Miller v. State Farm Mut. Auto. Ins. Co., 95-3825

• Decision Date: 28 June 1996
• Docket Number: No. 95-3825,95-3825
• Citation: 87 F.3d 822
• Parties: Tricia MILLER, Executrix of the estate of Rhonda Bishop, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 822

87 F.3d 822

Tricia MILLER, Executrix of the estate of Rhonda Bishop Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.

No. 95-3825.

United States Court of Appeals, Sixth Circuit.

Submitted June 14, 1996.

Decided June 28, 1996.

Lynn E. Lebit (briefed), Sindell, Lowe & Guidubaldi, Cleveland, OH, for Plaintiff-Appellant.

Josheph H. Wantz (briefed), Meyers, Hentemann, Schneider & Rea Co., Cleveland, OH, for Defendant-Appellee.

Before: BROWN, KENNEDY, and WELLFORD, Circuit Judges.

BAILEY BROWN, Circuit Judge.

Tricia Miller, executrix of and heir at law to the estate of Rhonda Bishop, appeals from the district court's award of summary judgment to State Farm Mutual Automobile Insurance Company ("State Farm"), in this diversity action brought to determine the amount potentially payable pursuant to the underinsured motorist provision of an insurance policy which State Farm issued to Bishop. The sole issue is whether the district court was correct when it held that, under Ohio's choice of law rules, Pennsylvania law applies because the instant case involves the interpretation of a contract executed in Pennsylvania by a Pennsylvania resident. We AFFIRM.

I. BACKGROUND

The parties stipulated to the material facts. Plaintiff Miller is an Ohio resident, and her decedent, Bishop, was a Pennsylvania resident. Bishop purchased an insurance policy for automobile liability coverage from State Farm while residing in Pennsylvania. State Farm, which is licensed to do business in both Pennsylvania and Ohio and which has its principal place of business in Illinois, agreed to provide Bishop with uninsured and underinsured motorist coverage in exchange for premium payments. Under the policy, State Farm would pay Bishop a limit of $100,000 per person and $300,000 per accident for "damages for bodily injury an insured is legally entitled to collect from the owner or driver of an ... underinsured motor vehicle."

Bishop suffered a wrongful death in 1993 as a result of an automobile collision in Monroe Township, Ohio. The underinsured driver of the other vehicle, an Ohio resident, caused the fatal collision and is not a party to this action. Bishop's insurance policy with State Farm was in full force and effect on the date of the fatal accident.

After exhausting the tortfeasor's insurance policy, Miller, as executrix of the estate of Bishop, made an underinsured motorist claim against State Farm. The claim requested all damages which Miller was legally entitled to collect from the tortfeasor. State Farm paid Miller $100,000 pursuant to the "per person" clause of the insurance policy, and claimed that that was the entire amount of the damages for which it was responsible. The parties agreed, however, that Miller reserved the right to litigate the question of whether the remaining $200,000 of the "per accident" policy limit was available.

Miller eventually sued State Farm in Ohio state court, alleging that State Farm had wrongfully denied full payment under the policy Bishop had purchased. Miller asserts that, under Ohio law, she is entitled to the full $300,000 "per accident" limit of the policy. State Farm removed the case to federal district court on diversity grounds, and Miller then amended her complaint to make it a declaratory judgment action. The parties stipulated that "[a] question has arisen as to whether Ohio law or Pennsylvania law should apply to determine the amount payable under the uninsured/underinsured motorist provisions of the policy."

The importance of this choice of law question is a matter of money. State Farm notes (and Miller does not dispute) that, under Pennsylvania law, Miller would be entitled only to the $100,000 "per person" limit for Bishop's wrongful death, while under Ohio law, Miller "would arguably be entitled to the $300,000.00 'per accident' limits." Br. of Appellee at 9 (emphasis added). Thus, State Farm moved for summary judgment, and the court below granted its motion, finding that, under Ohio choice of law rules, Pennsylvania law controlled the amount of coverage for which State Farm was liable. This appeal followed.

II. ANALYSIS

A. Standard of Review.

Summary judgment is appropriate if "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). When considering an appeal from a district court's grant of summary judgment, we apply this same test, and our review is plenary. E.g., Maddox v. University of Tenn., 62 F.3d 843, 845 (6th Cir.1995). Further, when the material facts of a case are undisputed, as they are here, one of the parties is entitled to summary judgment. Niecko v. Emro Mktg., 973 F.2d 1296, 1304 (6th Cir.1992). Finally, we conduct a de novo review of a district court's determinations of state law. E.g., Salve Regina College v. Russell, 499 U.S. 225, 231, 111 S.Ct. 1217, 1220-21, 113 L.Ed.2d 190 (1991).

B. Choice of Law.

A federal court sitting in its diversity jurisdiction applies the choice of law rules of the forum state. E.g., Klaxon Co. v. Stentor Elec. Mfg., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941). Miller, the executrix, does not dispute the proposition that Ohio conflict of laws rules govern. Thus, we begin by looking to Ohio choice of law rules to determine what state law to apply to this case. Under Ohio law, courts apply interest-analysis tests set forth in the Restatement (Second) of the Law, Conflict of Laws to resolve conflict of laws issues. E.g., Gries Sports Enters. v. Modell, 15 Ohio St.3d 284, 473 N.E.2d 807, 810 (1984), cert. denied, 473 U.S. 906, 105 S.Ct. 3530, 87 L.Ed.2d 654 (1985).

The basis of an action--i.e., whether it is deemed to be a tort case or a contract case--determines which of the Restatement 's interest-analysis tests an Ohio court must apply. If an action is deemed to be a tort action, section 146 applies, and the law of the state where the injury occurred presumptively controls. Morgan v. Biro Mfg. Co., 15 Ohio St.3d 339, 474 N.E.2d 286, 288-89 (1984) (per curiam). If an action is based in contract, however, then section 188 applies, and the law of the state where the contract was made presumptively controls. Nationwide Mut. Ins. Co. v. Ferrin, 21 Ohio St.3d 43, 487 N.E.2d 568, 569 (1986) (per curiam).

Thus, the question before us is whether, under Ohio law, tort law or contract law applies when determining an insurance company's liability pursuant to an underinsured motorist policy. Miller, the executrix, argues that we must apply Ohio tort law to determine the potential damages for which State Farm may be held responsible, because the tort which gave rise to this case occurred in Ohio.

The district court, however, found that it was "asked to decide whose law to apply to determine the amount of coverage available to the insured under State Farm's insurance policy." Thus, the court reasoned, this case "sounds in contract, not tort," because it "involves interpretation of a contract executed in Pennsylvania by a Pennsylvania resident." See Fiste v. Atlantic Mut. Ins. Co., 94 Ohio App.3d 165, 640 N.E.2d 551, 553 (1994) (holding that an action sounded in contract where it involved an insured suing his insurer as to the insurer's contractual obligations, even though "the triggering event" was an automobile accident). The district court then held that, under Ohio choice of law rules, the law of the state where the contract was made--Pennsylvania--controlled the interpretation of the insurance contract between Bishop and State Farm. E.g., Ferrin, 487 N.E.2d at 569.

We agree with the district court's conclusions that this case, under Ohio law, sounds in contract and that it must, under Ohio choice of law rules, be decided under Pennsylvania law. The Supreme Court of Ohio recently stated, "We recognize that an action by an insured against an insurance carrier for payment of uninsured or underinsured motorist benefits is a cause of action sounding in contract." Miller v. Progressive Casualty Ins. Co., 69 Ohio St.3d 619, 635 N.E.2d 317, 321 (1994) (emphasis added). Although the Miller court did not address the precise issue before us--it invalidated insurance policy provisions that required insureds to bring claims for uninsured and underinsured coverage within one year of an accident--its express recognition that cases similar to the instant case sound in contract is quite persuasive.

We are aware that the Ohio cases in this area evince some confusion. We believe, however, that a close reading of the cases shows that they do not conflict. Rather, they are distinguishable by virtue of the questions they resolve.

For example, Miller chiefly relies on the case of Kurent v. Farmers Insurance of Columbus, Inc., 62 Ohio St.3d 242, 581 N.E.2d 533 (1991), which presented the issue of whether a plaintiff was "legally entitled" to recover damages pursuant to an underinsured motorist policy. In Kurent, a Michigan driver injured Ohio residents in Michigan, where no-fault law denies non-economic damages unless such damages are established beyond a threshold limit. Id. 581 N.E.2d at 534. The Ohio residents, who could not satisfy that limit, sued their insurance company in Ohio for uninsured motorist benefits under their policy, arguing that Ohio law should apply for purposes of determining their coverage. Id. at 537. The court held that Michigan law applied because it was the site of the accident, and because under their policy the Ohio residents had to show both that (1) the injuring vehicle was uninsured, and (2) they were "legally entitled to recover" from its owner. Id. at 536 (citing Sumwalt v. Allstate Ins. Co., 12 Ohio St.3d 294, 466 N.E.2d 544, 545 (1984)). Under Michigan's no-fault law, they were not "legally entitled to recover" from the Michigan driver, because the driver had no-fault insurance and because they could not meet the threshold limit for non-economic damages. Thus, t...