[Cite as Martel vs. Am. Family Ins. Co., 2012-Ohio-1486.]




                                       COURT OF APPEALS
                                   DELAWARE COUNTY, OHIO
                                   FIFTH APPELLATE DISTRICT


THOMAS MARTEL                                               JUDGES:
                                                            Hon. Patricia A. Delaney, P.J.
        Plaintiff-Appellant                                 Hon. William B. Hoffman, J.
                                                            Hon. Sheila G. Farmer, J.
-vs-

AMERICAN FAMILY INSURANCE                                   Case No. 11CAE080077
COMPANY

        Defendant-Appellee                                  OPINION



CHARACTER OF PROCEEDING:                                    Appeal from the Court of Common
                                                            Pleas, Case No. 09CVH081028



JUDGMENT:                                                   Affirmed




DATE OF JUDGMENT:                                           March 26, 2012




APPEARANCES:

For Plaintiff-Appellant                                     For Defendant-Appellee

CHARLES H. COOPER, JR.                                      JAMES R. GALLAGHER
REX H. ELLIOTT                                              471 East Broad Street
2175 Riverside Drive                                        19th Floor
Columbus, OH 43221                                          Columbus, OH 43215-3872
Delaware County, Case No. 11CAE080077                                                    2


DANIEL R. MORDARSKI
5 East Long Street
Suite 1100
Columbus, OH 43215


Farmer, J.

      {¶1}    In August of 1999, Jeffrey and Margaret Heintzelman hired appellant, Tom

Martel, dba Martel Heating and Cooling, to install an attic air conditioner in their home.

The air conditioner never worked properly. Mr. Martel attempted to fix the problem, but

was unsuccessful.

      {¶2}    In 2001, the Heintzelmans hired Air Experts, Inc. to fix the air conditioner.

Air Experts was unable to repair the unit and the problems continued.

      {¶3}    On July 15, 2002, Mr. Heintzelman went to the attic to examine leaking

from the air conditioner. Mr. Heintzelman was electrocuted by an unprotected outlet

providing power to the condensation pump leading to the air conditioner. The outlet had

been installed by appellant.

      {¶4}    At the time of the installation of the air conditioner, appellant was insured

under a commercial insurance policy issued by appellee, American Family Insurance,

Policy No. 34–X03305–01. The policy was in effect from May 18, 1999 to May 18,

2000, with a limit of $500,000.00.

      {¶5}    On December 10, 2002, the Estate of Jeffrey K. Heintzelman, together

with Mrs. Heintzelman, filed a complaint against appellant and Air Experts, claiming

wrongful death and negligent infliction of serious emotional distress (Case No. 02CVH–

12–712).     Appellee defended appellant in the lawsuit.       On March 16, 2003, the

complaint was dismissed without prejudice.
Delaware County, Case No. 11CAE080077                                                       3


      {¶6}   On December 4, 2003, appellee filed a declaratory judgment action (Case

No. 03CVH–12–896), seeking a judgment that it did not have a duty to indemnify

appellant for any damages awarded in the case. On March 4, 2004, appellee filed a

motion for default judgment based upon appellant's failure to answer or otherwise

defend the action. The trial court granted the motion on March 10, 2004. In March of

2007, appellant filed a motion to vacate the default judgment. By judgment entry filed

March 12, 2007, the trial court denied the motion, finding the motion was untimely filed.

      {¶7}   On April 9, 2004, the Heintzelman Estate again filed a complaint against

appellant and Air Experts (Case No. 04CVH–04–233).           A jury trial commenced on

February 28, 2005. The jury found in favor of the Heintzelman Estate, awarding the

estate $1,014,186.00 and Mrs. Heintzelman $2,650,000.00 on her emotional distress

claim. The award to Mrs. Heintzelman was subsequently reversed by this court. See,

Estate of Heintzelman v. Air Experts, Inc., Delaware App. No.2005–CAPE–08–0054,

2006–Ohio–4832, (hereinafter "Heintzelman I").

      {¶8}   On May 10, 2005, while the appeal was pending, the Heintzelman Estate

filed a supplemental complaint against appellee, claiming appellee must indemnify

appellant (Case No. 04CVH–04–233). Appellee filed a motion for summary judgment

on October 6, 2005, claiming in part that the Heintzelman Estate could not collaterally

attack the default judgment in favor of appellee and against appellant, and appellant

was not entitled to coverage under the insurance policy. The trial court stayed the case

pending the outcome of the appeal.

      {¶9}   On August 23, 2006, appellant filed a separate complaint against

appellee, claiming bad faith and fraudulent misrepresentation regarding coverage under
Delaware County, Case No. 11CAE080077                                                4


the policy and over the default judgment in the declaratory judgment action (Case No.

06CVH–08–761). On December 15, 2006, appellee filed a motion to dismiss appellant's

complaint, claiming res judicata because of the declaratory judgment decision in Case

No. 03CVH12–0896. By judgment entry filed February 1, 2007, the trial court granted

the motion. On appeal, this court reversed, finding res judicata did not apply to the

specific claims made by appellant. Martel v. American Family Insurance Company,

Delaware App. No. 07CAE020012, 2007–Ohio–4819.

      {¶10} Upon remand by this court in Heintzelman I, the trial court adjusted the

award for emotional distress to $0 (Case No. 04CVH–04–233). See, Judgment Entry

filed August 6, 2007. By separate entry filed August 6, 2007, the trial court granted

appellee's motion for summary judgment that had been stayed in Case No. 04CVH04–

0233, finding the Heintzelman Estate was bound by the default judgment rendered

against appellant in Case No. 03CVH12–0896. On appeal, this court reversed the trial

court's decision granting appellee's motion for summary judgment, finding the

Heintzelman Estate as a judgment creditor was not bound by the declaratory judgment

because appellee had initiated the declaratory judgment against its insured, appellant.

See, Estate of Heintzelman v. Air Experts, Inc., Delaware App. No. 07CAE090054,

2008–Ohio–4883, (hereinafter "Heintzelman II"). The Supreme Court of Ohio affirmed

the decision in Heintzelman II. See, Estate of Heintzelman v. Air Experts, Inc., 126

Ohio St.3d 138, 2010–Ohio–3264.

      {¶11} On August 5, 2009, appellant filed the complaint which is the subject of

this appeal (Case No. 09CVH-08-1028) that was a refilling of Case No. 06CVH-08-761

which had alleged bad faith and fraudulent misrepresentation against appellee. The 06
Delaware County, Case No. 11CAE080077                                                 5


case had been dismissed by the trial court under the doctrine of res judicata which this

court reversed. Martel v. American Family Insurance Company, Delaware App. No.

07CAE020012, 2007–Ohio–4819.          On July 16, 2010, appellee filed a motion for

summary judgment, claiming appellant was not covered under the policy, res judicata,

and insufficient evidence to support his claims.

      {¶12} Upon remand by this court in Heintzelman II, affirmed by the Supreme

Court of Ohio, the trial court entertained motions for summary judgment filed by the

Heintzelman Estate and appellee on the issue of insurance coverage on the wrongful

death award. By judgment entry filed April 29, 2011, the trial court denied the motion

filed by the Heintzelman Estate and granted appellee's motion, finding the subject

insurance policy was not in effect at the time of Mr. Heintzelman's death, appellee had

not waived its defense of no coverage, and the doctrine of estoppel did not apply. This

court affirmed the trial court's decision.   Estate of Heintzelman v. Air Experts, Inc.,

Delaware App. No. 11CAE050043, 2011-Ohio-5242.

      {¶13} On July 25, 2011, the trial court granted appellee summary judgment as

against appellant in the case sub judice, finding no bad faith or fraudulent

misrepresentation.

      {¶14} Appellant filed an appeal and this matter is now before this court for

consideration. Assignment of error is as follows:

                                             I

      {¶15} "THE TRIAL COURT ERRED WHEN IT GRANTED AMERICAN

FAMILY'S MOTION FOR SUMMARY JUDGMENT ON THE BASIS THAT THE
Delaware County, Case No. 11CAE080077                                                6


INSURANCE POLICY AMERICAN FAMILY ISSUED TO THOMAS MARTEL DID NOT

PROVIDE COVERAGE."




                                           I

      {¶16} Appellant claims the trial court erred in granting summary judgment to

appellee. We disagree.

      {¶17} Summary Judgment motions are to be resolved in light of the dictates of

Civ.R. 56. Said rule was reaffirmed by the Supreme Court of Ohio in State ex rel.

Zimmerman v. Tompkins, 75 Ohio St.3d 447, 448, 1996-Ohio-211:

      {¶18} "Civ.R. 56(C) provides that before summary judgment may be granted, it

must be determined that (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 nonmoving party, that conclusion is

adverse to the party against whom the motion for summary judgment is made. State

ex. rel. Parsons v. Fleming (1994), 68 Ohio St.3d 509, 511, 628 N.E.2d 1377, 1379,

citing Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 4 O.O3d 466, 472,

364 N.E.2d 267, 274."

      {¶19} As an appellate court reviewing summary judgment motions, we must

stand in the shoes of the trial court and review summary judgments on the same

standard and evidence as the trial court. Smiddy v. The Wedding Party, Inc. (1987), 30

Ohio St.3d 35.
Delaware County, Case No. 11CAE080077                                                     7


       {¶20} Appellant argues four issues. The first and second issues concern the

coverage provisions under his American Family commercial liability insurance policy.

Appellant conceded the issue of coverage under the policy has been resolved by this

court in Estate of Heintzelman v. Air Experts, Inc. Delaware App. No. 11CAE050043,

2011-Ohio-5242. The remaining issues for consideration are the issues of bad faith and

fraudulent misrepresentation by appellee to appellant.

       {¶21} "Bad Faith" "generally implies something more than bad judgment or

negligence. It imports a dishonest purpose, moral obliquity, conscience wrongdoing,

breach of a known duty through some ulterior motive, or ill will partaking of the nature of

fraud. It also embraces actual intent to mislead or deceive another." State v. Combs,

Delaware App. No. 03CA-C-12-073, 2004-Ohio-6574, ¶4.            An action for fraudulent

misrepresentation requires proof of (1) a representation, (2) which is material to the

transaction at hand, (3) made falsely, with knowledge of its falsity, or with such utter

disregard and recklessness as to whether it is true or false that knowledge may be

inferred, (4) with the intent of misleading another into relying upon it, (5) justifiable

reliance upon the representation or concealment, and (6) a resulting injury proximately

caused by the reliance. Burr v. Stark County Board of Commissioners (1986), 23 Ohio

St.3d 69, 73.

       {¶22} In its decision filed July 25, 2011, the trial court addressed the issues of

bad faith and fraudulent misrepresentation, finding no genuine issues of material fact:

       {¶23} "Here, it has been determined that there was no coverage at the time of

Mr. Heintzelman's death; therefore, any bad faith claim against American Family cannot

survive. Accordingly, there is no question as to any material fact regarding the bad faith
Delaware County, Case No. 11CAE080077                                                    8


claims and American Family is entitled to judgment as a matter of law as to Count One

of the Plaintiff's complaint.

       {¶24} "Second, the Plaintiff seeks to recover for fraudulent misrepresentation;

claiming that American Family made various representations to the Plaintiff that were

false regarding the Heintzelman case and the Plaintiff's insurance coverage.         (Pl.'s

Compl. ¶28.) To establish a claim for fraudulent misrepresentation, the Plaintiff must

establish an actual or implied misrepresentation which is material to the transaction,

made with knowledge that the statement is false, with the intent to mislead another who

relies on the misrepresentation with resulting injury. Baker v. Stoner (1994), 70 Ohio

Misc.2d 42, 650 N.E.2d 1372.

       {¶25} "The Plaintiff claims that he suffered damages exceeding $1,000,000.00

because American Family refused to pay the damages assessed against him. (Pl.'s

Compl. ¶29.) Again, the Court has established that American Family was not obligated

to pay any claims against the Plaintiff in the Heintzelman case because there was no

policy in effect at the time of Mr. Heintzelman's death. Accordingly, the Plaintiff has not

suffered any injury and has failed to establish the requisite elements for a fraudulent

misrepresentation claim.        Therefore, there is no question as to any material fact

regarding the fraudulent misrepresentation claim and American Family is entitled to

judgment as a matter of law as to Count Two of the Plaintiff's complaint."

       {¶26} The basis of the bad faith and fraudulent misrepresentations claims are

set forth in the August 5, 2009 complaint as follows:

       {¶27} "This cases (sic) arises out of one of the most egregious examples of an

insurer's bad faith treatment of its insured imaginable. Defendant's bad faith includes (i)
Delaware County, Case No. 11CAE080077                                                        9


failing to inform its insured about a settlement offer within the insured's $500,000 policy

limits; (ii) fraudulently denying coverage by changing the wording of plaintiff's insurance

policy; (iii) sending plaintiff a reservation of rights letter that misrepresented the terms of

the insurance policy in an effort to avoid coverage; (iv) suing its own insured and failing

to advise the insured that the attorney appointed by the insurer would not be

representing him in the lawsuit; and (v) informing plaintiff that he did not need to take

any action in response to the complaint or defendant's motion seeking a Default

Judgment in order to obtain an uncontested Court Order declaring that plaintiff had no

insurance coverage for Mr. Heintzelman's death. As a result of defendant's unlawful

conduct, plaintiff is now subject to a seven figure Judgment that is far in excess of

plaintiff's personal assets. Plaintiff seeks compensatory and punitive damages due to

defendant's bad faith as well as his attorneys fees for prosecuting this action."

       {¶28} In his August 19, 2010 memorandum in opposition to the motion for

summary judgment, appellant argued the following facts demonstrated bad faith and

fraudulent misrepresentation:

       {¶29} "The bad faith in this case includes each of the following acts:

       {¶30} "American Family failed to inform Mr. Martel of an inquiry into settling the

matter for the limits of his insurance policy;

       {¶31} "American Family initially accepted coverage and later altered its position

by changing the language of its policy;

       {¶32} "American Family sent Mr. Martel a Reservation of Rights letter

misrepresenting the terms of the policy six months after informing him he had coverage;
Delaware County, Case No. 11CAE080077                                                    10


       {¶33} "American Family sued Mr. Martel seeking to vitiate coverage and failed to

inform Mr. Martel that he needed to seek independent legal advice in connection with

the lawsuit; and

       {¶34} "American Family advised Mr. Martel that he did not need to respond to

the lawsuit and that it would have no impact on him leading to a Default Judgment

against Mr. Martel.

       {¶35} "As a result of American Family's bad faith, Mr. Martel has been staring

down the barrel of a seven figure Judgment for the past five years."

       {¶36} The reservation of rights letter dated June 30, 2003 included the following

language:

       {¶37} "This letter is to advise you that there exists a dispute between you and

American Family Insurance Company as to whether the Company can provide liability,

or other protection to you for the above indicated incident. The Plaintiffs in this case are

alleging that a loss occurred on July 1, 2002. Your policy was effective from May 18,

1999 to May 18, 2000. It does not appear that your policy was in effect on the date of

the alleged loss. As such, the loss would not be covered under your policy.

       {¶38} "***

       {¶39} "We are bringing these matters to your attention at this time and wish to

further advise that in American Family Insurance Company's investigation of this matter

and any claims arising from it, in the negotiation or settlement of any such claims, in

defending any lawsuit against you or others or against American Family Insurance

Company, or in taking any other action with regard to the complaint of The Estate of

Jeffrey K. Heintzelman, American Family Insurance Company reserves the right to
Delaware County, Case No. 11CAE080077                                                11


assert any and all defenses it may have as to the coverage afforded to you, if any,

under policy number 34X-03305-01-0000. By taking these actions or refraining from

any such action, American Family Insurance Company does not waive any of its rights

under the policy nor does it admit any obligation to defend any lawsuit against you or

pay any claim or judgment arising from this incident."

       {¶40} Prior to this reservation of rights letter, a letter dated January 22, 2003

was sent to appellant indicating a law firm was engaged to represent him:

       {¶41} "We have retained Mark Maddox, Attorney, Frost & Maddox, 400 South

Fifth Street, Ste. 301, Columbus, OH 43215, with telephone number (614) 224-0933 to

represent you in the above-referenced lawsuit.           This was done pursuant to your

American Family Insurance Company of Ohio policy of insurance.

       {¶42} "***

       {¶43} "I am writing you to advise you of this personal exposure which you may

have. You may obtain another attorney at your own expense to assist you in this

litigation. Mark Maddox and their firm mentioned above will continue to represent you

and we will pay their attorney fees."

       {¶44} Appellee had filed a declaratory judgment action relative to the coverage

available under the policy (Case No. 03CVH–12–896). Appellant did not respond and

default judgment was granted on March 10, 2004. In March of 2007, appellant filed a

motion to vacate the default judgment. By judgment entry filed March 12, 2007, the trial

court denied the motion, finding the motion was untimely filed. .
Delaware County, Case No. 11CAE080077                                                    12


       {¶45} Appellant appears to argue that a "default" on a declaratory judgment

action is not a decision on the merits.     Even in default, a trial court is required to

consider the issues and therefore a determination on such is a decision on the merits:

       {¶46} "Subject to division (B) of this section, courts of record may declare rights,

status, and other legal relations whether or not further relief is or could be claimed. No

action or proceeding is open to objection on the ground that a declaratory judgment or

decree is prayed for under this chapter. The declaration may be either affirmative or

negative in form and effect.     The declaration has the effect of a final judgment or

decree." R.C. 2721.02(A).

       {¶47} The 2004 motion for default judgment argued appellee had no duty to

indemnify appellant in the Heintzelman case and gave reasons in support. See, March

4, 2004 Motion for Default Judgment attached to Plaintiff's August 5, 2009 Complaint as

Exhibit D. The judgment entry granting the default judgment specifically found appellee

had no duty to indemnify appellant in the Heintzelman case pursuant to the terms in the

policy. See, March 10, 2004 Default Judgment Entry attached to Plaintiff's August 5,

2009 Complaint as Exhibit E.

       {¶48} Appellant also argues he was led to believe there was coverage under the

policy because appellee provided him with an attorney in the tort case, he was not

informed that the attorney would not be representing him in the declaratory judgment

action, he was misinformed about the consequences of the default judgment in the

declaratory judgment action, and he was not informed about mediation and/or any

possible settlement in the tort case.
Delaware County, Case No. 11CAE080077                                                 13


      {¶49} In his deposition, appellant stated that very early on in the tort action, he

was informed personally and in writing that although there was no coverage, appellee

would provide him with an attorney to defend himself. Martel depo. at 56, 59-60. When

appellant received the declaratory judgment complaint or the motion for default

judgment, he contacted the attorney provided by appellee and was told to contact

American Family as he had nothing to do with the declaratory judgment action. Id. at

60, 63. Appellant was assured by American Family that the declaratory judgment action

would not affect the representation being provided in the tort case. Id. at 60-61.

      {¶50} Appellant reaffirmed that regardless of the declaratory judgment action, it

was his understanding that there was no coverage:

      {¶51} "Q. From the very first time that you had any communications at all with

American Family either in writing or on the phone, was their position pretty consistent

that they did not believe that you had any coverage under your policy but despite that,

they were going to continue to have Scott Norman continue to defend you in the

lawsuit?

      {¶52} "A. Yes. Initially I was told that I was covered very, very, very way back in

the beginning and then it was changed so pretty much from, I will say, week two I knew

that they are not paying any money but they are going to pay for the attorney.

      {¶53} "***

      {¶54} "Q. All you can recall is that, whether it be this letter or something else,

you recall getting a letter from American Family saying they were denying coverage or

disputing coverage for the loss but they would still have a lawyer defend you; is that

correct?
Delaware County, Case No. 11CAE080077                                                     14


          {¶55} "A. I remember being notified. I don't know if it was a letter or phone

conversation. I couldn't tell you that. I just remember being - - knowing that they

weren't picking up any - - any money if we lost or whatever.

          {¶56} "***

          {¶57} "Q. Did you have any dispute with their taking that position? Did you ever

disagree with them when they told you that that was their position?

          {¶58} "A. I mean, no, if I did, I would have probably even have done something

about it, but no." Id. at 68, 72, 79-80, respectively.

          {¶59} Appellant admitted to getting served the declaratory judgment action and

just throwing it in a pile of papers, and did not take any action until he received the

motion for default judgment and then he called the attorney representing him in the tort

action.     Id. at 74, 76.   When appellant became aware that the attorney could not

represent him in the declaratory judgment action, he called American Family who told

him not to worry, they would still provide him with counsel for his tort case. Id. at 60-61,

63-64.      Appellant did not consult with anyone else about the motion for default

judgment. Id. at 65.

          {¶60} A mediation was held in the tort action of which appellant had no

recollection, but he freely admitted he was never in a position to make any kind of

settlement in the case. Id. at 83-85.

          {¶61} Regardless of appellant's lack of specific recall relative to the declaratory

judgment action and what he should do, it is law of the case that there was no coverage

under the American Family commercial liability policy. Estate of Heintzelman v. Air

Experts, Inc., Delaware App. No. 11CAE050043, 2011-Ohio-5242.
Delaware County, Case No. 11CAE080077                                                15


       {¶62} Appellant freely admitted he understood very early on and throughout the

underlying case that there was no coverage and American Family would just pay for an

attorney to defend him. Further, appellant admitted there was no way he was financially

able to participate in any settlement of the tort action.

       {¶63} Based upon these undisputed facts, we conclude the trial court was

correct in granting summary judgment to appellee on the bad faith and fraudulent

representation claims.

       {¶64} The sole assignment of error is denied.

       {¶65} The judgment of the Court of Common Pleas of Delaware County, Ohio is

hereby affirmed.

By Farmer, J.

Delaney, P.J. and

Hoffman, J. concur.




                                               s/ Sheila G. Farmer_____________



                                               s/ Patricia A. Delaney_____________



                                               s/ William B. Hoffman_____________

                                                            JUDGES
Delaware County, Case No. 11CAE080077   16


SGF/sg 305
[Cite as Martel vs. Am. Family Ins. Co., 2012-Ohio-1486.]


                 IN THE COURT OF APPEALS FOR DELAWARE COUNTY, OHIO

                                   FIFTH APPELLATE DISTRICT



THOMAS MARTEL                                               :
                                                            :
        Plaintiff-Appellant                                 :
                                                            :
-vs-                                                        :   JUDGMENT ENTRY
                                                            :
AMERICAN FAMILY INSURANCE                                   :
COMPANY                                                     :
                                                            :
        Defendant-Appellee                                  :   CASE NO. 11CAE080077




        For the reasons stated in our accompanying Memorandum-Opinion, the

judgment of the Court of Common Pleas of Delaware County, Ohio is affirmed. Costs to

appellant.




                                                       s/ Sheila G. Farmer_____________



                                                       s/ Patricia A. Delaney_____________



                                                       s/ William B. Hoffman_____________

                                                                    JUDGES
