Grange Mut. Cas. Co. v. Refiners Transport and Terminal Corp.

• Decision Date: 02 January 1986
• Docket Number: No. 85-193,85-193
• Citation: 487 N.E.2d 310,21 Ohio St.3d 47,21 OBR 331
• Parties: , 21 O.B.R. 331 GRANGE MUTUAL CASUALTY COMPANY, Appellant, v. REFINERS TRANSPORT AND TERMINAL CORPORATION, Appellee.
• Court: Ohio Supreme Court

Page 47

21 Ohio St.3d 47

487 N.E.2d 310, 21 O.B.R. 331

GRANGE MUTUAL CASUALTY COMPANY, Appellant, v. REFINERS TRANSPORT AND TERMINAL CORPORATION, Appellee.

No. 85-193.

Supreme Court of Ohio.

Jan. 2, 1986.

Syllabus by the Court

The uninsured motorist provisions of R.C. 3937.18 do not apply to either self-insurers or financial responsibility bond principals.

On December 13, 1979, Frank Damiano, a truck driver employed by Refiners Transport and Terminal Corporation ("Refiners"), was fatally injured by an uninsured motorist. The motor vehicle accident occurred while the decedent was driving a tanker truck, owned by Refiners, in the course of his employment.

At the time of the accident, Refiners met state financial responsibility requirements for its truck fleet by utilizing a hybrid program consisting of a financial responsibility bond for the first $100,000 of loss coupled with excess insurance coverage, none of which contained uninsured motorist coverage. ¹ However, Damiano's personal automobile insurance policies, issued by appellant, Grange Mutual Casualty Company ("Grange"), did contain uninsured motorist coverage. Consequently, Grange settled with Damiano's estate for $140,000.

Thereafter, Grange filed a declaratory judgment action against Refiners alleging that Refiners was required to provide uninsured motorist coverage on its trucks.

Grange asserted that, as a self-insurer, appellee is obligated under R.C. 3937.18 to provide uninsured motorist coverage for the protection of its drivers. Refiners countered that it is not such an insurer and that in any event Ohio law does not require that uninsured motorist coverage be provided either under a financial responsibility bond or by a self-insurer. Refiners also produced a rejection of uninsured motorist coverage signed by a company official.

The trial court denied declaratory relief to Grange and the court of appeals affirmed. The appellate court reasoned that a self-insurer does not issue motor vehicle insurance policies. The court noted that there is no unequal bargaining position between the insured and the self-insurer because a self-insurer is in fact "dealing with himself." The court observed that Grange's position defied logic since it would require one to write a rejection notice to himself declining the coverage.

The cause is now before this court pursuant to the allowance of a motion to certify the record.

Kitchen, Messner & Deery and Paul S. Klug, Cleveland, for appellant.

Cronquist, Smith, Marshall & Weaver and John A. Valenti, Cleveland, for appellee.

CELEBREZZE, Chief Justice.

The issue raised by this appeal is whether an employer, who meets Ohio's financial responsibility laws other than by purchasing a contract of liability insurance, must comply with the requirements concerning uninsured motorist coverage contained in R.C. 3937.18 relative to employees injured in the course of employment while driving or occupying a vehicle owned by the employer. This precise question has not been considered by us before. However, past decisions of Ohio's appellate courts have embraced the issue, with conflicting outcomes.

For example, in Unigard Ins. Co. v. Green Cabs (1980), 67 Ohio App.2d 152, 426 N.E.2d 200 , the Court of Appeals for Franklin County concluded that where a taxicab company has filed a certificate of self-insurance pursuant to R.C. 4509.45(D), but has failed to reject uninsured motorist coverage pursuant to former R.C. 3937.18(A), ² the company must provide uninsured motorist coverage to an injured customer-passenger riding in a company cab. The court relied principally on that portion of R.C. 4509.45(D) which equates "* * * a certificate of self-insurance to a motor vehicle liability policy by the following language: ' * * * he will pay the same amounts that an insurer would have been obligated to pay under an owner's motor vehicle liability policy * * *.' " Id. at 155, 426 N.E.2d 200. The court reasoned that the intent of this proviso "* * * is to place a self-insurer in the same position as one who has purchased a motor vehicle liability policy." Id. at 156, 426 N.E.2d 200.

A contrary, and we believe better reasoned, result was reached by the Court of Appeals for Summit County in the more recent decision of Snyder v. Roadway Express, Inc. (1982), 7 Ohio App.3d 218, 455 N.E.2d 11. The Snyder court rejected the reasoning of Unigard, supra, concluding at 219, 455 N.E.2d 11 that "[w]e do not believe that R.C. 3937.18 was intended to apply to self-insurers." The court recognized, as did the appellate court in the case sub judice, that if the statute did apply to self-insurers, in addition to insurance carriers authorized to write motor vehicle liability insurance policies, it would result in the absurd "situation where one has the right to reject an offer of insurance to one's self * * *"; even if applicable, "we believe the insured's rejection must be presumed." Id.

As in the above cases, the instant appellant alleged in its complaint that Refiners was a self-insurer under R.C. 4509.45, which provides in relevant part:

"Proof of financial responsibility * * * may be given by filing any of the following:

"(A) A certificate of insurance * * *;

"(B) A bond as provided in section 4509.59 of the Revised Code;

" * * *

"(D) A certificate of self-insurance, as provided in section 4509.72 of the Revised Code, supplemented by an agreement by the self-insurer that, with respect to accidents occurring while the certificate is in force, he will pay the same amounts that an insurer would have been obligated to pay under an owner's motor vehicle liability policy if it had issued such a policy to the self-insurer."

However, Refiners sought to meet its financial responsibility requirements and to protect itself from claims, in part by purchasing a financial responsibility surety bond and in part by purchasing two excess insurance policies for larger claims. As such, it was not a "self-insurer" in the legal sense contemplated by R.C. 4509.45(D) and 4509.72, but rather in the practical sense in that Refiners was ultimately responsible under the term of its bond either to a claimant or the bonding company in the event the bond company paid any judgment claim.

As pertaining to our consideration of this action, appellee's excess insurance (over the first $100,000 of loss) is not relevant. In this regard, the parties agree that the first $100,000 of mandated coverage was secured by a bond. Further, the two companies that issued the excess insurance are not part of this action and appellant claims no proceeds from them in this suit.

The parties stipulated that appellee did not file a certificate of self-insurance. Solely at issue in this cause is the extent of financial responsibility for the first $100,000 of loss which appellee personally undertook to perform, secured by a financial responsibility bond.

Since we find that appellee's status was actually that of a bond principal and not a self-insurer, a conclusion that the requirements of R.C. 3937.18 are not applicable is even more compelling.

In Republic-Franklin Ins. Co. v. Progressive Cas. Ins. Co. (1976), 45 Ohio St.2d 93, 341 N.E.2d 600 , this court held that a financial responsibility bond is not liability insurance under Ohio's...