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Burdette v. Bell

Court of Appeals of Ohio, Twelfth District, Preble

December 9, 2019

BARRY S. BURDETTE, et al., Appellants,
v.
LACHELL B. BELL, et al., Appellees.

          CIVIL APPEAL FROM PREBLE COUNTY COURT OF COMMON PLEAS Case No. 16CV30690

          Intili & Groves Co., L.P.A., Thomas J. Intili, for appellants

          Freund, Freeze & Arnold, Gordon D. Arnold, for appellee, State Farm Fire and Casualty Company

          OPINION

          M. POWELL, J.

         {¶ 1} Appellants, Barry and Sandra Burdette, appeal a decision of the Preble County Court of Common Pleas granting summary judgment to appellee, State Farm Fire and Casualty Company.

         {¶ 2} On January 2, 2015, Barry Burdette was injured when he was struck in a crosswalk by an automobile driven by Lachell Bell, who was delivering pizzas for JimJam, Inc., dba Sarah's Pizza. Bell was driving her personal vehicle. Her automobile insurance had lapsed the day before. JimJam was insured under a Businessowners Insurance Policy issued by State Farm ("State Farm policy").

         {¶ 3} On January 8, 2016, the Burdettes filed a complaint in the trial court against JimJam and Bell. State Farm provided defense counsel to JimJam. On March 6, 2017, State Farm moved to intervene in the litigation. State Farm sought a declaratory judgment that it was not required to defend or indemnify JimJam or Bell because the State Farm policy excluded coverage for claims arising from the use of any automobile. The trial court denied the motion, finding that it was untimely and that State Farm could raise its coverage defense in a post-judgment proceeding pursuant to R.C. 3929.06.

         {¶ 4} On September 29, 2017, the Burdettes, JimJam, and Bell entered into a consent judgment pursuant to which the Burdettes were granted a $400, 000 judgment but agreed to seek satisfaction of the judgment exclusively under the State Farm policy. State Farm refused to satisfy the judgment within 30 days of the entry of the consent judgment. Consequently, the Burdettes filed a supplemental complaint against State Farm for an order that it pay the $400, 000 judgment. State Farm answered, arguing that the State Farm policy excluded coverage for bodily injury arising out of the use of any automobile.

         {¶ 5} The Burdettes asserted claims that State Farm had waived its coverage defense or was estopped from advancing such a defense because of its failure to assert it at an earlier time. The Burdettes thereafter sought discovery upon their waiver and estoppel claims. State Farm moved for a protective order. The Burdettes moved to compel State Farm to comply with their discovery requests. On June 26, 2018, the trial court granted State Farm's motion for a protective order, thereby prohibiting the Burdettes from seeking discovery related to their waiver and estoppel claims. The trial court found that the Burdettes had no standing to assert such claims because they were a third party to the State Farm policy. The trial court further found that the issue of whether the State Farm policy "excludes coverage in this case * * * will be resolved by the language of the insurance contract and applicable rules of construction."

         {¶ 6} State Farm and the Burdettes filed cross-motions for summary judgment. State Farm argued it had no duty to indemnify the Burdettes for their losses because the State Farm policy excluded coverage for losses resulting from the use of an automobile. The Burdettes argued that State Farm was liable for their losses under the "products-completed operations hazard" coverage of the State Farm policy, or alternatively, because of its breach of an amendatory endorsement to the policy. The Burdettes further argued that State Farm had waived its coverage defense or was estopped from denying coverage.

         {¶ 7} On March 15, 2019, the trial court denied the Burdettes' motion for summary judgment and granted summary judgment in favor of State Farm. The trial court found that liability for losses from use of an automobile was excluded under the State Farm policy. The trial court further found that the "products-completed operations hazard" ("PCOH") provisions in the State Farm policy did not provide a separate type of coverage but were simply definitions establishing a limit for coverage. The trial court once again rejected the Burdettes' argument relating to waiver and estoppel.

         {¶ 8} The Burdettes now appeal, raising two assignments of error.

         {¶ 9} Assignment of Error No. 1:

         {¶ 10} THE TRIAL COURT ERRED BY ENTERING SUMMARY JUDGMENT FOR DEFENDANT-APPELLEE STATE FARM FIRE AND CASUALTY COMPANY AND BY DENYING SUMMARY JUDGMENT FOR PLAINTIFFS-APPELLANTS.

         {¶ 11} The Burdettes argue the trial court erred in granting summary judgment to State Farm because (1) as an employee or volunteer worker of JimJam, Bell is an "insured" under the State Farm policy and the exclusion from use of an automobile does not apply, (2) the PCOH provisions of the State Farm policy provide a separate coverage under the policy, and (3) State Farm waived its coverage defense or is estopped from denying coverage.

         {¶ 12} Summary judgment is proper when the pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence, and written stipulations of fact, if any, show that (1) there are no genuine issues of material fact to be litigated, (2) the moving party is entitled to judgment as a matter of law, and (3) when all evidence is construed most strongly in favor of the nonmoving party, reasonable minds can come to only one conclusion which is adverse to the nonmoving party. Civ.R. 56(C); Zivich v. Mentor Soccer Club, Inc., 82 Ohio St.3d 367, 369-370 (1998). The moving party bears the initial burden of informing the court of the basis for the motion and demonstrating the absence of a genuine issue of material fact. Dresher v. Burt, 75 Ohio St.3d 280, 293 (1996). Once this burden is met, the nonmoving party has a reciprocal burden to set forth specific facts showing there is some genuine issue of material fact yet remaining for the trial court to resolve. Id. An appellate court reviews a trial court's decision to grant or deny summary judgment de novo, without any deference to the trial court's judgment. Bravard v. Curran, 155 Ohio App.3d 713, 2004-Ohio-181, ¶ 9 (12th Dist.).

         {¶ 13} The central issue in this case is whether the Burdettes' losses are covered under the State Farm policy and involves construction of the automobile exclusion in the policy as well as language pertaining to the policy's PCOH provisions.

         {¶ 14} An insurance policy is a contract whose interpretation is a matter of law, subject to de novo review. Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm, 73 Ohio St.3d 107, 108 (1995). The insurance contract must be examined as a whole, and a court will presume that the intent of the parties is reflected in the language used in the policy. Cincinnati Ins. Co. v. CPS Holdings, Inc., 115 Ohio St.3d 306, 2007-Ohio-4917, ¶ 7. Terms in an insurance policy must be given their plain and ordinary meaning, and only where an insurance policy is ambiguous and susceptible of more than one interpretation must the policy language be liberally construed in favor of the insured or claimant seeking coverage. DICE., Inc. v. State Farm Ins. Co., 6th Dist. Lucas No. L-11-1006, 2012-Ohio-1563, ¶ 22, citing Buckeye Union Ins. Co. v. Price, 39 Ohio St.2d 95 (1974).

         {¶ 15} The Burdettes first argue that State Farm is liable for their losses because as an employee or volunteer worker of JimJam, Bell was an "insured" under the State Farm policy and the exclusion from use of an automobile does not apply.

         {¶ 16} The State Farm policy consists of two main sections. Section I is entitled "PROPERTY" and Section II is entitled "LIABILITY." Section II is further divided into "Coverage L - Business Liability" and "Coverage M - Medical Expenses." Coverage L lists several exclusions of coverage, including for "Aircraft, Auto or Watercraft." As relevant here, this specific exclusion provides that "this insurance does not apply to 'Bodily injury' or 'property damage' arising out of the ownership or use of any 'auto' owned or operated by any insured." See Section II - Exclusions, Paragraph 8. "Use also includes operation and 'loading and unloading.'" Id. Paragraph 8 is, however, modified by Paragraph 8.e which stated that "[t]his exclusion does not apply to 'Bodily injury' or 'property damage' arising out of the use of any 'non-owned auto' in your business by any person[.]" However, Endorsement CMP-4765 modified the exclusions provision of the policy by deleting Paragraph 8.e.

         {¶ 17} Thus, stated more simply, Paragraph 8 generally excluded coverage for losses arising from the ownership or use of any automobile by any insured. Paragraph 8.e provided an exception to this exclusion by extending coverage for losses arising from the use of non-owned automobiles in JimJam's business by any person. However, Endorsement CMP-4765 deleted Paragraph 8.e from the policy and the coverage that would otherwise apply to the business use of a "non-owned auto." ...


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