Oral Argument Preview: Insurance Coverage for Employer Intentional Torts. Back into this Netherworld. Duane Allen Hoyle v. DTJ Enterprises, Inc., et al.

Update: On March 12, 2015, the Supreme Court of Ohio handed down a merit decision in this case. Read the analysis here.

Read the analysis of the argument here.

On June 10, 2014, the Supreme Court of Ohio will hear oral argument in the case of Duane Allen Hoyle v. DTJ Enterprises, Inc., et al., 2013-1405. The issue in this case is insurance coverage for employer intentional torts.

Case Background

Duane Hoyle was employed as a carpenter for DTJ Enterprises and Cavanaugh Building Corporation. He was severely injured when the scaffolding he was standing on collapsed, causing him to fall 13 feet onto the concrete pavement. The scaffolding equipment was not furnished with guards or other mandatory safety features, and DTJ had prohibited workers from using pins supplied by the manufacturer of the equipment that would have prevented the collapse. Hoyle filed a workplace intentional tort action. Among his allegations was that, pursuant to R.C. 2745.01(C), an “equipment safety guard” had been deliberately removed by his employer. DTJ and Cavanaugh were insured by the Cincinnati Insurance Company under standard Commercial General Liability and Umbrella Policies. In addition, the companies purchased additional Employers Liability Coverage,which expressly provides coverage for injuries sustained by employees as a result of certain “intentional acts” which include acts which are substantially certain to cause “bodily injury,” but expressly excludes liability for acts committed “with the deliberate intent to injure.”

CIC sought to intervene, seeking a declaration that no coverage was owed for the employer intentional tort claims because of policy exclusions. Ultimately, despite denying summary judgment to DTJ and Cavanaugh on Hoyle’s 2745.01(C) claim, the trial court granted summary judgment to CIC on the ground that the (C) claim required proof of deliberate intent to injure, and thus, even if proven, was excluded from coverage.

In a split decision, the Ninth District Court of Appeals reversed the trial court’s order of summary judgment. The majority held that, based upon the presumption of intent to injure under subsection (C) of the statute, an employee could prevail on claims of an intentional tort without invoking the “deliberate intent” to injure exclusion provisions of the insurance policy. Therefore, the case involves a question of fact: whether Hoyle’s claim falls within the policy exclusion. The dissent agreed with the trial court.

Cincinnati Insurance Company (“CIC”) brought the appeal to the Supreme Court of Ohio. While Hoyle and the employers filed separate briefs, and have antagonistic positions in the event of trial on the merits, their interests are aligned for the purposes of this appeal. Both argue there is insurance coverage for the employer intentional tort alleged in this case. They are collectively referred to as Appellees.

Key Statute and Precedent

R.C. 2745.01 – Liability of employer for intentional tort – intent to injure required – exceptions.

(C) Deliberate removal by an employer of an equipment safety guard … creates a rebuttable presumption that the removal … was committed with intent to injure another if an injury … occurs as a direct result.

Houdek v. ThyssenKrupp Materials N.A., Inc., 2012-Ohio-5685 (Absent a deliberate intent to injure another, an employer is not liable for a claim alleging an employer intentional tort, and the injured employee’s exclusive remedy is within the workers’ compensation system.)

Harasyn v. Normandy Metals, Inc., 49 Ohio St.3d 173 (Ohio 1990) (Ohio public policy does not prohibit an employer from insuring against tort claims by employees in cases where the injury was “substantially certain” to occur but the employer did not intend to injure the employee.)

Rudisill v. Ford Motor Co., 709 F.3d 595 (6th Cir. 2013). (A plaintiff is not required to adduce evidence of an intent to injure in order to invoke the presumption of intent of injure in subsection (C); once the presumption has been invoked, a defendant may rebut it by marshaling evidence that there was in fact no intent to injure. When a presumption is rebutted, the case proceeds as if the presumption had never arisen.)

Cincinnati Insurance Company’s Argument

CIC urges the Court to consider the history and development of the employer intentional tort in Ohio. At common law, the intent necessary to prove an employer intentional tort could be established by proving direct intent to harm or by showing that harm was substantially certainty to occur. Now, by statute, direct intent and substantial certainty have been merged, and substantial certainty now requires proof of deliberate intent to injure.  Under the current statutory scheme, the employer’s specific or direct intent to injure is the only way to prove an employer liable for this tort. Furthermore, Ohio public policy prohibits insuring torts caused by a direct intent to injure. Finally, reliance on subsection (C) and its rebuttable presumption does not create a duty to indemnify when the policy itself contains an express exclusion for acts committed with direct intent.

The injury here is excluded by the express terms of CIC’s insurance policy endorsement. The insurance policy states CIC will not indemnify an employer when the employer’s liability to an employee arises from “acts committed by or at the direction of an insured with deliberate intent to injure.”

CIC relies on the decisions in Houdek and Kaminski, emphasizing the employer’s specific intent to injure. According to CIC, the Ninth District Court of Appeals misconstrued the statute and erroneously relied on the rebuttable presumption of intent to injure rather than requiring Hoyle to establish an employer’s specific intent to injure in order to establish the intentional tort. The presumption created in subsection (C) is not enough to establish liability for an employer intentional tort. That presumption only shifts the burden of production (going forward); the burden of persuasion remains with the employee.  Any presumption created in this statute does not satisfy the employee’s ultimate burden which is that the employer’s actions were done with specific intent to injure.

The appellate court also improperly imposed a duty on insurers to indemnify employers who intentionally injure their employees. CIC argues that this imposition is against public policy and should not be promoted by Ohio courts. Therefore, CIC urges the Supreme Court of Ohio to reverse the Ninth District’s opinion.

Hoyle and DTJ Enterprises, and Cavanaugh Building Corporation’s Argument

Appellees argue that, while the policy purchased by DTJ and Cavanaugh excludes coverage for acts committed “with the deliberate intent to injure,” it does not exclude coverage for damages sustained by employees caused by acts where intent is merely presumed. Subsection (C) of the employer intentional tort statute preserves a separate approach for imposing intentional tort liability without proof of specific intent to injure.

Further, the Appellees argue that the Ninth District Court of Appeals did not hold that CIC had an indemnity obligation for all intentional acts, but merely that the additional coverage offered by CIC, which purports to afford coverage for “intentional acts,” does not clearly exclude coverage where liability for an intentional act is established through a legal presumption. Subsection (C) of the employer intentional tort statute, with its rebuttable presumption, establishes a different way of proving an employer intentional tort than (A) or (B). Subsection (C) allows an employee to prove intent through a presumption, rather than through actual proof of intent to injure.

Appellees rely on the Ohio Supreme Court decision in Harasyn, in which the Court distinguished between torts where the employer directly intends to injure the employee and torts where injury was substantially certain to occur, where insurance coverage is permissible.  The reasoning in Harasyn should apply to intentional torts relying on the rebuttable presumption in subsection (C).

Finally, the Appellees argue that if the Court accepts CIC’s propositions of law, the policy the employers purchased, which purportedly covered “intentional acts” that are “substantially certain” to cause injury, would be useless, and CIC would be allowed to sell policies promising to cover “intentional acts” without ever having to honor the commitment. Thus, this coverage would be illusory. Thus, the Appellees urge the Supreme Court of Ohio to affirm the decision of the Ninth District Court of Appeals.

CIC’s Proposed Propositions of Law

1. Where an employee is relying upon R.C. 2745.01(C) to create a rebuttable presumption of intent to injure arising from the employer’s deliberate removal of an equipment safety guard, the ultimate burden remains with the employee to prove that the employer acted with “deliberate intent” in order to establish liability against the employer for an employer intentional tort.

2. Ohio public policy prohibits an insurer from indemnifying its insured employer for employer intentional tort claims filed under R.C. 2745.01 because an injured employee must prove that the employer committed the tortious act with direct or deliberate intent to injure in order to establish liability.

3. An insurer has no duty to indemnify an employer-insured for employer intentional tort liability when an employee invokes R.C. 2745.01(C) for the deliberate removal of an equipment safety guard where an endorsement to the insurer’s policy excludes coverage for liability for acts committed by or at the direction of an insured with deliberate intent to injure.

Amicus Curiae

Amici submitted briefs on both sides of the case. The Ohio Association of Civil Trial Attorneys appeared on behalf of the CIC. OACTA argues that the presumption in R.C. 2745.01 (C) is an evidentiary tool to get past summary judgment when an employer deliberately removes an equipment safety guard. Whether or not the employer rebuts the presumption, the plaintiff still carries the burden of proof, because in order to establish liability under R.C. § 2745.01 (C), a jury would still have to find an employer acted with deliberate intent to harm. The Legislature never intended for the plaintiff to prevail without a finding of deliberate intent to injure–whether established by an unrebutted presumption or by actual evidence of deliberate intent to injure. The Court of Appeals decision in this case, which suggests that an employee can prove his or her case with something less than deliberate or specific intent, is wrong, and contrary to the legislative intent behind R.C. 2745.01.

The Ohio Association for Justice appeared on behalf of all the appellees. The OAJ argues that CIC’s propositions of law invite the Court to ignore the language of the additional insurance policy, which covers acts where intent would be implied under state law. If the court determines that insurers have no duty to indemnify employers where there is only implied intent, CIC’s policy would be illusory. The issue of whether there was actual intent has yet to be litigated, and CIC is simply attempting to avoid its contractual obligations. Because actual intent has yet to be established in this case, the Association asks that the Court affirm the Ninth District’s decision.

Student Contributors: Elizabeth Chesnut and Michael Elliot

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