COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 69401 PAUL L. SEEGOTT, ET AL., : : Plaintiffs-Appellants : : JOURNAL ENTRY vs. : and : OPINION GREAT AMERICAN INSURANCE : COMPANY, : : Defendant-Appellee : DATE OF ANNOUNCEMENT OF DECISION : JULY 25, 1996 CHARACTER OF PROCEEDING : Civil appeal from : Common Pleas Court : Case No. 269544 JUDGMENT : AFFIRMED. DATE OF JOURNALIZATION : _______________________ APPEARANCES: For plaintiffs-appellants: Willard E. Bartel MILLER, STILLMAN & BARTEL 1610 Euclid Avenue Cleveland, Ohio 44115 For defendant-appellee: Edward J. Cass Gary L. Nicholson GALLAGHER, SHARP, FULTON & NORMAN 6th Floor, Bulkley Building 1501 Euclid Avenue Cleveland, Ohio 44115 Donald A. Lane DRODER & MILLER 125 West Central Parkway Cincinnati, Ohio 45202 -3- NAHRA, J.: In this action for a declaratory judgment, plaintiffs- appellants Paul L. Seegott and Edward I. Stillman appeal from the trial court order which denied their motion for summary judgment but granted the cross-motion for summary judgment filed by defendant-appellee Great American Insurance Company, thus terminating the case. The record reveals that in 1978, appellants, along with a partner, S. Michael Loveman, purchased a parcel of industrial property located in Hamtramck, Michigan from the Sherwin-Williams Paint Company ("Sherwin-Williams"). The property had been previously owned by Sherwin-Williams or a company later acquired by Sherwin-Williams since 1908. After their purchase, appellants leased the property to tenants which used the property for similar industrial purposes. In March, 1979, appellants purchased a liability insurance 1 policy on the property from appellee. In pertinent part, the policy stated as follows: COVERAGE A -- BODILY INJURY LIABILITY COVERAGE B -- PROPERTY DAMAGE LIABILITY The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of A. bodily injury or B. property damage 1 The first policy was in effect until March 2, 1982; at that time, another, substantially similar policy was issued to appellants and was in effect at the time appellants sold the property. -4- to which this insurance applies, caused by an occurrence and arising out of the ownership, maintenance or use of the insured premises and all operations necessary or incidental thereto, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, ***. Exclusions This insurance does not apply: *** (f) to bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental; *** (k) to property damage to (1) property owned or occupied by or rented to the injured, (2) property used by the insured, or (3) property in the care, custody or control of the insured or as to which the insured is for any purpose exercising physical control; ***. (l) to property damage to premises alienated by the named insured arising out of such premises or any part thereof; *** CONDITIONS -5- *** 4. Insured's Duties in the Event of Occurrence, Claim or Suit: (a) In the event of an occurrence, written notice containing particulars sufficient to identify the insured and also reasonably obtainable information with respect to the time, place and circumstances thereof, and the names and addresses of the injured and of available witnesses, shall be given by or for the insured to the company or any of its authorized agents as soon as practicable. (b) If claim is made or suit is brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative. (c) The insured shall cooperate with the company and, upon the company's request, assist in making settlements, in the conduct of suits and in enforcing any right of contribution or indemnity against any person or organization who may be liable to the insured ***. 5. Action Against Company: No action shall lie against the company unless, as a condition precedent thereto, there shall have been full compliance with all of the terms of this policy, ***. (Emphasis added.) In 1981, appellants began negotiating with the city of Hamtramck concerning the sale of the property. As part of this process, the city had the property inspected. Soil borings made on -6- 2 the property disclosed "numerous hazardous materials on the site." These materials consisted in part of high lead and zinc "concentrations." The city's attorney notified appellant Stillman that the cost of disposing of the materials could be as high as $800,000.00. Consequently, the purchase price of the property had to be lowered. The city eventually purchased the property from appellants in 1982. In 1983, the city hired a contractor to clean up industrial waste on the property which had been left by one of appellants' tenants. Then the city had the property graded. In 1985, the city sold the property to a refrigeration company. When that company began to build a warehouse, however, it discovered "organic chemical odors, paint residues, sludges and lead" in the soil. The company sued the city, "claiming in part breach of warranty as to the condition of the property." Eventually, these two parties settled the case after the city agreed to be responsible for clean-up costs. The clean-up was supervised by the Michigan Department of Natural Resources ("MDNR"). In March 1991, the MDNR notified Sherwin-Williams and appellants that they might be deemed a "responsible party" for clean-up costs under the Michigan Environmental Response Act. In January 1993, the city filed an action against Sherwin- Williams and appellants in Michigan state court for recovery of the 2 Quoted material is from the pleadings or exhibits attached to appellee's motion for summary judgment. -7- funds expended in cleaning up the property. In pertinent part, the city's complaint stated: 29. During the periods of time the premises were owned by Sherwin-Williams, Acme White Lead and Color Works/Acme Quality Paints, Inc., and Stillman and Seegott, and further during the period of time the premises or a portion thereof were (sic) leased to tenants of Sherwin-Williams or Stillman and Seegott, including Foster Chemical, Inc., there were numerous "releases" of hazardous substances into the soil on the site, ***. (Emphasis added.) At the same time, viz., January 1993, Sherwin-Williams filed an action in Michigan federal court, seeking a declaratory judgment 3 that it was not, or not solely, responsible for clean-up costs. The city and appellants were named as defendants in the federal suit. In its complaint, Sherwin-Williams set forth the ownership of the property over the period of years, the controversy over the condition of the soils because of the "alleged release of hazardous substances at the property," and requested the court to determine if the city could recover from Sherwin-Williams and, if so, to "equitably allocate[ ]" the costs "among the parties to this action." 3 To establish jurisdiction, Sherwin-Williams also sought a determination of whether 42 U.S.C. 9607 and 9613, the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") applied to the property with regard to the allocation of clean-up costs. -8- The record reflects that both discovery and negotiation of possible settlements proceeded in these two lawsuits, hereinafter referred to as "the underlying suits." In June 1993, appellants notified appellee under the liability insurance policy first issued in 1979 of the underlying suits. Shortly thereafter, appellee sent a reply to appellants denying their "claim." 4 As the basis for its denial, appellee stated "pollution related claims" such as the ones involved in the underlying suits were barred by the policy exclusion which precluded coverage unless the release of hazardous materials was "sudden and accidental." In April 1994, appellants filed an action against appellee in 5 the Cuyahoga County Court of Common Pleas. Appellants sought a declaratory judgment that pursuant to the insurance policies issued to appellants, appellee had a duty to defend and indemnify them with regard to the underlying suits, thus, its refusal to do so constituted both a breach of the insurance contract and a breach of appellee's duty to act in good faith toward its insureds. Appellee's answer denied the pertinent allegations of appellants' complaint and set up several affirmative defenses. Inter alia, appellee averred appellants' claims against it were 4 Appellee also reserved the right to "amend" the denial to include additional bases as they became known. 5 The Estate of S. Michael Loveman, appellants' partner during their ownership of the Hamtramck property, was later joined as a party in the action below; however, since the estate did not file a notice of appeal from the trial court's judgment, it is not a party to this appeal. -9- barred by the express terms of the policies, by the doctrines of waiver and laches, and by appellants' failure to comply with the conditions set forth in the policies. Appellee also filed a counterclaim seeking a declaratory judgment that it had no duty to defend appellants in the underlying suits. The record reflects that as discovery in this case proceeded, the underlying suits were settled by the parties to those actions. On January 31, 1995, appellants filed a motion for summary judgment in the trial court. Appellants argued they were entitled to judgment on their duty to defend claims pursuant to both the express terms of the insurance policies and persuasive legal authority. Thus, appellants directed the court's attention to only the pleadings, the insurance policies, and copies of case law. On April 26, 1995, appellee filed a brief in opposition to appellants' motion and its own cross-motion for summary judgment. Appellee contended summary judgment in its favor was appropriate for the following reasons: 1) no coverage was owed due to the "pollution exclusion" of the policies; 2) no coverage was owed due to the "owned property" exclusion of the policies; 3) appellants failed to meet the condition precedent of giving appellee reasonable notice of the underlying claims; and 4) appellants had failed to support their bad faith claim. In addition to its motion, appellee filed a volume of exhibits and a separate volume of case law. The exhibits included, inter alia, the following: pleadings and other documents, such as appellants' affidavits and answers to interrogatories, filed in the -10- underlying suits; appellants' answers to appellee's interrogatories; and the affidavits of two executives in the insurance industry. On May 31, 1995 appellants filed a brief in opposition to appellee's motion, in which they essentially restated the arguments previously made in their own motion for summary judgment. Once again, appellants neither submitted evidentiary materials with 6 their brief, nor made any arguments with respect to their bad faith claim. On June 26, 1995 appellee filed a reply, attaching thereto appellants' deposition testimony filed in one of the underlying suits. On July 13, 1995 the trial court simply granted appellee's "motion for summary judgment." Subsequently, the trial court issued an order in which, without opinion, it overruled appellants' motion for summary judgment, sustained appellee's cross-motion for summary judgment, and entered final judgment for appellee on both appellants' complaint and appellee's counterclaim. Appellants appeal from the foregoing order, stating the following as their sole assignment of error: THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT IN FAVOR OF DEFENDANT, GREAT AMERICAN INSURANCE COMPANY, IN THAT THERE EXISTS A NUMBER OF GENUINE ISSUES OF MATERIAL FACT AND BECAUSE DEFENDANT WAS NOT ENTITLED TO JUDGMENT AS A MATTER OF LAW. 6 On June 2, 1995, the Estate of S. Michael Loveman also filed a brief in opposition to appellee's motion to which some evidentiary materials were attached for the trial court's consideration. -11- Appellants argue summary judgment in appellee's favor was improper because there remained genuine issues of fact concerning their claim that appellee breached its duty to defend or indemnify them in the underlying suits. Citing, inter alia, City of Willoughby Hills v. Cincinnati Ins. Co. (1984), 9 Ohio St.3d 177, in support of their position, appellants contend the allegations made in the underlying suits were "arguably" within policy coverage, therefore, appellee was not entitled to summary judgment. As a corollary to this position, since the trial court did not clarify the basis for its decision, appellants assert the following three issues which would determine coverage under the policies were jury questions rather than matters resolvable by summary judgment: 1) whether the "pollution exclusion" applied; 2) whether the "owned property" exclusion applied; and 3) whether the notice they gave appellee of the underlying suits was adequate. Upon a review of the record, however, this court finds appellants' position and arguments to be without merit and also finds this case may be resolved by addressing only the first issue set forth above, since the Ohio Supreme Court's opinion in Hybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd. (1992), 64 Ohio St.3d 657 is dispositive of this appeal. Civ.R. 56(C) makes summary judgment proper when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Norris v. Ohio Std. Oil Co. (1982), 70 Ohio St.2d 1. Once it is made and properly -12- supported, a motion for summary judgment forces the nonmoving party to produce evidence on any issue for which that party bears the burden of production at trial. Wing v. Anchor Media, Ltd. of Texas (1991), 59 Ohio St.3d 108. In reviewing a motion for summary judgment, the inferences to be drawn from the evidence are to be viewed in a light most favorable to the nonmovant; nevertheless, if reasonable minds could come only to the conclusion there is no genuine issue of material fact, summary judgment must be granted. Leibreich v. A.J. Refrigeration, Inc. (1993), 67 Ohio St.3d 266 at 269; Welco Industries, Inc. v. Applied Cos. (1993), 67 Ohio St.3d 344 at 346; Midwest Specialties, Inc. v. Firestone Tire & Rubber Co. (1988), 42 Ohio App.3d 6. The facts of this case are substantially the same as those faced by the supreme court in Hybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd., supra. In Hybud the plaintiffs owned a landfill and vehicles to transport industrial waste. They purchased comprehensive general liability insurances policies from defendant. Under the policies, as in this case, defendant agreed to pay any sums it became "legally obligated to pay" for bodily injury or property damage caused by an "occurrence." In addition, the policies in Hybud contained what the supreme court termed the "Standard Pollution Exclusion." This exclusion was identical to the pollution exclusion set forth in appellants' policies. -13- The plaintiffs in Hybud were sued for environmental damage which had occurred over a long period of time. They then made a claim under their policies with defendant. When defendant refused to defend plaintiffs in the environmental lawsuits, plaintiffs sought a declaratory judgment that defendant was required to defend them under the policies. Both the trial court and the court of appeals agreed with plaintiffs. On appeal to the Ohio Supreme Court, however, the lower courts' decisions were reversed. In its opinion in Hybud, the supreme court addressed and answered each of the arguments appellants herein make with respect to the "pollution exclusion" clause, viz., 1) it stated the language of the clause was not ambiguous and the word "sudden" meant exactly what it ordinarily meant, i.e., "abrupt;" 2) it stated Buckeye Union Ins. Co. v. Liberty Solvents & Chemicals Co. (1987), 17 Ohio App.3d 127, upon which the lower courts had relied, was wrongly decided and was overruled; and 3) it stated both public policy and the weight of legal authority supported its conclusion the insureds were not entitled to coverage under the facts of the case. In this case, as in Hybud, appellants' policies contained the "standard pollution exclusion," the underlying suits claimed the discharge of pollutants on the property had occurred over long periods of time, and the clear language of the insurance policies precluded coverage of such an "occurrence." To overcome the obvious import of Hybud to the resolution of this appeal, however, appellants argue this court may disregard it. -14- Appellants cite Rule 1(B), Sup.Ct. Rules for the Reporting of Ops. as authority for their position, contending that because the Hybud opinion lacks a syllabus, it is not controlling law, and, therefore, this court instead should follow the rationale of Buckeye Union Ins. Co. v. Liberty Solvents & Chemicals Co., supra. Appellants' argument is not persuasive. First, this court is a court of inferior jurisdiction, therefore, it is bound by both the doctrine of stare decisis and the rules of appellate procedure. Sanborn Plastics Corp. v. St. Paul Fire & Marine Ins. Co. (1993), 84 Ohio App.3d 302 at footnote 1; see, also, Battig v. Forshey (1982), 7 Ohio App.3d 72 at headnote 3. Moreover, the Sup.Ct. Rules for the Reporting of Ops., Rule 2(G)(2), states in pertinent part: *** Opinions reported in the Ohio Official Reports *** shall be considered controlling authority for all purposes in the judicial district in which they were rendered unless and until each such opinion is reversed or modified by a court of competent jurisdiction; (Emphasis added.) The Ohio Supreme Court, a court of both competent and superior jurisdiction, has expressly overruled the decision rendered in Buckeye Union; therefore, this court declines to accept appellants' invitation to disregard the clear application of Hybud to their assignment of error. On the facts of this case, appellee had no duty to defend or indemnify appellants with regard to the underlying suits since the "pollution exclusion" applied to bar coverage. Thus, no genuine -15- issue of material fact remained with regard to appellants' claims and the trial court correctly concluded appellee was entitled to judgment as a matter of law. Hybud, supra; Plasticolors, Inc. v. Cincinnati Ins. Co. (1992), 85 Ohio App.3d 547 (motion to certify the record overruled (1993), 67 Ohio St.3d 1467); cf. Sanborn Plastics Corp. v. St. Paul Fire & Marine Ins. Co., supra. Accordingly, appellants' sole assignment of error is overruled. The order of the trial court is affirmed. -16- 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. SPELLACY, C.J., and O'DONNELL, 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 .