Brown v. Gallagher

• Decision Date: 31 May 2013
• Docket Number: No. 12CA3332.,12CA3332.
• Citation: 993 N.E.2d 415
• Parties: John G. BROWN, Plaintiff–Appellant, v. Jason GALLAGHER, Defendant–Appellee.
• Court: Ohio Court of Appeals

993 N.E.2d 415

John G. BROWN, Plaintiff–Appellant,

v.Jason GALLAGHER, Defendant–Appellee.

No. 12CA3332.

Court of Appeals of Ohio, Fourth District, Ross County.

May 31, 2013.

James T. Boulger, Chillicothe, OH, for Appellant John G. Brown.

Thomas M. Spetnagel, Chillicothe, OH, for Appellee Jason Gallagher.

McFARLAND, P.J.

{¶ 1} John G. Brown (Plaintiff–Appellant herein) appeals the decision of the Chillicothe Municipal Court dismissing his complaint which sought a contractual right of indemnification from Appellee. Having reviewed the record, we find the trial court's judgment was not in error. Accordingly, we overrule Appellant's assignment of error and affirm the judgment of the trial court.

FACTS

{¶ 2} We recount the facts as previously set forth in the first consideration of this matter, Brown v. Gallagher, 179 Ohio App.3d 577, 2008-Ohio-6270, 902 N.E.2d 1037. In 2002, Appellant's vehicle collided into Appellee in Union Township, Ross County. At the time, Appellee was employed as a deputy sheriff with the Ross County Sheriff's Department. As a result of injuries he sustained in the incident, Appellee brought a civil suit against Appellant. Before the case came on for trial, the parties entered into a settlement agreement. As part of that agreement and in consideration of $87,500.00, Appellee executed a document entitled “Release of All Claims,” in which he agreed to indemnify Appellant for “any and all claims, liability, and expense, including attorney fees, for any claim or demand of any party, and any claim or demand of any third party” resulting from the auto collision. The dispute in this case centers around the indemnification agreement.

{¶ 3} Subsequent to the civil settlement, Appellant pleaded guilty to a charge of vehicular assault in the criminal case stemming from the same auto collision. Appellant was sentenced to 17 months in prison, though he was granted judicial release after serving only two. As part of Appellant's sentence, he was further ordered to pay $7,923.44 in restitution to the Ross County Sheriff's Department for leave payments the department had made to Appellee during his convalescence.¹

{¶ 4} As a result of being ordered to pay restitution in the criminal case, Appellant filed a complaint against Appellee in the Chillicothe Municipal Court for $7,923.44, based on the indemnification clause of the civil settlement agreement. Appellee then filed a motion to dismiss the complaint for failure to state a claim for which relief can be granted pursuant to Civ.R. 12(B). Appellant failed to respond to the motion. The trial court subsequently granted Appellee's Civ.R. 12(B) motion and dismissed the complaint.

{¶ 5} Appellant filed a timely appeal of the trial court's decision. This court agreed with Appellant's argument that the trial court erred in granting Appellee's Civ.R. 12(B) motion for failure to state a claim for which relief can be granted and sustained Appellant's assignment of error. Our decision further noted there is no clear public policy in Ohio preventing the enforcement of the indemnification clause at issue. The case was remanded for further proceedings.

{¶ 6} On January 14, 2011, Appellant re-filed his complaint for indemnification.² Appellee filed a timely answer. Eventually the parties filed a stipulation of facts for the trial court's review in rendering a final adjudication on the merits. The parties supplemented their factual stipulation with exhibits containing the various court entries in order to make them part of the evidentiary record. On June 11, 2012, the trial court issued its decision dismissing the case. The trial court found Appellant had failed to establish entitlement to recover from Appellee based on: (1) his failure to provide Appellee notice of the claim for restitution, and (2) Appellant's failure to provide Appellee an opportunity to defend against the claim for restitution. As a result, the current timely appeal ensued.

ASSIGNMENT OF ERROR

I. THE TRIAL COURT ERRED IN DENYING TO MR. BROWN HIS CONTRACTUAL RIGHT TO INDEMNIFICATION PROVIDED IN THE AGREEMENT WHICH SETTLED MR. GALLAGHER'S TORT CLAIMS AGAINST HIM.

A. STANDARD OF REVIEW

{¶ 7} Review of a trial court's application of the law to stipulated facts is de novo. Clark v. Butler, 4th Dist. No. 12CA3315, 2012-Ohio-5618, 2012 WL 6018027, at ¶ 9; see Wertz ex rel. Boyer v. Indiana Ins., 9th Dist. No. 21571, 2003-Ohio-5905, 2003 WL 22491734, at ¶ 4;Wayne Mut. Ins. Co. v. Parks, 9th Dist. No. 20945, 2002-Ohio-3990, 2002 WL 1800377, at ¶ 13;Cincinnati Ins. Co. v. Slutz, 5th Dist. No. CA–7109, 1987 WL 18538 (Oct. 13, 1987). In other words, we afford no deference to the trial court and conduct our own independent review. Clark, supra, citing State v. Browning, 190 Ohio App.3d 400, 2010-Ohio-5417, 942 N.E.2d 394, at ¶ 13 (4th Dist.); State v. Poole, 185 Ohio App.3d 38, 2009-Ohio-5634, 923 N.E.2d 167, at ¶ 18 (11th Dist.); White v. Emmons, 4th Dist. No. 11CA3438, 2012-Ohio-2024, 2012 WL 1595084, at ¶ 9. Upon review of the case sub judice, we reach the same conclusion as did the trial court.

ASSIGNMENT OF ERROR I

{¶ 8} Appellant seeks enforcement of the indemnification clause contained in the Release of All Claims Appellee signed in settlement of the bodily injury suit underlying this action. Appellant contends the issues arise only from the four corners of the release and indemnity clause. Appellant further contends Globe Indemn. Co. v. Schmitt, 142 Ohio St. 595, 53 N.E.2d 790 (1944), is inapplicable to these facts. In Appellant's “Conclusion” to his brief, he asserts: “The trial court erred in applying the Globe requirements for voluntary settlements to the restitution order.” In doing so, Appellant mischaracterized the trial court's application of the general indemnification principles cited in Globe. We find the trial court did not err in its application of the Globe requirements to the release and indemnification clause on which Appellant bases his claim. We begin our analysis with a review of the general principles of indemnification contained in Globe and other Ohio cases.

B. LEGAL ANALYSIS

{¶ 9} “Indemnity shifts the entire loss from one who has been compelled to make payment to the plaintiff to another who is deemed responsible for reimbursing the full amount. The right to indemnity exists when the relationship between the parties requires one to bear the loss for the other. This right may arise from common law, contract, or in some cases, statutes. When a judgment is obtained against the indemnitee, and indemnitor who has been given proper notice and an opportunity to defend the action falls in that class of non-parties who are bound by the outcome.” Portsmouth Insurance Agency v. Medical Mutual of Ohio, 188 Ohio App.3d 111, 2009-Ohio-941, 934 N.E.2d 940, ¶ 16;Blair v. Mann, 4th Dist. No. 98CA35, 1999 WL 228265 (Apr. 8, 1999).

{¶ 10} Indemnity agreements must be interpreted in the same manner as other contracts. Portsmouth Insurance Agency, at ¶ 18. See also Worth v. Aetna Cas. & Sur. Co., 32 Ohio St.3d 238, 240, 513 N.E.2d 253 (1987). The nature of an indemnity relationship is determined by the intent of the parties as expressed by the language used. Portsmouth Insurance Agency, ¶ 18. See also Cleveland Window Glass & Door Co. v. National Surety Co., 118 Ohio St. 414, 161 N.E. 280 (1928). All words used must be taken in their ordinary and popular sense, Glaspell v. Ohio Edison Co., 29 Ohio St.3d 44, 47, 505 N.E.2d 264, 267 (1987), and “[w]hen a * * * [writing] is worded in clear and precise terms; when its meaning is evident, and tends to no absurd conclusion, there can be no reason for refusing to admit the meaning which * * * [it] naturally presents.” Portsmouth Insurance Agency at ¶ 18 citing Lawler v. Burt, 7 Ohio St. 340, 350 (1857); Id. at 240–241, 513 N.E.2d 253.

{¶ 11} “When an indemnitor expressly agrees to indemnify an indemnitee except in certain specified instances, and it is determined that the exceptions do not pertain, the indemnitor is obligated to indemnify the indemnitee under the terms of the agreement.” Portsmouth Insurance Agency at ¶ 18 citing Allen v. Standard Oil Co., 2 Ohio St.3d 122, 443 N.E.2d 497 (1982), paragraph one of the syllabus. Id. at 241, 513 N.E.2d 253.

{¶ 12} In the case at bar, Appellant's right to indemnity arises from the following language contained in the Release of All Claims:

It is further understood and agreed that the undersigned will indemnify and hold harmless the above-named persons or parties and their insurers, successors, and assigns from any and all claims, liability, and expense, including attorneys' fees, for any claim or demand of any party, and any claim or demand of any third party, including those claiming consortium of any type or those claiming subrogation rights arising out of payments made to the undersigned individually, in a representative capacity, or on behalf of the undersigned as a result of the occurrence set forth herein. It is further understood that Plaintiff agrees to satisfy any and all liens, including but not limited to the Ohio Bureau of Worker's Compensation, arising from the claim on behalf of the plaintiff out of the settlement proceeds. It is further understood and agreed that the monies paid by Nationwide Mutual Insurance Company on behalf of John G. Brown's settlement of Plaintiff's claims, pursuant to this agreement, represent all sums due and owing to Plaintiff, including interest from the date of the agreement to the settlement to the date indicated below.

{¶ 13} The language contained in the terms of the release and indemnification clause at issue here clearly set forth a right to pursue a claim for indemnification. However, under the general principles of indemnification, there are other considerations which Appellant asked the trial court, and now this court, to ignore. The Supreme Court of Ohio has stated that when an indemnitee settles a claim, instead of litigating it, the indemnitee is...