David Kamnikar et al., Plaintiffs-Appellants, v. Cameron Fiorita et al., Defendants-Appellees.
No. 16AP-736
IN THE COURT OF APPEALS OF OHIO, TENTH APPELLATE DISTRICT
June 29, 2017
2017-Ohio-5605
(C.P.C. No. 14CVH07-7708), (REGULAR CALENDAR)
Rendered on June 29, 2017
On brief: Law Offices of James P. Connors, and James P. Connors, for appellants. Argued: James P. Connors.
On brief: Hollern & Associates, and Edwin J. Hollern, for appellees Cameron, Robert, and Kristin Fiorita. Argued: Edwin J. Hollern.
On brief: Lane Alton, Rick E. Marsh, and Eric S. Bravo, for appellee Encompass Home & Auto Insurance Company. Argued: Rick E. Marsh.
APPEAL from the Franklin County Court of Common Pleas
SADLER, J.
{¶ 1} Plaintiffs-appellants, David and Laurie Kamnikar, and their minor son, Jack (collectively “Kamnikars“), appeal from a judgment of the Franklin County Court of Common Pleas in favor of defendants-appellees, Cameron, Robert, and Kristin Fiorita (collectively “Fioritas“) and Encompass Home & Auto Insurance (“Encompass“). For the reasons that follow, we affirm.
{¶ 2} This case arises out of a minor motor vehicle accident that occurred in the parking lot of the Chiller Skating Rink (“Chiller“) in Dublin, Ohio on January 24, 2014. On that evening, a Cadillac Escalade operated by Cameron Fiorita and owned by his father, Robert Fiorita, struck a Toyota Corolla parked in the Chiller lot. David and Laurie Kamnikar had driven to the Chiller in their Corolla to pick up their son, Jack Kamnikar, who had been skating at the ice rink. David was driving the Corolla with Laurie in the passenger seat. Jack left the ice rink and climbed in the back seat. The Kamnikars remained in the vehicle while Jack texted a friend, who was still in the rink, to see if she could find a hat that Jack had left at the rink. At or around that same time, Cameron arrived at the Chiller in the Escalade to pick up two girls, one believed to be his sister.
{¶ 3} At approximately 9:45 p.m., while Jack was texting his friend, Cameron drove the Escalade into the back of the Corolla. According to the Kamnikars, Cameron apologized to David and acknowledged he was at fault for hitting a parked vehicle. The complaint states that Cameron told a Dublin police officer at the scene that he did not see the Kamnikars’ vehicle because he was either “texting, playing with his phone, or not paying attention.” (Compl. at 3.) Because the accident took place in a private parking lot, the police officer did not make a written report, but he told the parties to exchange insurance information.
{¶ 4} As David waited in the Chiller lobby to obtain insurance information, Cameron called his parents. When Cameron returned, he provided David with information he retrieved from the Escalade identifying Westfield Insurance Company (“Westfield“) as the Fioritas’ insurance carrier.
{¶ 5} When David contacted Westfield in order to submit a claim, he learned that Westfield no longer insured the Fioritas’ vehicle. A representative of Encompass subsequently contacted David to inform him that Encompass insured the Fioritas’ Escalade. David orally submitted a claim to Encompass and provided a recorded statement. On February 11, 2014, the Kamnikars received a letter from Encompass stating that “[a]fter careful investigation, we have found that our insured was not legally responsible for the accident. As a result, we will not be able to make any payment for the
{¶ 6} According to the complaint, the investigation conducted by Encompass consisted of speaking with Kristin about the accident and reviewing the report of the appraiser. The complaint alleges that Encompass failed to interview either Cameron, his two female passengers, or the Dublin police officer. The complaint states that when David contacted Encompass to question the denial of his claim, an Encompass representative told David to file a claim with his own insurance company.
{¶ 7} The Kamnikars subsequently obtained legal counsel who, on February 25, 2014, contacted Encompass seeking to obtain copies of any “investigation materials” related to the Kamnikars’ claim and an explanation of the denial of the claim. (Compl. at 7.) Encompass responded by referring counsel to the February letter denying the Kamnikars’ claim and explaining that Encompass‘s internal policy was not to share their investigative materials with claimants. When the Kamnikars’ counsel sought to obtain a copy of the internal policy referred to in the previous communication, he received a response from an Encompass “supervisor” explaining that internal Encompass policies are not shared with others and that the investigation into the accident revealed that “[t]he two drivers are telling opposing stories and, in our opinion, the physical damage favors our client.” (Compl. at 8.)
{¶ 8} On July 24, 2014, the Kamnikars commenced a civil action against Encompass and the Fioritas. On October 3, 2014, Encompass filed a motion, pursuant to
{¶ 9} On September 24, 2015, the trial court scheduled a jury trial in the matter for March 16, 2016. On February 22, 2016, during the discovery process, the Kamnikars produced a videotape recording of the accident captured on the Chiller security camera. The Fioritas, after viewing the videotape, filed the following stipulation:
Defendant, Cameron Fiorita, by and through counsel, hereby stipulates that he was negligent and is therefore liable for the
damages that are found by the jury to be proximately caused by his negligence that arise out of the January 24, 2014 accident that is the subject of plaintiffs’ Complaint. The issues of proximate cause and damages, if any, are specifically reserved for the jury to determine.
(Mar. 6, 2016 Stipulation.)
{¶ 10} On March 10, 2016, the trial court rescheduled the jury trial for August 16, 2016. On August 9, 2016, the Fioritas filed a motion for judgment on the pleadings, pursuant to
{¶ 11} On the morning of trial, the trial court heard arguments on the pending motion for judgment on the pleadings. At the close of those proceedings, the trial court announced its decision to grant the motion. As a result of the ruling, the only claim remaining for trial was the negligence claim against Cameron asserted in Count Two of the complaint and only as to the issue of damages.
{¶ 12} The case was tried to a jury on August 16, 2016. On August 17, 2016, the jury rendered a verdict in favor of the Kamnikars as to their negligence claim against Cameron and awarded damages of $3,087.05. On September 21, 2016, the trial court issued a judgment entry in favor of the Kamnikars and against Cameron in the total amount of $3,087.05, plus court costs. The trial court denied the Kamnikars’ motion for sanctions on October 6, 2016 in an entry stating “[t]here is no basis in law or fact upon which the Court would award Plaintiffs legal fees and expenses in this matter.” (Oct. 6, 2016 Decision and Entry at 1.)
{¶ 13} On October 21, 2016, the Kamnikars appealed to this court from the November 24, 2014 decision granting Encompass‘s motion to dismiss, the August 16, 2016 decision granting the Fioritas’ motion for judgment on the pleadings, and the October 6, 2016 decision denying the Kamnikars’ motion for fees and expenses. On
II. ASSIGNMENTS OF ERROR
{¶ 14} The Kamnikars assert the following assignments of error:
- I. THE TRIAL COURT ERRED BY DISMISSING THE CASE AND ALL CLAIMS AGAINST ENCOMPASS PURSUANT TO CIV.R. 12(B)(6).
- II. THE TRIAL COURT ERRED BY GRANTING JUDGMENT ON THE PLEADINGS AND DISMISSING ALL CLAIMS AGAINST DEFENDANTS ROBERT AND KRISTIN FIORITA, AND ALL CLAIMS OTHER THAN FOR NEGLIGENCE AGAINST CAMERON FIORITA, PURSUANT TO CIV.R. 12(C).
- III. THE TRIAL COURT ERRED BY DENYING PLAINTIFFS’ MOTION FOR LEGAL FEES AND EXPENSES FOR FAILURE TO ADMIT, PURSUANT TO CIV.R. 37(C)(2), AND BY GRANTING LEAVE TO THE FIORITAS TO RESPOND TO THE MOTION OUT OF RULE.
III. LEGAL ANALYSIS
A. First Assignment of Error
{¶ 15} In their first assignment of error, the Kamnikars argue that the trial court erred when it dismissed their claims against Encompass alleging negligent misrepresentation and fraud (Count One of the complaint), bad faith, lack of good faith and fair dealing, and negligence (Count Four of the complaint). We disagree.
{¶ 16} Under
{¶ 17} In reviewing a motion to dismiss, pursuant to
{¶ 18} Both Count One and Four of the complaint allege that Encompass breached a duty it owed to the Kamnikars by failing to conduct a thorough investigation of the accident before denying their claim, by failing to share the results of the investigation with their counsel, and by encouraging the Kamnikars to file an insurance claim with their own insurance carrier even though such a claim was unsupported by the facts. The trial court‘s ruling on the motion to dismiss reads, in relevant part, as follows:
Upon reviewing Encompass‘s motion, it is clear to the Court that it must dismiss Plaintiffs’ claims against it. While stated as two separate claims, Plaintiffs’ claims against Encompass are the same. Plaintiffs try to argue that their negligent misrepresentation/fraud claim against Encompass is distinct, but that is just not the case. Both of Plaintiffs’ claims stem from Encompass’ alleged bad faith in denying Plaintiffs’ claim. It can be stated in different ways and different words can be used, but a third-party bad faith claim will always be a third-party bad faith claim. Unfortunately for Plaintiffs, [i]t is well established that Ohio does not recognize a claim of third-party bad faith. Since this is so, Plaintiffs’ claims against Encompass must be dismissed.
(Nov. 24, 2014 Decision and Entry at 3.)
1. Bad Faith
{¶ 20} “Under Ohio law, an insurer has a duty to act in good faith in the processing and payment of valid claims of its insured.” Beever v. Cincinnati Life Ins. Co., 10th Dist. No. 02AP-543, 2003-Ohio-2942, ¶ 20, citing Petrone v. Grange Mut. Cas. Co., 9th Dist. No. 20909, 2002-Ohio-3746. The Supreme Court of Ohio held that “[a]n insurer fails to exercise good faith in the processing of a claim of its insured where its refusal to pay the claim is not predicated upon circumstances that furnish reasonable justification therefor.” Zoppo v. Homestead Ins. Co., 71 Ohio St.3d 552 (1994), paragraph one of the syllabus.
{¶ 21} “If an insurer improperly refuses to pay a valid claim, such failure may amount to insurance ‘bad faith.‘” Beever at ¶ 20, citing Stefano v. Commodore Cove E., Ltd., 145 Ohio App.3d 290, 293 (9th Dist.2001). An insurance company‘s refusal to pay a valid claim is not conclusive of bad faith, but if the insurer bases its refusal on a belief that there is no coverage for a particular claim, such belief may not be arbitrary or capricious. Beever at ¶ 20, citing Petrone at ¶ 12. Pursuant to Zoppo, an insurance company‘s failure to properly investigate a claim against its insured may also give rise to a bad-faith claim against the insurer. Beever at ¶ 41.
{¶ 22} Ohio courts have generally held that the tort of bad faith is “‘independent of the contract of insurance.‘” Id. at ¶ 50, quoting United Dept. Stores Co. No. 1 v. Continental Cas. Co., 41 Ohio App.3d 72, 73 (1st Dist.1987). “The liability of the insurer in such cases does not arise from its mere omission to perform a contract obligation * * *. Rather, the liability arises from the breach of the positive legal duty imposed by law due to the relationships of the parties.” Hoskins v. Aetna Life Ins. Co., 6 Ohio St.3d 272, 276 (1983). Ohio law is clear, however, that an insurer‘s duty to act in good faith runs only from the insurer to the insured and a third party has no cause of action for bad faith against the tortfeasor‘s insurance company. McLynas v. Karr, 10th Dist. No. 03AP-1075, 2004-Ohio-3597, ¶ 29, citing Murrell v. Williamsburg Local School Dist., 92 Ohio App.3d 92, 95 (12th Dist.1993).
2. Negligence
{¶ 24} The Kamnikars argue that the facts alleged in their complaint state a claim for relief against Encompass sounding in ordinary negligence. We disagree.
{¶ 25} “The economic-loss rule generally prevents recovery in tort of damages for purely economic loss.” Corporex Dev. & Constr. Mgt., Inc. v. Shook, Inc., 106 Ohio St.3d 412, 2005-Ohio-5409, ¶ 6, citing Chemtrol Adhesives, Inc. v. Am. Mfrs. Mut. Ins. Co., 42 Ohio St.3d 40, 45 (1989); Floor Craft Floor Covering, Inc. v. Parma Community Gen. Hosp. Assn., 54 Ohio St.3d 1, 3 (1990). “The economic-loss rule stems from the principle that, ‘[i]n the absence of privity of contract between two disputing parties the general rule is “there is no * * * duty to exercise reasonable care to avoid intangible economic loss or losses to others that do not arise from tangible physical harm to persons and tangible things.“‘” Waverly City School Dist. Bd. of Edn. v. Triad Architects, Inc., 10th Dist. No. 08AP-329, 2008-Ohio-6917, ¶ 26, quoting Floor Craft at 3, quoting Prosser & Keeton, Law of Torts, Section 92, 657 (5th Ed.1984).
{¶ 26} Here, the Kamnikars allege that Encompass‘s negligence in failing to adequately investigate their claim against the Fioritas, improperly denying the claim, and carelessly advising the Kamnikars to file the claim against their own insurance carrier caused the Kamnikars to incur unnecessary costs and expenses associated with hiring counsel and pursuing legal action. Because the Kamnikars seek recovery of a purely economic loss arising from Encompass‘s alleged negligence, the economic-loss rule bars their negligence claim.
3. Restatement of Law 2d, Torts, Sections 323 and 324A
{¶ 27} The Kamnikars contend that their complaint states a claim for relief against Encompass under the rule of law expressed in Restatement of the Law 2d, Torts, Section 323 (1965), “Negligent Performance of Undertaking to Render Services,” and Restatement of the Law 2d, Torts, Section 324A (1965), “Liability to Third Person for Negligent Performance of Undertaking.” We disagree.
{¶ 29} As previously stated, Encompass undertook the processing of the Kamnikars’ personal injury and property damage claim for the benefit of their insured, the Fioritas, pursuant to a contract of liability insurance. The Kamnikars make no claim that they are a third-party beneficiary to the contract of insurance between Encompass and the Fioritas. See Chitlik v. Allstate Ins. Co., 34 Ohio App.2d 193 (8th Dist.1973) (third-party claimants are merely incidental beneficiaries to a liability insurance contract). Nor have the Kamnikars cited any Ohio authority holding that a liability insurer may be held liable to a third-party claimant under Restatement of the Law 2d, Torts, Sections 323 or 324A. See Bugg v. Am. Standard, Inc., 8th Dist. No. 84829, 2005-Ohio-2613 (insurance defendant assumed no duty to the insured‘s work force, despite their knowledge of the risks associated with asbestos within the insured‘s premises).
4. Fraud and Negligent Misrepresentation
{¶ 31} Though the Kamnikars’ complaint also alleges claims of fraud and negligent misrepresentation against Encompass, the Kamnikars’ appellate brief contains no argument in support of those claims. Nevertheless, because our review is de novo, we will address the dismissal of those claims herein. A prima facie case for fraud includes the following elements: (1) a representation material to the transaction, (2) made falsely, with knowledge of its falsity, or with utter disregard and recklessness regarding its truth or falsity, (3) with the intent to mislead another into reliance, (4) justifiable reliance on the representation or concealment, and (5) injury proximately resulting from such reliance. Burr v. Stark Cty. Bd. of Commrs., 23 Ohio St.3d 69 (1986), paragraph two of the syllabus. A negligent misrepresentation occurs when “[o]ne who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.” Delman v. Cleveland Heights, 41 Ohio St.3d 1, 4 (1989), citing 3 Restatement of the Law 2d, Torts, Section 552(1), at 126-27 (1965). Justifiable reliance and damages proximately caused by such reliance are elements of both torts. Martin v. Ohio State Univ. Found., 139 Ohio App.3d 89, 104 (10th Dist.2000).
{¶ 33} For the foregoing reason, we hold that the trial court did not err when it granted Encompass‘s motion to dismiss the Kamnikars’ claims against Encompass. Accordingly, the Kamnikars’ first assignment of error is overruled.
B. Second Assignment of Error
{¶ 34} In the Kamnikars’ second assignment of error, the Kamnikars argue that the trial court erred when it granted the Fioritas’ motion for judgment on the pleadings. We disagree.
{¶ 35} A motion for judgment on the pleadings “has been characterized as a belated
{¶ 36} The record reveals that the trial court first considered the Fioritas’ motion for judgment on the pleadings with counsel, in chambers, before announcing a decision from the bench prior to the commencement of the jury trial. Though the Kamnikars claim that the trial court failed to address all the claims asserted against the Fioritas, our review of the transcript reveals that the trial court ruled on each of the claims alleged in the complaint, albeit in a summary fashion. The trial court granted a judgment on the pleadings in favor of the Fioritas as to the claims for negligent misrepresentation and fraud, bad faith, negligent entrustment, negligence, and civil conspiracy.
1. Negligent Entrustment
{¶ 37} With regard to the claim of negligent entrustment, we note that in Williamson v. Eclipse Motor Lines, Inc., 145 Ohio St. 467, 470 (1945), the Supreme Court explained that “liability may arise where an owner entrusts his motor vehicle, with permission to operate the same, to a person so lacking in competency and skill as to convert the vehicle into a dangerous instrumentality.” According to the court in Williamson, “liability in such cases arises from the combined negligence of the owner and the driver; of the former in entrusting the machine to an incompetent driver, and of the driver in its operation.” Id. at 471. “Liability for negligent entrustment arises ‘from the act of entrustment of the motor vehicle, with permission to operate the same, to one whose incompetency, inexperience or recklessness is known or should have been known by the owner.’ * * * Not only does the test require the owner to entrust the vehicle to the driver with permission to drive, but the driver must be one who is known to be incompetent, inexperienced or reckless.” Dowe v. Dawkins, 10th Dist. No 93AP-860 (Dec. 23, 1993), quoting Williamson at paragraph two of the syllabus.
{¶ 39} With regard to the claim against Robert Fiorita, the complaint alleges insufficient facts to satisfy the Williamson test. The complaint alleges that Robert permitted his son Cameron to drive the Escalade on the night in question, that the vehicle is an SUV, and that Cameron is a “relatively inexperienced driver.” (Compl. at 11.) The complaint does not reveal Cameron‘s age on the date of the accident, but the complaint acknowledges that Cameron is a licensed driver. In our view, the complaint does not allege facts which would permit a reasonable inference that Cameron‘s “relative[] inexperience[]” as a driver renders him so lacking in competency and skill as to convert the vehicle into a dangerous instrumentality. (Compl. at 11.) Additionally, the facts alleged in the complaint do not permit an inference that Robert knew that his son was an incompetent driver notwithstanding his licensure. Accordingly, the trial court did not err when it granted judgment on the pleadings as to the claim for negligent entrustment.
2. Fraud and Negligent Misrepresentation
{¶ 40} With regard to the claim for fraud, the Kamnikars allege that the Fioritas breached a duty owed to them by “lying to Encompass and others about how the accident happened, * * * misle[ading] the Kamnikars about the identity of their insurance carrier at the time of the accident,” and “wrongfully direct[ing] the Kamnikars to file a fraudulent insurance claim” with their insurer. (Compl. at 13.) The complaint also alleges that such conduct constitutes a violation of
{¶ 41} As noted above, the Kamnikars do not allege that they abandoned their claim against the Fioritas as a result of the representations made by the Fioritas either as
3. Civil Conspiracy
{¶ 42} Turning to the claim for civil conspiracy, we note that “[c]ivil conspiracy’ has been defined as ‘a malicious combination of two or more persons to injure another in person or property, in a way not competent for one alone, resulting in actual damages.‘” Kenty v. Transamerica Premium Ins. Co., 72 Ohio St.3d 415, 419 (1995), quoting LeFort v. Century 21-Maitland Realty Co., 32 Ohio St.3d 121, 126 (1987), citing Minarik v. Nagy, 8 Ohio App.2d 194, 196 (8th Dist.1963). “Civil conspiracy is derivative in that the claim cannot be maintained absent an underlying tort that is actionable without the conspiracy.” Zhelezny v. Olesh, 10th Dist. No. 12AP-681, 2013-Ohio-4337, ¶ 55, citing Kenty at 419, citing LeFort at 126. Having determined that the trial court did not err when it dismissed the claims for relief against Encompass and having further determined that the Fioritas are entitled to judgment on the pleadings as to the remaining tort claims, the Kamnikars’ complaint fails to allege a claim for relief sounding in civil conspiracy.
{¶ 43} For the foregoing reasons, we hold that the trial court did not err when it granted the Fioritas’ motion for judgment on the pleadings. Accordingly, the Kamnikars’ second assignment of error is overruled.
{¶ 44} In their third assignment of error, the Kamnikars argue that the trial court abused its discretion when it granted the Fioritas leave to respond to the Kamnikars’ motion for sanctions, out of rule, and denied the Kamnikars’ motion for fees and expenses allegedly incurred as a result of Cameron Fiorita‘s failure to admit that he was at fault for the accident.
{¶ 45}
Failure to admit. If a party fails to admit what is requested under
Civ.R. 36 , and if the requesting party later proves * * * the matter true, the requesting party may move that the party who failed to admit pay the reasonable expenses, including attorney‘s fees, incurred in making that proof. The court shall so order unless:(a) The request was held objectionable under
Civ.R. 36(A) ;(b) The admission sought was of no substantial importance;
(c) The party failing to admit had a reasonable ground to believe that it might prevail on the matter; or
(d) There was other good reason for the failure to admit.
(Emphasis added.)
{¶ 46} In Salem Med. Arts & Dev. Corp. v. Columbiana Cty. Bd. of Revision, 82 Ohio St.3d 193 (1998), the Supreme Court characterized the sanctions for a failure to admit as follows:
A party may deny a request for admissions, but, upon motion pursuant to
Civ.R. 37(C) , improper denials may subject the responding party to sanctions. Whether such denials are subject toCiv.R. 37(C) sanctions depends upon whether the proof at trial contradicts the denial. If the matters denied are proved at trial, then a court shall award sanctions “unless the request had been held objectionable under Rule 36(A) or the court finds that there was good reason for the failure to admit or that the admission sought was of no substantial importance * * *.”Civ.R. 37(C) . See Itskin v. Restaurant Food Supply Co., 7 Ohio App.3d 127 (1982).
{¶ 47} Even if we assume that Cameron Fiorita did not have reasonable grounds to deny fault for the accident, pursuant to Salem Med. Arts, sanctions under
Requests for admissions, * * * are distinguishable from other discovery requests. “In reality, [a request for admissions] is not a discovery procedure but is a procedure used to narrow the issues and to eliminate unnecessary proof at trial by obtaining the admission of facts known to the party requesting the admissions and concerning that upon which there should be no issue.” McCormac, Ohio Civil Rules Practice (2 Ed.1992) 287, Section 10.56.
Civ.R. 37(C) sanctions are in effect reimbursement for the expense incurred in forcing issues to be tried that should have been resolved before trial.
(Emphasis added.) Id. at 197.
{¶ 48} Here, the Fioritas admitted Cameron‘s negligence prior to trial. The trial court denied the Kamnikars’ motion for sanctions stating “[t]here is no basis in law or fact upon which the Court would award Plaintiffs legal fees and expenses in this matter.” (Oct. 6, 2016 Decision and Entry.) Because the Kamnikars were not required to produce evidence at trial contradicting Cameron‘s denial, the event triggering sanctions under
D. Frivolous Appeal
{¶ 49} Having overruled each of the Kamnikars’ assignments of error, we turn to Encompass‘s motion seeking monetary sanctions against the Kamnikars and their counsel for prosecuting a frivolous appeal.
{¶ 51} Here, Encompass requests attorney fees on the basis that the assignments of error asserted by the Kamnikars are completely without merit as they pertain to the dismissal of the claims against Encompass and the motion for fees and expenses filed by the Kamnikars in the trial court. We have determined that the Kamnikars’ assignments of error are meritless, and we affirmed the trial court‘s decisions on all matters. However, in our discretion and considering all the facts and circumstances of this case, we do not conclude that monetary sanctions are appropriate. See Weinstock v. McQuillen, 10th Dist. No. 09AP-539, 2010-Ohio-1071, ¶ 15; Nyamusevya v. Nkurunziza, 10th Dist. No. 10AP-857, 2011-Ohio-2614, ¶ 25. Accordingly, we deny Encompass‘s motion for sanctions.
IV. CONCLUSION
{¶ 52} Having overruled the Kamnikars’ three assignments of error and having denied Encompass‘s motion for sanctions, we affirm the judgment of the Franklin County Court of Common Pleas.
Motion for sanctions denied; judgment affirmed.
BROWN and HORTON, JJ., concur.