[Cite as Cincinnati Ins. Co. v. Song, 2012-Ohio-1062.]


                 Court of Appeals of Ohio
                                EIGHTH APPELLATE DISTRICT
                                   COUNTY OF CUYAHOGA


                               JOURNAL ENTRY AND OPINION
                                        No. 97379


                    THE CINCINNATI INSURANCE CO.
                                                   PLAINTIFF-APPELLEE

                                                         vs.


                                 KYUNG SONG, ET AL.
                                                   DEFENDANTS-APPELLANTS




                                   JUDGMENT:
                             REVERSED AND REMANDED


                                      Civil Appeal from the
                             Cuyahoga County Court of Common Pleas
                                      Case No. CV-615775

        BEFORE: Kilbane, J., Celebrezze, P.J., and S. Gallagher, J.

        RELEASED AND JOURNALIZED:                              March 15, 2012
ATTORNEY FOR APPELLANTS

Harold L. Levey
410 The Leader Building
526 Superior Avenue
Cleveland, Ohio 44114-1984

ATTORNEY FOR APPELLEE

Patrick S. Corrigan
55 Public Square
Suite 930
Cleveland, Ohio 44113
MARY EILEEN KILBANE, J.:

      {¶1} Defendant-appellant, Kyung Song (“Song”), appeals from the order of the

trial court that granted summary judgment to plaintiff-appellee, The Cincinnati Insurance

Co. (“Cincinnati Insurance”), in its declaratory judgment action.    For the reasons set

forth below, we reverse and remand for further proceedings.

      {¶2} During the one-year period beginning on October 27, 2005, Kevin Latona

(“Latona”) was the named insured under an automobile insurance policy issued by

Cincinnati Insurance.    In relevant part, this policy provided liability coverage from

October 27, 2005 through October 27, 2006, “[w]hen a ‘covered person’ becomes legally

responsible because of an auto accident[.]”

      {¶3} The policy further defined “covered person” to include “[a]ny person using

‘your covered auto.’”

      {¶4} The policy also provided that it would be cancelled for nonpayment of

premium, material misrepresentation, or:

      If “your” driver’s license or that of:

      (1)   Any driver who lives with “you”; or

      (2) Any driver who customarily uses “your covered auto”;
      has been suspended or revoked. This must have occurred:

      (1) During the policy period; or
       (2) Since the last anniversary of the original effective date if the policy
       period is other than 1 year.

       {¶5} The policy also provided, in the uninsured motorists coverage provision, the

following:

       A. “We” do not provide Uninsured Motorists Coverage for “bodily
       injury” or “property damage” sustained by any person:

       ***

       3. While operating or “occupying” a “motor vehicle” without a reasonable
       belief that he or she is entitled to do so, provided that under no
       circumstances will a person whose license has been suspended, revoked or
       never issued be held to have a reasonable belief that he or she is entitled to
       operate a “motor vehicle. ”

       {¶6} On June 9, 2006, Song was operating Latona’s vehicle when it was struck

by an uninsured motorist, Archie Howard.       Later that day, as Latona was driving to the

police station to make a police report about the first collision, he backed into a retaining

wall, causing damage to the rear of the car.

       {¶7} Immediately following the accident, Latona and Song learned that Cincinnati

Insurance had agreed to indemnify him for the damage to his vehicle, totaling $3,996.

Song then began to receive treatment for her injuries.   Six months later, on December 5,

2006, Cincinnati Insurance informed Song that she was an excluded driver under the

policy, and it demanded that Song reimburse the money it had paid to Latona.

       {¶8} On February 13, 2007, Cincinnati Insurance filed a complaint for declaratory

judgment against Song, Latona, and Howard. In its first claim for relief, Cincinnati

Insurance claimed that Song was an excluded driver under Latona’s policy and is not
entitled to recovery for damages, bodily injury, or uninsured motorists benefits resulting

from the collision with Howard.     In the second claim, Cincinnati Insurance asserted a

claim for unjust enrichment against Latona, seeking recovery of $3,996 for property

damages that the insurer paid as the result of Latona’s alleged misrepresentations and

omissions about the collision.       In the third claim, Cincinnati Insurance sought

subrogation from Howard for the payment to Latona.

       {¶9}    Latona was subsequently dismissed with prejudice and service was not

obtained on Howard.       Song filed a counterclaim for defense, indemnity, medical

payments, and uninsured motorists benefits under the Cincinnati Insurance policy.

       {¶10} On August 24, 2007, Cincinnati Insurance moved for summary judgment

and maintained that Song was not entitled to coverage pursuant to the named driver

exclusion.    Cincinnati Insurance presented evidence that in October 2005, Song was

involved in a motor vehicle accident in Latona’s car.          Following that accident,

Cincinnati Insurance requested additional information from Latona regarding “all

licensed drivers that live in the home,” and warned:

       If we do not hear back from you or receive this[,] Cincinnati Insurance may
       take further action due to the increased risk[.]

       {¶11} Six months later, on March 15, 2006, Latona signed a named driver

exclusion that stated:

       It is agreed the insurance afforded by this policy shall not apply to any
       claim arising from or in any way involving any motor vehicle while that
       motor vehicle is being operated by Ky [sic] Song.
       {¶12} Latona also indicated that he was not certain that he and Song would remain

together, and she would no longer be driving his car.

       {¶13} Cincinnati Insurance also claimed that the named driver exclusion was

supported by consideration because the company did not cancel the policy due to Song’s

driving record.    In this regard, Cincinnati Insurance presented evidence that on March

21, 2006, Song failed to appear in court in connection with a speeding ticket, and the

Mentor Municipal Court sent a declaration of forfeiture of her license to the Bureau of

Motor Vehicles.

       {¶14}      Alternatively, Cincinnati Insurance additionally maintained that Song

was not entitled to coverage under the uninsured motorists coverage exclusion for injury

or damages sustained by any person while operating a motor vehicle “without a

reasonable belief that he or she is entitled to do so, [such as] * * * a person whose license

has been suspended[.]”

       {¶15}      In opposition, Song noted that she was in fact a permissive driver under

the policy, and that the named driver exclusion impermissibly modified the policy during

its effective term in contravention of R.C. 3937.31(B)(1).          She also asserted that

Cincinnati Insurance obtained the exclusion by improperly threatening to cancel Latona’s

policy due to her driving record.

       {¶16} As to the insurance company’s claim that the exclusion was supported by

consideration because the company did not exercise its right to cancel the policy, Song
maintained that the requirements for cancellation were not met because she did not live

with Latona and her driver’s license was promptly reinstated.   Song averred:

      7. That [my sister’s] Seven Hills address was my permanent mailing
      address both at the time Kevin Latona signed the exclusion form and at the
      time of the June 9, 2006, motor vehicle accident;

      8. That at those times, Affiant was spending nights at both the home of
      Kevin Latona, and at Affiant/Affiant’s sister’s home;

      9. That at that time I maintained a room and clothing at my [sister’s]
      Seven Hills home[;]

      10. That at all times I continued to use my [sister’s] Seven Hills address
      as my residential address including for the receipt of mail.

      {¶17} Song additionally maintained with regard to the insurance company’s

cancellation argument and its related contention that she was excluded from coverage

because the collision occurred while she was operating a motor vehicle “without a

reasonable belief that he or she is entitled to do so[,]” that she did not have notice from

the state that her license had been suspended, and after learning of the suspension, she

promptly had it reinstated. In an email dated January 30, 2006, in which Cincinnati

Insurance discussed obtaining the named driver exclusion from Latona, it acknowledged

that Song’s license was “now valid.” Finally, she claimed that Cincinnati Insurance

waived its right to deny the claim because it paid Latona’s claim for property damages

from Song’s collision with Howard.

      {¶18} On September 7, 2011, the trial court awarded summary judgment to

Cincinnati Insurance on its claim and on Song’s counterclaim.    The court concluded that
Latona had voluntarily consented to named driver exclusion that excluded Song from

coverage, and that the exclusion was valid and enforceable.1 Song now appeals.

      {¶19} In her assignments of error, Song asserts that by initially accepting the claim

and paying Latona’s claim for property damages, Cincinnati Insurance is estopped as a

matter of law from now contesting it. Song also asserts that the trial court erred in

enforcing the named driver exclusion because it was procured through economic duress,

unsupported by consideration, and impermissibly altered the policy during its term,

contrary to R.C. 3937.31(A).

      {¶20}      We review an appeal from summary judgment under a de novo standard of

review.     Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 1996-Ohio-336, 671

N.E.2d 241; Mitnaul v. Fairmount Presbyterian Church, 149 Ohio App.3d 769,

2002-Ohio-5833, 778 N.E.2d 1093,¶ 27 (8th Dist.2002). Therefore, this court applies

the same standard as the trial court, viewing the facts in the case in the light most

favorable to the nonmoving party and resolving any doubt in favor of the nonmoving

party. Viock v. Stowe-Woodward Co., 13 Ohio App.3d 7, 12, 467 N.E.2d 1378 (1983).

      {¶21} Pursuant to Civ.R. 56(C), and as stated in Temple v. Wean United, Inc.

(1977), 50 Ohio St.2d 317, 327, 364 N.E.2d 267, 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


      1
          The court additionally found no just cause for delay under Civ.R. 54(B).
       the motion for summary judgment is made, that conclusion is adverse to
       that party.

       {¶22} 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), the

nonmoving party must set 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-Ohio-211, 663 N.E.2d 639.

       {¶23} As to Song’s waiver and estoppel argument, we note that in general, the

doctrines of waiver and estoppel may not be used to expand insurance coverage. Erie

Ins. Co. v. Favor, 129 Ohio App.3d 644, 649, 718 N.E.2d 968 (10th Dist.1998).

Although there is an exception to this rule where the insured provides a defense without

reserving its rights, id., this exception is inapplicable herein.   The trial court therefore

properly rejected this basis of coverage for Song.

       {¶24} As to Song’s challenge to the named driver exclusion, we note that, in

general, insurers are permitted to include terms and conditions to preclude coverage for

injury or death of an insured that is caused by a motor vehicle operated by any person

who is specifically excluded from coverage in the policy, provided that such

circumstances are specified within the policy. R.C. 3937.18(I)(3); Green v. Westfield

Ins. Co., 9th Dist. No. 06CA0025-M, 2006-Ohio-5057, ¶ 16-17.

       {¶25}     However,     every automobile liability policy issued must have, at a

minimum, a guaranteed two-year policy period during which the policy cannot be altered

except by agreement of the parties and in accordance with R.C. 3937.30 to 3937.39. See
generally Reese v. Barbiere, 12th Dist. No. CA2002-09-079, 2003-Ohio-5110, ¶ 10.

That is, pursuant to R.C. 3937.31(A):

      (A) Every automobile insurance policy shall be issued for a period of not
      less than two years or guaranteed renewable for successive policy periods
      totaling not less than two years. * * * 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 * * *.

      {¶26} In accordance with the foregoing, Ohio courts have upheld the validity of

named driver exclusions aimed at excluding an insured’s household member where the

exclusion is supported by adequate consideration.   See Roberts v. Reyes, 9th Dist. No.

10CA009821, 2011-Ohio-2608.

      {¶27}     Applying the foregoing to this matter, and in accordance with our duty to

conduct a de novo review of this matter, and to view the evidence most strongly in favor

of the party against whom the motion for summary judgment is made, we conclude that

the trial court erred in awarding Cincinnati Insurance summary judgment in this matter.

The record contains evidence that       Latona was the named insured, and Song was a
“covered person” under this policy while using Latona’s “covered auto” under the policy

for the one-year period beginning on October 27, 2005.       One month after that effective

date, Cincinnati Insurance sent Latona a letter warning that if Cincinnati Insurance did

not receive the additional information, it may “take further action due to increased risk.”

Six months later, on March 15, 2006, and during the effective period of the insurance

policy, Latona signed a named driver exclusion barring Song from coverage.           On this

record, therefore, Song     demonstrated the existence of a genuine issue of material fact as

to whether Cincinnati Insurance modified the policy coverage during the policy term, in

contravention of R.C. 3937.31.

       {¶28}   Further, the record contains genuine issues of material fact as to whether

Cincinnati Insurance obtained an enforceable named driver exclusion supported by

sufficient consideration.    The record contains conflicting evidence as to whether Song

lived with Latona and customarily drove his vehicle.       In addition, there was a lack of

official documentation as to whether Song’s driver’s license had been suspended or

revoked during the policy period.      Accordingly, there are issues of fact as to whether

Cincinnati Insurance had a right to cancel the policy or demand additional premiums, the

purported   consideration for the named driver exclusion.         Therefore, we    conclude

that the trial court erred in awarding summary judgment to Cincinnati Insurance in this

matter.

       {¶29} The assignment of error is well taken.       The judgment of the trial court is

reversed and the matter remanded for further proceedings consistent with this opinion.
      {¶30}   Judgment reversed and remanded.

      It is ordered that appellant recover from appellee costs herein taxed.

      The court finds there were reasonable grounds for this appeal.

      It is ordered that a special mandate be sent to said court to carry this judgment into

execution.

      A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of

the Rules of Appellate Procedure.




MARY EILEEN KILBANE, JUDGE

FRANK D. CELEBREZZE, JR., P.J., and
SEAN C. GALLAGHER, J., CONCUR
