Henry v. Wausau Business Ins. Co.

• Decision Date: 08 December 2003
• Docket Number: No. 01-4223.,No. 01-4105.,01-4105.,01-4223.
• Parties: Darrel HENRY, Plaintiff-Appellee/Cross-Appellant, v. WAUSAU BUSINESS INSURANCE CO., Defendant-Appellant/Cross-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

351 F.3d 710

Darrel HENRY, Plaintiff-Appellee/Cross-Appellant, v. WAUSAU BUSINESS INSURANCE CO., Defendant-Appellant/Cross-Appellee.

No. 01-4105.

No. 01-4223.

United States Court of Appeals, Sixth Circuit.

Argued: August 1, 2003.

Decided and Filed: December 8, 2003. Pursuant to Sixth Circuit Rule 206.

Michael Robert Thomas (argued and briefed), Pratt, Singer & Thomas, Middleton, OH, for Appellee.

ARGUED:

Brian L. Wildermuth (argued), David J. Arens (briefed), Law Offices of Nicholas E. Subashi, Dayton, OH, for Appellant.

ON BRIEF:

David J. Arens, LAW OFFICES OF NICHOLAS E. SUBASHI, Dayton, Ohio, for Appellant. Michael Robert Thomas, PRATT, SINGER & THOMAS, Middleton, Ohio, for Appellee.

Before KENNEDY, GILMAN, and GIBBONS, Circuit Judges.

OPINION

JULIA SMITH GIBBONS, Circuit Judge.

Plaintiff-appellee/cross appellant Darrel Henry's wife, Carol Henry, was killed in an automobile accident. At the time of her death, Carol Henry was an employee of the Madison Local School District (Madison). Henry filed insurance claims pursuant to the uninsured and underinsured (UM/UIM) motorist provisions in a business automobile liability insurance policy and an education liability insurance policy issued to Madison by defendant-appellant/cross-appellee Wausau Business Insurance Company (Wausau). Wausau denied coverage and Henry sued seeking a declaratory judgment that Carol Henry was covered by the Wausau policies at the time of her accident. The parties filed cross-motions for summary judgment. The district court denied Wausau's motion with respect to Henry's claims under the business automobile policy and granted summary judgment in favor of Henry. The district court granted Wausau's motion for summary judgment with respect to Henry's claims under the education liability policy on the grounds that the policy was not subject to Ohio Revised Code (O.R.C.) § 3937.18's requirement that the insurer offer UM/UIM coverage. For the reasons set forth below, we reverse in part, affirm in part, and remand the case for further proceedings consistent with this opinion.

I.

On September 21, 1998, Carol Henry was killed when an automobile driven by Todd J. Hyde, Sr. collided with the vehicle she was operating. The sole cause of the accident was Hyde's negligence. Hyde did not have automobile liability insurance covering him for the operation of the vehicle involved in the collision. At the time of the accident, Carol Henry was an employee of the Madison Local School District. Wausau had issued a business automobile policy of insurance to Madison that was in full force and effect on the date of the accident. The policy was issued for the period of September 1, 1998, to September 1, 1999. Madison also had an education liability policy of insurance with Wausau that was in full force and effect on the date of the accident.

At the time of the accident, Carol Henry maintained an automobile insurance policy with Westfield Insurance Company that included both liability coverage and uninsured motorist coverage. Darrel Henry settled with Westfield for $100,000.00, the uninsured motorist coverage limit. Although Carol Henry was not acting in the scope of her employment and was driving her own vehicle when the accident occurred, Darrel Henry also sought UM/UIM coverage under both of Wausau's policies. Wausau denied coverage under the policies.

On June 27, 2000, Darrel Henry sued Wausau in the Butler County, Ohio Court of Common Pleas. Henry sought a declaratory judgment against Wausau seeking recovery of uninsured motorist benefits under the business automobile liability policy and the education liability policy. Wausau removed the case to the United States District Court for the Southern District of Ohio on the basis of diversity jurisdiction.

The parties filed stipulations of fact and then filed cross-motions for summary judgment. On September 27, 2001, the district court granted summary judgment in favor of Wausau as to Henry's claims under the education liability policy on the grounds that the policy was not subject to O.R.C. § 3937.18's requirement that the insurer offer UM/UIM coverage, but denied Wausau's request for summary judgment on Henry's claims under the business automobile policy. The district court granted summary judgment in favor of Henry on the business automobile policy and referred the case to binding arbitration on the issue of damages under that policy.

On October 4, 2001, Henry filed a motion for certification of questions of law to the Ohio Supreme Court. On October 12, 2001, Wausau filed a timely notice of appeal regarding the district court's summary judgment rulings. The district court denied Henry's motion to certify on October 24, 2001. On October 29, 2001, Henry filed a notice of appeal.

II.

This court reviews de novo a district court's grant of a motion for summary judgment. Braithwaite v. Timken Co., 258 F.3d 488, 492-93 (6th Cir.2001). This court reviews for an abuse of discretion an order denying summary judgment on the grounds that there is a genuine issue of material fact; however, if the denial is based on purely legal grounds, then review of the denial is de novo. Garner v. Memphis Police Dep't., 8 F.3d 358, 363 (6th Cir.1993). When reviewing the record, all inferences are to be drawn in the light most favorable to the non-moving party. Braithwaite, 258 F.3d at 493 (citing Woythal v. Tex-Tenn Corp., 112 F.3d 243, 245-46 (6th Cir.1997)). However, a party opposing a 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." Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). The party opposing the motion must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). "If after reviewing the record as a whole a rational factfinder could not find for the nonmoving party, summary judgment is appropriate." Braithwaite, 258 F.3d at 493 (quoting Ercegovich v. Goodyear Tire & Rubber Co., 154 F.3d 344, 349 (6th Cir. 1998)) (citation omitted).

III.

The district court had jurisdiction over this action pursuant to 28 U.S.C. § 1332. Lee-Lipstreu v. Chubb Group Ins. Cos., 329 F.3d 898, 899-900 (6th Cir.2003) (holding that federal courts have jurisdiction over actions by an insured against his or her own insurance company if the two parties are diverse because such actions are not direct actions within the meaning of 28 U.S.C. § 1332(c)(1)). This court has appellate jurisdiction to review the district court's order granting summary judgment pursuant to 28 U.S.C. § 1291.

Because the court is exercising its diversity jurisdiction in the present case, the substantive law of Ohio is controlling. Talley v. State Farm Fire & Cas. Co., 223 F.3d 323, 326 (6th Cir.2000) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)). In determining questions of Ohio state law, the court must follow the controlling decisions of the Ohio Supreme Court. Id.

A. Business Automobile Liability Policy

Henry claims that his wife was an insured covered under the Wausau business automobile policy pursuant to Scott-Pontzer v. Liberty Mutual Fire Insurance Co., 85 Ohio St.3d 660, 710 N.E.2d 1116 (1999), and therefore is entitled to UM/UIM motorist coverage pursuant to Ohio law. Wausau contends that Scott-Pontzer is not applicable because this case involves a policy of insurance issued to a public school district, not a private corporation.

Coverage under the UM/UIM provision at issue is limited to an "insured," a term defined in the provision as follows:

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."

This definition is identical to the definition of "insured" in the policy that was at issue in Scott-Pontzer.

In Scott-Pontzer, the Ohio Supreme Court ruled that a corporation's employees, even though they are not named insureds, are considered insureds entitled to UM/UIM coverage under a commercial automobile liability policy. 710 N.E.2d at 1119. According to the court, where the definition of "insured" in a UM/UIM provision includes the term "You" and the named insured is a corporation, the term "You" is ambiguous. Applying the legal principle that ambiguous provisions in an insurance contract will be "strictly construed against the insurer," the court held that the term "You" could be construed to include the corporation's employees because a corporation can act only by and through live persons. Id. at 1119 (quoting King v. Nationwide Ins. Co., 35 Ohio St.3d 208, 519 N.E.2d 1380 (1988)). Moreover, the court concluded that, unless the UM/UIM provision contained a specific limitation or exclusion, the corporation's employees were entitled to UM/UIM coverage even when acting outside the scope of their employment. Id. at 1120.

Henry argues that his wife was covered by the UM/UIM provisions in Wausau's business automobile liability policy even though she was not acting within the scope of her employment at the time of her accident because the rationale in Scott-Pontzer should be extended to business automobile liability policies issued to public school districts. We find it unnecessary to address this argument due to the Ohio Supreme Court's recent decision in Westfield Insurance Company v. Galatis, et al., 797 N.E.2d 1256 (Ohio 2003). Westfield limits the holding of Scott-Pontzer so that it now applies only in those situations where an employee is acting...