Kunz v. Buckeye Union Ins. Co.

• Decision Date: 21 July 1982
• Docket Number: No. 81-1705,81-1705
• Citation: 1 OBR 117,437 N.E.2d 1194,1 Ohio St.3d 79
• Parties: , 1 O.B.R. 117 KUNZ et al., Appellants, v. BUCKEYE UNION INS. CO.; Ingram et al., Appellees.
• Court: Ohio Supreme Court

Page 79

1 Ohio St.3d 79

437 N.E.2d 1194, 1 O.B.R. 117

KUNZ et al., Appellants, v. BUCKEYE UNION INS. CO.; Ingram et al., Appellees.

No. 81-1705.

Supreme Court of Ohio.

July 21, 1982.

Henderson, Deis & Wolf and Larry E. Deis, Hamilton, for appellants.

Beckman, Lavercombe, Fox & Weil, Sidney Weil and Donald C. Moore, Cincinnati, for appellees.

PER CURIAM.

The issues posed within this cause are two-fold. The first query is whether the allegations in appellants' complaint sound in tort and are governed by R.C. 2305.09, the statute of limitations for certain tort claims, or whether the allegations sound in contract and are governed by R.C. 2305.07, the statute of limitations for actions upon a contract not in writing. Second, where such insurance as acquired by the agent for the insured is not as requested by the insured, when does a cause of action accrue for the failure to procure the coverage as requested.

The Court of Appeals determined that the four-year tort statute of limitations contained in R.C. 2305.09 applied to the facts of this cause, and stated in its opinion that:

" * * * the language of the complaint sets forth a cause of action in tort, not in contract. The complaint contains no reference to a contract, either express or implied, between Kunz and Ingram, or to the breach of any such contract. Rather, the complaint sounds in negligence."

We conclude that this interpretation of the nature of this action is a correct one. The instant action is roughly analogous to a malpractice action in which a party claims that his accountant, lawyer, or doctor has failed to perform the professional services that had been contractually bargained for. The relationship between the parties herein called for the performance of certain services by the insurance agent, and any breach thereof involved the agent's failure to secure the desired insurance coverage.

In that "[t]he ground of the action and the nature of the demand determine which statute of limitation is applicable" (Peterson v. Teodosio [1973], 34 Ohio St. 2d 161, 173, 297 N.E.2d 113 , and State, ex rel. Lien v. House [1944], 144 Ohio St. 238, 58 N.E.2d 675 ), the Court of Appeals reasonably found that the instant action was grounded in tort.

The Court of Appeals, upon determining that R.C. 2305.09 applied, affirmed the trial court without discussing the second issue raised by appellants concerning when the cause of action accrued. Appellees argue that the statute of limitations began to run in 1970 when the disputed policy was issued, or at the very latest in 1973 when the policy was renewed. Appellees find support in Squire v. Guardian Trust Co. (1947), 79 Ohio App. 371, 72 N.E.2d 137 , where it is stated, at page 389, that:

"Delayed damage is ineffective to delay the accrual of a cause of action predicated upon a wrongful act. The damage resulting therefrom is immediate. That its effect may not be apparent is unavailing to delay the operation of the statute of limitations."

Appellants urge this court to adopt the "delayed damage" theory rejected in Squire on the ground that prior to 1975 it had not been damaged and, therefore, had no viable cause of action against appellees. Squire is distinguishable from the case at bar in that the misdeeds of the bank directors in Squire caused immediate harm to the bank even though they were not discovered until much later, whereas in the instant case no actual loss occurred until 1975.

This court has not decided a case precisely on point. However, in Austin v. Fulton Ins. Co. (Alaska 1968), 444 P.2d 536, the Alaska Supreme Court considered whether a cause of action for negligent failure to provide coverage for damage due to an earthquake arose when the policy was delivered or when an earthquake caused property damage. In holding that the later date was controlling, the court stated, at page 539, that:

" * * * The statute of limitation as to torts does not usually begin to run until the tort is complete. A tort is ordinarily not complete until there has been an invasion of a legally protected interest of the plaintiff. Appellant's interest was in being protected against earthquake loss. There was no invasion, or infringement upon or impairment of such interest until there had been a loss by earthquake, because until that event occurred such protection could...