Hartford Accident and Indemnity Company et al v. FFP Holdings LLC et al

Filing 238

Memorandum Opinion and Order: I grant CNA's and Westchester's motions for summary judgment, (Doc. No. 219; Doc. No. 223), and deny the Policyholders' motion. (Doc. No. 217). re 217 219 223 . Judge Jeffrey J. Helmick on 9/28/2020. (S,AL)

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
WESTERN DIVISION
Hartford Accident and Indemnity
Company, et al.,

Case No. 3:15-cv-377

Plaintiffs,
v.

MEMORANDUM OPINION
AND ORDER

FFP Holdings LLC, et al.,
Defendants.
I. INTRODUCTION
This litigation arises from an insurance coverage dispute concerning groundwater
contamination in an area near a manufacturing plant in Elkhart, Indiana. The remaining parties in
this case have filed motions for summary judgment on the dispositive issues of (i) whether Ohio or
Indiana law applies to pollution exclusions in applicable liability insurance policies and (ii) whether
those exclusions are enforceable. (Doc. No. 217, 219, and 223). The parties have completed
briefing on these motions. For the reasons stated below, I grant the insurers’ motions for summary
judgment.
II.

BACKGROUND

In 1986, Flexible Foam Products, Inc., purchased substantially all of the assets of another
polyurethane foam manufacturer known as Indiana Foam, Inc. These assets included a
manufacturing plant located at 1900 West Lusher in Elkhart, Indiana. Chemical runoff from that
plant unfortunately made its way into the groundwater nearby. Contamination in the groundwater

first was identified in the mid-1980s and the Environmental Protection Agency (“EPA”) added the
Elkhart groundwater site to its National Priorities List in 2008.
The EPA notified Flexible Foam in May 2011 that the EPA had determined the Lusher
plant was responsible for the groundwater contamination. The EPA subsequently sought
reimbursement for costs incurred, and expected to be incurred in the future, in remediating the
pollution.
FFP Holdings, LLC (as successor in interest to Flexible Foam Products, Inc.), Ohio
Decorative Products, LLC, and Moeller Land & Cattle Co., Inc. (collectively, “Policyholders”), seek
to recover these costs by invoking coverage under insurance policies issued by American Casualty
Company of Reading, PA, Continental Casualty Company, National Fire Insurance Company of
Hartford, Transportation Insurance Company, and Valley Forge Insurance Company (collectively,
“CNA”), and excess insurance policies issued by Westchester Fire Insurance Company
(“Westchester”). FFP Holdings was wholly owned by Ohio Decorative Products, LLC, which
manufactured metal parts for appliances and automobiles. Moeller Land & Cattle Co. owned
manufacturing plants which it leased to Flexible Foam and Flexible Foam’s affiliates.
CNA issued a total of 35 policies to one or more of the Policyholders between 1983 and
2014. (See Doc. No. 221-1). The Policyholders seek coverage from CNA under ten policies in
effect between 2000 and 2011, (Doc. No. 217-1 at 11-12), and from Westchester under seven excess
policies in effect between 1985 and 1994. (Doc. No. 223 at 12-13). Each of these policies contained
a pollution exclusion. The CNA policies exclude coverage for bodily injury and property damage
arising out of the release of toxic chemicals, contaminants, or pollutants into the land, air, or water.1

1

Some of these policies include a more-limited exclusion provision which provided that the
exclusion did not apply if the release of pollutants was sudden and accidental. (See Doc. No. 221 at
34). The Policyholders do not argue the contamination was the result of a sudden and accidental
release.
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(See, e.g., Doc. No. 221-37 at 5-6). The Westchester policies contain a similar exclusion to coverage
for liability arising out of the release of pollutants. (See, e.g., Doc. No. 215-1 at 16).
The parties’ dispute centers on which state’s law applies to the insurance contracts – Ohio’s
or Indiana’s. Under Ohio law, the pollution exclusions are enforceable, and the Policyholders are
not entitled to coverage under either the CNA or the Westchester policies. Under Indiana law, the
pollution exclusions are unenforceable. Both CNA and Westchester seek summary judgment on the
basis that the pollution exclusions are enforceable and bar the Policyholders’ requests for coverage.
(Doc. No. 219 and 223). The Policyholders seek summary judgment against CNA but not
Westchester. (Doc. No. 217).
III.

STANDARD

Summary judgment is appropriate if the movant demonstrates there is no genuine dispute of
material fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a).
All evidence must be viewed in the light most favorable to the nonmovant, White v. Baxter Healthcare
Corp., 533 F.3d 381, 390 (6th Cir. 2008), and all reasonable inferences are drawn in the nonmovant’s
favor. Rose v. State Farm Fire & Cas. Co., 766 F.3d 532, 535 (6th Cir. 2014). A factual dispute is
genuine if a reasonable jury could resolve the dispute and return a verdict in the nonmovant’s favor.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A disputed fact is material only if its
resolution might affect the outcome of the case under the governing substantive law. Rogers v.
O’Donnell, 737 F.3d 1026, 1030 (6th Cir. 2013).
IV.
A.

ANALYSIS

APPLICABLE LAW

A federal court exercising diversity jurisdiction applies the choice-of-law rules of the state in
which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941); State Farm Mut. Auto. Ins.
Co. v. Norcold, Inc., 849 F.3d 328, 331 (6th Cir. 2017). Where conflicting laws of two or more states
3

might apply to the interpretation of a liability insurance policy, Ohio determines which state’s law
governs the dispute by applying Section 188 of the Restatement (Second) of Conflicts. See Gries
Sports Ent., Inc. v. Modell, 473 N.E.2d 807 (Ohio 1984) and Nationwide Mut. Ins. Co. v. Ferrin, 487
N.E.2d 568 (Ohio 1986).
Section 188 includes the following factors as those most relevant to determining which
state’s law applies to a particular contract:
(a) the place of contracting,
(b) the place of negotiation of the contract,
(c) the place of performance,
(d) the location of the subject matter of the contract, and
(e) the domicile, residence, nationality, place of incorporation and place of business
of the parties.
Restatement (Second) of Conflict of Laws § 188(2) (1971); see Nat’l Union Fire Ins. Co. v. Watts, 963
F.2d 148, 150 (6th Cir. 1992) (“Ohio choice of law rules mandate that the law of the state with the
more significant relationship to the contract should govern disputes arising from it.”).
In insurance cases, the Restatement offers a way to further narrow the field of the potentially
relevant contacts. In such cases, courts seek to determine which state “the parties understood was
to be the principal location of the insured risk during the term of the policy, unless with respect to
the particular issue, some other state has a more significant relationship under the principles stated
in § 6 to the transaction and the parties, in which case the local law of the other state will be
applied.” Restatement (Second) of Conflict of Laws § 193.
Where the parties have not included a choice-of-law provision, and their intentions with
respect to which state’s law should apply “cannot be ascertained, it may at least be said, subject
perhaps to rare exceptions, that they expected that the provisions of the contract would be binding
upon them.” Restatement (Second) of Conflict of Laws § 188, comment b. See also Ohayon v. Safeco
Ins. Co. of Illinois, 747 N.E.2d 206, 212 (Ohio 2001) (“The Restatement’s contractual choice-of-law
rules will protect the justified expectations of the parties who bargain for those terms.”).
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1.

CNA Policies – § 188 Factors
a.

The Place of Contracting

As the Policyholders note, the phrase “the place of contracting” is used to refer to “the place
where occurred the last act necessary, under the forum’s rules of offer and acceptance, to give the
contract binding effect . . . .” Restatement (Second) of Conflict of Laws § 188 cmt. e. CNA argues
the place of contracting is Ohio, because the CNA policies were negotiated through Ohio-based
brokers by Ohio-based employees of the Policyholders and the premiums for the CNA policies were
paid from Ohio. (See Doc. No. 221 at 20-24, 27). The Policyholders contend there is no conclusive
evidence as to what the last necessary act was and this factor is “relatively insignificant . . . [so it] is
entitled to little or no weight . . . .” (Doc. No. 217-1 at 25).
Even if § 188 suggests the place of contracting does little on its own to move the needle
toward one state’s law over another, Ohio has adopted that factor as part of the contractual choiceof-law analysis. Moreover, it is not “impossible” to determine the place of contracting in this case.
(Doc. No. 232 at 19). The Policyholders do not dispute the insurance agencies that procured the
policies were based in Ohio, the insurance premiums were paid from Ohio, and its employees who
sought the policies – and who would have signed any required term sheet or policy
acknowledgment, as the Policyholders hypothesize – were based in Ohio. (See Doc. No. 217-1 at
25). Whatever the “last necessary act” was to form a contract between CNA and the Policyholders,
there is no genuine dispute that it occurred in Ohio.
b.

Place of Negotiation

The state where the parties “negotiate and agree on the terms of their contract . . . has an
obvious interest in the conduct of the negotiations and in the agreement reached.” Restatement
(Second) of Conflict of Laws § 188 cmt. e. This factor has less importance, however, “when there is

5

no one single place of negotiation and agreement, as, for example, when the parties do not meet but
rather conduct their negotiations from separate states by mail or telephone.” Id.
CNA argues this factor also points toward the applicability of Ohio law, because the
Policyholders’ employees who were primarily responsible for obtaining the insurance policies were
in Ohio, as were the insurance brokers retained by the Policyholders and the CNA underwriting
offices. (See, e.g., Doc. No. 230 at 21). The Policyholders argue this factor is unclear because (i) the
Policyholders’ president, Charles Moeller, typically was in Florida at his winter home when the
insurance policies were purchased and when John Stepelton, an executive and officer with FFP and
Ohio Decorative Products who was involved with the procurement of insurance policies, presented
the insurance proposals to him; (ii) the policies do not uniformly say they were underwritten by
Ohio-based offices; (iii) there is no evidence anyone at the branch offices negotiated the policies;
and (iv) there was no evidence the policies were negotiated in person. (See, e.g., Doc. No. 217-1 at
25-26; Doc. No. 232 at 17-18).
The Policyholders’ arguments are not persuasive. Even if Moeller was in Florida when
Stepelton communicated with him about the policies, there is no evidence Moeller was involved in
negotiations for the policies, either while he was in Florida or while he was in Ohio. (Doc. No. 2218 at 18 (“Stepelton Rule 30(b)(6) deposition”)).
Further, the policies which include a specific reference to an underwriting office refer to
Ohio-based offices. Policyholders rely on their Ohio-based insurance brokers to procure insurance
policies on their behalf, (Doc. No. 221-8 at 19), and there is no evidence that the policies at issue in
this case were underwritten by an office outside of Ohio. While one policy refers to an Illinois
underwriter, (Doc. No. 221-43), the Policyholders do not dispute that they do not seek coverage
under this policy. (See Doc. No. 236 at 25, n.13).

6

Finally, while the parties may not have met in person to negotiate the policies, the evidence
demonstrates that the telephone calls, emails, faxes, and mailings were made and received by
individuals in Ohio. Though the place-of-negotiation factor may be entitled to less weight than
other factors in the specific circumstances of this case, that factor points toward the application of
Ohio law.
c.

The Domicile, Residence, Nationality, Place of Incorporation, and
Place of Business of the Parties

This factor considers “places of enduring relationship to the parties,” and takes on relative
degrees of importance in correlation to “the issue involved and . . . the extent to which [these places]
are grouped with other contacts.” Restatement (Second) of Conflict of Laws § 188 cmt. e. “The
fact that one of the parties is domiciled or does business in a particular state assumes greater
importance when combined with other contacts, such as that this state is the place of contracting or
of performance . . . .” Id.
American Casualty Company, Continental Casualty Company, National Fire Insurance
Company, Transportation Insurance Company, and Valley Forge Insurance Company are domiciled
or incorporated in Illinois and Pennsylvania. The parties do not dispute that these contacts are
entitled to little or no weight in the choice-of-law analysis. (Doc. No. 217-1 at 26; Doc. No. 230 at
15-19).
FFP Holdings, Ohio Decorative Products, and Moeller Land & Cattle each are incorporated
or formed in Ohio. There appears to be no dispute that Ohio Decorative Products and Moeller
Land & Cattle have their principal places of business in Ohio. The Policyholders argue, however,
that FFP Holdings has its principal place of business in Elkhart, Indiana:
[I]ts Elkhart plant was considered to be the company’s headquarters . . . because
company-wide engineering, accounting, and research and development work was
performed there, because it served as the company’s trucking hub, and because it and
its fellow Elkhart plant were unique among the company’s other facilities in terms of
their payroll-processing and accounts-payable systems and banking relationships.
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(Doc. No. 217-1 at 27).
CNA strongly disputes this contention. CNA first argues the Policyholders are judicially
estopped from claiming Indiana is FFP Holdings’ principal place of business because they previously
have repeatedly represented in court and tax filings that FFP Holdings’ principal place of business is
Spencerville, Ohio. (See, e.g., Doc. No. 230 at 15-19). CNA also argues the evidence demonstrates
the Spencerville location accounted for a greater percentage of the Policyholders’ economic activity
than the Elkhart location:
Even if the Court were to consider the amount of economic activity at each of
Policyholders’ operation sites, that evidence shows that the Spencerville site is
highest and that Elkhart is never more than 12% of total sales. Accounting records
demonstrate that Flexible Foam’s Elkhart, Indiana operation was not “principal” in
any sense, but instead only was a fraction of Flexible Foam’s total manufacturing
costs and sales income. Manufacturing costs and sales income were higher at
Flexible Foam’s Spencerville, Ohio location than in Elkhart, Indiana in every year
except 2008-2009, with only marginal difference in those two years. . . . Moreover,
the Elkhart site accounted for only 11.3% and 11.4% of total sales among 13 sites in
10 states in those two years. . . . Even in the 2000- 2011 time frame, these sites were
spread nationwide in Ohio, Indiana, Texas, Florida, Colorado, Wisconsin,
Pennsylvania, Mississippi, Washington, and North Carolina. . . . Otherwise, the
Spencerville, Ohio location had the highest cost and sales of any Flexible Foam
location during every other year.
(Doc. No. 236 at 32-33).
The Policyholders concede they previously have represented that FFP Holdings’ principal
place of business is in Ohio for purposes of diversity jurisdiction and venue, but argue those
purposes are distinguishable from the principal place of business for choice-of-law purposes. (Doc.
No. 232 at 23-24).
The Policyholders do not cite to any opinions in which a court has drawn the distinction the
Policyholders seek to rely upon, and their general statements that FFP Holdings’ “actual business
activity was principally conducted in Indiana” are inadequate to shift the focus from Ohio. While
the Policyholders take issue with CNA’s calculation of the percentage of sales attributable to each
state, the evidence demonstrates the Policyholders’ economic activity spanned up to 10 states and
8

that the total sales from the two Indiana facilities only marginally exceeded the next-highest state, if
at all. (See, e.g., Doc. No. 230-14 at 30).
Moreover, the Policyholders fail to reconcile its assertion that “company-wide engineering,
accounting, and research and development work” was performed in Indiana, (Doc. No. 232 at 25),
with its admission “that [FFP Holdings’] trade or business was principally directed or managed from
Ohio.” (Id. at 24). That is, either FFP Holdings’ officers “direct[ed], control[led], and
coordinate[d]” the company’s activities from Ohio, or they did not. Hertz Corp. v. Friend, 559 U.S.
77, 92-93 (2010). The Policyholders have not shown the “company-wide” operations in Indiana are
greater in scope or importance than the Ohio operations they previously acknowledged constitute
the “main[ and] prominent” operations of the company. See id. at 93 (construing 28 U.S.C. §
1332(c)(1) and stating “[t]he word ‘place’ is in the singular, not the plural.”).
The Policyholders fail to establish that its domicile or principal place of business for choiceof-law purposes differs from its domicile for jurisdictional or tax purposes. I conclude there is no
genuine dispute that the Policyholders are incorporated or formed, and have their principal places of
business, in Ohio. Therefore, this factor also favors the application of Ohio law.
d.

The Principal Location of the Insured Risk, the Place of Performance,
and the Location of Subject Matter of the Contract

Section 188 states that “[i]f the place of negotiating the contract and the place of
performance are in the same state, the local law of this state will usually be applied, except as
otherwise provided in §§ 189- 199 and 203.” Restatement (Second) of Conflict of Laws § 188(3). In
the case of “a contract of fire, surety[,] or casualty insurance,” Section 193 generally directs that the
law of the state containing “the principal location of the insured risk.” Restatement (Second) of
Conflict of Laws § 193. If § 193 permits a court to identify the principal location of the insured risk,
the local law of that location displaces the local law of the state identified pursuant to § 188(3).

9

The Policyholders contend Indiana was the principal location of the insured risk because
FFP Holdings “had many more insured facilities than either [Ohio Decorative Products or Moeller
Land & Cattle], greater fixed assets, greater revenue, greater net income, greater expenses, and many
more employees . . . [and] Indiana was the center of [FFP Holdings’] operations.” (Doc. No. 217-1
at 19). The Policyholders point to the engineering, accounting, and research and development work
performed at the Lusher Avenue plant, its status as the company’s trucking hub, and its separate
payroll system. (Id. at 20-21). The Policyholders also argue that, even if § 193 does not compel the
application of Indiana law, that law should apply under § 188 because Indiana is the location of the
subject matter of the contract and the place of performance. (Doc. No. 217-1 at 21-24).
In effect, the Policyholders present a two-pronged argument: (1) the Indiana plants
accounted for the largest portion of FFP Holdings’ business, and FFP Holdings accounted for the
largest portion of the Policyholders’ business, during the period at issue, so, under § 193, Indiana law
applies to the CNA insurance policies; and (2) Indiana, as the place where the environmental
cleanup is occurring, is the location of the subject matter of the contract and the place of
performance as to this particular incident, so, under § 188, Indiana law applies. I am not persuaded
by either prong.
The first prong runs counter to the multiple-risk policy laid out in the comments to § 193.
The location of the insured risk is entitled to the greatest weight in the analysis “provided that the
risk can be located, at least principally, in a single state.” Restatement (Second) of Conflict of Laws
§ 193 cmt. b. The principle location of the risk cannot be determined or “has less significance . . .
where the policy covers a group of risks that are scattered throughout two or more states.” Id.
The Policyholders do not, and cannot, dispute that the CNA policies cover multiple risks
scattered across no fewer than ten states – Colorado, Florida, Indiana, Mississippi, North Carolina,
Ohio, Texas, Washington, and Wisconsin. Further, the Policyholders concede Indiana was not the
10

only state in which FFP Holdings operated two facilities at the same time, as it operated two
facilities in Wisconsin for three years, and two facilities in Mississippi for five years, between 20002011. (Doc. No. 217-1 at 19).
It perhaps is worth pausing here to reiterate that the CNA policies were general commercial
insurance policies, covering personal and advertising injuries, property damage, medical expenses,
fire damage, and liability arising out of the Policyholders’ employee benefits program. (See, e.g., Doc.
No. 221-45). Losses associated with these risks could arise from any of the Policyholders’ offices or
facilities. The Policyholders do not identify a basis for concluding Indiana law should apply to
insurance coverage determinations in all of these areas.
This argument is derived in part from comment f to § 193. Comment f describes a
hypothetical scenario in which a single policy incorporates special statutory forms for fire insurance
on houses the insured owns in three different states. “Presumably, the courts would be inclined to
treat such a case, at least with respect to most issues, as if it involved three policies, each insuring an
individual risk.” Restatement (Second) of Conflict of Laws § 193 cmt. f.
The Policyholders, however, seek to go even further than this scenario – in effect proposing
that the pollution exclusion would be evaluated differently as to the different facilities in each of the
ten states, despite the fact that none of the policies include state-specific forms, nor do the policies
attempt to treat the pollution provisions as though those provisions actually were separate miniinsurance policies. See, e.g., Gen. Acc. Ins. Co. v. Ins. Co. of N. Am., 590 N.E.2d 33, 37 (Ohio Ct. App.
1990) (rejecting application of § 193 and applying § 188 where policy at issue “did not set forth a
principal location, or the location of a single insured risk, but, rather, expressly indicated that the
insurance extended to ‘all locations’ of the insureds, and for ‘all operations’”).
“The factors enumerated in Section 188 are keyed to the justifiable expectations of the parties
to the contract, not to the ultimate benefit of one party over another.” Ohayon, 747 N.E.2d at 211
11

(emphasis in original). Section 188 identifies “the contacts to be taken into account in applying the
principles of § 6 to determine the law applicable to an issue . . . .” Restatement (Second) of Conflict
of Laws § 188(2). If accepted, the Policyholders’ arguments would require me to dismiss “the
relevant policies of [the other nine] interested states, . . .the protection of [the parties’] justified
expectations, . . . [the principles of] certainty, predictability[,] and uniformity of result, and [the
importance of] ease in the determination and application of the law to be applied.” Restatement
(Second) of Conflict of Laws § 6(2).
Moreover, even if I were persuaded that the parties implicitly understood Indiana to be the
principal location of the insured risk under § 193, the Restatement would counsel against applying
Indiana law to invalidate the pollution exclusions. “On occasion, a state which is not the state which
the parties understood was to be the principal location of the insured risk during the term of the
policy will nevertheless, with respect to the particular issue, be the state of most significant
relationship to the transaction and the parties and hence the state of the applicable law. This may be
so, for example, when the contract would be invalid under the local law of the state of principal
location but valid under the local law of another state with a close relation to the transaction and the
parties.” Restatement (Second) of Conflict of Laws § 193 cmt. d (emphasis added). The parties
repeatedly agreed to include the Ohio pollution exclusion – a provision that would have been void
from the start under Indiana law – in the policies.
Thus, under the circumstances of this case, the risks covered by the CNA policies cannot be
located in a single state and the rule stated in § 193 does not apply.
The Policyholders’ reliance on Chartis Specialty Insurance Company v. Lubrizol Corporation, does
not change my conclusion. Unlike the CNA policies, the policy at issue in that case did not “provide
blanket coverage; rather, the terms of coverage var[ied] significantly by property.” Chartis Specialty
Ins. Co. v. Lubrizol Corp., No. 1:11 CV 369, 2013 WL 12130642, at *10 (N.D. Ohio Mar. 29, 2013).
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Further, Chartis’s “risk-at-issue” approach extends both § 188 and Ohio law a step too far.
Id. at *9. While § 188 refers to the choice-of-law determination for “an issue,” it frames that inquiry
through the consideration of which state’s law “has the most significant relationship to the
transaction and the parties under the principles stated in § 6.” Restatement (Second) of Conflict of
Laws § 188(1). Taken to its logical conclusion, the Chartis approach would require the application of
the law of no fewer than twelve different states2 to the policies underlying this case, depending on
which element of the contracts was the subject of a dispute. Such a result would run counter to the
principles stated in § 6, including protection of the parties’ justified expectations, certainty, and
predictability. Restatement (Second) of Conflict of Laws § 6(2)(d), (f).
The Chartis court also supported its “risk-at-issue” approach by noting “Ohio follows the
doctrine of dépeçage, which allows for the application of different states’ laws to different claims.”
Chartis, 2013 WL 12130642, at *9. Caselaw demonstrates, however, that Ohio courts may apply
different states’ laws to different areas of law, not that Ohio courts apply a different state’s law to
each cause of action within an area of law. See, e.g., Am. Interstate Ins. Co. v. G & H Serv. Ctr., Inc., 861
N.E.2d 524, 527-28 (Ohio 2007) (holding the choice-of-law analysis for the insured’s workers’
compensation claims did not control the choice of law for the insured’s tort claims); Ohayon, 747
N.E.2d at 209 (“[T]he Restatement and courts emphasize different factors when resolving choice-oflaw issues in these contextually distinct legal fields.”).

2

The 10 states in which FFP Holdings operated a facility between 2000-2011, and Illinois and
Pennsylvania, where the CNA insurers had their home offices. The Policyholders identified a total
of 51 locations operated in 22 states during the approximately 30 years covered by policies provided
to the Policyholders by some or all of the insurers. (Doc. No. 221-11 at 6-9). CNA takes issue with
the Policyholders’ implication that only the policies issued between 2000-2011 are in dispute, as
CNA seeks summary judgment on all policies issued from 1986 through 2014. (Doc. No. 236 at 1314).
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Because § 193 does not control the choice-of-law analysis, what remains is the determination
of the place of performance,3 and here the second prong of the Policyholders’ argument fares no
better than the first.
In an insurance coverage dispute, a court must decide whether, and to what extent, the
insurer is required to provide coverage for its insured’s loss. This question involves a determination
of the parties’ rights and responsibilities under the contract to which they agreed. Likewise, in these
circumstances, § 188(2)(c) focuses on what the insurance policy requires and not on the location of
the underlying incident which gave rise to the coverage dispute or the law which applies to that
incident. Ohayon, 747 N.E.2d at 213 (“The resolution of these stacking and setoff [of uninsured
motorist benefits] issues is a coverage issue, separate and independent from the measure of damages
assessed to the tortfeasor.”). See also Miller v. State Farm Mut. Auto. Ins. Co., 87 F.3d 822, 827 (6th Cir.
1996) (“Though the case comes to us because of a “triggering event” that occurred in Ohio, . . . it
ultimately concerns the interpretation of an insurance contract made in Pennsylvania.” (citation
omitted)).
“[T]he place of performance of an insurance policy is the place of the payment of insurance
benefits.” Allstate Fire & Cas. Ins. Co. v. Moore, 993 N.E.2d 429, 436 (Ohio Ct. App. 2013) (citation
and internal quotation marks omitted). Under the CNA policies, any insurance benefits would be
paid to the Ohio-based Policyholders in Ohio.
Relying on two pre-Ohayon cases – Morton International, Inc. v. Harbor Insurance Co., 607 N.E.2d
28 (Ohio Ct. App. 1992), and Morton International, Inc. v. Aetna Casualty & Surety Co., 666 N.E.2d 1163

3

To the extent that the “principal location of the insured risk” differs from the “location of the
subject matter of the contract”, § 188(2)(d), I conclude the latter factor favors the application of
Ohio law, because the contracts insure the Policyholders’ assets in Ohio in addition to the day-today operations at their various facilities. The extensive overlap between these two concepts,
however, means the “location of the subject matter” factor includes contacts to all of those various
states and, therefore, it has little weight under the facts of this case.
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(Ohio Ct. App. 1995) – the Policyholders contend “when the injury for which insurance coverage is
sought is property damage caused by environmental contamination, the place of that injury is the
place of performance, and is not only relevant, [but] it is more important than any other factor.”
(Doc. No. 228 at 23).
Though the two Morton cases have not been expressly overruled, it would be anomalous to
apply them in the manner necessary to reach the result the Policyholders seek. Eight years prior to
the first Morton opinion, the Supreme Court of Ohio reiterated its rejection of the blanket rule that
the place of injury was controlling in the tort choice-of-law analysis. Morgan v. Biro Mfg. Co., Inc., 474
N.E.2d 286, 288-89 (Ohio 1984). In Ohayon, the court rejected the application of the law of the state
(Pennsylvania) in which the coverage-triggering event (a car accident) occurred, because the
coverage dispute involved “the nature and extent of the rights and duties created” under an
insurance contract the parties agreed to in Ohio. Ohayon, 747 N.E.2d at 214.
Neither § 188 nor precedent from the Supreme Court of Ohio carve out different treatment
for environmental claims where the parties have not negotiated for such a result. Cf. Meijer, Inc. v.
Gen. Star Indem. Co., 61 F.3d 903, *7 (6th Cir. 1995) (unreported table decision) (Where a policy
insures against multiple risks which are located in multiple states and subject to different statutes, the
parties should include provisions incorporating “the different statutes of the states involved . . . [if
they desire that] the policy would be treated separately for each state.”).
e.

Ohio Law Applies to the CNA Policies

Thus, the factors described in § 188 point toward the application of Ohio law to the CNA
policies. In particular, Ohio is both the place of negotiation and the place of performance with
regard to these insurance policies, and § 193 does not direct the application of another state’s law.
See Restatement (Second) of Conflict of Laws § 188(3).

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2.

Westchester Policies – § 188 Factors

Westchester and the Policyholders disagree on the proper scope of coverage under seven
excess policies issued between 1985 and 1994. Westchester argues either Ohio or Tennessee law
applies to the policies and that under the law of either of those states, the pollution exclusions are
enforceable. The Policyholders assert Indiana law should apply.
Westchester incorporated into its motion for summary judgment Sections II.A., II.B, II.D,
II.E, II.F, II.G, III.A, and III.B of CNA’s brief in support of its summary judgment motion. (Doc.
No. 223 at 4 n.1). Westchester asserts the same contacts that point toward the application of Ohio
law to the CNA policies also support the application of Ohio law to the seven Westchester excess
policies. (Id. at 5). Westchester concedes that two of the seven policies were issued to the
Policyholders in Tennessee but argue that fact does not change the outcome of this case because
both Ohio and Tennessee law would uphold the pollution exclusion provisions in the Westchester
policies. (Id.).
The Policyholders acknowledge operating 13 plants in 6 states for various durations between
1985 and 1994. (Doc. No. 229-1 at 7-11). Relying on Chartis and the two Morton cases, the
Policyholders argue Indiana law nonetheless should apply. I disagree, as the risks insured by the
Westchester policies span multiple states and the excess policies do not provide a basis for treating
each of the facilities as though it was insured under a separate policy.
Further, the Ohio connections of Westchester and the Policyholders are stronger than their
connections to any other state, even if those connections are not as strong as the Ohio connections
of the parties to the CNA policies. The brokers for the Westchester policies were located in
Georgia and Tennessee, meaning the negotiations for the policies took place in Ohio, Tennessee,
and Georgia. (See Doc. No. 233 at 21-22). Likewise, the place of contracting for the policies is one

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of these three states. As I concluded above, however, the Policyholders were domiciled in Ohio and
the place of performance – that is, the payment of any benefits due under the contracts – is Ohio.
I conclude Ohio has the most substantial contacts with the parties and the transaction and,
therefore, Ohio law applies to the Westchester policies.
B.

SUMMARY JUDGMENT

The parties agree that, while the choice-of-law analysis is complex, it also is outcomedeterminative. See, e.g., Hybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd., 597 N.E.2d 1096 (Ohio 1992)
(upholding insurance policy provision excluding from coverage claims arising out of the release of
pollutants unless that release was “sudden and accidental”); GrafTech Int'l, Ltd. v. Pac. Employers Ins.
Co., 101 N.E.3d 1271 (Ohio Ct. App. 2017) (affirming summary judgment in favor of insurer based
upon pollution exclusion); Sulphuric Acid Trading Co. v. Greenwich Ins. Co., 211 S.W.3d 243, 251 (Tenn.
Ct. App. 2006) (same).
The Policyholders argue, however, that any judgment should extend only to the issue of
coverage for FFP Holdings under the CNA policies issued between 2000 and 2011. (Doc. No. 228
at 8-12). They argue the EPA has not alleged Ohio Decorative Products or Moeller Land & Cattle
are liable for the environmental contamination at the Lusher Street Groundwater Contamination
Site and, therefore, there is not an actual controversy involving those companies sufficient to
support the Court’s jurisdiction under 28 U.S.C. § 2201. CNA argues there remains an actual
controversy involving Ohio Decorative Products and Moeller Land & Cattle because both entities
previously owned the Lusher Avenue plant during the policy terms, (see Doc. No. 221-9 at 8), and
thus the EPA, as well as several other private third parties, still could sue those entities under the
Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). (Doc.
No. 236 at 13-15).

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As the Policyholders concede, this line of argument is intended to focus the choice of law
analysis on “the ten policies issued by CNA between March 1, 2000 and March 1, 2011 that insured
[FFP Holdings].” (Doc. No. 228 at 12). Ohio Decorative Products and Moeller Land & Cattle,
along with FFP Holdings, have asserted declaratory judgment claims against CNA. (Doc. No. 120;
Doc. No. 139). While they may have withdrawn their defense and indemnity requests, (Doc. No.
228-1), they have not dismissed their claims. Further, both Ohio Decorative Products and Moeller
Land & Cattle seek summary judgment against CNA in pursuit of a declaration that the CNA
policies do not bar their right to coverage under those policies. (Doc. No. 217-1).
Ohio Decorative Products and Moeller Land & Cattle fall within the scope of CERCLA as
prior owners of the Lusher Avenue property. 42 U.S.C. § 9607(a). The essential fact necessary to
establish CERCLA liability – the release of hazardous substances – already has occurred, as has the
necessary basis for a CERCLA contribution claim – the expenditure of funds by a responsible party
to respond to the improper release of hazardous substances. See City of Colton v. Am. Promotional
Events, Inc.-W., 614 F.3d 998, 1005 (9th Cir. 2010). Neither § 2201 nor CERCLA require that the
EPA or a responsible party must have filed suit against Ohio Declarative Products and Moeller Land
& Cattle for there to be a justiciable controversy concerning whether those companies are entitled to
coverage under the CNA policies.
I conclude, pursuant to Rule 56, that the pollution exclusions in the CNA and Westchester
policies bar coverage as a matter of law.

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IV.

CONCLUSION

For the reasons stated above, I grant CNA’s and Westchester’s motions for summary
judgment, (Doc. No. 219; Doc. No. 223), and deny the Policyholders’ motion. (Doc. No. 217).
So Ordered.
s/ Jeffrey J. Helmick
United States District Judge

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