Motorists Mutual Insurance must provide coverage for a metal supplier that caused damage to 3.7 million pounds of glass containers, the Supreme Court of Ohio ruled today.

The Supreme Court unanimously, but for different reasons, found the umbrella insurance policy that Ironics Inc. purchased from Motorists provides coverage for its accidental contamination of Owens-Brockway Glass Container bottles. The Court affirmed the Sixth District Court of Appeals decision, which rejected Motorists’ claim that coverage is not provided for integrated products, such as the mixture of ingredients to make Owens’ amber and brown bottles.

Writing for the Court majority, Justice Jennifer Brunner explained that when Ironics’ ingredients were mixed into Owens‘ glass, the containers produced were solely the property of Owens. Because Ironics damaged Owens’ property, Ironics’ insurance policy covered the accident.

Chief Justice Maureen O’Connor and Justices Michael P. Donnelly and Melody Stewart joined Justice Brunner’s opinion.

In an opinion concurring in judgment only in part and dissenting in part, Justice Patrick F. Fischer wrote that both the commercial general-liability (CGL) policy and the umbrella policy Ironics purchased from Motorists covered the claim. Justice Fischer noted that coverage under the CGL policy should be considered first before the parties rely on the umbrella policy.

In a separate concurring opinion, Justice R. Patrick DeWine agreed with the majority that Motorists was obligated to cover Ironics and that only coverage under the umbrella policy was before the Supreme Court. Justice DeWine objected to the “majority’s use of this case to go beyond the contractual language and write something of a treatise on insurance law,” He explained that the Court needed only to consider the plain meaning of the contractual language to resolve the dispute.  But even though the majority “digresse{d] well beyond the contractual language,” Justice DeWine concurred in the majority’s judgment because it ended up with the right result.

Justice Sharon L. Kennedy joined Justice DeWine’s opinion.

Mixture Led to Potentially Hazardous Glass
Ironics buys and sells metal products, including waste products generated by steel mills. Ironics obtained a waste product from a tubular steel maker. The waste product, known as “tube scale,” is resold to several other customers.

Owens, the manufacturer of glass containers, contracted with Ironics in 2016 to purchase tube scale as a coloring agent to make its bottles amber and brown. After using Ironics’ tube scale, Owens discovered chrome stones embedded in the containers. The presence of the stones increased the likelihood that the glass would break.

Because the stones could not be removed, Owens scrapped more than 1,850 tons of the containers. Owens sued Ironics, claiming damages in excess of $1 million for the faulty ingredient.

Company Discovers Cause of Mishap
Ironics discovered the tube scale it purchased from the steel mill was contaminated when it was sent to a materials processer. The processor subcontracted the work to another company. That company accidentally mixed the tube scale with chrome stones, another material the processor was preparing.

When Owens sued, Ironics sought coverage from Motorists to defend the company and to pay for any damages imposed on Ironics. Motorists asked for a declaratory judgment from the Wood County Common Pleas Court, stating that Motorists had no duty to cover Ironics because neither the CGL or umbrella policy covered the damage to the glass containers.

The trial court agreed with Motorists and denied Ironics’ coverage request. Ironics appealed to the Sixth District, which ruled the CGL policy did not cover the damages, but the umbrella policy did.

Motorists appealed the Sixth District decision to the Supreme Court, which agreed to hear the case.

Supreme Court Examined Policy Provisions
Motorists raised two issues to support its denial of coverage. It stated the policy covers damage to the property of “others,” and damage not caused by an accident is not covered. Motorists claimed that under court interpretations of insurance policies, the bottles should be considered the property of both Ironics and Owens. Because the property is still partly Ironics, it is not the property of “others” and no coverage is provided. Motorists also argued that the provision of a faulty product is not an accident, and the policy’s requirement that an accident triggers the coverage was not met.

The Court disagreed. The umbrella policy defined “property damage” as “[p]hysical injury to or destruction tangible property …, including all resulting loss of use of that property.” Justice Brunner explained that while Owens’ property includes Ironics’ ingredients, it was the tube scale that damaged Owens’ containers. Because the containers could no longer be used, Ironics caused property damage to Owens, which is covered by the policy.

The opinion noted that the umbrella policy contained three exclusions, including no coverage for “your product,” “your work,” or “impaired property.” The Court explained that none of the exceptions applied. The Court rejected Motorists’ claim that the containers fell into the “your product” exclusion as a product that belonged to Ironics, ruling the products belonged to Owens.

The opinion stated Ironics did no work for Owens, just supplied the tube scale, which eliminated the “your work” exclusion. “Impaired property” was defined in the policy as property that could be repaired or restored. Because the containers could not be restored, the exclusion did not apply, the Court concluded.

The Court also disagreed with Motorists’ contention that Ironics failed to meet the requirement that coverage is only offered for accidents. Citing recent Court opinions regarding faulty workmanship, Motorists argued that supplying faulty ingredients is not an accident covered by insurance, but a business risk for which the company is financially responsible.

Faulty workmanship and faulty ingredients are not the same, the opinion stated. The Court ruled there was no evidence Ironics was aware of any contamination of the tube scale when it sold it to Owens and inclusion of the chrome stone was an accident.

The Court remanded the case to the trial court for further proceedings.

2020-0306. Motorists Mut. Ins. Co. v. Ironics, Slip Opinion No. 2022-Ohio-841.

View oral argument video of this case.

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