2019 Ohio 4852
Ohio Ct. App.2019Background
- ISCO received demand/notification letters from Wolseley Canada in early 2014; Wolseley filed suit in Canada on February 25, 2014. ISCO did not notify Great American until August 20, 2015. ISCO later settled the Canadian suit on February 15, 2018.
- ISCO held a claims-made directors-and-officers/entity policy covering March 19, 2013–March 19, 2014, which was renewed twice. The policy defines “Claim” to include written demands and civil proceedings and defines “Loss” to include settlements and defense costs.
- The policy’s notice provision required (1) reporting written demands made during the policy period before the period’s end, or (2) for civil proceedings made during the policy period, notice “as soon as practicable” but no later than 90 days after the end of the policy period; a “savings clause” preserved the right to report a civil proceeding if a demand had not been reported.
- Great American denied coverage based on untimely notice. ISCO sued for breach of contract; the trial court granted Great American’s motion to dismiss under Civ.R. 12(B)(6). ISCO appealed.
- The appellate court reviewed de novo, applied Ohio law (no conflict shown with Kentucky), and affirmed dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timely notice under the policy (Helberg reliance) | Helberg permits coverage where a claims-made policy is renewed and notice given within a reasonable time across renewals. | The policy unambiguously required notice of the civil proceeding no later than 90 days after the policy period; ISCO failed to comply. | Helberg distinguishable; policy plain and unambiguous; ISCO’s notice was untimely. |
| Applicability of notice‑prejudice rule (Ferrando) | Ferrando’s notice‑prejudice rule should apply so insurer must show actual prejudice from late notice. | Ferrando applies to UIM/prompt‑notice provisions; where policy sets a fixed deadline, insurer need not show prejudice. | Ferrando inapplicable to fixed‑deadline claims‑made D&O policy; insurer need not prove prejudice. |
| Savings clause and pre‑suit letters | Pre‑lawsuit letters were written demands that trigger the savings clause so failure to report the demands does not bar reporting the later civil proceeding. | The letters were not demands for relief; treating them as such would render the 90‑day deadline meaningless. | Savings clause inapplicable; letters did not constitute demands for relief and cannot nullify the explicit 90‑day deadline. |
| Request to amend complaint | ISCO asked leave to amend to add facts showing reasonableness and lack of prejudice. | Amendment would be futile because controlling law and the policy’s plain terms foreclose coverage. | Leave to amend properly denied as futile. |
Key Cases Cited
- Helberg v. Natl. Union Fire Ins. Co., 102 Ohio App.3d 679 (6th Dist. 1995) (ambiguity in renewed claims‑made policy construed for insured; concerned ‘‘trap’’ across renewals)
- Ferrando v. Auto‑Owners Mut. Ins. Co., 98 Ohio St.3d 186 (Ohio 2002) (notice‑prejudice rule for UIM policies requiring prompt notice)
- McCarty v. Natl. Union Fire Ins. Co. of Pittsburgh, PA., 699 Fed.Appx. 464 (6th Cir. 2017) (applying Ohio law; claims‑made policy with fixed post‑period deadline not subject to notice‑prejudice rule)
- Telxon Corp. v. Fed. Ins. Co., 309 F.3d 386 (6th Cir. 2002) (contracts interpreted to effectuate parties’ intent from policy language)
- Skivolocki v. East Ohio Gas Co., 38 Ohio St.2d 244 (Ohio 1974) (contract interpretation principle that courts enforce plain language to effectuate intent)
- United States v. A.C. Strip, 868 F.2d 181 (6th Cir. 1989) (distinguishes claims‑made vs occurrence policies for notice/prejudice analysis)