[Cite as Martel vs. Am. Family Ins. Co., 2012-Ohio-1486.]
COURT OF APPEALS DELAWARE COUNTY, OHIO FIFTH APPELLATE DISTRICT
THOMAS MARTEL JUDGES: Hon. Patricia A. Delaney, P.J. Plaintiff-Appellant Hon. William B. Hoffman, J. Hon. Sheila G. Farmer, J. -vs-
AMERICAN FAMILY INSURANCE Case No. 11CAE080077 COMPANY
Defendant-Appellee OPINION
CHARACTER OF PROCEEDING: Appeal from the Court of Common Pleas, Case No. 09CVH081028
JUDGMENT: Affirmed
DATE OF JUDGMENT: March 26, 2012
APPEARANCES:
For Plaintiff-Appellant For Defendant-Appellee
CHARLES H. COOPER, JR. JAMES R. GALLAGHER REX H. ELLIOTT 471 East Broad Street 2175 Riverside Drive 19th Floor Columbus, OH 43221 Columbus, OH 43215-3872 Delaware County, Case No. 11CAE080077 2
DANIEL R. MORDARSKI 5 East Long Street Suite 1100 Columbus, OH 43215
Farmer, J.
{¶1} In August of 1999, Jeffrey and Margaret Heintzelman hired appellant, Tom
Martel, dba Martel Heating and Cooling, to install an attic air conditioner in their home.
The air conditioner never worked properly. Mr. Martel attempted to fix the problem, but
was unsuccessful.
{¶2} In 2001, the Heintzelmans hired Air Experts, Inc. to fix the air conditioner.
Air Experts was unable to repair the unit and the problems continued.
{¶3} On July 15, 2002, Mr. Heintzelman went to the attic to examine leaking
from the air conditioner. Mr. Heintzelman was electrocuted by an unprotected outlet
providing power to the condensation pump leading to the air conditioner. The outlet had
been installed by appellant.
{¶4} At the time of the installation of the air conditioner, appellant was insured
under a commercial insurance policy issued by appellee, American Family Insurance,
Policy No. 34–X03305–01. The policy was in effect from May 18, 1999 to May 18,
2000, with a limit of $500,000.00.
{¶5} On December 10, 2002, the Estate of Jeffrey K. Heintzelman, together
with Mrs. Heintzelman, filed a complaint against appellant and Air Experts, claiming
wrongful death and negligent infliction of serious emotional distress (Case No. 02CVH–
12–712). Appellee defended appellant in the lawsuit. On March 16, 2003, the
complaint was dismissed without prejudice. Delaware County, Case No. 11CAE080077 3
{¶6} On December 4, 2003, appellee filed a declaratory judgment action (Case
No. 03CVH–12–896), seeking a judgment that it did not have a duty to indemnify
appellant for any damages awarded in the case. On March 4, 2004, appellee filed a
motion for default judgment based upon appellant's failure to answer or otherwise
defend the action. The trial court granted the motion on March 10, 2004. In March of
2007, appellant filed a motion to vacate the default judgment. By judgment entry filed
March 12, 2007, the trial court denied the motion, finding the motion was untimely filed.
{¶7} On April 9, 2004, the Heintzelman Estate again filed a complaint against
appellant and Air Experts (Case No. 04CVH–04–233). A jury trial commenced on
February 28, 2005. The jury found in favor of the Heintzelman Estate, awarding the
estate $1,014,186.00 and Mrs. Heintzelman $2,650,000.00 on her emotional distress
claim. The award to Mrs. Heintzelman was subsequently reversed by this court. See,
Estate of Heintzelman v. Air Experts, Inc., Delaware App. No.2005–CAPE–08–0054,
2006–Ohio–4832, (hereinafter "Heintzelman I").
{¶8} On May 10, 2005, while the appeal was pending, the Heintzelman Estate
filed a supplemental complaint against appellee, claiming appellee must indemnify
appellant (Case No. 04CVH–04–233). Appellee filed a motion for summary judgment
on October 6, 2005, claiming in part that the Heintzelman Estate could not collaterally
attack the default judgment in favor of appellee and against appellant, and appellant
was not entitled to coverage under the insurance policy. The trial court stayed the case
pending the outcome of the appeal.
{¶9} On August 23, 2006, appellant filed a separate complaint against
appellee, claiming bad faith and fraudulent misrepresentation regarding coverage under Delaware County, Case No. 11CAE080077 4
the policy and over the default judgment in the declaratory judgment action (Case No.
06CVH–08–761). On December 15, 2006, appellee filed a motion to dismiss appellant's
complaint, claiming res judicata because of the declaratory judgment decision in Case
No. 03CVH12–0896. By judgment entry filed February 1, 2007, the trial court granted
the motion. On appeal, this court reversed, finding res judicata did not apply to the
specific claims made by appellant. Martel v. American Family Insurance Company,
Delaware App. No. 07CAE020012, 2007–Ohio–4819.
{¶10} Upon remand by this court in Heintzelman I, the trial court adjusted the
award for emotional distress to $0 (Case No. 04CVH–04–233). See, Judgment Entry
filed August 6, 2007. By separate entry filed August 6, 2007, the trial court granted
appellee's motion for summary judgment that had been stayed in Case No. 04CVH04–
0233, finding the Heintzelman Estate was bound by the default judgment rendered
against appellant in Case No. 03CVH12–0896. On appeal, this court reversed the trial
court's decision granting appellee's motion for summary judgment, finding the
Heintzelman Estate as a judgment creditor was not bound by the declaratory judgment
because appellee had initiated the declaratory judgment against its insured, appellant.
See, Estate of Heintzelman v. Air Experts, Inc., Delaware App. No. 07CAE090054,
2008–Ohio–4883, (hereinafter "Heintzelman II"). The Supreme Court of Ohio affirmed
the decision in Heintzelman II. See, Estate of Heintzelman v. Air Experts, Inc., 126
Ohio St.3d 138, 2010–Ohio–3264.
{¶11} On August 5, 2009, appellant filed the complaint which is the subject of
this appeal (Case No. 09CVH-08-1028) that was a refilling of Case No. 06CVH-08-761
which had alleged bad faith and fraudulent misrepresentation against appellee. The 06 Delaware County, Case No. 11CAE080077 5
case had been dismissed by the trial court under the doctrine of res judicata which this
court reversed. Martel v. American Family Insurance Company, Delaware App. No.
07CAE020012, 2007–Ohio–4819. On July 16, 2010, appellee filed a motion for
summary judgment, claiming appellant was not covered under the policy, res judicata,
and insufficient evidence to support his claims.
{¶12} Upon remand by this court in Heintzelman II, affirmed by the Supreme
Court of Ohio, the trial court entertained motions for summary judgment filed by the
Heintzelman Estate and appellee on the issue of insurance coverage on the wrongful
death award. By judgment entry filed April 29, 2011, the trial court denied the motion
filed by the Heintzelman Estate and granted appellee's motion, finding the subject
insurance policy was not in effect at the time of Mr. Heintzelman's death, appellee had
not waived its defense of no coverage, and the doctrine of estoppel did not apply. This
court affirmed the trial court's decision. Estate of Heintzelman v. Air Experts, Inc.,
Delaware App. No. 11CAE050043, 2011-Ohio-5242.
{¶13} On July 25, 2011, the trial court granted appellee summary judgment as
against appellant in the case sub judice, finding no bad faith or fraudulent
misrepresentation.
{¶14} Appellant filed an appeal and this matter is now before this court for
consideration. Assignment of error is as follows:
I
{¶15} "THE TRIAL COURT ERRED WHEN IT GRANTED AMERICAN
FAMILY'S MOTION FOR SUMMARY JUDGMENT ON THE BASIS THAT THE Delaware County, Case No. 11CAE080077 6
INSURANCE POLICY AMERICAN FAMILY ISSUED TO THOMAS MARTEL DID NOT
PROVIDE COVERAGE."
{¶16} Appellant claims the trial court erred in granting summary judgment to
appellee. We disagree.
{¶17} Summary Judgment motions are to be resolved in light of the dictates of
Civ.R. 56. Said rule was reaffirmed by the Supreme Court of Ohio in State ex rel.
Zimmerman v. Tompkins, 75 Ohio St.3d 447, 448, 1996-Ohio-211:
{¶18} "Civ.R. 56(C) provides that before summary judgment may be granted, it
must be determined that (1) no genuine issue as to any material fact remains to be
litigated, (2) the moving party is entitled to judgment as a matter of law, and (3) it
appears from the evidence that reasonable minds can come to but one conclusion, and
viewing such evidence most strongly in favor of the nonmoving party, that conclusion is
adverse to the party against whom the motion for summary judgment is made. State
ex. rel. Parsons v. Fleming (1994), 68 Ohio St.3d 509, 511, 628 N.E.2d 1377, 1379,
citing Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 4 O.O3d 466, 472,
364 N.E.2d 267, 274."
{¶19} As an appellate court reviewing summary judgment motions, we must
stand in the shoes of the trial court and review summary judgments on the same
standard and evidence as the trial court. Smiddy v. The Wedding Party, Inc. (1987), 30
Ohio St.3d 35. Delaware County, Case No. 11CAE080077 7
{¶20} Appellant argues four issues. The first and second issues concern the
coverage provisions under his American Family commercial liability insurance policy.
Appellant conceded the issue of coverage under the policy has been resolved by this
court in Estate of Heintzelman v. Air Experts, Inc. Delaware App. No. 11CAE050043,
2011-Ohio-5242. The remaining issues for consideration are the issues of bad faith and
fraudulent misrepresentation by appellee to appellant.
{¶21} "Bad Faith" "generally implies something more than bad judgment or
negligence. It imports a dishonest purpose, moral obliquity, conscience wrongdoing,
breach of a known duty through some ulterior motive, or ill will partaking of the nature of
fraud. It also embraces actual intent to mislead or deceive another." State v. Combs,
Delaware App. No. 03CA-C-12-073, 2004-Ohio-6574, ¶4. An action for fraudulent
misrepresentation requires proof of (1) a representation, (2) which is material to the
transaction at hand, (3) made falsely, with knowledge of its falsity, or with such utter
disregard and recklessness as to whether it is true or false that knowledge may be
inferred, (4) with the intent of misleading another into relying upon it, (5) justifiable
reliance upon the representation or concealment, and (6) a resulting injury proximately
caused by the reliance. Burr v. Stark County Board of Commissioners (1986), 23 Ohio
St.3d 69, 73.
{¶22} In its decision filed July 25, 2011, the trial court addressed the issues of
bad faith and fraudulent misrepresentation, finding no genuine issues of material fact:
{¶23} "Here, it has been determined that there was no coverage at the time of
Mr. Heintzelman's death; therefore, any bad faith claim against American Family cannot
survive. Accordingly, there is no question as to any material fact regarding the bad faith Delaware County, Case No. 11CAE080077 8
claims and American Family is entitled to judgment as a matter of law as to Count One
of the Plaintiff's complaint.
{¶24} "Second, the Plaintiff seeks to recover for fraudulent misrepresentation;
claiming that American Family made various representations to the Plaintiff that were
false regarding the Heintzelman case and the Plaintiff's insurance coverage. (Pl.'s
Compl. ¶28.) To establish a claim for fraudulent misrepresentation, the Plaintiff must
establish an actual or implied misrepresentation which is material to the transaction,
made with knowledge that the statement is false, with the intent to mislead another who
relies on the misrepresentation with resulting injury. Baker v. Stoner (1994), 70 Ohio
Misc.2d 42, 650 N.E.2d 1372.
{¶25} "The Plaintiff claims that he suffered damages exceeding $1,000,000.00
because American Family refused to pay the damages assessed against him. (Pl.'s
Compl. ¶29.) Again, the Court has established that American Family was not obligated
to pay any claims against the Plaintiff in the Heintzelman case because there was no
policy in effect at the time of Mr. Heintzelman's death. Accordingly, the Plaintiff has not
suffered any injury and has failed to establish the requisite elements for a fraudulent
misrepresentation claim. Therefore, there is no question as to any material fact
regarding the fraudulent misrepresentation claim and American Family is entitled to
judgment as a matter of law as to Count Two of the Plaintiff's complaint."
{¶26} The basis of the bad faith and fraudulent misrepresentations claims are
set forth in the August 5, 2009 complaint as follows:
{¶27} "This cases (sic) arises out of one of the most egregious examples of an
insurer's bad faith treatment of its insured imaginable. Defendant's bad faith includes (i) Delaware County, Case No. 11CAE080077 9
failing to inform its insured about a settlement offer within the insured's $500,000 policy
limits; (ii) fraudulently denying coverage by changing the wording of plaintiff's insurance
policy; (iii) sending plaintiff a reservation of rights letter that misrepresented the terms of
the insurance policy in an effort to avoid coverage; (iv) suing its own insured and failing
to advise the insured that the attorney appointed by the insurer would not be
representing him in the lawsuit; and (v) informing plaintiff that he did not need to take
any action in response to the complaint or defendant's motion seeking a Default
Judgment in order to obtain an uncontested Court Order declaring that plaintiff had no
insurance coverage for Mr. Heintzelman's death. As a result of defendant's unlawful
conduct, plaintiff is now subject to a seven figure Judgment that is far in excess of
plaintiff's personal assets. Plaintiff seeks compensatory and punitive damages due to
defendant's bad faith as well as his attorneys fees for prosecuting this action."
{¶28} In his August 19, 2010 memorandum in opposition to the motion for
summary judgment, appellant argued the following facts demonstrated bad faith and
fraudulent misrepresentation:
{¶29} "The bad faith in this case includes each of the following acts:
{¶30} "American Family failed to inform Mr. Martel of an inquiry into settling the
matter for the limits of his insurance policy;
{¶31} "American Family initially accepted coverage and later altered its position
by changing the language of its policy;
{¶32} "American Family sent Mr. Martel a Reservation of Rights letter
misrepresenting the terms of the policy six months after informing him he had coverage; Delaware County, Case No. 11CAE080077 10
{¶33} "American Family sued Mr. Martel seeking to vitiate coverage and failed to
inform Mr. Martel that he needed to seek independent legal advice in connection with
the lawsuit; and
{¶34} "American Family advised Mr. Martel that he did not need to respond to
the lawsuit and that it would have no impact on him leading to a Default Judgment
against Mr. Martel.
{¶35} "As a result of American Family's bad faith, Mr. Martel has been staring
down the barrel of a seven figure Judgment for the past five years."
{¶36} The reservation of rights letter dated June 30, 2003 included the following
language:
{¶37} "This letter is to advise you that there exists a dispute between you and
American Family Insurance Company as to whether the Company can provide liability,
or other protection to you for the above indicated incident. The Plaintiffs in this case are
alleging that a loss occurred on July 1, 2002. Your policy was effective from May 18,
1999 to May 18, 2000. It does not appear that your policy was in effect on the date of
the alleged loss. As such, the loss would not be covered under your policy.
{¶38} "***
{¶39} "We are bringing these matters to your attention at this time and wish to
further advise that in American Family Insurance Company's investigation of this matter
and any claims arising from it, in the negotiation or settlement of any such claims, in
defending any lawsuit against you or others or against American Family Insurance
Company, or in taking any other action with regard to the complaint of The Estate of
Jeffrey K. Heintzelman, American Family Insurance Company reserves the right to Delaware County, Case No. 11CAE080077 11
assert any and all defenses it may have as to the coverage afforded to you, if any,
under policy number 34X-03305-01-0000. By taking these actions or refraining from
any such action, American Family Insurance Company does not waive any of its rights
under the policy nor does it admit any obligation to defend any lawsuit against you or
pay any claim or judgment arising from this incident."
{¶40} Prior to this reservation of rights letter, a letter dated January 22, 2003
was sent to appellant indicating a law firm was engaged to represent him:
{¶41} "We have retained Mark Maddox, Attorney, Frost & Maddox, 400 South
Fifth Street, Ste. 301, Columbus, OH 43215, with telephone number (614) 224-0933 to
represent you in the above-referenced lawsuit. This was done pursuant to your
American Family Insurance Company of Ohio policy of insurance.
{¶42} "***
{¶43} "I am writing you to advise you of this personal exposure which you may
have. You may obtain another attorney at your own expense to assist you in this
litigation. Mark Maddox and their firm mentioned above will continue to represent you
and we will pay their attorney fees."
{¶44} Appellee had filed a declaratory judgment action relative to the coverage
available under the policy (Case No. 03CVH–12–896). Appellant did not respond and
default judgment was granted on March 10, 2004. In March of 2007, appellant filed a
motion to vacate the default judgment. By judgment entry filed March 12, 2007, the trial
court denied the motion, finding the motion was untimely filed. . Delaware County, Case No. 11CAE080077 12
{¶45} Appellant appears to argue that a "default" on a declaratory judgment
action is not a decision on the merits. Even in default, a trial court is required to
consider the issues and therefore a determination on such is a decision on the merits:
{¶46} "Subject to division (B) of this section, courts of record may declare rights,
status, and other legal relations whether or not further relief is or could be claimed. No
action or proceeding is open to objection on the ground that a declaratory judgment or
decree is prayed for under this chapter. The declaration may be either affirmative or
negative in form and effect. The declaration has the effect of a final judgment or
decree." R.C. 2721.02(A).
{¶47} The 2004 motion for default judgment argued appellee had no duty to
indemnify appellant in the Heintzelman case and gave reasons in support. See, March
4, 2004 Motion for Default Judgment attached to Plaintiff's August 5, 2009 Complaint as
Exhibit D. The judgment entry granting the default judgment specifically found appellee
had no duty to indemnify appellant in the Heintzelman case pursuant to the terms in the
policy. See, March 10, 2004 Default Judgment Entry attached to Plaintiff's August 5,
2009 Complaint as Exhibit E.
{¶48} Appellant also argues he was led to believe there was coverage under the
policy because appellee provided him with an attorney in the tort case, he was not
informed that the attorney would not be representing him in the declaratory judgment
action, he was misinformed about the consequences of the default judgment in the
declaratory judgment action, and he was not informed about mediation and/or any
possible settlement in the tort case. Delaware County, Case No. 11CAE080077 13
{¶49} In his deposition, appellant stated that very early on in the tort action, he
was informed personally and in writing that although there was no coverage, appellee
would provide him with an attorney to defend himself. Martel depo. at 56, 59-60. When
appellant received the declaratory judgment complaint or the motion for default
judgment, he contacted the attorney provided by appellee and was told to contact
American Family as he had nothing to do with the declaratory judgment action. Id. at
60, 63. Appellant was assured by American Family that the declaratory judgment action
would not affect the representation being provided in the tort case. Id. at 60-61.
{¶50} Appellant reaffirmed that regardless of the declaratory judgment action, it
was his understanding that there was no coverage:
{¶51} "Q. From the very first time that you had any communications at all with
American Family either in writing or on the phone, was their position pretty consistent
that they did not believe that you had any coverage under your policy but despite that,
they were going to continue to have Scott Norman continue to defend you in the
lawsuit?
{¶52} "A. Yes. Initially I was told that I was covered very, very, very way back in
the beginning and then it was changed so pretty much from, I will say, week two I knew
that they are not paying any money but they are going to pay for the attorney.
{¶53} "***
{¶54} "Q. All you can recall is that, whether it be this letter or something else,
you recall getting a letter from American Family saying they were denying coverage or
disputing coverage for the loss but they would still have a lawyer defend you; is that
correct? Delaware County, Case No. 11CAE080077 14
{¶55} "A. I remember being notified. I don't know if it was a letter or phone
conversation. I couldn't tell you that. I just remember being - - knowing that they
weren't picking up any - - any money if we lost or whatever.
{¶56} "***
{¶57} "Q. Did you have any dispute with their taking that position? Did you ever
disagree with them when they told you that that was their position?
{¶58} "A. I mean, no, if I did, I would have probably even have done something
about it, but no." Id. at 68, 72, 79-80, respectively.
{¶59} Appellant admitted to getting served the declaratory judgment action and
just throwing it in a pile of papers, and did not take any action until he received the
motion for default judgment and then he called the attorney representing him in the tort
action. Id. at 74, 76. When appellant became aware that the attorney could not
represent him in the declaratory judgment action, he called American Family who told
him not to worry, they would still provide him with counsel for his tort case. Id. at 60-61,
63-64. Appellant did not consult with anyone else about the motion for default
judgment. Id. at 65.
{¶60} A mediation was held in the tort action of which appellant had no
recollection, but he freely admitted he was never in a position to make any kind of
settlement in the case. Id. at 83-85.
{¶61} Regardless of appellant's lack of specific recall relative to the declaratory
judgment action and what he should do, it is law of the case that there was no coverage
under the American Family commercial liability policy. Estate of Heintzelman v. Air
Experts, Inc., Delaware App. No. 11CAE050043, 2011-Ohio-5242. Delaware County, Case No. 11CAE080077 15
{¶62} Appellant freely admitted he understood very early on and throughout the
underlying case that there was no coverage and American Family would just pay for an
attorney to defend him. Further, appellant admitted there was no way he was financially
able to participate in any settlement of the tort action.
{¶63} Based upon these undisputed facts, we conclude the trial court was
correct in granting summary judgment to appellee on the bad faith and fraudulent
representation claims.
{¶64} The sole assignment of error is denied.
{¶65} The judgment of the Court of Common Pleas of Delaware County, Ohio is
hereby affirmed.
By Farmer, J.
Delaney, P.J. and
Hoffman, J. concur.
s/ Sheila G. Farmer_____________
s/ Patricia A. Delaney_____________
s/ William B. Hoffman_____________
JUDGES Delaware County, Case No. 11CAE080077 16
SGF/sg 305 [Cite as Martel vs. Am. Family Ins. Co., 2012-Ohio-1486.]
IN THE COURT OF APPEALS FOR DELAWARE COUNTY, OHIO
FIFTH APPELLATE DISTRICT
THOMAS MARTEL : : Plaintiff-Appellant : : -vs- : JUDGMENT ENTRY : AMERICAN FAMILY INSURANCE : COMPANY : : Defendant-Appellee : CASE NO. 11CAE080077
For the reasons stated in our accompanying Memorandum-Opinion, the
judgment of the Court of Common Pleas of Delaware County, Ohio is affirmed. Costs to
appellant.
JUDGES