Ohio “property damage” caused by an “occurrence,” and exclusions j(6), k., l., and m.

In Cincinnati Ins. Co. v. Dorsey Reconditioning, Inc., No. 10-CA-11 (Ohio Ct. App. March 25, 2011), insured Dorsey contracted with claimant Clow to sandblast and prime pipe which Clow contracted to supply to WMSI for use in its utility project. After completion, WMSI discovered that the primer coat applied by Dorsey, and intermediate and finish coats applied by another contractor, were flaking off the pipe resulting in corrosion to the pipe. WMSI sued Clow for damages. Clow settled the WMSI lawsuit and demanded reimbursement from Dorsey. Dorsey tendered the claim to its CGL insurer—Cincinnati–which denied coverage and filed a declaratory judgment against Dorsey and Clow. Clow cross-claimed against Dorsey for negligence and breach of contract. Dorsey and Clow entered into a consent judgment on the cross-claim with Dorsey assigning to Clow its rights against Cincinnati. On Cincinnati and Clow’s cross-motions for summary judgment, the state trial court entered summary judgment in favor of Clow. On appeal, the intermediate court of appeals reversed.  Applying Ohio law, the court first held that the damages for the repair of Dorsey’s surface preparation and primer application did not constitute damages because of property damage caused by an “occurrence.”  The court then held that the property damage resulting from Dorsey’s defective work—intermediate and final coatings and corroded pipe–fell within exclusion j.(6) for property damage to “that particular part of any property that must be restored, repaired or replaced because [Dorsey’s work] was incorrectly performed on it,” exclusion k. for property damage to Dorsey’s product, exclusion l. for property damage to Dorsey’s work, and exclusion m. for property damage to “impaired property” or property not physically injured.