Stuckman v. Westfield Ins. Co.

[Cite as Stuckman v. Westfield Ins. Co., 2012-Ohio-986.]

IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
CRAWFORD COUNTY

CARL STUCKMAN, ET AL.,

PLAINTIFFS-APPELLEES, CASE NO. 3-11-18

v.

WESTFIELD INSURANCE COMPANY, OPINION

DEFENDANT-APPELLANT.

Appeal from Crawford County Common Pleas Court
Trial Court No. 08-CV-0580

Judgment Reversed and Cause Remanded

Date of Decision: March 12, 2012

APPEARANCES:

Richard D. Sweebe for Appellant

Paul E. Hoeffel for Appellees
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PRESTON, J.

{¶1} Defendant-appellant, Westfield Insurance Co. (hereinafter

“Westfield”), appeals the Crawford County Court of Common Pleas’ judgment

entry awarding plaintiffs-appellees, Carl and Mona Stuckman (hereinafter “the

Stuckmans”), $35,956.78, plus prejudgment statutory interest from April 14, 2008,

for the loss they sustained from a fire at their home, which was covered under the

terms of their insurance policy with Westfield. For the reasons that follow, we

reverse.

{¶2} On April 14, 2008, the Stuckmans suffered damages as a result of a

fire at their home in Bucyrus, Ohio. (Complaint, Doc. No. 1, ¶ 2); (Answer, Doc.

No. 7, ¶ 2). The Stuckmans and Westfield were unable to agree on the amount of

loss, and consequently, Westfield demanded an appraisal under the terms of the

insurance policy. (Id. at ¶ 3-4); (Id. at ¶ 3-4).

{¶3} On December 2, 2008, the Stuckmans filed a declaratory action in the

trial court asking the court to declare the appraisal provision of the insurance

contract ambiguous and unenforceable, or, in the alternative, for the trial court to

appoint an umpire and declare the appropriate procedure for the appraisal. (Doc.

No. 1). The complaint prayed further for the trial court to declare the Stuckmans’

right to recover under other sections of the insurance policy and to award the

Stuckmans damages, costs, and prejudgment interest from April 14, 2008. (Id.).

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{¶4} On January 9, 2009, Westfield filed a motion for leave to plead,

requesting an additional 30 days to respond to the complaint. (Doc. No. 3). On

January 12, 2009, the trial court granted Westfield’s motion. (Doc. No. 4). On

January 30, 2009, Westfield filed its answer setting forth several defenses and

requesting an appraisal as provided for in the insurance policy. (Doc. No. 7).

{¶5} On June 1, 2009, the trial court held a hearing for the purpose of

appointing an umpire as provided for in the insurance policy. (Doc. No. 15).

Thereafter, by journal entry dated June 10, 2009, the trial court appointed David

Dolland to serve as umpire. (Id.). In relevant part, the trial court’s entry further

provided that “[t]he manner in which the appraisal is to be conducted is set forth in

the subject policy of insurance.” (Id.). The trial court explained this process in its

journal entry as follows:

Plaintiff’s selected appraiser Patrick Murphy and Defendant

Westfield’s selected appraiser John Anich will separately set the

amount of loss on each of the issues to be determined by appraisal.

If the two appraisers agree on the amount of any of the losses at

issue to be determined by appraisal, then as to any such agreement,

the two appraisers will issue a report accordingly and that will be the

amount of any such loss. If the two appraisers fail to agree on the

amount of any of the losses at issue to be determined by appraisal,

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then they will submit their differences to the umpire. A decision

agreed by either of two appraisers and the umpire will set the

amount of any such loss. (Id.).

{¶6} Since the parties’ appraisers could not agree on the amount of loss, the

umpire issued an appraisal award on January 27, 2010, concurring with the

appraisal submitted by Westfield’s appraiser, John Anich, for the following:

A. Dwelling- Replacement cost repairs: $31,845.56
Depreciation: - 5,102.23

Actual Cash Value Loss: $26,743.231

B. Contents-Replacement cost to clean: $3,813.45
(Actual cash value loss)

C. Additional Living Expense: $5,400.00

TOTAL: $35,956.682

(Doc. No. 27, attached). Below these calculations, appears the following

statement: “[t]his appraisal award is made without consideration of the deductible.

The signatures of any two of the below three persons constitutes the amount of

loss.” (Id.).

{¶7} On February 3, 2010, the trial court issued judgment in favor of the

Stuckmans as follows:

1
This number is the actual number provided in the appraisal award; however, it is mathematically
incorrect. The actual cash value loss should be $26,743.33. The trial court corrected this error in its
subsequent judgment entry based upon the appraisal. (Feb. 3, 2010 JE, Doc. No. 27).
2
Because of the aforementioned mathematical error, the total loss should be $35,956.78. (Feb. 7, 2010 JE,
Doc. No. 27).

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$26,743.33, less any amount previously paid by Westfield, for

Dwelling coverage; $3,813.45, less any amount previously paid by

Westfield, for Contents coverage; and $5,400.00, less the $1,000.00

deposit paid by Westfield to Housing Headquarters that is

refundable directly to Plaintiffs, for Additional Living Expense

coverage. If and when Plaintiffs complete repairs to the dwelling,

they will be entitled to recover the Depreciation holdback of

$5,102.23. (Doc. No. 27) (emphasis added).

{¶8} On February 26, 2010, the Stuckmans filed a motion for

reconsideration of the trial court’s judgment entry arguing that the trial court

inappropriately deducted sums “previously paid by Westfield” from the appraisal

award without any evidence in the record to support these deductions. (Doc. No.

29). The Stuckmans further argued that the trial court’s judgment entry failed to

comply with Chapter 2711 of the Ohio Revised Code governing arbitrations. (Id.).

{¶9} On March 4, 2010, Westfield filed a motion for leave to oppose the

Stuckmans’ motion for reconsideration. (Doc. No. 30). On that same day, the

Stuckmans filed a notice of appeal from the trial court’s judgment, which was

assigned appellate case no. 3-10-08. (Doc. No. 31).

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{¶10} On March 9, 2010, the trial court granted Westfield leave to respond

to the Stuckmans’ motion for reconsideration. (Doc. No. 34). Westfield filed its

brief in opposition to the motion on March 17, 2010. (Doc. No. 35).

{¶11} On March 30, 2010, the Stuckmans filed a motion with this Court

asking to remand the case to the trial court for consideration of the pending

“Civ.R. 60(B) Motion/Motion to Reconsider.” On April 16, 2010, this Court

granted the motion, remanded the case to the trial court, and stayed the

proceedings in appellate case no. 3-10-08.

{¶12} On April 27, 2010, the trial court denied the Stuckmans’ motion for

reconsideration. (Doc. No. 36). On May 25, 2010, the Stuckmans filed a notice of

appeal from the trial court’s judgment, which was assigned appellate case no. 3-

10-16. (Doc. No. 38).

{¶13} On July 13, 2010, this Court ordered that appellate cases nos. 3-10-

08 and 3-10-16 be consolidated for purposes of appeal. In appellate case no. 3-10-

08, the Stuckmans raised five assignments of error for review. Stuckman v.

Westfield Insurance Co., 3d Dist. Nos. 3-10-08, 3-10-16, 2011-Ohio-2338

(“Stuckman I”) We overruled the Stuckmans’ first and second assignments of

error concerning the enforceability of the appraisal provision and the trial court’s

alleged lack of instruction to the appraisers concerning the appropriate procedure

for the appraisal. Id. at ¶ 14-19. We also rejected the Stuckmans’ arguments

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concerning the applicability of R.C. Chapter 2711, governing arbitrations,3 and the

Stuckmans’ argument that the trial court’s judgment entry was not a final order.

Id. at ¶ 20-24. Although we determined that the trial court’s proceedings were not

governed by the arbitration laws (assignment of error no. 3), we did conclude that

the trial court erred by modifying the appraisal award absent any evidence of

fraud, mistake, or misfeasance (assignment of error no. 4). Id. Since the

Stuckmans’ appeal in case no. 3-10-16 raised the same issues as their appeal in

case no. 3-10-08, we found the former appeal moot in light of our reversal in the

latter. Id. at ¶ 27-29. Ultimately, we remanded the case to the trial court for

further proceedings consistent with our opinion.

{¶14} Following our remand and on June 20, 2011, the Stuckmans filed a

“motion to enter judgment on the appraisal award” in the aggregate amount of

$35,956.78 in conformity with this Court’s opinion. (Doc. No. 44). The

Stuckmans also requested prejudgment statutory interest from April 14, 2008 and

costs, as they had previously requested in their complaint. (Id.); (Doc. No. 1).

{¶15} On June 28, 2011, Westfield filed a motion for an oral hearing and

brief in opposition arguing that it had paid the Stuckmans $20,213.42 under the

dwelling and contents coverage provisions of the insurance contract prior to the

3
Although we stated in our original opinion that the Stuckmans’ third assignment of error (concerning the
applicability of R.C. Chapter 2711) was “well taken,” it is clear from our discussion in the opinion that we
actually overruled this assignment of error, while sustaining only the Stuckmans’ fourth assignment of
error. This error appears to have occurred since the third and fourth assignments of error were combined
for discussion in our original opinion.

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appraisal and $15,743.26 after the appraisal award. (Doc. Nos. 45-46). As such,

Westfield argued that it had “already paid every penny of the judgment that

Plaintiffs now seek, and Plaintiffs are entitled to no additional payment.” (Doc.

No. 45).

{¶16} On July 18, 2011, Westfield filed a motion for declaratory judgment

asking the trial court to “declar[e] that Westfield has paid all sums due and

payable under the Appraisal Award, and that Plaintiffs are not entitled to any

further recovery.” (Doc. No. 48). On that same day, Westfield also filed a motion

for an oral hearing. (Doc. No. 49).

{¶17} On July 21, 2011, the trial court granted Westfield’s motion for an

oral hearing. (Doc. No. 50). On September 21, 2011, the trial court held a hearing

on the pending motions. (Doc. No. 53). On September 27, 2011, the trial court

issued judgment in favor of the Stuckmans for $35,956.78, plus statutory

prejudgment interest from April 14, 2008, and overruled all Westfield’s pending

motions. (Id.).

{¶18} On October 20, 2011, Westfield filed a notice of appeal, which was

assigned appellate case no. 3-11-18 and is now before this Court. (Doc. No. 54).

Westfield raises five assignments of error for our review. We elect to combine

several of Westfield’s assignments of error for discussion.

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ASSIGNMENT OF ERROR NO. I

THE TRIAL COURT ERRED BY MAKING A DUPLICATIVE
AWARD TO APPELLEES OF SUMS THAT WESTFIELD
HAD ALREADY PAID PRIOR TO THE APPRAISAL
AWARD.

ASSIGNMENT OF ERROR NO. II

THE TRIAL COURT ERRED BY MAKING A DUPLICATIVE
AWARD TO APPELLEES OF SUMS THAT WESTFIELD
HAD ALREADY PAID SUBSEQUENT TO, AND IN
COMPLIANCE WITH, THE APPRAISAL AWARD.

ASSIGNMENT OF ERROR NO. III

THE TRIAL COURT ERRED BY AWARDING JUDGMENT
IN FAVOR OF APPELLEES WITHOUT DEDUCTING FROM
THE APPRAISAL AWARD THE APPLICABLE
DEDUCTIBLE SET FORTH IN THE POLICY OF
INSURANCE.

{¶19} In its first and second assignments of error, Westfield argues that the

trial court erred by failing to deduct the amount of money it had already paid to the

Stuckmans under the insurance policy prior to and after the appraisal award. In its

third assignment of error, Westfield argues that the trial court failed to deduct the

$500 deductible from the total appraisal award.

{¶20} The procedural history of this case is important. The appraisal award

was issued on January 27, 2010, and the trial court entered judgment just one week

later on February 3, 2010 without holding a hearing. (Doc. No. 27). At the time

the trial court entered its judgment, it did not have any evidence of payments made

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by Westfield; nevertheless, the trial court deducted “any amount previously paid

by Westfield” from the appraisal award. (Id.). Although not clearly articulated in

our previous opinion, the trial court’s previous error was not its decision to deduct

Westfield’s payments from the appraisal award, but the trial court’s decision to

make these deductions without having proper evidence before it.4 Procedurally,

the trial court should have held a hearing prior to its February 3, 2010 judgment at

which time Westfield could have submitted evidence of its payments.

{¶21} Prior to the trial court’s September 21, 2011 hearing upon remand,

Westfield presented evidence of payments it made to the Stuckmans totaling

$35,456.78—the total amount of the appraisal award minus the $500 deductible.

(Westfield’s Motion for Declaratory Judgment, Doc. No. 48, attached). Despite

this evidence, the trial court entered judgment in favor of the Stuckmans for

$35,956.78, the total amount of the appraisal award without regard to the $500

policy deductible or Westfield’s previous payments, plus statutory interest from

April 14, 2008, the date of the fire. (Sept. 27, 2011 JE, Doc. No. 53). To the

extent that our previous opinion can be read to require this result, that was not our

intention. Since the trial court had evidence of Westfield’s payments at the

September 21, 2011 hearing—evidence the trial court did not have when it entered

4
Notably, the relevant assignment of error we sustained provided: “The court erred in, sue [sic] sponte,
modifying the “appraisal award” by amounts not in evidence.” With regard to this assignment of error, we
stated, “the Stuckmans contend the trial court erred when it sua sponte modified the appraisal award by
amounts not in evidence.” 2011-Ohio-2338, at ¶ 21.

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judgment on February 3, 2010—it should have deducted Westfield’s payments

from the appraisal award for purposes of its judgment.5 The trial court also

should have subtracted the $500 deductible from the appraisal award, as the

Stuckmans concede on appeal.

{¶22} For the reasons stated herein, Westfield’s first, second, and third

assignments of error are sustained.

ASSIGNMENT OF ERROR NO. IV

THE TRIAL COURT ERRED BY AWARDING
PREJUDGMENT INTEREST.

ASSIGNMENT OF ERROR NO. V

THE TRIAL COURT ERRED BY ARBITRARILY
AWARDING PREJUDGMENT INTEREST FROM THE
DATE OF LOSS.

{¶23} In its fourth assignment of error, Westfield argues that the trial court

erred in awarding the Stuckmans prejudgment interest under R.C. 1343.03(A)

since the insurance payments were “due and payable” under the terms of the

policy on March 28, 2010, and it had already paid the Stuckmans the full amount

of the appraisal award, minus their $500 deductible, on or before February 1,

2010, long before this deadline.

5
The purpose of the appraisal under the terms of the insurance policy and the trial court’s June 10, 2009
order was to determine the amount of “loss” only. (Doc. No. 7, attached); (Doc. No. 15). See also 5A Ohio
Jurisprudence 3d, Alternative Dispute Resolution, Section 184 (2012) (distinguishing appraisals from
arbitrations). Consequently, the trial court’s judgment entry should have reflected the balance due and
payable to the Stuckmans under the insurance policy taking into consideration: the amount of loss as
determined by the appraisal; applicable coverage amounts under the policy; insurance payments previously
received by the Stuckmans; and the policy deductible.

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{¶24} In its fifth assignment of error, Westfield argues that, in the event the

court finds that it owes the Stuckmans additional sums of money beyond what it

has already paid, then interest on that amount of money should run from March

28, 2010 at the earliest for the reasons articulated in its fourth assignment of error.

{¶25} “The trial court’s authority to award prejudgment interest in this case

is set forth in R.C. 1343.03(A) which provides that interest on written instruments,

including insurance contracts, begins to run ‘when money becomes due and

payable.’” Smith v. Shelby Ins. Group, 11th Dist. Nos. 96-T-5547, 96-T-5566, at

*5 (Dec. 26, 1997). R.C. 1343.03(A) provides, in relevant part: “when money

becomes due and payable upon any * * * instrument of writing * * * the creditor

is entitled to interest at the rate per annum determined pursuant to section 5703.47

of the Revised Code * * *.”

{¶26} “‘[W]hile the right to prejudgment interest in a contract claim is a

matter of law, the amount awarded is based on the court’s factual determination of

the accrual date and interest rate.’” Smith v. Motorists Mut. Ins. Co., 3d Dist. No.

8-02-17, 2002-Ohio-6259, ¶ 9, quoting Dwyer Elec., Inc. v. Confederated

Builders, Inc., 3d Dist. No. 3-98-18 (Oct. 29, 1998). The date prejudgment

interest begins is a discretionary determination for the trial court to make. Id.,

citing Landis v. Grange Mut. Ins. Co., 82 Ohio St.3d 339, 342 (1998).

Consequently, we may not reverse a trial court’s determination on this issue absent

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an abuse of discretion. Id.; Gates v. Praul, 10th Dist. No. 10AP-784, 2011-Ohio-

6230, ¶ 61. An abuse of discretion implies that the trial court’s attitude was

unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d

217, 219 (1983).

{¶27} The general rule is that “interest commences to run from the time the

loss is deemed payable by the terms of the policy.” Royal Crown Plastics & Sales,

Inc. v. Motorists Mut. Ins. Co., 51 Ohio App.2d 79, 81 (9th Dist. 1976), citing

Amatullis, Inc. v. Great Central Ins. Co., 36 Ohio App.2d 106 (2nd Dist. 1971);

Woodward v. Motorists Mut. Ins. Co., 6th Dist. No. H-96-016, at *2 (Nov. 1,

1996). That being said, one of the primary purposes of awarding prejudgment

interest is to “make the aggrieved party whole” by “compensate[ing] for the lapse

of time between accrual of the claim and judgment.” Royal Electric Constr. Corp.

v. Ohio State Univ., 73 Ohio St.3d 110, 117 (1995).

{¶28} The Stuckmans’ insurance policy provided, in relevant part:

I. Loss Payment

We will adjust all losses with you. We will pay you unless some
other person is named in the policy or is legally entitled to receive
payment. Loss will be payable 60 days after we receive your proof
of loss and:

1. Reach an agreement with you;

2. There is an entry of a final judgment; or

3. There is a filing of an appraisal award with us.

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(Doc. No. 7, attached). The earliest of the three sub-conditions above was the

filing of the appraisal award with Westfield (#3), which occurred on or about

January 27, 2010. (Doc. No. 27, attached). Consequently, the loss payment was

payable under the insurance policy 60 days after January 27, 2010, which was

March 28, 2010; and therefore, the money was “due and payable” on March 28,

2010 for purposes of awarding prejudgment interest under R.C. 1343.03(A).

Woodward, 6th Dist. No. H-96-016. Nevertheless, the trial court awarded the

Stuckmans prejudgment interest from April 14, 2008, the date of the fire, absent

any reason(s) for doing so. (Sept. 27, 2011 JE, Doc. No. 53).

{¶29} This case is most similar to Sixth District’s decision in Woodward,

supra, where the homeowners’ insurance policy included a “Loss Payment”

provision exactly like the one herein. 6th Dist. No. H-96-016. In Woodward, the

appellant’s home was damaged by fire on January 18, 1993. Id. at *1. On January

14, 1994, the appellant filed a complaint for recovery of insurance proceeds under

her homeowners’ policy. Id. at *2. On December 29, 1995, following an

appraisal, appellant filed a motion for entry of judgment on the appraisal award

and a motion for prejudgment interest from October 1, 1993, the date she filed her

proof of loss with the insurance company. Id. The trial court, however, awarded

appellant prejudgment interest from December 2, 1995. Id.

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{¶30} Thereafter, appellant filed an appeal in which she argued that the trial

court should have awarded her prejudgment interest from October 1, 1993, when

she submitted her proof of loss. Id. at *3. The insurance company, on the other

hand, argued that the trial court correctly determined that prejudgment interest

began on December 2, 1995, since the loss payment was not “due and payable”

until 60 days after the filing of the appraisal award under the insurance policy. Id.

The Court of Appeals ultimately affirmed the trial court’s decision.

{¶31} In reaching its decision, the appellate court first observed that, under

R.C. 1343.03(A), prejudgment interest begins “when money becomes due and

payable.” Id. at *4. Second, the appellate court observed that the insurance

policy’s “Loss Payment” provision stated that the loss payment was due “60 days

after we receive your proof of loss and * * * there is a filing of an appraisal

award with us.” Id. at *4-5 (emphasis in original). Third the appellate court

observed that “[a]s a general rule, Ohio Courts have held that prejudgment interest

starts to run from the time the loss is deemed payable under the insurance policy.”

Id. at *5 (citations omitted). Based upon those three observations, the appellate

court concluded that the trial court did not abuse its discretion by awarding

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prejudgment interest from December 2, 1995, i.e. 60 days after the date6 of

appraisal award. Id.

{¶32} This case is easily distinguishable from Smith v. Shelby Ins. Co., to

which the Stuckmans cite, since the insurance policy herein provides when the

loss payment is payable. 11th Dist. Nos. 96-T-5547, 96-T-5566 . This case is

further distinguishable from Smith v. Shelby Ins. Co. because the plaintiff in that

case waited 11 years for the resolution of his car insurance claim; whereas the

Stuckmans’ homeowners’ insurance claim was resolved in almost three and a half

years. It is also worth noting that the trial court did not award any prejudgment

interest when it entered judgment the first time in February 2010. (Doc. No. 27).

{¶33} Viewing the totality of the circumstances in this case, we find that

the trial court’s decision to award the Stuckmans prejudgment interest from April

14, 2008 (the date of the fire)—without any indication on the record of its

reason(s) for doing so—constituted an abuse of its discretion.

{¶34} Westfield’s fourth and fifth assignments of error are, therefore,

sustained.

6
It was not clear in the record whether the appraisal was filed with the insurance company on October 1st
or 3d of 1995, so the trial court chose October 2, 1995 as the date of the appraisal award, apparently
splitting the difference. Woodward, 6th Dist. No. H-96-016, at * 4.

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{¶35} Having found error prejudicial to the appellant herein in the

particulars assigned and argued, we reverse the judgment of the trial court and

remand for further proceedings consistent with this opinion.

Judgment Reversed and
Cause Remanded

SHAW, P.J. and ROGERS, J., concur.

/jlr

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