Douglas Ramsey inherited his father's house when his father, Ralph Ramsey, passed away in August 2002. Ralph had kept up a homeowners insurance policy on this house with Allstate since 1993, and the premium payments were drawn from his back account. After Ralph passed, Douglas kept paying the premiums only the payments were drawn from his account. The house burned on June 26, 2008, and Allstate refused coverage, claiming that its policy on the home was still in Ralph's name (although it had been taking and keeping Douglas's money for going on 6 years).
Douglas claimed that there existed a contract implied-in-fact between him and Allstate that provided coverage. A district court granted summary judgment to Allstate. But the Sixth Circuit reversed, ruling that there were factual issues regarding whether a contract implied-in-fact had been formed. First, the Court identified the two components for contract implied-in-fact analysis:
- the parties' meeting of the minds is shown by the surrounding circumstances, including the conduct and declarations of the parties, that make in inferable that the contract exists as a matter of tacit understanding
- a plaintiff must demonstrate that the circumstances surrounding the parties' transactions make it reasonably certain that an agreement was intended
The court noted that there was evidence that Allstate knew that Ralph had passed, because it had cancelled his auto insurance upon his death. Three things then made it possible to conclude that there was a contract implied-in-fact between Douglas and Allstate: (1) Allstate knew Ralph had died; (2) Allstate renewed the homeowners insurance policy each year; and, (3) Allstate took Douglas's money for payment of the premiums.
The case is Ramsey v. Allstate Insurance Company, No 11-4347 (February 8, 2013). Judge Boyce Martin wrote the court's opinion joined by Judges Gilbert Merritt and Damon J. Keith.