[Cite as James v. Safeco Ins. Co. of Illinois, 195 Ohio App.3d 265, 2011-Ohio-4241.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 96077
JAMES,
APPELLANT,
v.
SAFECO INSURANCE COMPANY OF ILLINOIS,
APPELLEE,
JUDGMENT:
REVERSED AND REMANDED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-707732
BEFORE: Sweeney, P.J., Jones, J., and S. Gallagher, J.
RELEASED AND JOURNALIZED: August 25, 2011
Tyrone E. Reed, for appellant.
Frost, Brown, Todd, L.L.C., and William M. Harter, for appellee.
JAMES J. SWEENEY, Presiding Judge.
{¶ 1} Plaintiff-appellant, Katherine James, appeals from the trial court’s judgment
granting defendant-appellee, Safeco Insurance Co.’s (“Safeco’s”) motion for summary
judgment. After reviewing the facts of the case and pertinent law, we reverse the judgment
and remand the cause to the trial court.
{¶ 2} On March 1, 2002, plaintiff purchased automobile insurance from Safeco.
Plaintiff’s 2002 Hyundai Santa Fe was the only vehicle listed on the policy and plaintiff was
the only driver listed. On March 3, 2008, plaintiff leased a 2008 Ford Mustang and requested
that Safeco add this vehicle to the policy, which Safeco did.
{¶ 3} Shortly after plaintiff bought the Mustang, her daughter Marcia Eason became
the primary driver of the car. Eason did not live with plaintiff, and the car was stored at
Eason’s house. On October 14, 2008, plaintiff requested that Safeco add Eason as a driver
on the policy, which Safeco did.
{¶ 4} On February 10, 2009, almost one year after leasing the Mustang, plaintiff took
the car back from Eason because, according to plaintiff, Eason “never put a penny” toward
the lease payments. Plaintiff parked the Mustang in her driveway.
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{¶ 5} On February 27, 2009, the Mustang was stolen from plaintiff’s driveway.
Plaintiff filed a claim with Safeco under the policy. Safeco denied coverage, and on October
23, 2009, plaintiff filed a complaint against Safeco, alleging breach of contract and other
associated claims. On October 27, 2010, the court granted Safeco’s summary-judgment
motion, finding that “plaintiff’s representations and non-disclosures rendered insurance
policy void.”
{¶ 6} Plaintiff appeals and raises one assignment of error for our review.
{¶ 7} “I. The trial court erred to the substantial prejudice of the appellant, when it
granted the insurer’s motion for summary judgment finding that the appellant’s automobile
policy was rendered void ab initio, when material issues of fact remained * * * as to whether
the appellant made a misrepresentation or non disclosure [that] equated a warranty about the
2008 Mustang when she added it and her daughter to her policy.”
{¶ 8} Appellate review of summary judgment is de novo. Grafton v. Ohio Edison Co.
(1996), 77 Ohio St.3d 102, 105, 671 N.E.2d 241. The Ohio Supreme Court set forth the test
for determining whether summary judgment is appropriate in Zivich v. Mentor Soccer Club
(1998), 82 Ohio St.3d 367, 369–370, 696 N.E.2d 201, as follows:
{¶ 9} “Pursuant to Civ.R. 56, summary judgment is appropriate when (1) there is no
genuine issue of material fact, (2) the moving party is entitled to judgment as a matter of law,
and (3) reasonable minds can come to but one conclusion and that conclusion is adverse to
the nonmoving party, said party being entitled to have the evidence construed most strongly
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in his favor. Horton v. Harwick Chem. Corp. (1995), 73 Ohio St.3d 679, 653 N.E.2d 1196,
paragraph three of the syllabus. The party moving for summary judgment bears the burden of
showing that there is no genuine issue of material fact and that it is entitled to judgment as a
matter of law. Dresher v. Burt (1996), 75 Ohio St.3d 280, 292–293, 662 N.E.2d 264, 273–
274.”
{¶ 10} In Allstate Ins. Co. v. Boggs (1971), 27 Ohio St.2d 216, 218, 271 N.E.2d 855,
the Ohio Supreme Court addressed the issue “whether a misstatement * * * by an insured in
an application for an automobile * * * insurance policy renders the policy void ab initio.”
{¶ 11} An insured’s misstatement will fall into one of two categories, each with a
different legal consequence. First, a “representation” is “a statement made prior to the
issuance of the policy which tends to cause the insurer to assume the risk.” Id. at 219. If the
misstatement of fact is a representation, the statement “will render the policy voidable, if it is
fraudulently made and the fact is material to the risk * * *.” Id. Second, a “warranty,” which
is “a statement, description or undertaking by the insured of a material fact either appearing
on the face of the policy or in another instrument specifically incorporated in the policy.” Id.
A misstatement in warranty “voids the policy ab initio.” Id., at 218-219.
{¶ 12} In determining how to treat an insured’s misstatement, “[t]he insurer’s decision
[whether] to incorporate the statement in * * * the policy generally controls whether the
statement is a warranty or a representation.” Id. at 219. However, a statement “does not
constitute a warranty unless the language of the policy, construed strictly against the insurer,
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requires such an interpretation. * * * If it is [the insurer’s] purpose to provide that a
misstatement by the insured shall render the policy void ab initio, such facts must appear
clearly and unambiguously from the terms of the policy.” Id.
{¶ 13} Safeco alleges that plaintiff made misstatements regarding the following
information: “(1) the identity of the Mustang’s driver; (2) the residency of the driver; and (3)
the fact that the car would not be garaged at [plaintiff’s] home.” This court has considered
affirmative statements, as well as failure to disclose information, under the ambit of Boggs.
See, e.g., Med. Protective Co. v. Fragatos, 190 Ohio App.3d 114, 2010-Ohio-4487, 940
N.E.2d 1011.
{¶ 14} In the instant case, the policy contains the following language:
{¶ 15} “In return for your payment of all premiums, and in reliance upon the
statements in the application we agree to insure you subject to the terms, conditions and
limitations of this policy.
{¶ 16} “* * *
{¶ 17} “This policy was issued in reliance upon the information provided on your
application. We may void this policy if you or an insured have concealed or misrepresented
any material fact or circumstance, or engaged in fraudulent conduct, at the time application
was made or any time during the policy period.
{¶ 18} “* * *
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{¶ 19} “We may void this policy or deny coverage for fraud or material
misrepresentation even after the occurrence of an accident or loss.”
{¶ 20} This court recently concluded that an insurance company “satisfied both prongs
of the Boggs test to establish that [the insured’s] statement regarding the number of prior
claims constitutes a warranty [and] breach of this warranty therefore renders the policy void
ab initio.” Fragatos, 190 Ohio App.3d 114, 2010-Ohio-4487, 940 N.E.2d 1011, ¶ 33. The
provision of the Fragatos policy stated: “It is understood and agreed that the statements made
in the insurance application are incorporated into, and shall form part of, this policy.” This
court held that this language “expressly incorporated [the insured’s] answers to his
application as part of the policy.” Fragatos also held that the application contained a
“warning that any material misrepresentation would render the policy null and without effect,
[which was] equivalent to warning that the policy is void ab initio.” Id.
{¶ 21} This court has also recently determined, on the other hand, that misstatements
by an insured “constitute a representation, not a warranty, which renders the policy voidable,
but not void” under the Boggs test. Am. Family Ins. Co. v. Johnson, Cuyahoga App. No.
93022, 2010-Ohio-1855, ¶ 17. In Johnson, the insurance policy contained the following
language:
{¶ 22} “ ‘We will provide this insurance to you in reliance on the statements you have
given us in your application of insurance. You warrant the statements in your application to
be true and this policy is conditioned upon the truth of your statements. We may void this
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policy if the statements you have given us are false and we have relied on them.’ ” Id. at
¶ 16.
{¶ 23} The Johnson court reasoned that “the policy merely mentions the application; it
does not state that the application is part of the policy. Moreover, the policy does not
specifically state that a misrepresentation as to prior claims would render the policy void ab
initio. Instead, it generally states that the false statements on the application may void the
policy.” Id. at ¶ 17.
{¶ 24} Upon review, we find the policy language in the instant case does not
incorporate the application, nor does it clearly and unambiguously “provide that a
misstatement by the insured shall render the policy void ab initio * * *.” Boggs, 27 Ohio
St.2d at 219, 271 N.E.2d 855. The policy language “in reliance upon the statements in the
application” merely refers to the application. “The mere fact that a policy of insurance refers
to the application does not make such application a part of the policy. * * * In order to have
an incorporation by reference in an insurance policy, it must be done in unequivocal language
on the face of the policy.” Id. at 220.
{¶ 25} Additionally, the policy language “we may void this policy” is not a clear
warning to the insured that a misstatement shall render the policy void. Rather, it is a general
statement reflecting the long-standing point of law that a “contract induced by fraud is not
void, but it is voidable at the election of the one defrauded.” Columbus & T.R. Co. v.
Steinfeld (1884), 42 Ohio St. 449, 455.
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{¶ 26} Accordingly, we hold that plaintiff’s alleged misstatements or nondisclosures
were representations and thus they render the policy voidable if they were fraudulently made
and material to the risk. A voidable policy may be canceled by the insurer but “may not be
used to avoid liability arising under the policy after such liability has been incurred.” Boggs,
at paragraph one of the syllabus. Therefore, the court erred as a matter of law in concluding
that the policy was void and in granting Safeco’s summary-judgment motion. Plaintiff’s
assignment of error is sustained.
{¶ 27} The judgment is reversed, and the cause is remanded to the trial court for
proceedings consistent with this opinion.
Judgment reversed,
and cause remanded.
JONES and GALLAGHER, JJ., concur.
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