Macdonald v. Pacific Employers Ins. Co.
| Decision Date | 26 July 2002 |
| Docket Number | No. 1:01 CV 2814.,1:01 CV 2814. |
| Citation | 264 F.Supp.2d 576 |
| Parties | Donald MACDONALD, Jr., Plaintiff, v. PACIFIC EMPLOYERS INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Northern District of Ohio |
David A. Kulwicki, Becker & Mishkind Co., L.P.A., Cleveland, OH, for Plaintiff.
Michael L. Golding, Moscarino & Treu, Cleveland, OH, Steven J. Forbes, Norchi & Associates, Commerce Park IV, Beachwood, OH, for Defendant.
This matter is before the Court upon the Motion for Summary Judgment of Pacific Employers Insurance Company (Doc. 19). This cases arises out of injuries sustained by plaintiff in a motor vehicle accident. Plaintiff seeks a declaration that he is entitled to coverage under a policy issued by defendant to plaintiffs employer, compensatory and punitive damages and interest. For the following reasons, the Motion is GRANTED.
On November 14, 1999, plaintiff Donald MacDonald suffered severe personal injuries when his vehicle was struck by a vehicle operated by an underinsured motorist. (Compl. ¶¶3-4). At the time of the accident, plaintiff was an employee of J.E. Merit Constructors, Inc. (hereafter "J.E. Merit"). (Compl. ¶ 7).
Defendant Pacific Employers Insurance Company issued Business Auto Policy No. ISA H07831997 to J.E. Merit with a policy period of July 1, 1999 to July 1, 2000 (hereafter "Policy"). (Deft. Ex. A; Galganski Aff. ¶ 15). The Policy has liability limits of $5,000,000.00 and a matching deductible of $5,000,000.00. (Deft. Ex. A; Cook Aff. ¶ 5). J.E. Merit purchased the policy to satisfy the financial responsibility statutes of a number of states, including Ohio, where company vehicles were being operated. (Galganski Aff. ¶ 6). However, under the terms of the Policy, J.E. Merit remains entirely responsible for all losses, including administrative costs and expenses incurred in the processing of claims. (Cook Aff. ¶7; Galganski Aff. §§8-9). In addition, Jacobs Engineering Group, Inc., J.E. Merit's parent corporation, has executed letters of credit and/or bonds in favor of defendant that secure J.E. Merit's responsibility for all losses and payments incurred under the Policy, even in the event of bankruptcy. (Galganski Aff. ¶¶ 4, 10).
The Policy does not include a uninsured/underinsured motorists (hereafter "UM/UIM") coverage section. . Michael Carlin, who at all times relevant was the Manager of Corporate Risk Management for J.E. Merit, avers that it is J.E. Merit's corporate practice "not to purchase uninsured/underinsured motorist coverage because it is self-insured." (Carlin Aff. ¶¶3-4). For this reason, Carlin executed a Selection Form rejecting UM/UIM coverage in Ohio on August 6, 1998. .
Plaintiff originally filed suit in the Lorain County Court of Common Pleas. Defendant removed the case to this Court on December 13, 2001. On March 26, 2002, this Court denied plaintiffs Motion to Remand.
The Complaint sets forth three causes of action. Count One seeks a declaration that plaintiff is entitled to recover UIM benefits under the Policy. Count Two alleges breach of contract. Count Three alleges defendant acted tortiously and in bad faith by refusing to provide plaintiff with UIM coverage.
Defendant moves for summary judgment. Plaintiff opposes defendant's Motion and seeks summary judgment in his own favor.1
In accordance with Federal Rule of Civil Procedure 56(c), summary judgment is appropriate when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); LaPointe v. United Autoworkers Local 600, 8 F.3d 376, 378 (6th Cir.1993). The burden of showing the absence of any such genuine issues of material facts rests with the moving party:
[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which it believes demonstrates the absence of a genuine issue of material fact.
Celotex, 477 U.S. at 323, 106 S.Ct. 2548. A fact is material only if its resolution might affect the outcome of the lawsuit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
Once the moving party has satisfied its burden of proof, the burden then shifts to the nonmoving party pursuant to Federal Rule of Civil Procedure 56(e), which provides When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleadings, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party.
In ruling upon the motion, the court must afford all reasonable inferences and construe the evidence in the light most favorable to the nonmoving party. Cox v. Kentucky Dept. of Transp., 53 F.3d 146, 150 (6th Cir.1995); United States v. Hodges X-Ray, Inc., 759 F.2d 557, 562 (6th Cir.1985). However, summary judgment should be granted if the party bearing the burden of proof at trial does not establish an essential element of its case. Tolton v. American Biodyne, Inc., 48 F.3d 937, 941 (6th Cir.1995) (citing Celotex, 477 U.S. 317, 106 S.Ct. 2548).
The Policy provisions at issue in this case include the following:
ITEM TWO. SCHEDULE OF COVERAGES AND COVERED AUTOS:
This policy provides only those coverages where a charge is shown in the premium column below. Each of these coverages will apply only to "autos" shown as covered "autos." "Autos" are shown as covered "autos" for a particular coverage by the entry of one or more of the symbols from the COVERED AUTO Section of the Business Auto Coverage Form next to the name of the coverage.
COVERAGES COVERED LIMIT
AUTOS THE MOST WE WILL PAY FOR ANY PREMIUM
ONE ACCIDENT OR LOSS
Liability 1 $5,000,000 $1,763
* * * * * *
Uninsured Motorists $ Minimum Limits required by Law $ Included
Underinsured Motorists
(when not included
in Uninsured
Motorists Coverage) $ Minimum Limits required by Law $ Included
_______________________________________________________________________________________________
* * * * * *
Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered.
Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations. The words "we", "us" and "our" refer to the Company providing this insurance.
Other words and phrases that appear in quotation marks have special meaning. Refer to Section V—DEFINITIONS.
ITEM TWO of the Declarations shows the "autos" that are covered "autos" for each of your coverages. The following numerical symbols describe the "autos" that may be covered "autos". The symbols entered next to a coverage on the Declarations designate the only "autos" that are covered "autos".
A. DESCRIPTION OF COVERED AUTO DESIGNATION SYMBOLS SYMBOL DESCRIPTION
1= ANY "AUTO"
* * * * * *
6= OWNED "AUTOS" SUBJECT TO A COMPULSORY UNINSURED MOTORISTS LAW. Only those "autos" you own that because of the law in the state where they are licensed or principally garaged are required to have and cannot reject Uninsured Motorist Coverage. This includes those "autos" you acquire ownership of after the policy begins provided they are subject to the same state uninsured motorists requirement.
.
SECTION II-LIABILITY COVERAGE defines "insured" as follows:
1. WHO IS AN INSURED
a. You for any covered "auto". .
Defendant argues that it is entitled to summary judgment because (1) plaintiff is not an insured under the Policy; (2) J.E. Merit is self-insured in a practical sense and not required to offer UIM coverage to itself or have been offered UIM coverage by defendant; and (3) J.E. Merit executed a timely and valid written rejection of UIM coverage in connection with the Policy-Plaintiff responds by arguing that he is an insured under the Policy in accordance with the holding of the Supreme Court of Ohio in Scott-Pontzer v. Liberty Mutual Fire Insurance Co., 85 Ohio St.3d 660, 710 N.E.2d 1116 (1999), because he was employed by the named insured and liability coverage under the Policy extends to "any auto." Plaintiff also argues that J.E. Merit is not self-insured and defendant's offer and J.E. Merit's rejection of UIM/UM coverage are invalid in light of the requirements of Ohio law. Thus, according to plaintiff, UIM coverage arises by operation of law for his benefit.
In accordance with former Ohio Revised Code § 3937.18(A)2, insurance companies must offer UM and UIM coverage with every automobile liability or motor vehicle liability policy delivered or issued in Ohio. Gyori v. Johnston Coca-Cola Bottling Group, Inc., 76 Ohio St.3d 565, 669 N.E.2d 824, 826 (1996) (citing Abate v. Pioneer Mutual Casualty Co., 22 Ohio St.2d 161, 258 N.E.2d 429 (1970), syllabus). In the event an insurer is subject to and fails to comply with O.R.C. § 3937.18, UM/UIM coverage arises by operation of law at an amount equivalent to the limit of liability. Id. Thus, the first issue this Court must address is whether the Policy provides UIM coverage expressly or by operation of law. In the event no UIM coverage is provided by the Policy, this Court need not...
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