[Cite as James v. Safeco Ins. Co. of Illinois, 195 Ohio App.3d 265, 2011-Ohio-4241.]




                Court of Appeals of Ohio
                               EIGHTH APPELLATE DISTRICT
                                  COUNTY OF CUYAHOGA


                                JOURNAL ENTRY AND OPINION
                                         No. 96077


                                               JAMES,
                                                   APPELLANT,

                                                      v.

       SAFECO INSURANCE COMPANY OF ILLINOIS,
                                                   APPELLEE,



                                   JUDGMENT:
                             REVERSED AND REMANDED


                                      Civil Appeal from the
                             Cuyahoga County Court of Common Pleas
                                      Case No. CV-707732

        BEFORE:           Sweeney, P.J., Jones, J., and S. Gallagher, J.


        RELEASED AND JOURNALIZED: August 25, 2011
       Tyrone E. Reed, for appellant.

       Frost, Brown, Todd, L.L.C., and William M. Harter, for appellee.



       JAMES J. SWEENEY, Presiding Judge.

       {¶ 1} Plaintiff-appellant, Katherine James, appeals from the trial court’s judgment

granting defendant-appellee, Safeco Insurance Co.’s (“Safeco’s”) motion for summary

judgment. After reviewing the facts of the case and pertinent law, we reverse the judgment

and remand the cause to the trial court.

       {¶ 2} On March 1, 2002, plaintiff purchased automobile insurance from Safeco.

Plaintiff’s 2002 Hyundai Santa Fe was the only vehicle listed on the policy and plaintiff was

the only driver listed. On March 3, 2008, plaintiff leased a 2008 Ford Mustang and requested

that Safeco add this vehicle to the policy, which Safeco did.

       {¶ 3} Shortly after plaintiff bought the Mustang, her daughter Marcia Eason became

the primary driver of the car. Eason did not live with plaintiff, and the car was stored at

Eason’s house. On October 14, 2008, plaintiff requested that Safeco add Eason as a driver

on the policy, which Safeco did.

       {¶ 4} On February 10, 2009, almost one year after leasing the Mustang, plaintiff took

the car back from Eason because, according to plaintiff, Eason “never put a penny” toward

the lease payments. Plaintiff parked the Mustang in her driveway.




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       {¶ 5} On February 27, 2009, the Mustang was stolen from plaintiff’s driveway.

Plaintiff filed a claim with Safeco under the policy. Safeco denied coverage, and on October

23, 2009, plaintiff filed a complaint against Safeco, alleging breach of contract and other

associated claims. On October 27, 2010, the court granted Safeco’s summary-judgment

motion, finding that “plaintiff’s representations and non-disclosures rendered insurance

policy void.”

       {¶ 6} Plaintiff appeals and raises one assignment of error for our review.

       {¶ 7} “I. The trial court erred to the substantial prejudice of the appellant, when it

granted the insurer’s motion for summary judgment finding that the appellant’s automobile

policy was rendered void ab initio, when material issues of fact remained * * * as to whether

the appellant made a misrepresentation or non disclosure [that] equated a warranty about the

2008 Mustang when she added it and her daughter to her policy.”

       {¶ 8} Appellate review of summary judgment is de novo. Grafton v. Ohio Edison Co.

(1996), 77 Ohio St.3d 102, 105, 671 N.E.2d 241. The Ohio Supreme Court set forth the test

for determining whether summary judgment is appropriate in Zivich v. Mentor Soccer Club

(1998), 82 Ohio St.3d 367, 369–370, 696 N.E.2d 201, as follows:

       {¶ 9} “Pursuant to Civ.R. 56, summary judgment is appropriate when (1) there is no

genuine issue of material fact, (2) the moving party is entitled to judgment as a matter of law,

and (3) reasonable minds can come to but one conclusion and that conclusion is adverse to

the nonmoving party, said party being entitled to have the evidence construed most strongly

                                               3
in his favor. Horton v. Harwick Chem. Corp. (1995), 73 Ohio St.3d 679, 653 N.E.2d 1196,

paragraph three of the syllabus. The party moving for summary judgment bears the burden of

showing that there is no genuine issue of material fact and that it is entitled to judgment as a

matter of law. Dresher v. Burt (1996), 75 Ohio St.3d 280, 292–293, 662 N.E.2d 264, 273–

274.”

        {¶ 10} In Allstate Ins. Co. v. Boggs (1971), 27 Ohio St.2d 216, 218, 271 N.E.2d 855,

the Ohio Supreme Court addressed the issue “whether a misstatement * * * by an insured in

an application for an automobile * * * insurance policy renders the policy void ab initio.”

        {¶ 11} An insured’s misstatement will fall into one of two categories, each with a

different legal consequence. First, a “representation” is “a statement made prior to the

issuance of the policy which tends to cause the insurer to assume the risk.” Id. at 219. If the

misstatement of fact is a representation, the statement “will render the policy voidable, if it is

fraudulently made and the fact is material to the risk * * *.” Id. Second, a “warranty,” which

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.

A misstatement in warranty “voids the policy ab initio.” Id., at 218-219.

        {¶ 12} In determining how to treat an insured’s misstatement, “[t]he insurer’s decision

[whether] to incorporate the statement in * * * the policy generally controls whether the

statement is a warranty or a representation.” Id. at 219. However, a statement “does not

constitute a warranty unless the language of the policy, construed strictly against the insurer,

                                                4
requires such an interpretation. * * * If it is [the insurer’s] purpose to provide that a

misstatement by the insured shall render the policy void ab initio, such facts must appear

clearly and unambiguously from the terms of the policy.” Id.

       {¶ 13} Safeco alleges that plaintiff made misstatements regarding the following

information: “(1) the identity of the Mustang’s driver; (2) the residency of the driver; and (3)

the fact that the car would not be garaged at [plaintiff’s] home.” This court has considered

affirmative statements, as well as failure to disclose information, under the ambit of Boggs.

See, e.g., Med. Protective Co. v. Fragatos, 190 Ohio App.3d 114, 2010-Ohio-4487, 940

N.E.2d 1011.

       {¶ 14} In the instant case, the policy contains the following language:

       {¶ 15} “In return for your payment of all premiums, and in reliance upon the

statements in the application we agree to insure you subject to the terms, conditions and

limitations of this policy.

       {¶ 16} “* * *

       {¶ 17} “This policy was issued in reliance upon the information provided on your

application. We may void this policy if you or an insured have concealed or misrepresented

any material fact or circumstance, or engaged in fraudulent conduct, at the time application

was made or any time during the policy period.

       {¶ 18} “* * *




                                               5
       {¶ 19} “We may void this policy or deny coverage for fraud or material

misrepresentation even after the occurrence of an accident or loss.”

       {¶ 20} This court recently concluded that an insurance company “satisfied both prongs

of the Boggs test to establish that [the insured’s] statement regarding the number of prior

claims constitutes a warranty [and] breach of this warranty therefore renders the policy void

ab initio.” Fragatos, 190 Ohio App.3d 114, 2010-Ohio-4487, 940 N.E.2d 1011, ¶ 33. The

provision of the Fragatos policy stated: “It is understood and agreed that the statements made

in the insurance application are incorporated into, and shall form part of, this policy.” This

court held that this language “expressly incorporated [the insured’s] answers to his

application as part of the policy.” Fragatos also held that the application contained a

“warning that any material misrepresentation would render the policy null and without effect,

[which was] equivalent to warning that the policy is void ab initio.” Id.

       {¶ 21} This court has also recently determined, on the other hand, that misstatements

by an insured “constitute a representation, not a warranty, which renders the policy voidable,

but not void” under the Boggs test. Am. Family Ins. Co. v. Johnson, Cuyahoga App. No.

93022, 2010-Ohio-1855, ¶ 17. In Johnson, the insurance policy contained the following

language:

       {¶ 22} “ ‘We will provide this insurance to you in reliance on the statements you have

given us in your application of insurance. You warrant the statements in your application to

be true and this policy is conditioned upon the truth of your statements. We may void this

                                              6
policy if the statements you have given us are false and we have relied on them.’ ” Id. at

¶ 16.

        {¶ 23} The Johnson court reasoned that “the policy merely mentions the application; it

does not state that the application is part of the policy. Moreover, the policy does not

specifically state that a misrepresentation as to prior claims would render the policy void ab

initio. Instead, it generally states that the false statements on the application may void the

policy.” Id. at ¶ 17.

        {¶ 24} Upon review, we find the policy language in the instant case does not

incorporate the application, nor does it clearly and unambiguously “provide that a

misstatement by the insured shall render the policy void ab initio * * *.” Boggs, 27 Ohio

St.2d at 219, 271 N.E.2d 855. The policy language “in reliance upon the statements in the

application” merely refers to the application. “The mere fact that a policy of insurance refers

to the application does not make such application a part of the policy. * * * In order to have

an incorporation by reference in an insurance policy, it must be done in unequivocal language

on the face of the policy.” Id. at 220.

        {¶ 25} Additionally, the 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 voidable at the election of the one defrauded.” Columbus & T.R. Co. v.

Steinfeld (1884), 42 Ohio St. 449, 455.

                                               7
       {¶ 26} Accordingly, we hold that plaintiff’s alleged misstatements or nondisclosures

were representations and thus they render the policy voidable if they were fraudulently made

and material to the risk. A voidable policy may be canceled by the insurer but “may not be

used to avoid liability arising under the policy after such liability has been incurred.” Boggs,

at paragraph one of the syllabus. Therefore, the court erred as a matter of law in concluding

that the policy was void and in granting Safeco’s summary-judgment motion. Plaintiff’s

assignment of error is sustained.

       {¶ 27} The judgment is reversed, and the cause is remanded to the trial court for

proceedings consistent with this opinion.

                                                                           Judgment reversed,

                                                                         and cause remanded.


       JONES and GALLAGHER, JJ., concur.




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