Patterson v. Cincinnati Ins. Cos.
91 N.E.3d 191
Ohio Ct. App. 9th2017Background
- Plaintiff Jolene Patterson (as administratrix and assignee of Fabrizi entities) sued Fabrizi Trucking & Paving and Fabrizi Recycling after her husband died when an excavator bucket detached; the cases were consolidated.
- Both Fabrizi entities were insured by Cincinnati Insurance; Cincinnati provided defense counsel under a reservation of rights and denied a duty to indemnify.
- The parties negotiated and entered a consent judgment for $3,119,000 against the Fabrizi entities, signed by the trial judge and counsel (including Fabrizi counsel who negotiated the settlement).
- Patterson assigned the Fabrizi entities’ rights under the Cincinnati policy to herself and sued Cincinnati for breach of contract, bad faith, and declaratory relief seeking the insurer’s indemnification for the judgment.
- Cincinnati moved for summary judgment arguing (1) employer-intentional-tort exclusion precludes coverage for the Trucking & Paving claim and (2) the consent judgment was invalid because the insureds breached policy conditions by settling without insurer consent.
- The trial court granted Cincinnati’s summary judgment; the appeals court reversed in part, holding the intentional-tort claim is excluded but the consent judgment as to Recycling (negligence/product-liability) can be valid and remanding for further discovery on indemnity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of consent judgment entered without insurer’s consent | Patterson: Cincinnati refused to indemnify; Fabrizi were permitted to settle; consent judgment should bind insurer under R.C. 3929.06 and Sanderson doctrine | Cincinnati: Settlement breached policy clauses (anti-assignment, voluntary payment, cooperation, no-action); judgment is collusive and cut off insurer’s ability to defend/contest coverage | Court: Consent judgment not improper here; insurer’s denial of indemnity and conduct justified insureds’ settlement without consent as to Recycling claims; judgment may be enforced against insurer absent fraud/collusion; remand for further proceedings on indemnity for Recycling |
| Insurer’s duty to indemnify employer-intentional-tort claim against Trucking & Paving | Patterson: Insurer should indemnify judgment generally (assignment) | Cincinnati: Employer-intentional-tort exclusion bars coverage for employer’s deliberate-intent-to-injure acts | Court: Held for Cincinnati — Ohio law requires specific intent to injure for employer intentional torts; policy excludes deliberate-intent conduct, so no indemnity for that claim |
| Duty to indemnify Recycling for negligence/product-liability (Products/completed operations) | Patterson: Evidence (purchase "as is", no safety pin, post-sale assembly without warnings) creates genuine issue that Recycling’s product/work triggered coverage | Cincinnati: Patterson cut off fact-finding and barred insurer from rebutting claims by entering the consent judgment; insurer denies indemnity | Court: There is a genuine issue of material fact about indemnity for Recycling; remanded for further discovery and resolution |
| Discovery/in camera inspection of insurer claims file & bifurcation/stay of bad-faith claim | Patterson: Needs access to claims file and more time to pursue bad-faith discovery | Cincinnati: Claims file privileged; protective order; bifurcation/stay appropriate | Court: Trial court erred by denying Patterson further discovery/review; remanded so additional discovery (including possible claims-file review) may proceed |
Key Cases Cited
- Kaminski v. Metal & Wire Prods., 125 Ohio St.3d 250 (Ohio 2010) (employer-intentional-tort requires specific intent to injure)
- Stetter v. R.J. Corman Derailment Servs., L.L.C., 125 Ohio St.3d 280 (Ohio 2010) (same principle re: employer intentional tort)
- Houdek v. ThyssenKrupp Materials N.A., Inc., 134 Ohio St.3d 491 (Ohio 2012) (discussing boundaries of employer intentional tort and workers’ compensation exclusivity)
- Cincinnati Ins. Co. v. DTJ Ents., Inc. (In re Hoyle), 143 Ohio St.3d 197 (Ohio 2015) (insurer exclusion for deliberate-intent acts precludes coverage for employer intentional torts)
- Sanderson v. Ohio Edison Co., 69 Ohio St.3d 582 (Ohio 1994) (insurer that unjustifiably refuses to defend may forgo right to control litigation; insured may settle reasonably without prejudice to coverage)
- Ward v. Custom Glass & Frame, 105 Ohio App.3d 131 (Ohio Ct. App.) (insurer’s reservation of rights while effectively controlling litigation can create frustration justifying insured’s settlement without consent)