Bentley v. Pendleton, 2004 Ohio 3848 (OH 7/9/2004), Case No. 03CA722.
| Decision Date | 09 July 2004 |
| Docket Number | Case No. 03CA722. |
| Citation | 2004 Ohio 3848 |
| Parties | Bryan P. Bentley, et al., Plaintiffs-Appellants, v. Carmen Pendleton, et al., Defendant-Appellee.<SMALL><SUP>1</SUP></SMALL> |
| Court | Ohio Supreme Court |
Robert W. Kerpsack, 21 East State Street, Suite 300, Columbus, Ohio 43215, Counsel for Appellants.
Michael L. Close and Dale D. Cook, 300, Spruce Street, Floor One, Columbus, Ohio 43213, and Stacy Lilly and Matthew, Grimm, 9200 South Hills Boulevard, Suite 300, Cleveland, Ohio 44147-3521, Counsel for Appellee.
DECISION AND JUDGMENT ENTRY
{¶1} This is an appeal from a Pike County Common Pleas Court summary judgment in favor of American Home Assurance Company, defendant below and appellee herein. The trial court determined that Bryan P. and Lisa Bentley, plaintiffs below and appellants herein, are not entitled to uninsured/underinsured motorist (UM/UIM) coverage under appellee's business auto policy that it issued to Bryan's employer, Wal-Mart Stores, Inc. (Wal-Mart). Appellants raise the following assignment of error for review:
{¶2} "The trial court erred to the prejudice of plaintiff-appellants, bryan and lisa bentley, in granting summary judgment in favor of defendant-appellee, american home assurance company, and denying plaintiff-appellants' motion for summary judgment on their claims for declaratory relief on american home assurance business auto policy number RM CA 320-96-52."
{¶3} Appellee raises the following cross-assignments of error:
{¶4} First cross-assignment of error:
{¶5} "The trial court erred in not finding that wal-mart rejected um/uim coverage."
{¶6} Second cross-assignment of error:
{¶7} "The trial court erred in failing to find that bentley was not an insured under the american home policy."
{¶8} Third cross-assignment of error:
{¶9} "The trial court erred in failing to find that there was no coverage under the american home policy as bentley was not occupying a covered auto."
{¶10} Fourth cross-assignment of error:
{¶11} "The trial court erred in failing to find that the gl fronting policy was not an automobile policy and not subject to ohio revised code section 3937.18."
{¶12} The parties do not dispute the underlying facts. On June 15, 1999, a three-car accident occurred when Carmen Pendleton failed to yield to on-coming traffic, crashing into Fred Bice's vehicle, which then crashed into Bryan's vehicle. At the time of the accident, Bryan was acting in the course and scope of his employment with Wal-Mart.
{¶13} Appellee and Wal-Mart entered into an "Indemnity Agreement," which provides: "Client will indemnify the Company against and Reimburse it in full for each Reimbursable Loss." Additionally, Wal-Mart executed a form rejecting Ohio UM/UIM coverage.
{¶14} Appellants subsequently filed a complaint against appellee and requested the trial court to declare that they are entitled to UM/UIM coverage under appellee's policy that it issued to Wal-Mart.
{¶15} The parties then filed cross-summary judgment motions regarding appellants' right to UM/UIM coverage under appellee's policy. Appellants asserted that: (1) they fell within the definition of an "insured" under appellee's policy; (2) appellee failed to properly offer UM/UIM coverage to Wal-Mart, resulting in such coverage being implied as a matter of law in an amount equal to the liability limit.
{¶16} Conversely, appellee argued that appellants are not entitled to UM/UIM coverage. Appellee contended that Wal-Mart is self-insured in the practical sense and thus exempt from the R.C. 3937.18 mandatory offering of UM/UIM coverage. Appellee argued that because Wal-Mart is self-insured in a practical sense and not subject to R.C. 3937.18, any purported failure to offer UM/UIM coverage in accordance with Linko v. Indemnity Ins. Co. of N. Am. (2000), 90 Ohio St.3d 445, 739 N.E.2d 338,2 could not result in UM/UIM coverage arising by operation of law.
{¶17} Appellants disputed appellee's claim that Wal-Mart is self-insured in a practical sense by arguing that the "MCS-90 endorsement" shows that appellee, not Wal-Mart, retains the ultimate risk of loss. The MCS-90 endorsement states:
{¶18} "The insurance policy to which this endorsement is attached provides automobile liability insurance and is amended to assure compliance by the insured, within the limits stated herein, as a motor carrier of property, with Sections 29 and 30 of the Motor Carrier Act of 1980 and the rules and regulations of the Federal Highway Administration (FHWA) and the Interstate Commerce Commission (ICC).
{¶19} In consideration of the premium stated in the policy to which this endorsement is attached, the insurer (the company) agrees to pay, within the limits of liability described herein, any final judgment recovered against the insured for public liability resulting from the negligence in the operations, maintenance or use of motor vehicles subject to the financial responsibility requirements of Sections 29 and 30 of the Motor Carrier Act of 1980 regardless of whether or not each motor vehicle is specifically described in the policy and whether or not such negligence occurs on any route or in any territory authorized to be served by the insured or elsewhere. Such insurance as is afforded, for public liability, does not apply to injury to or death of the insured's employees while engaged in the course of their employment, or property transported by the insured, designated as cargo. It is understood and agreed that no condition, provision, stipulation, or limitations contained in the policy, this endorsement, or any other endorsement thereon, or violation thereof, shall relieve the company from liability or from the payment of any final judgment, within the limits of liability herein described, irrespective of the financial condition, insolvency or bankruptcy of the insured. However, all terms, conditions, and limitations in the policy to which the endorsement is attached shall remain in full force and effect as binding between the insured and the company. The insured agrees to reimburse the company for any payment made by the company on account of any accident, claim, or suit involving a breach of the terms of the policy, and for any payment that the company would not have been obligated to make under the provisions of the policy except for the agreement contained in this endorsement.
{¶20} It is further understood and agreed that, upon failure of the company to pay any final judgment recovered against the insured as provided herein the judgment creditor may maintain an action in any court of competent jurisdiction against the company to compel such payment.
{¶21} The limits of the company's liability for the amounts prescribed in this endorsement apply separately, to each accident, and any payment under the policy because of any one accident shall not operate to reduce the liability of the company for the payment of final judgments resulting from any other accident."
{¶22} Appellants read the MCS-90 endorsement to mean that appellee bears the ultimate risk of loss under the policy.
{¶23} On December 2, 2003, the trial court granted summary judgment in appellee's favor and denied appellants' motion. The court determined that: (1) Wal-Mart is self-insured; (2) appellee possessed no duty to comply with former R.C. 3937.18 regarding the mandatory offering of UM/UIM coverage; and (3) as such, UM/UIM coverage could not be implied as a matter of law. Appellants filed a timely notice of appeal.
{¶24} In their sole assignment of error, appellants assert that the trial court erred by granting appellee summary judgment and by denying their summary judgment motion. Appellants argue that the court incorrectly determined that Wal-Mart was self-insured and thus not subject to R.C. 3937.18. Appellants recognize that appellee and Wal-Mart "entered into a `Reimbursement Agreement,' which provides that Wal-Mart Stores, Inc., shall bear the ultimate risk for claims against the American Home Assurance business auto policy in question." They assert, however, that the presence of the "Reimbursement Agreement" does not mandate a finding that Wal-Mart is self-insured because the policy includes an "ICC endorsement MCS-90." Appellants maintain that the MCS-90 endorsement states that appellee, not Wal-Mart, bears the ultimate risk of loss under the policy. Appellants also assert that Wal-Mart is not self-insured because it does not hold a financial responsibility bond or an R.C. 4509.45(D) self-insurance certificate.
{¶25} Essentially, the question we must resolve is whether the MCS-90 endorsement negates Wal-Mart's self-insured status. If Wal-Mart is self-insured, then appellee possessed no obligation to offer UM/UIM coverage in accordance with R.C. 3937.18 and Linko and thus, such coverage cannot arise by operation of law. Appellants basically concede that but for the MCS-90 endorsement, Wal-Wart is self-insured. See Appellants' Merit Brief at 2 (). Throughout their brief, appellants focus on the MCS-90 endorsement and argue that it negates any claim that Wal-Mart is self-insured. We, however, do not believe that the MCS-90 endorsement alters Wal-Mart's self-insured status. Therefore, we believe that appellee did not have a duty to comply with the mandatory offering of UM/UIM coverage under former R.C. 3937.18 and Linko. Consequently, UM/UIM coverage cannot arise by operation of law. Thus, appellants' claim that appellee's offer of UM/UIM coverage failed to comply with R.C. 3937.18 and Linko and that such coverage therefore arises by operation of law lacks merit.
{¶26} We initially note that when reviewing a trial court's decision regarding a ...
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