Havberg v. Delphi Automotive Systems

Citation268 F.Supp.2d 855
Decision Date14 June 2002
Docket NumberNo. 4:01-01683.,4:01-01683.
PartiesJane E. HAGBERG, et al., Plaintiffs, v. DELPHI AUTOMOTIVE SYSTEMS, an unincorporated division of General Motors Corporation, et al., Defendants.
CourtUnited States District Courts. 6th Circuit. United States District Court of Northern District of Ohio

Daniel R. Mordarski, Zeiger & Carpenter, Columbus, OH, Stephen T. Bolton, Thomas J. Lipka, Manchester, Bennett, Powers & Ullman, Youngstown, OH, for Plaintiffs.

Daniel R. Freytag, Zeiger & Carpenter, Columbus, OH, Matthew J. Grimm, Janik & Dorman, Cleveland, OH, for Defendants.

MEMORANDUM OPINION AND ORDER

LIMBERT, United States Magistrate Judge.

The above case came before the undersigned on Plaintiffs' motion for certification to the Ohio Supreme Court and motions for summary judgment filed by Defendant General Motors Corporation ("Defendant GM") who was served and sued as Delphi Automotive Systems, and Defendant National Union Insurance Company of Pittsburgh, Pennsylvania ("Defendant National Union"). See Electronic Court Filing (hereinafter "ECF") Dkt. # s 36, 37, 55.

For the following reasons, the undersigned GRANTS Defendant GM's motion for summary judgment based upon choice of law principles. Consequently, Plaintiffs' complaint is DISMISSED as against all parties and Plaintiffs' motion for certification to the Ohio Supreme Court is DENIED as MOOT. See ECF Dkt. # s 36, 37, 55.

I. PROCEDURAL HISTORY

On November 9, 2001, Plaintiffs filed their third amended complaint against Defendants GM and National Union. See ECF Dkt. # 35. Plaintiffs indicated that on or about May 6, 1998, Plaintiff Jane Hagberg was involved in an automobile accident while on her way home from her job as a chemical engineer with Delphi Automotive Systems in Ohio. See id. at 2. Plaintiff Jane Hagberg stated that she collected the insurance policy limits from the insurance company of the tortfeasor, Gary S. Meech, an underinsured motorist. See id Further, she alleged that Defendant GM had a commercial automobile insurance policy along with an excess automobile fronting policy with Defendant National Union at all relevant times. See id. at 3. Plaintiffs alleged that Defendants GM and National Union extended underinsured motorist coverage in the State of Ohio, which coverage included insuring Plaintiffs for personal injuries and medical payments proximately caused by underinsured motorists based upon the Ohio Supreme Court's ruling in Scott-Pontzer v. Liberty Mutual Fire Insurance Company, 85 Ohio St.3d 660, 710 N.E.2d 1116 (1999). See id. Plaintiff Eric Hagberg, husband of Jane Hagberg, filed a claim for a loss of consortium due to his wife's injuries. See id. at 3-4. Plaintiffs rely solely on the holding in Scott-Pontzer as the basis for their claims.

In Scott-Pontzer, Christopher T. Pontzer, an employee of Superior Dairy, was killed in an automobile accident while driving home from work in his wife's car. Pontzer was killed as the result of the negligence of Troy W. Taylor, who had an automobile liability insurance policy with limits of $100,000 per person and $300,000 per accident. At the time of the accident, Superior Dairy had commercial automobile liability insurance and an umbrella/excess insurance policy with Liberty Mutual Fire Insurance Company. Both policies identified Superior Dairy as the named insured, but only the commercial automobile liability policy of insurance contained an underinsured motorist coverage provision. The uninsured/underinsured motorist coverage form defined an "insured" for purposes of underinsured motorist coverage as the following:

B. Who Is An Insured

1. You.

2. If you are an individual, any family member.

3. Anyone else occupying a covered auto or a temporary substitute for a covered auto. The covered auto must be out of service because of its breakdown, repair, servicing, loss or destruction.

4. Anyone for damages he or she is entitled to recover because of bodily injury sustained by another insured.

Scott-Pontzer, 85 Ohio St.3d at 663, 710 N.E.2d at 1120. Kathryn Scott-Pontzer, Christopher Pontzer's wife, brought an action as surviving spouse and executrix of her husband's estate asserting that she was entitled to underinsured motorist benefits under Superior Dairy's automobile liability policy and umbrella/excess policy because her husband was an employee of Superior Dairy. The case proceeded through the courts to the Ohio Supreme Court.

Upon examining the policies at issue, the Ohio Supreme Court found the definitions of "insured" in the commercial liability policy ambiguous and held that

Rather, it would be reasonable to conclude that "you," while referring to Superior Dairy, also includes Superior's employees, since a corporation can act only by and through real live persons. It would be nonsensical to limit protection solely to the corporate entity, since a corporation, itself, cannot occupy an automobile, suffer bodily injury or death, or operate a motor vehicle. Here, naming the corporation as the insured is meaningless unless the coverage extends to some person or persons—including to the corporation's employees.

Scott-Pontzer, 85 Ohio St.3d at 664, 710 N.E.2d at 1119. The Ohio Supreme Court also ruled that Pontzer was an insured under his employer's umbrella/excess policy even though that policy did not include underinsurance. See Scott-Pontzer, 85 Ohio St.3d at 665, 710 N.E.2d at 1120. The court reasoned that "[a]bsent any showing that underinsured coverage was offered and rejected, such coverage is included in the policy" by operation of law under the version of Ohio Revised Code § 3937.18 in effect at the time of the contract.1 See id. The court also held that Pontzer did not have to be acting within the scope of his employment in order to collect under the commercial automobile liability policy because the policy did not contain such a restriction. See id. The court further held that the scope of employment language in the umbrella/excess policy was inoperative to Pontzer because it applied only to the excess liability portion of the policy, not underinsured coverage, given that the court had already found that Liberty Mutual failed to offer underinsured motorist coverage to Superior Dairy. See 85 Ohio St.3d at 666, 710 N.E.2d at 1120.

In the instant case, at the time of Plaintiff Jane Hagberg's automobile accident, Defendant GM had in place a Risk Management Program which contained motor vehicle liability policies issued by Defendant National Union, effective September 1, 1997 through September 1, 1998. See ECF Dkt. #38 at 2. These policies included a primary business auto fronting policy with a $300,000 policy limit and matching deductible of $300,000, and an excess business auto fronting policy containing a $9,700,000 policy limit with a matching deductible of $9,700,000. See ECF Dkt. #36, Exhibits 2-4. These deductible endorsements also contained reimbursement clauses whereby Defendant GM was obligated to reimburse Defendant National Union for any payments made by Defendant National Union under the policies. See id. Defendant GM and Defendant National Union also had an Indemnity Agreement that was secured by a trust established by Defendant GM for Defendant National Union which served as collateral for Defendant GM's obligation under the Indemnity Agreement.2 See ECF Dkt. #36, Exhibits 5-6.

The primary business auto fronting policy, Policy Number RM CA 1350935, listed General Motors Corporation as the named insured and, effective: September 1, 1997, defined an "insured" with language identical to that in Scott-Pontzer. See ECF Dkt. # 36 at # 2, Exhibit A, Policy Number RM CA 1350935. The excess business auto fronting policy, Policy Number RM CA 1350937, named General Motors Corporation as the named insured, but does not show that uninsured or underinsured motorist coverage was part of the policy as the box next to the underinsured designation remains unchecked, while liability and personal injury protection are checked as applicable. See id. at # 3, Exhibit B, Policy Number RM CA 1350937. Nevertheless, under Ohio law, underinsured coverage can exist without designation in the umbrella/excess insurance policy by operation of law under the former version of Ohio Revised Code § 3937.18. See Scott-Pontzer, 85 Ohio St.3d at 665, 710 N.E.2d at 1120.

Defendant GM, on behalf of Delphi Automotive Systems, and Defendant National Union answered Plaintiffs' third amended complaint and also filed separate motions for summary judgment. See ECF Dkt. # s 36-42, 48, 54, 60, 67. On January 23, 2002, Plaintiffs filed a motion in this Court requesting certification to the Ohio Supreme Court on the issue of whether Defendant GM's Risk Management Program constituted the practical equivalent of self-insurance. See ECF Dkt. #55. On March 1, 2002, Defendant GM filed a memorandum in opposition to Plaintiffs' motion for certification. See ECF Dkt. # 62. On May 13, 2002, Plaintiffs filed a response to Defendants' motions for summary judgment and on May 20, 2002, Defendant GM filed a reply. See ECF Dkt. # 70. On June 3, 2002, Defendant National Union filed a reply to Plaintiffs response to its motion for summary judgment. See ECF Dkt. # 74.

II. LAW AND ANALYSIS
A. DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT

1. CHOICE OF LAW

The Court shall address Defendant GM's choice of law argument first. Defendant GM argues that Ohio choice of law rules mandate the application of Michigan law to its policies. See ECF Dkt. #67 at 16. Defendant GM asserts that Michigan law rejects the Ohio Supreme Court's Scott-Pontzer interpretation of the word "You" in employer insurance policies, which is the sole basis of Plaintiffs' complaint against Defendants. See id. Defendant GM outlines the appropriate factors to analyze in determining the applicable state law and has attached the affidavit of Ronald Judd, the former Director of Risk Financing for Defendant GM beginning in 1996, who currently serves as Vice President, International, with Defendant GM. See ...

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