Insurers need not cover lead-paint abatement fund payment

The Ohio Supreme Court said Tuesday that Sherwin-Williams Co.’s insurers do not need to cover the amount the company paid into a $305 million abatement fund to mitigate the hazards caused by lead paint in California, ruling the payment into the fund did not constitute covered damages.

The justices said in Sherwin-Williams Co. v. Certain Underwriters at Lloyd’s London et al. that the paint maker’s $101 million payment was not covered because the fund was established to prevent future harm, not compensate for past physical damage.

The court also said the lawsuit filed by California’s Santa Clara County did not trigger coverage because it did not involve allegations of property damage caused by lead paint.

The county sued Cleveland-based Sherwin-Williams and other lead-paint makers in California state court in 2000 over the hazards caused by their marketing and sales of the product.

Other government entities later joined the lawsuit, and, following a 2013 trial, the judge ruled that Sherwin-Williams, ConAgra Brands Inc. and NL Industries Inc. created a public nuisance by selling lead paint. The judge ordered the companies to collectively pay $1.15 billion into an abatement fund. The amount was later decreased on appeal, court records show.

Sherwin-Williams sued its insurers in Ohio state court in 2006 seeking coverage for its portion of the abatement fund. The insurers successfully moved for summary judgment after arguing that the abatement fund was not created to pay covered damages.

Sherwin-Williams persuaded Ohio’s 8th District Court of Appeals to reverse that decision in September 2022 and find that the company’s portion of the abatement fund was covered.

Representatives for the parties did not respond to requests for comment.