Greyhound Food Management, Inc. v. City of Dayton
| Decision Date | 26 November 1986 |
| Docket Number | C-3-85-13.,No. C-3-84-997,C-3-84-997 |
| Citation | 653 F. Supp. 1207 |
| Parties | GREYHOUND FOOD MANAGEMENT, INC., et al., Plaintiffs, v. CITY OF DAYTON, et al., Defendants. FEDERAL INSURANCE COMPANY, et al., Plaintiffs, v. CITY OF DAYTON, et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
COPYRIGHT MATERIAL OMITTED
Robert P. Bartlett, Thomas H. Pyper, Dayton, Ohio, for defendant R.E. Holland.
William H. Thornburgh, Dayton, Ohio, for defendant C.E. Schultz.
James J. Gilvary, Dayton, Ohio, for defendant Bowser.
William L. Millard, Theodore M. Munsell, Columbus, Ohio, for defendant Meuser.
John E. Gotherman, Cleveland, Ohio, for amicus curiae Ohio Municipal Leagues.
Thomas F. Green, Dayton, Ohio, for plaintiffs.
Gregory C. Gibson, Dayton, Ohio, for plaintiffs in Case No. C-3-85-13.
Neil F. Freund, Jane M. Lynch, Dayton, Ohio, for defendant City of Dayton.
This case is before the Court on Defendant City of Dayton's Motion for Summary Judgment (Doc. # 85) and on Cross Motions for Summary Judgment of Plaintiffs Indiana Insurance Company (Doc. # 148) and Federal Insurance Company (Doc. # 147) and of Cross-Claim Plaintiff Cincinnati Insurance Company (Doc. # 149).
Defendant City of Dayton's Motion for Summary Judgment argues that Substitute Senate Bill No. 297 () bars claims under subrogation provisions of insurance or other contracts against municipalities, and accordingly that the claims against it of Indiana, Federal and Cincinnati Insurance Companies ("the insurers") are barred. The insurers, however, argue that the statute should not be read to bar their claims; however, they claim, if it is so read, that it is unconstitutional.
For the reasons set forth below, the Court rejects the insurers' argument that the statute is not applicable to their claims and their arguments that it violates Article II, Section 28 of the Ohio Constitution () and the obligation of contract clause of article I, section 10 of the United States Constitution. Ruling further, however, for the reasons set forth below, the Court finds that the statute does violate the equal protection, due process, and takings provisions of the United States Constitution and the due course provision of the Ohio Constitution. Accordingly, Defendant City of Dayton's Motion for Summary Judgment is overruled, and the insurers' cross motions for summary judgment are granted.
This case arises out of flooding at Sinclair Community College in Dayton, Ohio, in January, 1983, which Plaintiffs allege was caused, inter alia, by defective water pipes for which Defendant City of Dayton is liable. On December 11, 1984, Plaintiffs Greyhound Food Management, which operated a food service at Sinclair Community College, and Indiana Insurance Company, Sinclair Community College's insurer, which had become subrogated to Sinclair's interest by virtue of payment under the policy of insurance, filed suit against the City of Dayton and various other Defendants for the damages caused by that flooding. On January 9, 1985, Leviton Construction Company and Federal Insurance Company, Leviton's insurer, filed suit against the City of Dayton and other Defendants for damages caused by the same flooding (Case No. C-3-85-13). On January 18, 1985, co-Defendant C.E. Schulz and Son, insured by Cincinnati Insurance Company, filed a cross-claim against the City of Dayton for similar damages in the captioned cause. Those two lawsuits were consolidated for pretrial purposes by an Entry of this Court on March 20, 1985. The claims of Plaintiffs Indiana, and Federal and the cross-claim Plaintiff Cincinnati are based upon rights assigned to them by Sinclair Community College, Leviton Construction Company, and C.E. Schulz and Son, respectively, under subrogation clauses in those parties' insurance contracts.
During the pendency of this consolidated action, on March 27, 1986, the Ohio legislature passed Substitute Senate Bill No. 297, which became effective on April 30, 1986. Section 5 of that statute provides:
This act is hereby declared to be an emergency measure necessary for the immediate preservation of the public peace, health, and safety. The reason for the necessity is that, unless the collateral source provisions contained in Division (B) of Section 2744.05 of the Revised Code that apply to judgments obtained on or after November 20, 1985, against political subdivisions of this state in connection with causes of action for injury, death, or loss to persons or property caused by acts or omissions associated with governmental or proprietary functions, are immediately made applicable to causes of action against political subdivisions that arose before that date, that are not barred by a statute of limitations, and that were not the subject of a commenced trial prior to that date, situations will arise after November 20, 1985, in which some political subdivisions are required to pay the entire amount of judgments against them despite the fact that the plaintiffs involved already have been entirely or partially compensated from insurance or other collateral benefits for injury, death or loss experienced. Therefore, this act shall go into immediate effect.
Ohio Revised Code § 2744.05(B), as amended November 20, 1985, provides:
If a claimant receives or is entitled to receive benefits for injuries or loss allegedly incurred from a policy or policies of insurance or any other source, the benefits shall be disclosed to the court, and the amount of benefits shall be deducted from any award against a political subdivision recovered by the claimant. No insurer or other person is entitled to bring an action under a subrogation provision in an insurance or other contract against a political subdivision with respect to such benefits. Nothing in this division shall be construed to limit the rights of a beneficiary under a life insurance policy or the rights of sureties under fidelity or surety bonds.
(emphasis added)
Defendant City of Dayton argues that Ohio Revised Code § 2744.05(B), made retroactive by Senate Bill No. 297 to all cases not tried before November 20, 1985, bars the claims assigned by the subrogation clauses of insurance contracts of the insurers.
As indicated above, the insurers assert a number of reasons in support of their argument that Section 2744.05 and Substitute Senate Bill No. 297 do not bar their claims against the City of Dayton:
The Court will consider these arguments in order.
The insurers' first argument against the application of O.R.C. § 2744.05(B) and Substitute Senate Bill No. 297 to bar their claims against the City of Dayton, is that those statutes read together do not apply the bar against actions "under a subrogation provision in an insurance or other contract" retroactively. Specifically, these Plaintiffs argue that Substitute Senate Bill No. 297 makes retroactive only the first sentence of § 2744.05(B), which provides: "If a claimant receives or is entitled to receive benefits for injuries or loss allegedly incurred from a policy or policies of insurance or any other source ... the amount of the benefits shall be deducted from any award against a political subdivision recovered by that claimant." Thus, under these Plaintiffs' construction of Section 5 of Substitute Senate Bill No. 297, a claimant would have to deduct the amount of insurance coverage he or she holds from the amount of any award against a municipality, but the insurance company could then proceed against that municipality on a subrogated claim for that amount.
The Court notes, however, that the Ohio legislature in enacting Section 5 of Substitute Senate Bill 297 was concerned that "political subdivisions are required to pay the entire amount of judgments against them despite the fact that the plaintiffs involved have already been entirely or partially compensated from insurance or other collateral benefits for injury, death, or loss experienced." The Ohio legislature therein does not seem concerned with the limited issue of double recovery by plaintiffs, but rather with the possibility that municipalities will have to pay the entire amount of damages when insurance coverage is available. If insurers can proceed against municipalities on claims under the subrogation clauses of their insurance contracts, the net liability of municipalities would be the same with Substitute Senate Bill ...
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