Court of Appeals of Ohio, Eighth District, Cuyahoga
INTERGROUP INTERNATIONAL LTD. PLAINTIFF-APPELLANT
CINCINNATI INSURANCE COMPANIES DEFENDANT-APPELLEE
Appeal from the Cuyahoga County Court of Common Pleas Case
ATTORNEY FOR APPELLANT David J. Horvath.
ATTORNEY FOR APPELLEE Patrick S. Corrigan.
BEFORE: Boyle, J., E.A. Gallagher, P.J., and McCormack, J.
JOURNAL ENTRY AND OPINION
J. BOYLE, JUDGE.
Plaintiff-appellant, Intergroup International Ltd.
("Intergroup"), timely appeals from an order of the
trial court that denied its motion for summary judgment and
granted summary judgment in favor of defendant-appellee
Cincinnati Insurance Companies ("Cincinnati") on
Intergroup's complaint and Cincinnati's counterclaims
for declaratory judgment. After careful review of the record,
we find that summary judgment in favor of Cincinnati on
Intergroup's claims related to the 2014 insurance claim
was proper, but further find that summary judgment was
improper on its 2015 claims and Cincinnati's
counterclaims. Accordingly, we affirm in part and reverse in
Facts Underlying the Parties' Claims
This case arises from an insurance claim dispute between
Intergroup and Cincinnati and pertains specifically to
Cincinnati's denial of insurance coverage on two
incidents of property damage to the roof structure of
Intergroup's warehouse facility located at 14500 Darley
Avenue, Cleveland, Ohio (the "Darley building" or
the "property"). The relevant facts are taken from
the evidentiary documents and transcripts of depositions
filed with the parties' motions for summary judgment.
Purchase, Repairs, and Initial Inspection
Intergroup purchased the Darley building in 2011. In
conjunction with the purchase, Intergroup hired Kane
Construction to inspect the roof, its supporting members, and
to make any and all necessary repairs. Mike Kane, the owner
of Kane Construction, repaired leaks to the roof, and
"re-engineered" and replaced a roof truss that was
"sagging." Kane further reported that a few of the
trusses appeared to have "slight discoloration"
from leaks throughout the years because the building was
nearly 100 years old. Otherwise, Kane did not "see the
need to replace any of the trusses because of any noticeable
deterioration" other than the truss that he
"re-engineered" and replaced.
Subsequently, Intergroup contracted with Cincinnati to
provide commercial insurance coverage on the property. In
April 2012, as part of the insurance underwriting process,
Cincinnati sent loss control field director, Leo Kline, to
the Darley building to inspect the premises and note the
physical conditions of the property. In his report, Kline
noted that the roof had been repaired in 2011-2012, with
"only minor repairs needed" and that the roof was
in satisfactory condition at the time of the inspection.
Kline did not make any recommendations for repairs to the
property at that time.
The June 2, 2014 Event and Claim Denial
Over two years later, on the morning of June 2, 2014,
Intergroup employees arrived to the Darley building to
discover that a truss holding up the roof had undergone
movement and was sagging in place. Intergroup immediately
attempted to stabilize the sagging truss by engineering a
metal support beam to hold it up. Subsequently, Intergroup
contacted Cincinnati to report the failed truss and file a
claim for insurance coverage.
In response to the claim, Cincinnati sent a claims
representative, Lee Hatch, to inspect the affected area of
the property and take pictures. When Hatch viewed the failed
truss from the ground, he saw peeling paint and discolored
and splintered wood. This led him to believe that there could
be an issue with the wood that caused the trusses to move.
Hatch reported his observations to his field claims manager,
Jeff Shive, and further recommended that Cincinnati employ an
expert to view the damaged truss and give an opinion on the
cause of damage. Cincinnati contacted Rudick Forensic
Engineering to investigate. Rudick dispatched engineer Eric
Hauser, a senior forensic engineer, to the site.
Hauser inspected the damaged property on June 11, 2014, and
issued his findings in an inspection report. In his report,
Hauser stated that two trusses had experienced
"differential movement, " and Intergroup had
installed a steel post "below the south-most of the two
compromised trusses." He noted that workers informed him
of a storm that occurred the night before and said that when
they arrived in the morning they saw the sagging trusses and
water leaking down through the roof directly above the
When describing the roofs surface upon inspection, Hauser
reported the presence of "a large area of ponded
water" on the roof directly above the damaged trusses.
Specifically, he noted that "[t]he severity of staining
of the membrane surfaces both below and adjacent to the
accumulated water indicated this condition had been present
over an extended period of time prior to the reported
discovery of leaks during the previous week." He also
noted that there were numerous and apparently old cracks in
the roof membrane that might have allowed water to seep into
the interior of the building and damage the structures.
Hauser reported that a close range inspection of the failed
trusses revealed that the presence of varying degrees of rot
and decay within the "truss chords" caused the
movement of the trusses and that "[m]inimal resistance
was afforded during insertion of the point of a scratch awl
into the interior of the more severely deteriorated
sections." Lastly, he noted that "[i]t was readily
apparent that exposure to moisture over an extended period of
time had eventually compromised the integrity of the support
structure such that it was unable to support normal roof
On June 27, 2014, Cincinnati denied Intergroup's claim
for insurance coverage. In a letter written by Hatch to Neil
Gloger, Intergroup's chief executive officer, Hatch
explained that the claim was denied because:
Mr. Hauser's conclusion is that the damage to the roof
truss was not storm related but due to varying degrees of rot
and decay within portions of the top chords, diagonals, and
vertical truss members. This occurrence is unfortunately not
a direct physical loss to your property and after a review of
your policy it does not appear that we will be able to
provide coverage for your loss.
Hatch further included in the letter the section of the
policy that he felt was relevant to the denial of the claim
SECTION A. COVERAGE
We will pay for direct physical "loss" to Covered
Property at the "premises" caused by or resulting
from any Cause of Loss.
1. Covered Property
Covered Property, as used in this Coverage Part, means the
following types of property for which a Limit of Insurance is
shown in the Declarations:
Building, means the building or structure described in the
(2)Fixtures, including outdoor fixtures;
(3)Permanently installed [items]:
(5) If not covered by other insurance:
(a) Additions under construction, alterations and repairs to
a covered building;
(b)Materials, equipment, supplies and temporary structures,
on or within 1, 000 feet of the "premises, " used
for making additions, alterations or repairs to a covered
We will not pay for "loss" caused directly or
indirectly by any of the following, unless otherwise
provided. Such "loss" is excluded regardless of any
other cause or event that contributes concurrently or in any
sequence to the "loss."
(d) Miscellaneous Causes of Loss
1) Wear and tear;
2) Rust or other corrosion, decay, deterioration, hidden or
latent defect or any quality in property that causes it to
damage or destroy itself[.]
Gloger challenged the denial of the claim on the grounds that
the insurance policy had a rider on page 19 that covered a
"collapse" where rot and decay was hidden from view
and was not reasonably discoverable. According to Gloger, no
one at the facility had noticed the presence of rot or decay
until the truss failed and exposed splintered wood.
Cincinnati reviewed the rider to the policy and in a letter
written by Hatch to Gloger dated September 14, 2014,
Cincinnati once again denied ...