Raudins v. Hobbs

• Decision Date: 14 June 2018
• Docket Number: 106233,106236,Nos. 106232,106238,s. 106232
• Citation: 104 N.E.3d 1040,2018 Ohio 2309
• Parties: Eric J. RAUDINS, et al., Plaintiffs v. William HOBBS, et al., Defendants-Appellants
• Court: Ohio Court of Appeals

104 N.E.3d 1040

2018 Ohio 2309

Eric J. RAUDINS, et al., Plaintiffs

v.William HOBBS, et al., Defendants-Appellants

Nos. 106232

106233

106236

106238

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

RELEASED AND JOURNALIZED: June 14, 2018

Randy L. Taylor, Ronald A. Rispo, Weston Hurd L.L.P., The Tower at Erieview, 1301 East 9th Street, Suite 1900, Cleveland, Ohio 44114, ATTORNEYS FOR APPELLANTS ERIE INSURANCE COMPANY, RECREATION INSURANCE SPECIALISTS, L.L.C. AND RIS RISK MANAGEMENT SERVICES, L.L.C.

Shawn W. Maestle, Robert E. Goff, Jr., Weston Hurd L.L.P., The Tower at Erieview, 1301 East 9th Street, Suite 1900, Cleveland, Ohio 44114, ATTORNEYS FOR APPELLANTS AMICA MUTUAL INSURANCE COMPANY AND WILLIAM HOBBS

Dennis Fogarty, Matthew P. Baringer, Davis & Young, 29010 Chardon Road, Willoughby Hills, Ohio 44092, ATTORNEYS FOR APPELLEE WESTFIELD INSURANCE COMPANY

William Craig Bashein, Bashein & Bashein Co., L.P.A., Terminal Tower, Suite 1910, 50 Public Square, Cleveland, Ohio 44113, Paul W. Flowers, Paul W. Flowers Co. L.P.A., Terminal Tower, Suite 1910, 50 Public Square, Cleveland, Ohio 44113, ATTORNEYS FOR ERIC AND DEE RAUDINS

BEFORE: E.A. Gallagher, A.J., Blackmon, J., and Celebrezze, J.

JOURNAL ENTRY AND OPINION

EILEEN A. GALLAGHER, A.J.:

{¶ 1} This case involves the interpretation of various insurance policies. In this consolidated appeal, defendants-appellants Erie Insurance Co. ("Erie") and William Hobbs ("Hobbs") and third-party defendants-appellants Amica Mutual Insurance Co. ("Amica"), Recreation Insurance Specialists, L.L.C. ("Recreation") and RIS Risk Management Services, L.L.C. ("Risk") appeal from the trial court's order granting third-party defendant-appellee Westfield Insurance Co.'s ("Westfield's") motion for summary judgment and denying Erie's motion for summary judgment regarding insurance coverage for injuries sustained by Eric Raudins ("Raudins") arising out of a January 13, 2011 automobile accident.¹ Appellants contend that the trial court erred in concluding that Westfield was not obligated to provide liability insurance coverage to Hobbs, the driver of the accident vehicle, under a non-owned auto liability endorsement to a businessowners policy Westfield issued to Recreation and Risk. Erie, Recreation and Risk further contend that the trial court erred in concluding that the accident was covered under a personal auto liability insurance policy Erie issued to Hobbs. For the reasons that follow, we affirm the decision of the trial court.

Factual and Procedural Background

The Accident and the Companies

{¶ 2} On January 13, 2011, Hobbs and Raudins were traveling from Risk and Recreation's offices in Akron, Ohio to the Hilton Garden Inn in Mayfield Heights, Ohio where Hobbs was scheduled to make a presentation on trailer insurance to an insurance agency. Raudins accompanied Hobbs to the January 13, 2011 meeting out of "curiosity" and "to get out of the office." Hobbs was driving his 2003 Toyota Tundra truck (the "accident vehicle" or the "Toyota Tundra") and Raudins was the front seat passenger. On their way to the meeting, Hobbs hit a patch of ice on I-271 North, lost control of the vehicle and the vehicle struck a concrete barrier. Raudins injured his neck in the accident, requiring surgery.

{¶ 3} At the time of the accident, Hobbs and Raudins were involved in three related business entities — Recreation, Risk and RIS Holdings, L.L.C. ("RIS Holdings").

{¶ 4} Recreation was an insurance agency in the business of underwriting insurance policies for recreational vehicles. At the time of the accident, Hobbs was the president of Recreation, Raudins was the company's vice-president and chief operating officer and the two men comprised its board of directors.

{¶ 5} Risk was in the business of administering claims made under insurance policies for recreational vehicles. At the time of the accident, Hobbs was the president of Risk and Hobbs and Raudins comprised its board of directors.

{¶ 6} RIS Holdings, a holding company, was the sole member of Recreation and Risk. At the time of the accident, Hobbs and Raudins were two of the members of RIS Holdings. Hobbs was the president of RIS Holdings and Raudins was its vice-president and chief operating officer. Raudins testified that he and Hobbs were responsible for "overseeing [the] strategy and direction" of the three entities and "mak[ing] sure that those companies operated and functioned properly." Raudins testified that he did not have "any defined duties" for the companies and that what he did "varied widely." Although Recreation and Risk each had employees who earned wages reported on W-2 forms, Hobbs and Raudins were not among them. Hobbs and Raudins were compensated for the services they provided through guaranteed payments from Recreation, which were reported on K-1 forms issued by RIS Holdings.

{¶ 7} Raudins filed workers' compensation claims for the injuries he sustained in the accident but his claims were denied on the ground that he was not an employee of any of the companies and did not otherwise have workers' compensation coverage.²

The Insurance Policies

{¶ 8} At the time of the accident, Erie insured Hobbs under a "family auto insurance policy" (the "Erie policy"). The Toyota Tundra was specifically identified as a "covered auto" on the declarations page of the policy. The Erie policy included bodily injury auto liability coverage with limits of $250,000 per person and $500,000 per accident and uninsured/underinsured motorists ("UM/UIM") coverage with limits of $250,000 per person and $500,000 per accident.

{¶ 9} Amica issued a personal automobile policy to the Raudinses (the "Amica policy"). As it relates to this case, the Amica policy provided UM/UIM coverage with limits of $1,000,000 per person and $1,000,000 per accident.

{¶ 10} Westfield issued a "businessowners package policy" to Recreation and Risk (the "Westfield policy").³ The policy included an endorsement for "hired auto and non-owned auto" liability coverage with a $2,000,000 limit (the "endorsement").

The Litigation

{¶ 11} On August 20, 2012, the Raudinses filed a complaint in the Cuyahoga County Court of Common Pleas (Case No. CV-12-789591) against Hobbs, Erie and Amica to recover for injuries and damages sustained as a result of the accident (the "first lawsuit"). Raudins asserted a negligence claim against Hobbs and claims for breach of contract and declaratory judgment against Erie and Amica, seeking to establish his rights against the insurers under their respective insurance policies. Dee Raudins asserted a claim for loss of consortium against Hobbs, Erie and Amica. Erie filed an answer⁴ and counterclaim for declaratory judgment, seeking a declaration that the Erie policy afforded no liability or UM/UIM coverage for Raudins' injuries and damages. Amica filed an answer, a counterclaim for declaratory judgment and a cross-claim against Hobbs for contribution and/or indemnification. Amica sought a declaration that it owed no UM/UIM coverage to Raudins as a result of the accident or, alternatively, that (1) it owed no UM/UIM coverage until all other liability coverage and primary UM/UIM coverage was exhausted or (2) any UM/UIM coverage under the Amica policy applied on a pro rata basis with other applicable UM/UIM coverage. Hobbs filed an answer and a cross-claim against Erie for declaratory judgment, seeking a declaration that he was entitled to liability coverage under the Erie policy. The Raudinses filed an answer to Erie's counterclaim. Hobbs and Erie filed answers to the cross-claims asserted against them.

{¶ 12} In March 2013, Hobbs filed a third-party complaint against Recreation, Risk, Westfield and Community Insurance Company d.b.a. Anthem Blue Cross and Blue Shield ("Anthem"). Hobbs asserted a claim for contractual indemnity against Recreation and Risk, alleging that the companies had a duty to indemnify him for Raudins' alleged damages pursuant to indemnification provisions in their operating agreements. Hobbs asserted a claim for breach of contract against Westfield for its failure to defend and indemnify him under the Westfield policy and asserted a claim for declaratory judgment against Anthem, seeking a declaration that Anthem was not entitled to recover medical benefits it paid to Raudins from Hobbs. Westfield and Anthem filed answers to Hobbs' third-party complaint.

{¶ 13} On January 10, 2014, the Raudinses filed a second lawsuit in the Cuyahoga County Court of Common Pleas against Westfield (the "second lawsuit"). Raudins asserted a claim for UM/UIM coverage under the Westfield policy, and Dee Raudins asserted a claim for loss of consortium. In February 2014, the trial court consolidated the two lawsuits. In March 2014, Hobbs voluntarily dismissed his cross-claim against Erie and his third-party complaint against Recreation and Risk in the first lawsuit without prejudice.

Motions for Summary Judgment

{¶ 14} In August 2014, Westfield, Erie and Amica all filed motions for summary judgment on the issue of insurance coverage. Each insurer argued that there was no liability coverage and/or UM/UIM coverage for the accident under its insurance policy and that the other insurers were responsible for coverage for the accident.

{¶ 15} Westfield argued that it was entitled to summary judgment on Hobbs' third-party complaint in the first lawsuit because Hobbs did not meet the definition of an "insured" under the endorsement⁵ and that it was entitled to summary judgment on the Raudinses' complaint in the second lawsuit because the Westfield policy did not include UM/UIM coverage. Erie argued that it owed no liability coverage or UM/UIM coverage for the accident under its policy because (1) the policy excluded coverage for injuries to an insured's employees occurring in the course of employment and (2) Hobbs was not "legally" required to "pay" for Raudins' injuries and Raudins was not "legally entitled to recover" for his injuries from Hobbs (as necessary to trigger liability coverage or...