Twin City Fire Ins. Co. v. Adkins

• Decision Date: 03 March 2005
• Docket Number: No. 04-3205.,No. 04-3204.,04-3204.,04-3205.
• Citation: 400 F.3d 293
• Parties: TWIN CITY FIRE INSURANCE COMPANY, Plaintiff-Appellee, v. Michele ADKINS et al., Defendants-Appellants. Michele Adkins et al., Plaintiffs-Appellants, v. Twin City Fire Insurance Company; Insurance Company of North America; First State Insurance Company, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

400 F.3d 293

TWIN CITY FIRE INSURANCE COMPANY, Plaintiff-Appellee, v. Michele ADKINS et al., Defendants-Appellants.

Michele Adkins et al., Plaintiffs-Appellants, v. Twin City Fire Insurance Company; Insurance Company of North America; First State Insurance Company, Defendants-Appellees.

No. 04-3204.

No. 04-3205.

United States Court of Appeals, Sixth Circuit.

Argued: January 27, 2005.

Decided and Filed: March 3, 2005.

COPYRIGHT MATERIAL OMITTED

ARGUED:

Gregory K. Pratt, Pratt & Singer, Middletown, Ohio, for Appellants. Richard M. Garner, Davis & Young, Cleveland, Ohio, David S. Bloomfield, Jr., Porter, Wright, Morris & Arthur, Columbus, Ohio, Bruce M. Allman, Thompson Hine, Cincinnati, Ohio, for Appellees.

ON BRIEF:

Gregory K. Pratt, Pratt & Singer, Middletown, Ohio, for Appellants. Richard M. Garner, Davis & Young, Cleveland, Ohio, David S. Bloomfield, Jr., John Kenneth Thien, Porter, Wright, Morris & Arthur, Columbus, Ohio, Bruce M. Allman, Matthew C. Curran, Thompson Hine, Cincinnati, Ohio, for Appellees.

Before: MERRITT, MOORE, and GILMAN, Circuit Judges.

OPINION

GILMAN, Circuit Judge.

Michele Adkins was involved in an automobile accident in 1983 that seriously injured her and her unborn daughter. At the time of the accident, Michele's husband was employed by a subsidiary of the American Electric Power Company. American Electric had three insurance policies then in force that provided for uninsured and underinsured motorist (UM/UIM) coverage. The Adkinses brought the present action seeking coverage under these policies. Exercising its diversity jurisdiction, the district court concluded that the Ohio Supreme Court's decision in Westfield Insurance Co. v. Galatis, 100 Ohio St.3d 216, 797 N.E.2d 1256 (Ohio 2003), was controlling, and granted summary judgment in favor of the insurers.

On appeal, the Adkinses argue that Galatis is void ab initio and therefore not controlling because of an alleged lack of subject matter jurisdiction and because the decision violated the Galatises' due process rights. For the reasons set forth below, we AFFIRM the judgment of the district court.

I. BACKGROUND

A. Factual background

In January of 1983, Michele Adkins was involved in a head-on automobile accident in Licking County, Ohio. She was seriously injured — sustaining fractures to her femur, knee, arm, and face, as well as extensive abdominal injuries — when a car driven by Lori Deckard crossed the center line and collided with her car. At the time of the accident, Michele was eight months pregnant with Lindsay Adkins. Following the accident, Lindsay was born prematurely and now suffers from cerebral palsy, microcephaly, mental retardation, and other related handicaps. The Adkinses maintain that Lindsay's condition is a direct and proximate result of the accident.

Michele was not at fault in the collision. She later settled her claims with Deckard and Deckard's insurer in return for a $50,000 payment, the limit of Deckard's automobile liability insurance policy. Michele and her husband, Charles Adkins, also had an automobile insurance policy in effect with the J.C. Penney Casualty Company at the time of the accident. That policy provided for coverage of up to $12,500 for uninsured motorists and up to $25,000 for underinsured motorists. After litigation against J.C. Penney, wherein the Adkinses had alleged that it had acted in bad faith, J.C. Penney paid the Adkinses $28,000 for the settlement of all claims.

At the time of Michele's accident, her husband, Charles, was employed by a subsidiary of American Electric Power Company. American Electric was the named insured on several automobile insurance policies in effect during this time that provided UM/UIM coverage. The primary policy, obtained through the Insurance Company of North America (INA), provided for UM/UIM motorist coverage in the amount of $25,000. American Electric was also covered by two umbrella insurance policies. The first, with Twin City Fire Insurance Company, provided for automobile liability coverage with a limit of $5 million in excess of the INA policy. Another, from First State Insurance Company, also provided for additional coverage in an amount not specified in the record.

B. Procedural background

In 1999, the Ohio Supreme Court drastically altered Ohio insurance law with its decision in Scott-Pontzer v. Liberty Mutual Fire Insurance Co., 85 Ohio St.3d 660, 710 N.E.2d 1116 (Ohio 1999). The court ruled that Ohio law permitted the employees of corporate insureds to receive UM/UIM coverage under the provisions of their employers' insurance polices even if, at the time of their accidents, the employees were driving their own vehicles and acting outside the scope of their employment. Extending this principle in Ezawa v. Yasuda Fire & Marine Insurance Co. of America, 86 Ohio St.3d 557, 715 N.E.2d 1142 (Ohio 1999), the Ohio Supreme Court held that the UM/UIM coverage was also available to the family members of a corporation's employees.

Relying on the Ohio Supreme Court's decisions in Scott-Pontzer and Ezawa, the Adkinses brought this action in Ohio state court in June of 2001, over 18 years after Michele's accident. The case was removed to the United States District Court for the Southern District of Ohio and was joined with a declaratory judgment action that had been previously filed in federal court by Twin City that raised essentially the same issues. All parties filed for summary judgment. While these motions were pending, the Ohio Supreme Court issued its decision in Westfield Insurance Co. v. Galatis, 100 Ohio St.3d 216, 797 N.E.2d 1256 (Ohio 2003). The court in Galatis overruled Ezawa and limited Scott-Pontzer. After reviewing supplemental briefs from the parties, the district court granted summary judgment in favor of the insurers on the basis of Galatis, thereby precluding the recovery sought by the Adkinses. This timely appeal followed.

II. ANALYSIS

A. Standard of review

The district court's grant of summary judgment is reviewed de novo. Therma-Scan, Inc. v. Thermoscan, Inc., 295 F.3d 623, 629 (6th Cir.2002). Summary judgment is proper where there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In considering a motion for summary judgment, the district court must construe all reasonable inferences in favor of the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The central issue is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

B. The district court did not err in concluding that the Galatis decision was controlling and in granting summary judgment for the insurers on that basis

A federal court in Ohio exercising its diversity-of-citizenship jurisdiction must apply the substantive law as determined by the Ohio Supreme Court. See John Hancock Fin. Servs. v. Old Kent Bank, 346 F.3d 727, 733 (6th Cir.2003) ("Because jurisdiction in this case is based upon diversity of citizenship between [the parties], we apply state law in accordance with the then controlling decision of the highest state court.") (quotation marks omitted). The district court in the present action concluded, and the parties agree, that this dispute is governed by Ohio law.

In Westfield Insurance Co. v. Galatis, 100 Ohio St.3d 216, 797 N.E.2d 1256 (2003), the Ohio Supreme Court was presented with a fact pattern analogous to the one before us: a father and mother sought a recovery on behalf of their dependent child who was killed in an automobile accident, with coverage claimed under the UM/UIM policies previously issued to their employers. Expressly overruling its decision in Ezawa v. Yasuda Fire & Marine Insurance Co. of America, 86 Ohio St.3d 557, 715 N.E.2d 1142 (1999), and limiting its decision in Scott-Pontzer v. Liberty Mutual Fire Insurance Co., 85 Ohio St.3d 660, 710 N.E.2d 1116 (1999), the court held that "a policy of insurance that names a corporation as an insured for uninsured or underinsured motorist coverage covers a loss sustained by an employee of the corporation only if the loss occurs within the course and scope of employment . . . [and such a policy] does not extend insurance coverage to a family member of an employee of the corporation. . . ." Galatis, 797 N.E.2d at 1271.

If Galatis is held to be the controlling authority in the present action, then the district court was unquestionably correct in granting summary judgment. See Henry v. Wausau Bus. Ins. Co., 351 F.3d 710, 713 (6th Cir.2003) (applying Galatis after observing that "[i]n determining questions of Ohio state law, the court must follow the controlling decisions of the Ohio Supreme Court."). By failing to argue to the contrary in their brief, the Adkinses impliedly concede the correctness of this conclusion. They state that "[t]he lynchpin, if not the sole authority for the District Court's decision herein, is Galatis. If Galatis is void ab initio, then the District Court's decision herein is erroneous."

1. The district court erred in failing to make findings regarding the validity of the Galatis decision

On appeal, the Adkinses' primary contention is that the Galatis decision is not controlling authority because the decision was rendered without subject matter jurisdiction and in violation of the Galatises' due process rights. They frame this argument as an attempt to "collaterally challenge" the Ohio Supreme Court's decision in Galatis. The Adkinses insist that their collateral attack in federal court on the Galatis decision is permitted through a number of exceptions to the Rooker/Feldman doctrine. This federal jurisdictional doctrine holds that the lower federal courts "do not have jurisdiction . . . over...