[Cite as Nationwide v. Pusser, 2018-Ohio-2781.]




             IN THE COURT OF APPEALS OF OHIO
                             SEVENTH APPELLATE DISTRICT
                                 MAHONING COUNTY

             NATIONWIDE MUTUAL FIRE INSURANCE COMPANY,

                                          Plaintiff-Appellee,

                                                  v.

                                 BARBARA PUSSER ET AL.,

                                      Defendants-Appellant.


                        OPINION AND JUDGMENT ENTRY
                                        Case No. 17 MA 0117


                                    Civil Appeal from the
                       Court of Common Pleas of Mahoning County, Ohio
                                  Case No. 2014 CV 00290.

                                         BEFORE:
                  Gene Donofrio, Cheryl L. Waite, Carol Ann Robb, Judges.


                                              JUDGMENT:
                                               Reversed.


Atty. Kirk Roman, 50 South Main Street, Suite 502, Akron, Ohio 44308, for Plaintiff-
Appellee.
Atty. Timothy Cunning, Scullin & Cunning, LLC, 940 Windham Court, Suite 4,
Boardman, Ohio 44512, for Defendants-Appellants.

                                                Dated:
                                             June 29, 2018
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Donofrio, J.

       {¶1}    Defendant-appellant, the Estate of Robert D. Boak (the Estate), appeals
from a Mahoning County Common Pleas Court judgment granting summary judgment in
favor of plaintiff-appellee, Nationwide Mutual Fire Insurance Company (Nationwide),
and determining no coverage existed for a vehicle-pedestrian fatality.
       {¶2}    Defendants Barbara Pusser and Diane Lapaze are sisters. Pusser began
living with Lapaze in December 2009.
       {¶3}    On March 17, 2011, Lapaze signed a policy application with appellee for
automobile insurance (the Application). Lapaze signed the Application as the named
insured or applicant. The Application contains statements that:


               I   ALSO   UNDERSTAND        THAT        MISREPRESENTATION     OF
               INFORMATION ON THIS APPLICATION, INCLUDING FAILURE
               TO DISCLOSE A DRIVER OR MEMBER OF THE HOUSEHOLD,
               COULD VOID SOME OR ALL OF MY COVERAGES.
               I hereby declare that the facts stated in the above application are
               true and request the company to issue the insurance and any
               renewal thereof in reliance thereon, with the understanding that I
               personally will provide any information requested on any policy
               questionnaire sent to me by the company.


(Application, p. 5).
       {¶4}    The Application included a section for the applicant to list “ALL
HOUSEHOLD MEMBERS OF DRIVING AGE AND NON-RESIDENT OPERATORS.”
Lapaze listed only herself. She did not list Pusser as a household member of driving
age despite the fact that Pusser met this definition.
       {¶5}    Pusser did not have a valid driver’s license. Apparently her license was
suspended sometime prior due to a driving under the influence charge and she never
obtained a valid license after that.




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       {¶6}   Nationwide issued the automobile policy to Lapaze on March 17, 2011
(the Policy). The vehicle insured under the Policy was Lapaze’s Dodge Neon.
       {¶7}   In 2012, Lapaze was diagnosed with dementia.
       {¶8}   On August 13, 2012, Pusser was operating Lapaze’s Dodge Neon when
she struck and killed Robert Boak as he was walking on Midlothian Boulevard. A third
party, Dennis Lehman, was also operating a vehicle that was involved in the accident.
The Policy was in effect at that time.
       {¶9}   On March 28, 2014, Nationwide filed a declaratory judgment action
against Pusser, Lapaze through her legal guardian, Lehman, and the Estate seeking a
declaration that it does not owe liability coverage to Pusser or Lapaze and does not owe
coverage that would insure to the benefit of Lehman or the Estate.
       {¶10} Nationwide filed a motion for summary judgment asserting no genuine
issues of material fact as to (1) the Policy was void ab initio due to a breach of the
warranties contained therein and failure to disclose Pusser as a driver and (2) Pusser
could not be a permissive user of Lapaze’s vehicle because Lapaze lacked the mental
capacity to permit Pusser to use the vehicle.
       {¶11} The Estate filed a response in opposition and a competing motion for
summary judgment asserting (1) Nationwide could not void the Policy ab initio, (2) even
if Nationwide could have voided the Policy, it waived that right by failing to cancel the
Policy before it expired and continuing to insure Lapaze after the accident, (3)
Nationwide was the party in position to discover any fraud, and (4) a genuine issue of
material fact existed as to whether Lapaze had the necessary capacity to giver Pusser
permission to operate her vehicle.
       {¶12} The trial court granted Nationwide’s motion for summary judgment and
denied the Estate’s motion for summary judgment. In so doing, the court found the
Policy was void ab initio due to a breach of the warranties in the Application and the
Policy concerning the disclosure of all drivers and other operators in Lapaze’s
household.
       {¶13} The Estate filed a timely notice of appeal on July 25, 2017. The Estate is
the only appellant in this appeal. It now raises two assignments of error.




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       {¶14} In reviewing a trial court's decision on a summary judgment motion,
appellate courts apply a de novo standard of review.         Cole v. Am. Industries &
Resources Corp., 128 Ohio App.3d 546, 552, 715 N.E.2d 1179 (7th Dist.1998). Thus,
we shall apply the same test as the trial court in determining whether summary
judgment was proper. Civ.R. 56(C) provides that the trial court shall render summary
judgment if no genuine issue of material fact exists and when construing the evidence
most strongly in favor of the nonmoving party, reasonable minds can only conclude that
the moving party is entitled to judgment as a matter of law. State ex rel. Parsons v.
Fleming, 68 Ohio St.3d 509, 511, 628 N.E.2d 1377 (1994). A “material fact” depends
on the substantive law of the claim being litigated. Hoyt, Inc. v. Gordon & Assoc., Inc.,
104 Ohio App.3d 598, 603, 662 N.E.2d 1088 (8th Dist.1995), citing Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 247-248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
       {¶15} The Estate’s two assignments of error share the same basis in law and
fact. Therefore, we will address them together.
       {¶16} The Estate’s first and second assignments of error state, respectively:


             THE TRIAL COURT ERRED WHEN IT DENIED THE ESTATE OF
       ROBERT D. BOAK’S MOTION FOR SUMMARY JUDGMENT.


             THE TRIAL COURT ERRED WHEN IT GRANTED NATIONWIDE’S
       MOTION FOR SUMMARY JUDGMENT.


       {¶17} This case is controlled by Allstate Ins. Co. v. Boggs, 27 Ohio St.2d 216,
271 N.E.2d 855 (1971).
       {¶18} In Boggs, the Ohio Supreme Court observed that there are two types of
statements by an insured in insurance policies: warranties and representations. Id. at
218.   The Court stated it is important to differentiate between the two types of
statements because


             [t]he consequences of a misstatement of fact by an insured are
             entirely different, depending on whether the statement is a warranty



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                 or a representation. If the statement is a warranty, a misstatement
                 of fact voids the policy ab initio. However, if the statement is a
                 representation, a misstatement [sic.] by the insured will render the
                 policy voidable, if it is fraudulently made and the fact is material to
                 the risk, but it does not void the policy ab initio.
Id. at 218-219.
       {¶19} The Court went on to define the two types of statements. It stated that a
representation is “made prior to the issuance of the policy which tends to cause the
insurer to assume the risk.” Id. at 219. On the other hand, a warranty “is a statement,
description or undertaking by the insured of a material fact either appearing on the face
of the policy or in another instrument specifically incorporated in the policy.” Id. The
Court held:
                 Although an applicant's misstatement in an insurance application, if
                 shown to be material to the risk and fraudulently made, is grounds
                 for cancellation of the policy, such representation, standing alone,
                 does not render the policy void ab initio and may not be used to
                 avoid liability arising under the policy after such liability has been
                 incurred.


Id. at paragraph one of the syllabus.
       {¶20} Moreover, if the insurer intends that a misstatement by an insured will
render a policy void ab initio, that intent “must appear clearly and unambiguously from
the terms of the policy.” Id. at 219.
       {¶21} Courts have since followed Boggs’ two-prong test in determining if a
misstatement voids an insurance policy. Am. Family Ins. Co. v. Johnson, 8th Dist.
Cuyahoga No. 93022, 2010-Ohio-1855, ¶ 16, citing Horton v. Safe Auto Ins. Co. 10th
Dist. No. 00AP-1017, 2001 WL 664421 (June 14, 2001). In order for a misstatement to
be a warranty that voids a policy ab initio, first, the representation must plainly appear
on the policy or must be plainly incorporated into the policy. Id. Second, there must be
a plain warning that a misstatement as to the warranty will render the policy void from its
inception. Id.



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       {¶22} The Estate argues that in this case the Policy does not include any
language that a misstatement will render the Policy void from its inception. Instead, it
states that a misstatement “may” cause the Policy to be held void ab initio and that the
Policy “could” be void from the beginning. The Estate asserts that because the Policy
does not clearly and unambiguously warn that a misstatement will render it void, it does
not satisfy Boggs and summary judgment in favor Nationwide was not warranted.
       {¶23} Alternatively, the Estate argues Nationwide waived its right to void the
policy because it did not return Lapaze’s premium. It points out that the Policy provides
that it may be held void ab initio “upon return of the policyholder’s premium.” (Policy, p.
G4). Therefore, the Estate contends, Nationwide could not void the Policy.
       {¶24} Finally, the Estate argues that it is an innocent party to this situation and it
should not be forced to pay the price for Nationwide’s negligence in failing to discover
that it was defrauded.
       {¶25} We must apply Boggs’ two-part test to the case at hand to determine if
Lapaze’s misstatement voided the Policy.           First, we must look at whether the
misstatement plainly appears on the Policy or is plainly incorporated into the Policy.
       {¶26} The misstatement that Lapaze is the only household member of driving
age in her household is contained in the Application.           The Application is plainly
incorporated into the Policy at page G4 wherein the Policy states, “The application for
this policy is incorporated herein and made a part of this policy.” Thus, the first part of
the Boggs test is satisfied.
       {¶27} Second, there must be a plain warning that a misstatement as to the
warranty will render the policy void from its inception.
       {¶28} The Application provides:


              IF AN INCORRECT ANSWER IS GIVEN TO A QUESTION LISTED
              AS A WARRANTY, IN EITHER THIS APPLICATION OR THE
              POLICY CONTRACT, SUCH A MISSTATEMENT MAY VOID THE
              POLICY.


(Italics added).



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       {¶29} Additionally, the Policy provides:


              13.      REPRESENTATIONS            AND   WARRANTIES        IN   THE
              APPLICATION The application for this policy is incorporated herein
       and made a part of this policy. * * * The policyholder agrees that the
       statements in the Declarations and the application for this policy are his or
       her agreements, representations and warranties. * * * If it is determined
       that any warranty made by the policyholder is incorrect, this policy may
       be held void ab initio, or void back to the date of inception, upon return of
       the policyholder’s premium.
       Warranties which, if incorrect, could void the policy from the beginning are:
       ***
       (2) all drivers and other operators in the household;
       (3) use of the insured vehicle


(Italics added; Policy, p. G4).
       {¶30} The language employed by Nationwide in both the Application and the
Policy is not a plain warning that a misstatement as to the warranty will render the policy
void from its inception. Neither the Application nor the Policy states unconditionally that
a misstatement as to a warranty will render the Policy void ab initio. Instead, the insurer
chose to use the words “may” and “could” in the phrases “such a misstatement may
void the policy”, “this policy may be held void ab initio”, and “[w]arranties which, if
incorrect, could void the policy from the beginning.” The use of these words speaks of
possibilities, not certainties. Thus, they do not provide a plain warning as required by
Boggs.
       {¶31} Regarding the same type of language, the Eighth District has held:


              [T]he policy language “we may void this policy” is not a clear
              warning to the insured that a misstatement shall render the policy
              void. Rather, it is a general statement reflecting the long-standing
              point of law that a “contract induced by fraud is not void, but it is



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              voidable at the election of the one defrauded.” Columbus & T.R.
              Co. v. Steinfeld (1884), 42 Ohio St. 449, 455.


(Emphasis sic.); James v. Safeco Ins. Co. of Illinois, 195 Ohio App.3d 265, 2011-Ohio-
4241, 959 N.E.2d 599 (8th Dist.), ¶ 25.
       {¶32} Moreover, Boggs specifically held that if the insurer intends a
misstatement by an insured will render a policy void ab initio, the insurer’s intent “must
appear clearly and unambiguously from the terms of the policy.” (Emphasis added);
Boggs, at 219. The words “may” and “could” do not clearly and unambiguously put the
insured on notice that a misstatement will render a policy void ab initio. These words
speak only of a possibility.
       {¶33} Additionally, it was undisputed that Nationwide never declared the Policy
void nor did it return Lapaze’s premium.      The Policy specifically states that if it is
determined that the policyholder made an incorrect warranty, then the Policy “may be
held void ab initio, or void back to the date of inception, upon return of the
policyholder’s premium.” (Policy, p. G4). Because Nationwide did not declare the
Policy void and return Lapaze’s premium, it failed to even attempt to void the Policy by
its terms.
       {¶34} For these reasons, the trial court erred in granting summary judgment in
favor of Nationwide. Instead, the court should have granted summary judgment in favor
of the Estate. No genuine issue of material fact exists.
       {¶35} Accordingly, the Estate’s first and second assignments of error have merit
and are sustained.
       {¶36} For the reasons stated above, the trial court’s judgment is hereby reversed
and summary judgment is entered in favor of the Estate.

Waite, J., concurs
Robb, P. J., concurs




Case No. 17 MA 0117
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       For the reasons stated in the Opinion rendered herein, the Estate’s first and
second assignments of error are sustained. It is the final judgment and order of this
Court that the judgment of the Court of Common Pleas of Mahoning County, Ohio, is
reversed and summary judgment is entered in favor of the Estate. Costs to be taxed
against Nationwide.

        A certified copy of this opinion and judgment entry shall constitute the mandate in
this case pursuant to Rule 27 of the Rules of Appellate Procedure. It is ordered that a
certified copy be sent by the clerk to the trial court to carry this judgment into execution.



                                 NOTICE TO COUNSEL

       This document constitutes a final judgment entry.




Case No. 17 MA 0117
