Canfield Motor Sports, Inc. v. Motorist Mut. Ins. Co.
2017 Ohio 735
| Ohio Ct. App. | 2017Background
- Canfield Motor Sports, Inc. (CMS) consigned ten used motorcycles to Elite Auction Sales under an Exclusive Auction Listing Contract; Elite collected the bikes on September 2, 2009, and held an auction on September 5, 2009.
- CMS received a consignor statement showing $35,400 due but never received payment; Elite later filed bankruptcy (around September 25, 2009) and CMS recovered $7,838.39 from the bankruptcy estate.
- CMS submitted an insurance claim under Motorist Mutual’s commercial policy endorsement for "False Pretense Coverage," which covers loss when someone causes the insured to voluntarily part with property by trick, scheme, or false pretenses.
- CMS sued Motorist for declaratory relief and reimbursement; a magistrate awarded CMS $27,500 and the trial court overruled Motorist’s objections and entered judgment for CMS.
- Motorist appealed, arguing the evidence did not show Elite had a fraudulent scheme at the time CMS parted with the motorcycles on September 2, 2009.
- The Seventh District affirmed, holding competent, credible evidence supported an inference Elite intended to deceive CMS at the time of transfer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CMS proved it was induced to part with motorcycles by trick, scheme, or false pretenses under the policy | CMS: Elite ceased business immediately after the auction and the surrounding timeline permits inferring Elite intended to deceive when it took the bikes | Motorist: No direct evidence Elite had a fraudulent scheme on Sept 2; bankruptcy filing and later conduct are insufficient to prove intent at transfer | Court: Affirmed — timeline and circumstances permitted an inference of fraudulent intent existing at the time of transfer |
| Proper standard of review for declaratory judgment | CMS: Trial court’s factual findings should stand if supported by competent, credible evidence | Motorist: Judgment is against manifest weight of the evidence | Court: Reviewed for manifest weight; found judgment supported by competent, credible evidence |
| Burden of proof for insurance coverage | CMS: Insured bears burden to show coverage but presented sufficient evidence to meet it | Motorist: CMS failed to meet burden to show policy coverage requirement (inducement by deceit) | Court: CMS met its burden; policy language construed in favor of insured where facts supported inference of deceit |
Key Cases Cited
- C.E. Morris Co. v. Foley Constr. Co., 54 Ohio St.2d 279 (Ohio 1978) (appellate courts will not reverse factual findings supported by competent, credible evidence)
- Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216 (Ohio 2003) (insurance policy interpretation: read contract as whole and apply plain meaning)
- Kelly v. Med. Life Ins. Co., 31 Ohio St.3d 130 (Ohio 1987) (presume parties’ intent is reflected in policy language)
- Chicago Title Ins. Co. v. Huntington Natl. Bank, 87 Ohio St.3d 270 (Ohio 1999) (insurer policy coverage: claimant bears burden to demonstrate coverage)
- Joe Cotton Ford, Inc. v. Illinois Emcasco Ins. Co., 389 Ill. App.3d 718 (Ill. App. 2009) (example of false-pretense analysis involving purchaser presenting worthless check)
- McConnell v. Fireman’s Fund Ins. Co., 178 F.2d 76 (5th Cir. 1949) (early federal discussion of false pretense/theft distinctions)