DEACONESS HOSP. OF CINN., OHIO v. AM. LIFE INS.
| Decision Date | 04 May 1990 |
| Docket Number | No. C-1-89-412.,C-1-89-412. |
| Citation | 736 F. Supp. 154 |
| Court | U.S. District Court — Southern District of Ohio |
| Parties | The DEACONESS HOSPITAL OF CINCINNATI, OHIO Plaintiff, v. AMERICAN LIFE INSURANCE COMPANY, and Gardner & White, Inc., Defendants. |
Stuart Dornette, Cincinnati Ohio, for plaintiff.
William Hardy, David Poast, Cincinnati Ohio, for defendants.
This matter is before the Court on a motion for summary judgment (Doc. No. 26) filed by defendant Gardner & White, Inc. ("GW") and an opposing memorandum (Doc. No. 31) submitted by plaintiff The Deaconess Hospital of Cincinnati, Ohio ("Deaconess"). GW moves for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.
OPINIONOn June 7, 1989, Deaconess, a non-profit hospital, filed suit against both GW, a specialist in employee benefit pension plan consultation, brokerage and administration, and American United Life Insurance Company ("AUL"), an insurance company which designs and administers pension plans and manages pension funds. Deaconess alleges that GW negligently designed and promoted an employee pension plan ("Plan") for Deaconess in 1973 and in 1976. Deaconess also alleges that GW negligently administered Deaconess's Plan after an amendment was made in 1981. The complaint contains allegations against AUL as well for its participation in the design and the administration of Deaconess's Plan from 1973 through March, 1989.
The crux of plaintiff's charges against GW is GW's alleged failure to advise Deaconess to include a benefit accrual formula ("accrual formula") in its Plan from 1973 through 1981.1 In 1981, GW recommended and Deaconess adopted an amendment which contained an accrual formula. Deaconess alleges that GW failed to administer the amended Plan as written in the years following 1981 until March, 1990.
GW urges the Court to grant summary judgment based on two separate grounds. First, GW contends that any cause of action or claim of negligence occurring prior to June 7, 1985 is barred by the applicable statute of limitations. Second, GW argues that all claims brought by Deaconess against GW are barred by the doctrine of laches.
The summary judgment procedure under Federal Rule of Civil Procedure 56 is designed to secure a just, speedy, and inexpensive determination of any action. Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). However, Rule 56(c) permits the Court to grant summary judgment as a matter of law only after the moving party has identified as the basis of its motion "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any" which demonstrate the absence of any genuine issue of material fact. Id. at 323, 106 S.Ct. at 2553. The party opposing a properly supported motion for summary judgment "may not rest upon mere allegations or denials of his pleading, but ... must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986) (quoting, First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968)). The evidence of the nonmovant is to be believed and all justifiable inferences are to be drawn in his favor. Anderson, 477 U.S. at 255, 106 S.Ct. at 2513 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970)). The function of the Court is not to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial. Anderson, 477 U.S. at 249, 106 S.Ct. at 2510. There is no genuine issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. Anderson, 477 U.S. at 249, 106 S.Ct. at 2510 (citing Cities Service, 391 U.S. at 288-289, 88 S.Ct. at 1592-1593). If the evidence is merely colorable, Dombrowski v. Eastland, 387 U.S. 82, 87 S.Ct. 1425, 18 L.Ed.2d 577 (1967) or is not significantly probative, Cities Service, 391 U.S. at 290, 88 S.Ct. at 1593, judgment may be granted. Anderson, 477 U.S. at 249, 106 S.Ct. at 2510.
The parties agree that Deaconess's claims of negligence against GW are grounded in Ohio law and that the applicable statute of limitations is Ohio Rev.Code § 2305.09(D). R.C. 2305.09(D), the general tort statute of limitations, provides that an action must be brought within four years of the date the cause of action accrues. Holsman Neon & Elec. Sign Co. v. Kohn, 34 Ohio App.3d 53, 516 N.E.2d 1284, 1286 (1986). GW asserts that a cause of action accrues when the negligence complained of occurs and that the negligent acts allegedly committed by GW in 1973, 1976, 1981 and each year thereafter until June 7, 1985 occurred and accrued when contributions were made, benefits were calculated and annuities were purchased, and consequently such claims are barred. GW assumes that each of Deaconess's claims constitute separate causes of action which accrued separately upon the payment by Deaconess of a premium. Therefore, GW argues that the statute of limitations was triggered anew with each accrual event and Deaconess cannot advance any claims of negligence occurring four years before the filing of this lawsuit or prior to June 7, 1985.
The Court of Appeals for the Sixth Circuit recently addressed the issue of when a negligence claim accrues under Ohio law, stating:
It has been recognized in Ohio law, for instance, that a cause of action generally accrues when the wrongful act is committed. citations omitted. ("A cause of action for negligence accrues when the negligent act is committed.") However, when an injury does not result immediately, the cause of action does not accrue until actual injury or damage ensues. citations omitted. Therefore, in determining when an action accrues, the Ohio courts focus on when the wrongful act is committed, unless the act does not give rise to injury immediately.
Vaughn v. J.C. Penney Co., Inc., 822 F.2d 605, 609-10 (6th Cir.1987). A cause of action does not accrue until actual damage or injury occurs, thereby completing the tort. See McPherson v. Cleveland Punch & Shear Co., 816 F.2d 249, 254 (6th Cir.1987) citing Children's Hospital v. Ohio Department of Public Welfare, 69 Ohio St.2d 523, 433 N.E.2d 187, 190 (1982); see also Kunz v. Buckeye Union Ins. Co., 1 Ohio St.3d 79, 437 N.E.2d 1194, 1196-97 (1982); Sladky v. Lomax, 43 Ohio App.3d 4, 538 N.E.2d 1089, 1091 (1988). More difficult to apply than articulate, this rule of law requires a court to determine when actual injury to the plaintiff occurred.
The Ohio courts give some guidance but no clear directives that can be easily adapted to the facts of this case. In Kunz, supra, the Supreme Court of Ohio concluded that plaintiffs' negligence claim against an insurer for failing to obtain proper insurance coverage for their equipment accrued when the equipment sustained a loss and not when the policy was issued or renewed. A different rule would require an insured to consult legal counsel whenever he consolidated or renewed an insurance, an onerous and impractical burden. Id. 437 N.E.2d at 1197. Similarly, taxpayers' claims against their accountants for negligent preparation of their income tax returns accrued when the plaintiffs were notified of an assessment against them by the Internal Revenue Service and not when the negligent advice was given. Sladky, 538 N.E.2d at 1091. So too, a hospital's suit against the Ohio Department of Public Welfare for wrongful withholding of payments was timely brought since its claim accrued when the money was actually withheld and not when the deductions were calculated and entered on the books of the department. Children's Hospital, 433 N.E.2d at 190; see also Investors REIT One v. Jacobs, 46 Ohio St.3d 176, 546 N.E.2d 206, 211 (1989) )
It is clear from the allegations in the complaint that Deaconess charges GW with continuous and ongoing negligence in its function as pension plan advisor for the hospital from 1973 through 1989. However, the Ohio Court of Appeals has rejected the application of the continuing injury doctrine to negligence claims brought against professionals such as accountants under R.C. 2305.09(D). Lee Turzillo Contracting Co. v. Touche Ross & Co., Slip Op. Nos. 51075, 51114 (Ohio App. October 9, 1986). Moreover, the Court of Appeals for the Sixth Circuit has noted the distinction between claims for asbestos injuries in...
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