On December 10, 2024, the Ohio Supreme Court issued a unanimous 7-0 opinion finding that various insurers were not obligated to indemnify their insured, Sherwin-Williams, for payments into an abatement fund related to lead paint hazards. Reminger attorneys Brianna M. Prislipsky and Clifford C. Masch represented one of several insurers who were named as parties.
The underlying coverage dispute arose out of a 2000 lawsuit in California filed by Santa Clara County against Sherwin-Williams and other paint companies related to a public nuisance resulting from lead paint which was sold by these companies. After more than a decade, that case went to trial, where it was found that Sherwin-Williams had created a public nuisance and was ordered to pay a share of $1.15 billion into an abatement fund to be administered by the State of California. The abatement plan was meant to provide funding for testing to identify the presence of lead, remedial work to either replace or incapsulate the presence of lead, and public education regarding lead poisoning prevention and paint stabilization techniques, among other things.
While the lead paint suit was pending in California, Sherwin-Williams instituted an action in Ohio seeking a determination that its various insurers were required to indemnify it for any payments into the abatement fund. Sherwin-Williams’s insurers later filed a motion for summary judgment seeking a determination that they had no obligation to indemnify Sherwin-Williams for its obligation to may into the abatement fund, because the policies only provided coverage for “damages” and expenses, and the policies only covered damages, for, because of, or on account of property damage or bodily injury, neither of which have been awarded in the California action.
That motion was granted but was later reversed on appeal because the appellate court determined that the abatement fund was meant to reimburse the government for its costs in responding to lead paint hazards. The insurers then appealed to the Ohio Supreme Court, who accepted review.
In a unanimous decision, with a concurring opinion by Justice Stewart, the Supreme Court of Ohio reversed the Eighth District Court of Appeals and found that payment into the abatement plan was limited to addressing future harm, rather than compensating California for past harm. Because damages are, by definition, compensation for past injuries, Sherwin-Williams’s payments into the abatement fund did not constitute damages, and the insurers were not obligated to indemnify Sherwin-Williams for its payments into the abatement fund.
The court also concluded that the California court’s order did not compensate the government for “bodily harm,” nor did it offer compensation for past physical damages to property, given that lead paint does not cause physical damage to property.
This opinion clarifies longstanding Ohio law regarding the nature of damages as it applies to coverage matters. If you have any questions regarding this decision or have any questions concerning insurance coverage matters, please contact a member of our Insurance Coverage or Appellate Law Practice Groups.
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