Court Opinion

ID: 6700271
Source: CourtListenerOpinion
Date Created: 2022-07-20 22:07:11.439925+00
Date Added: 2024-06-11T16:01:23.829773
License: Public Domain

Diane V. Grendell, Judge,
dissenting.
{¶ 38} I respectfully dissent from the majority’s holding.
{¶ 39} The trial court decided the issue of whether Ohio Farmers Insurance Company waived its right to enforce the two-year limitation-of-action clause contained in the performance bond on a motion for directed verdict. The standard for granting a directed verdict is, “[i]n essence,” the same as the standard for granting summary judgment: “ ‘whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.’ ” Grau v. Kleinschmidt (1987), 31 Ohio St.3d 84, 91, 31 OBR 250, 509 N.E.2d 399, quoting Anderson v. Liberty Lobby, Inc. (1986), 477 U.S. 242, 251-252, 106 S.Ct. 2505, 91 L.Ed.2d 202. Cf. Civ.R. 54(A)(4) (a motion for directed verdict shall be granted where “the trial court, after construing the evidence most strongly in favor of the party against whom the motion is directed, finds that upon any determinative issue reasonable minds could come to but one conclusion upon the evidence submitted and that conclusion is adverse to such party”).
{¶ 40} The issue of whether a limitation-of-action provision has been waived by the insurer is a factual issue to be decided by the jury. Rak v. Safeco Ins. Co. of Am., 8th Dist. No. 84318, 2004-Ohio-6284, 2004 WL 2676740, at ¶ 32; Walls v. Kemper Ins. Cos., 10th Dist. Nos. 81AP-201 and 81AP-290, 1981 WL 3580, *3, 1981 Ohio App. LEXIS 12134, at *10-*11.
{¶ 41} The Ohio Supreme Court stated the basic rule regarding the waiver of a limitation-of-action provision as follows: “An insurance company may be held to have waived a limitation of action clause in a fire insurance policy by acts or declarations which evidence a recognition of liability, or acts or declarations which hold out a reasonable hope of adjustment and which acts or declarations occasion *11the delay by the insured in filing an action on the insurance contract until after the period of limitation has expired.” Hounshell v. Am. States Ins. Co. (1981), 67 Ohio St.2d 427, 21 O.O.3d 267, 424 N.E.2d 311, at syllabus.
{¶ 42} Since Hounshell, “Ohio appellate courts have found that reasonable minds could differ as to whether the insurance company waived the one-year contractual limitations period by not officially denying the claim or by leading the insured to believe that the claim was still viable after the contractual limitations period had expired.” Am. Family Ins. Co. v. Taylor, 5th Dist. No. CT2010-0014, 2010-Ohio-2756, 2010 WL 2414091, at ¶ 43.
{¶ 43} In the present case, there is no evidence that Ohio Farmers specifically denied liability under the bond. Monreal Funeral Home notified Ohio Farmers of its claim in April 2004. In June 2004, Ohio Farmers advised Monreal Funeral Home that it believed its “obligations under the bond have not arisen” and noted “a number of disputes or issues relative to the referenced contract and bond.” These included disagreements about the scope of the punch list and scope of completion and the principal’s (Olympic Building Company’s) willingness “to complete undisputed contract items.” Ohio Farmers stated that it believed “Olympic [would] object to any owner completion as Olympic is prepared to complete the undisputed scope of completion.” Moreover, “given the disputes regarding the scope of completion, * * * [Ohio Farmers] is unable to obtain bids for completion.” Finally, Ohio Farmers observed that “the Monreals and Olympic have agreed to arbitrate their disputes.” Thus, “[i]t would not be appropriate for [Ohio Farmers] to act as arbitrator by resolving on its own the scope of completion and the other disputes between the Monreals and Olympic.”
{¶ 44} It is completely reasonable to construe this letter as notification that Monreal Funeral Home’s claim was premature, rather than denied. Ohio Farmers did not wish to pay on a bond where the principal was willing to complete the work and where there were disputes regarding the work to be completed. Given these uncertainties, Ohio Farmers suggested that it was not even possible to obtain bids to finish the work. Finally, and sensibly, Ohio Farmers was reluctant to pay a claim that could not be determined until the arbitration process had determined the liabilities. It is difficult to imagine how Monreal Funeral Home could have brought suit against Ohio Farmers at this time when all the determinative issues, i.e., damages and liability, were currently the subject of arbitration.
{¶ 45} The trial court and the majority misconstrue the law of waiver by imposing a heightened standard of proof on Monreal Funeral Home. As the basis for its decision, the majority agrees with the trial court that the June 2004 letter did not evince “a clear, unequivocal and decisive waiver of the contractual time limitation.” Simply stated, this is not the law of Ohio with respect to the waiver of contract limitations.
*12{¶ 46} The standard applied by the lower court and majority derives from the decision of White Co. v. Canton Transp. Co. (1936), 131 Ohio St. 190, 5 O.O. 548, 2 N.E.2d 501. Therein, the Ohio Supreme Court held: “He who affirms a waiver must prove it, and in so doing he must prove a clear, unequivocal, decisive act of the party against whom the waiver is asserted, showing such a purpose or acts amounting to an estoppel on his part.” Id. at paragraph four of the syllabus. White Co., however, is readily distinguishable from the line of cases deriving from Hounshell. At issue in White Co. was the “the claim * * * that a party has waived the terms of a written contract and agreed to different terms by parole.” Id. at 198. The “waiver” at issue, “in fact, if not in law, amount[ed] to a modification of the original contract.” Moreover, the purported waiver occurred “after a breach of the original contract by, the party claiming the benefit of the waiver.” Accordingly, the Supreme Court held that “it [the purported waiver] should receive not only careful but serious consideration at the hands of the courts, as such an arrangement is diametrically opposed to sound business principles.” Id.
{¶ 47} The sort of waiver at issue in Hounshell, as in the case before us, involves a limitation-of-action provision. Thus, there are different considerations that demand a lesser burden of proof. In Hounshell, the Supreme Court recognized that “ ‘[b]y definition, contractual limitations are in derogation of the time period fixed by the legislature for bringing such actions.’ ” Hounshell, 67 Ohio St.2d at 431, 21 O.O.3d 267, 424 N.E.2d 311. “While courts are diligent to protect insurance companies from fraudulent claims and to enforce all regulations necessary to their protection, it must not be forgotten that the primary function of insurance is to insure. When claims are honestly made, care should be taken to prevent technical forfeitures such as would ensue from an unreasonable enforcement of a rule of procedure unrelated to the merits.” Id.
{¶ 48} In Hounshell, the Supreme Court was asked to adopt a rule similar to that in White Co., i.e., “that the law of waiver, if applied, should only apply where it is found that the insurance company, by its overt acts, misled the insured into forbearing suit until after the limitation period had expired.” Id.
{¶ 49} The Supreme Court rejected this standard as “too narrow an interpretation of the law of waiver to be applied to this type of case.” Id. Rather, the court held that a waiver “in these types of cases” may occur when the insurer, by its acts or declarations, has led the insured to delay bringing an action on the insurance contract in the reasonable expectation that the claim would be paid. Id.
{¶ 50} In the present case, Ohio Farmers advised Monreal Funeral Home that its obligations under the bond “have not arisen” based on various outstanding issues between Monreal and Olympic. There was no direct denial of the claim. *13The issue, then, is whether Ohio Farmers’ actions, as evidenced by the June 2004 letter, reasonably induced Monreal Funeral Home to delay filing suit until after the limitations period had expired. That question is for the jury to decide. Accordingly, I respectfully dissent.