Equity Diamond Brokers v. Transnational

• Decision Date: 07 March 2003
• Docket Number: No. C-010554.,C-010554.
• Citation: 785 N.E.2d 816,2003 Ohio 1024,151 Ohio App.3d 747
• Parties: EQUITY DIAMOND BROKERS, INC., Appellant, v. TRANSNATIONAL INSURANCE COMPANY et al., Appellees.<SMALL><SUP>*</SUP></SMALL>
• Court: Ohio Court of Appeals

Page 816

785 N.E.2d 816

151 Ohio App.3d 747

2003 Ohio 1024

EQUITY DIAMOND BROKERS, INC., Appellant, v. TRANSNATIONAL INSURANCE COMPANY et al., Appellees.^*

No. C-010554.

Court of Appeals of Ohio, First District, Hamilton County.

Decided March 7, 2003.

Robert G. Kelly, for appellant.

Traub, Eglin, Lieberman, Straus and Stephen D. Straus; and Freund, Freeze & Arnold and Mark A. MacDonald, Hamilton, for appellee Transnational Insurance Company.

Schroeder, Maundrell, Barbiere & Powers and William P. Schroeder, Cincinnati, for appellee International Jewelers Block & Fine Arts Insurance Services, Inc.

Deters, Benzinger & LaVelle, P.S.C., and William J. Moran Jr., Cincinnati, for appellee E. Kinker & Company, d.b.a. Kinker-Eveleigh Insurance Agency.

DOAN, Presiding Judge.

{¶ 1} Plaintiff-appellant, Equity Diamond Brokers, Inc. ("EDB"), is a retail and wholesale jeweler. It filed suit against defendants-appellees, Transnational Insurance Company ("Transnational"), International Jewelers Block & Fine Arts Insurance Services ("IJB"), and E. Kinker & Company, d.b.a. Kinker-Eveleigh Insurance Agency ("Kinker"). It sought insurance coverage and/or damages for the failure to provide insurance related to the theft of jewelry from Brian Higgins, one of EDB's salespersons. The trial court granted appellees' motions for summary judgment and overruled EDB's motion.

{¶ 2} The record shows that on November 10, 1998, Higgins was driving through Georgia while returning from a sales trip when he decided to stop at a restaurant to eat. He pulled into the restaurant's parking lot and parked directly in front of the restaurant. He left three nylon bags containing trays of jewelry in the back seat of his Dodge Durango. He ate at a table by the restaurant's front windows so that he could see his SUV at all times.

{¶ 3} After eating, Higgins walked to the front of the restaurant to pay his check. He stated that he could see his vehicle as he approached the cashier's desk. After he paid for his meal with a credit card, an unidentified person told him that he had dropped some money. He became suspicious because he knew that he had not dropped any money, so he ran out to the parking lot where he saw a white minivan sitting perpendicular to his SUV. He ran after the minivan and unsuccessfully tried to smash out its window, and the van sped out of the parking lot. Then Higgins noticed that his rear driver's side window had been "punched out" and that his bags of jewelry were gone.

{¶ 4} At the time of the robbery, EDB was covered by a jeweler's block insurance policy that was issued by Commercial Underwriters Insurance Company ("CUIC"). It contained an unattended-vehicle exclusion. The policy provided that it insured against all risks of loss or damage to the insured property except "[l]oss or damage to property while in or upon any Automobile, Motorcycle or any other vehicle unless, at the time of loss or damage occurs, there is actually in or upon such vehicle, the Insured, or a Permanent Employee of the Insured, or a person whose sole duty is to attend the vehicle, except as may be endorsed hereon." Coverage was ultimately denied based on this exclusion because Higgins was not "actually in or upon" the automobile at the time of the robbery.

{¶ 5} EDB did not receive the actual written policy until a few days after the robbery. In June 1998, Edward Lane, co-founder and president of EDB, had discussed insurance coverage for July 1998 through July 1999 with EDB's insurance agent, Richard Lonneman, who worked for Kinker. He met at the same time every year with Lonneman, who explained coverage and exclusions before any policies were issued. EDB frequently did not receive the policies themselves until several months later.

{¶ 6} Lane specifically declined the expensive unattended-vehicle coverage because it was company policy that vehicles should not be left unattended. In fact, the insurance polices issued to EDB in previous years had all contained unattended-vehicle exclusions with language similar to the policy issued by CUIC in 1998. Higgins testified that it was his understanding and an unwritten company policy that a vehicle was not unattended as long as it was in the salesperson's sight.

{¶ 7} After the June 1998 meeting, Lonneman contacted Brian McCluskey of IJB, a broker specializing in insurance for jewelers. IJB obtained a binder from Transnational and notified Lonneman that EDB's coverage was bound with Transnational effective July 1, 1998, through June 30, 1999. Lonneman forwarded the binder to EDB and notified EDB that Transnational was issuing the insurance policy.

{¶ 8} Transnational, however, was not licensed to do business in Ohio. Some confusion existed over whether Transnational would actually issue the policy, and numerous communications occurred between IJB and Transnational in July and August 1998, all without EDB's knowledge. Eventually, though, Transnational entered into a "fronting" arrangement with CUIC, which was licensed to do business in Ohio. Under that arrangement, CUIC issued the jeweler's block policy. Transnational and CUIC entered into a reinsurance agreement in which all of CUIC's liability under the jeweler's block policy issued to EDB was reinsured by Transnational. Under this agreement, Transnational was required to fully reimburse and hold CUIC harmless for any covered claims that may have arisen under the policy CUIC issued to EDB. After the robbery, Transnational never claimed that the binder was not valid or stated that it was not obligated to provide insurance coverage to EDB. The sole reason coverage was denied was the unattended-vehicle exclusion.

{¶ 9} In this appeal, EDB presents three assignments of error for review, which we address out of order. EDB does not raise the central issue in the case, which is the validity of the unattended-vehicle exclusion, until its third assignment of error. In that assignment of error, it argues that the phrase "actually in or upon" the vehicle is ambiguous and therefore must be construed in its favor. It also argues that because appellees were not properly licensed in Ohio to issue jeweler's block insurance, the exclusionary clause was not enforceable by the insurer. This assignment of error is not well taken.

{¶ 10} An insurance policy is a contract, and the relationship between the insurer and the insured is purely contractual in nature. Nationwide Mut. Ins. Co. v. Marsh (1984), 15 Ohio St.3d 107, 109, 15 OBR 261, 472 N.E.2d 1061. The interpretation and construction of insurance policies is a matter of law to be determined by the court using rules of construction and interpretation applicable to contracts generally. Gomolka v. State Auto. Mut. Ins. Co. (1982), 70 Ohio St.2d 166, 167-168, 24 O.O.3d 274, 436 N.E.2d 1347. In insurance polices, as in other contracts, courts should give words and phrases their plain and ordinary meaning unless something in the contract indicates a contrary intention. Olmstead v. Lumbermens Mut. Ins. Co. (1970), 22 Ohio St.2d 212, 216, 51 O.O.2d 285, 259 N.E.2d 123; Nationwide Ins. Co. v. Tobler (1992), 80 Ohio App.3d 560, 564, 609 N.E.2d 1318.

{¶ 11} Where an insurance policy's provisions are clear and unambiguous, courts must apply the terms as written and may not enlarge the contract by implication to embrace an object distinct from that contemplated by the parties. Gomolka, supra, at 168, 24 O.O.3d 274, 436 N.E.2d 1347; Bowling v. St. Paul Fire & Marine Ins. Co., 149 Ohio App.3d 290, 2002-Ohio-4933, 776 N.E.2d 1175, at 1115; Tobler, supra, at 564, 609 N.E.2d 1318. However, where the provisions of an insurance policy are reasonably susceptible of more than one interpretation, courts must construe them strictly against the insurer and liberally in favor of the insured. King v. Nationwide Ins. Co. (1988), 35 Ohio St.3d 208, 519 N.E.2d 1380, syllabus; Bowling, supra, at ¶ 15.

{¶ 12} At issue in this case is the interpretation of the phrase "actually in or upon the vehicle" contained in the unattended-vehicle exclusion. EDB relies upon Gottlieb & Sons, Inc. v. Hanover Ins. Co. (Apr. 21, 1994), 4th Dist. No. 64559, 1994 WL 144539, which is the only Ohio case we can find on the issue. In that case, the theft occurred when the employee had left jewelry in the trunk of his car while he briefly went into a hotel to inquire about a room. The court held that the phrase "in or upon the vehicle" in the unattended-vehicle exclusion was ambiguous. Therefore, it reversed the trial court's granting of summary judgment to the insurer. It remanded the case to the trial court to determine whether the employee "was within a reasonable geographic perimeter around the vehicle and had some reasonable relationship with the vehicle at the time the theft occurred."

{¶ 13} We disagree with the reasoning of Gottlieb. Most cases interpreting similar policy language have found the phrase "in or upon the vehicle" to be unambiguous. See Annotation, Construction and Effect of "Jeweler's Block" Policies or Provisions Contained Therein (1994), 22 A.L.R.5th 579; Couch on Insurance (3d Ed.2003), Section 154:74. Based on exclusions with nearly identical language, courts have consistently "denied coverage to insureds who were not literally in or upon their vehicles at the time of the losses, even though the insureds may have been only a short distance away from the vehicle, watching the vehicle, or absent from the vehicle for only a short period of time." Am. Stone Diamond, Inc. v. Lloyds of London (S.D.Tex.1996), 934 F.Supp. 839, 843. Accord Thomas Noe, Inc. v. Homestead Ins. Co. (C.A.6, 1999), 173 F.3d 581; Jerome I. Silverman, Inc. v. Lloyd's Underwriters, Inc. (S.D.N.Y.1976), 422 F.Supp. 89; Revesz v. Excess Ins. Co. (1973), 30 Cal.App.3d 125, 106 Cal.Rptr. 166; Williams v. Fallaize Ins. Agency, Inc. (1996), 220 Ga.App. 411, 469 S.E.2d 752; Phil G. Ruvelson, Inc. v. St. Paul Fire & Marine Ins. Co. (1951), 235 Minn. 243, 50 N.W.2d 629; ...