On August 23, 2011, the Supreme Court of Ohio issued a unanimous decision in the case of Dominish v. Nationwide Insurance Company, reversing the decision of the 11th District Court of Appeals (Lake County, Ohio), finding that a provision in an insurance contract requiring the homeowner to "start" "any action" against Nationwide within one year of the date of loss was not ambiguous, and had not been waived by Nationwide.
The background facts are quite simple. A tree fell on the homeowner's house, causing damage. The homeowner filed a claim with Nationwide. Nationwide sent a letter to the homeowner which contained the language "Partial Denial of Coverage." The letter explained that part of the damage was covered by the insurance policy, but part was not covered. Nationwide included a check for the amount of the damage that it admitted was covered by the policy. The homeowner wrote "void" on the check, and returned it to Nationwide. Nationwide sent another letter to the homeowner, along with another check, only to have the homeowner "void" and return the check a second time.
The letters from Nationwide to the homeowner each included a reminder of a certain provision in the insurance policy that provided as follows: "Suit Against Us. No action can be brought unless there has been full compliance with the policy provisions. Any action must be started within one year after the date of loss or damage."
Nationwide and the homeowner were ultimately unable to resolve their coverage dispute, and the homeowner sued Nationwide. The lawsuit, however, was filed nearly two years after the date of the accident.
Nationwide defended the lawsuit, claiming that the lawsuit was barred by the provision in the policy that required suit to be brought within one year. The trial court agreed with Nationwide, and granted Nationwide's motion for summary judgment.
The 11th District Court of Appeals reversed the trial court, finding that (1) the policy language was ambiguous, and (2) that Nationwide's actions constituted a waiver of the applicable policy language.
The Supreme Court of Ohio reversed the decision of the Court of Appeals, and held that Nationwide could enforce the one-year requirement, i.e., the homeowner was out of luck.
On the issue of ambiguity, the Supreme Court specifically acknowledged that the policy language "could have been written more clearly," but also found that the language was "set out in terms that the ordinary person exercising ordinary common sense can sufficiently understand and comply with." In addition, the Court cautioned against reading any word or phrase "in isolation" and, when read as a whole, the quoted language was not ambiguous.
On the issue of waiver, the Supreme Court reiterated a rule that it had articulated in 1981, and held that in order for Nationwide to have waived the one-year requirement, it must have (1) "either recognized liability" or (2) "held out a reasonable hope of adjustment and by doing so, induced the insured to delay filing a lawsuit until after the contractual period of limitation had expired." In reviewing the correspondence between Nationwide and the homeowner, the Court found that Nationwide had "clearly stated" that it was not liable to the homeowner for the disputed amount. Furthermore, since Nationwide did not participate in any further negotiations with the homeowner after sending the partial denial letters, the Court found that Nationwide had not taken any other action that would have led the homeowner to believe that he might be paid for the disputed portion.
A simple lesson to be learned - if you believe that you have an insurable loss, read your insurance policies, and comply with all of the policy requirements, including the the requirements to pursue and perfect a claim. If you do not, you may end up with nothing.
If you would like to discuss any insurance related issues with an attorney, feel free to contact me at my office at (216) 635-0002.
The link to the full case/decision can be found here: Dominish v. Nationwide Insurance Co. (2011-Ohio-4102).
