IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Amy Stout,
:
Plaintiff-Appellant,
:
No. 02AP-628
v.
:
(C.P.C. No. 01CVC02-1919)
Travelers Property Casualty Ins. Co.,
:
(REGULAR CA LENDAR)
Defendant-Appellee.
:
_________________________________________________
O P I N I O N
Rendered on March 31, 2003
_________________________________________________
Maney & Brookes, and Mark C. Brookes, for appellant.
Gallagher, Sharp, Fulton & Norman, Margaret Mary Me ko,
Thomas J. Cabral, and Richard J. Scislowski, for appellee.
_________________________________________________
APPEAL from the Franklin County Court of Common Ple as.
McCORMAC, J.
{¶1}
Plaintiff-appellant, Amy Stout, appeals from a gran t of summary judgment
entered by the Franklin County Court of Common Plea s in favor of defendant-appellee,
Travelers Property Casualty Insurance Company ("Tra velers").
{¶2}
On August 11, 1993, plaintiff was injured in an aut omobile accident while
riding as a passenger in an automobile driven by Mi a Welch. Welch, who admitted fault
for the accident, was uninsured. At the time of th e accident, plaintiff was employed by a
subsidiary of Ralston Purina Co. ("Ralston"), altho ugh she was not riding in a company
vehicle, nor acting within the scope of her employm ent.
No. 02AP-628
2
{¶3}
In October 2000, plaintiff notified Ralston that, p ursuant to Scott-Pontzer v.
Liberty Mut. Fire Ins. Co. (1999), 85 Ohio St.3d 660, she would be pursuing a
claim for
uninsured motorist benefits against a business auto mobile policy issued by Travelers to
Ralston and its subsidiaries. Said policy provides $2,000,000 in liability coverage, but
carries a matching $2,000,000 deductible. Under th e deductible provision, Travelers is
required to "pay any part or all of the deductible
amount to effect settlement of any claim
or suit," and Ralston would reimburse Travelers for
such amounts. On February 26,
2001, plaintiff brought a claim against Travelers i n the Franklin County Court of Common
Pleas seeking to recover uninsured motorist coverag e under the insurance policy issued
to Ralston. On March 8, 2002, Travelers moved for
summary judgment on the grounds
that
it
had
offered,
and
Ralston
had
expressly
reje cted
the
inclusion
of
uninsured/underinsured motorist ("UM/UIM") coverage in the policy at issue; it was not
required to offer UM/UIM coverage in the policy pur suant to former R.C. 3937.18,
1
as the
matching deductible provision in the policy rendere d Ralston self-insured; and plaintiff's
seven-year delay in notifying Travelers of its clai m breached notice and subrogation
provisions in the policy.
{¶4}
On May 7, 2002, the trial court issued a decision a nd judgment entry
granting Travelers' motion for summary judgment. I n so doing, the trial court held that
Ralston's rejection of UM/UIM coverage in the polic y was invalid because Travelers' offer
of such coverage had failed to delineate the premiu m for such coverage as required
under Linko v. Indemn. Ins. Co. of N. Am. (2000), 90 Ohio St.3d 445, 449. Nonetheless,
the trial court went on to hold that the policy was
not subject to the requirements of former
R.C. 3937.18, because the matching deductible provi sion in the policy effectively
rendered Ralston self-insured. The trial court did not address Travelers' argument that
plaintiff had violated the policy's notice and subr ogation provisions. Plaintiff appeals from
the judgment of the trial court assigning the follo wing error:
{¶5}
"The trial court erred to the prejudice of plaintif f-appellant in sustaining
defendant-appellee's motion for summary judgment on
the grounds that Travelers'
1
The parties agree that, pursuant to Ross v. Farmers Ins. Group of Cos. (1998), 82 Ohio St.3d 281, sylla-
bus, the version of R.C. 3937.18 in effect on Octob er 1, 1992, applies in this case.
No. 02AP-628
3
insured was self-insured 'in a practical sense' and therefore Travelers policy is exempted
from the operation of R.C. 3937.18."
{¶6}
Because plaintiff's assignment of error arises out of the trial court's ruling on
a motion for summary judgment, we review the trial
court’s determination independently
and without deference. Brown v. Scioto Cty. Bd. of Commrs. (1993), 87 Ohio App.3d
704, 711. In conducting our review, we apply the s ame standard as the trial court, Maust
v. Bank One Columbus, N.A. (1992), 83 Ohio App.3d 103, 107: In accordance wit h Civ.R.
56, summary judgment may only be granted if, viewin g the evidence most strongly in
favor of the non-moving party, no genuine issue of
fact exists, the moving party is entitled
to judgment as a matter of law, and reasonable mind s can only come to a conclusion
which is adverse to the non-moving party.
Harless v. Willis Day Warehousing Co. (1978),
54 Ohio St.2d 64.
{¶7}
Plaintiff's lone assignment of error challenges the trial court's determination
that Ralston was self-insured and that its policy w ith Travelers was, therefore, not subject
to the requirements of former R.C. 3937.18. Former
R.C. 3937.18 provided, in relevant
part, as follows: "No automobile liability or motor vehicle liability policy of insurance * * *
shall be delivered or issued for delivery in this s tate * * * unless both * * * [UM and UIM
motorist coverages] are provided[.]"
2
In order to comply with this provision, an insura nce
company was required to provide any purchaser of au tomobile insurance with a
"meaningful offer" for UM/UIM coverage.
Linko, supra.
In order to constitute a
"meaningful offer," an offer was required to includ e a brief description of the UM/UIM
coverage, the premium for the coverage, and an expr ess statement of the limits of the
coverage. Id. Failure to include a "meaningful off er" of UM/UIM coverage in an offer to
sell automobile insurance resulted in the automatic extension of UM/UIM coverage by
operation of law. Gyori v. Johnston Coca-Cola Bottling Group, Inc. (1996), 76 Ohio St.3d
565, 567. However, the requirements of former R.C. 3937.18 did not apply to self-insured
entities, i.e., those that satisfied the financial responsibility requirements of R.C. 4509.45
2
Effective October 31, 2001, R.C. 3937.18 was amend ed to eliminate the requirement that UM/UIM cover-
age be offered in any automobile policy.
No. 02AP-628
4
other than by purchasing a contract of liability in surance. Grange Mut. Cas. Co. v.
Refiners Transport and Terminal Corp. (1986), 21 Ohio St.3d 47, 49.
{¶8}
In the present case, we are faced with the question
of whether a company
that purchased an automobile insurance policy with a deductible that matches the liability
limits of the policy qualifies as a self-insured, s uch that the requirements of former R.C.
3937.18 do not apply to it. This court recently ad dressed this precise issue in Dalton v.
Wilson, Franklin App. No. 01AP-014, 2002-Ohio-4015.
Dalton is attached in the
Appendix to this opinion. We adopt the reasoning t herein which contains an excellent
discussion of the law relating to this issue. In
Dalton, we held that a matching deductible
policy does not amount to self-insurance under
Gyori. Id. at ¶76. In reaching this
conclusion, we noted that the determination of whet her an entity is self-insured turns on
whether the entity or the insurance company bears t he ultimate risk of loss. Id. at ¶64.
An entity can be considered self-insured, only wher e it, rather than an insurance
company, bears the ultimate risk of loss. Id. In t he case of matching deductible policies,
the ultimate risk of loss is born by the insurance
company, as it is required to pay claims
regardless of whether the insured actually reimburs es it or not. Id. at ¶77. Accordingly,
the trial court erred in determining that Ralston w as self-insured and that the requirements
of R.C. 3937.18 did not apply to the insurance poli cy issued to it by Travelers. As a
result, UM/UIM coverage in an amount equal to the p olicy's liability coverage is implied
into the Travelers policy by operation of law. Gyori, supra. Plaintiff's assignment of error
is sustained.
{¶9}
Travelers argues, however, that the trial court's g rant of summary judgment
in its favor should be affirmed on an alternative b asis. According to Travelers, it is entitled
to summary judgment on plaintiff's claim because pl aintiff's seven-year delay in notifying
Travelers of its claim breached the policy's notice and subrogation provisions. In support
of this argument, Travelers points to the following language which appears in the policy
under the heading "BUSINESS AUTO CONDITIONS":
{¶10}
"
2. DUTIES IN THE EVENT OF ACCIDENT, CLAIM, SUIT OR LOSS
{¶11}
"a. In the event of 'accident,' claim, 'suit' or 'l oss,' you must give us or our
authorized representative prompt notice of the 'acc ident' or 'loss.' Include:
No. 02AP-628
5
{¶12}
"(1) How, when and where the 'accident' or 'loss' o ccurred;
{¶13}
"(2) The 'insured's' name and address; and
{¶14}
"(3) To the extent possible, the names and addresse s of any injured
persons and witnesses.
{¶15}
"* * *
{¶16}
"
5. TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO US
{¶17}
"If any person or organization to or for whom we ma ke payment under this
Coverage Form has rights to recover damages from an other, those rights are transferred
to us. That person or organization must do everyth ing necessary to secure our rights and
must do nothing after 'accident' or 'loss' to impai r them."
{¶18}
As a preliminary matter, we note that, because the
above provisions
constitute "conditions" of coverage rather than exc lusions, they apply to the UM/UIM
coverage that has been implied into the Travelers' policy by operation of law.
Heiney v.
Hartford, Franklin App. No . 01AP-1100, 2002-Ohio-3718, at ¶29-35, discretionar y appeal
allowed (2002), 97 Ohio St.3d 1481.
{¶19}
Travelers contends that plaintiff's failure to noti fy it of its claim against the
policy for more than seven years after the accident
breached the policy's notice and
subrogation provisions. Several weeks after the in stant case was argued, the Ohio
Supreme Court decided Ferrando v. Auto-Owners Mut. Ins. Co ., 98 Ohio St.3d 186,
2002-Ohio-7217, which, like the instant case, invol ved the question of whether a provider
of UM/UIM coverage may be released from its obligat ion to provide coverage due to the
failure of a claimant to promptly notify the insure r of a potential claim or to protect the
insurer's subrogation rights. In addressing the is sue, the Ferrando court established a
clear framework for determining whether a claimant' s alleged breach of a notice or
subrogation provision in a UM/UIM policy bars that
claimant from recovering UM/UIM
benefits under the policy. Specifically, the Ferrando court held that determining whether
an alleged breach of a notice or subrogation provis ion barred recovery required a two-
stage inquiry. Id. at ¶89. First, a court must de termine whether a notice or subrogation
provision has actually been breached. Id. Second, if the court determines that a breach
has occurred, it must determine whether the insurer has been prejudiced by that breach.
No. 02AP-628
6
Id. An insurer will be relieved of its obligation
to provide UM/UIM coverage as the result
of a breach of a notice or subrogation provision on ly when it has been prejudiced by such
breach. Id. at ¶1. However, where a breach is fou nd, prejudice is presumed, unless the
claimant presents some evidence to rebut that presu mption. Id. at ¶88.
{¶20}
As stated previously, the trial court did not addre ss the validity, if any, of
defendant's claims that plaintiff had violated the policy's notice and subrogation provisions
to the prejudice of defendant. Consequently, we re mand the case to the trial court to
consider these defenses in accordance with Ferrando.
Judgment reversed and case remanded.
BOWMAN and KLATT, JJ., concur.
McCORMAC, J., retired of the Tenth Appellate Distri ct,
assigned to active duty under authority of Section 6(C), Article
IV, Ohio Constitution.
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