[Cite as ISCO Industries, Inc. v. Great Am. Ins. Co., 2019-Ohio-4852.]



                          IN THE COURT OF APPEALS
                 FIRST APPELLATE DISTRICT OF OHIO
                            HAMILTON COUNTY, OHIO



ISCO INDUSTRIES, INC.,                            :           APPEAL NO. C-180636
                                                              TRIAL NO. A-1803505
   and                                            :

ISCO CANADA, INC.,                                :
                                                                   O P I N I O N.
         Plaintiffs-Appellants,                   :

   vs.                                            :

GREAT AMERICAN INSURANCE CO.,                     :

         Defendant-Appellee.                      :




Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Affirmed

Date of Judgment Entry on Appeal: November 27, 2019



Taft Stettinius & Hollister LLP, Mark T. Hayden and Aaron M. Herzig, Reed Smith
LLP, John D. Shugrue, Kevin B. Dreher and Bradley H. Dlatt, for Plaintiffs-
Appellants,

Bailey Cavalieri LLC, Michael R. Goodstein and Mark A. Glumac, for Defendant-
Appellee.
                    OHIO FIRST DISTRICT COURT OF APPEALS


WINKLER, Judge.

       {¶1}    Plaintiffs-appellants ISCO Industries, Inc., and ISCO Canada, Inc.,

(collectively “ISCO”) appeal the dismissal of their complaint against their insurer,

defendant-appellee Great American Insurance Company (“Great American”), arising

from Great American’s refusal to provide coverage with respect to a lawsuit and

settlement between ISCO and a third-party Canadian corporation. For the reasons

that follow, we affirm the trial court’s dismissal.

                     Factual Background and Procedural Posture

       {¶2}    According to ISCO’s complaint, on January 31, 2014, ISCO received a

letter from outside counsel for Wolseley Canada, Inc., (“Wolseley Canada”). The

letter informed ISCO that those former Wolseley Canada employees who had been or

were about to be hired by ISCO owed post-employment obligations to Wolseley

Canada.     The letter requested that ISCO acknowledge those obligations.           On

February 25, 2014, Wolseley Canada filed a lawsuit in Canada against ISCO and

several of its individual employees. Almost a year and a half later, on August 20,

2015, ISCO notified Great American of the Wolseley Canada lawsuit.

       {¶3}    ISCO had entered into a claims-made insurance agreement with Great

American for directors and officers and entity coverage, for a period covering March

19, 2013, to March 19, 2014 (the “policy”). ISCO renewed the policy twice for the

periods covering March 19, 2014, to March 19, 2015, and March 19, 2015, to March

19, 2016.

       {¶4}    The policy obligates Great American to pay on behalf of ISCO “all Loss

which [ISCO] shall be legally obligated to pay as a result of a Claim first made against

[ISCO] during the Policy Period or the Discovery Period for a Wrongful Act.” The


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                   OHIO FIRST DISTRICT COURT OF APPEALS


policy also includes ISCO employees as insureds. The policy defines “Claim” to

include “(1) a written demand for monetary or non-monetary relief made against any

Insured * * * [and] (2) (a) a civil * * * proceeding made against any Insured seeking

monetary or non-monetary relief and commenced by the filing of a complaint or

similar pleading.” The policy defines “Loss” to include “settlement” and “Cost of

defense.”

       {¶5}   The policy containes a “Notice Provision,” which provides:

       With respect to any Liability Claim for which coverage is provided

       under any Liability Coverage Part, the Insureds shall, as a condition

       precedent to their rights under this Policy, give the Insurer notice in

       writing of such Liability Claim:

       (1) as defined in subparagraph (1) of the definition of Claim in the

       applicable Liability Coverage Part, which is made during the Policy

       Period. Such notice shall be given prior to the end of the Policy Period;

       or

       (2) as defined in subparagraph (2) of the definition of Claim in the

       applicable Liability Coverage Part, which is made during the Policy

       Period. Such notice shall be given as soon as practicable from the date

       the General Counsel, Risk Manager, or person with equivalent

       responsibility has knowledge of the Claim, and in no event later than

       ninety (90) days after the end of the Policy Period.

       The Insureds failure to report a Claim pursuant to (1) above shall not

       negate the right to report a Claim pursuant to (2) above under this

       Policy or any renewal thereof.


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                    OHIO FIRST DISTRICT COURT OF APPEALS


       {¶6}   Great American denied coverage to ISCO on the basis that it had failed

to timely notify Great American of the Wolseley Canada lawsuit.

       {¶7}   ISCO settled the Wolseley Canada lawsuit on February 15, 2018. ISCO

then filed the instant complaint against Great American for breach of contract. ISCO

alleged that Great American had breached its duty to defend ISCO in the Wolseley

Canada lawsuit, and that Great American had breached its duty to indemnify ISCO,

including the amount that ISCO had paid to settle the Wolseley Canada lawsuit.

       {¶8}   Great American moved to dismiss ISCO’s complaint on the basis that

ISCO had failed to timely notify Great American as required by the policy. Great

American argued that the filing of the Wolseley Canada lawsuit was a “claim” under

the original policy period, and under the policy’s notice provision, ISCO was required

to give notice to Great American regarding the Wolseley Canada lawsuit no later than

90 days after the expiration of the original policy period, or June 17, 2014. Because

ISCO did not provide Great American with notice of the Wolseley Canada lawsuit

until August 20, 2015, Great American argued that it had no duty to provide coverage

under the policy.

       {¶9}   The trial court granted Great American’s motion to dismiss.        This

appeal by ISCO ensued.

                                   Standard of Review

       {¶10} ISCO raises four assignments of error challenging the trial court’s

dismissal of its complaint under Civ.R. 12(B)(6). This court reviews a trial court’s

decision granting a motion to dismiss under Civ.R. 12(B)(6) de novo. Alford v.

Collins-McGregor Operating Co., 152 Ohio St.3d 303, 2018-Ohio-8, 95 N.E.3d 382.

Under Civ.R. 12(B)(6), the factual allegations must be taken as true, and all


                                          4
                      OHIO FIRST DISTRICT COURT OF APPEALS


reasonable inferences drawn in favor of the nonmoving party. Id. “To grant the

motion, ‘it must appear beyond doubt that the plaintiff can prove no set of facts in

support of the claim that would entitle the plaintiff to the relief sought.’ ” Id.,

quoting Ohio Bur. of Workers’ Comp. v. McKinley, 130 Ohio St.3d 156, 2011-Ohio-

4432, 956 N.E.2d 814, ¶ 12.

                                    Choice of Law

       {¶11} Before delving into the substance of ISCO’s complaint, we must

determine whether Kentucky or Ohio law applies to this dispute. Great American

contends that Kentucky law applies because Kentucky has the “most significant

relationship” to the dispute between these parties.

       {¶12}       The “most significant relationship” test comes from Gries Sports

Ents., Inc. v. Modell, 15 Ohio St.3d 284, 473 N.E.2d 807 (1984), and Restatement of

the Law 2d, Conflict of Laws, Section 188 (1971). The most-significant-relationship

test provides that in the absence of an effective choice of law by the parties to a

contract, the state with the most significant relationship to the transaction and the

parties should govern. Restatement, Section 188. In determining which state has

the most significant relationship, courts should consider the place of contracting, the

place of negotiation, the place of performance, the location of the subject matter, and

the domicile, residence, nationality, place of incorporation, and place of business of

the parties. Id.

       {¶13} Great American argues that Kentucky has the most significant

relationship to this insurance-coverage dispute.      ISCO Industries is a Kentucky

corporation with a principal place of business in Kentucky, and the policy was issued

in Kentucky.


                                           5
                    OHIO FIRST DISTRICT COURT OF APPEALS


       {¶14} The party asserting that a foreign law applies has the burden to

demonstrate that a conflict of laws exists between the foreign law and the law of the

forum. Cross v. Carnes, 132 Ohio App.3d 157, 168, 724 N.E.2d 828 (11th Dist.1998).

Where no conflict of laws exists, the law of the forum controls. Id. Therefore, “ ‘[a]

court must conduct conflict of laws analysis only if there is an actual conflict between

local law and the law of another jurisdiction.’ ” Miami Valley Mobile Health Serv.,

Inc. v. ExamOne Worldwide, Inc., 852 F.Supp.2d 925, 937 (S.D.Ohio 2012), quoting

Andersons, Inc. v. Consol, Inc., 185 F.Supp.2d 833, 836 (N.D.Ohio 2001). “[I]f two

jurisdictions apply the same law, or would reach the same result applying their

respective laws, a choice of law determination is unnecessary because there is no

conflict, and the laws of the forum state apply.” Wendy’s Internatl., Inc. v. Illinois

Union Ins. Co., S.D.Ohio No. 2:05-cv-803, 2007 WL 710242, *6 (Mar. 6, 2007),

citing Mecanique C.N.C., Inc. v. Durr Environmental, Inc., 304 F.Supp.2d 971, 957

(S.D.Ohio 2004).

       {¶15} In Wendy’s, the court refused to engage in a choice-of-law analysis in

an insurance-coverage dispute. Wendy’s Internatl., Inc., at *6. In that case, Wendy’s

sued its insurer following the insurer’s failure to provide coverage with respect to an

arbitration and settlement between Wendy’s and a California corporation.            The

insurer refused to provide coverage because Wendy’s had not reported the claim

during the policy period. As to whether Ohio, the law of the forum, or California law

applied to the coverage issue, Wendy’s argued that California law applied, because

the dispute with the California corporation over which Wendy’s sought coverage had

occurred in California. The court declined to engage in a choice-of-law analysis,

stating:


                                           6
                   OHIO FIRST DISTRICT COURT OF APPEALS


       Here, Plaintiffs, seeking to apply California law, have the burden of

       showing that California law is different than Ohio law. Not only have

       Plaintiffs not pointed to any material differences between California

       law and Ohio law on this issue, Plaintiffs argue that both California

       and Ohio have adopted the “notice-prejudice” rule bearing on the issue

       of whether courts must inquire as to whether an insurer was

       prejudiced by late or untimely notice before determining that coverage

       is precluded on such basis. Because Plaintiffs have failed to show how

       California law differs from Ohio law, and because the Court has not

       found any material differences in the states’ respective laws, the Court

       will not engage in a choice-of-law analysis and will apply the laws of

       the forum state, Ohio, to this dispute.

Id. at *5-6.

       {¶16} Great American contends that ISCO is not entitled to coverage under

either Ohio or Kentucky law, and Great American has not shown that the laws of

Kentucky or Ohio differ regarding whether late notice of a claim vitiates coverage.

Because Great American has not shown that a conflict of laws exists between Ohio

and Kentucky, we will apply Ohio law, as did the trial court, to determine whether

ISCO provided timely notice of the Wolseley Canada claim.

                      Timely Notice of a Claim under the Policy

       {¶17} In its first assignment of error, ISCO argues that the trial court erred in

holding that ISCO had failed to timely notify Great American under the policy,

because the trial court failed to follow a decision from Ohio’s Sixth District Court of

Appeals, Helberg v. Natl. Union Fire Ins. Co., 102 Ohio App.3d 679, 657 N.E.2d 832


                                           7
                      OHIO FIRST DISTRICT COURT OF APPEALS


(6th Dist.1995), as well as a case that relied on Helberg: Professionals Direct Ins. Co.

v. Wiles, Boyle, Burkholder & Bringardner Co., LPA, S.D.Ohio No. 2:06-CV-240,

2009 WL 4281263 (Nov. 24, 2009).

       {¶18} Before considering whether Helberg applies to the notice provision in

the policy, we must look first to the language of the policy itself. The policy requires

that ISCO give notice of a civil proceeding against it “as soon as practicable from the

date the General Counsel, Risk Manager, or person with equivalent responsibility has

knowledge of the Claim, and in no event later than ninety (90) days after the end of

the Policy Period.” Here, the parties do not dispute that the filing of the Wolseley

Canada lawsuit was a civil proceeding, and that ISCO failed to notify Great American

of the Wolseley Canada lawsuit within 90 days after the end of the policy period.

Nevertheless, ISCO argues that coverage exists under Helberg, because ISCO

renewed the policy.

       {¶19} In Helberg, the insured’s malpractice insurance policy provided

coverage for acts or omissions that occurred prior to the end of the policy period, if

the insured reported the claim during the policy period. The policy contained an

exclusion section, which provided coverage with respect to “any claim arising out of

any acts or omissions occurring prior to the effective date of the first policy issued to

the named insured by this Company and continuously renewed thereafter if any

insured on such date knew or could have reasonably foreseen that such acts or

omissions might be expected to be the basis of a claim or suit.”

       {¶20} After the insured’s original policy expired, the insured purchased a

renewal. The insured reported a malpractice claim to his insurer almost six weeks

after the original policy had expired.


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                   OHIO FIRST DISTRICT COURT OF APPEALS


       {¶21} The Helberg court determined that the policy language was ambiguous

regarding when a claim must be reported, and that the ambiguity should be

construed in favor of the insured. The court noted that despite the language in the

policy requiring that the insured report a claim during the policy period, the renewal

language in the exclusion section indicated that the parties expected continuous

coverage upon policy renewal. The court determined that “[i]n the present case,

there was no cancellation of coverage, nor did the insured change insurance carriers.

The insured merely renewed his claims-made policy. Such an event should not

precipitate a trap wherein claims spanning the renewal are denied.” Helberg, 102

Ohio App.3d at 682, 657 N.E.2d 832.           Therefore, the Helberg court reversed

summary judgment in favor of the insurer on its late-notice defense.

       {¶22} Following Helberg, in Professionals Direct, an insurer moved for

summary judgment on the basis that an insured had failed to timely report a

malpractice claim. The policy indicated that a claim is made “when you first receive

information or have knowledge of specific circumstances involving a particular

person or entity which could reasonably be expected to result in a claim.”

Professionals Direct Ins., S.D.Ohio No. 2:06-CV-240, 2009 WL 4281263, at *10.

The court determined that the “reasonably be expected” language was ambiguous,

and that whether the insured had notice of the claim was a factual issue. The court

then reasoned that Helberg provided an independent basis upon which to deny

summary judgment to the insurer.       The court determined that Helberg’s policy

concern with a “ ‘trap wherein claims spanning the renewal are denied’ ” applied in

that case with equal force. Id. at *20, quoting Helberg, 102 Ohio App.3d at 682, 657

N.E.2d 832.    The court analyzed Helberg and determined that it stood for the


                                          9
                     OHIO FIRST DISTRICT COURT OF APPEALS


proposition that so long as a policy is renewed and an insured provides notice of a

claim within a reasonable time, coverage exists even if the notice of the claim was not

timely.

          {¶23} The Helberg and Professionals Direct courts determined that because

the notice provisions in the policies were ambiguous, the insureds need only have

provided notice to the insurers within a reasonable time. The courts were also

concerned with the insureds being caught in a “trap” where a claim made at or near

the end of a policy period would effectively eliminate the insured’s ability to report

the claim within the policy period. In this case, the notice provision in the policy is

unambiguous. The notice provision in this case also eliminates the “trap” concern in

Helberg, and it provides a 90-day cushion after the policy ends in which ISCO can

provide notice. Additionally, in Professionals Direct, the court determined that the

ambiguous language in the policy created a factual issue as to when a claim had been

made. Here, no factual issue exists as to when a claim was made, because the parties

agree that the filing of the Wolseley Canada lawsuit constituted a claim under the

policy. Therefore, Helberg and Professionals Direct are distinguishable.

          {¶24} Other courts have also found Helberg distinguishable in cases where a

claim must be made and reported within a specific timeframe. In US HF Cellular

Comm. v. Scottsdale Ins. Co., S.D.Ohio No. 2:17-cv-261, 2018 WL 2938388 (June 12,

2018), the court considered whether the insureds had timely reported a claim to their

insurer under an executive policy similar to the one at issue in this case. The policy

provided that notice of a claim must be made to the insurer as soon as practicable,

but in no event later than 60 days after the end of the policy period. The parties did

not dispute that a claim was made when the insureds were sued, and that the


                                          10
                   OHIO FIRST DISTRICT COURT OF APPEALS


insureds did not report the claim until four months after the 60-day reporting

deadline. Although the court applied California law to the coverage dispute, the

court considered the insureds argument that the analysis in Helberg applied to

provide coverage. The insureds argued that because the policy had been renewed,

coverage existed even though the claim had been made during a second policy

period, but not reported until the third policy period. The court determined that

Helberg was distinguishable because the insured in Helberg did not have a 60-day

extension under the policy in which to report claims, like the insureds in the case

before it.

       {¶25} The court in US HF Cellular applied the plain language of the policy in

determining that the insured’s claim coverage did not extend past the 60-day

reporting deadline. “It is well-established in Ohio, and indeed universally, that

contracts, including insurance policies, ‘are to be interpreted so as to carry out the

intent of the parties, as that intent is evidenced by the contractual language.’ ”

(Citations omitted.) Telxon Corp. v. Fed. Ins. Co., 309 F.3d 386, 391 (6th Cir.2002),

quoting Skivolocki v. East Ohio Gas Co., 38 Ohio St.2d 244, 313 N.E.2d 374 (1974).

       {¶26} Here, the plain language of the policy required ISCO to report a claim

no later than 90 days after the end of the policy period. ISCO’s argument that

Helberg applies such that its policy renewal creates an expectation of continuous and

seamless coverage, so long as ISCO reported its claim in a reasonable time, is not

supported by the plain language of the policy.

       {¶27} We overrule the first assignment of error.




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                    OHIO FIRST DISTRICT COURT OF APPEALS


                            The Notice-Prejudice Rule

       {¶28} In its second assignment of error, ISCO contends that the trial court

erred in granting Great American’s motion to dismiss, because the trial court

incorrectly held that the “notice-prejudice rule” was inapplicable. See Ferrando v.

Auto-Owners Mut. Ins. Co., 98 Ohio St.3d 186, 2002-Ohio-7217, 781 N.E.2d 927.

ISCO contends that the notice-prejudice rule applies, so that even if ISCO did not

timely notify Great American of a claim under the policy, Great American must still

provide coverage if it has not been prejudiced by the late notice.

       {¶29} In Ferrando, the Ohio Supreme Court held that when an insurer’s

denial of underinsured motorist (“UIM”) coverage is based upon an insured’s failure

to comply with a prompt-notice provision, the insurer is not required to provide

coverage, so long as the insurer has been prejudiced by the insured’s unreasonable

delay in providing notice. The UIM policy in Ferrando required “prompt notice” to

the insurer. The Ferrando court reasoned that prompt notice meant notice “ ‘within

a reasonable time in light of all the surrounding facts and circumstances.’ ” Id. at ¶

90, quoting Ruby v. Midwestern Indemn. Co., 40 Ohio St.3d 159, 161, 532 N.E.2d

730 (1988). Even if an insured did not provide notice within a reasonable time under

an UIM policy, then a court must determine whether the insurer was prejudiced.

Ferrando at ¶ 90.

       {¶30} The policy here does not require “prompt notice” of a claim, and

instead requires notice within 90 days after the end of the policy period. The policy

here is also a directors and officers liability coverage policy, not a UIM policy.

Therefore, Ferrando is distinguishable.      ISCO cites several cases, however, that

purportedly extend Ferrando beyond its facts. ISCO cites to Sesko v. Caw, 8th Dist.


                                           12
                    OHIO FIRST DISTRICT COURT OF APPEALS


Cuyahoga No. 87359, 2006-Ohio-5434, in which a judgment creditor sought to

recover from a judgment debtor’s insurance company. The policy at issue in Sesko

required that the notice of a claim be made “as soon as practicable.” Id. at ¶ 19. The

court determined that the issue of whether the insurance company had been timely

notified of a claim was similar to the notice issue in Ferrando. Applying the notice-

prejudice rule, the court reasoned that the insurance company had been prejudiced.

       {¶31} The requirement to provide notice “as soon as practicable” at issue in

Sesko is similar to the requirement of providing “prompt notice,” in that neither

requirement specifies notice during a set timeframe. See Ormet Primary Aluminum

Corp. v. Employers Ins. of Wausau, 88 Ohio St.3d 292, 725 N.E.2d 646 (2000),

syllabus (“A provision in an insurance policy requiring notice to the insurer ‘as soon

as practicable’ requires notice within a reasonable time in light of all the surrounding

facts and circumstances.”). The policy here requires notice to Great American within

a set timeframe—no later than 90 days after the end of the policy period.

       {¶32} ISCO also cites to Vecchio v. Montgomery Cty., 8th Dist. Cuyahoga

No. 20467, 2005-Ohio-313.       In Vecchio, an employee brought suit against his

employer’s automobile insurer seeking UIM coverage after the employee had been

injured in a car accident during the scope of his employment.          The employer’s

automobile-insurance policy provided that notice of a claim must be made to the

insurer within 30 days after an accident. The court reasoned that the plaintiff-

employee was a third-party beneficiary under his employer’s insurance policy, and as

a third party, he did not have actual notice of the 30-day reporting requirement. The

court also reasoned that Ferrando’s reasonableness test applies to UIM coverage,

and thus a genuine issue of material fact existed as to whether the plaintiff acted


                                          13
                     OHIO FIRST DISTRICT COURT OF APPEALS


reasonably in failing to give notice within 30 days. Unlike Vecchio, this case does not

involve UIM coverage, and ISCO is not a third party to the contract, so it cannot

argue lack of notice of the policy terms.

          {¶33} ISCO cites McKean v. Howell, 5th Dist. Stark No. 2004CA00041,

2005-Ohio-721, for the proposition that the notice-prejudice rule has been extended

to liability-coverage cases. In McKean, a judgment debtor sought to recover against

the tortfeasor’s insurance company. The tortfeasor had never reported any loss to

his insurance company.       The McKean court held that the tortfeasor’s complete

failure to report the loss would not per se preclude coverage for the judgment debtor.

The policy at issue in McKean, however, like the policy in Ferrando, required prompt

notice.

          {¶34} Federal courts applying Ohio law have held that the notice-prejudice

rule in Ferrando is inapplicable in cases where the policy provides that notice of a

claim must be given to the insurer by a certain date. See McCarty v. Natl. Union

Fire Ins. Co. of Pittsburgh, PA., 699 Fed.Appx. 464 (6th Cir.2017); Wendy’s

Internatl., Inc., S.D.Ohio No. 2:05-cv-803, 2007 WL 710242, at *9; Certain

Underwriters at Lloyds of London v. Jeff Wyler Dealer Group, Inc., S.D.Ohio No. C-

1-05-572, 2007 WL 1989836, *8 (July 9, 2007).

          {¶35} In McCarty, the United States Court of Appeals for the Sixth Circuit

applying Ohio law rejected an argument that the notice-prejudice rule applied to the

terms of a malpractice-insurance policy, which provided coverage only for claims

made against the insured during the policy period, and “promptly reported” to the

insurer, “but in any case no later than sixty days after the end of the policy period.”

McCarty at 468.


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                    OHIO FIRST DISTRICT COURT OF APPEALS


       {¶36} The plaintiffs in McCarty had obtained a judgment against their

former attorney for malpractice, and the plaintiffs sought to collect on their

judgment against the attorney’s malpractice insurer. The plaintiffs argued that their

claim should be covered because the insurer was not prejudiced by their attorney’s

untimely reporting of their claim.       The Sixth Circuit noted that the plaintiffs

“appear[ed] to conflate a claims-made policy, like [the attorney’s], with an

occurrence-based policy.” According to the court,

       [a] claims-made policy covers losses that arise during the policy

       period, regardless of when the events underlying the claim might have

       occurred. On the other hand, an occurrence-based policy covers losses

       resulting from events that occur during the coverage period, even

       though it might be long after the policy period before the events are

       discovered and the claim is filed.

(Internal citation omitted.) Id.

       {¶37} The court further reasoned that “[b]ecause coverage in a claims-made

policy is generally restricted to only claims made and reported during the policy

period, an insurer need not demonstrate prejudice to deny a claim that is made

outside of the policy period.” Id., citing United States v. A.C. Strip, 868 F.2d 181, 187

(6th Cir.1989). Therefore, the court held that the plaintiffs’ malpractice claim was

reported too late to be covered.

       {¶38} Prior to McCarty, in Wendy’s, the United States District Court for the

Southern District of Ohio determined that the notice-prejudice rule did not apply to

a policy in which the notice provision required notice of a claim to the insurer

“immediately, but in no event later than 60 days after the end of the Policy Period of


                                            15
                    OHIO FIRST DISTRICT COURT OF APPEALS


any Claim made against the Insured.” Wendy’s Internatl., Inc., S.D.Ohio No. 2:05-

CV-803, 2007 WL 710242, at *3. The court determined that the notice-prejudice

rule from Ferrando was inapplicable because the policy in Ferrando did not require

the insured to notify the insurer of any claim by a specific date, but “[r]ather the

policy provided that notice of the occurrence should be provided to the insurer

‘promptly.’ ” Id. at *8.

       {¶39} Another court in the United States District Court for the Southern

District of Ohio followed Wendy’s, reasoning that “[a]bsent any contrary caselaw

supporting the proposition that the notice-prejudice standard enunciated in

Ferrando applies when a specific notice deadline is imposed under a policy or

indicating that the Ohio Supreme Court would extend the notice-prejudice standard

in this manner, the Court declines to extend Ferrando to the facts of this case.”

Certain Underwriters at Lloyds of London, S.D.Ohio No. C-1-05-572, 2007 WL

1989836, at *7.

       {¶40} Similarly, the United States District Court for the Western District of

Kentucky refused to apply the notice-prejudice rule to a policy very similar to the one

at bar, which provided the insured with directors and officers and company coverage.

See C.A. Jones Mgt. Group, LLC v. Scottsdale Indemn. Co., W.D.Ky. No. 5:13-CV-

00173-TBR-LLK, 2016 WL 3460445, *1 (June 21, 2016). The policy required written

notice to the insurer of any claim as soon as practicable, but in no event later than 60

days after the end of the policy period.          The court determined that the notice

language was unambiguous, and that adoption of the notice-prejudice rule would

effectively rewrite the parties’ contract.




                                             16
                    OHIO FIRST DISTRICT COURT OF APPEALS


       {¶41} Following the reasoning of these federal courts, we hold that the

notice-prejudice rule does not apply to the policy here, which requires ISCO to

provide notice to Great American of a civil proceeding no later than 90 days after the

end of the policy period. Therefore, Great American need not demonstrate that it

was prejudiced by ISCO’s untimely notice of a claim in order for Great American to

deny coverage.

       {¶42} We overrule the second assignment of error.

                                    The Savings Clause

       {¶43} In its third assignment of error, ISCO contends that the trial court

incorrectly interpreted the notice provision in the policy, because the letters ISCO

received from outside counsel for Wolseley Canada prior to its lawsuit constituted a

“claim” that triggered the application of “the savings clause.”

       {¶44} The “savings clause” referred to by ISCO is bolded in the notice

provision below:

       With respect to any Liability Claim for which coverage is provided

       under any Liability Coverage Part, the Insureds shall, as a condition

       precedent to their rights under this Policy, give the Insurer notice in

       writing of such Liability Claim:

       (1) as defined in subparagraph (1) of the definition of Claim in the

       applicable Liability Coverage Part, which is made during the Policy

       Period. Such notice shall be given prior to the end of the Policy Period;

       or

       (2) as defined in subparagraph (2) of the definition of Claim in the

       applicable Liability Coverage Part, which is made during the Policy


                                           17
                    OHIO FIRST DISTRICT COURT OF APPEALS


       Period. Such notice shall be given as soon as practicable from the date

       the General Counsel, Risk Manager, or person with equivalent

       responsibility has knowledge of the Claim, and in no event later than

       ninety (90) days after the end of the Policy Period.

       The Insureds failure to report a Claim pursuant to (1) above

       shall not negate the right to report a Claim pursuant to (2)

       above under this Policy or any renewal thereof.

(Emphasis added.)

       {¶45} The definition of “claim” in subparagraph (1) is “a written demand for

monetary or non-monetary relief made against any Insured.”           The definition of

“claim” in subparagraph (2) is “a civil * * * proceeding made against any Insured

seeking monetary or non-monetary relief and commenced by the filing of a

complaint or similar pleading.”

       {¶46} Therefore, reading the definitions of claim together with the “savings

clause,” the “savings clause” provides that if ISCO fails to report a written demand

for relief, that failure will not negate ISCO’s right to report a civil proceeding under

the policy or any renewal of the policy.

       {¶47} ISCO argues that the Wolseley Canada letters constituted written

demands for relief, thereby invoking the savings clause, and that ISCO’s failure to

report the demand letters to Great American cannot negate its right to report the

Wolseley Canada lawsuit under any later renewal period. Thus, even though the

Wolseley Canada lawsuit was filed in February 2014, and the 2013-2014 policy

period expired in March 2014, ISCO contends that it did not have to report the

Wolseley Canada lawsuit to Great American within 90 days of the end of the 2013-


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2014 policy period, as required by paragraph two of the notice provision, because of

the “savings clause.”

       {¶48} The trial court determined that ISCO’s interpretation of the “savings

clause” makes the reporting requirement under paragraph two of the notice

provision meaningless, and that “ ‘[i]f one construction of a doubtful condition

written in a contract would make that condition meaningless, and it is possible to

give it another construction that would give it meaning and purpose, then the latter

construction must obtain.’ ” See Helberg, 102 Ohio App.3d at 682, 657 N.E.2d 832,

quoting Farmers Natl. Bank v. Delaware Ins. Co., 83 Ohio St. 309, 94 N.E. 834

(1911), paragraph six of the syllabus. We agree with the trial court’s analysis.

       {¶49} Moreover, the letters ISCO received from Wolseley Canada prior to the

lawsuit requested that ISCO and certain employees of ISCO confirm in writing that

they understood their alleged post-employment obligations to Wolseley Canada. The

letters do not constitute a “demand for relief,” because the Wolseley Canada

plaintiffs had not yet claimed any injury.

       {¶50} We determine that the “savings clause” is inapplicable to ISCO’s

dispute, and, as a result, we overrule the third assignment of error.

                              Amendment of the Complaint

       {¶51} In its fourth assignment of error, ISCO contends that the trial court

erred by failing to grant its request for leave to file an amended complaint.

       {¶52} Civ.R. 15(A) governs amendment of pleadings, and it provides that

“[t]he court shall freely give leave when justice so requires.” Even though Civ.R. 15

requires a court to freely give leave to amend in the interest of justice, “a trial court




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properly refuses to grant leave to amend when amendment would be futile.” Hensley

v. Durrani, 1st Dist. Hamilton No. C-130005, 2013-Ohio-4711, ¶ 14.

       {¶53} ISCO contends that the trial court should have allowed ISCO the

opportunity to amend its complaint to add more facts to show that its notice was

reasonable under the circumstances, and that Great American was not prejudiced by

ISCO’s delay in reporting. ISCO’s argument assumes that Helberg and Ferrando

govern the notice issue, but, as we have determined, those cases do not apply.

Therefore, an amendment to ISCO’s complaint would be futile, and the trial court did

not err in refusing to allow ISCO to amend its complaint. See Great Water Capital

Partners, L.L.C. v. Down-Lite Internatl., Inc., 1st Dist. Hamilton No. C-150015,

2015-Ohio-4877, ¶ 18.

       {¶54} We overrule the fourth assignment of error.

                                     Conclusion

       {¶55} We affirm the judgment of the trial court dismissing ISCO’s complaint.




                                                                     Judgment affirmed.


MOCK, P.J., and ZAYAS, J., concur.

Please note:
       The court has recorded its own entry on the date of the release of this opinion.




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