794 N.E.2d 129 | Ohio Ct. App. | 2003
{¶ 2} In November 1994, appellant was involved in an automobile accident with Gary Willaman. In 1996, appellant sued Willaman. However, prior to January 1997, appellant voluntarily dismissed her action, against Willaman, without prejudice. In January 1997, appellant's counsel contacted Allstate and accepted a prior offer of $6,000 as full settlement of all claims against Willaman.
{¶ 3} On February 11, 1997, Allstate sent appellant's counsel a check for $6,000 and a Release. Allstate requested that appellant execute the Release prior to presenting the check for payment. Approximately one month later, on March 6, 1997, appellant signed the Release. The Release provides, in pertinent part:
{¶ 4} "[I]n consideration of the sum of [$6,000], receipt whereof is hereby acknowledged . . . I do hereby release and forever discharge Gary L. Willaman Kevin Willaman and any other person, firm or corporation charged or chargeable with responsibility or liability, their heirs, representatives and assigns, from any and all claims, demands, damages, costs, expenses, loss of services, actions and causes of action, arising from any act or occurrence up to the present time and particularly on account of all personal injury, disability, property damage, loss or damages of any kind already sustained or that I may hereafter sustain in consequence of an accident that occurred on or about [November 17, 1994]."
{¶ 5} On June 14, 2002, over five years after appellant executed the Release, appellant filed this action against Allstate seeking the recovery of eleven days interest, on the settlement amount, from the date of settlement, January 31, 1997, until the date Allstate sent appellant's counsel the settlement check, February 11, 1997. Both parties filed motions for summary judgment. On November 27, 2002, the trial court granted Allstate's motion for summary judgment and denied appellant's motion for summary judgment. The trial court concluded the case of Peykov. Frederick (1986),
{¶ 6} Appellant timely filed a notice of appeal and raises the following assignment of error for our consideration:
{¶ 7} "I. THE TRIAL COURT ERRED BY GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT."
{¶ 9} "Summary judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence in the pending case and written stipulations of fact, if any, timely filed in the action, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. * * * A summary judgment shall not be rendered unless it appears from such evidence or stipulation and only therefrom, that reasonable minds can come to but one conclusion and that conclusion is adverse to the party against whom the motion for summary judgment is made, such party being entitled to have the evidence or stipulation construed most strongly in his favor."
{¶ 10} Pursuant to the above rule, a trial court may not enter summary judgment if it appears a material fact is genuinely disputed. The party moving for summary judgment bears the initial burden of informing the trial court of the basis for its motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. The moving party may not make a conclusory assertion that the non-moving party has no evidence to prove its case. The moving party must specifically point to some evidence which demonstrates the non-moving party cannot support its claim. If the moving party satisfies this requirement, the burden shifts to the non-moving party to set forth specific facts demonstrating there is a genuine issue of material fact for trial. Vahila v. Hall,
{¶ 12} In denying appellant's motion for summary judgment and granting Allstate's motion for summary judgment, the trial court relied upon the Ohio Supreme Court's decision in Peyko v. Frederick, supra, and R.C.
{¶ 13} The issue before the Court was whether the plaintiff could obtain access to the claims file of the defendant's insurer after the plaintiff obtained a judgment. Id. at 166. Concluding that discovery was proper, the Court noted, in a footnote, that "[a] defendant is ultimately responsible for the payment of prejudgment interest awarded to a plaintiff as a result of the defendant's failure (or the failure of others acting on his behalf) to make a good faith effort to settle the case against him. The defendant's insurer, however, may be liable to the defendant for the amount of the prejudgment interest award, if the insurer's conduct was the basis for the award." Id. at fn. 1.
{¶ 14} The trial court also relied upon R.C.
{¶ 15} In support of her assignment of error, appellant sets forth several arguments. First, appellant maintains the settlement agreement created a new set of obligations owed to her by Allstate. Appellant claims the record in this matter establishes that Allstate assumed direct obligations to her under the settlement agreement. Appellant refers to a letter directed to Allstate in which she accepted the offer to settle and notes that this letter was directed to Allstate and not Willaman.
{¶ 16} Appellant also maintains these new rights and responsibilities are independent of any underlying claims originally brought by appellant against Willaman. Therefore, when Allstate settled with appellant, the settlement created a new, direct relationship between appellant and Allstate that triggered the operation of R.C.
{¶ 17} Second, appellant contends that because she is not bringing a third-party tort claim, the "direct action" rule is inapplicable and Allstate cannot shield itself from the duty to pay post-judgment interest. The "direct action" rule provides that "[a]n injured person may sue a tortfeasor's liability insurer, but only after obtaining judgment against the insured. * * *." Chitlik v. Allstate Ins. Co. *383
(1973),
{¶ 18} Appellant maintains R.C.
{¶ 19} Appellant contends that by virtue of the settlement agreement, Allstate agreed to pay her a sum of money in exchange for the release of her claims against Willaman. Therefore, by virtue of this contract, Allstate owed the settlement debt to appellant and Allstate must pay the post-judgment interest as her claim arises out of the independent relationship between herself and Allstate. Appellant maintains courts have recognized and permitted direct actions against insurance companies who were third-party insurers in an underlying tort suit when the plaintiff's claims arose out of the settlement agreement between plaintiff and insurer. These cases have involved breaches of settlement agreements and actions to enforce settlement agreements.
{¶ 20} Appellant also maintains the Peyko decision does not apply because it concerns R.C.
{¶ 21} Third, appellant argues she did not waive her right to post-judgment interest when she signed the Release on March 6, 1997. In support of this argument, appellant cites the Eight District Court of Appeals' decision in Snyder v. Lindsay (Apr. 23. 2001), Cuyahoga App. No. 78121. In Snyder, the court of appeals explained that post-judgment interest was essentially part of the settlement agreement and plaintiffs were automatically entitled to such interest by statute and did not need to request post-judgment interest. Id. at 7-8. Thus, the Eighth District Court of Appeals concluded plaintiffs did not waive post-judgment interest by signing the releases. Id. at 8. On appeal to the Ohio Supreme Court1, the Court affirmed the award of interest and ordered it computed, from the date of settlement, consistent with the Court's decision in Hartmann v. Duffey,
{¶ 22} Upon review of the above arguments, we conclude the trial court did not err when it granted Allstate's motion for summary judgment and denied appellant's motion for summary judgment. Although the settlement agreement created new rights and obligations, these new rights and obligations remained between the parties to the action, even though the tortfeasor's insurer negotiated the settlement on his behalf. This conclusion is based upon the purpose and meaning of a settlement agreement.
{¶ 23} "As a general rule of law, a settlement agreement is a compromise achieved by the adverse parties in a civil action before final judgment whereby they agree between themselves upon their respective rights and obligations, thus eliminating the necessity of judicial resolution of the controversy." Green v. Clair (Feb. 14, 2001), Summit App. No. 20271, at 2. Further, "* * * the settlement `extinguishes or merges the original rights or claims and correlative obligations and, where the agreement is executory, substitutes for the original claim the new rights and obligations agreed to.'" Id. at 3, citing Bd. of Commrs.of Columbiana Cty. v. Samuelson (1986),
{¶ 24} Based upon the above definition, the compromise was between the parties to the action, that is, Willaman and appellant. Allstate acted on behalf of Willaman in negotiating this compromise, however, the compromise remained between the original parties to the action. Allstate did not become a party, to the action, merely because it represented Willaman during the proceedings that eventually resulted in a settlement agreement. Indeed, in the Peyko decision, the Ohio Supreme Court recognized the special function of a defendant's insurer. The Court stated as follows:
{¶ 25} "It is impossible to ignore the conduct of the defendant's insurer in any determination regarding settlement efforts, unless one is to ignore the realities of litigation. The defendant's insurer conducts the pretrial negotiations and litigation and approves any offers of settlement — all in the defendant's name and for the defendant's benefit. (Emphasis sic.) Peyko, supra, at 166.
{¶ 26} Appellant refers to a letter directed to Allstate in which she accepts the offer to settle and notes that this letter was directed to Allstate and not Willaman. Appellant claims this establishes that Allstate stepped out of its role as a third-party insurer when it negotiated the settlement with her. This conclusion ignores the fact that, in negotiating a settlement agreement, the insurer acts in the defendant's name and for the defendant's benefit. At no time does the insurer become a party to the lawsuit. *385
{¶ 27} The Ohio Supreme Court attempted to define the relationship between an insurer and its insured in Griffey v. Rajan (1987),
{¶ 28} "`* * * On balance, we believe that the courts have resorted to calling this relationship agency almost by default. There is no other term in law which can accurately describe the relationship. Because there is a void in this area, courts have resorted to calling the relationship agency and have applied agency rules.'" Id., citing Maxmanv. Farmers Ins. Exchange (1978),
{¶ 29} The Court also noted that:
{¶ 30} "`It was * * * early stated that an insurer which elected to exercise its right to conduct the defense was not regarded as being an agent of the insured, but was rather in the position of an independent contractor. But the more modern rule is that under such a policy provision the insurer becomes the agent of the insured.'" Id., citing 7C Appleman, Insurance Law and Practice (1979) 6, Section 4681.
{¶ 31} "The author cautions, however, that:
{¶ 32} "`* * * [T]he relationship is more complex than will fit precisely into one of the neat niches of the law, partaking in part of an agency relationship, in part of that of an independent contractor, in many respects that of a fiduciary.'" Id., citing 7C Appleman, Insurance Law and Practice, supra, at fn. 16.
{¶ 33} Based upon the above discussion of the nature of the insurer/insured relationship, we do not conclude that Allstate became a party to the settlement agreement when it negotiated the settlement between Willaman and appellant. Allstate merely acted on behalf of Willaman. Further, the new rights and responsibilities that arose as a result of the settlement agreement remained between appellant and Willaman. Therefore, as in Peyko with the payment of pre-judgment interest, Willaman remained responsible for the payment of post-judgment interest. We further conclude the "direct action" rule applies and appellant is not entitled to maintain an action against Allstate. In addition to setting forth the "direct action" rule in Chitlik, the court also addressed plaintiff's argument that since the insurer settled the property damage claim, it admitted and acknowledged liability, and this permitted the plaintiff to sue the insurer directly for injury to his person. The court rejected this argument and stated: *386
{¶ 34} "* * * [P]ayment of a claim for property damage is not tantamount to obtaining a judgment against the insured which would permit the injured person to sue the insurer under R.C.
{¶ 35} Similarly, in the case sub judice, since appellant settled with Allstate, she did not obtain a judgment against Willaman and therefore, would not be entitled to pursue a direct action against Allstate under the "direct action" rule.
{¶ 36} Our decision is consistent with this Court's recent decision in Layne v. Progressive Preferred Ins. Co., Stark App. Nos. 2002CA00327, 2002CA00335, 2003-Ohio-3575. In Layne, we concluded appellant was not entitled to recover post-judgment interest, from Progressive, from the date of oral settlement, until the date of payment, because the Release contained an integration clause2 which nullified the prior oral settlement agreement. Id. at 9. Therefore, since Progressive provided full payment to Layne on the date that Layne entered into the written agreement containing the integration clause, Layne was not entitled to interest. Id. The Release in the case sub judice does not contain an integration clause. However, we reach the same conclusion, as we did in Layne, for the reasons set forth above.
{¶ 37} Appellant's sole assignment of error is overruled.
{¶ 38} For the foregoing reasons, the judgment of the Court of Common Pleas, Stark County, Ohio, is hereby affirmed.
Farmer, P.J., and Boggins, J., concur.
