On April 26, 2011, Continental denied LGR's claim, relying on an exclusion in the policy.

LGR said that it incurred over $420,000 in attorneys' fees and expenses defending against the Milligan lawsuit.

On April 17, 2015, LGR brought an action against F&L, alleging that F&L had been negligent in failing to procure an appropriate professional liability insurance policy and had negligently misrepresented the coverage contained in the policy. As a result, LGR claimed, F&L had breached its duty to procure an appropriate insurance policy – one that would have provided coverage for defending and indemnifying LGR in the Milligan case.

F&L argued that the cause of action had accrued on the date the policy had gone into effect, May 12, 2010, and, therefore, that LGR's complaint was time barred by the four-year statute of limitations set forth in R.C. 2305.09 because it was filed in April 2015.

LGR countered that, under the delayed-damage rule, its cause of action had not accrued until it had suffered an "injury," which had occurred, at the earliest, when Continental denied LGR's claim for defense and indemnity on April 26, 2011. Therefore, LGR argued, its April 17, 2015 complaint was filed within four years of the accrual date and was not time barred.

The trial court determined that LGR's cause of action had accrued on the day the insurance policy had gone into effect, May 12, 2010, and it dismissed LGR's action on the basis that it had been filed outside the four-year statute-of-limitations period set forth in R.C. 2305.09. The trial court "decline[d] to apply the delayed damages rule to this case involving insurance agents."

The court of appeals reversed, and the dispute reached the Ohio Supreme Court.

The Ohio Supreme Court's Decision

The court reversed the court of appeals and reinstated the trial court's judgment.

The court held that LGR's cause of action accrued – that is, its injury occurred – when F&L issued to LGR the professional liability insurance policy that contained the exclusion that precluded coverage for the Milligan lawsuit. The court reasoned that if, as LGR argued, it was injured by the insurance policy containing the exclusion provided by F&L, "then LGR was damaged the moment it entered into the contract and became obligated to pay a premium" for a professional liability insurance policy "that was less than the coverage that it believed it would receive."

Therefore, the court ruled, the harm to LGR was complete when F&L issued the insurance contract setting forth the exclusion.

Accordingly, the court said, because the four-year statute-of-limitations period began to run when F&L issued the insurance policy setting forth the exclusion, and LGR's action was time-barred.

It added that the delayed-damage rule did 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 contained a provision "specifically excluding the type of claim" that the insured alleged it believed was covered by the policy. The cause of action in such a case accrued on the date the policy was issued, the court concluded.

The case is LGR Realty, Inc. v. Frank and London Ins. Agency, No. 2016-1307 (Ohio Jan. 16, 2018). Attorneys involved include: Hollern & Associates and Edwin J. Hollern; and Barkan Meizlish, L.L.P., and Neal J. Barkan, for appellee. Marshall, Dennehey, Warner, Coleman, & Goggin, Samuel G. Casolari Jr., and David J. Oberly; and Hunton & Williams, L.L.P., and Syed S. Ahmad, for appellant. Rutter & Russin, L.L.C., and Robert P. Rutter, urging affirmance for amicus curiae, the Ohio Association for Justice.