# FWB, LLC v. Auto-Owners (Mutual) Insurance Co.

> District Court, N.D. Ohio · August 5, 2021

URL: https://www.frixlaw.com/law-library/cases/10369791

## Case

- **Court:** District Court, N.D. Ohio
- **Decided:** August 5, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
WESTERN DIVISION

FWB, LLC, CASE NO. 3:20 CV 70

Plaintiff,

v. JUDGE JAMES R. KNEPP II

AUTO-OWNERS (MUTUAL)
INSURANCE CO.,
MEMORANDUM OPINION AND
Defendant. ORDER

INTRODUCTION
On December 19, 2019, FWB, LLC, doing business as South End Grille (“Plaintiff”),
brought this action in the Lucas County Court of Common Pleas asserting state law claims of
breach of contract, negligence, and breach of good faith, against Auto Owners Insurance Company
(“Defendant”). (Doc. 1-1). Defendant removed the case to this Court on January 14, 2020 (Doc.
1), and Plaintiff later filed an Amended Complaint (Doc. 23). The Court has jurisdiction pursuant
to 28 U.S.C. § 1332. Currently pending before the Court is Defendant’s Motion for Summary
Judgment (Doc. 34), to which Plaintiff filed an opposition (Doc. 37), and Defendant replied (Doc.
39).
For the reasons contained herein, the Motion for Summary Judgment (Doc. 34) is
GRANTED.
BACKGROUND
Viewing the facts in the light most favorable to Plaintiff, the background of this case is as
follows:
FWB, LLC owned and operated South End Grille in Toledo, Ohio. (Doc. 32-1, Bussdieker
Deposition, 7:22-25, 8:1) (“Bussdieker Depo.”). Fred Bussdieker and Lonnie Good were FWB’s

members. (Bussdieker Depo. 17:3-11, 19-20); see also Doc. 34-2, at 5 (Intent to Purchase
Agreement). Bussdieker performed the day-to-day management of South End Grille from its
opening in 2015 through August 2017. (Doc. 37-1, at ¶¶2-3, Bussdieker Affidavit) (“Bussdieker
Aff.”). The bar thrived under his watch. Id. At all times relevant to this case, Defendant insured
the business; the premiums were paid and current. Id. at ¶¶4-5. On April 28, 2017, as part of a
policy-obligated audit by Defendant of South End Grille’s 2015-2016 revenues, Plaintiff provided
information on its revenues to Defendant through an independent insurance agent. See Doc. 37-4
(email).
Bussdieker stepped back from business operations in August 2017. (Bussdieker Aff. at ¶6).

Good ran the South End Grille unsuccessfully in September of 2017, id., and the business
ultimately closed that same month. (Bussdieker Depo. 76:20-25, 77:1). Under Good’s watch, the
business was not profitable as it was being mismanaged. Id. at 77:2-4. Following Good’s brief
tenure, on September 21, 2017, Bussdieker and Good entered into an agreement with Dohnovan
Walton and Travis Murphy to act as general managers and run the business. (Bussdieker Aff. at
¶8); see also Doc. 34-2. Under the agreement, Walton and Murphy operated the business and paid
a monthly amount to Plaintiff for the right to manage, intending to purchase the business outright.
See Doc. 34-2. On October 24, 2017, Plaintiff’s insurance agent emailed a commercial underwriter
an application for insurance coverage for South End Grille on behalf of Walton and Murphy. (Doc.
37-6) (email). In the email, the agent acknowledged Walton and Murphy did not qualify for
Defendant’s business coverage because they lacked prior restaurant ownership experience. Id. The
agent also noted Bussdieker “ha[d] sold/is selling” South End Grille to Walton and Murphy. Id.
The next day, October 25, 2017, the underwriter responded to the agent asking some follow-up
questions regarding Walton and Murphy’s plans for the business as well as past revenue amounts.

(Doc. 37-5, at 1-2). The agent responded, explaining monthly sales figures for South End Grille
were $38,200 per month. Id. at 1.
In October 2017, business revenue was poor while Walton and Murphy remained in control
of South End Grille. (Bussdieker Aff. at ¶9). Walton and Murphy also stopped making monthly
payments to Plaintiff at that time. Id.
On December 18, 2017, during a premises inspection, Bussdieker told an Ohio Department
of Liquor Control agent he leased the business to Walton weeks prior. (Doc. 34-1, at 49). Walton
signed a liquor permit correction the same day, identifying himself as the new owner. Id. at 47.
The liquor permit was placed in Safekeeping by the State of Ohio effective December 27, 2017,

the day prior to the fire. Id. at 50.
Fire heavily damaged the South End Grille in the early morning hours of December 28,
2017. (Bussdieker Depo. 11:1-4, 62:1-12); see also Doc. 34-6, at 1 (letter). As a result, the business
did not resume normal operations. (Bussdieker Aff. at ¶16). Further, because the fire originated in
the business office, a substantial amount of records and equipment were lost. Id. at ¶18. Plaintiff
“reconstruct[ed]” some past revenue based upon state tax reporting and information recovered
from backup software. Id.; see also Docs. 37-9, 37-10 (revenue summaries).
In January 2018, Cousino Restoration gave an estimate for repair and cleaning of South
End Grille. (Doc. 34-4). Cousino never performed any work at the restaurant. (Bussdieker Depo.
96:1-25). Once Bussdieker saw the Cousino estimate, and learned the company wanted to be paid
up front, he decided to perform the cleaning himself. Id. at 57:5-17.
Plaintiff’s liquor permit expired on June 1, 2018 and had not been renewed as of September
11, 2018. (Doc. 34-1 at 55-56). In a letter to the Ohio Department of Liquor Control dated October
24, 2018, Bussdieker stated he was actively seeking one or two buyers for the business as he

“d[idn’t] want nothing to do with” it anymore. Id. at 60.
Bussdieker executed a “Sworn Statement in Proof of Loss” to Defendant on June 11, 2018.
See Doc. 34-7. Therein, on a “Personal Property Inventory” worksheet, he listed Plaintiff’s liquor
permit, valued at $2,844, as a loss incurred during the fire. Id. at 9. He also included a $13,300.96
line item cost for Cousino Restoration. Id.
On June 21, 2018, Defendant’s claim representative Douglas Guhl sent Plaintiff a letter
detailing the covered and uncovered portions of the insurance claim. See Doc. 34-6. Defendant
ultimately paid Plaintiff a total of $33,780.76 on the claim - $14,900 for lost business income, and
$18,880.76 for property damage and cleaning. (Bussdieker Depo. 24:16-25, 25:1); see also Doc.

34-6.
STANDARD OF REVIEW
Pursuant to Federal Civil Rule 56(c), summary judgment is appropriate where there is “no
genuine issue as to any material fact” and “the moving party is entitled to judgment as a matter of
law.” When considering a motion for summary judgment, the Court must draw all inferences from
the record in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986). The Court is not permitted to weigh the evidence or
determine the truth of any matter in dispute; rather, the Court determines only whether the case
contains sufficient evidence from which a jury could reasonably find for the nonmoving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). The moving party bears the burden
of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). This burden “may be discharged by
‘showing’—that is, pointing out to the district court—that there is an absence of evidence to
support the nonmoving party’s case.” Id. Further, the nonmoving party has an affirmative duty to
direct the court’s attention to those specific portions of the record upon which it seeks to rely to

create a genuine issue of material fact. See FED R. CIV. P. 56(c)(3) (noting that the court “need
consider only the cited materials”).
DISCUSSION

Plaintiff asserts three causes of action against Defendant: breach of contract (Count One),
negligence (Count Two), and breach of the duty of good faith (Count Three). See Doc. 23 (First
Amended Complaint). It alleges Defendant failed to fully compensate for the damage sustained
from the December 2017 fire. Id. at 2. Specifically, Plaintiff argues Defendant failed to fully
compensate its business income losses and the full cost associated with cleaning restaurant
equipment. (Doc. 37, at 9-13). Defendant argues it is entitled to summary judgment on each of
Plaintiff’s claims. Defendant asserts Plaintiff has been fully compensated under the terms of the
insurance contract and it owes nothing more because Plaintiff voided coverage when it: 1)
materially misrepresented the value of its claims, and 2) failed to comply with the policy’s terms
and conditions. See Doc. 34. For the reasons contained herein, the Court grants summary judgment
to Defendant on each of Plaintiff’s claims and dismisses the case with prejudice.
As an initial matter, in Ohio, “an insurance policy is a contract between an insured and the
insurer.” Pilkington N. Am., Inc. v. Travelers Cas. & Sur. Co., 861 N.E.2d 121, 126 (Ohio 2006).
An insurance contract must be construed to give words their plain and ordinary meaning. State
Farm Auto. Ins. Co. v. Rose, 575 N.E.2d 459, 461 (Ohio 1991), rev’d on other grounds, 620 N.E.2d
809 (Ohio 1993). However, if the language is ambiguous, and thus susceptible to more than one
interpretation, it must be liberally construed in favor of the insured. Id.; see also Akins v. Harco
Ins. Co., 815 N.E.2d 686, 693 (Ohio Ct. App. 2004) (“[A]ny reasonable construction which results
in coverage of the insured must be adopted by the trial court.”), rev’d on other grounds, 830 N.E.2d
1161 (Ohio 2005). Importantly, “[u]nder Ohio law, the burden is on the insured to prove that he is

entitled to coverage by showing facts sufficient to establish that his loss was within the description
of the policy.” State Farm Fire & Cas. Co. v. Hiermer, 720 F. Supp. 1310, 1314 (S.D. Ohio 1988)
(citing Sterling Merch. Co. v. Hartford Ins. Co., 506 N.E.2d 1192, 1199 (Ohio Ct. App. 1986)
(“The burden, however, is not on the insurer, but on the insured to prove that he is entitled to
coverage.”)), aff’d, 884 F.2d 580 (6th Cir. 1989) (unpublished table decision).
Breach of Contract – Count One
Business Income Loss
Defendant asserts it paid Plaintiff a total of $33,780.76 to settle the insurance claim at issue.
(Doc. 34, at 19). It argues this amount covered the damage to, and cleaning of, Plaintiff’s personal

property, as well as lost business income. Id. Of this total, Defendant paid $14,900 for lost business
income.1 (Bussdieker Depo. 24:20-25, 25:1); (Doc. 34-6, at 1-2). Plaintiff argues it is owed an

1. The $14,900 represents the sum of the $4,100 payment to Plaintiff’s landlord and six months of
$1,800 loan payments from Walton and Murphy. (Doc. 34-6, at 1).

Moreover, in his affidavit, Bussdieker contends Defendant only paid him $4,100 on the lost income
claim. (Doc. 37-1, at ¶24). This contradicts Bussdieker’s earlier deposition testimony that the
payout was $14,900. (Bussdieker Depo. 24:20-25, 25:1). Defendant asserts the lost income payout
was $14,900. (Doc. 34-6, at 1-2). Plaintiff cannot create a factual dispute by testifying to one
amount, then later swearing to a different amount in an affidavit. Boykin v. Fam. Dollar Stores of
Mich., LLC, -- F.4th --, 2021 WL 2708859, at *7 (6th Cir.) (“[Defendant] invokes our ‘sham
affidavit’ rule. This rule provides that a party cannot create a genuine dispute of material fact with
an affidavit that conflicts with the party’s earlier testimony about the fact.”).
additional $33,632.02. (Doc. 37, at 5). It asserts this figure represents the proper lost income
calculation which is based upon a six-month restoration period, as agreed, and the income
considered should be six times the business’s monthly average income when Bussdieker ran it. Id.
Defendant contends it properly paid the lost income claim based upon the information provided
by Plaintiff during the claims process and any failure on Plaintiff’s part to provide proper

documentation violated the terms and conditions of the insurance contract. See Doc. 34, at 19-29.
This dispute may be resolved by looking at the unambiguous language of the parties’
insurance contract. The following language is relevant to the business income calculation:
A. COVERAGE
1. Business Income
Busines Income means the:
a. Net Income (Net Profit or Loss before income taxes) that would have
been earned or incurred; and
b. Continuing normal operating expenses incurred, including payroll.
***We will pay for the actual loss of Business Income you sustain due to the
necessary “suspension” of your “operations” during the “period of restoration”.
***
C. LOSS CONDITIONS
***
2. Duties In The Event Of Loss
a. You must see that the following are done in the event of loss: ***
(6) Send us a signed, sworn proof of loss containing the
information we request to investigate the claim. You must
do this within 60 days after our request. We will supply you
with the necessary forms.

***
3.  Loss Determination
a. The amount of Business Income loss will be determined based on:
(1) The Net Income of the business before the direct physical
loss or damage occurred;
(2) The likely Net Income of the business if no physical loss or
damage had occurred, but not including any Net Income that
would likely have been earned as a result of an increase in
the volume of business due to favorable business conditions
caused by the impact of the Covered Cause of Loss on
customers or on other businesses;
(3) The operating expenses, including payroll expenses,
necessary to resume “operations” with the same quality of
service that existed just before the direct physical loss or
damages; and
(4) Other relevant sources of information, including:
(a) Your financial records and accounting procedures;
(b) Bills, invoices and other vouchers; and
(c) Deeds, liens or contracts.
***
4. Loss Payment
We will pay for covered loss within 30 days after we receive the sworn
proof of loss, if you have complied with all of the terms of this Coverage
Part and:
a. We have reached agreement with you on the amount of loss; or
b. An appraisal award has been made.
(Doc. 34-3, at 69, 73-74) (insurance policy). Giving these contract terms their plain and ordinary
meaning, see Rose, 575 N.E.2d at 461, the Court finds there is sufficient evidence to show
Defendant properly paid Plaintiff’s lost income claim in accordance with the contract.
In a letter from Guhl to Plaintiff dated June 21, 2018, Defendant explained how it arrived
at the $14,900 lost income figure:
We agreed that the business could have been repaired and back in operations after
6 months and that is the time frame we agreed to review for any loss of business
income [ ] you wished to present.

The documents you presented were for rent payment[s] that you claimed were
ongoing to the landlord in the amount of $4,100 and $1,800 per month for the loan
agreement entered into with your managers Dohnovan Walton and Travis Murphy.

(Doc. 34-6, at 1). As Guhl testified, Plaintiff provided no other evidence of lost income during the
claims process; Defendant paid the claim based solely upon a submitted rental agreement between
FWB and its landlord as well as Walton and Murphy’s intent to purchase agreement. See Doc. 33-
1, Guhl Deposition, 40:1-25, 41:1-15 (“Guhl Depo.”); see also Doc. 34-7 (“Sworn Statement in
Proof of Loss” submitted by Plaintiff containing the rental agreement and intent to purchase
agreement). Plaintiff argues it is owed an additional $33,632.02. (Doc. 37, at 5). It argues this
figure represents the proper income-loss calculation which is based upon a six-month restoration
period, as agreed, but that the six months of revenue considered should be six times the average
monthly amount of income the business had when Bussdieker was still in control. Id.
The conjecture that is Plaintiff’s argument falls far short of the support needed to meet its
burden to show entitlement to coverage under the insurance contract. Hiermer, 720 F. Supp. at

1314 (“Under Ohio law, the burden is on the insured to prove that he is entitled to coverage by
showing facts sufficient to establish that his loss was within the description of the policy.”). The
contract language clearly dictates four factors Defendant considers when it pays a lost income
claim: 1) net income before the loss occurred; 2) the likely net income of the business if the loss
had not occurred; 3) operating expenses just prior to the loss; and 4) other relevant documents
provided by the insured, including deeds, liens, contracts, bills, invoices, or financial records.
(Doc. 34-3, at 73-74). Moreover, the insurance contract unambiguously states that, for the claim
to be paid, Plaintiff must detail its losses in a “sworn proof of loss” and said statement must be
submitted within 60 days after Defendant requests it. Id. at 73.

Defendant has demonstrated, and Plaintiff has not contested, the only documentation
provided by Plaintiff during the claims process to support its income loss was a rental agreement
between Plaintiff and its landlord and Walton and Murphy’s intent to purchase agreement. See
Guhl Depo. 40:1-25, 41:1-15; see also Doc. 34-7 (“Sworn Statement in Proof of Loss”). Plaintiff
submitted no evidence to Defendant of net income earned prior to the fire and no evidence of its
operating expenses “just before” the fire. Id. Instead, Plaintiff now attempts to hang its hat on the
second factor – the “likely net income of the business if the loss had not occurred”. (Doc. 34-3, at
73-74). It argues the loss calculation should have been based on business’s likely income had
Bussdieker regained control. (Doc. 37, at 5). In support, Plaintiff argues the policy language directs
Defendant to pay the likely lost business income for the period of restoration and “[s]ince there is
no basis to find that [Walton and Murphy’s] payment was likely to continue, and instead there was
a strong likelihood that control was going [to] revert to Bussdie[]ker’s control of FWB
immediately following the loss, the likely lost income is what FWB would have made while under
Bussdie[]ker’s day-to-day management.” Id. As evidentiary support, Plaintiff attaches a

spreadsheet prepared by Bussdieker reflecting Plaintiff’s income from January 2016 to December
2017 (Doc. 37-9), and tax documents showing revenue for select months from 2015 through 2017
(Doc. 37-11). However, Plaintiff has provided no evidence it submitted these, nor any other
evidence, to Defendant during the claims process to support an income loss claim under the “likely
income” factor. Indeed, the “Sworn Statement in Proof of Loss” (Doc. 34-7), submitted by Plaintiff
during the claims process, does not contain these documents – only the lease and the intent to
purchase agreement.
Plaintiff argues it provided Defendant with proof of income at different times during
Bussdieker’s tenure as manager. In support, it directs the Court to two emails (Docs. 37-4, 37-5)

which it contends demonstrate that, in November and December of 2017, it provided Defendant
“with information related to estimates of business income” as part of a scheduled policy audit.
(Doc. 37, at 4). Plaintiff also points to documentation it received from Defendant during the
original policy application process in 2015 where Defendant explained its policy premiums were
based upon “gross sales” numbers. See Doc. 37-3, at 3. There are a few problems with Plaintiff’s
evidentiary support. First, and fatal to Plaintiff’s claims, is it has not demonstrated the revenue
estimates in the emails were provided to Defendant during the claims process in a sworn statement
of loss as the insurance contract unambiguously requires. (Doc. 34-3, at 73) (policy); see also Doc.
34-7 (“Sworn Statement in Proof of Loss”). Second, the policy application does not contain any
information regarding the specifics of Plaintiff’s income – it merely notes the total exposure under
the contract (including restaurant and liquor) was $700,000 – and that figure, on which Defendant
based its premium, was “Gross Sales”. (Doc. 37-3, at 3). And again, even if this document
contained specific sales numbers, Plaintiff has not demonstrated it provided this to Defendant as
support for its income losses during the claims process as required by the insurance contract. (Doc.

34-3, at 73).
Central to Plaintiff’s business income loss claim is the assumption Bussdieker would have
regained control of South End Grille in January 2018 if the fire had not occurred. (Bussdieker Aff.
at ¶13). The uncontradicted evidence Defendant presents to the Court demonstrates otherwise.
Here, Defendant offers a letter to the Ohio Department of Liquor Control dated October 24, 2018,
where Bussdieker stated he was actively seeking “1 or 2 people” to sell the business to as he
“d[idn’t] want nothing to do with” it anymore. (Doc. 34-1, at 60). This letter was written ten
months after Bussdieker avers he “began making arrangements to take control again in January
2018.” (Bussdieker Aff. at ¶13). Plaintiff fails to present any evidence to the Court regarding

exactly what “arrangements” Bussdieker made, nor does it present evidence Bussdieker
demonstrated such to Defendant during the claims process. In fact, Plaintiff submits no evidence
anyone at Auto Owners had this information in its possession at the time Plaintiff’s claim was
investigated and paid. Moreover, assuming arguendo Bussdieker would have resumed
management of South End Grille had the fire not occurred, there is no evidence Plaintiff submitted
anything to Defendant to show the business income would have immediately reverted back to its
Bussdieker-era amounts following the tumultuous tenures of Good, Walton, and Murphy. In
essence, Plaintiff asks Defendant to pony up $33,632.02 without any evidentiary support. Plaintiff
loosely argues it submitted evidence of its income to Defendant at other times – once when
applying for the policy, and at other times during scheduled audits. Id. at 4; see also Docs. 37-4,
37-5. However, Plaintiff had a contractual duty, in the event of loss, to provide Defendant with
information related to its lost income, within 60 days after Defendant requested it – not before.
(Doc. 34-3, at 73). The evidence clearly shows Plaintiff provided nothing beyond its lease and
intent to purchase agreements. See Doc. 34-7. As the terms of the policy dictate, Defendant is only

obligated to pay supported claims. See Doc. 34-3, at 74; see also Doc. 34-7, at 1 (“I understand I
must support my claim through the submission of appropriate documentation[.]”).
For these reasons, the Court finds Plaintiff has not presented sufficient evidence to
demonstrate a genuine issue of material fact regarding whether Defendant breached its duties under
the insurance contract when calculating Plaintiff’s income loss claim.
Property Cleaning and Loss

As part of its breach of contract claim (Count One), Plaintiff also argues Defendant failed
to fully compensate for costs related to cleaning restaurant equipment. (Doc. 37, at 9) (“The
covered losses sustained by FWB that Auto Owners failed to pay involve loss of business income
and costs related to cleaning heavy equipment.”). However, this is as far as Plaintiff’s “argument”
goes. Plaintiff does not elaborate as to what, if any, cleaning Defendant refused to cover. See
generally Doc. 23 (Amended Complaint); see also Doc. 37 (Opposition to Motion for Summary
Judgment). It does not argue any additional monies are owed. Even so, Defendant argues it rightly
denies further coverage – beyond the $18,880.76 it already paid for property damage (including
cleaning) – because Plaintiff violated the policy’s concealment or fraud clause when it made
material misrepresentations during the claims process by: 1) including a cost incurred for cleaning
by Cousino Restoration for $13,330.96, which never occurred; and 2) inaccurately listing the
liquor permit as a loss incurred in the fire. (Doc. 34, at 20-23). According to Defendant, these
misrepresentations void coverage under the contract. Id.
Concealment or fraud clauses are fully enforceable under Ohio law. Taylor v. State Farm
Fire & Cas. Co., 2012 WL 1643877, at *3 (N.D. Ohio) (citing Smith v. Allstate Indem. Co., 304
F. App’x 430, 431-32 (6th Cir. 2008)). To void an insurance contract due to concealment or fraud,

the insured must make a material misrepresentation. McCurdy v. Hanover Fire & Cas. Ins. Co.,
2013 WL 4050909, at *3 (N.D. Ohio). “A misrepresentation will be considered material if a
reasonable insurance company, in determining its course of action, would attach importance to the
fact misrepresented.” Latimore v. State Farm Fire & Cas., Co., 2012 WL 3061263, at *4 (N.D.
Ohio). An insurer may void a contract if it finds the insured made a material misrepresentation
during the insurer’s investigation into his or her claim. McCurdy, 2013 WL 4050909, at *3.
Misrepresenting the value of property lost in a fire bears materially on the amount the insurer is
obligated to pay the insured under the policy. Taylor, 2012 WL 1643788, at *3; see also Latimore,
2012 WL 3061263, at *7 (“Misrepresentations regarding an insured’s financial condition or items

lost in a fire constitute material misrepresentations.”); Parker v. State Farm Fire & Cas. Co., 1988
WL 1058394, at *4 (N.D. Ohio) (“Statements of an insured misrepresenting the extent of loss . . .
are clearly material since they affect the extent of the insurer’s obligation to pay for a claimed
loss.”).
Relevant here is the concealment or fraud clause in the parties’ contract:
A. CONCEALMENT, MISREPRESENTATION OR FRAUD
This Coverage Part is void in any case of fraud by you as it relates to this Coverage
Part at any time. It is also void if you or any other insured, at any time, intentionally
conceal or misrepresent a material fact concerning:

1. This Coverage Part;
2. The Covered Property;
3. Your interest in the Covered Property; or
4. A claim under this Coverage Part.

(Doc. 34-3, at 90).

Here, Defendant asserts it paid Plaintiff $33,780.76 to settle the insurance claim at issue.
(Doc. 34, at 19); (Bussdieker Depo. 24:16-25). It argues this amount covered the damage to, and
cleaning of, Plaintiff’s personal property, as well as lost business income. (Doc. 34, at 19). Of the
total, Defendant paid $18,880.76 for property damage. (Bussdieker Depo. 29:4-7); (Doc. 34, at
26). Defendant argues it owes no further monies to Plaintiff because Plaintiff made material
misrepresentations during the claims process when it included: 1) a cost incurred for cleaning by
Cousino Restoration for $13,330.96, which never occurred, and 2) inaccurately listed the liquor
permit as a loss incurred during the fire. (Doc. 34, at 20-23).
Regarding the Cousino Restoration item, Defendant offers Bussdieker’s “Sworn Statement
in Proof of Loss” which includes a line item cost for “Cousino Restoration” in the amount of
$13,330.96. (Doc. 34-7, at 9). It also includes $3,550.00 for cleaning performed by Bussdieker
himself. Id. However, as Bussdieker testified, Cousino Restoration never performed cleaning work
at the restaurant. (Bussdieker Depo. 96:1-25). Once Bussdieker saw Cousino’s full estimate (which
he attached to his loss statement at Doc. 34-7, at 19-21), and learned the company required up-
front payment, he decided to clean himself. Id. at 57:5-17. Further, as Defendant notes, Plaintiff
included a $2,844.00 claim for a lost liquor permit in its “Sworn Statement in Proof of Loss”. (Doc.
34-7, at 9). Plaintiff admits it never lost its liquor permit in the fire; it was placed in Safekeeping
with the Ohio Department of Liquor Control on December 27, 2017. (Bussdieker Depo. 77:11-19,
78:5-17); see also Doc. 34-1, at 51 (Safekeeping confirmation letter). Defendant argues including
such in a sworn loss statement, along with the Cousino Restoration item, amounts to a violation of
the concealment or fraud clause in the parties’ insurance contract. The Court agrees.
Under a plain reading, the abovementioned concealment or fraud clause states a
misrepresentation of a material fact concerning a claim under the policy amounts to fraud. (Doc.
34-3, at 90). As explained, these clauses are fully enforceable under Ohio law, Taylor, 2012 WL
1643877, at *3, and any misrepresentation of loss incurred during a fire is a material
misrepresentation, Parker, 1988 WL 1058394, at *4. Here, there is no dispute Plaintiff included

both items, as losses, within its “Sworn Statement in Proof of Loss”. (Doc. 34-7, at 9) (emphasis
added). By signing this loss form, Bussdieker, as Plaintiff’s representative, swore the cleaning item
and lost liquor permit were losses incurred in the fire. See Doc. 34-7, at 1.
Plaintiff counters the concealment or fraud clause was not violated because, as Defendant
acknowledged in Guhl’s letter, Defendant did not pay for these alleged losses. (Doc. 37, at 14);
see also Doc. 34-6, at 4 (letter from Defendant which explains “You added onto the Personal
property form, a cost for the liquor permit and the cost for what Cousino construction would have
charged you for the work you performed on cleaning your items. These charges are not being
considered as they were not incurred in this loss.”). Whether Defendant paid the losses or not is

immaterial. All the concealment or fraud clause requires to void coverage is that Plaintiff
misrepresent a material fact, i.e., the cleaning and liquor permit losses, to Defendant during the
claims process. (Doc. 34-3, at 90). As Defendant has shown, Plaintiff did just that. Plaintiff does
not counter this allegation.2
For these reasons, the Court finds Plaintiff has also not presented sufficient evidence to
create a genuine issue of material fact about whether Defendant breached its contractual duties

2. Because the Court finds Defendant entitled to summary judgment for the reasons stated above,
it need not reach Defendant’s alternative argument that Plaintiff also voided coverage by failing
to supply complete information regarding damaged property.
when processing Plaintiff’s claims regarding property cleaning and business income loss. Thus,
Defendant is entitled to summary judgment as to Count One.
Bad Faith – Count Three
Defendant next argues Plaintiff’s bad faith claim (Count Three) fails as a matter of law
because Plaintiff breached the terms and conditions of the insurance contract. (Doc. 34, at 26-27).

Plaintiff argues a bad faith claim may still survive where an insurer lacks “reasonable justification”
when it fails to investigate or pay a claim. (Doc. 37, at 6). Further, Plaintiff asks this Court to stay
a decision on the bad faith claim pending further discovery. Specifically, Plaintiff contends
Defendant has yet to provide a copy of its “claims manual” which may yield information as to
whether Defendant adjusted the claim without “reasonable justification.” Id. at 36-37.
“Under Ohio law, an insurer owes a duty of good faith to it its insured in the processing,
payment, satisfaction, and settlement of the insured’s claims.” Marsteller v. Sec. of Am. Life Ins.
Co., 2002 WL 31086111, at *4 (N.D. Ohio). “The appropriate test to determine whether an
insurance company breached this duty and denied an insurance benefit in bad faith is the

‘reasonable justification’ standard.” Id. (quoting Friendly Farms v. Reliance Ins. Co., 79 F.3d 541,
545-46 (6th Cir. 1996)); see also Zoppo v. Homestead Ins. Co., 644 N.E.2d 397, 399-400 (Ohio
1994) (“[O]ver the past forty-five years this court has consistently applied the “reasonable
justification” standard to bad faith cases.”). “The crucial inquiry is whether ‘the decision to deny
benefits was arbitrary or capricious, and there existed a reasonable justification for the denial,’ not
whether the insurance company’s decision to deny benefits was correct.” Rauh Rubber, Inc. v.
Berkshire Life Ins. Co., 202 F.3d 269, 269 (6th Cir. 1999) (unpublished table decision) (quoting
Thomas v. Allstate Ins. Co., 974 F.3d 706, 711 (6th Cir. 1992)). Thus, “[t]o withstand a motion for
summary judgment in a bad faith claim, an insured must oppose such a motion with evidence
which tends to show that the insurer had no reasonable justification for refusing the claim.”
Marsteller, 2002 WL 31086111, at *5.
Here, Defendant did not refuse or deny Plaintiff’s insurance claim – it paid the claim. The
only debate is to whether Plaintiff was entitled to more money for lost business income and
property cleaning. As discussed supra, it was not. Defendant is entitled to summary judgment on

a claim that Plaintiff is owed additional compensation because it failed to comply with the terms
and conditions of the policy by providing the proper documentation to Defendant to support
income loss greater than $14,900; Plaintiff also violated the concealment or fraud clause when it
materially misrepresented items lost during the fire. Defendant rightly paid $14,900 on the income
loss claim because this is the only figure which had evidence to support it. Marsteller, 2002 WL
31086111, at *4. There is no need to wait for a claims manual, as Plaintiff suggests. Plaintiff either
submitted documentation to Defendant to support its income loss as required by the policy, or it
didn’t; it either materially misrepresented its losses, or it didn’t. Here, as discussed supra, Plaintiff
was properly compensated under the terms of the policy based upon the evidence it submitted to

Defendant during the claims process. Plaintiff presents no evidence Defendant acted in bad faith
in refusing to pay more. Marsteller, 2002 WL 31086111, at *5.
For these reasons, Defendant is entitled to summary judgment as to Count Three.
Negligence – Count Two
Finally, in Count Two, Plaintiff alleges Defendant owed a duty of good faith and breached
that duty by negligently failing to investigate the insurance claim, informing Plaintiff it would not
pay the policy limits, and failing to train and supervise its employees. (Doc. 23, at 3). Defendant
does not independently address the negligence claim in its Motion for Summary Judgment, but
encompasses such in the argument that it did not act in bad faith in handling the claim. See Doc.
34, at 26-27.
A breach of the duty of good faith, as pleaded here in Count Three, is distinguishable from
negligence, as pleaded in Count Two. “A lack of good faith is the equivalent of bad faith, and bad
faith, although not susceptible of concrete definition, embraces more than bad judgment or

negligence. It imports a dishonest purpose, moral obliquity, conscious 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.” Wasserman v. Buckeye Union Cas. Co., 290
N.E.2d 837, 840 (Ohio 1972). Negligence is a separate, less serious tort, one where a tortfeasor’s
action falls below a reasonable standard of care. See Gedeon v. E. Ohio Gas Co., 190 N.E. 924,
925 (Ohio 1934) (“Negligence is the failure to exercise that degree of care which an ordinarily
careful and prudent person would exercise under the same or similar circumstances.”) (internal
quotation and citation omitted). “Ohio maintains the traditional elements for negligence: duty,
breach, causation, and harm.” Ross v. PennyMac Loan Servs. LLC, 761 F. App’x 491, 498 (6th

Cir. 2019).
Upon review of the negligence claim in the Amended Complaint (Doc. 23, at 3), it is clear
Plaintiff does not allege Defendant owed it a duty independent of any already encompassed by the
insurance contract. Plaintiff asks for economic damages in return for Defendant’s negligence. Id.
at 3, 5. Problematic for Plaintiff is that this scenario is specifically barred by the economic loss
doctrine which, in essence, “holds that absent tangible physical harm to persons or tangible things
there is generally no duty to exercise reasonable care to avoid economic losses to others. These
losses may be recovered in contract only.” Long v. Time Ins. Co., 572 F. Supp. 2d 907, 911 (S.D.
Ohio) (internal quotation and citation omitted); see also id. (“Ohio law precludes the recovery of
economic damages ‘where recovery of such damages is not based upon a tort duty independent of
contractually created duties.’” (quoting Pavlovich v. Nat’l City Bank, 435 F.3d 560, 569 (6th Cir.
2006)). In short, the existence of the insurance contract prevents Plaintiff from recovering
economic damages on a negligence theory.
Moreover, as discussed fully herein, Defendant did not act in bad faith in settling Plaintiff’s

insurance claim because it was reasonably justified in settling for the amount paid. The reasonable
justification stems from Defendant’s thorough investigation into the claim. The investigation
revealed Plaintiff made material misrepresentations during the claims process regarding losses
incurred during the fire. Moreover, Plaintiff failed to provide documentation to support its business
income losses. Because these failures are Plaintiff’s alone, it cannot reasonably be said Defendant
acted negligently by breaching its duty to handle Plaintiff’s claim carefully and prudently. As
discussed, supra, Defendant investigated and paid Plaintiff’s claim based upon the information
Plaintiff provided during the claim’s process in accordance with the unambiguous terms of the
insurance contract.

Because Plaintiff cannot show Defendant breached a duty, independent of one already
contemplated by the insurance contract, Count Two fails as a matter of law and Defendant is
entitled to summary judgment.
CONCLUSION
For the foregoing reasons, good cause appearing, it is
ORDERED that Defendant’s Motion for Summary Judgment (Doc. 34), be and the same
hereby is, GRANTED.

s/ James R. Knepp II
UNITED STATES DISTRICT JUDGE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10369791. Public record. Not legal advice.