COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 70873 THE ESTATE OF MICHAEL A. IZOLD, : ET AL. : PLAINTIFFS-APPELLANTS : v. : JOURNAL ENTRY : SUBURBAN POWER PIPING : AND CORPORATION : DEFENDANT : OPINION : and : : TRANSCONTINENTAL INSURANCE : COMPANY : NEW PARTY : DEFENDANT-APPELLEE : DATE OF ANNOUNCEMENT OF DECISION: MARCH 20, 1997 CHARACTER OF PROCEEDING: Civil appeal from Common Pleas Court, No. CV-290372. JUDGMENT: AFFIRMED. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiffs-Appellants: James E. Behrens, Esq. Joseph R. Gioffre, Esq. Michael S. Schroeder, Esq. Behrens & Gioffre 1700 Terminal Tower Cleveland, OH 44113 For Suburban Power Piping James S. Gowan, Esq. Corporation: Seventh Floor, Bulkley Building 1501 Euclid Avenue Cleveland, OH 44115 For Transcontinental Insurance W. Charles Curley, Esq. Company: Keener, Doucher, Curley & Patterson 88 E. Broad Street, No. 1750 Columbus, OH 43215-3506 - 3 - JAMES D. SWEENEY, C.J.: Plaintiffs-appellants Estate of Michael Izold, et al., appeal from the May 30, 1996, half-sheet status form order of the trial court which determined that: (1) the stop gap indemnity coverage contained in the insurance policy issued by new party defendant- appellee Transcontinental Insurance Company (the "insurer") to the insured, defendant Suburban Power Piping Corporation ("SPP" or "insured"), which was in addition to a commercial general liability policy, did not obligate the insurer to indemnify the insured in 1 the event of an adverse judgment in an intentional tort case ; and, (2) the United States Bankruptcy Court's orders concerning the existence of SPP's insurance coverage towards the accident in question were not binding on the trial court. For the reasons adduced below, we affirm. A review of the record on appeal indicates that Michael Izold was an ironworker employed by SPP. While working on a jobsite on January 18, 1991, Mr. Izold was the victim of an industrial on- the-job accident and died that day after being crushed by a steel beam which had fallen on him. On June 24, 1992, plaintiffs filed a complaint for intentional tort/wrongful death survivorship against SPP. See Blankenship v. Cincinnati Milacron Chemicals, Inc. (1982), 69 Ohio St.2d 608, 433 N.E.2d 572 (established a cause of action for workplace intentional torts); Fyffe v. Jeno's Inc. 1 The insurer never denied its obligation to defend the insured on the claim for intentional tort. - 4 - (1991), 59 Ohio St.3d 115, 570 N.E.2d 1108 (element of employer's "intent" demonstrated by the presence of three factors). Thereafter, SPP filed a Chapter 7 bankruptcy petition in federal bankruptcy court. The bankruptcy court ordered a stay of proceedings on September 9, 1992. Plaintiffs were granted relief from the stay order on March 22, 1993, so that plaintiffs could continue the negligence action in state court against the insurer, 2 who had assumed the financial obligation of the insured, SPP. On July 7, 1994, plaintiffs voluntarily dismissed the state court action without prejudice pursuant to Civ.R. 41(A). On June 2, 1995, plaintiffs refiled the action in state court. On July 25, 1995, the bankruptcy court again granted relief from the automatic stay of proceedings, thereby allowing the refiled state court 3 action to proceed. 2 It was in this relief from stay order, which was submitted on a form authored by movant's counsel and which was unopposed by the interested parties (the Debtor [SPP], the U.S. Trustee and the Case Trustee) and was heard on the brief of the movant- creditor and a review of the pleadings, that the bankruptcy court stated that: The Court finds that Suburban Power and Piping Corporation is insured and that the Creditor [Estate of Michael Izold] has moved for Relief from Stay to continue its action against the insurance carrier, only, which would not interfere with the bankruptcy proceeding as the financial obligation of the Debtor has been assumed by the insurer. 3 In this second relief from order of stay, which was submitted for approval on a form order authored by movant's counsel and heard, without objection by the interested parties, on the statements of movant's counsel and a review of the pleadings, the bankruptcy court stated: - 5 - The intentional tort action was heard before a jury in February of 1996, with a verdict being returned in favor of plaintiffs against SPP in the amount of $500,000 in compensatory damages. (Transcripts of the trial proceedings and deposition * * * 3. That although this Court previously granted relief from stay to enable the Movant to pursue the insurance carrier of Suburban Power & Piping Corporation, the initial proceeding in state court was dismissed which will now necessitate a refiling of the Complaint and service upon Suburban Power & Piping Corp. 4. That relief from stay is necessary in this bankruptcy proceeding in order to enable the Movant to re-serve Suburban Power & Piping Corp., Debtor and Defendant in the state court proceedings with the Complaint for purposes of liquidating the claim and collecting from the insurance carrier for the Debtor. 5. That Suburban Power & Piping Corp. is, in fact, insured for the claim pending against it by the Movant and that service upon Suburban Power & Piping Corp. of a Complaint in a state court proceeding thereby enabling the Movant to recover against the insurance carrier of the Debtor would not interfere with the bankruptcy case because of the financial obligation owed to this Creditor by the Debtor will be assumed by the insurer of the Debtor. 6. Furthermore, the negligence action against the Debtor has not yet been liquidated and represents a non-core proceeding which should be pursued in state court to its conclusion. * * * - 6 - transcripts are not in the record on appeal.) In the verdict, the jury specifically answered the following interrogatory: 2. Do you find that an officer, supervisor or foreman of Suburban Power Piping Corporation knew that harm to Michael A. Izold on January 18, 1991 was substantially certain to occur. Yes ("Yes" or "No") a. If the answer to No. 2 is "Yes," please identify: (i) The individual possessing this knowledge. Robert Palumbro. (ii) The event which was known to be substantially certain to occur. The beam would fall if the chain falls were removed. 3. Do you find that an officer, supervisor or foreman of Suburban Power Piping Corporation, under such circumstances and with the actual knowledge that harm was substantially certain to occur Mr. Izold, required Mr. Izold to perform the dangerous task. Yes ("Yes" or "No") a. If the answer to No. 3 is "Yes," please identify: (i) The dangerous task which Mr. Izold was required to perform. Working underneath a suspended load. (ii) The individual who required Mr. Izold to perform the task. Robert Palumbro. (Note: Answers of the jury are underlined for clarity.) - 7 - Thereafter, plaintiffs filed for an award of prejudgment interest. New party defendant insurance company then sought leave, with success, to intervene for the sole purpose of opposing the plaintiffs' motion for prejudgment interest. Plaintiffs then sought a declaratory judgment relative to the applicability of the exclusion of coverage in intentional tort Blankenship-type claims in the endorsement policy. An evidentiary hearing was conducted relative to the prejudgment interest motion and the declaratory judgment matter. (A transcript of the May 17, 1996, hearing is not in the record on appeal.) Subsequent to this evidentiary hearing, the trial court issued the order appealed from, denying the motion for prejudgment interest and precluding the insurer from indemnifying the insured through stop gap coverage, thereby effectively preventing the ability of plaintiffs to seek the amount of the judgment from the insurer. This appeal, containing two assignments of error, addresses only the issue of stop gap insurance coverage relative to the intentional tort claim. I THE EXCLUSION IN THE OHIO AMENDATORY STOP GAP LIABILITY ENDORSEMENT IS UNENFORCEABLE, THEREFORE APPELLEE TRANSCONTINENTAL MUST INDEMNIFY SUBURBAN FOR THE PLAINTIFFS- APPELLANTS' INTENTIONAL TORT CLAIM. In this assignment, appellants argue that the policy's stop gap endorsement exclusion of intentional torts is unenforceable on - 8 - two grounds: (1) that enforcement of the exclusion would eliminate all stop gap liability coverage thereby rendering the stop gap coverage purchased to be illusory (see generally pages 12-20 of appellants' brief); and, (2) that the exclusion clause in the stop gap endorsement is unenforceable because it is unconscionable and against public policy (see generally pages 20-31 of appellants' brief). Prior to addressing the merits of the argument, this court notes the following general propositions in construing an insurance contract/policy: Provisions of a contract of insurance that are reasonably susceptible of more than one interpretation will be construed strictly against the insurer and liberally in favor of the insured. King v. Nationwide Ins. Co. (1988), 35 Ohio St.3d 208, 519 N.E.2d 1380. However, if a contract of insurance is clear and unambiguous, its interpretation is a question of law to be decided by the judge. Olmstead v. Lumbermans Mutl. Ins. Co. (1970), 22 Ohio St.2d 212, 259 N.E.2d 123; Leber v. Smith (1994), 70 Ohio St.3d 548, 639 N.E.2d 1159. Additionally, exclusions in an insurance policy must be clear and exact in order to be given effect. Lane v. Grange Mut. Co. (1989), 45 Ohio St.3d 63, 543 N.E.2d 488. Presrite Corp. v. Commercial Union Ins. Co. (May 16, 1996), Cuyahoga App. No. 68704, unreported, 1996 Ohio App. LEXIS 1994, at 2. The stop gap endorsement in issue, issued for the period of November 1, 1990 through November 1, 1991, in the amount of $1,000,000 in coverage, provides in pertinent part the following: * * * - 9 - OHIO AMENDATORY STOP GAP LIABILITY ENDORSEMENT This endorsement modifies insurance provided under the following: Stop Gap Liability Coverage Part This insurance is subject to the limitations imposed by R.C. 4123.82 of the Revised Code and is amended as follows: 1. INSURING AGREEMENT is amended to read: Bodily injury a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" to which this insurance applies. The "bodily injury" must be caused by an "occurrence" to an employee of the insured. The employee's payroll must have been reported and declared under a "Worker's Compensation Law" of a state, territory or possession designated in Item 5 of the Declarations. The employee must have been injured in the course of employment. This insurance applies only to "bodily injury" occurring within the policy territory and caused by: (1) An accident occurring during the policy period; or (2) Sickness or disease caused or aggravated by exposure to conditions in the employment of the insured. The last day of the exposure to such conditions must occur during the policy period. b. We will have the right and duty to defend any "suit" seeking damages. But: (1) The amount we will pay for damages is limited as described in SECTION III - LIMITS OF INSURANCE; (2) We may investigate and settle any claim or "suit" at our discretion; and - 10 - (3) Our right and duty to defend end when we have used up the applicable Limit of Insurance in the payment of judgments or settlements. c. We will pay all sums you legally must pay as damages because of "bodily injury" to your employees. The damages we will pay, where recovery is permitted by law, include damages: (1) for which you are liable to a third party by reason of a claim against you by that third party to recover the damages claimed against such third party as a result of injury to your employee; (2) for care and loss of services; and (3) for consequential "bodily injury" to a spouse, child, parent, brother or sister of the injured employee; provided that these damages are the direct consequence of "bodily injury" that arises out of and in the course of the injured employee's employment to you; and (4) because of "bodily injury" to you employee that arises out of and in the course of employment, claimed against you in a capacity other than as employer. 2. EXCLUSIONS. The following exclusion is added: g. to "bodily injury" intentionally caused or aggravated by the named insured, any executive officer, director, stockholder, or partner, or "bodily injury" resulting from an act which is determined by a court to have been committed by the named insured, any executive officer, director or stockholder or partner with the belief that injury is substantially certain to occur. However, the cost of defending such claims is covered. (Emphasis added.) - 11 - * * * As a historical footnote, endorsements such as the one sub judice were very popular in the wake of Blankenship in an effort by employers to protect themselves from the potential financial ravages of employer intentional torts. Thereafter, the public policy of allowing insurance for such intentional torts and determining whether the particular individual insurance policies covered employer intentional torts was actively debated and litigated beginning with Wedge Products Inc. v. Hartford Equity Sales Co. (1987), 31 Ohio St.3d 65, 509 N.E.2d 74. Ultimately the Supreme Court addressed the issue, providing that it is clear that an employer may secure "insurance against compensatory damages sought by an employee in tort where the employer's tortious act was one performed with the knowledge that injury was substantially certain to occur." Harasyn v. Normandy Metals (1990), 49 Ohio 4 St.3d 173, 551 N.E.2d 962, syllabus. In so providing, the Harasyn court invalidated the long-held public policy in Ohio against the provision of intentional tort insurance for "substantially certain"-type intentional torts. Despite the Supreme Court's determination that R.C. 4121.80 was unconstitutional in toto, Brady v. Safety-Kleen (1991), 61 Ohio St.3d 624, 576 N.E.2d 722, and the 4 R.C. 4121.80 was enacted by the General Assembly shortly before the Supreme Court decided Harasyn. R.C. 4121.80 was to govern intentional tort actions against employers and established a statewide insurance fund to pay all claims for injuries resulting from employer intentional torts, whether the employer had a direct intent to cause the injury or whether the employer knew to a substantial certainty that the injury would occur. - 12 - General Assembly's formal repeal of R.C. 4121.80 effective December 1, 1992, this position allowing intentional tort insurance was most recently affirmed by this court in Ward v. Custom Glass & Frame, Inc. (Cuyahoga, 1995), 105 Ohio App.3d 131, 663 N.E.2d 734, and Presrite Corp. v. Commercial Union Ins. Co., supra, as well as in Baker v. Aetna Casualty & Surety Co. (Franklin, 1995), 107 Ohio App.3d 835, 669 N.E.2d 553, and Miller v. Midwestern Indemnity Co. (February 23, 1996), Montgomery App. No. 15360, unreported, 1996 Ohio App. LEXIS 1541. In the present case, the endorsement language specifically excludes liability coverage for both "direct intent" and "substantial certainty" categories of intentional torts. It was the jury in this case that found that SPP had committed a "substantial certainty" category intentional tort, a category of tort, according to Harasyn, for which an employer may purchase insurance. Based on this, the trial court properly determined that the exclusion in the endorsement precluded coverage for an intentional tort by SPP. Appellants attempt to defeat the application of Harasyn by arguing that coverage under the endorsement is illusory, giving the employer no coverage or benefit in exchange for the paid premiums, if the exclusion therein is given force and effect. Whether the endorsement is illusory or not is problematic for several reasons. First, the record on appeal does not indicate what the employer intended in purchasing the endorsement. Second, keeping in mind - 13 - the liability issues then extant at the time of the making of the policy in the wake of Blankenship, the clear terms of the exclusion would not provide coverage for intentional torts during the term of the policy. However, the endorsement's language specifically provides for the provision of a defense to a claim for intentional tort. Surely this defense is of no small benefit to the insured. Again, given the lack of evidence in the record demonstrating the insured's intentions in seeking the endorsement, we cannot say that the trial court erred in giving effect to the exclusion where some benefit to the insured is evident from the face of the endorsement. The first assignment of error is overruled. II APPELLEE-TRANSCONTINENTAL IS BOUND BY THE UNITED STATES BANKRUPTCY COURT'S RULING THAT SUBURBAN IS INSURED BY APPELLEE- TRANSCONTINENTAL FOR THE BLANKENSHIP INTENTIONAL TORT COMMITTED AGAINST MICHAEL A. IZOLD AND IS THEREFORE COLLATERALLY ESTOPPED FROM NOW ARGUING AGAINST COVERAGE. The doctrine of collateral estoppel was discussed by this court as follows: Collateral estoppel is the preclusion of the relitigation in a second action of an issue or issues that have been actually and necessarily litigated and determined in a prior action. Whitehead v. Gen. Tel. Co. (1969), 20 Ohio St.2d 108, 112, 254 N.E.2d 10. In order to assert collateral estoppel successfully, a party must plead and prove the following elements: (1) The party against whom estoppel is sought was a party or in privity with a party to the prior action; (2) there was a final judgment on the merits in the previous case after a full and fair opportunity to litigate the issue; (3) the issue must have - 14 - been admitted or actually tried and decided and must be necessary to the final judgment; and (4) the issue must have been identical to the issue involved in the prior suit. Monahan v. Eagle Picher Industries, Inc. (1984), 21 Ohio App.3d 179, 486 N.E.2d 1165; LaBonte v. LaBonte (1988), 61 Ohio App.3d 209, 572 N.E.2d 704. Hughes v. Goda (Sept. 1, 1994), Cuyahoga App. No. 66150, unreported, 1994 Ohio App. LEXIS 3892, at 3. After reviewing the texts of the two relief from stay orders issued by the bankruptcy court, see footnotes 2 and 3, supra, we conclude that collateral estoppel does not apply to the issue of exclusion of intentional tort insurance coverage. This conclusion is based on a number of reasons. First, we conclude that the insurer was in privity with the insured-employer, SPP, at the time of the second relief from stay because the insurer had knowledge of the bankruptcy action of its insured when the case was returned to common pleas court from bankruptcy court in 1993, thereby satisfying the first element of Hughes. However, the reliefs from stay were not final orders on the merits of the bankruptcy petition, thereby leaving the second element of Hughes unsatisfied. Likewise, the third element of Hughes is unsatisfied because the issue of exclusion of intentional tort coverage was not "admitted or actually tried" in the bankruptcy court's very limited review and proceedings relative to the motions for relief from stay. Accordingly, the trial court did not err in ruling that the exclusion applied to the claim at hand. - 15 - The second assignment of error is overruled. Judgment 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. Exceptions. TIMOTHY E. MCMONAGLE, J. and JOHN T. PATTON, J., CONCUR. JAMES D. SWEENEY CHIEF JUSTICE N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc.App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E) unless a motion for reconsideration with supporting brief, per App. R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the .