Kraly v. Vannewkirk

• Citation: 69 Ohio St.3d 627,635 N.E.2d 323
• Decision Date: 27 July 1994
• Docket Number: No. 92-2307,92-2307
• Parties: KRALY et al., Appellants, v. VANNEWKIRK; State Farm Mutual Automobile Insurance Company, Appellee.
• Court: United States State Supreme Court of Ohio

Page 627

69 Ohio St.3d 627

635 N.E.2d 323

KRALY et al., Appellants, v. VANNEWKIRK; State Farm Mutual Automobile Insurance Company, Appellee.

No. 92-2307.

Supreme Court of Ohio.

Submitted Nov. 16, 1993.

Decided July 27, 1994.

SYLLABUS BY THE COURT

1. Civ.R. 15(C) may be employed to substitute a party named in the amended pleading for a party named in the original pleading to permit the amended pleading to relate back to the date of the original pleading, provided the requirements of the rule are otherwise satisfied. (Cecil v. Cottrill [1993], 67 Ohio St.3d 367, 618 N.E.2d 133, approved and followed.) However, the rule may not be employed to assert a claim against an additional party while retaining a party against whom a claim was asserted in the original pleading.

2. The validity of a contractual period of limitations governing a civil action brought pursuant to the contract is contingent upon the commencement of the limitations period on the date that the right of action arising from the contractual obligation accrues.

3. Where the liability insurer of a tortfeasor has been declared insolvent, a right of action of an insured injured by the tortfeasor against his insurer under the uninsured motorist provision of his automobile insurance contract accrues on the date that the insured receives notice of the insolvency.

4. A provision in a contract of insurance which purports to extinguish a claim for uninsured motorist coverage by establishing a limitations period which expires before or shortly after the accrual of a right of action for such coverage is per se unreasonable and violative of the public policy of the state of Ohio as embodied in R.C. 3937.18. (Colvin v. Globe Am. Cas. Co. [1982], 69 Ohio St.2d 293, 295-296, 23 O.O.3d 281, 282-283, 432 N.E.2d 167, 169; Duriak v. Globe Am. Cas. Co. [1986], 28 Ohio St.3d 70, 73, 28 OBR 168, 171-172, 502 N.E.2d 620, 623-624, explained.)

Effective September 1, 1987, plaintiffs-appellants, Mark and Mary Lou Kraly, entered into a contract of insurance with defendant-appellee, State Farm Mutual Automobile Insurance Company, whereby appellee agreed to provide automobile liability insurance including uninsured/underinsured motorist coverage. The insurance contract provided in relevant part:

"We will pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle. The bodily injury must be caused by accident arising out of the operation, maintenance or use of an uninsured motor vehicle.

"THERE IS NO COVERAGE UNTIL THE LIMITS OF LIABILITY OF ALL BODILY INJURY LIABILITY BONDS AND POLICIES THAT APPLY HAVE BEEN USED UP BY PAYMENT OF JUDGMENTS OR SETTLEMENTS.

"Uninsured Motor Vehicle--means:

"1. a land motor vehicle, the ownership, maintenance or use of which is:

"a. not insured or bonded for bodily injury liability at the time of the accident; or

"b. insured or bonded for bodily injury liability at the time of the accident; but

"(1) the limits of liability are less than required by the financial responsibility act of the state where your car is mainly garaged; or

"(2) the limits of liability:

"(a) are less than the limits you carry for uninsured motor vehicle coverage under this policy; or

"(b) have been reduced by payments to persons other than an insured to an amount less than the limits you carry for uninsured motor vehicle coverage under this policy.

"(3) the insuring company denies coverage or is or becomes insolvent * * *." (Emphasis added.)

Moreover, Section V of the policy, under the heading "Conditions," contains the following language:

"2. Suit Against Us.

"There is no right of action against us:

"a. until all the terms of this policy have been met * * *." (Emphasis added.)

Effective January 1, 1988, an endorsement to the policy amended its provisions in the following fashion:

"4. SECTION III--UNINSURED MOTOR VEHICLE--COVERAGE U

"a. The following is added to the provision titled Deciding Fault and Amount:

"Under uninsured motor vehicle coverage, any arbitration or suit against us will be barred unless commenced within two years after the date of the accident." (Emphasis added.)

On June 4, 1988, appellants were involved in an automobile collision between their vehicle and a vehicle operated by defendant, Collin F. Vannewkirk. As a result of the accident, appellants suffered bodily injuries. At the time of the collision, defendant was insured under an automobile liability policy issued by Cadillac Insurance Company of Michigan.

On December 26, 1989, appellants instituted an action in negligence against Vannewkirk, in the Medina County Court of Common Pleas. On January 2, 1990, the Cadillac Insurance Company was declared insolvent by the Ingham County, Michigan Circuit Court. On February 12, 1990, the Ohio Insurance Guaranty Association ("OIGA") notified appellants of the insolvency of Cadillac, informed them that OIGA was assuming control of the matter and advised appellants to pursue an uninsured motorist claim against their insurer. A copy of the letter was contemporaneously sent to representatives of appellee. On or about March 5, 1990, counsel for appellants by telephone notified Kevin Hronec, Senior Claims Representative for appellee, regarding the claim of appellants for uninsured motorist coverage under their policy of insurance with appellee. This telephone conversation was acknowledged by Hronec in a letter dated March 5, 1990. The letter assured appellants that appellee would extend to them its cooperation. On March 9, 1990, counsel for appellants confirmed receipt of the March 5, 1990 letter from Hronec and agreed to have appellants provide a taped statement to him.

On July 5, 1990, Hronec sent a letter to counsel for appellants wherein he communicated that appellee would deny uninsured motorist coverage on the basis that appellants had failed to commence arbitration or suit against it within two years from the date of the accident.

On August 3, 1990, appellants filed a motion for leave to file an amended complaint adding appellee as a party defendant. On August 7, 1990, this motion was granted. On December 19, 1991, appellee filed a motion for summary judgment wherein it argued that the limitations period contained in the insurance policy barred suit, and that appellants could not rely on Civ.R. 15(C) to add appellee as a new-party defendant to allow the commencement of the action to relate back to December 26, 1989 when the suit against Collin Vannewkirk was instituted. On March 4, 1992, the motion was granted. On September 23, 1992, the judgment of the trial court was affirmed by the Ninth District Court of Appeals.

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

Robert J. Sindyla and David R. Hurd, Cleveland, for appellants.

Meyers, Hentemann, Schneider & Rea Co., L.P.A., Henry A. Hentemann and Joseph H. Wantz, Cleveland, for appellee.

Scanlon & Henretta Co., L.P.A., J. Thomas Henretta and James P. Hanratty, Akron, urging reversal for amicus curiae, Ohio Academy of Trial Lawyers.

A. WILLIAM SWEENEY, Justice.

I

The threshold question presented by this action concerns the extent to which the amendment of pleadings adding parties may relate back to the date of the original filing. Civ.R. 15(C) governs this issue. It provides in relevant part:

"Relation Back of Amendments. Whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading. An amendment changing the party against whom a claim is asserted relates back if the foregoing provision is satisfied and, within the period provided by law for commencing the action against him, the party to be brought in by amendment (1) has received such notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits, and (2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against him." (Emphasis added.)

Appellee challenges the application of Civ.R. 15(C) to the present controversy. Appellee maintains that the rule does not apply where the initial cause of action differs from the action instituted against the additional party. Appellee argues that the initial action was one in tort while the controversy between it and appellants sounds in contract. ¹ This argument is without merit. The rule provides that amendment of the pleading is proper if it "arose out of the conduct, transaction or occurrence set forth * * * in the original pleading." Clearly, the collision of June 4, 1988, gives rise to both the tort and contract actions.

Appellee also questions the application of Civ.R. 15(C) to the present case on another basis. Civ.R. 15(C) provides that an "amendment changing the party against whom a claim is asserted relates back" (emphasis added) to the date of the original pleading if the requirements of the rule are otherwise satisfied. It is the contention of appellee that the effect of the amended complaint herein was not to substitute a proper party for one previously named in the original complaint but to add appellee while retaining a proper party (i.e., the tortfeasor, Vannewkirk) to the action. We agree. The plain language of the rule relates to the substitution of a proper party for one previously misidentified in the original complaint. See Cecil v. Cottrill (1993), 67 Ohio St.3d 367, 370, 618 N.E.2d 133, 135. The concluding clause of Civ.R. 15(C) provides further support for this view inasmuch as it refers to a mistake regarding the identity of the proper party in the original pleading.

Accordingly, it is our determination that Ohio Civ.R. 15(C) may be employed to substitute a party named in the amended pleading for a party misidentified in the original...