Motorist Mut. Ins. Co. v. Andrews, s. 91-2214

• Decision Date: 14 December 1992
• Docket Number: Nos. 91-2214,91-2351,s. 91-2214
• Citation: 65 Ohio St.3d 362,604 N.E.2d 142
• Parties: MOTORISTS MUTUAL INSURANCE COMPANY, Appellant, v. ANDREWS et al., Appellees.
• Court: Ohio Supreme Court

Page 362

65 Ohio St.3d 362

604 N.E.2d 142

MOTORISTS MUTUAL INSURANCE COMPANY, Appellant, v. ANDREWS et al., Appellees.

Nos. 91-2214, 91-2351.

Supreme Court of Ohio.

Submitted Sept. 23, 1992.

Decided Dec. 14, 1992.

SYLLABUS BY THE COURT

When determining whether a motorist is underinsured within the meaning of R.C. 3937.18(A)(2), the amount actually available for payment under the tortfeasor's liability insurance policy must be compared with the insured's underinsured motorist coverage limits. If the amount available for payment is less than the insured's underinsured policy limits, then the insured is entitled to underinsured motorist coverage.

On August 27, 1987, Nathan Andrews and Shannon Andrews, minor children of Dennis and Anita Andrews, were passengers in a car driven by their grandfather, Richard Andrews. The car was involved in an accident with a truck owned by Mac's Transport, Inc. The operator of the truck, it seems, was at fault in causing the accident. As a result of the accident, Nathan was killed, Shannon was injured, and it appears Richard was severely and permanently injured.

Primary liability insurance was provided by two policies written by National Indemnity Insurance Company ("National"). The first policy, a single liability limit of $750,000, insured Mac's Transport. The second policy insured Fairmont Homes, Inc., owner of the mobile home hauled by Mac's Transport, and the policy named Mac's Transport as an additional insured.

Pursuant to agreement of all the parties, National paid Richard the full $750,000 under the Mac's Transport policy. National denied coverage under the Fairmont Homes policy. National filed a declaratory judgment action in federal court, and eventually settled the claim for $100,000. From the second policy, National paid $97,000 to Richard, and $1,000 each to Richard's wife, Nathan's estate, and Shannon. Finally, Mac's Transport paid $150,000 to Richard for release of all claims against it.

Dennis and Anita Andrews submitted claims to Dennis' own automobile insurer, Motorists Mutual Insurance Company ("Motorists"), for underinsured motorist coverage on behalf of themselves, Nathan's estate and Shannon. The policy limits of the underinsured motorist coverage are in dispute, but the parties agree that the limit is less than the $750,000 limit of Mac's Transport policy. ¹ Motorists denied underinsured motorist coverage. Motorists then filed a declaratory judgment action seeking a determination that the Andrewses were not entitled to underinsured motorist coverage.

The trial court determined that the Andrewses were not entitled to underinsured motorist coverage, based on Hill v. Allstate Ins. Co. (1990), 50 Ohio St.3d 243, 553 N.E.2d 658. The court of appeals reversed, holding that Hill could be distinguished and, therefore, did not preclude underinsured coverage in this case.

The court, finding its decision to be in conflict with the decisions in Estate of Bondurant v. J.C. Penney Cas. Ins. Co. (Oct. 31, 1990), Fairfield App. Nos. 35-C.A.-89, 39-CA-89 and 40-CA-89, unreported, 1990 WL 173356; Sellars v. Safeco Ins. Co. (Oct. 15, 1990), Butler App. No. 90-02-034, unreported, 1990 WL 154021; and Transamerica Ins. Co. v. Nolan (Sept. 4, 1990), Warren App. Nos. 89-12-077 and 89-12-079, unreported, 1990 WL 127204, certified the record of the case to this court for review and final determination in case No. 91-2351. This cause is also before this court pursuant to an allowance of a motion to certify the record on the certified question in case No. 91-2214.

Carpenter, Paffenbarger, McGimpsey & Lux and Earl R. McGimpsey, Norwalk, for appellant.

Murray & Murray Co., L.P.A., W. Patrick Murray, Sandusky, for appellees.

Williams, Jilek, Lafferty & Gallagher Co., L.P.A., Thomas W. Gallagher, Dale M. Grocki, Toledo, urging affirmance on behalf of amicus curiae, Ohio Academy of Trial Lawyers.

MARY CACIOPPO, Judge.

The question presented to this court is whether underinsured motorist coverage is available to an insured where the tortfeasor's policy limit is greater than the insured's policy limits but the claims of multiple claimants have resulted in undercompensation of the insured's injuries. For the reasons which follow, we hold that underinsured motorist coverage is available, and affirm the court of appeals.

The central dispute in the case at bar is whether the accident involved an underinsured motorist within the meaning of R.C. 3937.18(A)(2). Motorists asserts that Mac's Transport was not underinsured because its policy limit, $750,000, was greater than the Andrews policy limits. On the other hand, the Andrewses contend that Mac's Transport was underinsured because the amount available for payment to the Andrewses was zero after the policy limit had been paid to Richard Andrews.

In considering this question, we first examine R.C. 3937.18(A)(2), which requires insurance companies to offer underinsured motorist coverage as part of every automobile insurance policy. This provision states that insurance companies must offer:

"Underinsured motorist coverage, which shall be in an amount of coverage equivalent to the automobile liability or motor vehicle liability coverage and shall provide protection for an insured against loss for bodily injury, sickness, or disease, including death, whether the limits of coverage available for payment to the insured under all bodily injury liability bonds and insurance policies covering persons liable to the insured are less than the limits for the insured's uninsured motorist coverage at the time of the accident. The limits of liability for an insurer providing underinsured motorist coverage shall be the limits of such coverage, less those amounts actually recovered under all applicable bodily injury liability bonds and insurance policies covering persons liable to the insured."

Motorists asserts that the comparison-of-the-limits approach applied by this court in Hill v. Allstate Ins. Co. (1990), 50 Ohio St.3d 243, 553 N.E.2d 658, leads to the result that Mac's Transport was not underinsured. The Andrewses counter that the Hill rationale is inappropriate in a case such as this, where the claims of multiple claimants have limited the amount which each injured party can recover. The Andrewses assert that if the position advanced by Motorists were adopted by this court, the public policy behind requiring underinsured motorist coverage would be circumvented.

This court examined the public policy behind underinsured motorist coverage in James v. Michigan Mut. Ins. Co. (1985), 18 Ohio St.3d 386, 389, 18 OBR 440, 443, 481 N.E.2d 272, 274-275:

"Underinsured motorist coverage was first required by statute after the legislature discovered the 'underinsurance loophole' in uninsured motorist coverage--i.e., persons injured by tortfeasors having extremely low liability coverage were being denied the same coverage that was being afforded to persons who were injured by tortfeasors having no liability coverage. Thus, the original motivation behind the enactment of R.C. 3937.181(C) was to assure that persons injured by an underinsured motorist would receive at least the same amount of total compensation that they would have received if they had been injured by an uninsured motorist." (Emphasis sic.)

This court reiterated this policy in Hill, supra, 50 Ohio St.3d at 245, 553 N.E.2d at 661. Lower courts have also recognized and considered this policy in addressing these issues. See, e.g., Felber v. Grange Mut. Ins. Co. (Aug. 28, 1991), Summit App. No. 15003, unreported, 1991 WL 168586; Wilson v. Grange Mut. Cas. Co. (Aug. 29, 1989), Franklin App. No. 87AP-1197, unreported, 1989 WL 99417; Knudson v. Grange Mut. Cos. (1986), 31 Ohio App.3d 20, 23, 31 OBR 34, 37, 507 N.E.2d 1155, 1157-1158. Simply stated, the well-reasoned public policy behind requiring underinsured motorist coverage is to assure that an injured person receive at least the same amount of compensation whether the tortfeasor is insured or uninsured.

Returning to R.C. 3937.18(A)(2), we must interpret this statute in light of the public policy responsible for its adoption. In Hill, this court interpreted R.C. 3937.18(A)(2) to mean that:

"Unless otherwise provided by an insurer, underinsured motorist liability insurance coverage is not available to an insured where the limits of liability contained in the insured's policy are identical to the limits of liability set forth in the tortfeasor's liability insurance coverage. (R.C. 3937.18[A], construed and applied; Wood v. Shepard [1988], 38 Ohio St.3d 86, 526 N.E.2d 1089, distinguished and explained.)" Hill, supra, 50 Ohio St.3d 243, 553 N.E.2d 658, syllabus. In Hill, the insured-decedent and the tortfeasor had policies with identical limits of underinsured motorist and liability coverage, respectively; $50,000 per person and $100,000 per occurrence. The decedent's estate had been compensated by the same amount as the limit of the underinsured coverage. Therefore, the estate was not entitled to recover under the underinsured motorist coverage.

The Hill rationale is appropriate in a case involving a single claimant. However, Hill fails to address the situation where, as in the case at bar, the claims of multiple claimants result in reduction of the amount available for payment to the insured below the underinsured motorist limits. Several courts of appeals, including the courts below, have considered this issue, with similar results.

In Knudson v. Grange Mut. Cos., supra, 31 Ohio App.3d at 21, 31 OBR at 35, 507 N.E.2d at 1156, the issue before the Court of Appeals for Lucas County was whether underinsured coverage was available where the tortfeasor's liability limits were identical to the insured's, but the amount available for payment to the insured was reduced below the liability limits because of the claims of multiple claimants. The court reviewed R.C. 3937.18(A)(2) and this court's pronouncement of the policy behind requiring...