COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 68468 CHUBB GROUP OF INSURANCE : COMPANIES, : : Plaintiff-Appellee : : JOURNAL ENTRY vs. : and : OPINION DR. BAHMAN GUYURON, ET AL., : : Defendants-Appellants : : : DATE OF ANNOUNCEMENT OF DECISION : DECEMBER 14, 1995 CHARACTER OF PROCEEDING : Civil appeal from : Common Pleas Court : Case No. 257737 JUDGMENT : AFFIRMED. DATE OF JOURNALIZATION : _______________________ APPEARANCES: For plaintiff-appellee: William H. Baughman John G. Farnan Ronald A. Rispo Glenn D. Southworth WESTON, HURD, FALLON, PAISLEY & HOWLEY 2500 Terminal Tower 50 Public Square Cleveland, Ohio 44113-2241 For defendant-appellant, Robert S. Passov Dr. Bahman Guyuron: 75 Public Square Suite 914 Cleveland, Ohio 44113 For Amicon Corporation: David A. Crisafi 600 Standard Building Cleveland, Ohio 44113 For Champion Roofing Co.: Ernest W. Auciello Bulkley Building 1501 Euclid Avenue 7th Floor Cleveland, Ohio 44115 For Paul Colton & Associates: David Schaeffer 1800 Midland Building 101 Prospect Avenue, West Cleveland, Ohio 44115 For Anthony Crisafi: Anthony Crisafi, Pro Se Island Arch 7632 Herschel Avenue LaJolla, California 92037 -3- NAHRA, J.: Appellant, Dr. Bahman Guyuron, is appealing the decision of the trial court denying his motion for summary judgment and granting summary judgment in favor of appellee, Chubb Group of Insurance Companies. For the following reasons, we affirm. Dr. Guyuron constructed a 400 foot underground tunnel on his property to connect his home to his recreational complex. The top of the tunnel ranged from two to six feet underground. Construction was completed in August, 1987. In July, 1987, appellant noticed dampness on the tunnel floor and damage to the paint, plaster and carpeting. The water problem was sporadic and was worse during rain or humidity. In the summer of 1992, water flowed or leaked through the tunnel ceiling and walls. In 1992, appellant's caretaker, Fred Gorman, who had construction experience, excavated a portion of the tunnel. Gorman concluded that the tunnel was improperly installed. Appellant hired Charles Fazio & Associates, architects/planners, to examine the tunnel. Fazio conducted two excavations of the tunnel to expose the top and side of the tunnel to footing level. Fazio discovered that the backfill was inadequate. After removing insulation board from the tunnel, Fazio viewed the waterproofing membrane. Fazio opined the membrane was improperly installed. Appellant submitted a proof of loss to the Chubb Group of Insurance Companies, under his Chubb QP policy. Appellant listed the cause and origin of loss as "negligent planning and construction." -4- The QP policy covered the tunnel for all risks of physical loss not otherwise excluded. The QP policy states in pertinent part: WHAT WE DON'T COVER We do not provide coverage: 2. Under Coverage A - House, Coverage B - Other Structures, Coverage C - Personal Property - Unscheduled and Coverage D - Loss of Use: we do not cover: a. Water damage meaning: * * * (3) water below the surface of the ground, including water which exerts pressure on, or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool or other structure; * * * 3. Under Coverage A - House; Coverage B - Other Structures and Coverage C - Personal property - Unscheduled: we do not cover: * * * d. wear and tear, marring, deteriora- tion, inherent vice, latent defect, * * * Under 3.a., 3.b., 3.c. and 3.d., any ensuing loss not excluded is covered. Chubb filed a complaint for declaratory judgment to determine its rights and duties under the policy regarding the subject claim. The contractors who installed the tunnel were included as defendants. Appellant-Guyuron filed cross-claims against the other defendants and a counterclaim against Chubb. The court granted -5- Chubb's motion for summary judgment on the counterclaim. Chubb's motion for summary judgment on the coverage issue was denied. Appellant's motion for summary judgment remained pending. Later, at a pre-trial on December 15, 1994, the trial judge announced he was sua sponte reconsidering his prior ruling and had decided to grant appellee's motion for summary judgment. On December 19, 1994, appellant withdrew his motion for summary judgment. In a journal entry dated December 30, 1994, the trial court granted summary judgment to Chubb, and denied Dr. Guyuron's motion for summary judgment. The journal entry stated that the remaining indemnity claims were separate and distinct, so the ruling on the insurance coverage issues would be a final appealable order. I. We will consider appellant's three assignments of error in reverse order. Appellant's third assignment of error states: THE TRIAL COURT COMMITTED PREJUDICIAL AND REVERSIBLE ERROR IN RECONSIDERING, SUA SPONTE, ITS PRIOR ORDER AND ENTERING AN ORDER GRANTING SUMMARY JUDGMENT TO CHUBB. Appellant asserts that the trial court's order denying appellee's motion for summary judgment was a final appealable order. The trial judge may only reconsider interlocutory orders, not final orders. See Civ.R. 54(B), Beim v. Jemo Assoc., Inc. (1989), 61 Ohio App.3d 380. An order in a special proceeding, such as a declaratory judgment action, which affects a substantial right is a final -6- appealable order. General Accident Ins. Co. v. Insurance Co. of North America (1989), 44 Ohio St.3d 17, see R.C. 2505.02. General Accident Ins. Co. held that an order granting the insurance company summary judgment on the issue of whether it was entitled to a declaratory judgment that it had no duty to defend was a final order. In this case, unlike General Accident Ins. Co., the order in question did not affect a substantial right of the parties. By denying appellee's motion for summary judgment, the trial court only determined there were genuine issues of fact and appellee was not entitled to judgment as a matter of law. See Civ.R. 56(C). In other words: The overruling of a motion for summary judgment in a special proceeding cannot be "an order affecting a substantial right made in a special proceeding," as that phrase is used in Section 2505.02, Revised Code, because, in effect, it constitutes a refusal to make an order rather than the making of an order. Swanson v. Ridge Tool Co. (1961), 113 Ohio App. 357, par. 2 of the syllabus, followed in City of Mayfield Hts. v. Flanigan (Nov. 18, 1993), Cuyahoga App. No. 64131, unreported. Additionally, the order denying appellee's motion for summary judgment did not contain an express determination that there was no just reason for delay. Such an express determination was required because there were multiple parties. Civ.R. 54(B), see General Accident Ins. Co., supra. The order denying appellee's motion for summary judgment was not final. The court could sua sponte reconsider this non-final order. See Beim, supra. -7- Accordingly, this assignment of error is overruled. II. Appellant's second assignment of error states: THE TRIAL COURT COMMITTED PREJUDICIAL ERROR IN MAKING A RULING ON DEFENDANT-APPELLANT'S CROSS-MOTION FOR SUMMARY JUDGMENT AFTER THE MOTION HAD BEEN OFFICIALLY WITHDRAWN FROM THE COURT'S CONSIDERATION. We fail to see how denying appellant's cross-motion for summary judgment had any prejudicial impact upon appellant. Even if the court would have treated the motion as withdrawn and had not ruled on the motion, it still would have granted appellee's motion for summary judgment. The trial court could reconsider its decision on appellee's motion for summary judgment because it was a non-final order. It did not matter whether appellant had an outstanding motion for summary judgment. If any error occurred, the error was harmless. See Civ.R. 61. Additionally, when a motion has been submitted, the motion can only be withdrawn with leave of court. Gedeon v. Leiby (1991), 73 Ohio App.3d 627. The trial court did not grant appellant leave to withdraw his motion for summary judgment. Accordingly, this assignment of error is overruled. III. Appellant's first assignment of error states: THE TRIAL COURT COMMITTED PREJUDICIAL ERROR IN GRATUITOUSLY REVERSING ITSELF AND GRANTING SUMMARY JUDGMENT TO PLAINTIFF-APPELLEE WHERE THERE EXISTED GENUINE ISSUES OF MATERIAL FACT TO PLAINTIFF-APPELLEE'S POSITION; WHERE PLAINTIFF-APPELLEE HAD NOT RAISED ITS DEFENSES WITH SPECIFICITY REGARDING LATENT DEFECT; AND -8- WHERE THE DECISION IS UNSUPPORTED BY COMPETENT EVIDENCE, IS CONTRARY TO THE MANIFEST WEIGHT OF THE EVIDENCE, AND IS CONTRARY TO LAW. The trial court held that appellee was entitled to summary judgment because the latent defect and subsurface water exclusions in the Chubb QP policy barred coverage. First, we will consider whether the subsurface water exclusion, by itself, precluded recovery on the policy. Appellant alleged that negligent construction and design caused water to seep into the tunnel, and the water seepage caused the damage. While subsurface water seepage is not covered under the policy, negligent construction and design is not specifically excluded and could be considered covered. (We are not considering the latent defect exclusion for the moment.) Even if the cause nearest in point of time is not covered, recovery may still be had if the dominant cause of the loss is covered. Midwest Specialties, Inc. v. Westfield Insurance Co. (April 1, 1994), Montgomery App. No. 14027, unreported, citing Holmes v. Employer's Liability Assur. Corp., LTD (1941), 70 Ohio App. 239, Kenney v. Occidental Ins. Co. of San Francisco (1940), 66 Ohio App. 284, see, also, Yunker v. Republic-Franklin Ins. Co. (1982), 2 Ohio App.3d 339, Florea v. Nationwide Mutual Fire Insurance Co. (Jan. 28, 1983), Montgomery App. No. 7908, unreported. The dominant or efficient cause of the loss is the cause which sets the other causes in motion. Id. Here, the negligent construction and design set into motion the water seepage, and was the dominant cause of the loss. At least there is a question for the trier of fact as to whether the -9- negligent construction and design or the water seepage was the efficient cause of the loss. Id. Buttelworth v. Westfield Ins. Co. (1987), 41 Ohio App.3d 288, cited by appellee, is distinguishable. In that case, subsurface water seeped into the insured's home because their neighbor's plumbing broke. Buttelworth held the subsurface water exclusion precluded recovery, whether the source of the water was artificial or natural. The insured in Buttelworth did not argue that the break of the neighbor's plumbing was a separate cause which was covered under the policy. In this case, negligent design and construction is a separate and dominant cause which is arguably covered under the policy. We conclude that the appellee was not entitled to summary judgment on the subsurface water exclusion alone. Next, we consider whether recovery for loss caused by negligent design and construction was precluded by the latent defect exclusion. There is no authority in the courts of this state on this issue. Other jurisdictions have held that if a defect created by negligent design and construction cannot be discovered by a reasonable inspection, it is a latent defect and excluded under the latent defect exclusion. Winans v. State Farm Fire & Casualty Co. (C.A.9, 1992), 968 F.2d 884, Aetna Casualty & Surety Co. v. Yates (C.A.5, 1965), 344 F.2d 939, Merz v. Allstate (W.D.Pa. 1988), 677 F.Supp. 388, Derenzo v. State Farm Mut. Ins. Co. (Sup. 1988), 533 N.Y.S.2d 195, Acme Galvanizing v. Fireman's Fund Ins. (1990, 1st -10- Dist.), 221 Cal. App.3d 170, 270 Cal. Rptr. 405, Puckett v. State Farm Fire & Casualty Co. (La.App. 1989), 546 So.2d 354. Annotation (1995), 30 A.L.R. 5th 170, Section 86. The third party negligence is not a peril distinct from the latent defects, so the efficient or dominant cause rule discussed above does not apply. See Id., Chadwick v. Fire Ins. Exchange (1993, 1st Dist.), 17 Cal. App.4th 1112, 21 Cal. Rptr.2d 871. A federal district court, choosing the rule it believed Ohio courts would adopt, held that negligent design and construction was not equivalent to a latent defect. Essex House v. St. Paul Fire & Marine Insurance Co. (S.D.Ohio,W.D. 1975), 404 F.Supp. 978. Essex House appears to hold that "latent defect" means defects inherent in the materials used, and does not include negligent design and construction. Id. at 991. There is no authority cited in Essex House supporting this conclusion. See General American Transportation Corp. v. Sun Insurance Office, Ltd. (E.D. Tenn. 1965), 239 F. Supp. 844, aff'd (C.A. 6, 1966), 369 F.2d 907 (The defects were discoverable and not latent. There is no language in these opinions limiting latent defects to defects in materials used.) Furthermore, it was unnecessary for the court in Essex House to hold that negligent design and construction can never amount to a latent defect. In Essex House, the defects were apparent upon visual inspection of the insured building, and not latent. Thus, the claim for damages caused by the negligent construction and design of Essex House was not excluded under the latent defect -11- exclusion. The United States Court of Appeals, Ninth Circuit harmonized Essex House with Merz, supra, by stating that these cases create a general rule that defects in construction may constitute latent defects if the problems created are not readily discoverable. Tzung v. State Farm Fire and Casualty Co. (C.A. 9, 1989), 873 F.2d 1338, 1342. Other cases have held that latent defects are limited to inherent defects in the material used, and faulty design or construction is not within the latent defect exclusion. Chadwick (Cal. App., 1st Dist.), supra, at 877, Mattis v. State Farm Fire & Cas. Co. (1983), 118 Ill. App.3d 612, 454 N.E.2d 1156 at 1162, both citing Essex House, supra. Similar to Essex House, these cases were decided on other factors. In Chadwick, there was evidence the defects were patent. In Mattis, the insurance company failed to properly plead the defense of the latent defect exclusion. See Carty v. American States Ins. Co. (Cal. App., 4 Dist.), 7 Cal. App.4th 399, 9 Cal. Rptr. 2d 1. We decline to hold that "latent defect" means only inherent defects in materials, and not defects caused by negligent design or construction. The weight of authority holds that defects in design or construction may be latent defects, if the defects are not discoverable upon reasonable inspection. Winans, Merz, Derenzo, Acme, Carty, Puckett, supra. "Inherent defects in the materials used" defines "inherent vice," which is another exclusion listed in the policy. See Essex House at 989, quoting Employers Casualty Co. v. Holm (Tex.Civ.App. 1965), 393 S.W.2d 363. If inherent vice and -12- latent defect had the same meaning, it would be redundant to use both words in the policy. Additionally, the plain meaning of "latent defect" is a hidden defect not discoverable by inspection, and is not limited to defects in materials. See Deluxe Black's Law Dictionary (6 Ed. 1990), 883. Appellant contends that appellee failed to properly plead the "defense" of latent defect. See Mattis, supra. In Mattis, the insurance company was the defendant, but in this case Chubb Insurance Group was the plaintiff. Any rules concerning the pleading of an affirmative defense do not apply here. We conclude that the negligent design and construction will fall under the latent defect exclusion if the defects were not discoverable upon reasonable inspection. Next, we will consider whether the defects here were discoverable upon reasonable inspection. Appellant states the defects were discoverable during construction. We agree with the trial court that it would be unfair to require an insurance company to continually inspect an ongoing construction project for defects. See Derenzo v. State Farm Mut. Ins. Co. (Sup. 1988), 533 N.Y.S.2d 195. Appellant asserts the defects were discoverable after construction by reasonable inspection, because reasonable inspection includes known and customary tests conducted by experts. See Chadwick (Cal. App., 1st Dist.), supra, General American Transp. Corp. v. Sun Ins. Office, Ltd. (C.A.6, 1965), 369 F.2d 906, Annotation (1995), 30 A.L.R. 5th 170, Section 86. Reasonable inspection does not include intensive or in-depth expert testing or -13- post-failure destructive testing by experts. Winans, Acme Galvanizing, supra, Tzung v. State Farm Fire & Casualty Co. (C.A.9, 1989), 873 F.2d 1338, Annotation (1995), 30 A.L.R. 5th 170, Section 86. Here, the defects were discoverable only upon an excavation by the caretaker and by the architects. Reasonable minds could only conclude that such excavations consisted of intensive or in-depth testing, so the defects were latent. Appellant claims that even if the latent defect exclusion applies, he can recover for the ensuing loss caused by water damage. The exception to the latent defect exclusion for ensuing loss in appellant's policy states: Under 3.a., 3.b., 3.c. and 3.d., any ensuing loss not excluded is covered. Although water leakage is a separate peril from the latent defects, the peril of subsurface water leakage is excluded and not covered by the policy. Therefore, by the terms of the policy, appellant cannot recover for ensuing loss for water damage. The appellee was entitled to summary judgment based on the latent defect exclusion of the policy. Accordingly, this assignment of error is overruled. The decision of the trial court is affirmed. -14- It is ordered that appellee recover of appellants its costs herein taxed. The court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this court directing the Common Pleas Court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. PATTON, C.J., and SPELLACY, J., CONCUR. JOSEPH J. NAHRA JUDGE N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announcement of decision (see Rule 26). Ten (10) days from the date hereof this document will be stamped to indicate journalization, at which time .