Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca6-19-03035/USCOURTS-ca6-19-03035-0/pdf.json

Parties Involved:
Liberty Insurance Corporation
Appellee
Murray Richelson
Appellant

Document Text:

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION

File Name: 20a0004n.06

Case No. 19-3035

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

MURRAY RICHELSON,

Plaintiff-Appellant,

v.

LIBERTY INSURANCE CORPORATION,

Defendant-Appellee.

)

)

)

)

)

)

)

)

)

ON APPEAL FROM THE UNITED 

STATES DISTRICT COURT FOR 

THE NORTHERN DISTRICT OF 

OHIO 

BEFORE: BATCHELDER, DONALD, and READLER, Circuit Judges

CHAD A. READLER, Circuit Judge. When interpreting policy language in an insurance 

contract, Ohio courts will construe ambiguous language against the insurer and in favor of the 

insured. See Andersen v. Highland House Co., 757 N.E.2d 329, 332 (Ohio 2001). That interpretive 

practice seeks to encourage the drafter—typically the insurer, often the more experienced party—

to be as clear as possible in the contractual language it utilizes. By the same token, where an 

insurer has utilized contract language that is clear and unambiguous, Ohio courts will construe that 

language by giving it its ordinary and plain meaning. See Ohio N. Univ. v. Charles Constr. Servs., 

Inc., 120 N.E.3d 762, 766 (Ohio 2018). This latter principle resolves today’s case. Murray 

Richelson entered into an insurance contract with Liberty Insurance. Richelson purports not to 

have read, at the time of signing, language in that contract that is now in dispute and today reads 

that language differently than does Liberty. But that language is subject to only one 

 Case: 19-3035 Document: 26-2 Filed: 01/06/2020 Page: 1
Case No. 19-3035, Richelson v. Liberty Insurance

2

interpretation—the one given it by Liberty. Accordingly, we AFFIRM the district court’s grant 

of Liberty’s motion to dismiss Richelson’s breach-of-contract and fraud claims.

I. FACTS AND PROCEDURAL HISTORY

A windstorm caused damage to the roof of Murray Richelson’s home. Citing that storm 

damage, Richelson filed a claim with Liberty Insurance, from whom Richelson had purchased a 

homeowner’s insurance policy. An adjustor determined that the cost to replace the roof was 

$8,960. But Liberty declined to pay Richelson the replacement cost. Liberty instead paid 

Richelson the amount of the roof’s actual cash value, or “ACV.” Liberty determined the ACV

amount by applying the policy’s $1,000 deductible and deducting depreciation from the 

replacement cost amount. All told, Liberty reimbursed Richelson $4,350.58, less than half of the 

cost to replace the roof. This led to a dispute regarding the terms of Richelson’s policy.

Section 1 of Richelson’s policy addresses “A. Dwelling with Expanded Replacement 

Cost.” There, the policy states that “[l]osses covered under Section 1 are subject to a deductible 

of: $1,000.” 

Insurance policies also sometimes include “endorsements.” Generally speaking, an 

endorsement is an amendment to an insurance contract which impacts the scope of coverage of the 

policy in some way. See Endorsement, Black’s Law Dictionary (9th ed. 2009). Relevant here is 

an endorsement to Richelson’s homeowner’s policy numbered FMHO 3325 03 12. In large uppercase font, the endorsement reads: “THIS ENDORSEMENT CHANGES YOUR POLICY. 

PLEASE READ IT CAREFULLY.” Below that, in equally large upper-case font, this time also 

in bold, the endorsement addresses: “ACTUAL CASH VALUE LOSS SETTLEMENT 

WINDSTORM OR HAIL LOSSES TO ROOF SURFACING.” The endorsement provides

that losses to “[b]uildings under Coverage A or B, except for their roof surfacing, roof vents and 

 Case: 19-3035 Document: 26-2 Filed: 01/06/2020 Page: 2
Case No. 19-3035, Richelson v. Liberty Insurance

3

roof flashing materials if the loss to the roof surfacing, roof vents and roof flashing materials is 

caused by the peril of Windstorm or Hail, [is] at replacement cost without deduction for 

depreciation . . . .” The endorsement also sets forth the coverage that applies in such situations. 

Claims for losses to “[r]oof surfacing, roof vents and roof flashing materials if the loss is caused 

by the peril of Windstorm or Hail” are settled “at actual cash value at the time of the loss but not 

more than the amount required to repair or replace.” 

Challenging Liberty’s reading and application of the endorsement, Richelson filed in state 

court a class action complaint against Liberty. Because Richelson was an Ohio resident, and 

Liberty a Massachusetts corporation with its principal place of business in Massachusetts, there 

was diversity between them. That, and the fact that the total damages sought in the case exceeded 

$5 million, allowed Liberty to remove the case to federal court under the Class Action Fairness 

Act. See 28 U.S.C § 1332 (d)(2).

In the class action, Richelson sought to represent two distinct classes of Liberty 

policyholders: (1) Homeowners in Ohio with an ACV roof endorsement who filed claims with 

Liberty after their homes suffered damage and who, as a result of the endorsement, were paid ACV 

rather than replacement costs; and (2) Owners of Ohio homes who filed claims with Liberty on a 

home insurance policy with the same LibertyGuard Endorsement, or an endorsement with the same 

loss settlement provisions as the LibertyGuard Endorsement, who suffered a loss under Buildings 

Coverage A or B for which they were paid ACV, after application of a $1,000 deductible. In 

addition to pursuing those claims, Richelson also alleged that the language in the policy 

declarations led him justifiably to believe that the ACF/roof endorsement expanded, as opposed to 

diminished, the extent of his coverage, that Liberty included such misleading terms with an intent 

 Case: 19-3035 Document: 26-2 Filed: 01/06/2020 Page: 3
Case No. 19-3035, Richelson v. Liberty Insurance

4

to mislead Richelson, and that Richelson was thus fraudulently induced by Liberty to enter into

the insurance contract.

Liberty moved under Federal Rule of Civil Procedure 12 (b)(6) to dismiss the case. With 

respect to Richelson’s “ACV” breach-of-contract claim, the district court rejected as unreasonable 

Richelson’s interpretation that the policy endorsement provided an extra layer of coverage rather 

than explaining an exception to the replacement-cost general rule. Rather, Richelson’s coverage 

(as relevant here) was limited to ACV only. Accordingly, the district court concluded, Richelson’s 

claim failed as a matter of law. 

The district court held the same with respect to Richelson’s “deductible” breach-of-contract 

claim. Richelson conceded that his roof claim was a Section 1 claim. The district court in turn

concluded that the language in Richelson’s policy plainly declared that a $1,000 deductible is 

applicable to Section 1 claims. The district court rejected Richelson’s argument that the deductible 

was not part of any calculation except the replacement-cost calculation. That interpretation was 

unreasonable, the district court concluded, first because it misunderstood the meaning of the term 

“deductible,” and also because it made the deductible language superfluous for three of the four 

Section 1 coverages. 

The district court likewise dismissed Richelson’s fraud claim. The heading “additional 

coverages,” which Liberty placed above the ACV/roof endorsement section of the policy, was not 

misleading, the district court reasoned, when read in the context of the contract as a whole. Nor, 

the district court added, would the endorsement have gone unnoticed by a reasonable person, given 

the size of the bolded text used to highlight its importance. 

 Case: 19-3035 Document: 26-2 Filed: 01/06/2020 Page: 4
Case No. 19-3035, Richelson v. Liberty Insurance

5

II. ANALYSIS

We begin with the framework guiding our review. As an initial matter, the district court 

correctly considered the terms of the insurance contract because it was attached to, and thus

became part of, the pleadings. See Comm. Money Ctr., Inc. v. Ill. Union Ins. Co., 508 F.3d 327, 

335 (6th Cir. 2007) (citing Fed. R. Civ. P. 10(c)). In evaluating a district court’s grant of a motion 

to dismiss, we assume the plaintiff’s version of the facts to be true, Taylor v. City of Saginaw, 

922 F.3d 328, 331 (6th Cir. 2019), and we review de novo the district court’s decision to dismiss 

the complaint. United States ex rel. Ibanez v. Bristol-Myers Squibb Co., 874 F.3d 905, 914 (6th 

Cir. 2017). With respect to the district court’s legal conclusions, because the parties have invoked

diversity jurisdiction as the basis for proceeding in federal court, we view the substantive legal 

issues before us through the lens of state law. State Auto Prop. & Cas. Ins. Co. v. Hargis, 785 

F.3d 189, 195 (6th Cir. 2015). In this case, we apply the substantive state law of Ohio, as this case 

turns on an insurance contract governed by Ohio law. To measure the substantive aspects of Ohio 

law, we look to relevant decisions from the Ohio Supreme Court. See id. In their absence, 

decisions from Ohio’s intermediate appellate courts can help set that legal framework. Id.

A. Richelson Failed To State A Claim For Breach Of Contract.

Richelson’s complaint asserts two breach-of-contract theories against Liberty. Primarily, 

Richelson argues that Liberty breached the parties’ insurance contract by utilizing ACV, rather 

than replacement cost, in assessing the payment amount owed to Richelson for the windstorm 

damage to his roof. Alternatively, if ACV was in fact the proper method for determining the 

payment amount, Richelson says that Liberty nonetheless breached the contract by factoring in a 

deductible in the calculation for ACV. 

 Case: 19-3035 Document: 26-2 Filed: 01/06/2020 Page: 5
Case No. 19-3035, Richelson v. Liberty Insurance

6

The basic elements of a breach of contract under Ohio law are “the existence of a contract, 

the failure without legal excuse of the other party to perform when performance is due, and 

damages or loss resulting from the breach.” Lucarell v. Nationwide Mut. Ins. Co., 97 N.E.3d 458, 

469 (Ohio 2018). In assessing whether a breach of an insurance contract has occurred, we must

“examine the insurance contract as a whole and presume that the intent of the parties is reflected 

in the language used in the policy.” Westfield Ins. Co. v. Galatis, 797 N.E.2d 1256, 1261 (Ohio 

2003) (citation omitted). And we interpret the words of the contract “according to their plain 

meaning.” Boone Coleman Constr., Inc. v. Piketon, 50 N.E.3d 502, 515 (Ohio 2016). That said, 

as we find ourselves at the motion-to-dismiss stage, our task is not to decide which of the parties’ 

competing views has more merit. Instead, we ask whether Richelson has put forward a reasonable 

interpretation of the insurance policy. If so, we must reverse the district court and allow the suit 

to proceed. Andersen, 757 N.E.2d at 332.

1. Richelson Cannot State A Claim For Breach Of Contract Because Of Liberty’s Paying

Him ACV For His Roof Damage.

Richelson’s first argument turns on the interplay between a policy declaration and a related 

endorsement in his homeowner’s insurance policy. The relevant policy declaration states that 

Richelson would have coverage for “A. Dwelling with Expanded Replacement Cost.” A relevant 

endorsement—FMHO 3325 03 12—spoke to the same subject. It states that payments for losses 

to “Buildings under Coverage A or B, except for their roof surfacing, roof vents and roof flashing 

materials if the loss to the roof surfacing, roof vents and roof flashing materials is caused by the 

peril of Windstorm or Hail, [is] at replacement cost without deduction for depreciation . . . .” 

Parsing that lengthy sentence, the endorsement explains that the standard coverage for “Buildings 

under Coverage A or B” is “replacement cost without deduction for depreciation.” But the 

endorsement exempts from that standard coverage the very circumstance at issue here: coverage 

 Case: 19-3035 Document: 26-2 Filed: 01/06/2020 Page: 6
Case No. 19-3035, Richelson v. Liberty Insurance

7

for “roof surfacing, roof vents, and roof flashing materials if the loss to the roof surfacing, roof 

vents and roof flashing materials is caused by the peril of Windstorm or Hail.” That plain 

language, in other words, sets forth an exception to replacement-cost coverage for windstorm 

damage like that experienced by Richelson. The endorsement, it bears adding, then goes on to 

explain how those incidents are treated. Claims for losses to “[r]oof surfacing, roof vents and roof 

flashing materials if the loss is caused by the peril of Windstorm or Hail” are settled “at actual 

cash value at the time of the loss but not more than the amount required to repair or replace.” 

Taking the language of the policy declaration and the endorsement together, the only 

reasonable interpretation is that the amount of Richelson’s claim for reimbursement for roof 

damage caused by a windstorm is calculated by utilizing the ACV—not the replacement cost—of 

the roof. Put another way, Richelson’s windstorm-based claim was governed not by the general 

rule (replacement cost), but rather by an express exception to that rule (ACV for roof damage 

caused by hail or wind). For the roof-damages portion of Richelson’s claim, then, Liberty was 

required to pay ACV.

Resisting that conclusion, Richelson asks us to elevate the language in the policy 

declarations over that in the endorsement. But Ohio law understandably requires that we “examine 

the insurance contract as a whole,” giving meaning to each of its parts. Westfield Ins., 797 N.E.2d 

at 1261 (citation omitted). It may be, as Richelson contends, that some state courts find an 

insurance contract’s policy declarations to be the most important part of the policy. Setting aside 

the fact that such a preferential interpretive rule would require discounting certain plain language 

in an agreement, the fact remains that Ohio has not adopted such a rule, to our knowledge. Under 

Ohio law, where we must give fair meaning to all language in the contract, Richelson’s 

 Case: 19-3035 Document: 26-2 Filed: 01/06/2020 Page: 7
Case No. 19-3035, Richelson v. Liberty Insurance

8

interpretation of the ACV-related provision is not reasonable. Accordingly, he has not alleged a 

viable theory of breach by Liberty. See Andersen, 757 N.E.2d at 332.

2. Richelson Cannot State A Claim For Breach Of Contract Because Of Liberty’s Including 

A Deductible In Its Settlement Calculations.

Even assuming ACV governs the payment amount owed to Richelson, he argues that 

Liberty should not have included a $1,000 deductible when it calculated the settlement amount 

owed to him for his roof damage. The parties agree that, under the policy, Richelson’s roof claim 

is a “Section 1” claim. Turning then to the plain language of the policy, Boone Coleman Constr.,

50 N.E.3d at 515, we note that the declarations page provides that “[l]osses covered under Section 

1 are subject to a deductible of: $1,000.” So unless there is language elsewhere in the policy that 

excludes ACV claims from the Section-1-deductible language, Richelson’s claim was properly

subject to the deductible.

Richelson attempts to show such an exclusion. He starts by citing contractual language 

addressing how the deductible applies when calculating a replacement-cost settlement. He then 

contrasts that more robust discussion with the lack of comparable language in any section 

discussing deductibles in ACV settlements. Relying on the familiar maxim of “expressio unius 

est exclusio alterius,” which means expressing one item of an associated group or series excludes 

others left unmentioned, Richelson argues that this omission in the ACV section somehow 

undermines the otherwise straight-forward language in the policy declarations.

We disagree. Section 1 ACV claims are explicitly subject to a $1,000 deductible. 

Richelson has not cited language to the contrary. Nothing in any policy declaration or endorsement 

exempts settlements relating to roof damage covered under the ACV/roof endorsement from the 

$1000 deductible. Richelson has not cited relevant language to that effect. Instead, he cites two

cases he reads to stand for the proposition that we should read the ACV deductible language by 

 Case: 19-3035 Document: 26-2 Filed: 01/06/2020 Page: 8
Case No. 19-3035, Richelson v. Liberty Insurance

9

incorporating language not found in that part of the agreement. Those cases are Bond v. Liberty 

Ins. Corp., 272 F. Supp. 3d 1112 (W.D. Mo. 2017), and Lafollette v. Liberty Mut. Fire Ins. Co., 

139 F. Supp. 3d 1017 (W.D. Mo. 2015). The contracts at issue in those cases, however, utilized 

different language than today’s contract. And they were governed by Missouri law. Those cases

thus offer little guidance in interpreting different language of a different contract, measured under 

a different state’s law. Honoring the plain language in Richelson’s agreement, we reject this 

breach claim as well. 

B. Richelson Failed To State A Claim For Fraud.

Failing to offer a reasonable reading of the policy language, Richelson alternatively argues 

that the policy language is so misleading that he was fraudulently induced into signing the contract. 

Under Ohio law, a plaintiff asserting a fraud-based claim must prove six elements: (1) “a 

representation of a fact,” (2) “which is material,” (3) made either knowingly or recklessly falsely, 

(4) “with an intent to mislead,” (5) “with justifiable reliance thereupon,” and (6) “a resulting 

injury.” Tokles & Son, Inc. v. Midwestern Indemn. Co., 605 N.E.2d 936, 944 (Ohio 1992) (citation 

omitted); see also Brownfield Restoration Grp., LLC v. Trickett, 122 N.E.3d 570, 577 (Ohio Ct. 

App. 2018) (listing these same elements for fraudulent-inducement claims). For Richelson to 

succeed, he must plausibly allege each element. CitiMortgage, Inc. v. Hoge, 962 N.E.2d 327, 333 

(Ohio Ct. App. 2011).

We can resolve Richelson’s fraud claim based solely on his failure to plausibly allege 

justifiable reliance. The gist of his argument seems to be that because, in his mind, the policy 

language requiring replacement-value coverage is so clear, a reasonable person, rather than reading 

the entire policy, would instead have justifiably relied upon that replacement-value-coverage 

language, and thus would never have expected the insurer to invoke language in an endorsement 

 Case: 19-3035 Document: 26-2 Filed: 01/06/2020 Page: 9
Case No. 19-3035, Richelson v. Liberty Insurance

10

that changed the nature of that coverage. Whatever the outer limits of a viable claim of justifiable 

reliance, one cannot justifiably rely on a purportedly unclear statement in a contract when reading 

the contract in full would remove any lack of clarity. See Haller v. Borror Corp., 552 N.E.2d 207, 

210 (Ohio 1990). Put another way, Richelson “cannot say that he was misled into signing a paper 

which was different from what he intended to sign when he could have known the truth by merely 

looking when he signed.” Id.

As already discussed, Richelson’s policy plainly stated that the kind of roof damage he 

experienced was covered under the ACV/roof endorsement. Yes, as Richelson notes, that 

endorsement was listed under “Additional Coverages.” But reading the contract in full reveals 

that such coverage is not a top-up to other coverages, as Richelson suggests, but rather the

identification of an exception to previous coverage descriptions. Nor could the endorsement have 

been made more apparent. At the top of the page, in large upper-case font, the endorsement 

provides “THIS ENDORSEMENT CHANGES YOUR POLICY. PLEASE READ IT 

CAREFULLY.” Below that, in bold and equally large upper-case font, the endorsement sets forth 

“ACTUAL CASH VALUE LOSS SETTLEMENT WINDSTORM OR HAIL LOSSES TO 

ROOF SURFACING.” If Liberty was trying to hide the endorsement ball, as Richelson suggests, 

it did quite a poor job. 

The need to review the endorsement language was eminently clear to a reasonable reader. 

That is enough to doom Richelson’s fraud claim. The district court thus properly dismissed

Richelson’s fraud claim. 

III. CONCLUSION

For these reasons, we AFFIRM the judgment of the district court.

 Case: 19-3035 Document: 26-2 Filed: 01/06/2020 Page: 10