Crane Serv. & Inspections, L.L.C. v. Cincinnati Specialty Underwriters Ins. Co.
2018 Ohio 3622
Ohio Ct. App.2018Background
- In May 2013 a crane collapse at Nucor led CSI to notify its insurer, Cincinnati Specialty Underwriters (Cincinnati), which issued reservation-of-rights letters and agreed to investigate and defend subject to reservation.
- Nucor sued CSI in October 2014. Cincinnati initially provided panel counsel, later substituted counsel and moved to intervene in the Marion County action a week before a scheduled mediation, asserting it might owe no duty to indemnify.
- CSI hired independent counsel after concluding a conflict existed; mediation failed and Cincinnati later settled Nucor’s claims for $300,000 with no contribution from CSI.
- While the Marion County case was pending, CSI sued Cincinnati in Butler County for breach of contract and insurer bad faith and sought recovery of fees paid to its independent counsel. Cincinnati moved to stay discovery and later converted a motion to dismiss into a motion for summary judgment.
- CSI filed a Civ.R. 56(F) motion, asserting it could not oppose summary judgment because Cincinnati had not produced discovery. The trial court granted summary judgment for Cincinnati without ruling on CSI’s 56(F) motion or reopening discovery.
- The Court of Appeals reversed as to discovery, holding the trial court abused its discretion by denying CSI an opportunity to conduct discovery and by failing to rule on the Civ.R. 56(F) request; the bad-faith merits were remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court abused its discretion by denying discovery and failing to rule on CSI’s Civ.R. 56(F) request before granting summary judgment | CSI: the stay prevented it from obtaining facts (coverage analysis, adjuster decisions, intervention motives) essential to oppose summary judgment; 56(F) required consideration/hearing | Cincinnati: discovery was unnecessary because relevant damages (fees, acquisition delay) were in CSI’s control and Cincinnati had fully defended/indemnified | Court: Reversed — trial court abused its discretion by precluding discovery and not ruling on the 56(F) motion; CSI must be allowed discovery before summary judgment on bad-faith claim |
| Whether summary judgment on insurer bad-faith claim was proper without further discovery | CSI: timing of intervention, revocation of settlement authority, late coverage denial, and demand for contribution create genuine issues of material fact on bad faith and causation of attorney fees | Cincinnati: no bad faith because it defended and indemnified CSI; no compensable damages shown | Court: Merits were not decided because discovery error rendered summary judgment premature; the bad-faith claim remanded for further proceedings |
Key Cases Cited
- Hoskins v. Aetna Life Ins. Co., 6 Ohio St.3d 272 (Ohio 1983) (insurer owes a duty of good faith to its insured in handling and paying claims)
- Tucker v. Webb Corp., 4 Ohio St.3d 121 (Ohio 1983) (trial court should not grant summary judgment where there is a dearth of evidence because discovery has not occurred)
- Mauzy v. Kelly Services, Inc., 75 Ohio St.3d 578 (Ohio 1996) (appellate review of discovery-denial where trial court’s handling of discovery affects substantial rights)
- Bell v. Zurich Am. Ins. Co., 156 F. Supp. 3d 884 (N.D. Ohio 2015) (economic losses from insurer’s breach of good faith can include attorney fees as compensatory damages)