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Milestone Investment Enterprises, Inc. v. Mount Vernon Fire Insurance Co.

Court of Appeals of Ohio, Fifth District, Richland

July 1, 2019

MOUNT VERNON FIRE INSURANCE CO., et al. Defendant-Appellee

          Appeal from the Richland County Court of Common Pleas, Case No. 17-CV-610 D

          For Plaintiff-Appellant J. JEFFREY HECK The Heck Law Offices, Ltd.

          For Defendant-Appellee LORREE L. DENDIS Williams & Petro Co., LLC

          JUDGES: Hon. William B. Hoffman, P.J Hon. Craig R. Baldwin, J. Hon. Earle E. Wise, Jr., J.


          Hoffman, P.J.

         {¶1} Appellant Milestone Investment Enterprises, Inc. appeals the summary judgment entered by the Richland County Common Pleas Court dismissing its claims for breach of contract, bad faith, negligence, and breach of fiduciary duty against Appellee Mount Vernon Fire Insurance Co.


         {¶2} At some point prior to 2012, Appellant acquired a three-story commercial building with six storefronts in Mansfield, Ohio. Appellant is owned by John Dilts, an attorney, and Eric Johnson, who owns a pawn shop. When Appellant refinanced the property with First Merit Bank, the bank required Appellant to obtain property insurance.

         {¶3} Because of the age of the building and the fact the second and third stories were gutted, the property was not eligible for a conventional policy. Appellant's insurance agent, Dumbaugh Insurance Agency, asked for help form the Ohio Insurance Exchange to obtain suitable coverage for Appellant's building. The Ohio Insurance Exchange referred Dumbaugh to a wholesale insurance broker, Morstan General Insurance Agency.

         {¶4} Morstan obtained coverage for Appellant from Appellee effective August 16, 2012. However, a condition of the policy was Appellee would have the property inspected in order to inform Appellant of any repairs necessary to keep the policy's coverage in place. The property was later inspected by Lynne Miller, an independent contractor.

         {¶5} Based on the inspection, Appellee sent an email to Appellant and the insurance agents on October 15, 2012, which stated, in pertinent part:

         A recently conducted inspection has developed the following mandatory recommendations:

• Install functioning and operational ABC type fire extinguishers, full charged and tagged in all units. Fire extinguishers must be mounted at a height between 39 & 42 inches from the floor to be made available in case of an emergency.
• A three foot clearance must be maintained between storage and the electrical panel in the basement of area of Rocky's Pub & Grill.
• Open junction boxes and exposed electrical wiring was visible throughout the basement storage area of the jewelry store. In addition, wiring relics were left over from previous electrical installations. Obtain the services of a licensed and insured electrical contractor to remove the old wiring and install proper junction boxes.
• A structural engineer must be hired to inspect the balconies on the second and third floor levels and the fire escapes in the rear of the building to ensure they can be used safely.
The second and third floors have begun renovations resulting in the removal of walls. Unprotected vertical openings must be protected in accordance with NFPA 101 29.3, 8.6 (The first floor exit leading to the outside exit). The stairway leading from the second floor to the third floor must be protected by an [sic] one hour fire resistant barrier with one hour fire rated doors. In addition, any openings in the floor must be closed to prevent rapid fire spread throughout the combustible construction. The stairwell is open through the floors on all sides.
• The trash dumpster must be maintained at least 35 feet from the building.
• Obtain certificates of general liability insurance from all commercial tenants leasing space within your building. These certificates must be obtained when the tenant moves in and on a yearly basis thereafter.
• Please comply with the recommendations and confirm in writing by signing and returning this form within 45 days to avoid cancellation of your policy. (Emphasis added).

         {¶6} After negotiation, Appellee relented on the fourth and sixth bullet points. John Dilts was concerned complying with bullet point five, quoted in bold above, would be expensive. Consequently, Appellant, through ...

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