Burdette v. Bell, 2019 Ohio 5035

Background

On Jan 2, 2015 a pedestrian (Barry Burdette) was hit in a crosswalk by Lachell Bell, who was driving her personal car while delivering for JimJam, Inc.; Bell's personal auto insurance had lapsed and JimJam had a State Farm businessowners policy.
The Burdettes sued Bell and JimJam; State Farm provided JimJam a defense but later sought to intervene for a declaratory judgment that the policy excluded automobile use claims; intervention was denied.
The parties entered a consent judgment (Sept. 29, 2017) awarding the Burdettes $400,000 and directing satisfaction be sought exclusively under the State Farm policy; State Farm refused payment and the Burdettes sued State Farm under R.C. 3929.06.
The Burdettes claimed coverage under the policy’s products-completed-operations hazard (PCOH) or under an amendatory endorsement, and alternatively alleged State Farm waived or is estopped from denying coverage due to its prior conduct and defense of JimJam.
The trial court granted State Farm summary judgment, holding the policy’s automobile-use exclusion applied, PCOH did not create separate coverage, and waiver/estoppel did not apply; the Burdettes appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the policy's automobile-use exclusion bars coverage where driver was an insured employee/volunteer	Bell is an insured under the policy as an employee/volunteer, so exclusion does not apply	The endorsement deleted the non-owned auto exception and the exclusion bars bodily injury arising out of use of any auto owned/operated by any insured	Exclusion applies; no coverage because Bell, an insured, owned and operated the car involved
Whether PCOH supplies an independent coverage for off-premises injury	PCOH provides separate coverage that would cover Burdettes' injury	PCOH is a definitional/aggregate-limits provision, not a separate coverage form	PCOH does not create separate coverage; it only sets scope/limits for completed-products liability
Whether State Farm waived or is estopped from denying coverage by defending JimJam or delaying denial	Burdettes (as judgment creditors/subrogees) may assert waiver/estoppel based on State Farm's delay and conduct	Waiver/estoppel cannot create coverage where none exists; insurer sent a reservation and insureds were not prejudiced	Waiver/estoppel rejected; no coverage existed to be created and insureds suffered no prejudice
Whether trial court abused discretion by issuing protective order denying discovery into State Farm's claim-handling (CMP-4235)	Burdettes needed discovery on claim handling to support waiver/estoppel	CMP-4235 applies only to Section I first-party property claims, not these third-party liability claims	Protective order affirmed; endorsement inapplicable and discovery denied

Key Cases Cited

Zivich v. Mentor Soccer Club, Inc., 82 Ohio St.3d 367 (summary judgment standard)
Dresher v. Burt, 75 Ohio St.3d 280 (moving party burden on summary judgment)
Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm, 73 Ohio St.3d 107 (insurance contract interpretation is a question of law reviewed de novo)
Cincinnati Ins. Co. v. CPS Holdings, Inc., 115 Ohio St.3d 306 (policy language presumed to reflect parties' intent)
Buckeye Union Ins. Co. v. Price, 39 Ohio St.2d 95 (plain meaning of policy terms; ambiguity construed for insured)
Hybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd., 64 Ohio St.3d 657 (waiver/estoppel cannot create coverage where none exists)
Sanderson v. Ohio Edison Co., 69 Ohio St.3d 582 (judgment creditor standing under supplemental actions; insurer breach by failing to defend can affect rights)
Valmont Energy Steel Inc. v. Commercial Union Ins. Co., 359 F.3d 770 (limits/definitions delineate coverage and limits but do not create separate coverage)
Collins v. Grange Mut. Cas. Co., 124 Ohio App.3d 574 (reservation-of-rights/prejudice exception to waiver doctrine)
Mauzy v. Kelly Services, Inc., 75 Ohio St.3d 578 (appellate review of discovery orders; abuse of discretion standard)