Hoskins v. Liberty Mutual Group, Inc.

• Decision Date: 01 July 2021
• Docket Number: 2:19-cv-5441
• Parties: CARLA HOSKINS, et al., Plaintiffs, v. LIBERTY MUTUAL GROUP, INC., Defendant.
• Court: U.S. District Court — Southern District of Ohio

CARLA HOSKINS, et al., Plaintiffs, v. LIBERTY MUTUAL GROUP, INC., Defendant.

No. 2:19-cv-5441

United States District Court, S.D. Ohio, Eastern Division

July 1, 2021

Kimberly A. Jolson Magistrate Judge

OPINION AND ORDER

SARAH D. MORRISON UNITED STATES DISTRICT JUDGE

Currently pending before the Court are two motions in this insurance coverage dispute.First is DefendantLiberty Mutual Insurance Company's^[1]Motion for Summary Judgment on all claims of PlaintiffsCarla Hoskins and Ray Bloodwyn.(ECF No. 16).Plaintiffs responded to that Motion and filed their own Cross Motion for Summary Judgment on Liability Only for All Claims in Plaintiffs' Complaint as well as on Liberty's Counterclaim for declaratory judgment.(ECF No. 21).Liberty then filed a combined Reply in Support of its Motion and Memorandum in Opposition to Plaintiffs' Cross-Motion.(ECF No. 22).Both Motions became ripe for consideration when Plaintiffs filed their Reply in Support of their Cross-Motion.(ECF No. 23).

I.STATEMENT OF THE FACTS

PlaintiffsCarla Hoskins and Ray Bloodwyn, along with non-partyLarry Hoskins, co-own the property located at 7452County Road 121 in Fredericktown, Ohio (the “Property”).(ECFNo 21-1, HoskinsDecl. ¶¶ 2, 3, PageID 432;ECFNo. 21-2, BloodwynDecl. ¶¶ 2, 3, PageID 435).At all times relevant to this case, Mr. Bloodwyn lived at the Property.(ECFNo. 21-2, BloodwynDecl. ¶ 4, PageID 436).The Property was destroyed by a fire on December 9, 2016.(ECFNo. 21-1, HoskinsDecl. ¶ 18, PageID 432).

A.The Insurance Policies

An application for homeowner's insurance was made to Liberty identifying Carla Hoskins as the insured in October 2014(“the 2014 Application”).(ECF No. 16, Ex.A, PageID 570-572.)The Application was signed by Ms. Hoskins and Mr. Bloodwyn; both signatures are dated October 24, 2014.(Id.)This application states a policy number (H35-281-213275-40) and states that the policy would be effective from October 14, 2014 to October 14, 2015.(Id.)Effective October 26, 2014, Liberty issued an insurance policy that identified only Ms. Hoskins as the insured; as reflected on the application, this policy was given policy number H35-281-213275-40 and had a policy period of October 14, 2014 to October 14, 2015(the “Hoskins Policy”).(ECFNo. 21-4, PageID 442-445).

The parties tell different stories about what happened next.According to Plaintiffs, in February 2015, Liberty advised Ms. Hoskins that the named insured must reside at the Property - meaning that she could not be the named insured and a new policy had to be issued to Mr. Bloodwyn as the only person residing there.(ECFNo. 21-1, HoskinsDecl. ¶ 13, PageID 432).Mr. Bloodwyn says he then spoke to a Liberty representative and agreed to have a policy issued in his name, with him as the named insured.(ECFNo. 21-2, BloodwynDecl. ¶ 8, PageID 436).Liberty, on the other hand, says that the homeowner's policy was “re-issued . . . to list only Ray Bloodwyn as the Named Insured” at Plaintiffs' request in February 2015.(ECFNo. 16-1, MarrangoniAff. ¶ 7, PageID 575).

Regardless of how the change happened, the Hoskins Policy was cancelled by Liberty effective February 11, 2015.(ECF No. 21-4, Ex. 4, PageID 441).Policy Number H35-281-247968-40 was then issued for the Property identifying only Mr. Bloodwyn as the insured; this policy had a different premium, a new policy number, and a different policy period (the “Bloodwyn Policy”).(ECFNo. 21-6, Policy Declarations, PageID 450;ECFNo. 21-2, BloodwynDecl. ¶ 9, PageID 436.)Mr. Bloodwyn did not complete a new application for this policy.(ECF No. 21, Memo Contra, PageID 419;ECFNo. 21-2, BloodwynDec. ¶¶ 12-14).The Bloodwyn Policy was subsequently renewed for a policy period of February 11, 2016 to February 11, 2017.(ECFNo. 21-7, Policy Declarations, PageID 454;ECFNo. 21-8, Renewal Notice, PageID 501-503).

B.Rescission of the Bloodwyn Policy

The 2014 Application contained eleven “yes” or “no” questions.(ECFNo. 16-1, Ex.A, PageID 571).Relevant here, Question 8 asked: “Have you had any insurance declined, canceled or non-renewed in the past 12 months” to which the response was a checkmark in the box for “No.”(Id.)The Application then warned against false statements:

Signing this form does not bind the applicant to complete the insurance, but it is agreed that this form and the answers provided by you to questions as part of the application process shall be the basis of the contract should a policy be issued.In the event that any material misrepresentations, omissions, concealment of facts and/or incorrect statements are made by or on behalf of the insured during the application process, we may exercise whatever legal remedies may be available to us under the laws and regulations of this state.

(Id. at PageID 572 (emphasis added)).

The parties did not submit a copy of the Hoskins Policy, only the Hoskins Policy Declaration (see,ECFNo. 21-4, PageID 444-445), but the Bloodwyn Policy as renewed^[2] contained a warning regarding false statements:

The application for this policy is incorporated herein and made a part of this policy.When we refer to the policy, we mean this document, the application, the Declarations page, and any applicable endorsements.The Insured agrees that all of the statements in the application for this policy are his or her statements, and constitute warranties.The Insured agrees that this policy is issued in reliance upon the truth of the Insured's warranties in the application.If it is determined that any warranty made in the application is incorrect, this policy shall be void ab initio (void back to the date of inception) upon return of the policy premium.

(ECFNo. 16-1, Bloodwyn Policy, PageID 614 (emphasis added)).

After Mr. Bloodwyn filed an insurance claim for the fire in December 2016, Liberty investigated.During that investigation, Liberty learned that Mr. Bloodwyn had a prior homeowner's insurance policy that was cancelled for non-payment by Patrons Buckeye Mutual Insurance Company on August 2, 2014, less than three months before the 2014 Application was submitted.(ECFNo. 16-1, BartlettAff. ¶ 5, PageID 630).Liberty determined that this meant that the Plaintiffs had made a false statement on the 2014 Application and rescinded the Bloodwyn Policy, returning premium payments of $2, 485.00. (Id.¶¶ 6-7).

Plaintiffs acknowledge that Mr. Bloodwyn was previously insured by Patrons Buckeye Mutual Insurance Company from June 30, 2014 to August 2, 2014.(ECFNo. 16-1, Interrogatory ResponseNo. 11, PageID 660).That insurance policy was canceled for non-payment of premium.(ECFNo. 16-1, Patrons Buckeye Policy, PageID 674).

On the grounds that it had rescinded “the Policy, ” Liberty denied Plaintiffs' insurance claim for the fire on February 3, 2017.(ECFNo. 21-9, Recission Letter, PageID 508;ECFNo. 16-1, BartlettAff. ¶ 7, PageID 630).

C.Procedural Background

On November 14, 2019, Ms. Hoskins and Mr. Bloodwyn filed suit against Liberty in the Court of Common Pleas of Knox County, asserting claims for Breach of Contract, Breach of the Implied Covenant of Good Faith and Fair Dealing, Tortious Breach of the Implied Covenant of Good Faith and Fair Dealing, Bad Faith, and Unfair Trade Practices.(ECF No. 3).

Liberty timely removed the action to this Court pursuant to 28 U.S.C. § 1441(a) on the grounds that there is complete diversity of citizenship; Plaintiffs are citizens of Ohio, Liberty is incorporated in and maintains its principal place of business in Massachusetts, and the amount in controversy is more than $75, 000 exclusive of costs and interest.(ECF No. 1).Liberty then filed its Answer and asserted a Counterclaim for Declaratory Judgment.(ECF No. 4).Summary

Judgment briefing followed.

II.MOTIONS FOR SUMMARY JUDGMENT

A.Standard of Review

Summary judgment is appropriate when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”Fed.R.Civ.P. 56(a).The movant has the burden of establishing there are no genuine issues of material fact, which may be achieved by demonstrating the nonmoving party lacks evidence to support an essential element of its claim.Celotex Corp. v. Catrett, 477 U.S. 317, 322-23(1986);Barnhart v. Pickrel, Schaeffer & Ebeling Co., 12 F.3d 1382, 1388-89(6th Cir.1993).The burden then shifts to the nonmoving party to “set forth specific facts showing that there is a genuine issue for trial.”Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250(1986)(quotingFed.R.Civ.P. 56).When evaluating a motion for summary judgment, the evidence must be viewed in the light most favorable to the non-moving party.Adickes v. S.H. Kress & Co., 398 U.S. 144, 157(1970).

A genuine issue exists if the nonmoving party can present “significant probative evidence” to show that “there is [more than] some metaphysical doubt as to the material facts.”Moore v. Philip Morris Cos., 8 F.3d 335, 339-40(6th Cir.1993).In other words, “the evidence is such that a reasonable jury could return a verdict for the non-moving party.”Anderson, 477 U.S. at 248;see alsoMatsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587(1986)(concluding that summary judgment is appropriate when the evidence could not lead the trier of fact to find for the non-moving party).

B.The Breach of Contract Claim

The Court begins with a review of the rules of insurance policy interpretation.Under Ohio law, ^[3] insurance contracts are construed like any other written contract.Scott v Allstate Indem. Co., 417 F.Supp.2d 929, 932(N.D. Ohio2006).“The court's role in interpreting a contract is to give effect to the intent of the parties.”Fujitec Am., Inc. v. AXIS Surplus Ins. Co., 458...