On March 12, 2015, the Supreme Court of Ohio handed down a merit decision in Hoyle v. DTJ Ents., Inc., 2015-Ohio-843. In a 5-2 decision written by Justice French, in which Justices Lanzinger and Kennedy concurred in the syllabus and judgment only and Justices O’Neill and Pfeifer dissented, the court held that a deliberate-intent-to-injure insurance policy exclusion precludes coverage for all employer intentional torts, including those at issue in this case. The case was argued June 10, 2014.
Duane Hoyle was severely injured when he fell 14 feet from a ladder-jack scaffold onto a concrete pad while working as a carpenter on a construction project for his employers DTJ Enterprises (DTJ) and Cavanaugh Building Corporation (Cavanaugh)(Collectively, the Employers.) For safety purposes, each ladder jack bracket should be secured to the ladder and the platform must be secured to each bracket. When Hoyle assembled this ladder-jack scaffold, he did not have the bolts and pins to secure the ladder jacks to the ladders. He claims that the project superintendent kept the bolts in his office and told the employees not to bother with them because they took too much time.
Hoyle filed an employer intentional tort claim against DTJ and Cavanaugh. The Employers were insured by Cincinnati Insurance Company (CIC) under a Commercial General Liability policy (CGL) which excluded coverage for intentional acts. That policy also included additional coverage set forth in an endorsement entitled Employers Liability Coverage Form-Ohio (the Endorsement) which the Employers purchased for an additional premium. This endorsement provides coverage for “substantial certainty” employer intentional torts, but excludes coverage for acts committed with deliberate intent to injure, and is at the heart of this appeal.
CIC intervened in the lawsuit, seeking a declaration that it had no obligation to indemnify the Employers for Hoyle’s injuries. (CIC never disputed its duty to defend the Employers.) CIC argued that Hoyle could only win his lawsuit if he proved intent to cause injury, which recovery would be excluded from coverage under the Employers Liability Coverage Form. CIC also argued that R.C. 2745.01 and Ohio public policy preclude coverage for employer intentional torts.
Hoyle argued that an employer intentional tort brought under R.C.2745.01(C) does not involve deliberate intent to injure and therefore would not be excluded from coverage.
The trial court granted summary judgment to the Employers on the (A) and (B) claims, but found genuine issues of material fact on the R.C. 2745.01(C) claim, namely whether the pins were an equipment safety guard and whether either employer deliberately removed them. But the trial court granted summary judgment to CIC, finding that any claim Hoyle could establish—including the subsection (C) claim–required proof of deliberate intent to injure, and thus fell under the policy exclusions.
In a split decision, the Ninth District Court of Appeals reversed the trial court’s order of summary judgment to CIC. 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.
There is no insurance coverage for what happened here.
Key Statutes and Precedent
R.C. 2745.01 provides that an employer shall not be liable for damages resulting from an intentional tort unless the plaintiff proves that the employer committed the tortious act with the intent to injure another or with the belief that the injury was substantially certain to occur. Substantially certain means that an employer acts with deliberate intent to cause the employee to suffer injury or death. Under Subsection (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.
Brady v. Safety-Kleen Corp, 61 Ohio St.3d 624 (1991) (When an employee seeks damages resulting from an act or omission committed by the employer with the intent to injure, the claim arises outside of the employment relationship, and the workers’ compensation system does not preempt the employee’s cause of action.)
Jones v. VIP Dev. Co., 15 Ohio St.3d 90, (1984) (An intentional tort involves an act committed with the specific intent to injure or with the belief that injury is substantially certain to occur.)
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.)
Houdek v. ThyssenKrupp Materials N.A.,Inc., 2012-Ohio-5685, (R.C. 2745.01 limits claims against employers for intentional torts to circumstances demonstrating a deliberate intent to cause injury to an employee. Absent a deliberate intent, the injured employee’s exclusive remedy is within the workers’ compensation system.)
Irondale Indus. Contractors, Inc. v. Virginia Sur. Co., Inc., 754 F.Supp.2d 927, 933 (N.D.Ohio 2010), (R.C. 2745.01(C) creates a rebuttable presumption that the employer intended to injure. It is not a separate tort, and merely provides a legally cognizable example of “intent to injure”.)
Kaminski v. Metal & Wire Prods. Co., 2010-Ohio-1027 (Upheld the constitutionality of R.C. 2745.01, noting that the intent of the General Assembly in enacting this version was to significantly restrict recovery for employer intentional torts to situations in which the employer acts with specific intent to cause an injury. Intent to injure is an essential element of a claim for employer intentional tort.)
Rudisill v. Ford Motor Co., 709 F.3d 595 (6th Cir. 2013) (“what appears at first glance as two distinct bases for liability is revealed on closer examination to be one and the same,” describing R.C. 2745.01 as “a statute at war with itself.”)
Liberty Mut. Fire Ins. Co. v. Ivex Protective Packaging, Inc., S.D.Ohio No. 3:13-cv-175 (Nov. 26, 2014) (If an employer fails to rebut a presumption under R.C. 2745.01(C), then the effect of the presumption is that the employee proves that the employer committed the removal with the intent to injure another. Though an employee may prevail without direct evidence of a deliberate intent to injure, he or she cannot recover without a finding that the employer acted with the intent to injure.)
A Brief History of the Long and Tortured Life of the Employer Intentional Tort
For those of you unfamiliar with this, Justice French does a recap from the original statutory and Constitutional provisions establishing immunity for the “vast majority” of workplace injuries, to Blankenship v. Cincinnati Milacron Chemicals, Inc., and the creation of the employer intentional tort, to the creation of two options—intent to injure and substantial certainty– to prove the tort, to the striking down of many legislative attempts to codify this tort, to the present version of R.C. 2745.01, and to the upholding of the constitutionality of this version of the statute in Kaminski v. Metal & Wire Prods. Co. For more detail, read paragraphs 7-12 of the opinion. Or you can read this post. Or you can read Justice O’Donnell’s version in Houdek. Or former Justice Cupp’s in Kaminski. Or Justice O’Neill’s in the dissent in this case, with a slightly different spin.
What is key, here, is that to prove an employer intentional tort, proof of intent or deliberate intent is now required. In other words, the old “substantial certainty” iteration of this tort is now “deliberate intent” to injure. So the two bases for liability are now one. The court has gone over this many times. There is also subsection (C) in this statute which creates a rebuttable presumption of intent to injure when an employer deliberately removes an equipment safety guard.
The Insurance Policy
Under the basic Commercial General Liability (CGL) policy involved here, coverage for intentional acts is clearly excluded. At issue is coverage under the Employers Liability Coverage Form-Ohio, which the Employers purchased for an additional premium. Under this endorsement, there is coverage for substantial-certainty intentional torts that would otherwise be excluded under the CGL policy. But the supplemental coverage also expressly excludes coverage for acts committed with the deliberate intent to injure. So, an issue that was hotly debated (but ultimately deemed to have been waived) was whether this additional coverage was illusory.
CIC’s Explanation to Policyholders of this Supplemental Coverage
In a summary to policyholders, CIC explained that the Employer Liability Coverage provided coverage for substantial certainty intentional torts, but also explained that R.C. 2745.01 had changed the law and only allowed recovery for employer intentional torts upon proof of intent or deliberate intent to injure. CIC explained that at the time the coverage was offered, the constitutionality of R.C. 2745.01 was uncertain (understandable, given its stormy history), and that when Kaminski finally settled the question by upholding the constitutionality of R.C. 2745.01, it ceased offering this coverage.
The trial court granted summary judgment to the Employers on the (A) and (B) claims, but did not determine the merits of Hoyle’s claim under subsection (C), the deliberate removal of the equipment safety guard. That remains to be determined.
Court’s Analysis of the Statutory and Insurance Policy Language
If you are lost, the legal issue before the court is whether the CIC policy excludes coverage for all employer intentional torts. If so, CIC would have no duty to indemnify the Employers even if Hoyle can prove liability under subsection (C). Under that provision, the 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.
If Hoyle can establish that the Employers deliberately removed an equipment safety guard, and that the removal directly caused his injuries, then he will be entitled to a presumption that the Employers acted with the intent to harm him. But the only way Hoyle can recover is ultimately proving intent to injure him. “Thus, although Hoyle might prevail without direct evidence of a deliberate intent to injure, he cannot recover without a finding that DTJ and Cavanaugh acted with the intent to injure him,” French wrote. It really doesn’t matter, though, because either way, this isn’t covered under the CIC policy.
Got a headache? Short version is Hoyle can try and prove his case, but even if he does, it isn’t covered by CIC’s policy.
Two Issues Not Decided
The court did not decide whether Ohio public policy prohibits any type of indemnity for employer intentional torts, or whether the coverage offered in this endorsement was illusory. It felt it unnecessary to decide the former because the policy at issue precluded coverage in this case, and deemed the latter waived because it was not raised below.
Even if Hoyle were to prevail on his claims against the Employers, what happened here would not be covered. Summary judgment in favor of CIC was reinstated.
Justice Lanzinger’s Separate Concurrence
This is so clear I am including it verbatim, in its entirety:
“I concur in judgment, but I would frankly state that by defining “substantially certain” acts as “deliberate” in R.C. 2745.01, the General Assembly has closed off employer intentional torts. Even if a plaintiff proves the employer’s intent to injure directly under R.C. 2745.01(A) or (B), or by an unrebutted presumption under R.C. 2745.01(C), the act is not insurable as was the old substantial-certainty intentional tort. Harasyn v. Normandy Metals, Inc., 49 Ohio St.3d 173, 176, 551 N.E.2d 962 (1990). There is now nothing less than deliberate intent. As a practical matter, employees will be limited to workers’ compensation remedies for their workplace injuries.”
This position was reflected in Lanzinger’s questions at oral argument. Justice Kennedy agreed with this position, which is consistent with what she wrote in dissent in Vacha v. N. Ridgeville, 2013-Ohio-3020.
Justice O’Neill’s Dissent
This was Justice O’Neill’s take:
“The case before us demonstrates the money-driven efforts to return once again to the pre-Blankenship days, when profits were never placed in peril by the egregious acts of management.” He notes that although the lead opinion states that Hoyle should have his day in court, he agrees with Justice Lanzinger that because deliberate intent is required, the practical effect of the lead opinion is that Hoyle will be limited to his workers’ compensation benefits.
O’Neill made the following points:
- No one is alleging deliberate intent to injure here.
- This policy only excludes coverage for deliberate intentional acts, not other intentional acts like substantially certain acts. “A single act could in fact be found to be substantially certain to cause an injury, but not be driven by a deliberate intent to injure.”
- Not all intentional torts are uninsurable. Direct intent torts are, but substantial certainty torts are not.
- CIC drafted and collected a premium for the endorsement coverage, for “an event that is never going to happen.” It should not be allowed to get away with accepting premiums and denying coverage.
An insurance provision that excludes coverage for acts committed with the deliberate intent to injure an employee precludes coverage for employer intentional torts, which require a finding that the employer intended to injure the employee.
I correctly called this one for CIC, mainly because I think the employer intentional tort has passed the point of merely being on life support, as Justice Pfeifer has previously suggested, and is probably dead.
I find it an interesting question about exactly what coverage, if any, the Employers actually got with the endorsement. The court skirted that issue. At oral argument CIC’s explanation of what it was offering in the endorsement made sense, but probably only to those who have been following the thirty-years-wars of employer intentional torts. Whether the Employers knew what they were paying for is another story entirely. Actually, the Employers shared argument time with Hoyle in this case, because both were arguing for coverage. The court did not discuss that irony in its opinion.
While the majority is allowing Hoyle the chance to prove this tort, I doubt he’ll be able to do so. Clearly his only shot is under subsection (C). The fact is that the old “substantial certainty” version of this tort is now expressly defined under subsection (B) to require deliberate intent. Justice O’Neill may well have summed it all up with this question at oral argument:
“Isn’t this a catch-22? If Hoyle proves there was no deliberate intent to injure him, that would bring back coverage, but wouldn’t he lose on the tort?”
We’ll follow this case in our “What Happened on Remand” section. If Hoyle does recover, the Employers will have to pay the judgment on their own, because there won’t be insurance for it. I think Justice Lanzinger nailed it when she wrote, “even if a plaintiff proves the employer’s intent to injure directly under R.C. 2745.01(A) or (B), or by an unrebutted presumption under R.C. 2745.01(C), the act is not insurable as was the old substantial-certainty intentional tort.” Amen?