Court News Ohio
Court News Ohio
Court News Ohio

Tuesday, October 24, 2023

The Sherwin-Williams Company v. certain underwriters at Lloyd’s of London et al., Case No. 2023-0255
Eighth District Court of Appeals (Cuyahoga County)

J. Craig Snodgrass, auditor of Lorain County, Ohio v. [Patricia Harris], tax commissioner of Ohio, and Nexus Gas Transmission LLC, Case No. 2023-0354
Ohio Board of Tax Appeals

Do Insurance Policies Cover Settlement in Lead Paint Lawsuit?

The Sherwin-Williams Company v. certain underwriters at Lloyd’s of London et al., Case No. 2023-0255
Eighth District Court of Appeals (Cuyahoga County)


  • Do commercial general liability (CGL) insurance policies cover an insured that is found legally responsible for harm and is required to pay into an abatement fund?
  • Does the term “damages” in CGL policies include monetary payments the insured must make that don’t compensate anyone for a loss or an injury?
  • Do Ohio public policy and CGL policies prohibit insurance coverage when an insured is “substantially certain” or had “actual knowledge” that its conduct would cause harm?

In 2000, local governments in California sued paint companies, including Ohio-based Sherwin-Williams Company, for alleged health hazards and injuries caused by lead-based paint used in California buildings. All claims in the lawsuit were dismissed except for one. The remaining claim was based on California’s public nuisance law and was brought on behalf of “the people.”

The California trial court found Sherwin-Williams, NL Industries, and ConAgra liable for causing a public health hazard by promoting lead paint for use inside homes despite knowing it was hazardous and harmful. The court found in part that Sherwin-Williams had “actual knowledge” for decades of the hazards associated with lead paint when manufacturing lead-based paint pigments. It was also determined that the company used the pigments in its own paints and promoted the pigments or paints for use inside homes. The companies knew that lower-level lead exposure harmed children, lead paint deteriorated, and the resulting lead dust poisoned children and caused serious injuries, the court concluded.

After an appeal, the three paint companies were ordered to pay about $409 million into an abatement fund, which would be used to remediate lead-based paint from pre-1951 residences in 10 California jurisdictions. The remedy was designed to eliminate the continuing hazard and future harm. The fund would be used to identify lead hazards, remove lead dust, and prevent further deterioration of lead paint.

More appeals followed. In what’s referred to as the “Santa Clara action,” a California trial court ultimately approved a settlement between the local governments and the paint companies for $305 million. Sherwin-Williams owes $101.67 million. The company contacted its insurance companies to seek coverage. The insurers declined to cover the settlement.

Paint Company Sues for Insurance Coverage
Sherwin-Williams, which is headquartered in Cleveland, filed a lawsuit in Cuyahoga County Common Pleas Court against various commercial general liability (CGL) insurance policies. The lawsuit named Lloyd’s of London and 25 insurance companies. (Lloyd’s of London supervises a marketplace for insurance buyers and sellers.)

The insurers asked the court for summary judgment. They said the policies cover “damages” but the California abatement fund wasn’t damages. Sherwin-Williams also wasn’t found responsible for the harm “because of” property damage or bodily injury, the insurers argued. Instead, they stated, the settlement was forward-looking and not tied to specific injuries or damage. Because the California court found that Sherwin-Williams knew the harm its conduct would cause by promoting paints containing lead, the insurers maintained that the company “expected or intended” to cause injury or damage – which bars coverage by the policies.

The Ohio trial court granted summary judgment to the insurers, concluding that money paid into an abatement fund isn’t the same as damages.

Company and Insurers Appeal Trial Court Rulings
Sherwin-Williams appealed the ruling on the damages issue to the Eighth District Court of Appeals. The insurers cross-appealed, raising multiple claims. In a 2-1 decision, the Eighth District reversed the summary judgment ruling and ordered the case back to the trial court for additional proceedings.

Six days later, in September 2022, the Supreme Court of Ohio decided Acuity v. Masters Pharmaceuticals Inc, which dealt with insurance coverage for an opioid manufacturer. Given the Supreme Court decision, the Sherwin-Williams insurers requested reconsideration of this case by the Eighth District and a review en banc by all 12 of its judges. The appeals court denied the requests.

The insurers appealed to the Supreme Court, which accepted the case.

Policies Don’t Cover Lead Paint Liability, Insurers Argue
The insurers reject the view that Sherwin-Williams was ordered to pay “damages.” “Damages” in the CGL policies under Ohio law doesn’t mean any court-ordered monetary relief, the insurers maintain. Instead, they argue, damages are payments required to compensate for a person’s loss or injury. They contend that the settlement didn’t compensate anyone for past losses or injuries. The California public nuisance claim was a type that prohibits government entities from recovering damages, the insurers state.

The Acuity case involved a pharmaceutical company’s CGL policies, which covered liability “because of” or “for” bodily injury or property damage. In the insurers’ view, Acuity established that CGL policies with this language cover proven instances of bodily injury or property damage, but not liability for broad societal harm. In the Santa Clara case, the government entities that sued didn’t suffer any injuries or property damage themselves and didn’t have to prove specific injuries to others or property damage, the insurers maintain. Based on its policy language and Acuity, Sherwin-Williams isn’t covered, the insurers argue.

They also contend that the policies cover “accidents” or unexpected “occurrences,” but not actions the insured knows would be “substantially certain” to cause harm. The California court concluded that Sherwin-Williams had “actual knowledge” of the health hazard. This knowledge excludes Sherwin-Williams from coverage under its policies, the insurers argue.

California Decision Establishes Factors for Insurance Coverage, Company Asserts
Sherwin-Williams counters that the meaning of “damages” must be decided based on Ohio insurance law, not California’s public nuisance law. It argues that courts in Ohio and across the country have found that money paid to remove and remedy the effects of hazardous substances qualifies as damages under insurance policies. The company also states that damages can address future injuries and property damage if based on an existing hazard. Under Ohio insurance principles, the California settlement was an award of damages, entitling the company to coverage, Sherwin-Williams asserts.

Sherwin-Williams maintains that the California government entities sued on behalf of residents and alleged that residents suffered bodily injuries or property damage. The company maintains that it was found liable for lead paint used in residences resulting in hazardous conditions that caused injuries to residents or damaged residences. These are covered losses under the CGL policies, Sherwin-Williams argues.

The Acuity ruling doesn’t apply to this case, the company asserts. Those government entities were seeking to recover their own economic losses. Here, the local California governments sued “on behalf of the people” to recover the cost to remediate residents’ homes with lead hazards, the company argues.

Sherwin-Williams also contends that the insurers presented no evidence of the paint company’s “actual knowledge” of the health hazard and harm. In the California cases, the government entities had to show only that the company was aware that the use of lead paint for interiors posed a significant risk of harm, Sherwin-Williams maintains. The company argues that the company was found to have actual knowledge of the hazards associated with lead paint, but not of the harm that would be caused, especially to children, by promoting the product. At a minimum, a question of intent should be decided by a jury, Sherwin-Williams concludes.

Insurance, Manufacturing, and Business Groups File Additional Briefs
An amicus curiae brief supporting the insurers’ positions was submitted by the Ohio Insurance Institute. A joint amicus brief from the American Property Casualty Insurance Association, Complex Insurance Claims Litigation Association, and National Association of Mutual Insurance Companies was also filed in support of the insurers.

In support of Sherwin-Williams’ arguments, United Policyholders, a nonprofit organization that informs and assists the public about insurer duties and policyholder rights, filed an amicus brief. The Product Liability Advisory Council and the National Association of Manufacturers also submitted a joint amicus brief backing the paint company, as did the Ohio Manufacturers’ Association and 12 Ohio-based businesses.

Kathleen Maloney

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Representing Lloyd’s of London et al.: David Schaefer,

Representing the Sherwin-Williams Company: Mark Andreini,

Return to top

Can County Auditor Appeal Settlement on Taxable Value of Pipeline?

J. Craig Snodgrass, auditor of Lorain County, Ohio v. [Patricia Harris], tax commissioner of Ohio, and Nexus Gas Transmission LLC, Case No. 2023-0354
Ohio Board of Tax Appeals


  • When the Ohio tax commissioner reaches a settlement with a taxpayer, does a county auditor have an independent right to appeal?
  • When the Ohio Board of Tax Appeals dismissed an appeal that disputed the settlement, was it an error for the dismissal to apply to tax years 2020 and 2021?

The Nexus Gas Transmission pipeline carries natural gas from Kensington, Ohio, to southeastern Michigan – covering about 256 miles. The pipeline, which became operational in October 2018, serves customers in northern Ohio and southeastern Michigan as well as a natural gas trading facility in Ontario, Canada. Approximately 84% of the pipeline runs through 13 counties in Ohio.

The pipeline system is made up of a 36-inch diameter pipeline, compression stations, and other equipment that facilitate the transport of natural gas each day. In July 2020, the Ohio tax commissioner determined that the 2019 taxable value of the Nexus personal property related to the pipeline was $1.43 billion. The company had suggested $616 million as the correct taxable amount. Nexus argued the commissioner’s valuation improperly included nontaxable items, such as real property, engineering drawings, and drainage tiles.

The company appealed the 2019 tax valuation to the Board of Tax Appeals in September 2020. The tax commissioner placed Nexus’ request for reviews of the 2020 and 2021 valuations on hold while the tax board considered the 2019 valuation.

Commissioner and Company Settle Tax Dispute
Before the tax board hearing, the tax commissioner and Nexus negotiated a settlement. The February 2022 agreement set the 2019 taxable value of the pipeline personal property at $950 million. The agreement also determined the values for 2020 and 2021. The tax commissioner and Nexus asked the state tax board to formally remand the case to the tax commissioner to issue a new “final determination.”

The case was returned to the commissioner, who issued the final determination in June 2022. That decision was distributed to the auditors in the 13 affected counties.

In September 2022, Lorain County Auditor J. Craig Snodgrass appealed the determination of the tax commissioner to the tax board. The board dismissed the appeal in February 2023, finding that the determination was based on a settlement that was “dispositive of the valuation of the pipeline for all three years at issue.”

The auditor appealed to the Supreme Court of Ohio, which is required to hear certain appeals of tax board decisions.

Auditors Entitled to Appeal Settlement, County Auditor Maintains
Snodgrass notes that R.C. 5717.02 allows county auditors to appeal the final determinations made by the Ohio tax commissioner. Snodgrass maintains that the General Assembly gave county auditors this right because so auditors would act as a check on the tax commissioner’s authority in deciding the value of a public utility’s personal property. The settlement between the tax commissioner and Nexus didn’t deprive the county auditors of their right under state law to appeal, Snodgrass argues. He emphasizes that appeals are an independent right given to county auditors.

The auditor maintains that the settlement itself also makes clear that the tax commissioner and Nexus understood that county auditors could appeal the final determination issued after the settlement. The settlement stated that “both the Taxpayer and the Commissioner understand that others may have the right to appeal the Final Determination” and that the agreement was binding on the commissioner and Nexus but “not binding on others if they elect to file an appeal.”

In addition, Snodgrass argues that the settlement couldn’t decide the tax values for 2020 and 2021. Those weren’t even the subject of the Nexus appeal in September 2020, he maintains, because the commissioner hadn’t yet ruled on those valuations.

Snodgrass concludes that the board’s dismissal of his appeal isn’t supported by case law, the language of the statute, or the settlement provisions.

Settlement Resolved Dispute Over Tax Values, Pipeline Company Asserts
Nexus responds that the June 2022 final determination didn’t set a value for the Nexus personal property or analyze the valuation arrived at in the settlement. Instead, the determination simply repeated and formalized the terms of the settlement, Nexus argues. The company maintains that a county auditor’s right to appeal is limited to contesting errors made by the tax commissioner in addressing the facts and the law, but the final determination contained no conclusions on the facts or the law.

While the Lorain County auditor claims the valuation in the settlement doesn’t comply with calculation methods in state law, Nexus counters that settlements don’t have to adhere to formulas provided in the statutes. The tax commissioner and Nexus resolved various factual and legal issues to arrive at a compromise, the company notes. It maintains that the agreement falls within the Ohio tax commissioner’s exclusive authority in state law to resolve tax disputes. The county auditor can’t “revive and relitigate” a legal dispute that was resolved by the settlement, the company argues.

Schools, Other County Auditors, and Business Groups Disagree With Lorain County
An amicus curiae brief supporting Nexus’ arguments was submitted jointly by the Margaretta Local School District, Perkins Local School District, and eight county auditors. Their brief notes that the pipeline provides “significant resources to (typically rural) political subdivisions and school districts in Ohio that are funded, in large part, by property taxes.” The Lorain County auditor’s appeal has denied local governments and 37 school districts along the pipeline’s path “literally millions of dollars in property-tax distributions,” their brief states. The Court denied their request to participate in oral argument.

The Ohio Chamber of Commerce and Ohio Council of Retail Merchants also filed an amicus brief supporting the tax board’s dismissal of the Lorain County auditor’s appeal.

State Tax Commissioner Won’t Participate in Arguments
The tax commissioner, Patricia Harris, didn’t file a brief in this matter and will not be permitted to argue before the Court.

Kathleen Maloney

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Representing J. Craig Snodgrass, Lorain County auditor: Stephen Funk,

Representing Nexus Gas Transmission LLC: Anthony Ehler,

Return to top