MRR Article: Has the Supreme Court of Ohio Done Away with the Delayed Damages Rule?

By: Mike Byrne & Joe Nicholas

The Supreme Court of Ohio dealt a win for insurance agents and agencies with its January 31, 2018 decision in LGR Realty, Inc. v. Frank & London Ins. Agency, Slip Opinion No. 2018-Ohio-334.  In a 5-2 decision, the Court held that the delayed-damage rule does not apply to a cause of action alleging negligent procurement of a professional-liability insurance policy or negligent misrepresentation of the terms of the policy when the policy at issue contains provisions specifically excluding the type of claim that the insured alleges it believed was covered by the policy.  Instead, the cause of action accrues on the date the policy is issued.

By way of background, Frank & London Insurance Agency (“F&L”) procured a real estate agents’ errors and omissions liability policy for LGR Realty, Inc. (“LGR”) with effective dates of May 12, 2010 through May 12, 2011.  The policy included a specific endorsement excluding any claim against LGR by Plaza Properties.  During the policy period, a liability claim was made against LGR with regard to a lawsuit captioned Milligan Communications LLC v. Plaza Properties, Inc.  LGR’s carrier denied coverage on April 26, 2011, citing the Plaza Properties exclusion.

On April 17, 2015, LGR filed a Complaint against F&L, alleging negligent procurement and misrepresentation.  F&L moved to dismiss, arguing that the cause of action was barred by the statute of limitations as it had accrued on May 12, 2010 when the policy went into effect.  In opposition, LGR relied on the delayed damages rule previously articulated in Kunz v. Buckeye Union Insurance Co., 1 Ohio St.3d 79 (1982), to argue that the claim did not accrue until it had suffered an injury when coverage for the claim was denied on April 26, 2011, and as such, the complaint was not time-barred.  The trial court found for F&L, and LGR appealed.  On appeal, the Tenth District Court of Appeals reverse, finding that Kunz had not been overruled.  F&L appealed.

It is undisputed that the four year statute of limitations set forth in R.C. 2305.09(D) is applicable in insurance agent negligence cases.  However, the dispute over when that statute of limitation begins to run has been ongoing since the Supreme Court of Ohio’s decisions in Investors REIT One v. Jacobs, 46 Ohio St.3d 176 (1989) (holding that the legislature’s express inclusion og a discovery rule for certain torts arising under 2305.09 implies the exclusion of other torts arising under the statute, including professional negligence), and Flagstar Bank, F.S.B. v. Airline Union’s Mtge. Co., 2011-Ohio-1961 (holding that a cause of action for negligence exists from the time the wrongful act is committed).  While Justice DeWine’s concurring opinion in LGR Realty, Inc. makes it clear that he believes Kunz has now been eroded to the point of being overruled, the Court’s majority decision still does not go quite that far.

The majority provides an in-depth analysis of Kunz in an effort to distinguish it from the case at bar.  In Kunz, the insured previously owned several insurance policies that provided all-risk coverage.  These policies were then consolidated into a single policy, with the insured mistakenly continuing to believe that the all-risk coverage remained in place.  Therefore, the insured’s right to recovery would be barred before they are even aware that they have been injured.  In contrast, when LGR purchased its policy, it already contained the entity exclusion relied upon to deny the claim, and as such, the harm to LGR was complete and the claim accrued the day the policy was issued.  Given this minute, in not non-existent, distinction, it is not hard to understand Justice DeWine’s reasoning in concluding that “[t]he majority’s opinion today and the decision in Kunz cannot both be the law.”

However, the majority insisted that they need not reach the issue of Kunz in order to decide the case.  Moreover, the opinion uses very specific language to narrow the applicability of the holding; referring only to professional-liability insurance policies, and provisions creating specific exclusions.  Despite those efforts, it is not difficult to see how these could easily be expanded to apply in situations involving other types of policies, or instances where there is merely a lack of coverage, as opposed to excluded coverage.  While the confusion regarding the delayed-damages rule has not been officially put to rest, its applicability to insurance agent negligence matters is now hanging by a thread.

For more information on this decision and related topics, contact Mike Byrne at or Joe Nicholas at

Mike Byrne

Joe Nicholas



MRR Legal Update: Second Circuit Court Decision ~ “Because of…Sex” Discrimination Protections for Sexual Orientation

By: Tami Z. Hannon

“Because of…sex.”  Three small words have garnered much spilled ink and legal opinions.  What is “sex?”  When is an employee discriminated against “because of” his or her sex?  Most importantly for this article, is an employee who is terminated due to his or her sexual orientation discriminated against “because of…sex?”

The support for sexual orientation as sex discrimination under Title VII is growing.  On February 26, 2018, the Second Circuit Court of Appeals became the second circuit to hold that discrimination due to sexual orientation is discrimination “because of…sex” as under Title VII.  This opinion joins the recent Seventh Circuit Court of Appeals opinion which likewise held that sexual orientation discrimination is prohibited by Title VII.  These opinions have established new law for New York, Vermont, Connecticut, Illinois, Indiana and Wisconsin, while leaving the remaining states in confusion over the scope of Title VII’s protections.

Title VII Background

Title VII of the Civil Rights Act of 1964 prohibited employers from discriminating against current and potential employees on the basis of several characteristics.  The issue at hand in recent rulings has been the prohibition against discrimination “because of…sex.”  Prior to 2015, the courts largely agreed that “sex” discrimination applied to biological gender, and gender stereotyping (i.e. beliefs on how a male or female should act).  Courts largely rejected the notion that “sex” included discrimination based on sexual orientation.

Evans v. Georgia Regional Hospital

In March of 2017, the Eleventh Circuit Court of Appeals was asked to determine whether sexual orientation discrimination violated Title VII.  The Eleventh Circuit held that it was bound by its prior decisions that sexual orientation was not protected under Title VII.  As such, it dismissed Ms. Evans’ complaint alleging that she was subjected to harassment and discrimination as a result of her sexual orientation.  Ms. Evans sought review by the U.S. Supreme Court; however, on December 11, 2017, the U.S. Supreme Court declined to hear the appeal.

Hively v. Ivy Tech

In April of 2017, the Seventh Circuit Court of Appeals held that discrimination “because of…sex” included sexual orientation discrimination.  In so ruling, the Seventh Circuit held that decisions based on sexual orientation are inherently based upon an individual’s gender as a female who enters into a romantic relationship with a male is treated differently than a male who enters into a romantic relationship with another male.  The only variable is the biological gender of the employee.  As such, the sole factor was biological gender, or sex.  This ruling was not appealed to the U.S. Supreme Court.

It was on this stage that Zarda v. Altitude Express was recently decided.

Zarda v. Altitude Express

Mr. Zarda was a tandem sky diving instructor for Altitude Express.  Mr. Zarda stated that he would occasionally reveal his sexual orientation to female clients as a way of making them feel more comfortable about being closely strapped to an unfamiliar male.  One of Mr. Zarda’s clients alleged that he touched her inappropriately and then revealed his sexual orientation as a way of excusing his conduct.  She told her boyfriend of this exchange.  Her boyfriend contacted Altitude Express to complain.  Mr. Zarda was subsequently terminated as a result of the complaint.  Mr. Zarda alleged that his termination was the sole result of his sexual orientation and his failure to conform to the stereotype of a “straight male.”

Under prior rulings in the Second Circuit, claims of gender stereotyping could not be based on sexual orientation nor was sexual orientation recognized as sex discrimination.  As such, Mr. Zarda’s complaint was initially rejected.  Mr. Zarda appealed the dismissal to the Second Circuit Court of Appeals, which upheld the dismissal.  He then requested, and was granted, an en banc hearing. An en banc hearing is held before all judges appointed to that Circuit and provides the process for a court to overrule its prior decisions.  The granting of such a hearing signals the potential for a significant departure from prior cases.

After the en banc hearing, the Second Circuit Court of Appeals issued a lengthy and disputed opinion holding that sexual orientation constitutes discrimination “because of…sex” as defined by Title VII.  The Court held that the purpose of Title VII was to make sex and those traits associated with sex irrelevant to employment decisions.  The Court recognized that sexual harassment claims were initially not considered discrimination as they were not based on being a female, but for refusing to submit to sexual requests.  However, courts soon drew the distinction that the employee was the target of the sexual advances because of her gender, making sexual harassment a form of gender discrimination.  Male-on-male harassment was also barred as being based on gender and as “a reasonably comparable evil” against which Title VII was designed to protect.  Based on those cases, the Second Circuit Court of Appeals held that sexual orientation discrimination was necessarily the result of the sex of the people involved in the relationship and ultimately a decision based on sex.  Accordingly, sexual orientation discrimination was found to be discrimination “because of…sex” in violation of Title VII.

The Second Circuit Court of Appeals also held that sexual orientation discrimination constituted associational discrimination.  Associational discrimination was originally recognized under Title VII largely to offer protection for interracial marriages.  It was held that, in those case, employees were subjected to discrimination based on their own race and the race of those with whom they associated as it was the perceived racial misalignment that was the motivation for the discrimination.  The Second Circuit Court of Appeals found that rational applied with equal force to sexual orientation discrimination as it punished an employee based on the sex of the individual with whom he or she intimately associated.  As it is widely accepted a female should not be fired for having male friends, the Court found a lesbian employee should be similarly protected for associating with females, rather than males.

Impact of Zarda v. Altitude Express

The Zarda decision was far from unanimous.  Only 7 of the 13 judges hearing the case agreed that sexual orientation discrimination constitutes discrimination “because of…sex.”  Eight of the 13 judges found it was associational discrimination.  The allegation that sexual orientation discrimination is a form of gender stereotyping was only accepted by 6 of the 13 judges.  This sharp division shows that Title VII’s coverage of sexual orientation is far from settled.

Under President Obama, the Equal Employment Opportunity Commission was active in advancing protections for sexual orientation.  Under President Trump, the Commission has taken a more conservative view.  Regardless, once positions and protections are established by the courts, it becomes more difficult to change them as courts are bound to follow their prior rulings and interpretations issued by their circuit.  Given this, ongoing and future litigation will be impacted by these rulings regardless of any policy decisions made by the governmental administration.

The Zarda, Evans and Hively decisions have created a split among the courts as to whether sexual orientation discrimination is covered under Title VII.  Employers will need to be aware of the coverage for their specific business locations.  As courts are beginning to consider and reverse prior case rulings, we are also likely to see claims of sexual orientation discrimination increase as individuals seek to clarify Title VII protections.

The U.S. Supreme Court recently declined to hear the Evans case as to whether Title VII includes protections for sexual orientation.  The decision not to hear that appeal was not explained, but could be the result of several factors including poorly developed legal analysis by the lower courts and allegations by the employer that it had never been served with the complaint.  As the split among the circuits grows, it will likely only be a matter of time before the Supreme Court agrees to decide the issue.

For  more information, contact Tami Z. Hannon at or 440.424.0009.

MRR Columbus Office Expands with Partner Paul-Michael La Fayette

MRR is pleased to announce the addition of Paul-Michael La Fayette to its Columbus office. He represent clients in lawsuits involving professional malpractice, premises liability, contracts, employment, construction, civil rights, zoning, wrongful death and products liability.

“We are thrilled to expand our services in Columbus with the addition of Paul,” MRR President and Managing Partner Joseph F. Nicholas, Jr. said. “He brings to the firm expertise in a number of practice areas, a set of exceptional legal skills, and a client-focused commitment to excellence.”

Mr. La Fayette represents several professionals in administrative licensure proceedings before their professional Boards. In addition to professional liability, he regularly represents governmental entities in litigation and as general counsel. Paul is a member of the Ohio State Bar Association, Columbus Bar Association, The Defense Research Institute (DRI), PIAA, as well as a guest lecturer for The Ohio State University College of Dentistry.

In the community, Paul is the past president of the Epilepsy Foundation of Central Ohio, member of the Boy Scouts of American (Simon Kenton Council), Plain City Area Baseball Association member, and serves as baseball coach at Jonathan Alder Junior High.

A graduate of West Virginia Wesleyan College, Mr. La Fayette sought his Master’s at West Virginia University and then earned his J.D. from Capital University Law School in 1996.


Stacy Pollock to present “Texts, Tweets, and Tags – A Look at Public Officials’ Digital Communication” at OHPELRA’s Annual Training Conference on February 6, 2018

MRR Columbus Partner Stacy V. Pollock will present “Texts, Tweets, and Tags – A Look at Public Officials’ Digital Communications” at the 34th Annual OHPELRA Training Conference in Columbus on February 6, 2018.

Stacy is a certified Specialist in Employment and Labor law and a certified Professional in Human Resources. She advises public and private employers in matters involving leave and discipline issues, personnel policy matters and labor negotiations and arbitrations. When necessary, she defends them in state and federal court. She has experience representing clients before various governmental administrative agencies including the Equal Employment Opportunity Commission, the Ohio Civil Rights Commission, the State Personnel Board of Review, the State Employment Relations Board and the Ohio Department of Education. Ms. Pollock regularly speaks to the OHPELRA membership at trainings and seminars throughout the year.


Barry Miller to present on Current Trends in Police Technology & Tools at DRI’s Civil Rights & Governmental Tort Liability Conference in January

MRR Lexington Partner Barry Miller will present “The Future is Now: Current Trends in Police Tools and Technology and Policies to Support Their Use” at the 31st Annual DRI Civil Rights & Governmental Tort Liability Conference in New Orleans on January 25, 2018. Barry regularly provides instruction and counsel to a variety of groups, including attorneys and business owners, regarding preservation of digital evidence and insurance aspects of cyber liability.


David M. Smith Promoted to Partner at Mazanec, Raskin & Ryder

Mazanec, Raskin & Ryder, Co., L.P.A. (MRR), is proud to announce the promotion of attorney David M. Smith to partner. David is based in the firm’s Cleveland office.

David joined MRR in 2013 as an associate. He focuses his practice on civil rights and government liability, and employment and labor law, as well as representing clients in a wide range of general liability matters including business disputes. Mr. Smith regularly represents clients in State and Federal Courts throughout Ohio, before the Ohio Civil Rights Commission and the Equal Employment Opportunity Commission, and has successfully represented clients in arbitrations under the American Arbitration Association and the Federal Mediation and Conciliation Services.

“We are very proud of David’s accomplishments and extremely pleased to welcome him as a partner,” said MRR Managing Partner and President Joe Nicholas. “We look forward to his ongoing contributions to the firm and our clients.”

In addition to his current work, David has considerable experience handling commercial and residential real estate matters, contract disputes, appellate proceedings and administrative appeals. He began his legal career as the City of Cleveland Heights’ Assistant Prosecutor/Assistant Law Director.

Mr. Smith is a member of the Ohio State Bar Association, the American Bar Association, and the Defense Research Institute, where he serves as the Civil Rights & Governmental Committee Membership Chair. A graduate of Heidelberg University in 2002, David went on to earn his J.D. from Cleveland State University – Marshall College of Law.