2006 Ohio 3599 | Ohio Ct. App. | 2006
{¶ 2} As a result of the accident, Kelly made a claim against his wife for bodily injury, and his wife submitted the claim to Owners for coverage under the automobile policy. Owners denied liability based upon an endorsement excluding coverage for an injury to a spouse who resided in the same household.
{¶ 3} Kelly then submitted his own claim for compensation under the uninsured-motorists (UM) section of the automobile policy. Owners denied this claim as well.
{¶ 4} Based upon this denial, Kelly sued Owners for breach of contract and bad faith. Kelly moved for partial summary judgment, requesting that the court declare coverage under the UM section of the policy. Owners moved for summary judgment also, requesting the court to declare that Kelly was not entitled to UM benefits under the policy and to dismiss the bad-faith claim.
{¶ 5} The trial court ruled in favor of Owners and dismissed the lawsuit. Kelly now appeals, raising two assignments of error.
{¶ 6} In both assignments of error, Kelly argues that the trial court erred by granting summary judgment in favor of Owners and by denying his motion. This court reviews the granting of summary judgment de novo,2 employing the standards set out in Civ.R. 56.
{¶ 9} As we have already noted, the UM statute mandates that any UM exclusion must be "specified" in the policy. We interpret "specified" to mean that the exclusion must be "clear and conspicuous." As with any exclusion, this court will interpret an exclusion in UM coverage "as applying only to that which isclearly intended to be excluded."14 But we will not invoke this rule of strict construction to change the obvious intent of the parties and to impose coverage.15
{¶ 11} This intrafamilial-tort exclusion, which is apparently designed to prevent fraudulent or collusive intrafamilial lawsuits for insurance benefits, is permitted under Ohio law.16 In fact, the Ohio Supreme Court, after abolishing spousal-tort immunity, suggested that insurance companies use this type of exclusion to reduce the cost of insurance premiums.17
{¶ 12} This type of exclusion can be enforced to deny UM coverage because the current UM statute, unlike former versions of the statute, eliminates the mandatory offering of UM coverage and expressly allows insurers to include terms and conditions in UM policies that preclude coverage.18 The legislature appears to have swapped an interest in providing compensation for "uninsured" motorists with an interest in providing reasonable rates.19 Thus, the UM statute does not prevent an insurance company from eliminating UM coverage when one spouse becomes legally liable to another for personal injuries.
{¶ 14} Section (3)(c) states that UM coverage does not apply "to bodily injury caused by an automobile operated by a person excluded from coverage for bodily injury liability under the policy." According to Owners, this exclusion clearly applied because Mary Kelly had been excluded from liability coverage for the intrafamilial injury. Thus, Richard Kelly could not recover UM benefits for the same intrafamilial injury.
{¶ 15} Kelly argues the exclusion in section (3)(c) did not apply for several reasons. First, he claims his wife was not excluded from coverage from the personal-injury claim. Rather, in his view, the bodily-injury liability coverage did not apply to the circumstances giving rise to the claim. Since there was no coverage to begin with for the claim, his wife could not have been "a person excluded from coverage for bodily injury liability under the policy," as required by the exclusion.
{¶ 16} But Kelly's logic is flawed. Owners denied Mary Kelly, a named insured, coverage for her husband's injuries because of the intrafamilial-tort exclusion in the policy. Kelly could not claim UM benefits for himself as a named insured in the same policy because Mary Kelly caused his injury and she was excluded from coverage for the injury under the policy.
{¶ 17} Alternatively, Kelly argues that the exclusion in section (3)(c) did not clearly apply because his wife, as a named insured, did have coverage for bodily-injury liability under the policy, notwithstanding certain exceptions, including the intrafamilial-tort exclusion. Kelly claims that this created an ambiguity in coverage that should have been decided in favor of coverage.
{¶ 18} But Kelly ignores the fact that Mary Kelly did not have coverage for this injury under the bodily-injury liability portion of the policy, and that the UM exclusion specifically adopted the bodily-injury liability coverage exclusions. Admittedly section (3)(c) did not cross-reference by number the exclusions in the bodily-injury liability portion of the policy. But the reference to the exclusions was clear and did not create an ambiguity in this case.
{¶ 19} In related fashion, Kelly claims that the exclusion in section (3)(c) should have applied only to injuries caused by a person specifically excluded from coverage for bodily-injury liability under the policy, such as a named "relative" that the insured did not want covered as an insured. We recognize that this "specifically excluded person" provision does exist in some UM insurance policies20 and that the legislature used this exclusion as one example of an acceptable exclusion in a UM policy.21 But the current UM coverage statute unequivocally states that the specified exclusions are not the only acceptable exclusions.22
{¶ 20} We can only assume that the parties omitted the word "specifically" because they did not intend for section (3)(c) to apply only to those "specifically" excluded from coverage for bodily-injury liability under the policy. Importantly, this interpretation renders the UM coverage consistent with the bodily-injury liability coverage with regard to the intrafamilial-tort exclusion. If this injury were not also excluded under the UM coverage, the exclusion would be meaningless because family members could plot to recover UM benefits in lieu of bodily-injury damages.23
{¶ 21} In sum, Owners demonstrated that the exclusion in section (3)(c) applied, and Kelly's interpretations of section (3)(c) in favor of coverage are not reasonable under the circumstances of this case. As a result, Kelly was not entitled to recover under the UM portion of the insurance policy. The trial court correctly granted summary judgment for Owners on this issue. Accordingly, the first assignment of error is overruled.
{¶ 23} An insurer has a duty to act in good faith towards its insured in carrying out its responsibilities under the policy of insurance.24 An insurer breaches its duty of good faith in the processing of an insured's claim where its denial of the claim is not based upon circumstances that reasonably justify the denial.25
{¶ 24} Kelly's claim of bad faith was based upon Owners' denial of UM coverage. Owners denied coverage under section (3)(c) of the UM portion of the policy. We have upheld Owners' denial of Kelly's claim under this exclusion. Therefore, the claim was justifiably denied, and that denial could not serve as the basis of a bad-faith claim. Accordingly, the trial court did not err by entering judgment in favor of Owners on the bad-faith claim, and the second assignment of error is overruled.
{¶ 25} The judgment of the trial court is affirmed.
Judgment affirmed.
Doan, P.J., and Hendon, J., concur.