Turner v. Progressive Specialty Ins. Co.

• Decision Date: 04 February 1991
• Docket Number: No. 89-T-4283,89-T-4283
• Citation: 72 Ohio App.3d 381,594 N.E.2d 986
• Court: Ohio Court of Appeals
• Parties: TURNER et al., Appellants, v. PROGRESSIVE SPECIALTY INSURANCE COMPANY et al., Appellees, *

Page 381

72 Ohio App.3d 381

594 N.E.2d 986

TURNER et al., Appellants, v. PROGRESSIVE SPECIALTY INSURANCE COMPANY et al., Appellees, ^*

No. 89-T-4283.

Court of Appeals of Ohio, Eleventh District, Trumbull County.

Decided Feb. 4, 1991.

Michael Partlow, Warren, for appellants.

Eugene G. Gillis, Cleveland, for appellee Progressive Specialty Ins. Co.

Michael A. Malyuk, Akron, for appellee Paige & Byrnes Ins., Inc.

Charles L. Richards and Catherine Hawley, Warren, for appellee Aetna Cas. & Sur. Co. EDWARD J. MAHONEY, Judge.

Appellants, Douglas A. Turner and Lawrence S. Turner, appeal the judgment of the court of common pleas finding that an automobile insurance policy issued by appellee Progressive Specialty Insurance Company was not in effect on June 18, 1987, when Brian Turner was involved in an automobile accident. We reverse and remand.

This is a declaratory judgment case. The joint exhibits and stipulations show that Progressive issued a policy to Douglas A. Turner on a 1981 Chevrolet Chevette. Lawrence Turner and Brian Turner were listed as additional drivers. Lawrence Turner was also listed as having an additional interest in the policy. The policy term was March 16, 1987 to September 16, 1987.

On June 8, 1987, on behalf of Douglas A. Turner and with his permission, Lawrence Turner signed Douglas A. Turner's name to a "Policy Cancellation Request Form" pertaining to the policy issued by Progressive. This form was received from Paige & Byrnes Insurance Agency, authorized agent for Progressive. The form indicates that the policy was being cancelled at the insured's request. It was also typed on the cancellation form, "Please cancel this eff. 6-8-87 or sooner if you can do it. The insured went into the service in May, 1987." There is a dispute whether the cancellation form was blank at the time it was signed by Lawrence Turner, but this is not an issue in this appeal. The parties agree that the cancellation request was completed when it was received by Progressive on June 18, 1987.

On June 18, 1987, Brian Turner was involved in an accident while driving the Chevette automobile. The cancellation request was processed by Progressive on June 19, 1987. Progressive cancelled the policy retroactively to May 29, 1987. Progressive issued a check dated June 20, 1987, to Douglas A. Turner for the unearned premium. This refund check has never been negotiated.

It was also stipulated that the turnaround time of the cancellation request was reasonable. It was further stipulated for purpose of the hearing that the Turners had no evidence that Progressive was aware of the accident involving Brian Turner when the cancellation request was processed on June 19th, and that Progressive was not then denying coverage on the basis that it was not notified of the accident in a timely fashion.

The policy states that:

"You may cancel this policy by returning it to us or by advising us in writing when at a future date the cancellation is to be effective."

"Us" is defined in the policy as the company providing the insurance. The policy also provides that all statutory provisions of the state in which the policy is issued will be followed.

The appellants have filed the following assignment as error:

"The trial court erred to the prejudice of the appellants by holding that, as a matter of law, the requirements of R.C. 3937.32 are inapplicable in situations where a policy of automobile liability insurance is cancelled at the request of an insured."

The Turners contend that the trial court erred in finding that R.C. 3937.32 does not apply to cancellations initiated by an insured. That statute provides:

"No cancellation of an automobile insurance policy is effective, unless it is pursuant to written notice to the insured of cancellation. Such notice shall contain:

"(A) The policy number;

"(B) The date of the notice;

"(C) The effective date of cancellation of the policy, which shall not be earlier than thirty days following the date of the notice;

"(D) An explanation of the reason for cancellation and the information upon which it is based, or a statement that such explanation will be furnished to the insured in writing within five days after receipt of his written request therefor to the insurer;

"(E) Where cancellation is for nonpayment of premium at least ten days notice from the date of mailing of cancellation accompanied by the reason therefor shall be given;

"(F) A statement that if there is cause to believe such cancellation is based on erroneous information, or is contrary to law or the terms of the policy, the insured is entitled to have the matter reviewed by the superintendent of insurance, upon written application to the superintendent made not later than the effective date of cancellation of the policy, and that if a hearing is held by the superintendent of insurance, a deposit of five dollars shall be made, and that such deposit shall be returned to the insured if the finding is in his favor."

The Turners argue that the notice dated June 19, 1987 and sent by Progressive to Douglas A. Turner does not comply with either subsections (C) or (D) of the statute. The Turners are correct in this regard as the notice specifies a cancellation date of May 29, 1987 and contains no explanation as required by R.C. 3937.32(D). Further, there is no statement pursuant to subsection (F).

We agree, however, with the trial court and hold that R.C. 3937.32 does not apply where the insured initiates the cancellation.

The Turners concede that the general rule is that an insured may unilaterally cancel a policy with no further act by the insurer required to effectuate the cancellation. 17 Couch, Cyclopedia of Insurance Law (2 Ed. 1983) 555, Section 67:100; see, e.g., Hanover Ins. Co. v. Eggelton (N.Y.App.1982), 88 A.D.2d 188, 453 N.Y.S.2d 898. R.C. 3937.32 is in accord with this general rule.

By its terms, the statute requires the notice of cancellation to contain all six items listed therein. We see no persuasive reason why the explanation and statement required by R.C. 3937.32(D) and (F) would be necessary where the cancellation is at the insured's request. Progressive also cogently points out that under subsection (C), the insurer could make the effective date of the cancellation later than thirty days following the date of the notice, clearly at odds with the insured's right to an earlier cancellation date. Further, the statute says that the cancellation is effective only pursuant to written notice to the insured. In cancellations initiated by the insured, the cancellation is clearly pursuant to notice to the insurer.

Additional support for our holding is found in R.C. 3937.31, which provides in part:

"(A) * * * No insurer may cancel any such policy except pursuant to the terms of the policy, and in accordance with sections 3937.30 to 3937.39 of the Revised Code * * *.

" * * *

"(B) Sections 3937.30 to 3937.39 of the Revised Code do not prohibit:

"(1) Changes in coverage or policy limits, cancellation, or nonrenewal for any reason at the request or with the consent of the insured[.]"

Clearly, this language allows insured-initiated cancellations outside, and not pursuant to, R.C. 3937.32, cf. Stith v. Milwaukee Guardian Ins. (1988), 44 Ohio App.3d 147, 541 N.E.2d 1071.

The Turners cite Oates v. Nationwide Ins. Co. (June 28, 1985), Mahoning App. No. 85 C.A.5, unreported, 1985 WL 7001, as support for their argument. In Oates, the premiums were paid by payroll deduction. The insured, Oates, orally told a Nationwide agent on January 28, 1983, that she wanted the policy cancelled. The agent then forwarded a written request to Nationwide. In February 1983, another payroll deduction for coverage from February 15th to March 15th was made and paid to Nationwide. On March 14th, Oates's car was damaged. Nationwide sent Oates a letter on March 24th stating the policy had been cancelled January 28th. Written notice of cancellation was given to the agent by Nationwide on March 30th.

On appeal, Oates argued that Nationwide had not complied with R.C. 3937.33, and that since the premium was paid after the alleged cancellation date Nationwide could not claim a prior cancellation. R.C. 3937.33 requires an insurer who cancels a policy to mail notice of cancellation pursuant to R.C. 3937.32 to the insured at least thirty days prior to the effective date of cancellation. In ruling that Oates's policy was in effect on March 14, the court of appeals did not discuss R.C. 3937.31, but construed R.C. 3937.32 "to require strict adherence to statutory guidelines when a notice of cancellation is given."

We find Oates distinguishable from the instant case on the bases that the court in Oates did not consider the impact of R.C. 3937.31 and that the insured in Oates made a premium payment after her request for cancellation, which covered the period during which she sustained a loss. Other courts have impliedly held that R.C. 3937.32 does not apply to cancellations initiated by insureds. Williams v. State Farm Mut. Ins. Co. (June 8, 1981), Tuscarawas App. No. CA 1483, unreported, 1981 WL 6308.

The first assignment of error is overruled.

The second assignment of error:

"The trial court erred to the prejudice of the appellants by failing to declare the rights and obligations of the parties to the contract of automobile liability insurance in controversy and finding that said policy of automobile liability insurance had been unilaterally cancelled by the appellants, effective May 29, 1987."

The Turners first argue that the trial court erred in not declaring their rights pursuant to the insurance policy, as opposed to the effect of R.C. 3937.32. The Turners say they are prejudiced by this alleged failure by the trial court in that they cannot prosecute a precisely focused appeal. We note that the Turners filed a trial brief raising several arguments based on the language of the policy and that they presented a detailed argument to the trial...