Everett Cash Insurance Co. v. Lora Howell, et al.

Summary

The United States District Court for the Southern District of Ohio addresses Third-Party Defendants Jacobs Vanaman Agency Inc. and David Fitch’s motion for judgment on the pleadings and Lora and Justin Howell’s motion for leave to amend. The court dismisses the Howells’ negligent procurement claim under Ohio’s economic loss doctrine but allows their negligent misrepresentation claim to proceed. The court also determines that amendment may be permitted under the Federal Rules, although the proposed amendment would be futile in part.

Holdings

1. Under the circumstances alleged, Ohio's economic loss doctrine bars the Howells' negligent procurement claim because the claim seeks recovery for purely economic losses arising from inadequate insurance coverage and financial loss, without alleging tangible physical harm to persons or property caused by the defendants' negligence.
2. The Howells sufficiently pleaded negligent misrepresentation by alleging that JVA and Fitch supplied false information concerning the comparative coverage and premium of the proposed policy, that the information was supplied to guide Lora's insurance decision, that she relied on it, that the defendants failed to exercise reasonable care, and that she suffered pecuniary loss.
3. At the pleading stage, the court declined to dismiss the negligent misrepresentation claim for failure to plead a special relationship because Ohio law was unsettled and the allegations sufficiently indicated that the defendants supplied information in the course of their insurance business to guide Lora's specific insurance decision.
4. The Howells demonstrated sufficient diligence and lack of undue prejudice to satisfy Rule 16, and their proposed negligent misrepresentation and alternative breach of contract or quasi-contract claims were adequately pleaded at the amendment stage. Leave to amend was denied only as to the negligent procurement claim because that claim remained barred by the economic loss doctrine.

Questions Presented

1. Whether the Howells' negligent procurement claim is barred by Ohio's economic loss doctrine when the alleged damages consist solely of inadequate insurance coverage and financial loss.
2. Whether the Howells sufficiently pleaded negligent misrepresentation by alleging who supplied false information, what was represented, when it was represented, reliance, lack of reasonable care, and resulting pecuniary loss.
3. Whether the Howells were required at the pleading stage to allege a special relationship with the insurance agency and agent to proceed on negligent misrepresentation.
4. Whether the Howells showed good cause and diligence under Rule 16 and whether their proposed amended negligent misrepresentation and breach of contract or quasi-contract claims were futile under Rule 15.

Disposition

other