Vicki S. Mcguire v. Bryan L. Mills

• Decision Date: 30 August 1999
• Docket Number: 98CA2462,99-LW-3727
• Parties: VICKI S. MCGUIRE, et al., Plaintiffs-Appellees v. BRYAN L. MILLS, et al., Defendants CNA INSURANCE COMPANIES, Defendant-Appellant Case
• Court: Ohio Court of Appeals

VICKI S. MCGUIRE, et al Plaintiffs-Appellees v. BRYAN L. MILLS, et al., Defendants

CNA INSURANCE COMPANIES Defendant-Appellant

No. 98CA2462.

99-LW-3727 (4th)

Court of Appeals of Ohio, Fourth District Ross

August 30, 1999

Edwin J. Hollern, Mazanec, Raskin & Ryder Co., L.P.A., Columbus Ohio, for Appellant CNA Insurance Companies.

John S. Street, Phillips & Street, Chillicothe, Ohio, for Appellee John M. Knauff.

DECISION

Harsha J.

Appellant CNA Insurance Companies ("CNA") appeals the Ross

County Court of Common Pleas, grant of summary judgment in favor

of various plaintiffs in a declaratory judgment action. CNA

assigns four errors for our review:

I. THE TRIAL COURT ERRED WHEN IT GRANTED PLAINTIFF APPELLEE'S MOTION FOR SUMMARY JUDGMENT AND OVERRULED THE MOTION FOR SUMMARY JUDGMENT OF CNA INSURANCE COMPANIES.

II. THE TRIAL COURT ERRED BY HOLDING THAT OHIO LAW GOVERNS THE INTERPRETATION OF AN INSURANCE CONTRACT APPLIED FOR, ISSUED AND DELIVERED IN MINNESOTA TO MINNESOTA RESIDENTS.

III. THE DECISION OF THE TRIAL COURT IS AGAINST THE MANIFEST WRIGHT OF THE EVIDENCE.

IV. THE DECISION OF THE TRIAL COURT VIOLATES THE CONTRACT CLAUSES OF THE UNITED STATES CONSTITUTION AS SET FORTE IN ARTICLE I, SECTION 2 THEREOF AND THE OHIO CONSTITUTION, ARTICLE II, SECTION 28.

We affirm in part and reverse in part. The trial court correctly determined that a Minnesota insurance policy issued by CNA was effective on the date of the accident. However, the trial court erred in applying Ohio law to assess the scope of uninsured/underinsured motorist coverage available under that policy.

On July 25, 1993, defendant Bryan Mills was driving a Ford Escort along U.S. Route 50 near Bainbridge, Ohio. Miranda Ater, Tracy Smith, and appellee John Knauff were passengers in Mills, car, which drifted left of center and struck a car driven by Stanley Brown. The collision killed Ater and Mrs. Brown (a passenger in Mr. Brown's car) and injured the remaining passengers and drivers. The parties agree that Mills, negligence caused the accident. The disagreement focuses on which insurance policy covering Mills was effective on the date of the accident.

Many of the facts giving rise to the insurance coverage dispute occurred in the months preceding the accident. Until June 1993, Bryan Mills lived in Minnesota with Daniel and Julie Mills, his aunt and uncle. Continental Casualty Company, a subsidiary of CNA, issued automobile and homeowner's insurance policies to Daniel and Julie Mills while they lived in Minnesota. The automobile policy (the "Minnesota policy") was effective from October 21, 1992 to October 21, 1993 and included Bryan Mills as an insured. The Minnesota policy carried a personal liability limit of $500,000 and an optional excess liability limit of $1.5 million (for a maximum liability limit of $2 million). The policy also included uninsured/underinsured ("UM/UIM") motorist coverage with limits of $300,000.

In March 1993, Daniel Mills moved to Ohio after accepting a job offer from a company in Columbus. Julie and Bryan remained in Minnesota to allow Bryan to finish high school. Because of the family's pending move, the Mills sought to exchange their Minnesota insurance policies for Ohio policies. To effectuate that change, the Mills contacted the Heckman Insurance Agency in Dublin, Ohio, which mailed an application for an Ohio policy to Daniel Mills on May 25, 1993. A letter signed by Heckman agent Elaine Young stated: "As I explained to you, Dan, CNA will cancel the * * * policy you have from Minnesota, effective June 18, 1993, and apply any credit to the new Ohio * * * policy." The enclosed policy application stated that the Ohio automobile policy would have liability limits of $250,000 per person and $500,000 per accident, with $500,000 in excess coverage (for total liability limits of $1 million). The policy application also contained a request for UM/UIM coverage with coverage limits of $50,000 per person and $100,000 per accident. As a result, the Ohio policy the Mills applied for provided $1 million less in liability coverage and $200,000 less in UM/UIM coverage per accident than the Minnesota policy.

The final page of the application contained a section entitled "Agreement," which contained several paragraphs. One of the paragraphs, under the heading "CANCELLATION AUTHORIZATION," stated:

Commensurate with the issuance of the universal Security Policy being applied for, I agree to and authorize the cancellation of my existing policies issued by a member of CNA insurance Group of Companies which provide coverages similar to those provided by the universal Security Policy. Additionally, I hereby waive the cancellation provisions contained in my existing policies and any statutory rights with respect to the cancellation of these policies.

Another paragraph listed a heading entitled "BINDER IDENTIFICATION." Under this heading, the Heckman Agency had checked a box entitled "This is a Binder * * * of Insurance." The remainder of the provision read:

When signed on the application and the Binder Box is checked, upon delivery of this form to the applicant, coverage as described herein is bound from the desired effective date indicated.

The Company binds the kind(s) and limit(s) of insurance stipulated on this and any supplemental applications. This insurance is subject to the terms, conditions and limitations of the policy(ies) in current use by the Company. This binder shall terminate automatically at 12:01 a.m. Standard Time, 30* days after its effective date or upon issuance of a policy by the Company, or upon the Company's written notice of declination to the applicant or upon issuance of a binder or policy by any other company, whichever first occurs. This binder may be canceled by the insured by surrender of this binder or by written notice to the Company stating when cancellation will be effective within the 30*day effective period. If this binder is not replaced by a policy issued by this Company, the Company is entitled to charge a premium for this binder according to the Rules and Rates in current use by the Company.

Young signed the application on May 24, 1993 and sent it to Daniel Mills, who signed it on May 27, 1993. However, Mr. Mills did not return the application to the Heckman Agency until July 14, 1993. Upon receipt, the Heckman Agency immediately forwarded the mills, application to CNA. On July 30, 1993, five days after the accident in this case, CNA issued the Ohio policy to the Mills family. Sometime after completing the application for the Ohio policy, Daniel and Julie Mills also received a form entitled "CANCELLATION REQUEST/POLICY RELEASE" from the Minnesota insurance agent who had procured the family's Minnesota policy. On the face of the document, a box entitled "POLICY RELEASE" was marked with an "X"; a box entitled "CANCELLATION REQUEST" was not marked. The release statement on the form read:

The undersigned agrees that:

The [Minnesota policy] is lost, destroyed, or being retained.

No claims of any type will be made against the Insurance Company under this policy for losses which occur after the date of cancellation shown above. Any premium adjustment will be made in accordance with the terms and conditions of the policy.

Both Daniel and Julie Mills signed this document on July 21, 1993. It is undisputed that CNA received this document on July 30, 1993, five days after the accident.

Several months after the accident, Vicki McGuire (as administrator of Ater's estate), Mr. Brown, Smith, and the appellee filed four separate lawsuits against Bryan Mills in the Ross County Court of Common Pleas. After the court consolidated all four cases, the plaintiffs joined CNA as a defendant and asserted claims for declaratory relief. The plaintiffs sought a judicial determination of whether the Minnesota policy covered the accident on July 25, 1993.

All parties filed motions for summary judgment in the consolidated cases. In February 1996, the trial court sustained the plaintiffs' motions and overruled CNA's motion for summary judgment. The court found that the Minnesota policy was effective on the date of the accident. The court stated:

The Court finds that pursuant to the conditions of the binder, that binder expired as of 12:01 a.m. on July 19, 1993. Additionally, it was obviously contemplated that the cancellation of the Minnesota policy would not be effective in fact until the date on which the Ohio policy was issued. Further, the Court finds that the date of cancellation of the Minnesota policy could not have been effective prior to the date on which it was received by Defendant CNA which was July 30th, 1993.

CNA attempted to appeal the court's ruling. We dismissed the appeal for lack of a final appealable order. McGuire v Mills (may 21, 1997), Ross App. No. 96CA2191, unreported, application for reconsideration denied (July 25, 1997), Ross App. No. 96CA2191, unreported. Following dismissal of the appeal, the trial court severed the declaratory judgment component of the cases from the remaining issues.^[1] Following severance, the court allowed the parties to again file motions for summary judgment on the identical issue it decided in its February 13, 1996 order, i.e. whether the Minnesota policy covered the accident of July 25, 1993. The trial court again held that the Minnesota policy was effective on the day of the accident and adopted its February 13, 1996 decision. Additionally, the trial court held that UM/UIM coverage was available under the Minnesota policy despite language to the contrary. The court made this conclusion by applying Cole v. Holland (1996), 76 Ohio St.3d 220 and Savoie v. Grange Mut. Ins. Co. (1993), 67 Ohio St.3d 500 to its interpretation of the Minnesota policy. The court also...