[Cite as Myers v. United Ohio Ins. Co., 2012-Ohio-340.]


                                       COURT OF APPEALS
                                    GUERNSEY COUNTY, OHIO
                                   FIFTH APPELLATE DISTRICT



CHARLES MYERS aka CHUCK MYERS, et al.,

                      Plaintiffs-Appellees

-vs-


UNITED OHIO INSURANCE CO.

                  Defendant-Appellant
:      JUDGES:
:      William B. Hoffman, P.J.
:      Sheila G. Farmer, J.
:      Julie A. Edwards, J.
:
:      Case No. 11CA000009
:
:
:      OPINION


CHARACTER OF PROCEEDING:                                  Civil Appeal from Guernsey County
                                                          Court of Common Pleas Case No.
                                                          09-CV-665

JUDGMENT:                                                 Vacated; Final Judgment Entered

DATE OF JUDGMENT ENTRY:                                   January 26, 2012

APPEARANCES:

For Plaintiffs-Appellees                                  For Defendant-Appellant

DANIEL G. PADDEN                                          MICHAEL R. HENRY
Tribble, Scott, Plummer &                                 MATTHEW R. PLANEY
Padden                                                    Crabbe, Brown & James, LLP
139 West 8th Street                                       500 South Front Street, Suite 1200
P.O. Box 640                                              Columbus, Ohio 43215
Cambridge, Ohio 43725-0640
Edwards, J.

      {¶1}    Appellant, United Ohio Insurance Co., appeals a judgment of the

Guernsey County Common Pleas Court awarding appellees Charles and Valerie Myers

damages in the amount of $51,576.00.

                            STATEMENT OF FACTS AND CASE

      {¶2}    In 2006, appellees decided to build a home on their property on Rough

and Ready Road in New Concord, Ohio. While driving around the area, they saw a

home built by Perry Miller. They walked through the home and eventually entered into a

contract with Miller to build a home on their property. The home was built on a slab and

consisted of one bedroom, one bathroom, a kitchen and a living room.

      {¶3}    Appellees decided to add on to the original home. Because Miller was

familiar with their home, they entered a contract with him on July 7, 2007, to build a

twenty by forty-eight foot addition including a full basement and interior and exterior

staircases.   The contract called for a separate sixteen by twenty-four foot addition

including a full bathroom, bedroom and hallway. Miller was also to construct a garage

with two overhead doors.

      {¶4}    Late in 2007, one of the basement walls constructed by Miller began to

crack and bow.     Miller used wood boards to support the wall and eventually had to

replace the wall in December of 2007.

      {¶5}    Miller began showing up at the construction site less and less. By spring

of 2008, he stopped working on the project. When efforts to contact Miller by telephone

failed, appellees went to his house. Miller advised appellees that he had another job

and did not have time to complete the work on their home.
      {¶6}   Appellees had a number of contractors look at the work in order to have

the work finished. One noted that there was a “bath tub effect” on the roof and the roof

was leaking. He also noted that a second basement wall constructed by Miller was

bowing.

      {¶7}   In the spring and summer of 2008, this second basement wall began to

bow and crack, allowing water into the basement. Appellees attempted to use wood to

brace the wall, but eventually the wall was replaced by James Flesher at a cost of

$18,576.00. According to Flesher, if the wall had not been replaced it would have

collapsed.

      {¶8}   Also in the spring and summer of 2008, the roof over the addition of the

home began to leak in five or six places before they could paint the drywall in the

addition. The leaking caused water stains on the drywall and caused the drywall to

separate and tear. Flesher inspected the roof and noted that there is not enough pitch

on the roof, causing it to hold water like a bowl instead of allowing it to run off. In his

opinion, the roof needed to be replaced.

      {¶9}   J.D. Jones, housing inspector for Guernsey County, inspected the addition

for mold and moisture issues. He noted that the roof system does not allow for proper

ventilation, causing moisture and mold damage.

      {¶10} Appellees filed the instant action against Miller, alleging that he failed to

complete the work called for in their contracts with him concerning the construction of

the addition and garage. The complaint also alleged that the completed work was done

in an unworkmanlike manner.
       {¶11} On July 29, 2010, appellees filed an amended complaint including the

same claims against Miller but adding appellant as a defendant based on a general

liability policy of insurance appellant had issued to Miller. Appellant filed a counterclaim

and cross claim seeking a declaratory judgment clarifying the scope of coverage under

the policy based on appellees’ claims against Miller.

       {¶12} The case proceeded to bench trial in the Guernsey County Common

Pleas Court on February 16, 2011. Appellees voluntarily dismissed Miller because he

had received a discharge in bankruptcy applicable to all claims asserted against him by

appellees.

       {¶13} Following trial, the court found that the policy of insurance appellant

issued to Miller does not provide coverage for defective or faulty workmanship, but did

provide coverage for consequential damages related to repairs for mold and water

damage caused by repeated exposure to the elements.              Appellant had conceded

liability under the policy in the amount of $2,000.00 to repair water damage to the

drywall. The trial court found appellant liable to appellees under the policy for damages

in the amount of $51,576.00, which included $12,000.00 to re-work the main roof and

ceiling over the original structure, $19,000.00 to replace the roof and ceiling in the

addition, and $18,576 to replace the basement wall.

       {¶14} Appellant assigns five errors on appeal:

       {¶15} “I. THE TRIAL COURT ERRED BY FINDING AN ‘OCCURRENCE’

WHICH CAUSED ‘PROPERTY DAMAGE’ FOR WHICH UNITED OHIO HAD A DUTY

TO INDEMNIFY MILLER WHEN THE DAMAGES ALLEGED WERE RELATED TO

FAULTY WORKMANSHIP OF UNITED OHIO’S INSURED.
      {¶16} “II. THE TRIAL COURT ERRED AS A MATTER OF LAW IN AWARDING

ANY DAMAGES RELATED TO THE REPLACEMENT OF THE BASEMENT WALL

CONSTRUCTED BY MILLER RELATED TO MOLD OR OTHERWISE.

      {¶17} “III. THE TRIAL COURT ERRED IN AWARDING DAMAGES AND

FINDING COVERAGE UNDER THE UNITED OHIO POLICY WHEN A VALID FUNGI

OR BACTERIA EXCLUSION TO COVERAGE IN THE UNITED OHIO POLICY WOULD

ALSO APPLY.

      {¶18} “IV. THE TRIAL COURT ERRED IN AWARDING DAMAGES RELATED

TO ANY DEFECTS AFFECTING THE ROOF OVER THE MYERS’ MAIN HOME AND

THE GARAGE CONSTRUCTED BY MILLER.

      {¶19} “V. THE TRIAL COURT ERRED IN AWARDING JUDGMENT AGAINST

UNITED OHIO FOR CONSEQUENTIAL DAMAGES IN THE AMOUNT OF $51,576.00

WHEN ANY POTENTIALLY COVERED CONSEQUENTIAL DAMAGES RELATED TO

UNITED OHIO’S INSURED’S WORK WAS LIMITED TO $2,000.00.”

                                                 I

      {¶20} In the first assignment of error, appellant argues that the court erred as a

matter of law in finding that repeated exposure to rain and snow in the home was an

“occurrence” within the meaning of the policy.

      {¶21} The court made the following findings concerning whether the damage

was an “occurrence” that is covered under the policy:

      {¶22} “4. The Court concludes as a matter of law that the legal issue of the

construction within the insurance policy contract of the term ‘occurrence’ was addressed

by the Fifth District Court of Appeals in the case of Bogner Construction Co. vs. Field &
Associates, Inc. case no. 08-CA-11, Knox Co., January 13, 2009, 2009 WL 91300. The

Fifth District Court of Appeals has stated that when defective workmanship results in

collateral damage, an ‘occurrence’ under the terms of the general liability policy occurs.

       {¶23} “5. The Court concludes that the damages suffered by the Plaintiffs herein

are consequential damages stemming from the contractor (Miller’s) work.

       {¶24} “6. The Court concludes from the facts of this case that these damages

occurred due to a repeated exposure to the moisture leaking into the home through the

roof, walls and basement.      Thus, the property damage herein was caused by an

‘occurrence’, which the policy defines as ‘an accident, including continuous or repeated

exposure to substantially the same harmful conditions.’

       {¶25} “7. The Court, therefore, concludes as a matter of law, in accord with the

principle applied with Ohio Courts and the Fifth District Court of Appeals that the

defective workmanship herein does not constitute an ‘occurrence’ or an accident.

However, the repeated exposure to the elements has resulted in consequential

damages and this property damage is caused by an ‘occurrence’ which is not excluded

in the policy.

       {¶26} “8. The Court further concludes that the Plaintiffs’ home is now damaged

by mold which is growing in the home due to the repeated exposure to moisture. There

is no evidence that the mold was in existence in the home prior to the occurrence due to

harmful conditions which have caused the mold to grow. This occurrence has resulted

in the Plaintiffs’ home being damaged in the sum of $51,576. pursuant to Plaintiffs’

Exhibits 11 and 12.” Judgment Entry, March 23, 2011, Conclusions of Law 4-8.
        {¶27} This court's standard of review concerning questions of law is de novo.

Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm (1995), 73 Ohio St.3d 107, 108, 652

N.E.2d 684; Cleveland Elec. Illum. Co. v. Pub. Util. Comm. (1996), 76 Ohio St.3d 521,

523, 668 N.E.2d 889.

        {¶28} In the instant case, the policy issued to Miller provides coverage for

property damage only if it is caused by an occurrence that takes place in the coverage

territory.   The policy defines occurrence as “an accident, including continuous or

repeated     exposure    to   substantially    the      same   general   harmful   conditions.”

Businessowners Coverage Form, Defendants Exhibit A, p. 39.

        {¶29} In Bogner Construction Company v. Field & Associates, Inc., Knox App.

No. 08 CA 11, 2009-Ohio-116, City of Mount Vernon school board had contracted with

Bogner for the construction of a new middle school. The school board asserted breach

of contract claims against Bogner based on Bogner’s failure to construct a roof that

conformed to the project specifications. The complaint alleged that the roof leaked,

causing property damage not only to the roof but also to tangible property other than the

roof itself, including ceiling tiles and furnishings.

        {¶30} Bogner was insured by a comprehensive general liability policy issued by

USF&G which provided coverage for property damage caused by an “occurrence,” and

defined “occurrence” as “an accident, including continuous or repeated exposure to

conditions, which results in bodily injury or property damage neither expected nor

intended from the standpoint of the Insured.” Id. at ¶41.

        {¶31} This Court noted that the language of the policy was “clear and plain,

something only a lawyer’s ingenuity could make ambiguous.” Id. at ¶42, quoting Royal
Plastics v. State Auto. Mut. Ins. Co. (1994), 99 Ohio App.3d 221, 225. We then turned

to the issue of whether any of the claims fell within the scope of the insurance policy

coverage.

      {¶32} Citing Environmental Exploration Company v. Bituminous Fire & Marine

Insurance Co., (October 16, 2000), Stark App. No. 1999CA00315, we held that

defective workmanship does not constitute an accident or occurrence under a

commercial general liability policy. Id. at ¶44. If the policy is construed as protecting a

contractor against defective workmanship, the insurer becomes a guarantor of the

insured’s performance under the contract, and the policy becomes a performance bond.

Id. at ¶48. The policy does not insure an insured’s work itself, but rather insures the

consequential risks that stem from the insured’s work. Id. at ¶49. General commercial

liability policies are not intended to insure the normal, frequent or predictable costs of

doing business. Id. Such policies are intended to insure the risks of an insured causing

damage to other persons and their property, but are not intended to insure the risks of

an insured causing damage to the insured’s own work. Id. We found that there was no

“occurrence” within the meaning of the policy, and therefore, no coverage.

      {¶33} As to the roof, the trial court awarded damages for repair and replacement

of the roof, finding that the snow and rain that accumulated on the roof was an

“occurrence” within the meaning of the policy.       However, the claim and all of the

evidence presented at trial was that the roof was not properly constructed by Miller,

causing a “bowl” type effect on the roof which allowed water and rain to collect rather

than run off. The very purpose of a roof is to prevent rain and snow from entering the

interior of the home and causing damage. The repeated exposure of the roof to rain
and snow is not a separate cause of roof failure, but is the means by which the faulty

construction of the roof became apparent to appellees. The damages awarded for

repair of the roof were not damages for consequential or collateral damage caused to

the interior of the home, but rather were for damage to the work product itself and thus

did not qualify as an occurrence under the plain language of the policy.

       {¶34} Similarly, the court awarded damages for replacement of the basement

wall. The evidence presented at trial was undisputed that the reason the wall bowed,

cracked and ultimately allowed water to seep in was because it was improperly

constructed by Miller. Again, the replacement of the basement wall was not collateral or

consequential damage, but rather was damage to the work product itself caused by

faulty construction.

       {¶35} Appellees argue that their trial exhibit 13, a letter from appellant to their

attorney, concedes liability for the damages awarded by the trial court.          The letter

provides in pertinent part:

       {¶36} “As we discussed on the telephone prior, workmanship and the actual

work product of our insured is excluded under policy coverage. Resulting damage from

the work of our insured is determined as follows:

       {¶37} “Water has entered the roof structure resulting in water leaks and stains in

the family room ceiling and portions of the finished side of the exterior south wall.

       {¶38} “The resulting damage is not workmanship, or work product, and would be

afforded coverage for the repairs of the resulting damage only. Please provide your

contractor estimate for repair of the resulting damage for review and payment.”
       {¶39} This letter recognizes that appellant is not liable for the workmanship and

work product of Miller. Appellant states that coverage is provided only for resulting

water damage, such as stains in the ceiling of the family room, and not for the faulty

work itself.   Appellant conceded $2,000.00 in repairs for water damage at trial.

However, this letter does not inform appellees that there is coverage for replacement of

the roof and basement wall, and limits coverage to resulting damage from the leaks in

the roof.

       {¶40} The first assignment of error is sustained.

                                               II

       {¶41} Appellant argues that the court erred in awarding damages for

replacement of the basement wall as mold remediation when there was no evidence

presented that the problems with the basement wall contributed to the mold problem in

the home.

       {¶42} A judgment supported by some competent, credible evidence going to all

the essential elements of the case will not be reversed by a reviewing court as against

the manifest weight of the evidence. C.E. Morris Co. v. Foley Construction Co. (1978),

54 Ohio St.2d 279, 376 N.E.2d 578. As the trier of fact, the judge is in the best position

to view the witnesses and their demeanor in making a determination of the credibility of

the testimony. “[A]n appellate court may not simply substitute its judgment for that of

the trial court so long as there is some competent, credible evidence to support the

lower court's findings.” State ex rel. Celebrezze v. Environmental Enterprises, Inc.

(1990), 53 Ohio St.3d 147, 154, 559 N.E.2d 1335.
       {¶43} While appellant Valerie Myers testified that there was mold in the

basement, there is no evidence that replacement of the basement wall was necessary

because of mold damage. Flesher testified that the basement was going to cave in if

the wall wasn’t replaced because of cracking and bowing.                  J.D. Jones testified

concerning mold issues caused by the roof leaking, but did not present any evidence

about the basement wall.

       {¶44} The second assignment of error is sustained.

                                                   III

       {¶45} Appellant argues that the exclusion in the insurance policy related to

property damage caused by fungi or bacteria precludes recovery of damages for mold.

The policy provides in pertinent part:

       {¶46} “q. Fungi or Bacteria

       {¶47} “(1) . . . ‘property damage’ . . . which would not have occurred, in whole or

in part, but for the . . . existence of, or presence of, any ‘fungi’ . . . on or within a building

or structure, including its contents, regardless of whether any other cause, event,

material or product contributed concurrently or in any sequence to such injury or

damage.

       {¶48} “(2) Any loss, cost or expenses arising out of the abating, testing for,

monitoring, cleaning up, removing, containing, treating, detoxifying, neutralizing,

remediating or exposing of, or in any way responding to, or assessing the effects of,

‘fungi’ or bacteria, by any insured or by any other person or entity.”
       {¶49} J.D. Jones testified that mold is a type of fungus. By the clear language of

this policy exclusion, coverage is not provided for any property damage which is

attributable to mold.

       {¶50} The third assignment of error is sustained.

                                           IV

       {¶51} Appellant argues that the court erred in awarding damages for repair of

the original roof because such repairs are not an “occurrence” under the policy.

       {¶52} For the reasons stated in assignment of error one above, the moisture

problems with the house which required re-working and replacement of the roof are due

to faulty workmanship by Miller. Faulty workmanship on the roof is not an “occurrence”

within the meaning of the policy and damages awarded to repair the incompetently

constructed roof are not authorized by the insurance policy.

       {¶53} The fourth assignment of error is sustained.

                                                V

       {¶54} Appellant argues that its liability is limited to the $2,000.00 they conceded

at trial for water damage on to the drywall. For the reasons stated in assignments of

error one through four, we agree. The fifth assignment of error is sustained.

       {¶55} The judgment of the Guernsey County Common Pleas Court is vacated.

Pursuant to App. R. 12(B), we hereby enter final judgment in favor of appellees Charles

and Valerie Myers in the amount of $2,000.00.

By: Edwards, J.

Hoffman, P.J. and

Farmer, J. concur
            ______________________________



            ______________________________



            ______________________________

                     JUDGES

JAE/r1121
             IN THE COURT OF APPEALS FOR GUERNSEY COUNTY, OHIO

                             FIFTH APPELLATE DISTRICT


CHARLES MYERS aka CHUCK                     :
MYERS, et al.,                              :
                                            :
                     Plaintiffs-Appellees   :
                                            :
                                            :
-vs-                                        :       JUDGMENT ENTRY
                                            :
UNITED OHIO INSURANCE CO.                   :
                                            :
                    Defendant-Appellant     :       CASE NO. 11CA000009




       For the reasons stated in our accompanying Memorandum-Opinion on file, the

judgment of the Guernsey County Court of Common Pleas is vacated. Pursuant to

App.R. 12(B) we hereby enter final judgment in favor of appellees Charles and Valerie

Myers in the amount of $2,000.00. Costs assessed to appellees.




                                                _________________________________


                                                _________________________________


                                                _________________________________

                                                             JUDGES
