Broadview Savings & Loan Co. v. Buckeye Union Insurance

Clifford F. Brown, J.,

dissenting. The majority has reasoned that although the principles set forth in Hounshell v. American States Ins. Co. (1981), 67 Ohio St. 2d 427, apply to the present case, “a review of the facts of both cases leads us to the conclusion that the results are inapposite.” Because I believe the law announced in Hounshell has been misapplied, I must respectfully dissent.

Although the majority’s opinion quotes extensively from the text of Hounshell, it pointedly ignores the law as announced in the syllabus which reads as follows:

“An insurance company may be held to have waived a *53limitation of action clause in a fire insurance policy by acts or declarations which evidence a recognition of liability, or acts or declarations which hold out a reasonable hope of adjustment and which acts or declarations occasion the delay by the insured in filing an action on the insurance contract until after the period of limitations has expired.” (Emphasis added.)

In my view there are sufficient facts in the record to demonstrate that the insurer in this case both evidenced a recognition of its liability and held out a reasonable hope of adjustment which occasioned the delay of Broadview in filing suit: Broadview was apprised of the claim (May 15,1975); letters requesting resolution of the claim were sent (September 22, 1975; November 6,1975); Ohio Fair Plan’s adjuster stated that he envisioned “no problem with the claim itself’ (meeting in December of 1975); and Broadview was informed that the adjuster was forwarding the file to Ohio Fair Plan’s legal counsel for the purpose of determining the amount payable (phone call of December 15,1975). In fact, the file was not forwarded until after the one year contractual time limitation had expired (January 8, 1976).

To conclude, as has the majority, that the insurer was merely “ ‘ in the process of [internally] determining the validity of the claim under the policy’ ” is to ignore the assertion made by Ohio Fair Plan’s adjuster that “no problem” as to liability existed. Moreover, the adjuster held out a reasonable hope of adjustment when he informed Broadview’s attorney that he was currently processing the file (even though he did not do so for approximately three weeks). Thus, sufficient assurances were transmitted to Broadview’s attorney to lead him to reasonably believe that there was a likelihood of a future settlement offer. Indeed, such an offer was ultimately extended.

The majority attempts to distinguish Hounshell from the present case on the basis that here the insurer made no offer to the claimant prior to the expiration of the one-year time limitation contained in the policy. However, whether or not an actual offer is made should not be determinative. Rather, our focus should be, first, on whether or not the insurer “evidence[d] a recognition of liability”. Hounshell, supra. Ohio Fair Plan has clearly done this in stating that it could foresee *54“no problem” with the claim. Secondly, even though the offer in this case was made after the expiration of the one-year provision, the fact that such an offer was even made is certainly an indication that Broadview could have interpreted the ongoing negotiations as those which held out “a reasonable hope of adjustment”.

As in Hounshell, the insurer in this case recognized its liability before the expiration of the one-year limitation period contained in the insurance contract. The only remaining question was the actual settlement amount. The negotiations carried on between the parties were in good faith and the trier of fact could have reasonably concluded that Ohio Fair Plan held out a reasonable hope of adjustment which occasioned Broad-view’s delay in the filing of its action. This court should not reward dilatory tactics used by insurance companies in the conduct of their negotiations and processing of their files. The majority’s decision, in direct contravention of Hounshell, allows an insurer to avoid liability by enforcement of a suit limitation provision even though the same insurer had previously acknowledged liability and held out a reasonable hope of adjustment prior to the expiration of the limitation period.