Kurent v. Farmers Ins. of Columbus

• Decision Date: 18 December 1991
• Docket Number: No. 90-1633,90-1633
• Parties: KURENT et al., Appellants, v. FARMERS INSURANCE OF COLUMBUS, INC., Appellee.
• Court: Ohio Supreme Court

Page 242

62 Ohio St.3d 242

581 N.E.2d 533

KURENT et al., Appellants, v. FARMERS INSURANCE OF COLUMBUS, INC., Appellee.

No. 90-1633.

Supreme Court of Ohio.

Submitted Sept. 18, 1991.

Decided Dec. 18, 1991.

SYLLABUS BY THE COURT

When an Ohio resident is injured in an automobile accident in a no-fault insurance state, by a resident of that state who is insured under that state's no-fault insurance laws, the Ohio resident's legal right to recover from the tortfeasor-motorist must be determined with reference to the no-fault state's laws. Wh ere the no-fault state does not recognize a claim against the tortfeasor-motorist, the Ohio insured is not entitled to collect uninsured motorist benefits fro m his own insurer.

Plaintiffs-appellants, Thomas E. and Kathleen Kurent, are residents of Ohio and have an automobile insurance policy with defendant-appellee, Farmers Insurance of Columbus, Inc. ("Farmers"), a corporation organized under the laws of Ohio.

The Kurents were traveling in Michigan on July 11, 1987, when they became involved in an automobile accident proximately caused by Michael Karczewski, a Michigan resident. Karczewski was insured by AAA Michigan ("AAA"). The Kurents claim bodily and emotional injuries as a result of the accident.

The Kurents filed a claim against Karczewski and AAA to recover damages for their injuries. AAA denied the Kurents' claim based on AAA's position that the Kurents' injuries did not meet the threshold limit under Michigan no-fault law.

Michigan's no-fault insurance laws abolish tort liability for ordinary injuries arising from automobile accidents. M.C.L.A. Section 500.3135 (West 1983). In Michigan an insured person injured by an insured driver may recover specified benefits, based on costs actually incurred, from his own insurer regardless of fault. M.C.L.A. Sections 500.3105 and 500.3107 (West 1983). The insured tortfeasor driver is subject to tort liability for non-economic damages caused by the use of his automobile only if the injured person suffers damages beyond the threshold limit. The threshold limit in Michigan is defined as death, serious impairment of a bodily function, or permanent serious disfigurement. M.C.L.A. Section 500.3135. An uninsured Michigan driver is subject to tort liability for all economic loss as well as above-threshold non-economic loss. Bradley v. Mid-Century Ins. Co. (1980), 409 Mich. 1, 62-63, 294 N.W.2d 141, 163.

After AAA refused their claim, the Kurents sought uninsured coverage and medical payments coverage from Farmers. Claiming that Michigan law applies, Farmers denied the uninsured motorist claim because Karczewski was insured as required by Michigan law.

The Kurents filed suit against Farmers in the Common Pleas Court of Summit County, seeking a declaration of their rights and benefits under their insurance policy. On cross-motions for summary judgment, the trial court granted the Kurents' motion for summary judgment, holding that they were entitled to collect under the uninsured portion of their policy because (1) Ohio law controls under a conflict of laws "interest analysis" and (2) AAA's denial of coverage was sufficient to meet the uninsured motorist criteria in their policy.

On appeal the court of appeals reversed and held that under the terms of the insurance agreement the Kurents were not entitled to uninsured motorist coverage.

The cause comes before this court on a motion to certify the record.

Benos, Cummings, Mann & Valenti Co., L.P.A., and Wayne F. Benos, Cleveland, for appellants.

Christoff, Slater & Zurz, James W. Slater and Richard V. Zurz, Jr., Akron, for appellee.

HERBERT R. BROWN, Justice.

The sole issue before the court is whether the Kurents are entitled to uninsured motorist benefits under their policy with Farmers for an automobile accident that occurred in Michigan and was caused by a Michigan resident who is insured pursuant to Michigan's no-fault insurance laws. For the reasons which follow we hold that the Kurents are not entitled to uninsured motorist coverage.

The basis of Farmers' obligation to the Kurents lies in the insurance contract and our analysis begins with an examination of the policy as it applied when the Kurents entered Michigan and became involved in the accident with Karczewski.

Under Part I--Liability, the Kurents' insurance policy provides:

"An insured person may become subject to the financial responsibility law, compulsory insurance law of [sic ] similar law of another state or in Canada. This can happen because of ownership, maintenance or use of your insured car when you travel outside of Ohio. We will interpret this policy to provide any broader coverage required by those laws, except to the extent that other liability insurance applies. No person may collect more than once for the same elements of loss."

The effect of this contractual provision was to provide the Kurents with adequate insurance coverage when they left Ohio and became subject to the laws of a different jurisdiction. The contract's out-of-state provision required Farmers to provide no-fault liability coverage as required by Michigan law while the Kurents were traveling in Michigan. Accordingly, the Kurents received no-fault coverage from Farmers for the Michigan accident. The no-fault benefits consisted of economic damages, which included lifetime medical expenses for their injuries and wage loss during the first three years after the date of the accident, subject to certain restrictions. M.C.L.A. Section 500.3107.

Central to the dispute is the Kurents' claim for non-economic damages. Under Michigan no-fault laws the Kurents are not entitled to recover non-economic damages unless their claim reaches the threshold level. ¹ Accordingly, they seek non-economic damages under the uninsured motorist coverage of their policy.

The uninsured motorist provision of the Kurents' policy provides in relevant part:

"We will pay all sums which an insured person is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by the insured person. The bodily injury must be caused by accident and arise out of the ownership, maintenance or use of the uninsured motor vehicle.

"Determination as to whether an insured person is legally entitled to recover damages or the amount of damages shall be made by agreement between the insured person and us. If no agreement is reached, the decision will be made by arbitration." (Emphasis added.)

The uninsured motorist provision is subject to the following definition and limitation:

"3. Uninsured motor vehicle means a motor vehicle which is:

"a. Not insured by a bodily injury liability bond or policy at the time of the accident.

" * * *

"d. Insured by a bodily injury liability bond or policy at the time of the accident but the Company denies coverage or is or becomes insolvent." (Emphasis added.)

The policy's language complies with R.C. 3937.18 which requires insurance companies to offer uninsured motorist coverage to Ohio residents. The General Assembly enacted R.C. 3937.18 to protect Ohio residents from financially irresponsible drivers. York v. State Farm Fire & Cas. Co. (1980), 64 Ohio St.2d 199, 202, 18 O.O.3d 412, 414, 414 N.E.2d 423, 425. The basic purpose of R.C. 3937.18 is to protect persons injured in automobile accidents from uncompensated losses because a tortfeasor lacked liability coverage. It is a protection against injury at the hands of irresponsible or impecunious drivers. It was not intended to provide coverage in every uncompensated situation. York, 64 Ohio St.2d at 202, 18 O.O.3d at 413-414, 414 N.E.2d at 425. See, also, State Farm Mut. Auto. Ins. Co. v. Webb (1990), 54 Ohio St.3d 61, 61-62, 562 N.E.2d 132, 133, fn. 2. In accordance with this intent we have previously held that an injured person is not entitled to uninsured motorist coverage where the insured tortfeasor-motorist is immune from liability pursuant to statutory immunity. In Webb we stated that an insurance company must be able to assert the same defenses as the uninsured driver. Id. at 64, 562 N.E.2d at 135.

The Kurents' claim for uninsured motorist coverage is determined by their contractual relationship with Farmers. Under the contract the Kurents must show (1) Karczewski's vehicle was uninsured and (2) they are legally entitled to recover from him.

The Kurents claim they satisfied the policy and statutory definition of an uninsured vehicle in that AAA "denied coverage" based on the fact that the Kurents' injuries did not rise to Michigan's threshold level. Farmers, on the other hand, maintains that AAA did not deny coverage to the Kurents because they were not "legally entitled to recover" non-economic damages.

We agree with Farmers. According to Ohio law, the phrase "legally entitled to recover" means the insured must be able to prove the elements of his or her claim. Sumwalt v. Allstate Ins. Co. (1984), 12 Ohio St.3d 294, 12 OBR 368, 466 N.E.2d 544, at syllabus. The amount of damages is one element of the claim the Kurents must prove. Further, uninsured motorist coverage is dependent on the uninsured motorist's legal liability to the injured person. See York, 64 Ohio St.2d at 202, 18 O.O.3d at 414, 414 N.E.2d at 425. Therefore the Kurents are only entitled to recover damages which Karczewski is legally liable to pay.

Michigan law determines Karczewski's legal liability to the Kurents. He is a Michigan resident and the accident occurred in Michigan. A motorist traveling in Michigan accepts Michigan law as it pertains to accidents occurring in Michigan. That motorist does not have the option, for example, of claiming that Ohio's speed limit or traffic laws govern simply because the motorist resides in Ohio. The notion that Ohio law somehow controls the amount of damages flowing from torts committed on Michigan highways is akin to a contention that a Michigan resident who commits murder in Ohio is exempt from...