Summary
finding tort cause of action accrued as of date that damages were incurred, and not earlier date when duty was breached
Summary of this case from Casden v. BurnsOpinion
No. 81-1705
Decided July 21, 1982.
Negligence — Insurance agents — Failure to obtain requested insurance coverage — Applicable statute of limitations — Action accrues, when.
APPEAL from the Court of Appeals for Hamilton County.
The facts of this case, in essence, are that the appellants, Walter Kunz and the Newport Concrete Co., purchased insurance through the appellee insurance agent, Clyde C. Ingram, on the appellants' business equipment consisting primarily of construction machinery. The appellee had acted as Kunz' insurance agent for a number of years, dating back to 1952. In 1969, appellee secured for appellants an insurance policy written by Buckeye Union Insurance Company ("Buckeye Union") on a Bucyrus-Erie hydro-crane. This policy provided "all risk" coverage.
Later, in 1969, appellee and Kunz discussed the possibility of consolidating the various individual policies on appellants' equipment into a single omnibus policy. On or about April 1, 1970, appellee presented Kunz with a consolidated policy, which Kunz believed to provide the same coverage that the appellants formerly had. The consolidated policy was to run for three years. In 1973, appellants renewed the policy, Kunz again assuming that appellants were as well protected under the consolidated policy as they had been under the pre-1970 individualized policies. In January 1975, appellants increased the coverage on the hydro-crane from $100,000 to $175,000 to satisfy the demand of a general contractor for additional security on a job.
On April 21, 1975, the hydro-crane was involved in a job site accident. Kunz was initially informed by Buckeye Union that the loss would be covered. Buckeye Union, however, denied appellants' claim in June 1975, citing certain exclusionary provisions in the consolidated policy, which exclusions had not been part of the pre-1970 insurance contract on the hydro-crane.
Appellants filed suit on April 20, 1977, against Buckeye Union, Clyde C. Ingram, individually, and Clyde C. Ingram Associates, the insurance agency (the latter two collectively "appellees"), alleging acts against the appellees of commission or omission for failing to obtain the coverage requested on the crane and/or failing to disclose a change in coverage on the crane which was damaged, and on which coverage had been denied by Buckeye Union.
Appellees filed a motion for summary judgment on the ground that the applicable four-year statute of limitations for bringing actions of negligence, as contained in R.C. 2305.09(D) had run. Buckeye Union filed a motion to dismiss, claiming that appellants failed to follow the contractual one-year limitation of actions provision of the disputed policy.
The appellants, as to appellees' motion for summary judgment, argued that the action against appellees was one upon a contract not in writing and, as such, was controlled by the six-year statute of limitations contained in R.C 2305.07.
The trial court granted both of the motions. The Court of Appeals affirmed the trial court, holding that appellants' claim sounded in tort and not contract; therefore, the four-year statute of limitations barred the action. The Court of Appeals, however, did not address the issue as to when the cause of action accrued in this cause; but, since the Court of Appeals affirmed the trial court, it may be reasonably assumed that the Court of Appeals was of the opinion that the cause of action arose no later than April 1, 1973, the date of the renewal of the consolidated policy of insurance.
Appellants did not appeal the trial court's granting of the motion in favor of Buckeye Union. Consequently, Buckeye Union is not a party to this appeal.
This cause is now before the court upon allowance of a motion to certify the record.
Messrs. Henderson, Deis Wolf and Mr. Larry E. Deis, for appellants.
Messrs. Beckman, Lavercombe, Fox Weil, Mr. Sidney Weil and Mr. Donald C. Moore, for appellees.
The issues posed within this cause are two-fold. The first query is whether the allegations in appellants' complaint sound in tort and are governed by R.C. 2305.09, the statute of limitations for certain tort claims, or whether the allegations sound in contract and are governed by R.C. 2305.07, the statute of limitations for actions upon a contract not in writing. Second, where such insurance as acquired by the agent for the insured is not as requested by the insured, when does a cause of action accrue for the failure to procure the coverage as requested.
The Court of Appeals determined that the four-year tort statute of limitations contained in R.C. 2305.09 applied to the facts of this cause, and stated in its opinion that:
"* * * the language of the complaint sets forth a cause of action in tort, not in contract. The complaint contains no reference to a contract, either express or implied, between Kunz and Ingram, or to the breach of any such contract. Rather, the complaint sounds in negligence."
We conclude that this interpretation of the nature of this action is a correct one. The instant action is roughly analogous to a malpractice action in which a party claims that his accountant, lawyer, or doctor has failed to perform the professional services that had been contractually bargained for. The relationship between the parties herein called for the performance of certain services by the insurance agent, and any breach thereof involved the agent's failure to secure the desired insurance coverage.
In that "[t]he ground of the action and the nature of the demand determine which statute of limitation is applicable" ( Peterson v. Teodosio, 34 Ohio St.2d 161, 173 [63 O.O.2d 262], and State, ex rel. Lien, v. House, 144 Ohio St. 238 [29 O.O. 399]), the Court of Appeals reasonably found that the instant action was grounded in tort.
The Court of Appeals, upon determining that R.C. 2305.09 applied, affirmed the trial court without discussing the second issue raised by appellants concerning when the cause of action accrued. Appellees argue that the statute of limitations began to run in 1970 when the disputed policy was issued, or at the very latest in 1973 when the policy was renewed. Appellees find support in Squire v. Guardian Trust Co. (1947), 79 Ohio App. 371 [35 O.O. 144], where it is stated, at page 389, that:
"Delayed damage is ineffective to delay the accrual of a cause of action predicated upon a wrongful act. The damage resulting therefrom is immediate. That its effect may not be apparent is unavailing to delay the operation of the statute of limitations."
Appellants urge this court to adopt the "delayed damage" theory rejected in Squire on the ground that prior to 1975 it had not been damaged and, therefore, had no viable cause of action against appellees. Squire is distinguishable from the case at bar in that the misdeeds of the bank directors in Squire caused immediate harm to the bank even though they were not discovered until much later, whereas in the instant case no actual loss occurred until 1975.
This court has not decided a case precisely on point. However, in Austin v. Fulton Ins. Co. (Alas. 1968), 444 P.2d 536, the Alaska Supreme Court considered whether a cause of action for negligent failure to provide coverage for damage due to an earthquake arose when the policy was delivered or when an earthquake caused property damage. In holding that the later date was controlling, the court stated, at page 539, that:
"* * * The statute of limitation as to torts does not usually begin to run until the tort is complete. A tort is ordinarily not complete until there has been an invasion of a legally protected interest of the plaintiff. Appellant's interest was in being protected against earthquake loss. There was no invasion, or infringement upon or impairment of such interest until there had been a loss by earthquake, because until that event occurred such protection could avail appellant nothing. His interest, which is legally protected, was in having such protection when it was needed, at the time of the loss and not before. Thus, in a case like this there must be an injury or harm to appellant as a consequence of appellees' negligence to serve as a basis for recovery of damages before the tort became actionable and before the period of limitation commenced to run."
The Austin rationale can be applied to this case. To paraphrase, there was no invasion, or infringement upon or impairment of such interest until there had been a loss to appellants' equipment because until that event occurred such protection could avail appellants nothing. Their interest was in having protection when it was needed. The Austin rule is reasonable, and we hereby adopt it. To adopt the position of the lower courts would in essence require an insured to consult legal counsel whenever he consolidated or renewed an insurance policy so as to avoid statute of limitations problems when a claim eventually arises.
Based on all the foregoing, we hold that the Court of Appeals was correct in finding that the applicable statute of limitations was R.C. 2305.09(D), but that the cause of action did not accrue and such statute of limitations did not begin to run until April 21, 1975, the date of the job accident involving the Bucyrus-Erie crane.
We reverse the judgment of the Court of Appeals and remand this action to the Court of Common Pleas for further proceedings according to law.
Judgment reversed.
CELEBREZZE, C.J., W. BROWN, SWEENEY, HOLMES and C. BROWN, JJ., concur.
LOCHER and KRUPANSKY, JJ., dissent.
While I agree the instant action was grounded in tort, I disagree with the majority as to when the cause of action accrued. I, therefore, respectfully dissent.
In my opinion, appellants' cause of action accrued at the latest on April 1, 1973, the date appellants renewed the policy. It was on that date appellees allegedly committed a wrongful act by failing to procure the requested coverage. At that point, appellants had a right of action against appellees. If they had discovered the omission which was apparent on the face of their policy, they could have pursued appellees for the difference in value between a policy which included the requested coverage and the value of the policy as issued. Since the alleged wrongful act and the accrual of appellants' right of action occurred more than four years before appellants filed the instant lawsuit, appellants' suit is barred by the statute of limitations. I would, therefore, affirm the judgment of the Court of Appeals.
LOCHER, J., concurs in the foregoing dissenting opinion.