704 N.E.2d 344 | Ohio Ct. App. | 1998
Lead Opinion
Appellant Karen Vickers, as the administrator of the estate of her deceased husband James Vickers, brought this action against Dr. Richard Walters and appellee Dr. Steven Howe, alleging that these doctors negligently caused the death of her husband.
In the fall of 1995, appellant settled with Dr. Peggy Jane Anderson, prior to the filing of the above lawsuit against Drs. Walters and Howe, for an undisclosed sum of money, which did not exhaust her policy limits of $100,000. Several days prior to the commencement of the scheduled trial in this matter, appellant settled with Dr. Walters. The settlement amount was $100,000, significantly less than his policy limits of $1.4 million.
Appellee was insured by Professional Medical Insurance Company ("Professional Medical") with liability limits of $1.4 million. Professional Medical became insolvent and the Ohio Insurance Guaranty Association ("OIGA") stepped in to provide appellee with a defense pursuant to R.C. Chapter 3955. Throughout its representation of appellee, OIGA maintained that pursuant to R.C.
On September 9, 1996, the day of trial, appellee moved to dismiss appellant's claims, pursuant to R.C.
"I. The trial court erred when it dismissed the claim against the defendant based on the fact that the OIGA's interpretation of R.C. 3955 is against the law, disfavors public policy encouraging settlement, distorts the purpose of contribution among joint and several obligors, and contravenes the purpose of the statute.
"II. The trial court erred when it dismissed the claim against Dr. Howe without allowing the jury to determine issues of negligence and liability, improperly relieving Dr. Howe of any potential personal liability."
In determining the General Assembly's intent, we must look at several factors set forth in R.C.
"(A) The object sought to be attained;
"(B) The circumstances under which the statute was enacted;
"(C) The legislative history;
"(D) The common law or former statutory provisions, including laws upon the same or similar subjects;
"(E) The consequences of a particular construction;
"(F) The administrative construction of the statute."
R.C.
"Any person having a covered claim upon which recovery is also presently possible under an insurance policy written by another insurer shall be required first to exhaust his rights under such other policy."
In PIE Mut. Ins. Co. v. Ohio Ins. Guar. Assn. (1993),
"The Ohio Insurance Guaranty Association Act, R.C. Chapter 3955, was designed to protect insureds and third-party claimants from a potentially catastrophic loss due to the insolvency of a member insurer. To this end, OIGA assumes the place of the insolvent insurance carrier for liability purposes only and provides insurance coverage when no other insurance is available to compensate valid claims."
Appellant interprets the language of R.C.
First, we do not find that the language of R.C.
"(D)(1) * * * an unpaid claim, including one for unearned premiums, which arises out of and is within the coverage of an insurance policy to which sections
"(a) The claimant or insured is a resident of this state at the time of the insured event, provided that for the purpose of determining the place of residence of a claimant or insured that is an entity other than a natural person, the state in which its principal place of business is located at the time of the insured event shall be considered the residence of such claimant or insured.
"(b) The claim is a first-party claim for property damage to an insured's property that is permanently located in this state."
There is no dispute that appellant's claim against Dr. Howe is a "covered claim" within the definition of R.C.
There are two opinions from Ohio courts that do give some insight regarding the interpretation of R.C.
The second opinion we find persuasive is Wurth v. Ideal Mut.Ins. Co. (1987),
A split of authority exists in other jurisdictions that have addressed this issue. However, we find persuasive Aetna Cas. Sur. v. Ohio Ins. Guar. Assoc. (1991),
"Moreover, OIGA's obligation to indemnify does not extend to any portion of the covered claim that is covered by other insurance * * *. The other insurance that Signs is required to exhaust includes not only the decedent's uninsured motorist coverage and other insurance held by Compass, but also policies of insurance covering other tort-feasors, including F R's policy with Aetna and Huston's policy with Dairyland." Id. at 622,
Finally, in reviewing the legislative history of this act, we find the following statement regarding rights of claimants:
"Claimants against insolvent companies who also have a right to recover against a solvent company are required to first exhaust all rights of recovery against the solvent company. Any amounts payable under this bill shall be reduced by the amount of such recovery." Summary of 1970 Am.Sub.H.B. No. 1121, 133 Ohio Laws, Part III, 2937, codified at R.C. Chapter 3955, reprinted in Ohio Legislative Service Commission, Summary of 1970 Enactments (1970) 99.
Even the legislative history of the bill requires exhaustion of all rights of recovery against the solvent company before OIGA is responsible in damages. The mere fact that more than one company with solvent insurers may be involved does not alter the interpretation of the language contained in R.C.
In support of our conclusion that a party must exhaust all potential insurance coverage before proceeding against the OIGA, we set forth the following rationale. The purpose behind the formation of the OIGA is to provide a degree of *462
protection to insureds and injured parties against insolvent insurance companies This purpose is specifically set forth in R.C.
"The purposes of sections
In order to accomplish this, the General Assembly created the OIGA. Under this statutory scheme, the General Assembly imposes upon those insurance companies who transact business in the state of Ohio and make a profit from the sale of insurance, whether it be auto, professional malpractice, or other forms of insurance, a duty to protect our citizens against insolvent insurance companies. The OIGA assesses every insurance company doing business in the state of Ohio and places these assessments into a state fund, which is administered by a board of directors selected pursuant to R.C.
Without the OIGA, an insured would be totally unprotected when he or she has a valid claim against an insolvent insurance company. The OIGA provides a level of protection up to $300,000, or the maximum level of coverage contained in the policy of the insolvent insurance company, whichever is less. Therefore, an individual may receive protection up to the $300,000 limit of coverage without fear of an insurer's insolvency. However, beyond that level, an insured has no further protection. Absent the OIGA, an injured party may be limited to the individual tortfeasor's personal assets, which may be far less than the protection afforded by the OIGA.
Appellant also makes several public policy arguments in support of her interpretation of R.C.
Although we agree that such an interpretation of R.C.
In the case sub judice, appellee had coverage in the amount of $1.4 million. However, when his insurer became insolvent, coverage was capped at $300,000. Appellee is therefore personally liable for any amount beyond $300,000. Pursuant to our interpretation of R.C.
If a plaintiff and the OIGA are unable to settle their claims, a trial is necessary, and the plaintiff does not eliminate the need for trial by settling with the other potential tortfeasors. Further, judicial economy is enhanced when all possible parties are joined and claims are litigated in one proceeding. This could also eliminate the need for subsequent contribution actions, as issues regarding a specific tortfeasor's percentage of liability would be determined in one proceeding.
Based upon the above reasons, we overrule appellant's first assignment of error.
We will not disturb the trial court's imposition of dismissal unless the dismissal was an abuse of the trial court's discretion. Loynd v. Scott Molders, Inc. (1990),
We find that the trial court's dismissal of appellant's cause of action against appellee was an abuse of discretion. Although appellee would not be liable for damages up to or including $300,000, as appellant failed to exhaust all rights of recovery against the solvent insurance companies of other tortfeasors, appellee would be personally liable for any judgment above $300,000.
However, pursuant to Fidelholtz v. Peller (1998),
Appellant's second assignment of error is sustained.
For the foregoing reasons, the judgment of the Court of Common Pleas of Morgan County is hereby affirmed in part and reversed in part, and the cause is remanded.
Judgment accordingly.
FARMER, J., concurs.
WILLIAM B. HOFFMAN, P.J., concurs in part and dissents in part.
Dissenting Opinion
I concur in the majority's analysis and disposition of appellant's second assignment of error. However, I respectfully dissent from the majority's decision to overrule appellant's first assignment of error.
The majority finds, and I agree, that appellant's claim against appellee is a "covered claim" under R.C.
To find otherwise would impede the public policy favoring settlement of claims. To require exhaustion of all possible coverage of joint tortfeasors before the plaintiff may access the guarantee fund would force a plaintiff to reject any and all settlement offers by any one or more joint tortfeasors until settlement or final judgment was rendered with respect to all. To do otherwise would jeopardize the plaintiff's access to the guarantee fund. That would lead to unnecessary litigation expenses and use of valuable court time. *465
I further agree with appellant that to require exhaustion distorts proportional liability, making liability more a function of the total insurance coverage the joint tortfeasors have available, as opposed to each individual tortfeasor's relative faults. To that extent exhaustion contravenes or impedes the concepts of proportional contribution embodied in R.C.