[Cite as Freedom Banc Mtge. Servs., Inc. v. Cincinnati Ins. Co., 2014-Ohio-226.]


                              IN THE COURT OF APPEALS OF OHIO

                                    TENTH APPELLATE DISTRICT


Freedom Banc Mortgage Services, Inc.,                  :

                 Plaintiff-Appellant,                  :

v.                                                     :                  No. 13AP-400
                                                                    (C.P.C. No. 12CVH-09-11799)
Cincinnati Insurance Company,                          :
                                                                   (REGULAR CALENDAR)
                 Defendant-Appellee.                   :




                                         D E C I S I O N

                                    Rendered on January 23, 2014


                 Crabbe, Brown & James, and Christina Corl; Scott Elliot
                 Smith, LPA, and Scott E. Smith, for appellant.

                 Smith, Rolfes & Skavdahl Company, L.P.A., and William
                 Scott Lavelle; Beau K. Rymers, for appellee.

                  APPEAL from the Franklin County Court of Common Pleas

CONNOR, J.
        {¶ 1} Plaintiff-appellant, Freedom Banc Mortgage Services, Inc. ("Freedom"),
appeals from a judgment of the Franklin County Court of Common Pleas granting the
Civ.R. 12(C)      motion       of    defendant-appellee,          Cincinnati       Insurance      Company
("Cincinnati"). Freedom presents the following sole assignment of error for our review:
                 THE TRIAL COURT ERRED AS A MATTER OF LAW IN
                 GRANTING APPELLEE'S MOTION FOR JUDGMENT ON
                 THE PLEADINGS, BECAUSE THE COURT IGNORED
                 ALLEGATIONS IN THE COMPLAINT WHICH PLACED
                 THE APPELLANT'S LOSS WITHIN THE LIMITATIONS
                 PERIOD CONTAINED IN THE POLICY OF INSURANCE.
No. 13AP-400                                                                          2


       {¶ 2} Because the trial court correctly determined that Freedom did not file its
complaint within the contractual limitations period, we affirm.
I. FACTS AND PROCEDURAL HISTORY
       {¶ 3} Freedom filed a complaint against Cincinnati on September 18, 2012.
Freedom noted in the complaint that Cincinnati insured Freedom pursuant to a policy of
commercial property coverage ("policy"). The policy provided coverage for direct loss of
business property, including loss resulting from interruption of computer services or
loss of electronic data.
       {¶ 4} In the complaint, Freedom asserted that it began experiencing computer
problems on August 8, 2010. Freedom asserted that its "computer problems increased
in severity, peaking on August 18, 2010," which "resulted in Freedom Bank's servers and
computers to be inoperable." (Complaint, ¶ 7.) As a result of the inoperable computers
and servers, Freedom experienced a loss of business, productivity, and revenue.
Freedom alleged that "[b]y December of 2010, Freedom * * * was no longer able to
conduct business." (Complaint, ¶ 9.) Freedom contacted Cincinnati on March 15, 2011
about filing a claim for the losses resulting from its computer problems. Cincinnati
denied Freedom's claim on October 5, 2011. Freedom asserted claims against Cincinnati
for breach of contract, unjust enrichment, bad faith, and fraud.
       {¶ 5} Cincinnati filed an answer to the complaint on October 22, 2012. On
October 23, 2012, Cincinnati filed a Civ.R. 12(C) motion for judgment on the pleadings.
In the motion, Cincinnati noted that the policy provided that no one could bring a legal
action against Cincinnati under the policy, unless the action was brought within two
years "after the date on which the direct physical 'loss' occurred." (Policy, Commercial
Property Conditions, Section D(2).) Cincinnati asserted that Freedom had alleged in the
complaint that its direct physical loss occurred on August 8, 2010; rendering Freedom’s
September 18, 2012 complaint filed outside the two-year time limit.
       {¶ 6} On November 8, 2012, Freedom filed a memorandum in opposition to
Cincinnati's motion for judgment on the pleadings. In its memorandum, Freedom
asserted it had alleged in the complaint that its "[l]osses were not realized until
December, 2010," such that Freedom had timely filed the September 18, 2012
No. 13AP-400                                                                              3


complaint. (Memorandum in Opposition, 2.) Cincinnati filed a reply in support of its
motion for judgment on the pleadings on November 16, 2012.
       {¶ 7} On April 9, 2013, the court issued a decision and order granting
Cincinnati's motion for judgment on the pleadings. The court determined that the
limitations period provided for in the policy "clearly require[d] that any suit brought
against [Cincinnati] must be brought within two years of the loss." (Decision and Order,
3.) The court noted that Freedom had alleged "on the face of its complaint that its loss
occurred, at the latest, on August 18, 2010 (the date upon which the computer problems
'peaked')." (Decision and Order, 3.) Accordingly, the court found that Freedom had
failed to file its complaint within two years of the date of loss, and granted Cincinnati's
motion for judgment on the pleadings.
II. ASSIGNMENT OF ERROR
       {¶ 8} Under Civ.R. 12(C), a party may file a motion for judgment on the
pleadings "[a]fter the pleadings are closed but within such time as not to delay the trial."
Franks v. Ohio Dept. of Rehab. & Corr., 195 Ohio App.3d 114, 2011-Ohio-2048, ¶ 5 (10th
Dist.). In ruling on the motion for judgment on the pleadings, the court is permitted to
consider both the complaint and answer.         State ex rel. Midwest Pride IV, Inc. v.
Pontious, 75 Ohio St.3d 565, 570 (1996). When presented with such a motion, a court
must construe all the material allegations of the complaint as true, and must draw all
reasonable inferences in favor of the non-moving party. Id., citing Peterson v. Teodosio,
34 Ohio St.2d 161, 165 (1973); Whaley v. Franklin Cty. Bd. of Commrs., 92 Ohio St.3d
574, 581 (2001). The court will grant the motion if it finds, beyond doubt, that the
plaintiff can prove no set of facts in support of the claim(s) that would entitle him or her
to relief. Midwest Pride IV at 570.
       {¶ 9} A motion for judgment on the pleadings tests the allegations of the
complaint and presents a question of law. Peterson at 166, citing Conant v. Johnson, 1
Ohio App.2d 133 (4th Dist.1964). Thus, our review of a decision to grant judgment on
the pleadings is de novo.      See Rayess v. Educational Comm. for Foreign Med.
Graduates, 134 Ohio St.3d 509, 2012-Ohio-5676, ¶ 18, citing Perrysburg Twp. v.
Rossford, 103 Ohio St.3d 79, 2004-Ohio-4362, ¶ 5.
No. 13AP-400                                                                             4


         {¶ 10} The issue in the instant action resolves to whether, construing the factual
allegations in the complaint in Freedom's favor, Freedom filed its complaint within the
two-year contractual limitations period. Initially, we observe that "parties to a contract
may validly limit the time for bringing an action on a contract to a period that is shorter
than the general statute of limitations for a written contract, as long as the shorter
period is a reasonable one." Sarmiento v. Grange Mut. Cas. Co., 106 Ohio St.3d 403,
2005-Ohio-5410, ¶ 11, citing Miller v. Progressive Cas. Ins. Co., 69 Ohio St.3d 619, 624
(1994), and Colvin v. Globe Am. Cas. Co., 69 Ohio St.2d 293, 295 (1982), overruled on
other grounds by Miller. See R.C. 2305.06 (15-year statutory limitations period for
written contracts). Freedom does not contend that the two-year limitations period is
unreasonable.     Compare Angel v. Reed, 119 Ohio St.3d 73, 2008-Ohio-3193, ¶ 13
(finding a two-year contractual limitations period to be enforceable). Accordingly, we
find the two-year contractual limitations period reasonable and enforceable.
         {¶ 11} Freedom asserts that it alleged in the complaint "that its losses continued
up to December 2010," such that the court should have "construed the facts pled in the
Complaint to demonstrate that the loss continued up to the time that Appellant was
forced to close its doors." (Emphasis added.) (Appellant's brief, 5, 6.) Freedom asserts
the trial court erred in using the August 18, 2010 date as the date on which the direct
physical loss occurred.
         {¶ 12} The policy provided that Freedom could not bring a legal action against
Cincinnati unless the action was "brought within 2 years after the date on which the
direct physical 'loss' occurred." (Policy, Commercial Property Conditions, Section D(2).)
The policy defines "loss" as "accidental loss or damage." (Policy, Commercial Property
Conditions, Section J(1).) The policy does not further define the phrase "direct physical
loss."
         {¶ 13} In Bethel Village Condominium Assn. v. Republic-Franklin Ins. Co., 10th
Dist. No. 06AP-691, 2007-Ohio-546, this court reviewed a similar contractual
limitations period contained in a policy of insurance. In Bethel, the insured's property
was damaged in a hailstorm on April 20, 2003, and the insurance policy provided that
the insured could not bring an action against the insurer unless "[t]he action [was]
No. 13AP-400                                                                             5


brought within 2 years after the date on which the direct physical loss or damage
occurred." Id. at ¶ 13. In construing the provision, we noted as follows:
              "The first general maxim of interpretation * * * is, that it is
              not allowable to interpret what has no need of
              interpretation." Lawler v. Burt (1857), 7 Ohio St. 340, 350. If
              a term is clear and unambiguous, "* * * this court cannot in
              effect create a new contract by finding an intent not
              expressed in the clear language employed by the parties."
              Alexander v. Buckeye Pipe Line Co. (1978), 53 Ohio St.2d
              241, 246 * * *. In the absence of ambiguity, therefore, the
              terms of the policy must simply be applied " '* * * according
              to its terms without engaging in construction * * *.' "
              Hartford Ins. Co. v. Occidental Fire & Cas. Co. (C.A.7, 1990),
              908 F.2d 235, 238, quoting Arkwright-Boston Mfrs. v.
              Wausau Paper Mills Co. (C.A.7, 1987), 818 F.2d 591, 594.

Id. ¶ 10, quoting Santana v. Auto Owners Ins. Co., 91 Ohio App.3d 490, 494 (6th
Dist.1993).
      {¶ 14} In Bethel, we concluded that the contractual limitations provision was not
ambiguous. Under the plain wording of the contract, the "appellant was required to file
suit against appellee within two years following the hailstorm damage that occurred on
April 20, 2003." Id. at ¶ 20. Accordingly, as the insured did not file the lawsuit until
February 6, 2006, we found the trial court had correctly granted the insurer's motion to
dismiss the complaint. See also Figetakis v. Owners Ins. Comp., 9th Dist. No. 22874,
2006-Ohio-918, ¶ 14-15 (where a contractual limitations provision obligated an insured
to bring a lawsuit against the insurer "within one year after the loss or damage occurs,"
the court concluded that the "cause of action for coverage under the Insurance Policy
accrued on the date the damage occurred" and not when the insurance company denied
the claim for coverage).
      {¶ 15} Freedom does not allege that the limitations provision is ambiguous, and
we conclude that the policy is unambiguous. The policy provides that an insured must
file a lawsuit within two years of the date on which the insured property was directly lost
or damaged. The date of direct physical loss is not tied to the date on which business
operations ultimately cease. Rather, the date of direct physical loss is the date on which
the loss or damage to the insured property occurs.
No. 13AP-400                                                                         6


       {¶ 16} Freedom asserts that, because it alleged in the complaint that its losses
continued up until December 2010, the trial court should have construed December
2010 as the date on which the direct physical loss occurred. We disagree. Freedom pled
the following relevant facts in its complaint:
              6. On or about August 8, 2010, Freedom Ban[c] experienced
              computer problems in the form of its servers operating very
              slowly and a PC used by Freedom Ban[c] President, Stephen
              Harris, being frequently inoperable.

              7. During the week of August 14, 2010, Freedom Ban[c]'s
              computer problems increased in severity, peaking on
              August 18, 2010. This resulted in Freedom Ban[c]'s servers
              and computers to be inoperable. After hiring the services of
              several computer experts, Freedom Ban[c] learned that their
              computer problems were the result of outside individual's
              unauthorized intrusions on Freedom Ban[c]'s computers and
              servers and their use and remote installation of nefarious
              programs intended on causing harm to Freedom Ban[c],
              commonly known as "computer hacking."

              8. As a result of Freedom Ban[c]'s computer and server
              failure, Freedom Ban[c] experienced loss of business,
              productivity and revenue.

              9. By December of 2010, Freedom Ban[c] was longer able to
              conduct business.

(Complaint, ¶ 6-9.)
       {¶ 17} Freedom alleged in the complaint that the computer problems began on
August 8, 2010, then increased in severity the following week, peaking on August 18,
2010. Freedom then asserts that "[t]his," i.e. the computer problems which peaked on
August 18, 2010, resulted in Freedom's servers and computers being inoperable. The
inoperability of Freedom's computers and servers resulted in a loss of business,
productivity, and revenue. Thus, the direct physical loss at issue herein occurred when
Freedom's computers and servers became inoperable.
       {¶ 18} The word "peak" means "the highest or most important point or level" or
the "maximum point, degree, or volume of anything." The Random House Dictionary
of the English Language, 1426 (2d Ed.1987). By stating that the computer problems
No. 13AP-400                                                                           7


peaked on August 18, 2010, Freedom alleged that August 18, 2010 was the height of the
computer problems, or the maximum point of inoperability of its computers and
servers. As such, construing the factual allegations in the complaint in Freedom's favor,
we must find that the date of direct physical loss was August 18, 2010: the date on which
Freedom's computer problems peaked and Freedom's computers and servers became
inoperable. Notably, although Freedom alleged in the complaint that it went out of
business in December of 2010, there is no allegation of direct physical loss or damage to
business property occurring at that time.
      {¶ 19} As Freedom alleged in the complaint that the date of direct physical loss
occurred on August 18, 2010, Freedom's September 18, 2012 complaint was filed
beyond the two-year contractual limitations period. As such, the trial court correctly
granted Cincinnati's Civ.R. 12(C) motion for judgment on the pleadings.
III. DISPOSITION
      {¶ 20} Based on the foregoing, Freedom's sole assignment of error is overruled.
Having overruled Freedom's assignment of error, we affirm the judgment of the
Franklin County Court of Common Pleas.
                                                                    Judgment affirmed.

                          TYACK and DORRIAN, JJ., concur.
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