                    NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                               File Name: 11a0174n.06

                                          No. 10-3101                                  FILED
                                                                                   Mar 23, 2011
                            UNITED STATES COURT OF APPEALS                    LEONARD GREEN, Clerk
                                 FOR THE SIXTH CIRCUIT

DOUGLAS C. RAMSEY,

          Plaintiff-Appellant,

v.                                                        ON APPEAL FROM THE
                                                          UNITED STATES DISTRICT
ALLSTATE INSURANCE CO.,                                   COURT FOR THE SOUTHERN
                                                          DISTRICT OF OHIO
          Defendant-Appellee.


                                                     /

Before:          KEITH, MERRITT, and MARTIN, Circuit Judges.

          BOYCE F. MARTIN, JR., Circuit Judge. Allstate Insurance Company denied Douglas

Ramsey’s claim after a fire seriously damaged the house that he had inherited from his father.

Although the district court correctly found that Douglas did not have an express insurance contract

with Allstate, we REVERSE and REMAND for the district court to consider in the first instance

whether Allstate received constructive notice of Douglas’s father’s death and is estopped from

denying coverage, and whether the parties’ conduct established an implied-in-fact contract between

Douglas and Allstate.

                                                I.

          Douglas’s father, Ralph Ramsey, purchased homeowner’s insurance from Allstate in

September of 1993 and renewed the policy annually until his death in August of 2002. Bank of

America had a mortgage on the house and paid the insurance premiums from Ralph’s account. After
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Ramsey v. Allstate Ins. Co.
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Ralph died, Bank of America continued to pay the insurance premiums, but did so from Douglas’s

account. Allstate continued to renew the insurance coverage but never named Douglas on the policy.

The policy states in pertinent part:

       Policy Transfer
       You may not transfer this policy to another person without our written consent.

       Continued Coverage After Your Death
       If you die, coverage will continue until the end of the premium period for:
       1) your legal representative while acting as such, but only with respect to the
       residence premises and property covered under this policy on the date of your death.
       2) an insured person, and any person having proper temporary custody of your
       property until a legal representative is appointed and qualified.

       There is no evidence that Douglas ever directly notified Allstate of Ralph’s passing. Douglas

alleges that he informed Bank of America and Bank of America continued to pay the insurance

premiums, renewing the policy in Ralph’s name.

       After the fire on June 26, 2008, Allstate took possession of the home, inspected it, and

boarded it up. Allstate put Douglas’s salvageable property in storage and paid him $500 to cover

initial expenses. However, on July 20, Allstate sent Douglas a letter stating that it would not cover

the loss from the fire. There are no allegations of any improprieties, but Allstate discovered that the

policy was still only in Ralph’s name. Therefore, Allstate determined that it had no obligation to

cover the loss to what was now Douglas’s house.

       After Allstate denied coverage, the policy automatically renewed once again in September

of 2008. However, Allstate argues that this renewal, after it had learned of Ralph’s death, was

inadvertent. Allstate canceled the policy when it discovered the error.
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       The district court granted Allstate’s motion for summary judgment holding that under the

terms of the insurance contract, coverage ceased at the end of the premium period following Ralph’s

death. The district court found that Douglas did not notify Allstate of Ralph’s death before the fire

and, even if he had provided notice, the loss is still not covered because the policy is not

transferrable.

                                                 II.

A.     Summary Judgment Standard.

       “The Sixth Circuit reviews de novo a district court’s grant of summary judgment.” Hamilton

v. Starcom Mediavest Group, Inc., 522 F.3d 623, 627 (6th Cir. 2008). Summary judgment is proper

where “there is no genuine dispute as to any material fact and the movant is entitled to judgment as

a matter of law.” Fed. R. Civ. P. 56(a); see Hamilton, 522 F.3d at 627. “The moving party has the

initial burden of proving that no genuine issue of material fact exists,” and the court must draw all

reasonable inferences in the light most favorable to the nonmoving party. Vaughn v. Lawrenceburg

Power Sys., 269 F.3d 703, 710 (6th Cir. 2001). When a motion for summary judgment is properly

made and supported and the nonmoving party fails to respond with a showing sufficient to establish

an essential element of its case, summary judgment is appropriate. See Celotex Corp. v. Catrett, 477

U.S. 317, 322-23 (1986). Because jurisdiction is based on diversity of citizenship, the substantive

law of Ohio applies.

B.     Whether There is an Express Insurance Contract Between Douglas and Allstate.

       According to the terms of the policy, Ralph’s express insurance contract with Allstate

terminated at the end of the first premium period following his death. Douglas could not renew the
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policy on behalf of Ralph, the named insured, because Ralph had passed away. Additionally,

Douglas could not assume the policy because the contract contained an anti-assignment clause, and

provisions prohibiting assignment are valid and enforceable, see Pilkington N. Am., Inc. v. Travelers

Cas. & Sur. Co., 2006-Ohio-6551, 861 N.E.2d 121, at ¶¶ 36-39 (noting that an assignment could

dramatically alter the insurer’s exposure). Therefore, the district court correctly held that Douglas

does not have any viable claim under the express terms of Ralph’s policy.

       Douglas argues that he became an insured person under Ralph’s policy when he moved into

the house before Ralph died. While Douglas did meet the policy’s definition of an insured person,

the express insurance contract terminated at the end of the premium period following Ralph’s death.

Therefore, the district court correctly concluded that this is not a basis for finding Douglas covered.

Douglas ceased to be an insured person under Ralph’s policy when the policy terminated at the end

of the premium period following Ralph’s death.

C.     Whether Allstate Received Constructive Notice of Ralph’s Death.

       The district court correctly found that there is no evidence to suggest that Douglas directly

notified Allstate of Ralph’s passing. However, the district court failed to consider whether Allstate

is estopped from denying coverage because it received constructive notice of Ralph’s death. The

doctrine of equitable estoppel is not directly applicable but generally prevents a party who made a

representation from later denying it if the other party relied on the representation. Hortman v.

Miamisburg, 2006-Ohio-4251, 852 N.E.2d 716, at ¶ 20 (Ohio 2006).

       Although Douglas notified the mortgage holder, the district court appears to have correctly

concluded that there is no evidence in the record from which it may conclude that he directly notified
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Allstate. However, Ralph’s estate went through probate proceedings and Douglas took title to the

home, which may have provided Allstate with constructive notice of Ralph’s death. Therefore, we

remand for the district court to consider whether Allstate received constructive notice of Ralph’s

death and, if it did, whether it is estopped from denying coverage to Douglas.

D.     The Terms of the Policy Do Not Explicitly End All Liability After the Named Insured
       Dies.

       The Ohio Court of Appeals recently provided an informative summary of the procedure to

follow when interpreting insurance policies in Allstate Insurance Co. v. Eyster, 2010-Ohio-3673, 939

N.E.2d 1274, at ¶¶ 17-20 (Ohio Ct. App. 2010). Insurance policies are contracts, the proper

interpretation of which is a question of law for the court. Id. at ¶ 17 (citing Sharonville v. Am. Emp.

Ins. Co., 2006-Ohio-2180, 846 N.E.2d 833, at ¶ 6 (Ohio 2006)). The scope of coverage is

determined by construing the contract “in conformity with the intention of the parties as gathered

from the ordinary and commonly understood meaning of the language employed.” Id. (quoting King

v. Nationwide Ins. Co., 519 N.E.2d 1380, 1383 (Ohio 1988)) (internal quotation marks omitted).

When the contract “is reasonably susceptible of more than one interpretation, it will be strictly

construed against the insurer and in favor of the insured.” Id. at ¶ 18.

       Initially, the insured bears the burden of proving that the policy covers the claimed loss. Id.

at ¶ 20 (citing Chicago Title Ins. Co. v. Huntington Nat’l Bank, 719 N.E.2d 955, 959 (Ohio 1999)).

However, if an insurer denies coverage based on a policy exclusion, the insurer bears the burden of

demonstrating that the exclusion applies. Id. Ohio courts presume that coverage applies unless it

is clearly excluded. Id. at ¶ 19.
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       Allstate argues that the policy’s provision describing coverage after the death of the named

insured precludes it from any liability in this case. Although the policy specifically describes what

happens when the policyholder dies, that provision is for the benefit of the insured. Contrary to

Allstate’s position in this case, this provision appears to be designed to clarify that the policy does

not automatically terminate on the policy holder’s death. Without this provision, if the insured’s

property was damaged shortly after the policyholder died, the insurance company might not be

required to cover the loss. However, this term clarifies that the policy continues for as long as it

can—the end of the premium period.

       We agree that this provision terminated Ralph’s express insurance contract with Allstate at

the end of the first premium period following his death. However, in light of Ohio’s policy of

construing insurance contracts against the insurance company and placing the burden on the

insurance company to demonstrate that an exception applies, see, e.g., Anderson v. Highland House

Co., 757 N.E.2d 329, 332-33 (Ohio 2001), we cannot conclude that this clause excludes any

possibility of Allstate being responsible for coverage on an estoppel or implied contract theory after

Ralph’s death.

E.     Whether There Is an Implied Contract Between Douglas and Allstate.

       The district court did not consider whether the parties’ conduct entitled Douglas to relief

based on an implied contract theory. While Douglas has not specifically pled a cause of action based

on an implied contract, the complaint appears to sufficiently set forth the basis for and the facts

underlying such a claim. Cf. Randleman v. Fid. Nat’l Title Ins. Co., 465 F. Supp. 2d 812, 818 (N.D.
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Ohio 2006) (considering cause of action based on an implied contract even though not expressly pled

in the complaint).

       Ohio recognizes implied-in-fact contracts. Legros v. Tarr, 540 N.E.2d 257, 263 (Ohio 1989).

In order to find a contract implied in fact, the surrounding circumstances must be such that the court

can infer a contract exists as a matter of tacit understanding between the parties. Id. Whether there

is an implied contract turns on the facts of the particular case. See Reali, Giampetro & Scott v. Soc.

Nat’l Bank, 729 N.E.2d 1259, 1264 (Ohio Ct. App. 1999). The Ohio Court of Appeals has noted that

“[b]ecause the existence of an implied in fact contract requires crucial factual determinations

regarding the intent and thought process of the parties, deference must be paid by a reviewing court

to the trial court’s determinations.” Fouty v. Ohio Dep’t Youth Servs., 2006-Ohio-2957, 855 N.E.2d

909, at ¶ 57 (Ohio Ct. App. 2006).

       We remand this matter for the district court to consider whether the facts of this

case—particularly Douglas’s continued payment of the insurance premiums, and Allstate’s issuance

of renewed insurance policies—created an implied contract between Douglas and Allstate to insure

the house. If the facts warrant, finding an implied contract in this case would not be inconsistent

with Ohio cases, which have found implied contracts to exist between parties other than those named

on an express contract. Cf. Randleman, 465 F. Supp. 2d at 816 (holding that the complaint stated

a claim for breach of an implied contract where the plaintiffs were not named insureds and could not

recover under the express title insurance policy); Capella III, L.L.C. v. Wilcox, 2010-Ohio-4746, 940

N.E.2d 1026, at ¶ 18 (Ohio Ct. App. 2010) (implying contract between a holdover tenant and

landlord when original lease had multiple tenants). Here, Douglas paid the annual insurance
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premiums through Bank of America, and Allstate issued renewed policies. After the fire, Allstate

appears to have acted as if the house were insured by taking possession, boarding it up, and writing

Douglas a check to cover initial expenses. Therefore, we remand the matter for the district court to

determine whether there is a contract implied in fact between Douglas and Allstate.

       While Ralph’s express insurance contract prohibits assignment, finding that there is an

implied contract between Douglas and Allstate is not an assignment but an entirely new contract.

                                                 III.

       Although Douglas does not have a claim based on an express contract theory, the district

court failed to consider fully whether Allstate received constructive notice of Ralph’s death and

whether there is an implied in fact contract between Douglas and Allstate. Therefore, we

REVERSE the district court’s order dismissing the case with prejudice and REMAND the matter

for the district court to consider in the first instance whether Allstate received constructive notice

of Ralph’s death estopping it from denying coverage, and whether there is an implied-in-fact contract

to provide insurance coverage between the parties.
