Court Opinion

ID: 8211340
Source: CourtListenerOpinion
Date Created: 2022-10-03 16:07:28.873303+00
Date Added: 2024-06-11T16:42:02.207637
License: Public Domain

[Cite as Ransom v. Erie Ins. Co., 2022-Ohio-3528.]

             IN THE COURT OF APPEALS OF OHIO
                             SEVENTH APPELLATE DISTRICT
                                 HARRISON COUNTY

                                  WAYNE C. RANSOM et al.,

                                        Plaintiffs-Appellants,

                                                     v.

                               ERIE INSURANCE COMPANY,

                                        Defendant-Appellee.

                        OPINION AND JUDGMENT ENTRY
                                         Case No. 21 HA 0011

                                     Civil Appeal from the
                        Court of Common Pleas of Harrison County, Ohio
                                   Case No. CVH 2021-0032

                                       BEFORE:
                 Carol Ann Robb, Gene Donofrio, David A. D’Apolito, Judges.

                                          JUDGMENT:
                                Reversed, Vacated and Remanded.

Atty. Travis Collins, 105 Jamison Ave., Cadiz, Ohio 43907 for Plaintiffs-Appellants and

Atty. R. Brian Borla, Hanna, Campbell & Powell, LLP, 3737 Embassy Parkway, Suite 100,
Akron, Ohio 44333 for Defendant-Appellee.

                                     Dated: September 30, 2022
                                                                                          –2–

Robb, J.

         {¶1}   Appellants, Wayne C. and Katherine Ransom, timely appeal the trial court’s
decision dismissing their complaint against their insurer, Appellee Erie Insurance
Company, with prejudice. The trial court found Appellants’ complaint was time barred via
the time limit for filing suit in the parties’ contract of insurance. On appeal, Appellants
contend they plead sufficient facts alleging Appellee waived or was estopped from
invoking this one-year limitation. Appellants also assert the trial court erred in finding this
contractually-imposed time limit governs their bad faith claim. For the following reasons,
we agree with both assignments of error.
                                      Statement of the Case
         {¶2}   Appellants’ home was insured by a policy of insurance with Appellee. On
or about March 29, 2020, Appellants’ roof sustained damage as a result of a high wind
event.     After the parties’ negotiations came to an impasse, Appellants filed suit.
Appellants’ April 28, 2021 complaint asserts two grounds for relief, breach of contract and
bad faith. Their breach of contract claim contends Appellee breached the policy by
refusing to pay the entire cost to repair/replace their roof.
         {¶3}   For their bad faith claim, Appellants alleged Appellee breached its duty to
act in good faith by refusing to pay the entire cost to repair the roof; initially denying
coverage altogether; purposely delaying the handling of their claim without reasonable
justification; and canceling their policy after they made a legitimate claim for coverage.
         {¶4}   Appellee moved to dismiss the complaint alleging it was barred by the one-
year contractual time limit contained in the applicable policy of insurance. (May 24, 2021
Motion to Dismiss.)
         {¶5}   In their opposition, Appellants do not dispute the existence of the one-year
limitation in their insurance policy but asserted Appellee waived this one-year limitation
on the time to file suit and Appellee should be estopped from relying on it because the
parties were engaged in ongoing communications as to the amount of coverage when the
one year expired. In support, Appellants relied on and attached uncertified copies of

Case No.21 HA 0011
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emails between their attorney and Appellee. (May 28, 2021 Response to Motion to
Dismiss.)
       {¶6}   Appellants also argued in their opposition brief that this one-year contractual
limitation on the time to file suit did not govern their bad faith claim. Instead, they urged
the court to find this claim was governed by the statute of limitations for torts. (May 28,
2021 Response to Motion to Dismiss.)
       {¶7}   In reply, Appellee argued Appellants did not plead waiver or estoppel in their
complaint and claimed these legal doctrines were inapplicable. Appellee also asked the
court to strike the emails attached to Appellants’ opposition as improper when ruling on a
motion to dismiss. (June 4, 2021 Reply in Support of Dismissal.)
       {¶8}   The trial court subsequently granted Appellee’s motion to dismiss, finding
waiver and estoppel did not apply and the contractual limitation barred both of Appellants’
claims. (November 10, 2021 Judgment Entry.)
       {¶9}   Appellants raise two assignments of error.
              Waiver and Estoppel of Contractual Statute of Limitations
       {¶10} Appellants’ first assignment of error contends:
       “The trial court erred in finding that Appellee did not waive a contractual limitations
clause where Appellant had admitted liability, refused to pay the entire amount of
Appellant’s damages less than one week before the expiration of the limitation period,
and requested additional documents to review its decision.”
       {¶11} Appellants contend the trial court erred as a matter of law by rejecting their
waiver and estoppel argument and granting Appellee’s motion to dismiss.              For the
following reasons, we agree.
       {¶12} Appellate courts review orders granting Civ.R. 12(B)(6) motions to
dismiss de novo and without deference to the trial court’s decision. Perrysburg Twp. v.
Rossford, 103 Ohio St.3d 79, 2004-Ohio-4362, 814 N.E.2d 44, ¶ 5.               To dismiss a
complaint for the failure to state a claim upon which relief can be granted, it must appear
beyond a doubt the plaintiffs can prove no facts that would entitle them to the requested
relief. Mitchell v. Lawson Milk Co., 40 Ohio St.3d 190, 192, 532 N.E.2d 753 (1988). When
reviewing whether a motion to dismiss should be granted, we accept all factual

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allegations in the complaint as true and make all reasonable inferences in favor of the
plaintiffs. Id.
        {¶13} “‘[A]s long as there is a set of facts, consistent with the plaintiff's complaint,
which would allow the plaintiff to recover, the court may not grant a defendant's motion to
dismiss.’” Cincinnati v. Beretta U.S.A. Corp., 95 Ohio St.3d 416, 2002-Ohio-2480, 768
N.E.2d 1136, ¶ 5, quoting York v. Ohio State Hwy. Patrol, 60 Ohio St.3d 143, 144, 573
N.E.2d 1063 (1991).
        {¶14} Appellants’ complaint alleges the following facts. Appellants purchased a
homeowner’s policy of insurance from Appellee, and on March 29, 2020, Appellants’ roof
sustained damage due to a high wind event. They notified Appellee of the damage on
July 24, 2020. (Complaint.)
        {¶15} On September 1, 2020, Appellee denied Appellants’ claim by letter
indicating the damage was a result of wear and tear and the shingles were improperly
installed. Appellants challenged the denial via their attorney, and on September 22, 2020,
Appellee approved the claim and “agreed to provide coverage to repair the * * * roof.”
Due to the delay caused by Appellee’s initial denial of the claim, water continued to leak
and damaged the inside of Appellants’ home. (Complaint.)
        {¶16} Shortly after Appellants submitted their claim seeking coverage for their
roof, Appellee canceled their homeowner’s policy. (Complaint.)
        {¶17} After submitting additional documentation of their damage to Appellee in
approximately March of 2021, Appellee agreed to cover the cost to replace the shingles.
The roof repair was completed in March 2021. (Complaint.) The precise date of the
repair is not in the complaint.
        {¶18} Appellants sent their roofing contractor’s invoice for $12,650.63 to Appellee
for payment. The date Appellants sent this invoice to Appellee is not in the complaint.
After Appellee received the invoice, Appellee advised Appellants it would only pay for part
of the repair, the amount equal to its estimated cost to repair/replace the roof, or
$8,495.66. The date of this communication is also not included. (Complaint.)
        {¶19} For their breach of contract claim, Appellants contend Appellee’s refusal to
pay the total repair and replacement cost of their roof is a breach of their contract.

Case No.21 HA 0011
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         {¶20} As for their bad faith count, their second claim for relief, Appellants alleged
Appellee breached its duty to act in good faith by refusing to pay the entire cost of the
claim and by its initial refusal to pay any part of the claim and issuing a blanket denial.
Appellants also alleged Appellee purposefully delayed the handling of their claim without
reasonable justification resulting in additional damage.                                Finally, Appellants assert
Appellee breached its duty to act in good faith when it canceled the policy in response to
Appellants submitting a claim for a loss covered by the policy. (Complaint.)
         {¶21} In their request for relief, Appellants sought $4,154.97 in actual damages
and requested punitive damages, attorney’s fees, and court costs. (Complaint.)
         {¶22} Appellee moved to dismiss the complaint under Civ.R. 12(B)(6), contending
the one-year contractual provision barred Appellants’ lawsuit because they did not file suit
within one year after the date of the loss. Appellee argued in its motion the date of loss
or damage to Appellants’ property occurred on March 29, 2020, and because they filed
their lawsuit on April 28, 2021, it was filed beyond the one-year time limit set forth in the
parties’ agreement. Appellee’s motion to dismiss does not address the issue of waiver
and estoppel.
         {¶23} The applicable ErieSecure Home Insurance Policy of insurance provides in
part: “‘We’ may not be sued unless there is full compliance with all the terms of this policy.
Suit must be brought within one year after the loss or damage occurs.” (May 24, 2021
Motion to Dismiss, Exhibit A.1)
         {¶24} In their response in opposition, Appellants did not dispute the existence of
the one-year limitation clause in their policy of insurance. However, they claimed this
one-year limitation did not apply and did not preclude their lawsuit because the parties
were engaged in ongoing negotiations about the value of Appellants’ claim when the one
year expired, and as such, Appellee waived the right to raise this provision.

1
  Appellants did not attach a copy of the policy to their complaint, but the trial court allowed it as an exhibit to Appellee’s
motion to dismiss without objection. Courts may consider a document incorporated into the complaint when addressing
a motion to dismiss if it is not attached to the complaint but is integral to the claims. Lisboa v. Lisboa, 8th Dist. Cuyahoga
No. 95673, 2011-Ohio-351, ¶ 38; Fillmore v. Brush Wellman, Inc., 6th Dist. Ottawa No. OT-03-029, 2004-Ohio-
3448; Connolly Constr. Co. v. The City of Circleville, 3d Dist. Marion No. 9-87-10 (Mar. 16, 1988); Wallace v.
MetroHealth Sys., N.D.Ohio No. 1:13-CV-01017, 2013 WL 5739705, *1, citing Weiner v. Klais & Co. (C.A.6, 1997), 108
F.3d 86, 89.

Case No.21 HA 0011
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       {¶25} Appellants relied on the Ohio Supreme Court’s decision in Hounshell, infra,
for the theory that because there were continued discussions about the value of their
claim, Appellee either waived the limitation or it should be estopped from employing the
limitation to bar Appellants’ lawsuit. Since Appellee did not deny the claim or deny any
further payment in a sufficient time to allow Appellants to file suit within the one-year time
limit, Appellee could not rely on it to bar their claims. (May 28, 2021 Opposition to Motion
to Dismiss.)
       {¶26} As    indicated,   Appellants    attempted    to   rely   on   attached    email
communications between their attorney and Appellee’s representative as supporting their
waiver and estoppel argument. However, Civ.R. 12(B) states in part:
       When a motion to dismiss for failure to state a claim upon which relief can
       be granted presents matters outside the pleading and such matters are not
       excluded by the court, the motion shall be treated as a motion for summary
       judgment and disposed of as provided in Rule 56. Provided however, that
       the court shall consider only such matters outside the pleadings as are
       specifically enumerated in Rule 56. All parties shall be given reasonable
       opportunity to present all materials made pertinent to such a motion by Rule
       56.
       {¶27} Appellee opposed Appellants’ reliance on the emails attached to their
opposition brief and asked the court to strike them. The trial court did not rule on this
request but it should have granted Appellee’s request for several reasons. First, upon
resolving a Civ.R. 12(B)(6) motion, a court is confined to reviewing the complaint and the
attachments thereto. Volbers-Klarich v. Middletown Mgt., Inc., 125 Ohio St.3d 494, 2010-
Ohio-2057, 929 N.E.2d 434, ¶ 11. Second, the emails were not sworn or certified, and
thus are not Civ.R. 56(E) compliant. Stevenson v. Prettyman, 8th Dist. Cuyahoga No.
94873, 193 Ohio App.3d 234, 2011-Ohio-718, 951 N.E.2d 794, ¶ 25 (unsworn documents
cannot be considered).      Last, the trial court did not give the parties a reasonable
opportunity to present summary judgment evidence as required by Civ.R. 12(B) if the
court was converting the motion into one for summary judgment. State ex rel. Boggs v.
Springfield Local School Dist. Bd. of Edn., 72 Ohio St.3d 94, 647 N.E.2d 788 (1995); State
ex rel. Baran v. Fuerst, 55 Ohio St.3d 94, 563 N.E.2d 713 (1990) (The reasonable

Case No.21 HA 0011
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opportunity provision in Civ.R. 12(B)(6) requires a court to notify the parties when
converting a motion to a Civ.R. 56(C) motion for summary judgment prior to ruling on the
motion, and the failure to give the notice is reversible error.)
         {¶28} To the extent the trial court considered or relied on the uncertified emails
attached to Appellants’ opposition brief, this was error in contravention to Civ.R. 12(B)(6).
Regardless, because we review a motion to dismiss de novo, we must disregard the
uncertified copies of emails attached to Appellants’ opposition brief and rely only on the
complaint and documents incorporated in Appellants’ complaint, the policy. Upon limiting
our review as required by Civ.R. 12(B)(6), we conclude Appellee’s motion to dismiss lacks
merit.
         {¶29} As detailed previously, Appellants’ complaint states their roof was damaged
on March 29, 2020. The complaint also states about one year later, in March of 2021,
Appellee agreed to cover the cost to replace the shingles, and Appellants’ roof was
repaired in March 2021.       Appellants submitted their roofing contractor’s invoice for
$12,650.63 to Appellee for payment. The date Appellants sent this invoice to Appellee is
not in the complaint. After Appellee received the invoice, Appellee advised Appellants it
would only pay part of the repairs, the amount equal to its estimated cost to repair/replace
the roof, or $8,495.66. The date of this communication is likewise not included in the
allegations. (Complaint.)
         {¶30} Appellee then moved to dismiss, arguing the complaint was filed beyond
the one-year time limit to do so, as set forth in the contract of insurance. As alleged,
Appellants filed suit more than one year after the date the damage occurred. However,
Appellants urged the court to find Appellee had waived this provision based on its conduct
showing it relinquished the one-year limitation because the parties were still negotiating
the value of the claim when it expired.
         {¶31} In Hounshell v. Am. States Ins. Co., 67 Ohio St.2d 427, 428, 424 N.E.2d
311 (1981), the Supreme Court addressed a comparable issue when reviewing a motion
for summary judgment. There, the Hounshells were insured by American States and their
property was destroyed by fire on August 27, 1975. There were multiple insurance
policies covering the property, and American denied it was responsible for the entire loss.
American offered an amount it deemed to be its pro rata share of the total insurance on

Case No.21 HA 0011
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the property on January 20, 1976. The Hounshells were dissatisfied with this offer, and
American increased its offer on July 7, 1976.           The Hounshells contacted the other
insurance company on July 15, 1976 asking it to pay the difference between American’s
offer and their demand, and the second insurance company denied coverage. The
Hounshells filed suit in November of 1976, and American moved for summary judgment
based on its 12-month limitation clause. Id. 428-429.
        {¶32} The Supreme Court held an insurance company may be found to have
waived its limitation of action clause based on its conduct or “recognition of liability” that
“hold[s] out a reasonable hope” of payment, when the company’s acts or declarations of
coverage induce an insured to delay filing suit until after the expiration of the limitations
period. Id. It found there was “an inference to be drawn that American States had
admitted liability for a pro rata share of the fire loss and, as such, waived the 12-month
limitation of action provision by holding out a reasonable hope of adjustment.” Id. at 433.
“[S]ince the limitation on bringing actions is a right the company has provided itself by
contract, then relinquishment of such right by its own acts would reasonably constitute a
waiver.” Id. at 430. Had the company made it clear when making its offers to settle that
this was the full extent of its liability with sufficient notice to allow suit to be filed, then it
could have relied on the limitation of action clause. Id. at 433.
        {¶33} Unlike Hounshell, the Supreme Court in Dominish v. Nationwide Ins. Co.,
129 Ohio St.3d 466, 2011-Ohio-4102, 953 N.E.2d 820, ¶ 10, considered a comparable
issue in an appeal from a summary judgment decision, finding Nationwide did not induce
its insureds to forbear filing suit based on the company’s conduct. Instead, Dominish
held:
        Nationwide clearly stated that it was not liable beyond the amount of the
        check that it twice proffered to Dominish. In a letter dated September 6,
        2006, Nationwide stated, “You will receive or have received, a partial denial
        letter, indicating the roof damage is NOT part of the covered loss, nor is any
        damage to personal property, nor is there any covered cause of loss for any
        mold related issues. All of these issues are discussed in the partial denial
        letter.”

Case No.21 HA 0011
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Id. at ¶ 11. Moreover, the company’s letter to the insured highlighted the policy contained
a one-year limitation on the right to sue. Id. at ¶ 15. Thus, Hounshell did not apply, and
Nationwide did not waive the right to enforce the limitation period. Id.
       {¶34} The case relied on by Appellee is akin to Dominish. In Write Start Early
Christian Education Ctr., LLC v. Natl. Fire & Marine Ins., 836 Fed.Appx. 362, 365, the
United States Court of Appeals for the Sixth Circuit found National Fire made it clear it
was denying certain aspects of liability and asserting its right to invoke its time limitation
clause. Although National Fire admitted certain liability, “it paid for that portion of the
claim well before the limitations period ran[,]” and the insured was not induced to forbear
filing suit based on the company’s conduct. Id. at 366. Thus, like Dominish, National Fire
did not cause its insured to have “a reasonable hope of adjustment,” unlike that found in
Hounshell. Id.
       {¶35} Upon accepting all factual allegations in Appellants’ complaint as true and
making all reasonable inferences in favor of Appellants, this court concludes Appellee
agreed there was coverage under the policy and the parties’ negotiations about the value
of Appellants’ claim were ongoing one year after the date of damage to their roof.
Because of the continued and unresolved nature of the claim here, it can reasonably be
inferred these negotiations or contacts showed Appellee waived the right to invoke the
contractual one-year limitation.
       {¶36} Further, Appellants’ interactions with Appellee, as set forth in their
complaint, depict Appellants as having a reasonable hope of receiving additional payment
on their claim when the one year expired. Id. at 432-433.
       {¶37} Based on the alleged facts before this court and when limiting our review
only to the allegations in the complaint, this court concludes the trial court erred by
granting Appellee’s motion to dismiss. Although it is less than clear whether the parties’
negotiations ceased before or after the one-year time limit expired—what is clear is
Appellee acknowledged coverage under the policy and the parties were still
communicating one year later, in March of 2021, about the extent of the coverage. Upon
making all inferences in Appellants’ favor, we conclude the Civ.R. 12(B)(6) dismissal was
not warranted.

Case No.21 HA 0011
                                                                                           – 10 –

       {¶38} This court cannot conclude beyond doubt that Appellants can prove no set
of facts warranting relief, therefore, Appellants’ first assignment of error has merit.
                           Statute of Limitations for Bad Faith Claim
       {¶39} Appellants’ second assignment of error contends:
       “Because a bad faith claim sounds in tort, a contractual limitations clause does not
bar a cause of action for bad faith.”
       {¶40} Appellants assert the trial court erred by applying the one-year limitation
clause to their bad faith claim, their second count for relief, because bad faith claims are
governed by the statute of limitations for torts. This court agrees.
       {¶41} The trial court did not explicitly address this issue, but its dismissal of all
claims with prejudice makes clear it applied the one-year time limit to both of Appellants’
causes of action.
       {¶42} In Hoskins v. Aetna Life Ins. Co., 6 Ohio St.3d 272, 276, 452 N.E.2d 1315
(1983), the Ohio Supreme Court addressed whether a bad faith claim sounds in tort or
arises from the contract when assessing whether to allow a punitive damage claim. It
held in part:
       The liability of the insurer in [bad faith] cases does not arise from its mere
       omission to perform a contract obligation, for it is well established in Ohio
       that it is no tort to breach a contract, regardless of motive. * * * Rather, the
       liability arises from the breach of the positive legal duty imposed by law due
       to the relationships of the parties. * * * This legal duty is the duty imposed
       upon the insurer to act in good faith and its bad faith refusal to settle a claim
       is a breach of that duty and imposes liability sounding in tort.
Id. at 276.
       {¶43} Relying on Hoskins, numerous Ohio courts have held that a contract
limitation in the policy does not govern the time to file a bad faith claim because Hoskins
made it clear an insurer’s breach of the duty to act in good faith is a tort and consequently
governed by the statute of limitations for torts. Plant v. Illinois Employers Ins. of Wausau,
20 Ohio App.3d 236, 238, 485 N.E.2d 773 (9th Dist.1984); Stevenson v. First Am. Title
Ins. Co., 5th Dist. Fairfield No. 05-CA-39, 2005-Ohio-6461, ¶ 23; Beever v. Cincinnati Life
Ins. Co., 10th Dist. Franklin No. 02AP-543, 2003-Ohio-2942, ¶ 50. See also United Dept.

Case No.21 HA 0011
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Stores Co. No. 1 v. Continental Cas. Co., 41 Ohio App.3d 72, 534 N.E.2d 878 (1st
Dist.1987); Kamnikar v. Fiorita, 10th Dist. Franklin No. 16AP-736, 2017-Ohio-5605, ¶ 22.
       {¶44} We acknowledge Ohio courts, including this one, have recognized two
different types of bad faith claims—the first is when a claimant must prove the insurer had
no lawful basis to deny coverage, and the second is when the claimant does not have to
establish the underlying coverage since the claim arises from the company having a lack
of a reasonable justification to act in the manner it did. Essad v. Cincinnati Cas. Co., 7th
Dist. Mahoning No. 00 CA 199, 2002-Ohio-2002, 34-35. However, this distinction does
not affect our decision here.     Based on the broad nature of Appellants’ bad faith
allegations plus the fact we are reviewing a decision which granted a motion to dismiss,
this distinction makes no difference.    As stated, Appellants’ bad faith claim alleged
Appellee breached its duty to act in good faith by refusing to pay the entire cost to repair
the roof; initially denying coverage altogether; purposely delaying the handling of their
claim without reasonable justification; and canceling their policy after they made a
legitimate claim for coverage. These allegations arguably encompass both types of bad
faith claims, and thus, Appellee’s reliance on Essad is misplaced.
       {¶45} Consequently, the trial court erred by dismissing Appellants’ second claim
for relief by applying the one-year contractual limitation to Appellants’ bad faith claim.
This assignment of error has merit.
                                           Conclusion
       {¶46} Upon making all inferences in Appellants’ favor, we conclude the Civ.R.
12(B)(6) dismissal was not warranted since Appellee waived its statutory one-year
limitation based on its continued communications with Appellants at or about the time the
one year expired. Moreover, the trial court erred as a matter of law by applying this one-
year contractual limitation to Appellants’ bad faith claim, which sounds in tort.
Accordingly, the court finds both assigned errors have merit. The judgment is vacated
and remanded for a motion to dismiss denial and the case remanded for further
proceedings.

       +

Donofrio, P J., concurs.

D’Apolito, J., concurs.

Case No.21 HA 0011
[Cite as Ransom v. Erie Ins. Co., 2022-Ohio-3528.]

        For the reasons stated in the Opinion rendered herein, the assignments of error
are sustained and it is the final judgment and order of this Court that the judgment of the
Court of Common Pleas of Harrison County, Ohio, is reversed and its judgment vacated.
We hereby remand this matter to the trial court for further proceedings according to law
and consistent with this Court’s Opinion. Costs to be taxed against the Appellee.
        A certified copy of this opinion and judgment entry shall constitute the mandate in
this case pursuant to Rule 27 of the Rules of Appellate Procedure. It is ordered that a
certified copy be sent by the clerk to the trial court to carry this judgment into execution.

                                        NOTICE TO COUNSEL

        This document constitutes a final judgment entry.