IMG Worldwide, Inc. et al v. Westchester Fire Insurance Company

Filing 61

Memorandum Opinion and Order denying 54 defendant's Motion for reconsideration. Judge Donald C. Nugent(C,KA)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

IMG WORLDWIDE, INC., et al.,
Plaintiffs,
v.
WESTCHESTER FIRE INSURANCE, CO.,
Defendants.

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CASE NO. 1:11 CV 1594

JUDGE DONALD C. NUGENT

MEMORANDUM OPINION
AND ORDER

This matter is before the Court on Defendant, Westchester Fire Insurance Company’s
Motion for Reconsideration of the Court’s Order (ECF #52), denying the parties’ cross motions
for summary judgment on the issues of coverage. (ECF #54). Westchester’s motion cites no
new law, nor any facts that were not available at the time of its original motion for summary
judgment. A motion for reconsideration is not the proper means by which a party may raise
issues or facts that have been or could have been addressed in the original proceedings. Rather,
if a party is not satisfied with a Court ruling, made with full access to the relevant law and facts,
its dissatisfaction may be addressed at the appropriate time through an appeal.
The only newly decided case cited by the Defendants is Westfield Ins. Co. V. Custom

Agri Sys., Inc., No. 2011-1486, 2012 WL 4944305, at *1 (Ohio Oct. 16, 2012), like many of the
other cases previously relied on by Defendants involves a claim for defective construction and
faulty workmanship, brought as breach of contract action or failure to perform in an
workmanlike manner. In general under these factual scenarios courts have found that the failure
to perform appropriately under a contract or construction agreement does not equate to “property
damage” for purposes of insurance coverage. In this case, however, the Gastaldi court made
clear that the IMG Plaintiffs had no contractual relationship with the parties who sought to
recover under the insurance policy, and that they could not be held vicariously liable for the
actions of the entities who did have a direct contractual relationship with the Gastaldi Plaintiffs.
Because there was no contractual relationship between the IMG Plaintiffs in this case and the
Gastaldi Plaintiffs in the underlying action, the construction cases cited by Defendants are not
controlling, or otherwise applicable to the facts of this case.
Furthermore, even if the Defendants were correct that “property damage” and its
contractual definition “loss of use of tangible property that is not physically injured” appear to be
facially unambiguous, Ohio courts and the Sixth Circuit have recognized that facially
unambiguous language in an insurance contract may become ambiguous when applied to a
specific fact pattern. Such “latent ambiguities” arise when a fact pattern does not cleanly fit into
or fall outside the general language and definitions set forth prospectively in the contract. See,
e.g., Longaberger Co. v. U.S. Fid. & Guar. Co., 31 F.Supp.2d 595, 602 (S.D. Ohio 1998); ParkOhio Indus., Inc. v. Home Indem. Co., 975 F.2d 1215, 1219 (6th Cir. 1992). As set forth in the
prior order, this Court has found that a latent ambiguity does indeed exist in the language of this
policy as it would be applied to the facts at issue in this case.

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In conclusion, this Court finds no reason to alter the decision set forth in its October 4,
2012 Order denying the cross-motions for summary judgment on the coverage issues.
Defendant’s Motion for Reconsideration is, therefore, denied.
IT IS SO ORDERED.

/s/ Donald C. Nugent
Donald C. Nugent
United States District Judge

Date:

December 13, 2012

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