LGR Realty, Inc. v. Frank & London Ins. Agency
98 N.E.3d 241
Ohio2018Background
- LGR Realty purchased a real-estate errors-and-omissions professional-liability policy effective May 12, 2010–May 12, 2011; the issued policy contained a specific-entity exclusion for Plaza Properties.
- During the policy period LGR was sued (Milligan lawsuit); Continental denied defense/indemnity under the exclusion on April 26, 2011, and LGR incurred significant defense costs.
- On April 17, 2015 LGR sued its broker Frank & London Insurance Agency (F & L) for negligent procurement and negligent misrepresentation of coverage.
- F & L moved to dismiss under Civ.R. 12(B)(6), arguing the four‑year statute of limitations (R.C. 2305.09(D)) began when the policy was issued (May 12, 2010), so the 2015 suit was time‑barred.
- LGR argued the delayed‑damage rule (Kunz) applies, so the cause of action accrued when injury manifested (denial of coverage on April 26, 2011), making the suit timely.
- Trial court dismissed; Tenth District reversed applying Kunz; Ohio Supreme Court reversed the appellate court and reinstated dismissal, holding accrual occurred when the policy was issued.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When does a negligent‑procurement/negligent‑misrepresentation cause of action under R.C. 2305.09(D) accrue? | Accrual delayed until actual damage/denial of claim (delayed‑damage rule; Kunz) | Accrual occurs when the allegedly wrongful act is committed — i.e., when the policy with the exclusion was issued (Flagstar/Investors REIT reasoning) | Accrues when the policy was issued (delayed‑damage rule does not apply where policy expressly contains the exclusion alleged to cause the harm); plaintiff's suit was time‑barred. |
Key Cases Cited
- Kunz v. Buckeye Union Ins. Co., 1 Ohio St.3d 79 (holds delayed‑damage rule may delay accrual of negligent‑procurement claims)
- Flagstar Bank, F.S.B. v. Airline Union's Mtge. Co., 128 Ohio St.3d 529 (clarifies that professional‑negligence claims accrue when the allegedly negligent act is committed)
- Investors REIT One v. Jacobs, 46 Ohio St.3d 176 (professional‑negligence claims accrue at time of negligent act)
- Velotta v. Leo Petronzio Landscaping, Inc., 69 Ohio St.2d 376 (adopts the delayed‑damage rule in limited circumstances)