Vietzen v. Victoria Auto. Ins. Co. , 2014 Ohio 749 ( 2014 )

[Cite as Vietzen v. Victoria Auto. Ins. Co., 2014-Ohio-749.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF LORAIN )
ROBERT VIETZEN C.A. No. 13CA010390
Appellant
v. APPEAL FROM JUDGMENT
ENTERED IN THE
VICTORIA AUTOMOBILE INSURANCE COURT OF COMMON PLEAS
COMPANY COUNTY OF LORAIN, OHIO
CASE No. 12CV176322
Appellee
DECISION AND JOURNAL ENTRY
Dated: March 3, 2014
CARR, Judge.
{¶1} Appellant Robert Vietzen appeals the judgment of the Lorain County Court of
Common Pleas which granted summary judgment in favor of appellee Victoria Automobile
Insurance Company. This Court reverses and remands.
I.
{¶2} On September 6, 2009, Mr. Vietzen was injured in an automobile accident when a
car driven by Dean Mandell and owned by Paulette Henry collided with his vehicle. Victoria
Automobile Insurance Company (“Victoria Insurance”) had issued an insurance policy for Ms.
Henry’s vehicle. The parties agree that Mr. Vietzen obtained a judgment against Ms. Henry in
the amount of $97,000.00 in case number 10CV166122. Victoria Insurance refused to satisfy the
judgment based on its claims that it had cancelled Ms. Henry’s policy at 12:01 a.m. on
September 6, 2009, for nonpayment of the premium. Mr. Vietzen thereafter filed a supplemental
complaint against Victoria Insurance. The clerk’s office assigned a new case number to the
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supplemental complaint, specifically 12CV176322, even though the supplemental complaint
bore the prior case number. Victoria Insurance filed an answer, admitting that Mr. Vietzen had
obtained a judgment against Ms. Henry and that the insurance company had not satisfied the
judgment. It denied the remaining allegations in the complaint and raised two affirmative
defenses: (1) that the trial court previously determined in case number 10CV166122 that Ms.
Henry’s Victoria Insurance policy had been cancelled and was no longer in effect, and (2) that
due to Ms. Henry’s filing for bankruptcy, the proceedings in case number 10CV166122, which
encompassed the supplemental complaint, had been stayed.
{¶3} Victoria Insurance and Mr. Vietzen filed competing motions for summary
judgment. Victoria Insurance filed a brief in opposition to Mr. Vietzen’s motion for summary
judgment. The trial court denied Mr. Vietzen’s motion for summary judgment and granted the
insurance company’s motion for summary judgment. Mr. Vietzen filed a timely appeal in which
he raises one assignment of error for review. No party moved to supplement the record on
appeal with the record in case number 10CV166122. Accordingly, our review is constrained to
the record in case number 12CV176322.
II.
ASSIGNMENT OF ERROR
WHETHER AN AUTOMOBILE INSURANCE COMPANY CAN LEGALLY
COMBINE THE NOTICE OF CANCELLATION OF A POLICY WITH THE
NOTICE OF NON-PAYMENT OF PREMIUM AND MEET THE
REQUIR[E]MENTS OF [R.C. CHAPTER] 3937.
{¶4} Mr. Vietzen argues that the trial court erred by granting summary judgment in
favor of Victoria Insurance and by denying his motion for summary judgment. This Court
agrees.
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{¶5} This Court reviews an award of summary judgment de novo. Grafton v. Ohio
Edison Co., 77 Ohio St.3d 102, 105 (1996). This Court applies the same standard as the trial
court, viewing the facts in the case in the light most favorable to the non-moving party and
resolving any doubt in favor of the non-moving party. Viock v. Stowe-Woodward Co., 13 Ohio
App.3d 7, 12 (6th Dist.1983).
{¶6} Pursuant to Civ.R. 56(C), summary judgment is proper if:
(1) No genuine issue as to any material fact remains to be litigated; (2) the
moving party is entitled to judgment as a matter of law; and (3) it appears from
the evidence that reasonable minds can come to but one conclusion, and viewing
such evidence most strongly in favor of the party against whom the motion for
summary judgment is made, that conclusion is adverse to that party.
Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327 (1977).
{¶7} To prevail on a motion for summary judgment, the party moving for summary
judgment must be able to point to evidentiary materials that show that there is no genuine issue
as to any material fact, and that the moving party is entitled to judgment as a matter of law.
Dresher v. Burt, 75 Ohio St.3d 280, 293 (1996). Once a moving party satisfies its burden of
supporting its motion for summary judgment with sufficient and acceptable evidence pursuant to
Civ.R. 56(C), Civ.R. 56(E) provides that the non-moving party may not rest upon the mere
allegations or denials of the moving party’s pleadings. Rather, the non-moving party has a
reciprocal burden of responding by setting forth specific facts, demonstrating that a “genuine
triable issue” exists to be litigated for trial. State ex rel. Zimmerman v. Tompkins, 75 Ohio St.3d
447, 449 (1996).
{¶8} No party objected to the trial court’s consideration of any evidence appended to
the competing motions for summary judgment. Despite the fact that the majority of the evidence
appended to the motions did not comport with Civ.R. 56, the parties agreed that the evidence was
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proper because it had been obtained during discovery in case number 10CV166122 and, in some
cases, considered in conjunction with motions for summary judgment in that case. This Court
has recognized that the trial court may, in its discretion, consider improper Civ.R. 56 evidence if
no party has objected to the evidence. Wallner v. Thorne, 189 Ohio App.3d 161, 2010-Ohio-
2146, ¶ 18 (9th Dist.). As neither party objected to any evidence attached to the other’s motion
for summary judgment, and the trial court considered the evidence attached, this Court will also
consider all evidence submitted for purposes of our review.
{¶9} The parties do not dispute that Victoria Insurance mailed a billing statement to
Ms. Henry on August 24, 2009. The billing statement included an “Installment Payment
Notice,” indicating that a minimum payment of $198.39 was due on September 5, 2009. The
statement further included a “Cancellation Notice” which stated: “If the Minimum Due is not
received by or on the Payment Due date, your policy cancels on the date and time shown above
for nonpayment of premium.” The “Cancellation Effective” date on the statement was
September 6, 2009, at 12:01 a.m. The “Cancellation Notice” further expressly provided: “THIS
SECTION DOES NOT APPLY TO YOU IF YOU PAY THIS BILL BY THE DUE DATE.”
{¶10} The accident at issue occurred on September 6, 2009. The parties do not dispute
that Ms. Henry had not paid the minimum due on her insurance policy as of the September 5,
2009 due date. Victoria Insurance attached a document to its motion for summary judgment
which it asserted was Ms. Henry’s answer to Mr. Vietzen’s personal injury complaint in case
number 10CV166122. In her answer, Ms. Henry wrote that she had insurance at the time of the
accident and that, although that insurance “ended” at 12:01 a.m. on September 6, 2009, she “was
in [her] grace period” at that time.
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{¶11} The issue before the trial court was whether the cancellation notice sent to Ms.
Henry by Victoria Insurance complied with the requirements of R.C. 3937.32. In other words,
the trial court had to determine whether a notice of cancellation sent in advance of the premium
due date, and therefore in advance of any failure to timely pay the premium, was effective to
cancel the policy on the cancellation date identified in the billing statement. The issue implicates
the meaning of the statute and, therefore, constitutes an issue of law. Wetterman v. B.C., 9th
Dist. Medina No. 12CA0021-M, 2013-Ohio-57, ¶ 8. In construing the statute, this Court’s
primary goal is “‘to ascertain and give effect to the legislature’s intent in enacting the statute.’”
Id., quoting State v. Lowe, 112 Ohio St.3d 507, 2007-Ohio-606, ¶ 9.
{¶12} The version of R.C. 3937.32 in effect at the relevant time read, in part:
No cancellation of an automobile policy is effective, unless it is pursuant to
written notice to the insured of cancellation. Such notice shall contain:
(A) The policy number;
(B) The date of the notice;
(C) The effective date of cancellation of the policy, which shall not be earlier than
thirty days following the date of the notice;
(D) An explanation of the reason for cancellation and the information upon which
it is based, or a statement that such explanation will be furnished to the insured in
writing within five days after receipt of his written request therefor to the insurer;
(E) Where cancellation is for nonpayment of premium at least ten days notice
from the date of mailing of cancellation accompanied by the reason therefor[]
shall be given[.]
{¶13} Victoria Insurance argued in its motion for summary judgment, and the trial court
apparently agreed, that its notice of cancellation to Ms. Henry complied with the requirements of
R.C. 3937.32 and was, therefore, effective to cancel her policy at 12:01 a.m. on September 6,
2009. In support, the insurance company asserted that the cancellation notice contained the
policy number, date of the notice, and the effective date of cancellation, as well as an explanation
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that the policy would be cancelled on that date if the premium payment was not received by the
due date. In addition, the insurance company argued that the cancellation date identified was at
least ten days subsequent to the date of mailing of the cancellation notice. Victoria Insurance
argued that the notice of cancellation did not provide for a grace period in which Ms. Henry
could maintain coverage despite a failure to pay the minimum due on time. In addition, the
insurance company emphasized that its notice of cancellation would not apply if Ms. Henry paid
the bill by its due date. It offered no legal support for the proposition that an insurance company
may issue an effective notice of cancellation in advance of the insured’s failure to timely pay the
premium and in anticipation of the insured’s failure to pay by a later due date.
{¶14} Mr. Vietzen argued in his motion for summary judgment that the insurance
company must wait until the insured has failed to pay the premium when due before mailing the
notice of cancellation. He premised his argument on legislative intent and public policy
reasoning.
{¶15} This case presents an issue of first impression for this Court. Moreover, our
research reveals that no other Ohio appellate court has had the opportunity to address the
efficacy of a notice of cancellation based on nonpayment of the premium where the insured’s
payment is not yet delinquent. Upon due consideration, this Court is persuaded by Mr. Vietzen’s
arguments and concludes that Victoria Insurance’s notice of cancellation was not effective to
cancel Ms. Henry’s insurance policy prior to the accident on September 6, 2009.
{¶16} Victoria Insurance and Mr. Vietzen present varying interpretations of the notice
requirements in R.C. 3937.32. Accordingly, it is fair to say that the statute is ambiguous and
must, therefore, be “construed to give effect to the legislative intent.” Wolfe v. Wolfe, 88 Ohio
St.3d 246, 248 (2000). In determining legislative intent, this Court must look at the language of
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the statute, the objective of the statute, and the consequences of various constructions of the
statute. Id. at 248-249; see also R.C. 1.49.
{¶17} In this case, the statute requires that any notice of cancellation for nonpayment of
premiums must include the reason for the cancellation. Reasonably, “nonpayment of premium”
cannot constitute grounds for cancellation where the time for payment has not passed.
Construing the statute as Victoria Insurance suggests would allow an insurance company to
cancel an insured’s policy on the grounds of anticipatory breach. R.C. 3937.31(A) sets forth the
reasons for which an insurer may cancel an automobile insurance policy, including fraud,
concealment, or misrepresentation by the insured; loss of driving privileges of a covered driver;
change of residence by the insured to a state where the insurer is not authorized to write
automobile coverage; and nonpayment of premium, “which means failure of the named insured
to discharge when due any of the named insured’s obligations in connection with the payment of
premiums on a policy * * *.” R.C. 3937.31(A)(1)-(4). Anticipatory breach is not listed as a
valid reason for an insurer to cancel a policy. In other words, the statute grants no authority to
the insurer to cancel a policy on the belief that the insured will not pay her premium when due.
{¶18} In addition, the Ohio Supreme Court recognized the public policy interests that
the legislature intended to protect in enacting the statutory scheme regarding an insurer’s
cancellation of automobile insurance. In Wolfe, supra, at 249-250, the high court wrote that “the
statute is intended to protect insureds from unilaterally being left without the protections that
automobile insurance coverage affords by requiring that insurers provide an adequate method of
notification when canceling insurance policies. See R.C. 3937.31(A) (grounds for cancellation
limited), 3937.31(B)(4) (cancellation permitted at end of any mandatory period), 3937.32 (notice
of cancellation required), and 3937.33 (procedures for cancellation).” The Wolfe court
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concluded that “[i]t is clear that the public policy of this state, as gleaned through the Acts of the
General Assembly, is to ensure that all motorists maintain some form of liability coverage on
motor vehicles operated within Ohio. * * * It is beyond reasonable dispute that R.C. 3937.30 et
seq. are primarily designed to protect the public from the dangers which uninsured motorists
pose.” Wolfe, 88 Ohio St.3d at 250.
{¶19} Given the legislature’s clear intent to protect the public from the burden of
compensating for injuries sustained as a result of uninsured drivers, the reasonable interpretation
of the notice requirements in R.C. 3937.32 is that the legislature intended to include a grace
period of ten days in which an insured may pay a past-due premium before the insurance
company may cancel the policy. This interpretation is bolstered by the common sense
understanding that grounds must exist to support cancellation and the statutory scheme does not
include anticipatory breach as grounds for cancellation. Accordingly, this Court holds that R.C.
3937.32(E) includes a grace period of ten days during which an insured may cure her failure to
pay her premium by its due date before the insurance company may cancel her automobile
insurance policy.1 Therefore, an insurance company must wait until the insured has actually
failed to pay her premium when due before mailing notice of cancellation of the policy which
will take effect no fewer than ten days after the date of mailing of the notice.
{¶20} In this case, Victoria Insurance included a notice of cancellation of the policy in
its billing statement to Ms. Henry. The insurance company notified Ms. Henry in advance of the
premium due date that her policy would be cancelled one minute after midnight on the day after
her premium was due if she failed to make a timely payment. As Ms. Henry could only have
failed to timely pay her premium as of September 6, 2009, Victoria Insurance could only assert
1
As the issue is not before us, this Court does not render any conclusions regarding any
lapse in coverage under the policy due to Ms. Henry’s failure to timely pay her premium.
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nonpayment grounds at that time. The insurance company’s notice of cancellation mailed on
August 24, 2009, was ineffective to give Ms. Henry the requisite notice of cancellation pursuant
to R.C. 3937.32. Accordingly, the trial court erred by granting summary judgment in favor of
Victoria Insurance and by denying Mr. Vietzen’s motion for summary judgment. Mr. Vietzen’s
assignment of error is sustained.
III.
{¶21} Mr. Vietzen’s sole assignment of error is sustained. The judgment of the Lorain
County Court of Common Pleas is reversed and the cause remanded for further proceedings
consistent with this opinion.
Judgment reversed,
and cause remanded.
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Lorain, State of Ohio, to carry this judgment into execution. A certified copy of
this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
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Costs taxed to Appellee.
DONNA J. CARR
FOR THE COURT
WHITMORE, J.
CONCURS.
BELFANCE, P. J.
CONCURRING IN JUDGMENT ONLY.
{¶22} I concur in the majority’s judgment. The version of R.C. 3937.31 in effect in
2009 provided that:
No insurer may cancel any such policy except pursuant to the terms of the policy,
and in accordance with sections 3937.30 to 3937.39 of the Revised Code, and for
one or more of the following reasons:
(1) Misrepresentation by the insured to the insurer of any material fact in the
procurement or renewal of the insurance or in the submission of claims
thereunder;
(2) Loss of driving privileges through suspension or expiration of the driver’s or
commercial driver’s license of the named insured or any member of the named
insured’s family covered as a driver; provided that the insurer shall continue the
policy in effect but exclude by endorsement all coverage as to the person whose
driver’s license has been suspended or has expired, if the person is other than the
named insured or the principal operator;
(3) Nonpayment of premium, which means failure of the named insured to
discharge when due any of the named insured’s obligations in connection with the
payment of premiums on a policy, or any installment of such premiums, whether
the premium is payable directly to the insurer or its agent or indirectly under any
premium finance plan or extension of credit;
(4) The place of residence of the insured or the state of registration or license of
the insured automobile is changed to a state or country in which the insurer is not
authorized to write automobile coverage.
(Emphasis added.)
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{¶23} Thus, in order to cancel a policy, the insurer must comply with the provisions of
the policy, R.C. 3937.30 to 3937.39, and have a reason to cancel the policy as enumerated in
R.C. 3937.31. See former R.C. 3937.31. Victoria Insurance asserts that Ms. Henry’s payment
was due September 5, 2009, and that her policy was cancelled September 6, 2009, after she
failed to make the required payment. Victoria Insurance relies upon former R.C. 3937.31 in
isolation. However, former R.C. 3937.32 must also be taken into account given that it governs
when cancellation of an automobile policy is effective. See former R.C. 3937.31. It provided
that
No cancellation of an automobile insurance policy is effective, unless it is
pursuant to written notice to the insured of cancellation. Such notice shall contain:
(A) The policy number;
(B) The date of the notice;
(C) The effective date of cancellation of the policy, which shall not be earlier than
thirty days following the date of the notice;
(D) An explanation of the reason for cancellation and the information upon which
it is based, or a statement that such explanation will be furnished to the insured in
writing within five days after receipt of his written request therefor to the insurer;
(E) Where cancellation is for nonpayment of premium at least ten days notice
from the date of mailing of cancellation accompanied by the reason therefore
shall be given;
(F) A statement that if there is cause to believe such cancellation is based on
erroneous information, or is contrary to law or the terms of the policy, the insured
is entitled to have the matter reviewed by the superintendent of insurance, upon
written application to the superintendent made not later than the effective date of
cancellation of the policy, and that if a hearing is held by the superintendent of
insurance, a deposit of five dollars shall be made, and that such deposit shall be
returned to the insured if the finding is in his favor.
(Emphasis added.) Former R.C. 3937.32.
{¶24} Thus, in attempting to cancel Ms. Henry’s insurance for nonpayment, Victoria
Insurance had to provide notice of the cancellation ten days before the cancellation could be
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deemed effective. See former R.C. 3937.32(E). It asserts that it did so because it notified Ms.
Henry in late August that her policy would be cancelled if she failed to make her payment on or
before September 5, 2009. However, only cancellation of the policy when due is permissible.
Thus, cancellation is permissible for nonpayment of the policy only when there is nonpayment of
the premium on September 5th. Cancellation is not permissible prior to that. Moreover,
cancellation is not effective for 10 days from the date of notice of the cancellation. Victoria
Insurance’s argument that it could provide for preemptive notification of cancellation for
nonpayment before cancellation is actually permissible under the statutes does not comport with
the language of former R.C. 3937.31 and 3937.32, nor a common sense reading of the statutes in
pari materia.
{¶25} Under Victoria Insurance’s view, it could provide notice of cancellation months
before the bill was due and still satisfy the statutes. Considering the two provisions together, the
event of nonpayment of the premium when due must occur first, followed by providing a notice
to the insured of the cancellation of the policy for nonpayment. In other words, it is apparent that
the legislature intended that the insured have ten days after the insured failed to make payments
when due before the policy would be cancelled.2 Accordingly, the only reasonable interpretation
of those two provisions is that “effective notice of cancellation for nonpayment of premiums
cannot be given until the time for making payment of the premium has expired.” 2 Plitt,
Maldonado, Rogers, and Plitt, Couch on Ins., Section 31:6 (3d Ed.2013). To interpret the
provisions otherwise would essentially eviscerate the legislature’s creation of a notice
2
As noted by a California appellate court, “[r]eceipt of a notice of cancellation of
automobile insurance should be an unanticipated event; something that spurs the insured into
action to protect against the potentially catastrophic consequences associated with being an
uninsured motorist-not something that is received routinely with each month’s bill.” Mackey v.
Bristol West Ins. Servs. Of Cal., Inc., 105 Cal.App.4th 1247, 1262 (2003).
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requirement, thus thwarting the ultimate policy behind the provision, namely to ensure that Ohio
motorists have insurance so as to avoid shifting the substantial burden that is created when
motorists who are at fault are uninsured. See Wolfe v. Wolfe, 88 Ohio St.3d 246, 249-250 (2000),
superseded by statute on other grounds (noting that the statutory provisions are “primarily
designed to protect the public from the dangers which uninsured motorists pose[]” and also are
“intended to protect insureds from unilaterally being left without the protections that automobile
insurance coverage affords by requiring that insurers provide an adequate method of notification
when canceling insurance policies[]”). Therefore, I concur in the majority’s judgment.
APPEARANCES:
JONATHAN E. ROSENBAUM, Attorney at Law, for Appellant.
RONALD V. RAWLIN and STEPHANIE L. SIMON, Attorneys at Law, for Appellee.