Walker v. Albers Ins. Agency

2019 Ohio 1316

• Court: Ohio Court of Appeals
• Decided: April 10, 2019
• Docket: C-180207
• Status: Published

Opinion

[Cite as Walker v. Albers Ins. Agency, 2019-Ohio-1316.] IN THE COURT OF APPEALS FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO

JACQUELINE WALKER, on behalf of : APPEAL NO. C-180207 the Estate of Delores Walker, TRIAL NO. A-1701696 : and : O P I N I O N. JACQUELINE WALKER, individually, : Plaintiffs-Appellants, : vs. : ALBERS INSURANCE AGENCY, : Defendant, : and : WEST AMERICAN INSURANCE COMPANY, :

and :

LIBERTY MUTUAL INSURANCE : COMPANY, : Defendants-Appellees. :

Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Affirmed

Date of Judgment Entry on Appeal: April 10, 2019

The Moore Law Firm and Ginger S. Bock, Katzman Logan Halper & Bennett and Steven D. Halper, for Plaintiffs-Appellants, OHIO FIRST DISTRICT COURT OF APPEALS

Frost Brown Todd LLC, William H. Harter and Erin E. Orndorff, for Defendants- Appellees.

BERGERON, Presiding Judge.

{¶1} This insurance dispute turns on a question of timing. After a homeowner

passed away, her sister (and heir) distributed the assets (including interests in the home)

and closed the estate. This occurred—unfortunately for the sister—less than two weeks

before a fire severely damaged the home. Under the insurance policy, this timing mattered

because it meant that neither the decedent nor her heirs at that point qualified as an

“insured” in the parlance of the policy. For that reason, the insurer correctly denied

coverage, and we accordingly affirm the trial court’s grant of summary judgment.

I.

{¶2} This claim originates with a family home. Jacqueline Walker, the appellant,

grew up in this home along with her siblings. After their father passed away, the ownership

of this home transferred to Ms. Walker and her siblings. Eventually, Ms. Walker’s sister,

Delores Walker, came to occupy the home. In 2000, Delores (we will use first names to

avoid confusion) sought the assistance of Albers Insurance Agency (“Albers”) to procure

insurance coverage for the home. West American Insurance Company (“West American”),

affiliated with Liberty Mutual Insurance Company (“Liberty Mutual”), issued the policy,

which identified only Delores as a named insured.

{¶3} On October 27, 2013, Dolores passed away. The next day Jacqueline called

and informed Albers of her sister’s death. Jacqueline inquired if there was anything

additional that needed to be done regarding insurance coverage for the house. An agent for

Albers responded that the house’s coverage was paid until the end of the policy period in

May of 2014, and that nothing else needed to be done at that time. Jacqueline had no direct

communications with West American or Liberty Mutual.

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{¶4} Delores died intestate, and Jacqueline subsequently initiated the probate

process for her sister’s estate. The estate was relatively simple, with no substantial assets

other than the house. The probate court accordingly appointed Jacqueline as the

commissioner of her sister’s estate on December 5, 2013, and relieved the estate from

administration. The appointing documents, among other things, authorized Jacqueline to

“receive and sell or distribute the personal property or proceeds thereof” and to effectuate

the transfer of the real property. After completing this process, Jacqueline was to report

back to the probate court. On January 13, 2o14, she did just that. Her report demonstrated

that the assets of the estate, including the interests in the home, had been distributed, and

the probate court approved that report on the same day. This action closed the estate of

Delores Walker because, at that point, nothing remained to be done from the vantage point

of estate administration.

{¶5} Less than two weeks later, in an unfortunate turn of events, a fire severely

damaged the home. After submission of a claim on the insurance policy, West American

proceeded to investigate the loss and ultimately denied coverage. West American’s denial

letter explained that, at the time of the fire, Delores’s estate no longer had an insurable

interest in the property and so no coverage extended to the loss. The denial of coverage

letter emphasized several provisions of the insurance policy itself.

{¶6} Of central relevance to this appeal, West American featured the provisions of

the policy dealing with death of the named insured (here, Delores). That section provides

that, upon the death of the named insured, “We insure the legal representative of the

deceased but only with respect to the premises and property of the deceased covered under

the policy at the time of death[.]” The parties do not dispute that, at least for some period of

time, Jacqueline served as the “legal representative” of the estate in accordance with this

provision.

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{¶7} But they agree on little else, and that ultimately led to this lawsuit, in which

Jacqueline sued Albers, West American, and Liberty Mutual, alleging, among other things,

breach-of-contract, negligent-misrepresentation, and bad-faith claims. All of the defendants

eventually moved for summary judgment on the claims against them, which the trial court

granted in part.

{¶8} The court granted summary judgment in favor of the insurers, finding that no

genuine issue of material fact existed because, at the time of the fire, neither Delores nor her

estate owned the home. But with respect to Albers, the court denied summary judgment

based on questions surrounding the statements made by the agency to Jacqueline regarding

coverage after her sister’s death. Nevertheless, Jacqueline subsequently dismissed her

claims against Albers with prejudice. On appeal, Jacqueline frames a single assignment of

error challenging the trial court’s grant of summary judgment in favor of West American

and Liberty Mutual.

II.

{¶9} In her sole assignment of error, Jacqueline maintains that various disputes of

fact precluded summary judgment, highlighting the agency relationship between Albers and

West American, the breach-of-contract claim, Liberty Mutual’s liability for its participation

in the coverage denial, and the alleged bad-faith denial of the claim. We, of course, review

the grant of summary judgment de novo, construing the evidence in the light most favorable

to the nonmoving party. See, e.g., Hooten v. Safe Auto Ins. Co., 1st Dist. Hamilton No. C-

990684, 2000 WL 640260, *1 (May 19, 2000).

A.

{¶10} We first consider the breach-of-contract claim, which requires a foray into

probate law and insurance policy interpretation guidance. We begin, as we must, with the

language of the policy and the relevant provisions. Everyone agrees that the “named

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insured” identified on the declarations page is Delores Walker. The policy defines “insured”

to mean “you” (i.e., the named insured) and “residents of your household” who are “your

relatives” or certain other dependents. The policy then covers “the dwelling on the

‘residence premises’ shown in the Declarations,” which is the house that succumbed to the

fire. Included within that coverage is certain personal property “owned or used by an

‘insured’ while it is anywhere in the world,” as well as personal property owned by “[o]thers

while the property is on the part of the ‘residence premises’ occupied by an insured.”

{¶11} That tells us who is covered and the breadth of that coverage, but it begs the

question of what happens when the named insured passes away during the life of the policy.

The “Death” provision supplies the answer. It explains that the term “insured”

encompasses: (a) “[a]n ‘insured’ who is a member of your household at the time of your

death, but only while a resident of the ‘resident premises’ ” and (b) “[w]ith respect to your

property, the person having proper temporary custody of the property until appointment

and qualification of a legal representative.” The latter provision recognizes that, before the

probate process gets underway, someone may have temporary custody of the property, and

if so, that person qualifies as an “insured” under the policy.

{¶12} Once the probate (or other similar) process commences, it triggers the

following provision: “We insure the legal representative of the deceased but only with

respect to the premises and property of the deceased covered under the policy at the time of

death * * *.” The language of the policy thus focuses our attention on a specific moment (the

time of the loss) to determine the availability and scope of coverage.

{¶13} That date for us is January 23, 2014, the date of the fire. Thus, we must

determine whether Jacqueline qualified as a “legal representative” at the time that this loss

occurred because she did not live in the household at the time of Delores’s death.

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{¶14} Jacqueline suggests that the policy is ambiguous because it does not define

“legal representative,” and indeed, the policy stands strangely silent on that point. But we

fail to view that silence as ambiguity, particularly when everyone here agrees that when the

probate court appointed Jacqueline as commissioner of her sister’s estate, she constituted a

“legal representative” under the policy.

{¶15} Her appointment took effect on December 5, 2013, and it obligated her to

“receive and sell or distribute the personal property or proceeds thereof” and to “complete

these duties and report to the Court within sixty days of the date of this entry.” By separate

document, the probate court also on December 5 effectuated a “Certificate of Transfer” that

memorialized the transfer of the real property to Delores’s heirs.

{¶16} By January 13, 2014, Jacqueline reported back to the probate court with the

“Report of Distribution” of the estate, memorializing the distribution of the personal

property. By a judgment entry of the same date, the probate court approved the report,

drawing the probate proceedings to a close. Generally, once the final accounting and

distribution of the estate is approved, the estate is closed and the administrator is

discharged. See Beck v. Schmidt, 38 Ohio App. 476, 478-79, 176 N.E. 595 (3d Dist.1930)

(administratrix “discharged of her trust” after she distributed assets with court approval

before the time allotted for the task); see also In re Estate of Hudson, 82 Ohio App.3d 422,

424, 612 N.E.2d 506 (5th Dist.1993) (probate court “closed the estate” after approval of the

“final accounting”). Overlaying Ohio probate law with the terms of the policy, Jacqueline

ceased being a “legal representative” of Delores’s estate after January 13.1

{¶17} The Georgia Court of Appeals confronted a very similar scenario as it

interpreted identical policy language. See Higdon v. Georgia Farm Bur. Mut. Ins. Co., 204

1 Both parties get somewhat sidetracked in debating whether Jacqueline had an “insurable interest” in the home. She certainly had an interest capable of insuring—but that is not the question before us. Instead, we must determine who the policy defines as the “insured.” 6 OHIO FIRST DISTRICT COURT OF APPEALS

Ga.App. 192, 419 S.E.2d 80 (1992). Like this case, the insured owned a house and then

passed away. The policy provided that if the insured died, “we insure the legal

representative of the deceased but only with respect to the premises and property of the

deceased covered under the policy at the time of death.” Id. at 81. After the insured died in

August 1989, his sons agreed to the disposition of the property in the estate and the house

was transferred by deed to one of the sons in October (a transaction recorded a month

thereafter). A fire swept through and destroyed the house in December 1989, prompting the

deceased insured’s sons to file an insurance claim.

{¶18} Although the sons tried to broaden the interpretation of “legal representative

of the estate,” the Georgia Court of Appeals persuasively determined that at the time of the

fire, “there was no legal representative of the testator.” Id. Because the deed had been

executed and transferred at the time of the loss, and because the sons did not obtain written

consent of the insurer to assign the policy, no “insured” existed per the terms of the policy.

{¶19} The Georgia Court of Appeals acknowledged, as do we, the apparent

harshness of this result. Id. at 82. In this case, had Jacqueline waited another two weeks

before transferring assets and closing the estate, she would have been the “legal

representative” of the estate and the loss would have been covered. The insurers here

acknowledge as much.

{¶20} But our duty is to construe the policy language as written, in light of the

undisputed facts. Insurance policies must be interpreted by the same rules applied to

contract interpretation generally. World Harvest Church v. Grange Mut. Cas. Co., 148

Ohio St.3d 11, 2016-Ohio-2913, 68 N.E.3d 738, ¶ 28. We examine the policy in its entirety

and presume that the language therein represents the intentions of the parties. Id. Where

the language is clear, we cannot expand the language of the insurance policy to include

coverage that falls beyond the intent of the parties to the policy. Lovewell v. Physicians Ins.

7 OHIO FIRST DISTRICT COURT OF APPEALS

Co. of Ohio, 79 Ohio St.3d 143, 147, 679 N.E.2d 1119 (1997). Here the language of the policy

only extends coverage to Delores and the legal representative of her estate. We cannot now

expand the concept of “legal representative” simply because the equities tug us in that

direction.

{¶21} Beyond the real property, Jacqueline also claims Western American breached

by refusing to cover Delores’s personal property destroyed in the fire. Even if there were

personal property to be distributed after January 13 (and the probate documents evidence

no such property), this also was not covered at the time of the fire, largely for the reasons

explained above. Jacqueline’s submission of the final report of distribution, and the probate

court’s approval of that, wrapped up the estate at that point. Part of Jacqueline’s duties as

the commissioner, per the probate documents, was to “receive and sell or distribute the

personal property or proceeds thereof.” If she had not completed that task, she should not

have submitted the report. Moreover, Jacqueline fails to identify what undistributed

personal property she believes existed at the time of the fire. We cannot speculate that

certain personal property existed in order to extend the duration of her “legal

representative” status when that stands at odds with the documentation that she submitted

to the probate court.

{¶22} Looking at this timeline of events, the loss to all of the property, both personal

and real, occurred after Dolores Walker’s death, after her sister probated her estate, after

the assets were distributed, and after the estate closed. While the timing of these events is

certainly unfortunate from Jacqueline’s perspective, the policy’s coverage of Delores’s

interest in her real and personal property was extinguished by the time that the fire

occurred.

{¶23} Our conclusion on the breach-of-contract question effectively resolves two

subsidiary issues—liability for Liberty Mutual and the claim of bad faith. Liberty Mutual

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cannot be held liable for breaching the insurance policy since we concluded that no breach

occurred. Likewise, the contractual analysis precludes a finding that the insurers acted in

bad faith. In Ohio, an insurer fails to exercise good faith when processing an insurance

claim when the refusal to pay the claim is not based on any circumstances that reasonably

justify the denial. Zoppo v. Homestead Ins. Co., 71 Ohio St.3d 552, 554, 644 N.E.2d 397

(1994). Here, the undisputed record establishes a deliberate investigation into the incident,

coupled with advice of counsel, and an appropriate analysis of the policy language.

Ultimately, the insurers reached an interpretation of the policy that we uphold today. That

is certainly not bad faith.

B.

{¶24} Finally, Jacqueline insists that summary judgment was improperly granted as

to her negligent-misrepresentation claims, the genesis of which is her phone call with Albers

in the wake of Delores’s death. In that call, according to Jacqueline, a representative of

Albers told her that the house was insured “until May of 2014. I also asked her at that time

if any changes needed to be made to the policy because my sister is now deceased, and I was

told no. If any changes needed to be made, they would be made after May 2014, when I

would have to renew the policy.”

{¶25} We see two fundamental problems with this statement as a basis for a

negligent-misrepresentation claim. First, Jacqueline never had any direct communication

with the insurers regarding the coverage for the house. Negligent misrepresentation

requires, among other things, that a party supply false information to another. Phelps v.

PNC Bank, 1st Dist. Hamilton No. C-000518, 2001 WL 992081, *6 (Aug. 31, 2001). Since

the insurers did not directly convey information to Jacqueline, they could not have

committed some form of misrepresentation. For that reason, Jacqueline advances an

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agency theory to vicariously hold West American and Liberty Mutual liable for statements

that Albers made regarding the policy coverage after Delores’s death.

{¶26} Assuming that Albers constituted the insurers’ agent for this purpose,

however, Jacqueline’s dismissal of Albers with prejudice now precludes a finding of

negligence on the part of the alleged principal. A principal can generally only be held liable

for the acts of its agent when the agent itself can be held liable. See, e.g., Losito v. Kruse, 136

Ohio St. 183, 188, 24 N.E.2d 705 (1940) (“A settlement with and release of the servant will

exonerate the master.”); Comer v. Risko, 106 Ohio St.3d 185, 2005-Ohio-4559, 833 N.E.2d

712, ¶ 21 (extinguishment of primary liability, through settlement or judgment, bars

secondary liability); Natl. Union Fire Ins. Co. of Pittsburgh, PA v. Wuerth, 122 Ohio St.3d

594, 2009-Ohio-3601, 913 N.E.2d 939, ¶ 22 (“[A] principal is vicariously liable only when an

agent could be held directly liable.”). This is because vicarious liability flows through the

agent and to the principal; no liability of a principal can be found without direct liability of

the agent. It follows then, that where Albers can no longer be held directly liable, neither

West American nor Liberty Mutual can be found vicariously liable for its actions. Thus,

summary judgment was appropriate when the insurers made no direct statements (false or

otherwise) to Jacqueline and where she has dismissed all claims against Albers.

{¶27} Second, we do not see how the communication as conveyed by Jacqueline

constitutes a misrepresentation. The statement at the time was perfectly true—the agent

had no way of knowing that Jacqueline would be appointed by the probate court and

complete her duties before May 2014. More to the point, the agent never purports to

interpret the “Death” provision of the policy, nor did she lead Jacqueline astray in this

regard. To be sure, the conversation could have been more complete, but the absence of

elaboration fails to transform this discussion into a misrepresentation.

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{¶28} For all of the foregoing reasons, we conclude that the trial court properly

granted summary judgment, and we therefore overrule the sole assignment of error and

affirm the judgment of the trial court.

Judgment affirmed.

CROUSE and WINKLER, JJ. concur.

Please note: The court has recorded its own entry on the date of the release of this opinion.