[Cite as Third Wing, Inc. v. Columbia Casualty Co., 2012-Ohio-2393.]



                 Court of Appeals of Ohio
                               EIGHTH APPELLATE DISTRICT
                                  COUNTY OF CUYAHOGA



                              JOURNAL ENTRY AND OPINION
                                       No. 97622


                                   THIRD WING, INC.

                                                          PLAINTIFF-APPELLANT

                                                    vs.

                           COLUMBIA CASUALTY CO.
                                                          DEFENDANT-APPELLEE



                                           JUDGMENT:
                                            AFFIRMED


                                      Civil Appeal from the
                             Cuyahoga County Court of Common Pleas
                                      Case No. CV-688223

        BEFORE: Stewart, P.J., Boyle, J., and Rocco, J.

        RELEASED AND JOURNALIZED:                         May 31, 2012
ATTORNEY FOR APPELLANT

Robert P. Rutter
One Summit Office Park, Suite 650
4700 Rockside Road
Independence, OH 44131


ATTORNEYS FOR APPELLEE

Marianne K. Barsoum Stockett
Martin T. Galvin
Reminger Co., L.P.A.
1400 Midland Building
101 Prospect Avenue, West
Cleveland, OH 44115
MELODY J. STEWART, P.J.:

       {¶1} Plaintiff-appellant Third Wing, Inc. appeals from a summary judgment in

favor of defendant-appellee Columbia Casualty Company on its complaint seeking a

declaration that Columbia was legally obligated to reimburse attorney fees that Third

Wing paid to Buffalo Wild Wings International, Inc. (“BWWI”). Third Wing, a BWWI

franchisee, and BWWI were defendants in a lawsuit alleging that Third Wing violated the

Dram Shop Act. As relevant to this appeal, Third Wing paid BWWI’s attorney fees in

the action under an indemnification clause of their franchise agreement. It then filed this

declaratory judgment action claiming that those attorney fees were “damages” that

Columbia, its liquor liability insurer, was legally obligated to pay. The court held that

the franchisor’s attorney fees were not damages because they did not involve an “injury”

to which the franchisee’s insurance policy applied. The sole assignment of error contests

the court’s refusal to award attorney fees. Columbia filed a cross-assignment of error

relating to certain expert costs that were awarded but failed to file a notice of cross-appeal

as required by App.R. 4(B)(1), so we disregard the cross-assignment of error. Kaplysh v.

Takieddine, 35 Ohio St.3d 170, 175, 519 N.E.2d 382 (1988).

                                              I

       {¶2} The issue was joined on cross-motions for summary judgment and stipulated

facts, so the question presented on appeal is one we decide as a matter of law, with no
deference to the court’s judgment. Civ.R. 56(C); Morehead v. Conley, 75 Ohio App.3d

409, 411, 599 N.E.2d 786 (4th Dist.1991).

       {¶3} Third Wing operates a Buffalo Wild Wings restaurant franchise under license

from BWWI. The franchise agreement contains an indemnity clause in which Third

Wing agreed to hold BWWI harmless against all claims and costs arising from the

operation of the restaurant, “including attorneys’ fees[.]” The franchise agreement also

required Third Wing to carry liability insurance. To that end, Third Wing took out a

liquor liability policy with Columbia.

       {¶4} In 2005, a customer left the Third Wing franchise and crashed his car.

Tracey Glasney, a passenger in that car who suffered injuries in the crash, brought suit

against Third Wing and BWWI. She alleged that Third Wing violated the Dram Shop

Act, R.C. 4399.18, by knowingly serving alcoholic beverages to the driver of the car,

even though he was noticeably intoxicated.

       {¶5} Third Wing forwarded the suit to Columbia. Columbia provided a defense

for Third Wing, but refused to provide a defense for BWWI because it was not an insured

under the policy. The Glasney action ultimately settled with Columbia agreeing to pay

her $300,000 on behalf of Third Wing and BWWI agreeing to pay $7,500.

       {¶6} Following settlement, BWWI demanded indemnification from Third Wing

for the $7,500 it paid to Glasney in addition to $2,740 for expert’s fees and $64,732 in

attorney fees that it expended during the action. Third Wing paid BWWI according to its
demand. It then brought this declaratory judgment action seeking a declaration that

BWWI’s attorney fees were “damages” for purposes of the Columbia policy.1

       {¶7} The court acknowledged Neal-Pettit v. Lahman, 125 Ohio St.3d 327,

2010-Ohio-1829, 928 N.E.2d 421, as precedent for the proposition that attorney fees may

constitute damages under an insurance policy, but distinguished that case because the

attorney fees in that case were incurred and awarded to the plaintiff, who was also the

injured party. The court found that the attorney fees sought by Third Wing were incurred

solely as a result of BWWI defending itself in the Glasney litigation and were not

awarded for an injury that was covered by the Columbia policy.

                                                 II

       {¶8} We construe insurance policies as a matter of law, Alexander v. Buckeye Pipe

Line Co., 53 Ohio St.2d 241, 374 N.E.2d 146 (1978), paragraph one of the syllabus, and

give them their plain and ordinary meaning. Dairyland Ins. Co. v. Finch, 32 Ohio St.3d

360, 362, 513 N.E.2d 1324 (1987). We cannot create ambiguity where none exists, but if

a policy is ambiguous and susceptible to more than one reasonable interpretation, the

ambiguity must be resolved in favor of the insured. Hacker v. Dickman, 75 Ohio St.3d

118, 119, 661 N.E.2d 1005 (1996).

       {¶9} The Columbia policy states in pertinent part:



       1
        The court found Columbia responsible for the $7,500 that BWWI paid to Glasney in
settlement of the Dram Shop action and $2,740 in expert fees. Those awards are not a subject of this
appeal.
       We will pay those sums that you become legally obligated to pay as
       damages because of injury to which this insurance applies sustained by any
       person if liability for injury arises out of the selling, serving, or furnishing
       of any alcoholic beverage.

       {¶10} The policy defines “injury” as “all damages, including damages because of

bodily injury and property damage, and including damages for care, loss of services or

loss of support.”

       {¶11} Third Wing argues that the Columbia policy did not define the word

“damages” in the liquor liability policy, so that term must be expansively construed

against Columbia (the drafter of the policy) to include any form of damages. Because

attorney fees can sometimes be considered damages as held in Neal-Pettit, Third Wing

argues that the attorney fees expended by BWWI in litigating the Glasney claim fell

within the Columbia policy.

       {¶12} Regardless of whether we “expansively” construe the Columbia policy in a

manner suggested by Third Wing, we cannot consider the issue of damages unless and

until there has been a compensable injury suffered by the insured. The Columbia policy

states that Columbia will pay damages because of an “injury to which this insurance

applies.” The policy states that it applies only to an injury arising from the sale, service,

or furnishing of alcoholic beverages. Third Wing’s contractual obligation to indemnify

BWWI was not an “injury” under the Columbia policy because it arose solely from the

terms of the franchise agreement with BWWI.            The duty to indemnify thus existed

separate and apart from the liquor liability policy. In other words, the “injury” claimed
by Third Wing arose because of the indemnity clause in the franchise agreement, not from

selling, serving, or furnishing alcoholic beverages.

       {¶13} In Erie Ins. Group v. Grange Mut. Cas. Co., 176 Ohio App.3d 7,

2008-Ohio-1295, 889 N.E.2d 585 (6th Dist.), the court considered a similar legal

proposition. A guarantor co-signed an apartment lease that required the tenant to return

the premises in the same condition as that received. A fire caused by the tenant’s

negligence destroyed the premises. After receiving an insurance pay-out, the owner of

the apartment sued the tenant and the guarantor. The guarantor sought a legal defense

from the insurance company that issued her homeowner’s policy.            The guarantor’s

insurer refused.   The guarantor then negotiated a settlement with the owner of the

apartment building. The owner of the apartment building then filed a claim against the

guarantor’s insurer, seeking compensation under her policy.        The court affirmed a

summary judgment for the insurance company, stating that the only connection between

the insurance policy and the damages resulting from the fire was the contract entered into

by the guarantor as cosigner of liability under the lease. Id. at ¶ 25. The court held that

“the claims advanced here are contractual and not within the scope of the coverage

granted in the policy.” Id.

       {¶14} As in Erie Ins. Group, the claim made by Third Wing was a contractual

claim arising from a third party contract — the franchise agreement — with BWWI. It

was not within the scope of coverage granted by the liquor liability policy so any claim
for attorney fees arising from Third Wing’s settlement with BWWI was not covered.

The court did not err by granting summary judgment.

      {¶15} Judgment affirmed

      It is ordered that appellee recover of appellant its costs herein taxed.

      The court finds there were reasonable grounds for this appeal.

      It is ordered that a special mandate issue out of this court directing the Cuyahoga

County Court of Common Pleas to carry this judgment into execution.

      A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of

the Rules of Appellate Procedure.




MELODY J. STEWART, PRESIDING JUDGE

MARY J. BOYLE, J., and
KENNETH A. ROCCO, J., CONCUR
