704 N.E.2d 1 | Ohio Ct. App. | 1997
Lead Opinion
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *218 Plaintiff-appellant Sandra Gibson appeals from a summary judgment rendered in the Clark County Court of Common Pleas in favor of defendant-appellee State Farm Mutual Automobile Insurance Company ("State Farm").
At the time of the accident, Ehrman was covered under a liability insurance policy issued by GRE Insurance Group with a single-limit liability of $100,000. Mack, as executor of the estate of Fred Jagger, accepted $100,000 in full settlement of the decedent's personal injury and wrongful death claims. Mack released Ehrman and GRE Insurance Group from any and all further liability for any such claims. of this sum, $10,000 was paid to settle the wrongful death claim to be distributed to Fred Jagger's beneficiaries, of which Gibson received $5,000. The wrongful death settlement was approved by the Clark County Probate Court on August 10, 1993.
At the time of the accident, Gibson was insured under a policy of automobile insurance issued by State Farm ("the policy"), which provided for underinsured motorist coverage with limits of $100,000 per person/$300,000 per accident. Gibson notified State Farm on February 7, 1994 of the accident and her intent to present an underinsured motorist claim. State Farm rejected the claim on the grounds that the settlement with and release of the tortfeasor constituted a material breach of the policy.
On May 9, 1994, Gibson filed a complaint against State Farm. Gibson's complaint sought a declaration that her policy afforded underinsured motorist coverage for the harm she suffered as a result of her father's death. On September 14, 1995, the trial court filed a judgment entry sustaining State Farm's motion for summary judgment. The trial court determined that Gibson was not entitled to underinsured motorist coverage under her own automobile liability insurance policy because Gibson materially breached the terms of the policy when she failed to notify State Farm of the proposed settlement and release of the tortfeasor. The trial court also found that the settlement failed to exhaust the tortfeasor's available liability insurance limits, which bars Gibson's recovery of underinsured motorist benefits. On this basis, the trial court granted State Farm's motion for summary judgment and denied Gibson's cross-motion for summary judgment. Gibson timely filed her notice of appeal on October 13, 1995. Neither the tortfeasor nor her insurance company is a party to this action.
"I. The trial court erred to the prejudice of plaintiff-appellant in granting defendant-appellee's motion for summary judgment.
"II. The trial court erred to the prejudice of plaintiff-appellant in failing to sustain plaintiff-appellant's cross-motion for summary judgment."
The assignments of error are related and we will address them concurrently. *220
Pursuant to Ohio's wrongful death statute, R.C.
Summary judgment is a question of law; thus, our standard of review is de novo. AAAA Enterprises, Inc. v. River PlaceCommunity Urban Redevelopment Corp. (1990),
Three grounds of contention exist between the parties. State Farm contends that Gibson is not entitled to underinsured motorist benefits under the policy because (1) Gibson did not obtain State Farm's consent to settle with the tortfeasor as set forth in the policy, (2) Gibson is not legally entitled to recover damages due to the settlement negotiations with the tortfeasor, and (3) the available liability limits of the tortfeasor's policy were not exhausted as required by the policy. We will address each contention separately.
Both parties concede that all wrongful deaths in Ohio are controlled by R.C.
Both parties also concede that R.C.
Gibson presents two arguments. Gibson first contends that she did not breach the explicit terms of the advance notification and consent to settle provisions of the State Farm policy because she did not negotiate the settlement with the tortfeasor and did not execute a release in the tortfeasor's favor. Gibson next contends that the policy conflicts with R.C.
"THERE IS NO COVERAGE:
"1. FOR ANY INSURED WHO, WITHOUT OUR WRITTEN CONSENT, SETTLES WITH ANY PERSON OR ORGANIZATION WHO MAY BE LIABLE FOR THE BODILYINJURY."
The "insured" is defined as:
"Insured — means the person or persons covered by uninsured motor vehicle coverage. This is: *222
"1. the first person named in the declarations;
"2. his or her spouse;
"3. their relatives; and
"4. any other person while occupying:
"a. your car, a temporary substitute car, a newly acquired car or a trailer attached to such car. Such vehicle has to be used within the scope of the consent of you or your spouse; or
"b. a car not owned by you, your spouse or any other relative, or such other person or a trailer attached to such a car. It has to be driven by the first person named in the declarations or that person's spouse and within the scope of the owner's consent."
As used in the above section, "relative" is defined in the policy as follows:
"Relative — * * * means a person related to you or your spouse by blood, marriage or adoption (including a ward or foster child) who lives with you. It includes your unmarried and unemancipated child away at school * * *."
In this case, Mack, as executor of the estate of Fred Jagger, settled the wrongful death claim with the tortfeasor and executed an appropriate release. Thus, Gibson argues that because her personal representative or her husband is not the "insured" under Gibson's policy, there was no breach of the settlement notification and consent provisions in question.
State Farm maintains that Gibson breached the policy when she failed to notify State Farm and receive its consent to settle in accordance with the language in the policy. State Farm cites Lovev. Nationwide Mut. Ins. Co. (1995),
We agree with Gibson's reading of Love and further note that the other two cases cited by State Farm in furtherance of its position are distinguishable. In the cases of Hopping v. ErieIns. Co. (Mar. 20, 1990), Clark App. No. 2649, unreported, 1990 WL 31832, and Tennant, supra, this court and the Ninth District Court of Appeals held that a release given by a personal representative binds the beneficiaries. However, the specific language of the policies is not given, and, as such, they cannot fairly be read to support State Farm's position. *223 We decline to glean from these cases the blanket proposition that settlement by an insured's legal representation automatically disentitles the insured to underinsurance coverage irrespective of the actual terms of the contract.
Even if we were to find that the clause in Gibson's policy is ambiguous, we would follow King v. Nationwide Ins. Co. (1988),
We are mindful that Ohio law has long recognized the validity and enforceability of advance notification and consent clauses as a precondition to provide uninsured or underinsured motorist coverage. See Bogan v. Progressive Cas. Ins. Co. (1988),
The Supreme Court has held that "a subrogation clause is reasonably includable in contracts providing underinsured motorist insurance. Such a clause is therefore both a valid and enforceable precondition to the duty to provide underinsured motorist coverage." McDonald,
Requiring notice to be given to the insurer affords the insurer a reasonable opportunity to protect its subrogation rights by evaluating such factors as those listed in McDonald, supra: the amount of the settlement, the amount of liability insurance remaining, the amount of assets held by the tortfeasor, the likelihood of recovery via subrogation, and the expenses and risks of litigating the insured's cause of action. After considering these factors, the insurer may decide simply to permit the settlement and release, to pay the underinsured motorist benefits before the release is given, or to substitute its payment to the insured in an amount equal to the proposed settlement and pursue the tortfeasor personally. Id. Regardless of the probable success of the use of its subrogation rights, the insurer can require its consent as a precondition to providing underinsurance benefits. Back, supra.
While notice and consent provisions are generally valid and enforceable preconditions to underinsured motorist coverage, we find that the notice and consent provision is unenforceable in the present case pursuant to R.C.
The intent of Ohio's uninsured motorist statute, R.C.
R.C.
It is clear from Ohio's wrongful death statute, R.C.
The Supreme Court has discussed the benefits of having a personal representative in a wrongful death action. Ramsey v.Neiman (1994),
The purpose of R.C.
However, Gibson never had the power to protect State Farm's subrogation rights. She never had the power to prevent a settlement. Gibson was never an insured who destroyed her insurer's subrogation rights without the insurer's knowledge because Mack, as the personal representative, settled with the tortfeasor. Thus, in this circumstance the notification and consent provisions are not reasonable preconditions to coverage.
It could be argued that at no time was Gibson able to get State Farm's consent prior to the settlement because she may not have had notice of it. Even *226 assuming that she did know about the settlement, she had no authority to stop or control any aspect of the settlement because the personal representative does not need the permission of the beneficiaries to settle.
Accordingly, we hold that an automobile liability insurance policy provision which eliminates underinsured motorist coverage for persons insured thereunder who are injured under Ohio's wrongful death statute, but are not the personal representative, violates R.C.
If we were to hold otherwise, personal representatives may be forced to endure trials to prevent beneficiaries from losing their uninsured/underinsured motorist coverage. This would be against public policy, as settlements are a favored remedy.
"There are of course a number of considerations which militate in favor of settlement between the underinsured tortfeasor's insurer and the injured party. Obviously, settlement avoids litigation with its attendant expenses and resultant burden upon the legal system. Where the amount of settlement is less than the policy limit, the unpaid amount may well represent the savings in litigation costs for both sides. More importantly, settlement hastens the payment to the injured party who obviously needs compensation soon after the injuries when the medical expenses begin to amass and when the anxiety level is probably quite high. Additionally, there are many situations where litigation would not be a preferred course of action because, while the injuries are certain, there remain other problems of proof. Thus, the public policy considerations, apart from the contract of the parties, generally favor settlements." Bogan,
Thus, we find that we should not construe the law against settlements.
State Farm makes another argument that while it is true that Gibson did not participate in the settlement, her counsel was in attendance. Gibson's counsel also represented Mack in the settlement. We believe that Gibson is correct when she states that her knowledge is irrelevant because she could never have effectuated or prohibited a settlement from the tortfeasor in this case. *227
Thus, even assuming that the language in the policy implicitly included the words "personal representative," we find that the notification and consent provision conflicts with relevant Ohio law.
State Farm also attempts to deny coverage based on the following provision:
"If the insured and the person or the organization legally liable for the insured's bodily injury reach a settlement agreement to pay the insured such person's limits of liability, the insured must submit the agreement to us in writing for our approval prior to final execution of such settlement agreement if:
"a. the settlement would not fully satisfy the insured's claim for bodily injury; and
"b. an uninsured motor vehicle claim has been made or will be made against us."
We find that this provision does not exclusively ask for notification, but rather for notification and consent based upon the wording "for our approval." As such, for the same reasons elucidated above, we find that State Farm's argument is without merit. However, if the provision were strictly a notification provision, we might be inclined to hold differently. In a case where the insured clearly knew about a settlement and failed to notify her insurance company pursuant to a clearly written exclusive notification provision, we might hold that she breached her contract. This is because although the insurer may not have power to prevent a settlement, the insurer may be able to influence the personal representative not to settle and protect its rights. For example, the insurer may offer the personal representative an equal or greater amount of money than that of the tortfeasor's insurance company. Moreover, the insurance company may view the situation differently than does the personal representative. The personal representative may want to acquire funds to pay those who have been damaged or may not perceive the tortfeasor as having more than the policy in his possession. The insurance company has the funding to pursue a trial or may wait longer to recover damages from the tortfeasor or the tortfeasor's insurance company. Therefore, in a case where the policy calls for separate notification of a pending settlement and the insured clearly is aware of the settlement, we might be inclined to hold that the insured has an obligation to notify the insurer.
We find that the trial court erred in finding that State Farm was entitled to judgment as a matter of law on this issue.
Gibson maintains that at her father's death she became "legally entitled to recover damages" from the tortfeasor, and, as such, she had a contractual right against State Farm. State Farm responds that the release of the tortfeasor by the personal representative, Mack, bars Gibson from being legally entitled to recover damages at the time her claim was presented to State Farm. State Farm relies upon Love, supra, where the court stated that legal entitlement to recover damages terminates with the settlement and release because it was premised on the wrongful death action. See, also, Weiker, supra. The Love court relied upon Kurent v. Farmers Ins. of Columbus, Inc. (1991),
Underinsured and uninsured motorist coverage are mandatory under R.C.
In addition, when terms of an insurance contract are reasonably susceptible of more than one interpretation, they will be strictly construed against the insurer and in favor of the insured. Ohio Farmers Ins. Co., supra, citing King, supra. The purpose of the underinsured motorist coverage statute is to "provide protection for insureds * * * where the limits of coverage available for payment to the insured under all bodily injury liability bonds and insurance policies covering persons liable to the insured are less than the limits for the insured's uninsured motorist coverage." R.C.
The policy in question requires that the insured be entitled to collect damages from the driver or owner of the uninsured motor vehicle. In this regard, the Supreme Court has held that if a person is among those listed in R.C.
We find that Gibson's argument is persuasive. According to R.C.
We must also point out that if we were to agree with the Love court, a beneficiary of a wrongful death claim would never be able to recover underinsured motorist coverage when the personal representative settled with the tortfeasor. As such, the beneficiaries would be powerless and may lose their right to underinsured motorist coverage. We agree with Gibson's argument that all underinsured motorist claims involve a situation where the tortfeasor has been released and the insured is now pursuing benefits under her own policy. This is because all insurance policies have a condition precedent that the insured exhaust the liability limits of the tortfeasor's policy before she can recover underinsured motorist benefits. Thus, all insureds would be barred after exhausting the tortfeasor's policy and, therefore, one must look to the accrual of the claim when determining whether one is legally entitled to recover damages.
Moreover, beneficiaries in a wrongful death action are each entitled to a separate per-person limit of coverage under an uninsured policy. Sparks v. State Farm Mut. Auto. Ins. Co. (Oct. 24, 1995), Franklin App. No. 95APE03-339, unreported, 1995 WL 632081 (Tyack, J., dissenting), citing Savoie, supra, at paragraph four of the syllabus. The Supreme Court has recognized that R.C.
As such, we find that a beneficiary in a wrongful death action is legally entitled to recover underinsured motorist coverage after a settlement by the personal representative. Thus, the trial court erred in finding that State Farm was entitled to judgment as a matter of law on this issue.
The Supreme Court has set out four requirements for R.C.
The first requirement is that there be an insured. Id. Gibson meets this qualification, for she is the owner of the policy and the named insured.
The second requirement is that the insured be legally entitled to recover damages sustained because of injury or death caused by an uninsured or underinsured motorist. Id. In a footnote inSexton the court stated: "Pursuant to R.C.
"To maintain a wrongful death action on a theory of negligence, a plaintiff must show (1) the existence of a duty owing to plaintiff's decedent, (2) a breach of that duty, and (3) proximate causation between the breach of duty and the death."Littleton v. Good Samaritan Hosp. Health Ctr. (1988),
The third statutory requirement is that damages result from injury, sickness, disease, or death. Id. If the above element can be shown at trial, Gibson will be presumed to have been damaged by her father's death. Last, the tortfeasor must be the owner or operator of an uninsured or underinsured motor vehicle. Id. Ehrman was the operator of the vehicle that struck Fred Jagger. *231
Upon consideration of the foregoing, this court finds that genuine issues of material fact exist pursuant to whether the death of Gibson's father was proximately caused by Ehrman. Thus, the trial court properly overruled Gibson's motion for summary judgment.
Gibson's first assignment of error having been sustained and the second assignment of error having been overruled, we reverse the judgment of the trial court, and this cause will be remanded for further proceedings consistent with this opinion.
Judgment reversed and case remanded
FAIN, J., concurs.
GRADY, J., dissents.
Dissenting Opinion
I respectfully dissent from the decision of the majority sustaining the first assignment of error, which I would overrule.
R.C.
The obligation imposed on an insurer by R.C.
Pursuant to R.C.
Though the personal representative is but a nominal party, any judgment rendered for the beneficiaries on a wrongful death claim must be in favor of the personal representative, in that capacity. The power to settle with a defendant in a wrongful death action is exclusively in the personal representative, who acts on behalf of all interested persons. Tennant v. State FarmMut. Ins. Co. (1991),
The personal representative is appointed by the probate court of the county in which the decedent resided at the time of death. If the personal representative receives an offer of settlement from the defendant in a wrongful death case, the personal representative must apply to the probate court to approve the proffered settlement and for an order to distribute the proceeds paid. Unless otherwise agreed by the beneficiaries, distribution of wrongful death proceeds must conform to the statute of decent and distribution. R.C.
In support of its motion for summary judgment, defendant-appellee State Farm presented a certified copy of a Standard Probate Form 14.2 that Barbara Mack filed in the Probate Court of Clark County on August 10, 1993, asking to distribute the proceeds of $100,000 offered by Sandra Ehrman's insurer in settlement of the wrongful death claim arising from the death of Fred Jagger. Because Jagger's beneficiaries would receive less than the shares to which each was entitled by law, each beneficiary executed a consent to the distribution proposed. The form indicates that Sandra Gibson agreed to accept $5,000 from the proceeds received by the personal representative in settlement of her *233 wrongful death claim. State Farm also filed a certified copy of an order that the probate court entered on August 10, 1993, approving the settlement and distribution.
It is undisputed that the settlement approved by the probate court is complete. Because the settlement cuts off Ehrman's liability to Gibson, she is no longer "legally entitled to collect" damages from Ehrman on account of her father's death. That fact operates as a condition subsequent that terminates any prior duty imposed on State Farm by its contract with Gibson to provide underinsured coverage for the losses that Gibson suffered as a result of her father's death. Therefore, the trial court did not err when it granted summary judgment to State Farm on Gibson's claim. Accord Love v. Nationwide Mut. Ins. Co. (1995),
Judge Young has suggested that a settlement between the personal representative and the tortfeasor should not be binding on a beneficiary because the beneficiary is not a party to the settlement cutting off the tortfeasor's liability to him and because the existence and extent of the beneficiaries' underinsured loss cannot be known until the settlement is reached. I am not unsympathetic to that view. However, as the facts of this case demonstrate, a beneficiary is not necessarily unaware of the prospect of settlement or unable to object to it in the probate proceeding in a manner that will protect his interests. Any greater protections must, in my view, be afforded by the legislative branch, not judicially engrafted into a claim for relief that is wholly statutory or an obligation that is a creation of contract.
I would affirm the judgment of the trial court on the foregoing basis.