Fraley v. Estate of Oeding

• Decision Date: 15 October 2012
• Docket Number: No. CA2011–09–180.,CA2011–09–180.
• Citation: 981 N.E.2d 911
• Parties: David Fraley d.b.a. FRALEY TRUCKING, Plaintiff–Appellant, v. Estate of Timothy J. OEDING, Deceased, et al., Defendants–Appellees.
• Court: Ohio Court of Appeals

981 N.E.2d 911

David Fraley d.b.a. FRALEY TRUCKING, Plaintiff–Appellant,

v.Estate of Timothy J. OEDING, Deceased, et al., Defendants–Appellees.

No. CA2011–09–180.

Court of Appeals of Ohio, Twelfth District, Butler County.

Oct. 15, 2012.

Repper, Pagan, Cook, Ltd., Christopher J. Pagan, Middletown, OH, for plaintiff-appellant.

Smith, Rolfes & Skavdahl Company, LPA, James P. Nolan II, Cincinnati, OH, for defendants-appellees, Estate of Timothy J. Oeding, J & R Equip. & Storing, and Auto Owners Ins.

RINGLAND, J.

{¶ 1} Plaintiff-appellant, David Fraley d.b.a. Fraley Trucking (“Fraley”), appeals from a decision of the Butler County Court of Common Pleas dismissing his action against defendants-appellees, the Estate of Timothy J. Oeding (“Oeding”), J & R Equipment and Storing (“J & R”), and Auto–Owners Insurance Company (“Auto–Owners”), for lack of personal jurisdiction. For the reasons outlined below, we reverse the trial court.

{¶ 2} In late 2008, a collision occurred whereby Oeding, who was driving a motor vehicle while in the scope of his employment with J & R, hit a tractor-trailer owned by Fraley. This collision occurred in Spencer County, Indiana. Oeding and J & R are residents of Indiana, while Fraley is a resident of Ohio. The collision resulted in the death of Oeding, injury to the driver of Fraley's tractor-trailer, and damage to Fraley's tractor-trailer. Auto–Owners, the insurer of J & R and Oeding, conducted an investigation to determine liability. As a part of the investigation, Auto–Owners placed a hold on Fraley's tractor-trailer. This hold lasted approximately five months.

{¶ 3} On November 16, 2010, Fraley filed a complaint in the Butler County Court of Common Pleas against J & R, Oeding, and Auto–Owners alleging several causes of action, including negligence that resulted in personal injury to Fraley's driver and property damage to Fraley's tractor-trailer. The complaint also included a claim for the intangible economic loss of use of Fraley's tractor-trailer because the hold prevented him from leasing the tractor-trailer as a part of his business, which is located in Butler County, Ohio. In response to the complaint, appellees filed a motion to dismiss pursuant to Civ.R. 12(B)(2) for lack of personal jurisdiction.

{¶ 4} Prior to the trial court ruling on the motion to dismiss, the investigation conducted by Auto–Owners concluded that J & R's employee was responsible for causing the collision. Subsequently, Auto–Owners made payment to Fraley for injuries sustained by Fraley's driver and the physical damage to Fraley's tractor-trailer. However, the parties were unable to reach an agreement on the amount to be paid to Fraley as compensation for the economic loss of use of his tractor-trailer.

{¶ 5} Following the settlement of the majority of claims, the motion to dismiss was pending for Fraley's remaining claim for the loss of economic use of his tractor-trailer. In opposition to the motion to dismiss, Fraley contended that the trial court had personal jurisdiction, because Auto–Owners, as an agent of J & R, transacted business in Ohio, caused tortious injury in Ohio, and had a license to do business in Ohio. Nevertheless, the trial court found that it could not assert personal jurisdiction over an out-of-state defendant solely because its insurance company did business in the injured party's state. Furthermore, the trial court found that Fraley was barred from maintaining an action directly against Auto–Owners as the insurer because he had not yet obtained a judgment against J & R and Oeding, the insured. The trial court granted the motion to dismiss for lack of personal jurisdiction.

{¶ 6} Fraley now appeals from the trial court's decision granting the motion to dismiss, and raises one assignment of error for review.

{¶ 7} Assignment of Error No. 1:

{¶ 8} THE TRIAL COURT ERRED IN GRANTING THE MOTION TO DISMISS.

{¶ 9} On appeal, Fraley argues that he should be able to maintain a direct action against Auto–Owners. However, he concedes that a third party is precluded from initiating a direct action against an insurer without first obtaining a judgment against the insured on the basis of R.C. 3929.06 and Peyko v. Frederick, 25 Ohio St.3d 164, 495 N.E.2d 918 (1986).¹ Consequently, we need only address Fraley's argument that due process and Ohio's long-arm statute, R.C. 2307.382, allow the trial court to assert personal jurisdiction over J & R and Oeding. In order for his argument to be persuasive, because there is no indication that J & R or Oeding themselves had any contact with Ohio, the actions of Auto–Owners, as the insurer of J & R and Oeding, must be imputed to them. Fraley asserts that because the Ohio Supreme Court has imputed the actions (or inactions) of the insurer to the insured in other instances, the actions of the insurer should be imputed to the insured for the purpose of determining personal jurisdiction. See Griffey v. Rajan, 33 Ohio St.3d 75, 77–78, 514 N.E.2d 1122 (1987); Peyko. It appears that whether the actions of an insurer can be imputed to the insured for the purpose of determining personal jurisdiction is an issue of first impression in Ohio.

{¶ 10} Ohio courts have stated that it is a “long-standing principle” that “the relationship between the insurer and the insured is purely contractual in nature.” Pilkington N. Am., Inc. v. Travelers Cas. & Sur. Co., 112 Ohio St.3d 482, 2006-Ohio-6551, 861 N.E.2d 121, ¶ 23, citing Nationwide Mut. Ins. Co. v. Marsh, 15 Ohio St.3d 107, 109, 472 N.E.2d 1061 (1984). Despite defining the relationship as contractual, there are some instances where the insurer's conduct has been imputed to the insured. Griffey;Peyko;see alsoMarks v. Allstate Ins. Co., 153 Ohio App.3d 378, 2003-Ohio-4043, 794 N.E.2d 129 (5th Dist.) (finding negotiations conducted by an insurer on the behalf of the insured created new rights and obligations between the insured and the third party). Furthermore, the Ohio Supreme Court has stated that it resists “the temptation to let [the] determination of whether [the insurer's] neglect is imputable to [the insured] rest upon a mechanical labeling of the relationship between an insurer and its insured.” Griffey at 77–78, 514 N.E.2d 1122.

{¶ 11} For example, in Griffey, in discussing whether an insured is responsible for the inaction of the insurer for purposes of a Civ.R. 60(B)(1) motion for relief from a default judgment on the basis of excusable neglect, the Ohio Supreme Court found that the insured was responsible for the insurer's neglect. Id. at 78, 514 N.E.2d 1122. The court rationalized that similar to an attorney-client relationship, the insured has an opportunity to choose his insurer. Id. Both have a contractual relationship with a client, handle litigation for the client, and assume an obligation to third parties interested in the matter. Id. Consequently, the court found that the failure of the insurer to file an answer on behalf of the insured was imputable to the insured.

{¶ 12} Similarly, in Peyko v. Frederick, 25 Ohio St.3d 164, 495 N.E.2d 918, the Ohio Supreme Court stated that “[t]he defendant's insurer conducts the pretrial negotiations and litigation and approves any offers of settlement— all in the defendant's name and for the defendant's benefit.” (Emphasis sic.) Id. at 166, 495 N.E.2d 918. The court concluded that while the insured is ultimately responsible for any payment of prejudgment interest, the insured has a cause of action against the insurer if the insurer's actions were the basis for the award. Id. at fn. 1.

{¶ 13} The above cases indicate that Ohio courts have imputed the actions of the insurer to the insured in certain instances, which we now extend for the purpose of determining personal jurisdiction in this case. J & R had the opportunity to choose Auto–Owners as its insurer. Auto–Owners also assumed an obligation to Fraley, a third party. Furthermore, Auto–Owners conducted negotiations on behalf of J & R and Oeding and for their benefit. Under the facts and circumstances of this case, we find that the actions of Auto–Owners may be imputed to J & R and Oeding for the purpose of establishing personal jurisdiction.

{¶ 14} Having found the actions of Auto–Owners to be imputable to J & R and Oeding, before determining whether these actions were sufficient to establish personal jurisdiction, we will discuss the standard of review for the trial court's grant of a motion to dismiss. We review a trial court's judgment granting a motion to dismiss for lack of personal jurisdiction de novo. Buflod v. Von Wilhendorf, LLC, 12th Dist. No. CA2006–02–022, 2007-Ohio-347, 2007 WL 210790, ¶ 10. If the court determines its jurisdiction without an evidentiary hearing, the plaintiff must only make a prima facie demonstration that the trial court has personal jurisdiction over the defendant. Giachetti v. Holmes, 14 Ohio App.3d 306, 307, 471 N.E.2d 165 (8th Dist.1984). A prima facie showing is made where the plaintiff produces sufficient evidence to allow reasonable minds to conclude that the trial court has personal jurisdiction over the defendant. Id.;Buflod at ¶ 10. “In making this determination, a trial court must ‘view allegations in the pleadings and the documentary evidence in a light most favorable’ to the plaintiff and resolve ‘all reasonable competing inferences' in favor of the plaintiff.” Buflod at ¶ 10, quoting Goldstein v. Christiansen, 70 Ohio St.3d 232, 236, 638 N.E.2d 541 (1994).

{¶ 15} To find that personal jurisdiction exists over a non-resident defendant, a trial court must complete a two-step analysis. First, the trial court must determine whether the defendant's conduct falls within Ohio's long-arm statute, R.C. 2307.382. Dahlhausen v. Aldred, 187 Ohio App.3d 536, 2010-Ohio-2172, 932 N.E.2d 949, ¶ 22 (12th Dist.); Kentucky Oaks Mall Co. v. Mitchell's Formal Wear, Inc., 53 Ohio St.3d 73, 75, 559 N.E.2d 477 (1990). Second, if it does, the trial court must determine whether...