Zuber v. Department of Ins. of Ohio, 86AP-52

• Decision Date: 16 October 1986
• Docket Number: No. 86AP-52,86AP-52
• Parties: ZUBER, Appellant, v. DEPARTMENT OF INSURANCE OF OHIO et al., Appellees. *
• Court: Ohio Court of Appeals

Page 42

34 Ohio App.3d 42

516 N.E.2d 244

ZUBER, Appellant, v. DEPARTMENT OF INSURANCE OF OHIO et al., Appellees. ^*

No. 86AP-52.

Court of Appeals of Ohio, Tenth District, Franklin County.

Oct. 16, 1986.

Syllabus by the Court

1. For a court to dismiss a complaint for failing to state a claim upon which relief can be granted, it must appear beyond a reasonable doubt that the allegations in the complaint can prove no set of facts which when construed most favorably to the plaintiff would entitle him to relief.

2. False information and reliance are necessary elements for a cause of action in negligent representation.

Thomas J. Zuber, pro se.

Anthony J. Celebrezze, Jr., Atty. Gen., Nancy J. Miller, Columbus, and Kenneth L. McLaughlin, for appellees.

REILLY, Judge.

Appellant, Thomas J. Zuber, purchased single premium deferred annuities from subsidiary insurance companies of Baldwin-United Corporation, the parent corporation. Appellant alleges that he heard from various sources that Baldwin-United was having financial difficulty. Appellant contends that late in 1982 he called the Ohio Department of Insurance ("department") and inquired about the financial condition of Baldwin-United and its subsidiaries.

Appellant contends that he was advised by an employee of the department that Baldwin-United and its subsidiaries were financially secure. Appellant claims that he left his savings with these companies because of the information he received from the department. In July 1983, these annuity companies were placed into rehabilitation and all annuity assets were frozen.

Subsequently, appellant brought an action for damages in the Ohio Court of Claims against the department and the Ohio General Assembly. The department and the General Assembly moved for dismissal pursuant to Civ.R. 12(B) on the basis that appellant failed to state a claim upon which relief could be granted.

Appellant moved to file an amended complaint. Later, the department and the General Assembly filed their motion in opposition to appellant's motion to amend the complaint and asserted that there was not a statutory or common-law duty owed to appellant.

The Court of Claims in its written opinion dismissed both the department and the General Assembly. The court stated that:

"In this cause, plaintiff [Zuber] fails to indicate with any degree of specificity in support of his position which Ohio statute the issuance of the annuities were [sic ] violated and specifically where the department of insurance has failed to enforce the law pertaining to such annuities, or has acted in bad faith, or abused its discretion in regulating the affairs of the annuity issuer in Ohio."

Further, the court held that appellant had no actionable claim against the General Assembly based upon the rationale that the legislature had no legal duty to enact legislation to protect appellant if the issuer of the annuities could not meet its financial obligations.

Appellant has appealed, and advances the following two assignments of error:

"I. The Court of Claims' action in sustaining appellees' motion to dismiss is contrary to present law in Ohio governing pleadings.

"II. The opinion of the Court of Claims fails to address the present law of Ohio relating to the claims against appellees."

The assignments of error will be considered together as they are interrelated. The Supreme Court, in O'Brien v. University Community Tenants Union (1975), 42 Ohio St.2d 242, 71 O.O.2d 223, 327 N.E.2d 753, held that for a court to dismiss a complaint for failing to state a claim upon which relief can be granted, it must appear beyond a doubt that the allegations in the complaint can prove no set of facts, which when construed most favorably to the plaintiff would entitle him to relief.

Appellant contends that the department breached a statutory duty of care owed to him. The sections which appellant relies upon are R.C. 3901.011 and 3901.14.

Judge Whiteside stated in his concurring opinion in Spencer v. State (Apr. 14, 1977), No. 76AP-1021, unreported, that:

" * * * A statute imposing duties upon the officers and employees of the state does not create a claim for relief in third persons against the state for breach of such duties by such state officers or employees unless the statute specifically provides therefor. * * * In order for a claim against the state to be created by statute, the statute must specifically so provide. * * * "

The Revised Code sections upon which appellant relies do not particularly provide for a claim against the state. Specifically, R.C. 3901.14, which provides for the review of the financial condition of insurers doing business in the state, does not impose any affirmative duty upon the department to announce to the public any potential or current financial difficulties concerning Baldwin-United and its subsidiaries. These provisions are merely regulatory in nature.

Therefore, appellant's contention that the department breached its statutory duty imposed by law is not well-taken.

The question is whether appellant may maintain an action in the Court of Claims against the state where it is alleged that one of its employees, absent a statutory duty to provide financial information, nevertheless negligently misrepresented the financial condition of Baldwin-United and its subsidiaries. Thus, appellant's claim that the department breached a common-law duty of care is premised upon negligent misrepresentation.

Appellant asserts that the state has waived its immunity under R.C. 2743.02. This section states in pertinent part:

"(A) The state hereby waives * * * its immunity from liability and consents to be sued, and have its liability determined, in the court of claims created in this chapter in accordance with the same rules of law applicable to suits between private parties * * *."

In Reynolds v. State (1984), 14 Ohio St.3d 68, 14 OBR 506, 471 N.E.2d 776, the Supreme Court interpreted the language of R.C. 2743.02, in paragraph one of the syllabus, as follows:

"The language in R.C. 2743.02 that 'the state' shall 'have its liability determined * * * in accordance with the same rules of law applicable to suits between private parties * * * ' means that the state cannot be sued for its legislative or judicial functions or the exercise of an executive or planning function involving the making of a basic policy decision which is characterized by the exercise of a high degree of official judgment or discretion. However, once the decision has been made to engage in a certain activity or function, the state may be held liable, in the same manner as private parties, for the negligence of the actions of its employees and agents in the performance of such activities." (Emphasis added.)

While the Reynolds case dealt with a breach of a statutory duty, the Supreme Court's interpretation of R.C. 2743.02 remains unchanged and is therefore applicable to this case.

There has not been a new claim for relief or right of action created by the state's waiver of immunity, under R.C. 2743.02. McCord v. Division of Parks & Recreation (1978), 54 Ohio St.2d 72, 8 O.O.3d 77, 375 N.E.2d 50; Smith v. Wait (1975), 46 Ohio App.2d 281, 75 O.O.2d 560, 350 N.E.2d 431. The statute merely allows a party to bring an action which is predicated on a claim for relief against a private party for which the state would have been liable but for its sovereign immunity. Hence, when an action is brought under this statute, "liability [will be] determined with the same rules of law applicable to suits between private parties." Reynolds, supra, 14 Ohio St.3d at 70, 14 OBR at 507, 471 N.E.2d at 778.

As indicated above, appellant claims that the department breached a common-law duty owed to him based upon the tort of affirmative negligent misrepresentation. The department's position that no common-law duty was owed to appellant is contrary to the holding in Haddon View Investment Co. v. Coopers & Lybrand (1982), 70 Ohio St.2d 154, 24 O.O.3d 268, ...