

1970), 429 F.2d 1014, 1017.

{¶ 59} The majority rejects this causal-connection definition, the lead

opinion saying that it means that “any claim for injury that occurs on premises

owned by the insured other than the insured homeowner’s primary residence

would be denied, and the insured would not have liability coverage.” Lead

opinion, ¶ 18. But that is exactly what was bargained for in this homeowner’s

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policy. Westfield collected premiums for the premises listed on the declarations

page, which also included rental property owned by the Hunters. Grinnell

collected its premiums to provide coverage for the Hunters’ Indiana farm.

{¶ 60} The only reason the Hunters are being sued is that they own the

Indiana farm property and allegedly breached a duty of care owed to the children

on the property. The personal liability that is claimed arises out of the premises.

{¶ 61} Insurance involves the transfer of risk from insured to insurer.

Here Westfield agreed to assume the risk of liability for injuries occurring at,

flowing from, having their origin in, or having a causal connection with the

Hunters’ Hamilton, Ohio residence or the neighboring rental property. Westfield

was paid to assume those risks. Westfield further specified that it would not

provide liability coverage for injuries arising out of other premises that were

owned by the insureds but were not an insured location. Grinnell similarly agreed

to assume risks of injuries occurring at, flowing from, having their origin in, or

having a causal connection with the Hunters’ Indiana farm while excluding

injuries arising out of other premises owned by the insureds that are not an

insured location, and Grinnell was paid premiums for that coverage. The

complementary nature of these policies supports reading the plain language of the

policies as providing coverage for injuries arising from the insured location and

excluding coverage for injuries arising out of other premises owned by the insured

that are not an insured location.

II. Creation of Illogical Results

{¶ 62} The phrase “arising out of” is used multiple times throughout the

Westfield policy. By reading the phrase “arising out of” to require proof that a

dangerous condition on the land was the proximate cause of damage, the majority

renders this phrase meaningless where it is used elsewhere in the policy. In fact,

this term is used to introduce the following exclusions in Westfield’s policy:

business engaged in by the insured; a rental of premises by an insured; rendering

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January Term, 2011

of or failure to render professional services; ownership, maintenance, or use of a

motorized vehicle, watercraft, or aircraft; transmission of a communicable

disease; sexual molestation, corporal punishment, or physical or mental abuse; or

the use, sale, or manufacture of a controlled substance. An interpretation of the

term “arising out of” to mean “arising out of a dangerous condition” creates an

illogical result for these other exclusions.

{¶ 63} Moreover, the Westfield policy explicitly limits its coverage for

medical payments to conditions of the premises. In the policy's “Medical

Payments Coverage,” on the very same page of the policy where the “other owned

premises” exclusion appears, the policy provides: “As to others, this coverage

applies only: * * * 2. To a person off the insured location, if the bodily injury:

a. Arises out of a condition on the insured location or the ways immediately

adjoining.” Thus, the very language that the majority wishes to insert in one place

within the policy has already been used by the parties elsewhere in the policy.

This surely shows an intent to distinguish between “arising out of” premises and

“arising out of a condition on” premises. If the exclusion was to be linked to a

condition, the drafters added it; it should not be for this court to do so.

III. Conclusion

{¶ 64} I would answer the certified question by holding that in the context

of an insurance policy exclusion, an injury arises out of premises if the injury

originates in or has a causal connection with the premises. Here, the injury giving

rise to the suit occurred at the Indiana farm, premises that the Hunters owned but

did not insure with Westfield. The only basis for suit against them is their

ownership and control of the farm. Any personal liability therefore arises out of

the premises that are owned by the insureds and are not an insured location and

are accordingly excluded from coverage under its policy. I would affirm the

Twelfth District Court of Appeals and hold that Grinnell alone is obligated to

defend and indemnify in this case.

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LUNDBERG STRATTON, J., concurs in the foregoing opinion.

__________________

Isaac, Brant, Ledman & Teetor, L.L.P., James H. Ledman, J. Stephen

Teetor, Brandi L. Dorgan, and Scyld D. Anderson, for appellee, Westfield

Insurance Company.

Robbins, Kelly, Patterson & Tucker, Daniel J. Temming, and Jarrod M.

Mohler, for Terrell, Vince, and Tara Whicker.

Rendigs, Fry, Kiely & Dennis, L.L.P., James J. Englert, and Lynne M.

Longtin, for appellant.

______________________

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