2003 Ohio 5723 | Ohio Ct. App. | 2003
Lead Opinion
{¶ 2} The Wrights contend the trial court erred in finding that a 1997 insurance policy issued by MedAmerica to Miami Valley Hospital (Cecilia Wright's employer) was validly cancelled prior to the date of the traffic accident underlying the present litigation. The Wrights also contend the trial court erred in finding that MedAmerica was not required to offer uninsured/underinsured motorist coverage when issuing a 1998 insurance policy to Miami Valley Hospital. We conclude that the 1997 policy was properly cancelled with the mutual assent of the contracting parties. We also conclude that MedAmerica was not required to offer uninsured/underinsured motorist coverage in connection with the 1998 policy, which does not constitute an "automobile liability or motor vehicle liability policy of insurance" as that phrase is defined under the applicable version of R.C. §
{¶ 4} James Wright, Sr., the vehicle's owner, carried motor vehicle liability insurance through State Farm with liability limits of $50,000 per person and $100,000 per accident. The limits of this policy, which included underinsured motorist coverage, were exhausted by payment of $50,000 to another injured passenger (not a party herein) and an agreement to pay $50,000 to Cecilia Wright as executrix of the estate of James Wright, Jr., for his wrongful death, for the benefit of his sisters.
{¶ 5} On the date of the accident, Cecilia Wright was a part-time employee of Miami Valley Hospital, but she was not acting within the scope of her employment at the time of the accident. Miami Valley Hospital was a named insured under separate 1997 and 1998 excess liability insurance policies issued by MedAmerica. Although the stated policy period for the 1997 policy was July 1, 1997, through July 1, 2000, the policy contains endorsement number 3AB, indicating that it was cancelled effective January 1, 1998. The stated policy period for the 1998 policy was January 1, 1998, through July 1, 2000. The 1997 and 1998 policies do not contain express uninsured or underinsured motorist ("UM/UIM") coverage, and MedAmerica does not claim that it timely offered UM/UIM coverage or that it obtained a timely rejection of UM/UIM coverage under either policy. While the 1997 policy does not include any rejection of UM/UIM coverage, the 1998 policy includes an endorsement, effective April 1, 2000, reflecting Miami Valley Hospital's rejection of UM/UIM coverage. Given that the accident occurred on July 2, 1999, this endorsement was not then in effect.
{¶ 6} On June 29, 2001, Cecilia Wright, individually and as executrix of the estate of James Wright, Jr., and James Walter Wright, through his mother, filed this action against MedAmerica, alleging that they qualified as insureds and asserting entitlement to underinsured motorist benefits under the 1998 policy. During the course of discovery, the Wrights became aware of the 1997 policy. Although the Wrights did not amend their complaint to include claims under the 1997 policy, the parties stipulated, for purposes of the summary judgment motions, that the Wrights' claims included both the 1997 and the 1998 MedAmerica policies.
{¶ 7} The parties ultimately filed cross motions for summary judgment. In a February 20, 2003, decision, the trial court sustained the motion filed by MedAmerica and overruled the motion filed by the Wrights. In so doing, the trial court found that the 1997 policy was cancelled prior to the date of the accident, and that the 1998 policy did not qualify as an "automobile liability or motor vehicle liability policy of insurance" under R.C. §
{¶ 9} "The Trial Court Erred In Denying Plaintiffs' Summary Judgment Motion Seeking UM/UIM Benefits And Granting The Insurer's Summary Judgment Motion As To The 1997 Policy When The Policy Provides Plaintiffs With UM/UIM Coverage By Operation Of Law Under The 1994 Version Of R.C. §
{¶ 10} We review the appropriateness of summary judgment de novo.Koos v. Cent. Ohio Cellular, Inc. (1994),
{¶ 11} On appeal, the Wrights contend that the S.B. 20 version of R.C. §
{¶ 12} Upon review, we find no error in the trial court's determination that MedAmerica and Miami Valley Hospital mutually agreed to cancel the 1997 policy prior to the accident on July 2, 1999. As noted above, the 1997 policy includes endorsement number 3AB, signed by a representative of MedAmerica,3 which purports to cancel the policy effective January 1, 1998. MedAmerica cited this endorsement in its summary judgment motion before the trial court. In response, the Wrights argued, as they do now, that the endorsement does not reflect Miami Valley Hospital's assent to the cancellation. In order to rebut this argument, MedAmerica provided the trial court with a reply memorandum incorporating by reference an affidavit from Dale E. Creech, Jr., general counsel for Premier Health Partners.4 In relevant part, Creech averred as follows:
{¶ 13} "3. I am familiar with the terms and conditions of the 1997 MedAmerica policy, Policy No. MAI-EX-1002/97 (the 1997 MedAmerica Policy) issued by MedAmerica International Insurance, Ltd. to Miami Valley Hospital, et al. . . .
{¶ 14} "4. By express agreement of the parties to the 1997 MedAmerica Policy, the 1997 policy was to be cancelled effective January 1, 1998. This agreement was set forth in Endorsement No. 3AB of the 1997 policy."
{¶ 15} Although the trial court did not identify the evidentiary basis for its finding that MedAmerica and Miami Valley Hospital mutually agreed to cancel the policy prior to the July 2, 1999, accident date, it appears to have relied on the endorsement and Creech's affidavit. The Wrights insist, however, that this evidence did not entitle MedAmerica to summary judgment for two reasons. First, they contend that interpretation of an insurance policy is a matter of law for a court to decide, and the affidavit constitutes an attorney's inadmissible interpretation of the endorsement. Second, they argue that even if the trial court properly considered the affidavit, it fails to demonstrate that numerous other named insureds assented to the cancellation.
{¶ 16} We conclude that Creech's affidavit does not impermissibly interpret the policy endorsement. Creech simply averred that the parties agreed to cancel the 1997 policy, as memorialized by the endorsement. Furthermore, the numerous other named insureds were not required to give individual assent to the cancellation. As indicated in his affidavit, Creech served as general counsel for Premiere Health Partners. The record reveals that Premiere Health Partners is "a joint operating company over MedAmerica Health Systems," an organization that the Wrights concede operates Miami Valley Hospital. (See Gutman depo., Doc. #19 at 4; Appellants' brief at 6 n. 1). The record also contains uncontroverted evidence that in his capacity as general counsel for Premiere Health Partners, Creech acts on behalf of Miami Valley Hospital. (See, e.g., Gutman depo. at 7-8; Robinson depo. at 6; Appendix to Appellants' brief at Exh. 3, UM/UIM endorsement signature page). Thus, Creech's affidavit establishes that MedAmerica and Miami Valley Hospital mutually agreed to cancel the 1997 policy. Notably, Miami Valley Hospital is the first named insured in that policy. A provision of the policy expressly provides that the first named insured "is authorized to act on behalf of all named insureds and other insureds with respect to the giving . . . of notice of cancellation[.]"5 (Appendix to Appellants' brief at Exh. 2, p. 40). In light of this provision, Miami Valley Hospital acted on behalf of all insureds when it and MedAmerica mutually agreed to cancel the 1997 policy.6 Therefore, we reject the Wrights' argument that the cancellation was ineffective because the numerous other named insureds did not consent.7
{¶ 17} Finally, we find no merit in the Wrights' alternative argument that the cancellation failed to comply with various statutory requirements. In particular, the Wrights cite R.C. §
{¶ 18} For the foregoing reasons, we conclude that the trial court properly found that MedAmerica and Miami Valley Hospital mutually agreed to cancel the 1997 policy prior to the July 2, 1999, accident date. Accordingly, the Wrights are not entitled to underinsured motorist benefits under that policy, and we overrule their first assignment of error.
{¶ 20} "The Trial Court Erred In Denying Plaintiffs' Summary Judgment Motion Seeking UM/UIM Benefits And Granting The Insurer's Summary Judgment Motion As To The 1998 Policy When The Policy Provides Plaintiffs With UM/UIM Coverage By Operation of Law Under The 1997 Version Of R.C. §
{¶ 21} In support of this assignment of error, the Wrights advance two arguments. First, they contend the trial court applied the wrong version of R.C. §
{¶ 22} In response, MedAmerica appears to concede that the trial court applied the wrong version of R.C. §
{¶ 23} "The trial court erred when it determined that the 1998 MedAmerica policy was an `umbrella policy' as that term is judicially defined by the Second Appellate District."9
{¶ 24} Upon review, we agree that the trial court applied the wrong version of R.C. §
{¶ 25} "(1) Any policy of insurance that serves as proof of financial responsibility, as proof of responsibility is defined in division (K) of section
{¶ 26} "(2) Any umbrella liability policy of insurance."
{¶ 27} The later version of R.C. §
{¶ 28} On appeal, the Wrights do not quarrel with the trial court's finding that the 1998 policy does not serve as proof of financial responsibility under R.C. §
{¶ 29} The crucial issue is whether the 1998 policy qualifies as an umbrella liability policy of insurance under the H.B. 261 version of R.C. §
{¶ 30} "* * * The 1998 MedAmerica policy itself does not require that the insured purchase underlying insurance to cover the minimum retained amounts of one and two million dollars. However, this fact, in and of itself, does not mean the 1998 MedAmerica policy is not an umbrella policy. This Court takes the view that the 1998 MedAmerica policy was an umbrella policy regardless of whether the insured chose to purchase an underlying policy. Under the 1998 MedAmerica policy, the insured had the option to remain self-insured up to the retained amounts. However, for any claim beyond what would have been the self-insured amount, the MedAmerica policy still would have provided `umbrella coverage.'"11 (Doc. #44 at 5).
{¶ 31} Having reviewed the 1998 policy and relevant law, we disagree with the trial court's finding that the policy qualifies as an umbrella liability policy of insurance. It is undisputed that the 1998 policy did not require Miami Valley Hospital to purchase any underlying insurance. The policy expressly provides that MedAmerica's obligation to indemnify Miami Valley Hospital arises "only after the retained amounts have been paid, whether or not the insured obtains insurance with respect to all or part of the retained amount." In other words, the 1998 policy provided Miami Valley Hospital with coverage against claims exceeding a certain "retained amount," but the hospital remained responsible for the retained amount. In this case, Miami Valley Hospital elected to purchase other insurance to cover the retained amount. The 1998 policy did not require Miami Valley Hospital to purchase that insurance, however, and therefore it cannot be said that the 1998 policy provided "umbrella" coverage.
{¶ 32} In reaching this conclusion, we note first that Ohio law distinguishes between "umbrella" policies and "excess" liability policies.12 "Umbrella policies are different from standard excess insurance policies in that they are meant to fill gaps in coverage both vertically, by providing excess coverage, and horizontally (by providing primary coverage). [Citations omitted.] `The vertical coverage provides additional coverage above the limits of the insured's underlying primary insurance, whereas the horizontal coverage is said to "drop down" to provide primary coverage for situations where the underlying insurance provides no coverage at all.'" Pillo v. Stricklin, Stark App. No. 2000-CA-201, 2002-Ohio-363. Other Ohio courts also have recognized that umbrella policies provide both vertical coverage when an underlying policy has been exhausted and horizontal coverage to fill gaps in the coverage provided by an underlying policy, whereas excess policies merely provide vertical coverage. See, e.g., McNeeley v. Pacific Employers Ins.Co., Franklin App. No. 02AP-1217, 2003-Ohio-2951; Cincinnati Ins. Co. v.Lang, Lake App. No. 2002-L-063, 2003-Ohio-3267; Ponser v. St. Paul Fire Marine Ins. Co., Licking App. No. 2002CA00072, 2003-Ohio-4377;American Special Risk Ins. Co. v. A-Best Products, Inc. (N.D.Ohio 1997),
{¶ 33} In the case before us, we need not dwell on the foregoing distinction because it is widely recognized that "[b]oth true excess and umbrella liability policies require the existence of a primary policy as a condition of coverage." Russ Segalla, Couch on Insurance 3d (1999) 220-37, Section 220:32 (emphasis added); see also National Sur.Corp. v. Ranger Ins. Co. (8th Cir. 2001),
{¶ 34} The 1998 MedAmerica policy in the present case did not require Miami Valley Hospital to maintain an underlying primary insurance policy. Therefore, the 1998 policy is not a true umbrella policy of insurance. The fact that Miami Valley Hospital voluntarily elected to purchase one or more separate insurance policies to cover the retained amount does not alter this conclusion. As noted above, the relevant inquiry is whether the 1998 policy required the hospital to purchase underlying insurance, not whether it happened to do so. In addition to being supported by the case law cited above, the foregoing conclusion is sound as a matter of policy. In our view, it would be unduly burdensome to require an insurance company, like MedAmerica, to keep tabs on Miami Valley Hospital to determine if and when it purchases underlying insurance to cover the retained amount. If the voluntary purchase of underlying insurance by Miami Valley Hospital could render the 1998 policy an umbrella policy, then an umbrella policy under R.C. §
{¶ 35} Finally, we find no merit in the Wrights' argument that MedAmerica previously admitted that its 1998 policy came within the scope of R.C. §
{¶ 36} Although we agree with the Wrights that the trial court applied the wrong version of R.C. §
YOUNG, J., concurs.
Dissenting Opinion
{¶ 38} I agree that the MedAmerica policy is not within the R.C.
{¶ 39} I do not agree, however, with the distinction between an umbrella liability policy and other excess liability policies in Pillov. Stricklin (Feb. 5, 2001), Stark App. No. 2000-CA-0201,14 which the majority adopts and follows. The distinction is largely academic. See Holme's Appleman On Insurance, 2d. (1996), Volume 1, Section 2.16. Whether an excess liability policy also "drops down" to provide underlying coverage seems to me to be immaterial to the two-tier test the General Assembly devised when it enacted R.C.
