Title: Elevators Mut. Ins. Co. v. J. Patrick O'Flaherty's, Inc.

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Elevators Mut. Ins. Co. v. J. Patrick O’Flaherty’s, Inc., Slip Opinion No. 2010-Ohio-1043.] 
 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in 
an advance sheet of the Ohio Official Reports.  Readers are requested 
to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 
65 South Front Street, Columbus, Ohio 43215, of any typographical or 
other formal errors in the opinion, in order that corrections may be 
made before the opinion is published. 
 
SLIP OPINION NO. 2010-OHIO-1043 
ELEVATORS MUTUAL INSURANCE COMPANY ET AL., APPELLANTS, v.  
J. PATRICK O’FLAHERTY’S, INC., ET AL., APPELLEES. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Elevators Mut. Ins. Co. v. J. Patrick O’Flaherty’s, Inc.,  
Slip Opinion No. 2010-Ohio-1043.] 
Trials — Evidence — Admissibility of prior convictions based on no contest plea 
under Crim.R. 11(B)(2) and Evid.R. 410 — Insured convicted of arson and 
insurance fraud based on no contest pleas — Crim.R. 11(B)(2) and 
Evid.R. 410(A) prevent use of conviction based on no contest plea in 
action for declaratory judgment for insurance coverage. 
(No. 2009-0321 — Submitted October 21, 2009 — Decided March 24, 2010.) 
APPEAL from the Court of Appeals for Sandusky County, 
No. S-08-006, 180 Ohio App.3d 315, 2008-Ohio-6946. 
__________________ 
SYLLABUS OF THE COURT 
Crim.R. 11(B)(2) and  Evid.R. 410(A) prevent the use of convictions based on no 
contest pleas in an action for declaratory judgment for insurance coverage. 
SUPREME COURT OF OHIO 
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__________________ 
 
LANZINGER, J. 
{¶ 1} The issue before us is whether evidence of an insured’s criminal 
convictions for arson and insurance fraud based on pleas of no contest are 
admissible in a civil dispute over insurance coverage for loss or damage resulting 
from the dishonest or criminal acts underlying the convictions.  We hold that 
Crim.R. 11(B)(2) and  Evid.R. 410(A) prevent the use of convictions based on no 
contest pleas in an action for declaratory judgment for insurance coverage and 
therefore affirm the judgment of the court of appeals. 
Background Facts 
{¶ 2} This is an action for declaratory judgment to determine the rights 
and obligations of the parties to a commercial fire insurance policy issued by 
appellant Elevators Mutual Insurance Company (“Elevators Mutual”) to appellee 
J. Patrick O’Flaherty’s, Inc. (“O’Flaherty’s”).  O’Flaherty’s, an Ohio corporation 
that owned a restaurant in Fremont, Ohio, was the sole named insured on the 
policy that provided coverage for the restaurant building and contents.  Appellees 
Richard A. Heyman and Jan N. Heyman were officers and the sole shareholders 
of O’Flaherty’s and were identified in the policy as loss payees. 
{¶ 3} O’Flaherty’s was damaged by fire on February 4, 2001.  The 
company submitted a claim to Elevators Mutual to recover insurance proceeds for 
loss.  Elevators Mutual advanced O’Flaherty’s $30,000 on the claim subject to a 
reservation of rights pending the completion of its fire investigation. Following 
the investigation, Elevators Mutual concluded that Richard Heyman had 
intentionally started the fire and denied the claim based on a policy exclusion for 
loss or damage caused by an insured’s dishonest or criminal act. 
{¶ 4} Elevators Mutual filed this action on November 30, 2001 against 
O’Flaherty’s, and Richard and Jan Heyman individually, for a declaration of no 
coverage and to recover damages and the $30,000 advanced to them.  The 
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defendants filed a counterclaim for breach of contract, bad faith, fraud, and 
spoliation of evidence.  Appellant NAMIC Insurance Company intervened to 
defend the counterclaims against Elevators Mutual under a professional liability 
policy. 
{¶ 5} Less than a month after the complaint was filed, Richard and Jan 
Heyman were indicted on charges of aggravated arson, arson, and insurance fraud 
in relation to the fire.  The trial court stayed the civil case until the criminal 
charges were resolved.  Richard Heyman pleaded no contest to the charges of 
arson and insurance fraud and was convicted.  The charges against Jan Heyman 
were dismissed. 
{¶ 6} Following the conclusion of the criminal matter, the parties filed 
cross-motions for summary judgment.  In October 2005, the trial court denied the 
motions, concluding that evidence of Richard Heyman’s no contest plea could not 
be used to collaterally estop him from arguing his innocence because it 
contradicted the goal of Evid.R. 410.  The court further concluded that because 
Richard and Jan Heyman were simple loss payees under the policy, they stood in 
the shoes of O’Flaherty’s, the named insured, and were subject to the same 
potential policy exclusions or defenses.  Thus, an issue of fact remained over 
Richard Heyman’s responsibility for the restaurant fire.  The court reissued the 
order in April 2006. 
{¶ 7} Elevators filed a pretrial motion in limine for an order permitting it 
to introduce Heyman’s criminal convictions, rather than pleas, as substantive 
evidence of arson and insurance fraud.  The trial court granted the motion.  In 
light of its ruling, the court reconsidered Elevators Mutual’s previous motion for 
summary judgment.  This time, the court granted summary judgment in favor of 
Elevators Mutual on the basis that Heyman’s criminal convictions were 
admissible evidence that he had intentionally set the fire, thus excluding 
O’Flaherty’s from recovering any insurance proceeds for the fire loss.  The trial 
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court reinforced its previous ruling that Richard and Jan Heyman were loss payees 
under the policy who could not recover because they have no greater rights than 
the insured. 
{¶ 8} The court of appeals reversed and remanded, rejecting any 
distinction between a no contest plea and a conviction based upon that plea.  The 
court concluded that the convictions were not admissible per Evid.R. 410 and 
Crim.R. 11(B)(2) and that the limited exception to inadmissibility established in 
State v. Mapes (1985), 19 Ohio St.3d 108, 19 OBR 318, 484 N.E.2d 140, for a 
conviction based upon a no contest plea did not apply. 
{¶ 9} The case is now before us upon the acceptance of a discretionary 
appeal.  121 Ohio St.3d 1473, 2009-Ohio-2045, 905 N.E.2d 653. 
Legal Analysis 
The Policy 
{¶ 10} The O’Flaherty’s policy provides coverage for loss or damage 
from fire but expressly excludes coverage for “loss or damages caused directly or 
indirectly by any of the following * * * Dishonest or criminal acts by you * * *.”  
In addition, the coverage part of the policy was subject to the following 
conditions:  “A.  Concealment, Misrepresentation or Fraud[.]  This Coverage Part 
is void in any case of fraud by you as it relates to this Coverage Part at any time.  
It is also void if you or any other insured, at any time, intentionally conceal or 
misrepresent a material fact concerning * * * [a] claim under this Coverage Part.” 
{¶ 11} Elevators Mutual denied O’Flaherty’s claim for the fire loss and 
seeks to use Heyman’s convictions for arson and insurance fraud as conclusive 
evidence to deny coverage for the loss.  We must determine whether the 
convictions are admissible in this action for declaratory judgment. 
Crim.R. 11(B) and Evid.R. 410(A) 
{¶ 12} Richard Heyman pleaded no contest to the charges of arson and 
insurance fraud and was convicted.  Crim.R. 11(A) provides that a defendant may 
January Term, 2010 
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plead no contest in a criminal matter.  “The plea of no contest is not an admission 
of defendant’s guilt, but is an admission of the truth of the facts alleged in the 
indictment, information, or complaint, and the plea or admission shall not be used 
against the defendant in any subsequent civil or criminal proceeding.”  Crim.R. 
11(B)(2).  Evid.R. 410(A)(2) echoes this same principle.  A plea of no contest or 
the equivalent plea from another jurisdiction “is not admissible in any civil or 
criminal proceeding against the defendant who made the plea.”  Id. 
{¶ 13} Elevators Mutual challenges the application of Evid.R. 410(A), 
stating that the rule applies only to a plea of no contest, not the resulting 
conviction.  The Heymans, however, argue that the prohibition against admission 
of a no contest plea likewise applies to the conviction that follows.  The Heymans 
also argue that Evid.R. 803(22) acknowledges that Evid.R. 410 prohibits the 
admission of evidence of a final judgment entered upon a plea of no contest. 
{¶ 14} The purpose behind the inadmissibility of no contest pleas in 
subsequent proceedings is to encourage plea bargaining as a means of resolving 
criminal cases by removing any civil consequences of the plea.  Mapes, 19 Ohio 
St.3d at 111, 19 OBR 318, 484 N.E.2d 140; Rose v. Uniroyal Goodrich Tire Co. 
(C.A.10, 2000), 219 F.3d 1216, 1220.  The rule also protects the traditional 
characteristic of the no contest plea, which is to avoid the admission of guilt.  Id.  
The prohibition against admitting evidence of no contest pleas was intended 
generally to apply to a civil suit by the victim of the crime against the defendant 
for injuries resulting from the criminal acts underlying the plea.  Allstate Ins. Co. 
v Simansky (Conn.Super.1998), 45 Conn.Supp. 623, 628, 738 A.2d 231.  The 
plain language of Evid.R. 410(A) prohibits admission of a no contest plea, and the 
prohibition must likewise apply to the resulting conviction.  To find otherwise 
would thwart the underlying purpose of the rule and fail to preserve the essential 
nature of the no contest plea. 
Defensive v. Offensive Use of Rule 
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{¶ 15} Appellant NAMIC urges us to interpret the rule as prohibiting the 
use of a no contest plea only against the person who entered it, meaning that the 
plea would be admissible when a former criminal defendant seeks to benefit from 
his or her own criminal acts by using the rule offensively.  Some courts have 
permitted such a distinction to be made.  See Walker v. Schaeffer (C.A.6, 1988), 
854 F.2d 138, 143 (refusing to apply Fed.R.Evid. 410 when persons who entered 
the no contest pleas are plaintiffs in a civil action); USX Corp. v. Penn Cent. 
Corp. (2000), 137 Ohio App.3d 19, 27, 738 N.E.2d 13 (use of the conviction as a 
defense against a claim by a former criminal defendant is not prohibited).  These 
courts have distinguished the situation in which a former criminal defendant is the 
plaintiff from the typical situation, in which Evid.R. 410 acts as a shield to 
preclude imposition of a liability.  In the atypical situation, the courts reason that 
the rule is not being used “against” the defendant.  Walker, 854 F.2d at 143. 
{¶ 16} However, Evid.R. 410(A) states that a no contest plea “is not 
admissible in any civil or criminal proceeding against the defendant who made 
the plea” (emphasis added) and specifies no exception for offensive versus 
defensive use.  In this declaratory judgment action, Elevators Mutual intends to 
offer the fact of the conviction based on Richard Heyman’s no contest plea 
against him.  This is contrary to the clear language of the rule, and we decline to 
limit its broad application.  In a case similar to the one before us, the Supreme 
Court of Michigan held that neither a plea of nolo contendere nor a conviction 
based upon the plea was admissible to prevent an insured who had entered the 
plea from denying his responsibility for setting fire to his business in a civil suit to 
recover his losses under his insurance policy.  Lichon v. Am. Universal Ins. Co. 
(1990), 435 Mich. 408, 418-419, 459 N.W.2d 288.  In response, Michigan 
amended its evidence rules to allow evidence of a nolo contendere plea in a civil 
proceeding “to support a defense against a claim asserted by the person who 
entered the plea.” Mich.Evid.R. 410(2); see also 1991 Note to MRE 410.  
January Term, 2010 
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Similarly, any change in the Ohio Rules of Evidence must be accomplished 
through amendment. 
No Exception Pursuant to State v. Mapes 
{¶ 17} Appellants also contend that they should be allowed to admit 
Heyman’s convictions pursuant to the exception to Evid.R. 410(A) that permits a 
conviction based upon a no contest plea to be admitted in limited circumstances.  
In State v. Mapes, 19 Ohio St.3d 108, 19 OBR 318, 484 N.E.2d 140, this court 
held that “Crim.R. 11(B)(2) and Evid.R. 410 do not preclude admission of a 
conviction entered upon a no contest plea to prove a prior murder specification 
under R.C. 2929.04(A)(5).”  Id. at paragraph one of the syllabus.  After a jury 
convicted Mapes of aggravated murder, the death-penalty specification alleging a 
prior murder conviction was tried to the court.  The defendant objected when the 
court considered evidence of a prior conviction for murder entered upon the 
defendant’s plea of no contest in a New Jersey court.  But the Mapes court 
reasoned that the purpose behind excluding such convictions would not be 
disserved by admitting evidence of a conviction based upon a no contest plea 
when the fact of the conviction itself is made relevant by statute.”  Id. at 143-144, 
19 OBR 318, 484 N.E.2d 140. 
{¶ 18} Elevators Mutual contends that by extension of Mapes, Heyman’s 
convictions are “relevant” to the policy exclusions and thus are admissible.  
Application of Mapes, however, has been limited to cases where the fact of the 
conviction itself is made relevant by a statute or rule.  See Jaros v. Ohio State Bd. 
of Emergency Med Servs., Lucas App. No. L-01-1422, 2002-Ohio-2363, ¶ 21;  
Bivins v. Ohio State Bd. of Emergency Med. Servs., 165 Ohio App.3d 390, 2005-
Ohio-5999, 846 N.E.2d 881, ¶ 4.  We agree with the court of appeals that the 
justification underlying the Mapes exception does not extend to contract 
situations. 
Public Policy 
SUPREME COURT OF OHIO 
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{¶ 19} There is, of course, well-established public policy that no one 
should profit from his or her own wrongdoing.  Shrader v. Equitable Life Assur. 
Soc. of U.S. (1985), 20 Ohio St.3d 41, 44, 20 OBR 343, 485 N.E.2d 1031; In re 
Estate of Kissinger (2009), 166 Wash.2d 120, 125, 206 P.3d 665.  Public policy 
may indeed call for an amendment to the rules to allow admission of evidence of 
no contest pleas and convictions in cases such as this, to prevent a wrongdoer 
from benefiting by the wrong. 
{¶ 20} This is not to say that an insurance company will be unable to 
prove that its policy exclusion for concealment, misrepresentation, or fraud 
applies to bar a payment of proceeds.  Although Crim.R. 11(B)(2) and Evid.R. 
410(A) prevent the use of convictions based on no contest pleas in an action for 
declaratory judgment for insurance coverage, the rules do not prevent use of the 
facts upon which those convictions are based.  Until an amendment provides 
otherwise, we must apply the Evidence Rule as it is currently written and bar 
evidence of a no contest plea or conviction in this civil action. 
Conclusion 
{¶ 21} Here, summary judgment was granted in favor of Elevators Mutual 
on grounds that Richard Heyman’s convictions, the consequence of no contest 
pleas, were admissible evidence that he had intentionally set the fire that caused 
property loss.  The convictions were offered against him as proof of “dishonest or 
criminal acts,” thus enabling a policy exclusion to bar payment of insurance 
proceeds for the fire loss.  These admissions, however, were used in contravention 
of Evid.R. 410 and Crim.R.11(B)(2).  The rules make no distinction between 
offensive and defensive use, and the limited exception to inadmissibility of a 
conviction based upon a no contest plea in Mapes, 19 Ohio St.3d 108, 19 OBR 
318, 484 N.E.2d 140, does not apply. 
{¶ 22} We therefore affirm the judgment of the Sixth District Court of 
Appeals. 
January Term, 2010 
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Judgment affirmed. 
 
MOYER, C.J., and PFEIFER, O’CONNOR, and CUPP, JJ., concur. 
 
O’DONNELL, J., concurs in judgment only. 
 
LUNDBERG STRATTON, J., concurs in part and dissents in part. 
__________________ 
 
LUNDBERG STRATTON, J., concurring in part and dissenting in part. 
{¶ 23} I concur that the plain language of Crim.R. 11(B)(2) and Evid.R. 
410(A) prohibits the use of convictions based on no contest pleas in an action for 
declaratory judgment for insurance coverage.  However, I do not believe that the 
analysis ends there.  We must consider the terms of the insurance contract.  In this 
case, I believe that a person may waive the protections of Crim.R. 11(B)(2) and 
Evid.R. 410(A) by contract.  Therefore, I respectfully dissent. 
{¶ 24} Here, the parties contracted for fire insurance but excluded 
coverage for “loss or damages caused directly or indirectly by” the dishonest or 
criminal acts of the insured.  Also, the policy voided any coverage “if you or any 
other insured, at any time, intentionally conceal or misrepresent a material fact 
concerning” a claim.  I believe that when Richard Heyman, on behalf of 
O’Flaherty’s, purchased this insurance policy containing these provisions, he 
waived the protections of the Criminal Rules and the Rules of Evidence as they 
may apply to the admissibility of convictions for dishonest or criminal acts based 
on pleas of no contest.  “Waiver as applied to contracts is a voluntary 
relinquishment of a known right.”  White Co. v. Canton Transp. Co. (1936), 131 
Ohio St. 190, 5 O.O. 548, 2 N.E.2d 501, paragraph one of the syllabus.  It is well 
settled that a waiver-of-liability clause in an insurance policy is a valid expression 
of the freedom to contract. Hanover Ins. Co. v. Cunningham Drug Stores, Inc. 
(May 6, 1982), 8th Dist. No. 44066, 1982 WL 5341, * 3. In addition, courts have 
also held that waiver-of-subrogation provisions are valid and enforceable.  Valley 
SUPREME COURT OF OHIO 
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Forge Ins. Co. v. Premier Recyclers Plastics, Inc., Summit App. No. 22633, 
2005-Ohio-6317. 
{¶ 25} Richard Heyman pleaded no contest and voluntarily admitted the 
truth of the facts alleged against him, i.e., that he intentionally started the fire that 
destroyed O’Flaherty’s and committed a fraud against Elevators Mutual when he 
filed a claim for insurance proceeds.  He had contractually agreed that his 
criminal acts would have collateral legal consequences sufficient to trigger the 
exclusions from coverage.  When Richard admitted the truth of the facts 
underlying his convictions and then attempted to deny those facts in an insurance 
claim, he intentionally concealed or misrepresented material facts concerning his 
claim.  Thus, based on the policy language, I believe that the trial court properly 
admitted evidence of his convictions to conclusively establish Elevator Mutual’s 
entitlement to summary judgment. 
{¶ 26} The majority does not address contract waiver.  Thus, the 
defendant may deny the facts underlying his convictions by hiding behind the 
rules.  Such legal maneuvering allows a defendant to attempt to profit from his 
crime.  I do not believe that this is what Crim.R. 11(B)(2) and Evid.R. 410(A) 
intended. 
{¶ 27} After the Michigan Supreme Court decided Lichon v. Am. 
Universal Ins. Co. (1990), 435 Mich. 408, 459 N.W.2d 288, holding that an 
insured could maintain his innocence in an action to recover insurance proceeds 
for a fire that destroyed his business although he had pleaded nolo contendere and 
was convicted of attempted burning of the same property, Michigan’s Evidence 
Rules were amended to address Lichon.  See 1991 Note to Mich.Evid.R. 410.  
The amended rule now permits evidence of a nolo contendere plea in a civil 
proceeding “to support a defense against a claim asserted by the person who 
entered the plea.”  See Mich.Evid.R. 410(2). 
January Term, 2010 
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{¶ 28} In light of the inequitable situation here, Ohio should similarly 
amend its evidentiary rules so that a defendant may use the rules defensively, but 
may not rely on the rules offensively to impose liability on another.  “Clearly, 
[Evid.R. 410] prohibits the affirmative use of a no contest plea in a claim against 
a former criminal defendant to subject him or her to additional civil or criminal 
liability.  However, this does not mean a former criminal defendant should be able 
to assert a claim that contradicts the judgment of conviction against him or her.”  
USX Corp. v. Penn Cent. Corp. (2000), 137 Ohio App.3d 19, 27, 738 N.E.2d 13.  
I believe that this court should initiate proceedings to amend both the Criminal 
and Evidence Rules to prevent the legal tactics undertaken by the defendant in 
this case.  The current state of the rules violates public policy and condones legal 
maneuvering. 
{¶ 29} Although I concur with the majority’s analysis, I respectfully 
dissent because I believe that there are contractual implications involving waiver 
of the rules.  Thus, I would reverse the judgment of the court of appeals and 
reinstate the judgment of the trial court. 
__________________ 
Ulmer & Berne, L.L.P., Robert E. Chudakoff, and Gary S. Greenlee, for 
appellant Elevators Mutual Insurance Co. 
Gallagher Sharp, Jay Clinton Rice, and Richard C.O. Rezie, for appellant 
NAMIC Insurance Co. 
Murray & Murray Co., L.P.A., W. Patrick Murray, James L. Murray, and 
William. H. Bartle, for appellees. 
_____________________