An appellate court in Ohio, reversing a trial court's decision, has ruled that an exclusion in an insurance policy for “[w]ater that backs up or overflows from a sewer” was ambiguous and did not necessarily exclude coverage for raw sewage that backed up from a sewer.
The Case
AKC, Inc., d/b/a/ CleanTech, a cleaning and casualty restoration business, sued United Specialty Insurance Company, the insurer for Globalcor Associates, LLC, d/b/a/ Bank Nightclub, seeking to recover as Globalcor's assignee for the clean-up and restoration work AKC performed after a sewer backup that AKC asserted had been caused when two restaurants adjoining Bank Nightclub dumped cooking grease into their sanitary drain lines, which connected to a common drain line used by Globalcor.
The trial court ruled that the exclusion in United's policy for water backing up or overflowing from a sewer included raw sewage that also backed up, and it granted summary judgment in favor of United.
AKC appealed, contending that the trial court's interpretation of the exclusion was not the only fair interpretation.
The United Policy
The United policy provided that United:
will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. . .
1. Water . . .
Water that backs up or overflows from a sewer, drain or sump . . .
The Ohio Appellate Court's Decision
The appellate court reversed, finding that the exclusion was ambiguous.
In its decision, the appellate court explained that the section setting forth the exclusion was specifically listed under the category of “water.” Moreover, the appellate court continued, had United wished to exclude “sewage” from coverage, “it could have easily and succinctly done so with the mere addition of the very word.”
Accordingly, the appellate court concluded that the exclusion was reasonably susceptible of more than one interpretation and, therefore, should be construed strictly against United and liberally in favor of AKC.
The case is AKC, Inc. v. United Specialty Ins. Co., No. 29197 (Ohio Ct. App. July 10, 2019). Attorneys involved include: JOHN CURTIS ALBERTI, Attorney at Law, for Appellant. JEFFREY S. MAYNARD, Attorney at Law, for Appellee. ERIC J. WILLIAMS, Attorney at Law, for Appellee. JOHN L. ANTEL, Attorney at Law, for Appellee.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].