Scarberry v. W. Res. Group

[Cite as Scarberry v. W. Res. Group, 2015-Ohio-240.]

IN THE COURT OF APPEALS OF OHIO
FOURTH APPELLATE DISTRICT
HIGHLAND COUNTY

TAMMY SCARBERRY, :

Plaintiff-Appellant, :
Case No. 14CA6
v. :
DECISION AND
WESTERN RESERVE GROUP dba JUDGMENT ENTRY
LIGHTNING ROD MUTUAL INSURANCE CO., :

Defendant-Appellee. : RELEASED 01/20/2015

APPEARANCES:

Dennis A. Becker, Becker & Cade, Loveland, Ohio, for plaintiff-appellant Tammy Scarberry.

Ronald A. Rispo and Robert E. Goff, Jr., Weston Hurd LLP, Cleveland Ohio, and David L.
Jarrett, Of Counsel, Western Reserve Mutual Casualty Company, Wooster, Ohio, for defendant-
appellee Western Reserve Group dba Lightning Rod Mutual Insurance Company.

Hoover, P.J.

{¶ 1} Tammy Scarberry appeals the Highland County Common Pleas Court’s decision to

grant Western Reserve Group dba Lightning Rod Mutual Insurance Company (“Lightning Rod”)

summary judgment on her claims against the company. Scarberry alleged that she was entitled to

compensation for damage to her house and personal possessions resulting from a fire at the

residence and pursuant to a homeowners’ insurance policy issued to her by Lightning Rod.

Lightning Rod filed a motion for summary judgment in which it alleged that Scarberry’s claims

were barred because she failed to participate in appraisement proceedings and failed to file suit

within one and a half years after the date of loss as required by the policy and negotiated

extension. The trial court granted the motion noting that the action was brought after the
Highland App. No. 14CA6 2

expiration of the one-year suit limitations provision set forth in the policy, as well as an

additional six-month extension agreed to by the parties. The trial court also noted that

Scarberry’s failure to participate in the appraisement process initiated by Lightning Rod equated

to a failure to fulfill a condition precedent to filing suit.

{¶ 2} On appeal, Scarberry contends that the suit limitations provision of the policy is

ambiguous, and that a genuine issue of material fact exists regarding whether the action was

timely filed. Specifically, Scarberry contends that the one-year from date of loss suit limitations

provision set forth in an endorsement to the policy contradicts a two-year from date of loss

contractual time limit set forth in the main insuring document and that such contradiction was

not noted in a third document issued during the policy coverage period highlighting “changes”

from previous year coverages. We find that the policy language unambiguously states that an

action must be commenced within one year from the date of loss, and that the parties mutually

agreed to extend the suit limitations provision by six months. We further find that the one-year

from date of loss suit limitations provision was not a change from previous coverage periods and

thus was appropriately omitted from the summary change document provided to Scarberry. It is

undisputed that the loss occurred on August 26, 2011. However, Scarberry did not file her

complaint until June 17, 2013 – less than two years from the date of loss but beyond the

negotiated extension of the contractual time provision. Thus, there is no doubt that the complaint

was not timely filed and Lightning Rod was entitled to judgment as a matter of law. Accordingly,

we affirm the trial court’s judgment.

I. FACTS & PROCEDURAL HISTORY

{¶ 3} Scarberry obtained a homeowners’ insurance policy with Lightning Rod on April

10, 2008, for the premises at 3074 Beltz Road, Sardinia, Ohio. On April 10 of each following
Highland App. No. 14CA6 3

year the policy was renewed for an additional year. On August 26, 2011, a fire caused damage to

Scarberry’s home. Scarberry notified Lightning Rod of the damage and made a claim under the

insurance policy. On June 17, 2013, Scarberry filed a complaint for declaratory relief and money

judgment against Lightning Rod alleging that her claims with Lightning Rod remained

unresolved. Scarberry’s complaint also contained bad faith and breach of fiduciary duty claims.

{¶ 4} Lightning Rod filed a motion for summary judgment alleging that it paid Scarberry

all of her covered losses to the extent they were properly documented but that negotiations over

the amount and extent of additional claimed losses were protracted and unresolved. Lightning

Rod argued further that Scarberry’s suit was barred because she failed to abide by the terms and

conditions of the policy. In particular, Lightning Rod claimed that Scarberry failed to: (1)

appoint an appraiser after a request for appraisement proceedings was initiated by Lightning

Rod; and (2) file suit within the contractual time limits as set forth in the policy. Lightning Rod

also argued that the suit was barred by the doctrine of accord and satisfaction. Lightning Rod

supported its motion with a certified copy of the insurance policy, the affidavit of Attorney John

G. Witherspoon, Jr., (a former attorney for Lightning Rod), the affidavit of Hans Boehm

(Property Claims Manager for Lightning Rod), and other documents incorporated by the

affidavits. In response to the motion for summary judgment, Scarberry argued that genuine

issues of material fact remained, particularly with respect to the length of the contractual time

limits to bring suit. Scarberry argued that the main insuring document contradicted the time

limits announced in a policy endorsement and that it was unclear whether the endorsement was

effective at the time of loss.
Highland App. No. 14CA6 4

{¶ 5} Following the submission of a reply memorandum and supplemental memorandum

by the respective parties, the trial court granted the motion for summary judgment. The trial

court noted, inter alia, that:

The Court finds that based upon the facts which are not in dispute, that the

policy of insurance in effect at the time of [Scarberry’s] loss contained a valid

contractual provision that any suit against [Lightning Rod] had to be filed within

one year of the loss. The evidence is uncontroverted that the one year period was

extended for an additional six months to February 26, 2013 and that [Scarberry]

did not file her action until June 17, 2013.

Additionally, paragraph G of the endorsement to the “Section I-

Conditions” limitation provision required an additional provision that the insured

had to comply with all conditions of the policy before filing suit. The evidence is

uncontroverted that [Scarberry] failed to appoint an appraiser to determine the

amount of the loss for which she was to be compensated. By failing to do so, she

did not comply with all of the conditions precedent to filing a lawsuit against

[Lightning Rod] based upon the policy coverage.

Therefore, the Court finds that there is no genuine material issue of fact

and that [Lightning Rod] is entitled to judgment as a matter of law.

[Decision and Final Judgment Entry Granting Summary Judgment at 5.] This appeal followed.

II. ASSIGNMENT OF ERROR

{¶ 6} Scarberry assigns one error for our review:

THE TRIAL COURT ERRED IN GRANTING THE CIV.R.56 MOTION FOR
SUMMARY JUDGMENT OF DEFENDANT-APPELLEE LIGHTNING ROD
MUTUAL INSURANCE COMPANY/WESTERN RESERVE GROUP.
III. STANDARD OF REVIEW
Highland App. No. 14CA6 5

{¶ 7} We review the trial court’s decision on a motion for summary judgment de novo.

Smith v. McBride, 130 Ohio St.3d 51, 2011-Ohio-4674, 955 N.E.2d 954, ¶ 12. Accordingly, we

afford no deference to the trial court’s decision and independently review the record and the

inferences that can be drawn from it to determine whether summary judgment is appropriate.

Harter v. Chillicothe Long-Term Care, Inc., 4th Dist. Ross No. 11CA3277, 2012-Ohio-2464, ¶

12; Grimes v. Grimes, 4th Dist. Washington No. 08CA35, 2009-Ohio-3126, ¶ 16.

{¶ 8} Summary judgment is appropriate only when the following have been established:

(1) that there is no genuine issue as to any material fact; (2) that the moving party is entitled to

judgment as a matter of law; and (3) that reasonable minds can come to only one conclusion, and

that conclusion is adverse to the nonmoving party. Civ.R. 56(C); DIRECTV, Inc. v. Levin, 128

Ohio St.3d 68, 2010-Ohio-6279, 941 N.E.2d 1187, ¶ 15. In ruling on a motion for summary

judgment, the court must construe the record and all inferences therefrom in the nonmoving

party’s favor. Civ.R. 56(C). The party moving for summary judgment “bears the initial

responsibility of informing the trial court of the basis for the motion, and identifying those

portions of the record before the trial court which demonstrate the absence of a genuine issue of

fact on a material element of the nonmoving party's claim.” Dresher v. Burt, 75 Ohio St.3d 280,

292, 662 N.E.2d 264 (1996). To meet its burden, the moving party must specifically refer to “the

pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of

evidence, and written stipulations of fact, if any, timely filed in the action,” that affirmatively

demonstrate that the nonmoving party has no evidence to support the nonmoving party's claims.

Civ.R. 56(C); Dresher at 293. Moreover, the trial court may consider evidence not expressly

mentioned in Civ.R. 56(C) if such evidence is incorporated by reference in a properly framed

affidavit pursuant to Civ.R. 56(E). Discover Bank v. Combs, 4th Dist. Pickaway No. 11 CA25,
Highland App. No. 14CA6 6

2012–Ohio–3150, ¶ 17; Wagner v. Young, 4th Dist. Athens No. CA1435, 1990 WL 119247, *4

(Aug. 8, 1990). “If the moving party fails to satisfy its initial burden, the motion for summary

judgment must be denied.” Dresher at 293. However, once the initial burden is met, the

nonmoving party then has a reciprocal burden to set forth specific facts to show that there is a

genuine issue for trial. Id.; Civ.R. 56(E).

IV. LAW & ANALYSIS

{¶ 9} In support of her sole assignment of error, Scarberry contends that summary

judgment was inappropriate because the insurance policy is ambiguous as to the time limitation

within which she was required to initiate action against Lightning Rod. We respectfully disagree.

{¶ 10} “As with other contracts, a policy of insurance may set a limitations period for

bringing an action under the policy that is less than the statutory limitations period for contract

actions generally.” Montgomery v. State Auto. Mut. Ins. Co., 4th Dist. Pike No. 99CA639, 2000

WL 33226195, *3 (Dec. 18, 2000), citing Colvin v. Globe Am. Cas. Co., 69 Ohio St.2d 293, 432

N.E.2d 167 (1982); see also Dominish v. Nationwide Ins. Co., 129 Ohio St.3d 466, 2011-Ohio-

4102, 953 N.E.2d 820, ¶ 1 (upholding enforceability of limitation-of-action clause contained in

insurance contract). “However, such a contractual limitations period is valid only if ‘the time

provision is clear, unambiguous, and [for] a reasonable period.’ ” Montgomery at *3, quoting

Colvin at 296. “A one-year limitation of action period is not an unreasonable length of time.”

Maple v. Cincinnati Ins. Co., 10th Dist. Franklin No. 92AP-448, 1992 WL 249870, *2 (Sept. 29,

1992), citing Colvin. Thus, the issue before this Court is whether the limitations period stated in

the insurance policy is clear and unambiguous.

{¶ 11} The construction of a written contract, such as an insurance policy, is a matter of

law. Shafer v. Newman Ins. Agency, 4th Dist. Highland No. 12CA11, 2013-Ohio-885, ¶ 10,
Highland App. No. 14CA6 7

citing Dial v. Ostrander, 4th Dist. Athens No. 03CA14, 2003-Ohio-5117, ¶ 12. “In construing a

written instrument, the primary and paramount objective is to ascertain the intent of the parties so

as to give effect to that intent.” Id., citing Aultman Hosp. Assn. v. Community Mut. Ins. Co., 46

Ohio St.3d 51, 53, 544 N.E.2d 920 (1989). “Courts must give common words their ordinary

meaning unless manifest absurdity would result or some other meaning is clearly evidenced from

the face or overall contents of the written instrument.” Id., citing In re All Kelley & Ferraro

Asbestos Cases, 104 Ohio St.3d 605, 2004-Ohio-7104, 821 N.E.2d 159, ¶ 29. “ ‘If a contract is

clear and unambiguous, the court need not go beyond the plain language of the agreement to

determine the parties’ rights and obligations; instead, the court must give effect to the

agreement’s express terms.’ ” Id., quoting Uebelacker v. Cincom Sys., Inc., 48 Ohio App.3d 268,

271, 549 N.E.2d 1210 (1st Dist.1988).

{¶ 12} On the other hand, where the language of an insurance contract is ambiguous, it

must be construed in favor of the insured and against the insurer. Dominish at ¶ 7; see also

Faruque v. Provident Life & Acc. Ins. Co., 31 Ohio St.3d 34, 508 N.E.2d 949 (1987), syllabus

(“Language in a contract of insurance reasonably susceptible of more than one meaning will be

construed liberally in favor of the insured and strictly against the insurer.”). However,

“ambiguity should not be created where it does not exist.” Dominish at ¶ 7.

{¶ 13} In the case sub judice, the summary judgment evidence demonstrates that the first

insurance policy issued by Lightning Rod to Scarberry for the period spanning April 10, 2008 to

April 10, 2009, contained a one-year suit provision in the main insuring document. Specifically,

the insurance policy included the following suit limitations provision:

SECTION 1-CONDITIONS * * *
Highland App. No. 14CA6 8

8. Suit Against Us. No action can be brought unless the policy provisions have

been complied with and the action is started within one year after the date of loss.

The subsequent renewal policies for the next two policy periods contained an identical suit

limitations provision in the main insuring document.

{¶ 14} For the policy year April 10, 2011 through April 10, 2012, the main insuring

document was altered. The new main insuring document contained the following time limit

provision:

SECTION 1-CONDITIONS * * *

G. Suit Against Us

No action can be brought against us unless there has been full

compliance with all of the terms under Section 1 of this policy and the

action is started within two years after the date of loss.

However, attached to the 2011-2012 main insuring document was an HMO139 endorsement

form, which operated to retain the one-year suit limitation period. Specifically, endorsement

form HM0139 states the following:

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT

CAREFULLY.

SECTION 1-CONDITIONS

SUIT AGAINST US – OHIO

SECTION I – CONDITIONS

G. Suit Against Us

Condition G. is replaced by the following:

G. Suit Against Us
Highland App. No. 14CA6 9

No action can be brought against us unless there has been
full compliance with all of the terms under Section 1 of
this policy and the action is started within one year after
the date of loss.

All other provisions of this policy apply.

{¶ 15} The Declarations pages sent to Scarberry upon renewal of the policy, for policy

period April 10, 2011 to April 10, 2012, clearly identifies endorsement form HM0139 as a

governing document of the policy. A fifteen page summary document, summarizing changes to

the policy from previous year coverages, was also included with the new policy effective with

the renewal on April 10, 2011. The summary change document does not reference endorsement

form HM0139.

{¶ 16} Scarberry’s primary contention on appeal is that the insurance policy’s suit

limitations provision is ambiguous; and thus summary judgment is inappropriate. Specifically,

Scarberry argues that the suit limitations provision was altered or changed without notice to her

from two years from the date of loss to one year from the date of loss.

{¶ 17} Scarberry’s argument lacks merit for several reasons. First, the language of the

policy is clear and unambiguous. Endorsement form HM0139 plainly states that action under the

policy must be initiated within one year from the date of loss. The form attached to the main

insuring document unequivocally states that it replaced the suit limitations provision in the main

insuring document. In addition, reference to the endorsement was included in the Declarations

pages indicating it was a part of the insurance agreement. Second, the endorsement preserved the

one-year suit limitations period which was the same suit limitations period that had existed since

Scarberry received her first policy in 2008. The only difference was that the suit limitations

period that was formerly included in the main insuring document was now attached as an

endorsement to the policy. Thus, there was no change to the suit limitations period from previous
Highland App. No. 14CA6 10

policy years and Lightning Rod’s failure to reference endorsement form HM0139 in the

summary change document did not create an ambiguity as argued by Scarberry. The policy

language is not ambiguous.

{¶ 18} Scarberry also suggests that Lightning Rod violated its duty under Ohio

Adm.Code 3901-1-54(G)(5) to notify her of the pending expiration of the suit limitations

provision, thus contributing to the ambiguous nature of the provision. Ohio Adm.Code 3901-1-

54(G)(5) states as follows:

Notice shall be given to claimants at least sixty days, before the expiration of any

statute of limitation or contractual limit, where the insurer has not been advised

that the claimant is represented by legal counsel.

{¶ 19} This argument is also without merit. First, Scarberry was represented by legal

counsel during the claims process. Lightning Rod presented summary judgment evidence

showing that its previous legal counsel, Attorney Witherspoon, agreed with Scarberry’s previous

counsel, Attorney Jon C. Hapner, to extend the one-year suit limitations period by an additional

six months. This extension was memorialized in writing as evidenced by two letters dated

August 21, 2012, and introduced during the summary judgment proceedings. Both letters were

signed by Attorney Witherspoon and clearly set forth the one-year suit limitations provision and

the agreement of the parties to extend the provision by an additional six months. One of the

letters was addressed to Attorney Hapner; and the second letter was addressed to Scarberry

personally. The Scarberry letter also contained two checks that were signed and cashed by

Scarberry, indicating that she received the letter. Thus, there is no doubt that Scarberry and her

previous legal counsel, Attorney Hapner, were put on notice of the one-year suit limitation and

six month extension. Accordingly, even if we were to assume arguendo that notice was owed to
Highland App. No. 14CA6 11

Scarberry under the Ohio Administrative Code, the letters dated August 21, 2012, and delivered

to both her and her attorney satisfied such requirement by clearly restating the one-year suit

limitation and agreed upon six month extension.

{¶ 20} We further note that on October 26, 2012, Lightning Rod delivered via regular

and certified mail a letter to Scarberry requesting that she participate in appraisement

proceedings pursuant to the provisions of the insurance policy. The letter included a reminder

that the suit limitations provision had been previously extended six months, specifically stating:

Please note that the demand for appraisal is not an extension of the contract

limitations provision which we have previously agreed expires on February

26, 2013 as outlined in the letter to Attorney Hapner dated August 21, 2012.

(Emphasis added.) Thus, the October 26, 2012 correspondence reminded Scarberry for the

second time that the suit limitations provision and negotiated extension expired on February 26,

2013. Accordingly, even if Lightning Rod had a duty to inform Scarberry of the pending

deadline to file suit, it did so on more than one occasion, and Scarberry cannot reasonably

contend that the deadline to file suit was ambiguous.

V. CONCLUSION
{¶ 21} It is clear from the policy language that a lawsuit by an insured against the insurer

had to be commenced within one year of the loss or damage sustained. It is also clear from the

evidence that in the case sub judice, the parties agreed to extend the suit limitations provision by

an additional six months. Scarberry was advised both directly, and through counsel, that the

extension would expire six months later, or 18 months from the date of loss, which placed the

deadline at February 26, 2013. Scarberry, however, did not file her complaint until June 17,

2013. Therefore, her suit is untimely under the unambiguous language of the policy and agreed

upon extension.
Highland App. No. 14CA6 12

{¶ 22} Because Scarberry’s lawsuit was untimely filed, no genuine issues of material

fact exist and Lightning Rod is entitled to judgment as a matter of law. Accordingly, we overrule

the sole assignment of error and affirm the trial court’s judgment.

JUDGMENT AFFIRMED.
Highland App. No. 14CA6 13

JUDGMENT ENTRY

It is ordered that the JUDGMENT IS AFFIRMED. Appellant shall pay the costs herein
taxed.
The Court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this Court directing the Highland County
Common Pleas Court to carry this judgment into execution.

A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of
Appellate Procedure.

Harsha, J. & Abele, J.: Concur in Judgment & Opinion.

For the Court

By:
Marie Hoover, Presiding Judge

NOTICE TO COUNSEL

Pursuant to Local Rule No. 14, this document constitutes a final judgment entry and the
time period for further appeal commences from the date of filing with the clerk.