Nationwide Mut. Ins. Co. v. Baker

• Decision Date: 27 October 1993
• Docket Number: No. C-920468,C-920468
• Parties: NATIONWIDE MUTUAL INSURANCE COMPANY, Appellant, v. BAKER, Admr., Appellee. *
• Court: Ohio Court of Appeals

Page 433

99 Ohio App.3d 433

651 N.E.2d 1

NATIONWIDE MUTUAL INSURANCE COMPANY, Appellant, v. BAKER, Admr., Appellee. ^*

No. C-920468.

Court of Appeals of Ohio, First District, Hamilton County.

Decided Oct. 27, 1993.

Douglas E. King, Cincinnati, for appellant.

Kenneth Heuck, Jr., Cincinnati, for appellee, Patricia Baker, Administrator.

PER CURIAM.

This cause came on to be heard upon the appeal, the record filed herein, the briefs and arguments.

This case involves the right of plaintiff-appellant Nationwide Insurance Company ("Nationwide") to set off certain payments made by fully insured joint tortfeasors to the Estate of Mae E. Hirschauer, deceased ("the Estate"), from its uninsured motorist coverage policy limits. Nationwide brings this appeal and assigns as error the decision of the trial court, in a declaratory judgment action, denying this right of setoff to it. We have sua sponte removed this case from the accelerated calendar.

The facts giving rise to this case are these. Mae Hirschauer was a passenger in a car driven by her daughter Bonnie J. Warren ("Warren"). Warren was driving her car southbound on I-71 in Greene County when it was struck by a hit-and-run driver. Warren's car spun out of control and was in turn struck by a tractor-trailer owned by Altruk Freight Systems, Inc. ("Altruk"). Mrs. Hirschauer was killed in the accident. The Estate filed suit against Altruk and others. Altruk, in turn, filed a third-party complaint against Warren. Warren had an insurance policy with Nationwide, with liability limits of $50,000 per person and $100,000 per occurrence. In the same policy Warren had uninsured and underinsured motorist coverage in those same amounts. A hit-and-run driver is definitionally an uninsured motorist under the Nationwide policy. The Estate claimed economic and non-economic damages in the amount of $618,406. By way of settlement the Estate received $169,000 from Altruk and $50,000 from Nationwide pursuant to its liability coverage of Warren, for a total of $213,900. ¹ No issue was raised about Nationwide's consent to this settlement.

Nationwide subsequently brought this declaratory judgment action in regard to whether it was entitled to a setoff of the $213,900 from its policy with Warren under the uninsured motorists provision of that contract. The trial court found R.C. 3937.18(E) to be controlling and, finding that no payment had been made under the uninsured motorist coverage, allowed no setoff to Nationwide. For the reasons which follow, we reverse the decision of the trial court.

In support of its right of setoff, Nationwide relies on paragraph three of Endorsement 1604 to its insurance policy with Warren. The endorsement, by its terms, is to amend the uninsured motorists coverage of the policy. ² The endorsement reads:

"The limits of this coverage and/or any amounts payable under this coverage will be reduced by any amount paid by or for any liable parties."

Nationwide argues that so long as the language of its policy provision allowing setoff from uninsured motorist limits is clearly stated and so long as the application of the provision does not result in the insured receiving less compensation than he or she would have received if injured solely by an uninsured motorist, the insurer is entitled to the setoff. In support of this position Nationwide relies on the combined holdings of James v. Michigan Mut. Ins. Co. (1985), 18 Ohio St.3d 386, 18 OBR 440, 481 N.E.2d 272, and In re Nationwide Ins. Co. (1989), 45 Ohio St.3d 11, 543 N.E.2d 89.

The Estate, on the other hand, argues that there is a clear statutory difference as to the right of setoff for uninsured motorists as opposed to underinsured motorists. R.C. 3937.18(A)(2) specifically allows for setoff for underinsured motorist coverage while its companion section on uninsured motorist coverage, R.C. 3937.18(A)(1), specifically does not. The Estate further argues that R.C. 3937.18(E) controls this case and, since Nationwide has made no payment under its uninsured motorist coverage, by statute it is not entitled to any setoff. The trial court clearly agreed with the Estate's argument on this point. While we find the Estate's arguments cogent, we believe the law as articulated by the Ohio Supreme Court compels us to reach a contrary result.

We find this case to be controlled by the holdings of James, supra, and In re Nationwide, supra, and particularly by the language in Nationwide Endorsement 1604. In James the insured relied on R.C. 3937.181(C), a predecessor statute now essentially subsumed in present R.C. 3937.18, and argued that the insurer should not be allowed a setoff from the underinsured limits of its policy because the insured, like the Estate in the case before us, had not been fully compensated for his injuries. The court agreed with the insured that R.C. 3937.181(C) created a right of subrogation in the insurer and held, in the first paragraph of the syllabus of that case, that the insurer could not seek a setoff from the limits of its coverage until the insured had been fully compensated. The court then, however, went on to find that the policy endorsement, which allowed a setoff from limits for all sums paid by any person or entity legally responsible for the injury, was not subject to...