Cnty. Risk Sharing Auth. v. State

• Citation: 2022 Ohio 4043
• Decision Date: 14 November 2022
• Docket Number: 2022-G-0013
• Parties: COUNTY RISK SHARING AUTHORITY, INC., Plaintiff-Appellee, v. THE STATE OF OHIO, OFFICE OF THE ATTORNEY GENERAL, et al., Defendants-Appellants.
• Court: United States Court of Appeals (Ohio)

2022-Ohio-4043

COUNTY RISK SHARING AUTHORITY, INC., Plaintiff-Appellee, v. THE STATE OF OHIO, OFFICE OF THE ATTORNEY GENERAL, et al., Defendants-Appellants.

No. 2022-G-0013

Court of Appeals of Ohio, Eleventh District, Geauga

November 14, 2022

Civil Appeal from the Court of Common Pleas Trial Court No. 2020 P 000044

Judgment Reversed and remanded

George V. Pilat, Mazanec, Raskin & Ryder Co., (For Plaintiff-Appellee).

Jack Morrison, Jr., and Nathan P. Woodward, Amer Cunningham Co LPA, (For Defendants-Appellants).

OPINION

JOHN J. EKLUND, J.

{¶1} The familiar philosophical conundrum of what would happen if an unstoppable force met an immovable object might aptly describe the conflict of the case before us. Appellant, the State of Ohio, appeals the Judgment of the Geauga County Court of Common Pleas granting Summary Judgment in favor of Appellee, the County Risk Sharing Authority, Inc. (CORSA). The parties have stipulated to all relevant facts and the effect of those stipulations has created an unstoppable force and an immovable object. On the one hand, the parties stipulate that R.C 940.07 unequivocally imposes a duty on the State to indemnify the Geauga Soil and Water Conservation District (District)-our unstoppable force. On the other hand, the parties have also stipulated that a valid insurance Coverage Agreement imposes a clear duty to indemnify the District on CORSA-our immovable object. Our resolution of this seeming quandary relies on a close reading of the relevant statute, Constitutional considerations, and acknowledgement that we are to presume that parties to a contract actually intend to bind themselves to mutual obligations.

{¶2} For the reasons stated below, we reverse the Judgment of the lower court and remand for further proceedings as outlined in this opinion.

Substantive and Procedural History

{¶3} On September 10, 2018, Gail Prunty was involved in an automobile accident during the course and scope of her employment with the District. The accident caused the death of a minor child and severe injuries to three others. Two separate lawsuits were filed against the District alleging that Prunty negligently caused the accident. The District put CORSA on notice of the lawsuits and CORSA filed answers on behalf of the District. Then, on behalf of the District, CORSA notified the Soil and Water Commission of the State of Ohio of the lawsuits.

{¶4} On January 15, 2020, CORSA filed a complaint for declaratory judgment against the State of Ohio, the District, the Board of Supervisors of the Geauga Soil and Water Conservation District (Board), and Prunty. CORSA sought a declaratory judgment that under R.C. 940.07, the State was solely responsible to defend and indemnify the District, Board, and Prunty in two lawsuits filed against these entities regarding the automobile accident caused by Prunty. This accident occurred while Prunty was in the employ of the District.

{¶5} The State filed a Motion for a More Definite Statement under Civ.R. 12(E) in which it challenged CORSA's standing and for failure to state a claim under Civ.R. 12(B)(6) against the District and the Board. The trial court denied this motion and the State filed its Answer and Counterclaim against CORSA, seeking a declaratory judgment that CORSA was obligated to defend and indemnify the District, the Board, and Prunty up to the $6,000,000 coverage limits provided in CORSA's Coverage Agreement. CORSA replied to the State's counterclaim and the State filed a second Motion for a More Definite Statement, which the trial court also denied.

{¶6} By agreement of the parties, discovery was held in abeyance pending stipulations. The Stipulations of Fact resolved all pertinent questions of material fact in this matter. The 68 Joint Stipulations of Fact included the following:

2. The Geauga County Soil and Water Conservation District ("District") is a political subdivision of the State of Ohio under the authority of O.R.C. § 940.03 * * *

***

6. Geauga County, Ohio is a member of CORSA under a written Coverage Agreement and Memorandum of Coverage under which CORSA provides certain protections, including automobile liability ***.

7. The coverage Agreement and Memorandum of Coverage issued by CORSA to Geauga County provide certain automobile liability coverage to the District subject to all terms, conditions, and exclusions contained therein.

***

12. At the time of the subject accident, the District was a Covered Party as that term is defined in the Coverage Agreement.

* * *

14. Each Member of CORSA must submit an application or annual renewal application disclosing information about the Member which CORSA's third-party actuary utilizes in evaluating risk and recommending an amount to include in the Membership Contribution that each Member will pay each year.

15. In October 2017, CORSA requested that Geauga County submit a renewal application and other information that would allow CORSA to process an evaluation of the risk presented by covering Geauga County * * * including the District, for the 2018 program year.

16. Part of the information Geauga County provided to CORSA concerned vehicles owned or used by the District * * *."

** *

49. All conditions precedent to a defense and indemnity [of the subject tort claims,] * * * for the District, the Board, and Prunty have been satisfied under the terms of the Coverage Agreement.

50. Based solely on the language of the Coverage Agreement and subject to all terms, conditions, limitations, and exclusions contained therein, CORSA would owe a defense and indemnity to the District, for liability arising from the matters alleged [in the subject tort claims]

** *

65. Based Solely on the language of O.R.C. § 940.07, the State of Ohio would be responsible to [defend and] indemnify the District [the Board, and Prunty] in the amount of any judgment or settlement [in the subject tort claims] * * * to the extent required by O.R.C. §940.07(D).

{¶7} After the parties filed Joint Stipulations of Fact, the State filed a modified discovery request on the issue of the terms, conditions, and limitations of CORSA's Coverage Agreement. CORSA's response was not satisfactory to the State and the State filed a motion to compel relative to its modified discovery request, which the trial court denied.

{¶8} The trial court's denial of the motion to compel was without prejudice. In its entry, the court said:

While it is probably true Defendants' discovery inquiries are relevant to the counterclaims on the non-State Defendants, such discovery does not seem relevant, or to possibly lead to the discovery of relevant information, as to the allegations of the Complaint regarding the extent of the State's duty to indemnify the non-State Defendants * * * Since resolution of this issue through dispositive motions may render the counterclaims * * * unnecessary or somehow change them, the Court is disposed to deny the Motion to Compel, without prejudice, so as to not delay possible summary resolution of this critical issue. The Discovery deadlines will be extended to permit such discovery in the future should it become necessary to do so, and, if Defendants are again dissatisfied with Plaintiff's responses at that time, another Motion to Compel will be reviewed again.

{¶9} Both the State and CORSA filed timely Motions for Summary Judgment. Both parties filed their oppositions on May 13, 2021. Seven days later, on May 20, 2021, the court issued its judgment entry granting CORSA's Summary Judgment Motion at 10:18 AM. At 3:56 PM on the same day, the State timely filed a Reply to CORSA's Brief in Opposition to the State's Summary Judgment Motion. The State appealed the trial court's decision to grant summary judgment. We reversed and remanded in Cnty. Risk Sharing Auth., Inc. v. State, 11th Dist. Geauga No. 2021-G-0014, 2022-Ohio-164 based on the trial court's issuance of its judgment entry prematurely without consideration of the State's reply brief and for the trial court to issue a meaningful summary judgment entry.

{¶10} On remand, the trial court again granted summary judgment in favor of CORSA. In its entry, the court concluded that R.C. 940.07 "imposes a duty upon the State to defend and indemnify this Soil and Water Conservation district regardless of the existence of the CORSA insurance policy." The court said that R.C. 940.07(D)(1) was unambiguous in that it "does not contain any language justifying the State's position in this lawsuit." The court further found that CORSA's insurance contract insured

all the vehicle of Geauga County and its various agencies, boards, commissions, or districts, not just the Soil and Water Conservation District. And it is the latter district alone which enjoys the state indemnification framework of ORC 940.07. Thus, the insurance agreement is not illusory, even if there is an exception to its application in this instance caused by ORC 940.07. Ultimately, even if inclusion of this particular District within the CORSA coverage might be characterized as unnecessary due to this particular statute, that conclusion cannot justify ignoring the clear language of this statute which imposes a mandatory indemnification duty on the State to the District, the Board, and its employees.

{¶11} The State timely appealed this decision raising three Assignments of Error.

Assignments of Error and Analysis

{¶12} The State's First Assignment of Error provides:

{¶13} "[1.] The trial court erred in granting the plaintiff-appellee's motion for summary judgment and denying the defendants-appellants' motion for summary judgment."

{¶14} We review de novo a trial court's order granting summary judgment. Hapgood v. Conrad, 11th Dist. Trumbull No 2000-T-0058, 2002-Ohio-3363, ¶ 13, citing Cole v Am. Industries...