David J. Fagnilli

The insured, Neyer, was in contract negotiations with Kings Trust to renovate space in a commercial building that had been used as a restaurant. Before entering into a contract with Kings Trust, and without notice to Kings Trust, Neyer’s project manager went ahead with the demolition of the restaurant space. As it turned out, Kings Trust did not have the right to eliminate the restaurant, and the demolition was a breach of King Trust’s lease with the building owner. Neyer was sued for the damage the demolition did to the building among other things. The trial court held that there was an occurrence and coverage for the damages under Neyer’s CGL policy because Neyer’s project manager did not know that Neyer did not have authorization to proceed.

The First District court of Appeals reversed, finding that the unauthorized demolition did not constitute an occurrence under the policy and was not covered. The significance of this decision is that it further develops and explores the issues raised in the Ohio Supreme court decision in Westfield Ins. Co. v. Custom Agri Sys., 133 Ohio St.3d 476, 2012-Ohio-4712, 979 N.E.2d 269, and the distinction between claims that arise out of an occurrence that is covered by insurance and claims “which business management can and should control or manage” and are, therefore, not fortuitous or covered by insurance.

 

^{Case Law Alerts, 2nd Quarter, April 2021 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2021 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.}