In Chiquita Brands Int’l Inc. v. Nat. Union Fire Ins. Co, No C-120019, 2013 WL 836861 (Ohio Ct. App. Mar. 6, 2013), the Ohio Court of Appeals applied Ohio law and held that lawsuits asserting claims that the policyholder illegally financed foreign terrorist operations did not constitute an “occurrence.”  The Court also held that the policyholder’s alleged liability stemmed from injuries that took place in Colombia, which was outside the policies’ coverage territory. 

The underlying lawsuits arose out of the policyholder’s alleged activities in Colombia.  The underlying plaintiffs alleged that the policyholder illegally financed terrorist groups, and those groups engaged in torture, kidnapping, murder, and other atrocities. 

After the insurers declined to defend the lawsuits, the policyholder filed a declaratory judgment action against its insurers.  The policyholder argued, and the trial court agreed, that although the underlying lawsuits made “serious allegations of intentional even malicious conduct…. each complaint, to some extent makes allegations of negligence.”  Id at * 3.  Based on the negligence allegations, the trial court held that a duty to defend existed.  Additionally, the court held that any decision to pay the terrorist groups occurred at the policyholder’s corporate headquarters in Ohio, and thus the “occurrence” took place in the policies’ coverage territory, which was defined as the United States (including its territories and possessions), Puerto Rico, and Canada. 

The Ohio Court of Appeals reversed on both issues.  In holding the there was no “occurrence,” the Court rejected the policyholder’s argument that negligent-supervision and other negligence-based claims alleged an “occurrence.”  Unlike a negligent-supervision or negligent-entrustment claim, which alleges that a party’s negligence stems from the intentional acts of another, the Court explained that the negligence claims against the policyholder arose from its own intentional acts, not the acts of another. Id at * 4.

Further, the Court explained that a review of the record showed that although the underlying complaints had “causes of action sounding in negligence,” all those causes “were all based on [the policyholder’s] alleged intentional conduct”  Id.  “The mere insinuation of negligence in a civil suit complaint cannot transform what are essentially intentional torts into something ‘accidental’ that might be covered by insurance.”  Id.  Therefore, they did not allege an “occurrence.” 

The Court also rejected the policyholder’s argument that the alleged “occurrence” took place within the policies’ coverage territory.  The policyholder argued that the decision to pay terrorist organizations took place at its corporate headquarters in Ohio.  In a case of first impression under Ohio law, the Court adopted the place of injury test because the “‘great weight of case law’ from other jurisdictions holds that ‘it is the location of the injury, not some precipitating cause – that determines the location of the event for purposes of insurance coverage.’”  Id at * 5. The Court found the injuries alleged in the underlying lawsuits took place in Colombia, and the decision made in Ohio to pay the terrorists merely constituted a precipitating event.  Thus, the alleged “occurrence” did not take place in the policies’ coverage territory.   

This decision establishes that intentional conduct is not an “occurrence,” even when such conduct is labeled as negligence.  Thus, to determine if there is an “occurrence,” it is necessary to review the factual allegations, not the legal theories assigned to the factual allegations.  Additionally, it places Ohio among those jurisdictions that have adopted the place of injury test to determine the location of an “occurrence” under a liability policy.