Ohio “property damage” caused by an “occurrence.”

In JTO, Inc. v. State Automobile Mut. Ins. Co., No. 2010-L-062 (Ohio Ct. App. March 25, 2011), general contractor JTO was sued by hotel project owner Marriott for breach of contract and warranties seeking damages for the repair of construction defects resulting in moisture penetration property damage to interior components.  JTO filed a third party complaint against subcontractor Farizel and also tendered its defense as an additional insured under Farizel’s State Auto CGL policy.  State Auto denied a defense and JTO filed suit against State Auto.  The trial court granted State Auto’s motion for judgment on the pleadings.  The intermediate appellate court reversed.  The court first states that, because JTO conceded that the costs to repair the defective work were not covered under the State Auto policy, the only issue in dispute was the cost to repair the resulting property damage.  Applying Ohio law, the court held that, because the moisture penetration could constitute an “occurrence” and the resulting damage to interior components constituted “property damage,” the underlying complaint sought damages because of “property damage” caused by an “occurrence.”