Lorain Cty. Bd. of Commrs. v. U.S. Fire Ins. Co.

• Citation: 610 N.E.2d 1061,81 Ohio App.3d 263
• Decision Date: 22 January 1992
• Docket Number: No. 91CA005090,91CA005090
• Parties: LORAIN COUNTY BOARD OF COMMISSIONERS et al., Appellees, v. UNITED STATES FIRE INSURANCE COMPANY et al.; Ohio Insurance Guaranty Association, Appellant. *
• Court: United States Court of Appeals (Ohio)

Page 263

81 Ohio App.3d 263

610 N.E.2d 1061

LORAIN COUNTY BOARD OF COMMISSIONERS et al., Appellees, v. UNITED STATES FIRE INSURANCE COMPANY et al.; Ohio Insurance Guaranty Association, Appellant. ^*

No. 91CA005090.

Court of Appeals of Ohio, Ninth District, Lorain County.

Decided Jan. 22, 1992.

Gregory A. White, Pros. Atty., Elyria, for appellees.

Matthew J. Hatchadorian and Sarah J. Cruise, Cleveland, for appellant.

REECE, Judge.

Defendant-appellant, Ohio Insurance Guarantee Association ("OIGA"), challenges the May 16, 1991 order of the Lorain County Court of Common Pleas granting summary judgment in favor of plaintiffs-appellees, Lorain County Lorain County Children Services ("LCCS"), and the Board of Commissioners of Lorain County (collectively "county"), in this declaratory judgment action.

Facts

The existing facts are not in dispute. Thomas J. Waters-Rimmer filed a complaint in federal court on December 16, 1987, alleging that the county was liable for negligently placing him with an unfit and potentially dangerous foster parent. He charged that he "was sexually, physically and mentally abused" from 1978 to 1984 as a result of this misfeasance. Waters-Rimmer v. Lorain Cty., United States District Court for the Northern District of Ohio, Eastern Division, No. C87-3303.

The county initiated the instant proceedings on October 7, 1989 seeking, in essence, a declaration of coverage upon several insurance policies. ¹ Prior to the filing of the federal lawsuit, two corporations, Midland Insurance Company ("Midland") and Integrity Insurance Company ("Integrity"), had been rendered "insolvent insurers." R.C. 3955.01(C). In accordance with R.C. 3955.08(A)(1), the county demanded coverage from OIGA upon these defunct policies.

After a number of amendments to the complaint and various dismissals of other parties, only OIGA remained in the county's state-court declaratory judgment action. Motions for summary judgment were tendered by both sides. The trial court granted summary judgment for the county, precipitating this appeal. Two assignments of error have been raised.

Assignments of Error

"I. The trial court erred as a matter of law in granting plaintiffs-appellees' motion for summary judgment."

"II. The trial court erred as a matter of law in denying defendant-appellant's motion for summary judgment because reasonable minds can come to but one conclusion and that conclusion is adverse to plaintiff-appellee Lorain County."

As a preliminary issue, the county argues that this appeal is moot. An affidavit of an assistant county prosecutor has been submitted to this court, attesting that Waters-Rimmer's federal lawsuit "was, in principle, settled," and that this agreement, "in principle, did not require the payment of any monies from the Ohio Insurance Guarantee Association." Generally, an appeal may not be based upon an abstract question devoid of a live controversy. See Ohio Contract Carriers Assn., Inc. v. Pub. Util. Comm. (1942), 140 Ohio St. 160, 23 O.O. 369, 42 N.E.2d 758, syllabus.

We find it significant that we have been supplied with neither a final entry of the federal court terminating the Waters-Rimmer action, nor a formal settlement agreement executed by all interested parties. Indeed, OIGA has not joined the county's request for dismissal. Absent definite assurances that this appeal (which has already been briefed and argued) is, in fact, moot, prudence dictates that we resolve the case on the merits.

Since no factual disputes exist at this stage of the proceedings, our review is strictly a legal one. Ohio Ins. Guar. Assn. v. Simpson (1981), 1 Ohio App.3d 112, 114, 1 OBR 418, 420, 439 N.E.2d 1257, 1259. No special deference need be afforded the trial court in such instances. Tamarkin Co. v. Wheeler (1992), 81 Ohio App.3d 232, 234, 610 N.E.2d 1042, 1043. Our summary judgment analysis boils down to a determination of whether either party is entitled to relief as a matter of law. See, generally, Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 4 O.O.3d 466, 471, 364 N.E.2d 267, 273.

OIGA was created, in large part, by the General Assembly in 1970 to help avoid "financial loss to claimants or policyholders because of the insolvency of an insurer." R.C. 3955.03. See Smith v. Ohio Valley Ins. Co. (1971), 27 Ohio St.2d 268, 270-271, 56 O.O.2d 160, 161-162, 272 N.E.2d 131, 132-133, certiorari denied (1972), 405 U.S. 921, 92 S.Ct. 958, 30 L.Ed.2d 792; Bailey v. Reithmiller (1989), 46 Ohio App.3d 27, 545 N.E.2d 928.

" * * * Under the statutory scheme set forth in R.C. Chapter 3955, OIGA steps into the shoes of an insolvent insurance company for liability purposes and then acts as a source of last resort for uncompensated but otherwise valid claims. R.C. 3955.08(A)(2) and (4). As we read R.C. Chapter 3955, once all other insurance is exhausted, OIGA is only liable for the same claims as the insolvent insurer would have been, and then only up to the insolvent insurer's policy limits." Wurth v. Ideal Mut. Ins. Co. (1987), 34 Ohio App.3d 325, 331-332, 518 N.E.2d 607, 613.

OIGA has presented three independent rationales for refusing to supply coverage to the county. The first pertains strictly to the Midland excess liability policy. Our attention is directed to the final clause of R.C. 3955.08(A)(1), which declares:

" * * * Notwithstanding any other provision of the Revised Code, the association shall not be liable to pay any claim filed with the association after the final date set by a court for filing claims in the liquidation proceedings of the insolvent insurer."

In an order dated April 3, 1986, a New York court appointed a liquidator and demanded that all claims against Midland be submitted within twelve months. In the Matter of the Application of Corcoran, New York Supreme Court, County of New York, Index No. 41294/1986. Obviously, the county was unable to meet the deadline imposed by R.C. 3955.08(A)(1), since Waters-Rimmer did not file his federal court complaint until late 1987.

It is commonly accepted that upon the liquidation of an insolvent insurer, a firm date must be set after which no more claims against the company will be received. See R.C. 3903.35. In Ohio Ins. Guar. Assn. v. Berea Roll & Bowl (1984), 19 Ohio Misc.2d 3, 5, 482 N.E.2d 995, 998, the court explained that:

"The purpose of permitting the court to set a date beyond which no claim shall be presented allows the early liquidation of the insolvent insurance company and, therefore, benefits the claimants and policyholders of the insolvent company. See R.C. 3955.03. Without this provision, a liquidation and distribution could not be effected until all potential statutes of limitations have run. * * * "

The Ohio Insurance Guarantee Association Act supplies only a limited remedy and was not designed to indemnify all persons aggrieved by an insolvent insurer in every instance. When OIGA assumes the obligations contained in a policy, it is subrogated to the rights of the insured. OIGA may then seek reimbursement against the assets of the insolvent insurer in the liquidation proceedings. R.C. 3955.12.

By limiting the period in which claims may be submitted to OIGA to the period during which the liquidation proceedings are still open, the General Assembly has evidently intended to exclude those insureds whose rights to participate in the liquidation have lapsed. Accord Satellite Bowl, Inc. v. Michigan Prop. & Cas. Guar. Assn. (1988), 165 Mich.App. 768, 771, 419 N.W.2d 460, 462. We will not speculate as to the wisdom of this restriction. ² Plain and unambiguous statutory language may not be ignored regardless of policy implications. Bd. of Edn. v. Fulton Cty. Budget Comm. (1975), 41 Ohio St.2d 147, 156, 70 O.O.2d 300, 305, 324 N.E.2d 566, 571; Guear v. Stechschulte (1928), 119 Ohio St. 1, 7, 162 N.E. 46, 48.

In its brief to this court, the county makes much of the instruction that the Ohio Insurance Guaranty Association Act is to be "liberally construed" to effect its purpose. R.C. 3955.04. Be that as it may, the deadline imposed by R.C. 3955.08(A)(1) for filing a claim is susceptible to only one possible interpretation. There is no need to "liberally" construe a statute whose meaning is clear. See Kneisley v. Lattimer-Stevens Co. (1988), 40 Ohio St.3d 354, 357, 533 N.E.2d 743, 746. Citing a number of opinions, including Berea Roll & Bowl, supra, the Court of Appeals of Michigan reasoned that:

"The trend of decisions in other jurisdictions with similar insurance guaranty funds is to preclude recovery for late claims, even for equitable reasons. * * * As these decisions note, the courts do not have the power to create an exception to an express statutory scheme providing for claims against an insolvent insurer. We agree with these decisions that allowance of delinquent claims would prolong distribution of the insolvent company's assets to the detriment of other claimants and would adversely affect the guaranty associations. * * *" (Citation omitted.) Satellite Bowl, 165 Mich.App. at 772-773, 419 N.W.2d at 462.

This court is similarly constrained.

Taking an alternative approach, the trial judge found that the county had not been notified by the New York liquidator of the deadline for filing claims against Midland. OIGA was therefore estopped, the court concluded, from resorting to R.C. 3955.08(A)(1).

This notion that a state-created association can be "estopped" from abiding by a state law due to the neglect of a foreign official is troubling indeed. Initially we note that the doctrine of equitable estoppel may only be employed to preclude a party from taking a position when that party, by his conduct, has induced another to change his position in good-faith reliance upon that conduct. State ex rel. Cities Serv. v. Orteca (1980), 63 Ohio St.2d 295, 299, 17 O.O.3d 189, 191, 409 N.E.2d 1018, 1020-1021. OIGA was not obliged by R.C. Chapter 3955 to notify anyone of the deadline imposed by R.C. 3955.08(A)(1). Even...