Defendant accused of Breach of Contract

A recent appellate court decision has overturned a lower court’s ruling in a complex insurance coverage dispute involving an injured party seeking underinsured motorist (UIM) benefits. The case, which highlights the intricacies of insurance policy language and the obligations of policyholders, was filed by Jeffrey Cleary against Nationwide Mutual Insurance Company and Allied Property & Casualty Insurance Company. The appeal was heard in the Court of Appeals of Ohio, Tenth Appellate District, with the decision rendered on February 19, 2026.

The case began when Jan Cleary renewed her auto and umbrella policies with Nationwide in September 2020. Her son, Jeffrey Cleary, who had been living in California since 2011, was involved in an auto accident on December 26, 2020. Despite collecting from the tortfeasor’s liability insurance carrier, both Jan and Jeffrey sought UIM coverage from Nationwide, which was denied. In February 2023, they filed an amended complaint against Nationwide alleging bad faith and breach of contract among other claims. Nationwide countered with a declaratory judgment request asserting that neither Jan nor Jeffrey were entitled to UIM coverage due to non-residency and lack of cooperation.

In December 2023, after filing separate motions for summary judgment regarding both Jan and Jeffrey’s claims, Nationwide argued that Jeffrey did not qualify for UIM coverage as he did not reside with his mother at the time of the accident. Furthermore, they claimed that Jan had no compensable damages under Ohio law. In response to these motions and after voluntarily dismissing their claims in February 2024, Jan and Jeffrey faced further summary judgment motions from Nationwide regarding its counterclaim.

Jeffrey contended that his status as a “rated driver” created ambiguity in the policy’s terms regarding UIM coverage eligibility. He also challenged Nationwide’s assertion that he failed to cooperate materially affecting their investigation into his residency status at the time of the accident. Ultimately, the appellate court found merit in Jeffrey’s arguments about policy ambiguity concerning “rated drivers,” referencing a similar precedent where undefined terms led to coverage favoring insured parties.

The appellate court reversed part of the trial court’s decision relating to Jeffrey’s claim for UIM benefits due to insufficient evidence presented by Nationwide showing material prejudice caused by his alleged lack of cooperation. Consequently, it remanded the case back to Franklin County Court for further proceedings consistent with this interpretation.

Representing appellants were Florence A. Murray and Joseph A. Galea from Murray & Murray Co., L.P.A., while J. Stephen Teetor along with Scyld D. Anderson and Sarah A. Lodge from Teetor Westfall LLC represented appellees. The judges presiding over this appeal included Dingus J., Mentel J., and Leland J., under Case ID No. 25AP-226.