Smith, Rolfes & Skavdahl Company, L.P.A.

Significant Recent Ohio Court Decisions

INTRODUCTION: Without a doubt the most significant decision rendered by the Ohio Supreme Court in 1999 was State ex rel. Ohio Academy of Trial Lawyers v. Sheward (1999), 86 Ohio St. 3d 451. This was a challenge to the constitutionality of House Bill 350 which implemented massive tort reform legislation. In a 4-3 vote the Supreme Court found the legislation unconstitutional in its entirety, ruling the legislature overstepped its bounds in enacting such legislation. What made this decision unique as compared to other rulings of the court was the plaintiff was not an injured claimant, but rather a group of plaintiffs' attorneys who sought to overturn legislation they did not like. Despite their questionable standing to even bring such a suit, the Supreme Court not only agreed to hear their case, but also ruled in their favor on all points.

UM/UIM COVERAGE
1. WHO IS AN INSURED?
  1. Scott-Pontzer v. Liberty Mutual Fire et al., (1999), 85 Ohio St.3d 660.
    1. Facts: Plaintiff's decedent was killed while driving a car owned by his wife. After settling with the underinsured tortfeasor the estate then made a claim against the decedent's employer's UIM coverage. At the time of the accident he was not in the course and scope of his employment, nor was he driving a company vehicle.
    2. Issue: Whether an employee is an insured for purposes of UIM coverage, under the employer's policy, where the accident did not occur in the course and scope of employment and they were not driving a vehicle owned by the employer.
    3. Holding: The employee, at the time of his death, was an insured for purposes of UIM coverage under both the employer's vehicle policies and umbrella policy. The policies contained no language requiring employees to be acting within the scope of their employment in order to receive UIM coverage.
    4. Significance: The policy language defining "insured" was found ambiguous. As a result of this decision whenever a UM/UIM claim is presented under personal coverage it is imperative insurers look for other coverage from employers so as to spread the potential exposure. If multiple policies exist coverage is owed on a pro rata basis between insurers.
  2. Ezawa v.Yasuda Fire & Marine Ins. Co. of Am., (1999), 86 Ohio St.3d 557.
    1. Facts: A minor was injured while riding as a passenger in an underinsured vehicle. He made a UIM claim against a policy issued to his father's employer even though the vehicle he occupied was not owned by the employer or operated by one of their employees. The trip in question was not related to the employer's business.
    2. Issue: Whether Scott-Pontzer applies in cases where the injured person has no legal relationship with the employer other than being a family member of an employee.
    3. Holding: Without comment the majority applied Scott-Pontzer and allowed the child to make a claim under his father's employer's policy.
    4. Significance: As much as Scott-Pontzer shocked people and defied conventional logic, this decision did even more so. Its effect is now in any UM/UIM claim there are more layers of coverage potentially available than would otherwise be reasonably anticipated.
  3. Selander v. Erie Ins. Group, (1999), 85 Ohio St.3d 541.
    1. Facts: Plaintiff's decedent was killed in an accident and his estate made a claim for UM/UIM coverage under a General Business Liability policy for a corporation he owned part of. The policy did not expressly contain such coverage but did include automobile liability coverage for certain limited circumstances.
    2. Issue: Whether an insurer must offer UM/UIM coverage in connection with the sale of any policy including even the slightest amount of automobile liability coverage.
    3. Holding: In a 4-3 vote the Supreme Court ruled the duty to offer such coverage existed so long as any liability coverage was included in the policy, and absent a proper offer and rejection, such coverage existed as a matter of law.
    4. Significance: This was the beginning of a series of decisions in 1999 where the Supreme Court drastically expanded the scope of liability policies so as to find coverage. As a result plaintiffs' attorneys have been encouraged to seek coverage from sources never before contemplated to include UM/UIM coverage.
  4. Holliman v. Allstate Ins. Co. (1999), 86 Ohio St.3d 414.
    1. Facts: Plaintiffs' decedents were killed in an automobile accident. The driver of their vehicle was driving with the permission of his father, the vehicle's owner. The owner had UM/UIM coverage of $100,000/$300,000, along with an umbrella policy. Plaintiffs were denied coverage under the umbrella policy based on the definition of "insured persons" in the umbrella policy.
    2. Issue: Whether plaintiffs' decedents were "insured persons" under the umbrella policy.
    3. Holding: Plaintiffs are not insureds under the umbrella policy. The umbrella policy expressly defines "insured persons" to include only "you and any resident relative," and plaintiffs admittedly did not fall into that category.
    4. Significance: The court reasoned the umbrella policy unambiguously excludes plaintiffs and their decedents from the class of persons insured. The exclusion violates neither the purpose nor the express language of O.R.C. 3937.18 and plaintiffs are not legally entitled to recover under the policy.
  5. Delli Bovi, Exr. v. Pacific Indemn. Co. (1999), 85 Ohio St.3d 343.
    1. Facts: Plaintiff's decedent was killed when the helicopter in which he was riding crashed. At the time of his death, he had three insurance policies providing accidental death, UM/UIM coverage, and umbrella coverages. After the insurer of the helicopter denied coverage, the widow filed suit against the insurers seeking among other things, UM/UIM coverage. The insurers contended helicopters were not "motor vehicles" for purposes of UIM coverage.
    2. Issue: Whether a helicopter is a "motor vehicle" under O.R.C. 4501.01 for purposes of the mandatory UIM coverage set forth in O.R.C. 3937.18; and whether the word "land" in the policy impermissibly modifies the words "motorized vehicle" so as to eliminate UIM.
    3. Holding: A helicopter is not a motor vehicle and the word "land" in the insurer's policy did not impermissibly eliminate UIM coverage mandated by Ohio statute. Absent a specific statutory definition, words are to be given their usual, normal and customary meaning. While the court did not find a definition for the term "motor vehicle" in O.R.C. Title 39, it did find the term is defined in various sections of O.R.C. Title 45. All but one of the definitions specifically limit a "motor vehicle" to something that can be operated on a highway or public road.
    4. Significance: Insurers may contractually limit UIM coverage to motorized land vehicles.
  6. Critelli v. T.I.G. Ins. Co. (1997), 123 Ohio App.3d 436.
    1. Facts: Plaintiff was a passenger in an uninsured vehicle driven and owned by her fiancee and was injured when he lost control. She presented a UM claim against the policy issued to his parents, claiming she qualified as an insured based upon her status as a passenger in the automobile.
    2. Issue: Whether a passenger in a vehicle not specifically listed in a UM policy may recover UM benefits against the policy issued to the parents of the driver.
    3. Holding: Plaintiff was not an insured under the policy as that term is defined under the T.I.G. policy's UM coverage. The vehicle might have qualified for coverage, even though not listed in the declarations, if it had been owned by the named insureds.
    4. Significance: UM coverage is intended to protect persons and not specific vehicles. The court explained in order to qualify as an insured under the policy provisions, she would have had to establish either she was occupying a vehicle shown on the declarations sheet, she was occupying a vehicle owned by the named insureds, or the vehicle she was occupying was a temporary substitute vehicle pursuant to the terms and conditions of the policy of insurance.
2. STATUTE OF LIMITATIONS
  1. Marsh v. State Auto Mut. Ins. Co. (1997), 123 Ohio App.3d 356.
    1. Facts: Plaintiff was involved in an automobile accident on November 22, 1990. Her UM policy provided no legal action or proceeding may be brought unless the action is commenced within two years of the date of the accident. She sued the tortfeasor on November 10, 1992, and did not learn the tortfeasor was uninsured until March 22, 1993. On April 7, 1993, she advised her UM insurer she intended to make a claim. Negotiations were unsuccessful and she sued the UM carrier. The UM carrier argued the suit was barred by the two year limitations period provided in the policy. She claimed the two year limitations should be subject to a discovery rule. She offered evidence demonstrating she first learned the tortfeasor was uninsured more than two years after the date of the accident, but less than two years before she sued her insurer.
    2. Issue: Whether the limitations period for a UM claim is tolled until the date the insured allegedly first learns the tortfeasor was uninsured.
    3. Holding: The limitations period was not tolled until the date she first learned the tortfeasor was uninsured. Parties to an insurance contract may agree to a term shorter than the fifteen year period provided in O.R.C. 2305.06 in which an action on an insurance policy must be brought.
    4. Significance: A right to coverage under the UM provisions of a policy of automobile liability insurance accrues on the date of the injury from which the claim arose, not a later date.
3. WRONGFUL DEATH CLAIMS
  1. Gibson v. State Farm Mut. Aut. Ins. Co. (1997), 123 Ohio App.3d 216.
    1. Facts: Plaintiff's father was struck and killed by a motor vehicle. The executor of his estate accepted $100,000 in full settlement of the personal injury and wrongful death claims from the tortfeasor's insurer. Of this amount, $10,000 was distributed to the decedent's beneficiaries which included the daughter, who received $5,000. At the time of the accident, she was insured under an automobile policy issued by State Farm which provided UIM coverage with limits of $100,000/$300,000. She made a UIM claim which was denied on the grounds the settlement and release of the tortfeasor was a material breach of the policy which required written consent before settling with the tortfeasor.
    2. Issue: Whether State Farm must provide UIM coverage to a wrongful death beneficiary after the personal representative of the decedent settled the wrongful death claim without their consent.
    3. Holding: Applying Savoie, the court held a personal representative may settle a wrongful death action with the tortfeasor without obtaining the consent of the beneficiaries. Since the personal representative at no time must communicate with the beneficiaries in settling the wrongful death claim, Ms. Gibson never had the power to protect State Farm's subrogation rights or to prevent a settlement. Accordingly, the notification and consent provisions are not reasonable pre-conditions to coverage.
    4. Significance: The court noted if it were to hold otherwise, personal representatives may be forced to endure trials to prevent beneficiaries from losing their UM/UIM coverage. This would be against public policy, as settlements are a favored remedy.
  2. Stacy v. Nationwide Mut. Ins. Co. (1998), 125 Ohio App.3d 658.
    1. Facts: Plaintiff‘s decedent elected to have UM/UIM coverage with limits substantially lower than his liability limits and signed a written selection to that effect. In the years to follow the scheduled vehicles changed, but no new rejections were signed; he was the sole named insured. After his death in an accident his estate made a UM claim which settled for the $12,500 limits. Although a release was signed by the executrix, probate approval of the settlement was never secured. The estate challenged the reduction of coverage, contending full coverage had to be re-offered whenever scheduled vehicles changed.
    2. Issues: Whether the release was void for lack of probate court approval; whether the decedent validly rejected UM coverage equal to liability coverage; whether the widow was a "named insured".
    3. Holding: The release was void for lack of probate court approval. For a settlement and release to be valid the estate must obtain that court's consent regarding a settlement agreement. Although the probate court generally approved the partial accounting, there was no evidence the court approved the release as a settlement of the wrongful death claim as required by the statute. There was no duty to continue to re offer coverage after the initial rejection as neither statutes or case law require the signing of a new rejection statement each time an insured replaces a vehicle under the original policy. The widow was not a named insured since she was not listed on the declaration page and the language of the insurance contract could not reasonably be interpreted to mean she was a named insured by virtue of her status as the named insured's wife.
    4. Significance: Whenever any type of settlement is involved for a claim of a minor, a wrongful death claim, or a survivorship claim, it must always be approved by the probate court or it will not be enforced if later challenged.
4. OPERATION, MAINTENANCE OR USE REQUIREMENT
  1. Bakos v. Insura Prop. & Cas. Ins. Co. (1997), 125 Ohio App.3d 548.
    1. Facts: While driving his father's car, plaintiff was grabbed by the neck and hair and forced out of the car and onto the street by his passenger and struck by an oncoming vehicle. UM claims were made under his parents' various policies. The trial court granted both insurers' motions for summary judgment finding the injuries did not arise out of the operation, maintenance or use of an uninsured motor vehicle.
    2. Issue: Whether plaintiff's injuries arose out of the operation, maintenance or use of an uninsured motor vehicle.
    3. Holding: The court reversed and remanded this case for a determination as to what injuries occurred while in the automobile, while being forced out of the automobile, or arose from the operation, maintenance, or use of the automobile. He was an insured under his father's policy and this incident was an accident because generally, when an insured is intentionally injured or killed by another, the mishap is unforeseen and not the result of his own misconduct. Once the passenger took control of the automobile, the vehicle became uninsured.
    4. Significance: The relevant determination as to whether the injuries arose out of the operation, maintenance or use of an uninsured motor vehicle is the relationship between the uninsured automobile and the injuries sustained by the insured.
5. PHYSICAL CONTACT REQUIREMENT
  1. Weinberg v. Doe (1998), 129 Ohio App.3d 586.
    1. Facts: Plaintiff claimed to have been forced off the road by an unidentified motor vehicle while operating his bicycle and made a UM claim. He alleged the vehicle clipped his left arm causing him to lose his balance and fall. The trial court granted the insurer's motion for summary judgment based on the absence of a third-party to corroborate plaintiff's allegation.
    2. Issue: Whether the plaintiff had to produce independent evidence of an impact to support his UM claim.
    3. Holding: The corroborative evidence test was not required if plaintiff was actually struck by an uninsured motorist. The express terms of the policy provide coverage when an insured is struck by an uninsured motor vehicle. The policy here specifically provided coverage if the plaintiff was "hit" by a hit-and-run vehicle.
    4. Significance: The trial court relied on the holding in Girgis v. State Farm Mut. Auto. Ins. Co. (1996), 75 Ohio St.3d 302, which held the test to be applied in cases where an unidentified driver's negligence causes injury is the corroborative evidence test, which allows the claim to go forward if there is independent third-party testimony the negligence of an uninsured vehicle was a proximate cause of the accident. However, the court stated it is clear that in Girgis, the court expanded UM coverage to cases where there was no contact, provided the injured party could produce some corroborative evidence.
  2. Erie Ins. Co. v. Favor (1998), 129 Ohio App.3d 644.
    1. Facts: An automobile driven by an unknown person crashed into plaintiffs' living room. They were at home but in another room of the house at the time of the crash and were not physically injured. They made a UM claim for post-traumatic stress disorder ("PTSD") which was denied.
    2. Issue: Whether PTSD was a "bodily injury" as defined by the policy.
    3. Holding: PTSD was not a "bodily injury." Emotional distress is not a "physical harm," a "sickness" or "disease" as defined by the policy. A person may have a claim for infliction of emotional distress without having a claim for bodily injury. However, nonphysical losses, not derived from the physical injury may not be compensable under UM coverage.
    4. Significance: This decision is limited largely to its facts. Where there is a contemporaneous bodily injury a UM claim including PTSD would be allowed.
6. CONSTITUTIONALITY OF SENATE BILL 20
  1. Ott v. Borchardt (1998), 127 Ohio App.3d 152.
    1. Facts: Plaintiffs sued the tortfeasor and their insurer following an accident. The liability limits and UIM limits were identical. Plaintiffs recovered the tortfeasor's policy limits but the UIM claim was denied due to the equal amount of coverage.
    2. Issue: Whether Senate Bill 20 unconstitutionally denies claimants the right to excess insurance coverage under their UIM policies because it permits insurance companies to restrict injured parties' recovery amount only up to the limits of their own coverage; whether the statute violates the privileges and immunities and equal protection clauses of the Ohio and U.S. Constitutions.
    3. Holding: The right involved in this instance is not the constitutional right to a remedy, but is only a right granted under a contract of insurance and limited by authorization of a statute. The court reads the plain language of the Privileges and Immunities Clause as prohibiting the granting of an irrevocable privilege. The court noted "clearly the legislature, having granted automobile insurers the right to limit certain coverages, is not prohibited from revoking (or altering or repealing) same right in the future." There is no violation of the Equal Protection Clause. The only classifications of insureds treated differently under the statute are those who, by contract, have chosen different policy limits.
    4. Significance: While it is expected the Supreme Court will ultimately address the constitutionality of Senate Bill 20, in the meantime this is another appellate decision upholding its constitutionality.
7. WAIVER OF COVERAGE
  1. Williams v. Nationwide Prop. & Cas. Ins. Co. (1998), 126 Ohio App.3d 86.
    1. Facts: Plaintiff purchased UM/UIM coverage with substantially lower limits than her liability coverage. She sued her agent and carrier claiming she did not knowingly opt for lower limits and sought a determination she had higher UM/UIM limits. The entire policy application and selection of coverage was filled out by the agent and she simply signed where she was told.
    2. Issue: Whether the reduction in coverage was valid.
    3. Holding: A pre-packaged insurance plan where the agent selects the amount of UM/UIM coverage without a prior express offer by the insurer and rejection by the insured of equal coverage limits does not satisfy the requirements of R.C. 3937.18. The insurer must demonstrate by a preponderance of the evidence the insured had an understanding of coverage and expressly rejected it.
    4. Significance: This is a very result-oriented decision where the court really went out of its way to find additional coverage, but illustrates the great lengths an activist court will take to achieve its goals.
8. POLICY EXCLUSIONS
  1. W. Am. Ins. Co. v. Holman (1998), 130 Ohio App.3d 450.
    1. Facts: Plaintiff was struck by a sprint race car while acting as a flagman at a raceway and made a UM claim. The insurer argued the policy excluded coverage under the following policy language: "Uninsured motorist vehicle does not include any vehicle or equipment . . . designed mainly for use off public roads while not on public roads."
    2. Issue: Whether the exclusion bars coverage or whether modifications made to the race car remove it from the definition of an uninsured motor vehicle under the insurance policy.
    3. Holding: The policy exclusion is contrary to O.R.C. 3937.18 and not enforceable. Modifications made to the sprint race car are not equivalent to design. Since the sprint race car falls under the statutory definition of a motor vehicle, coverage cannot be precluded, regardless of any modifications made to the vehicle.
9. PRE-JUDGMENT INTEREST
  1. Bowman Progressive Cas. Ins. Co. - Unreported decision.
    1. Facts: This involved a UM claim where the ultimate issue and dispute pertained to the calculation of pre-judgment interest.
    2. Issue: From what date is pre-judgment interest calculated in a UM/UIM claim
    3. Holding: The measuring date is based upon a factual inquiry. If the damages exceed the available coverage interest runs from the date of loss. If the amount of coverage exceeds the damages interest runs from the date of judgment or settlement.
    4. Significance: This is one of the first decisions interpreting the Landis decision on pre-judgment interest. The law in this area is still in a state of flux and this case is currently valid authority only in Hamilton County.
LIABILITY COVERAGE
1. POLICY EXCLUSIONS - DUTY TO DEFEND AND INDEMNIFY
  1. Cincinnati Indemn. Co. v. Martin, (1999), 85 Ohio St. 3d. 604.
    1. Facts: A child shot and killed his brother at their mother's home. She had a homeowner's policy with Cincinnati Indemnity Company ("CIC"). A wrongful death suit was filed against the mother, alleging negligence in failing to supervise the children and in failing to safely store the rifle. CIC filed a declaratory judgment action, seeking a determination as to whether it was required to defend and indemnify her. The trial court found the plain language of the policy excludes liability coverage for bodily injury to an insured, including the wrongful death claim.
    2. Issue: Whether an insurer has a duty to indemnify and defend a homeowner against a wrongful death claim for the death of a family member residing in the household.
    3. Holding: An insurer has no duty to defend or indemnify its insured in a wrongful death lawsuit brought by a non-insured (i.e. the administrator of the estate) based on the death of an insured where the policy excludes liability coverage for claims based on bodily injury to an insured.
    4. Significance: This is a rare instance where the current Supreme Court declined an opportunity to expand coverage to claimants.
  2. Collins v. Grange Mut. Cas. Co. (1997), 124 Ohio App.3d 574.
    1. Facts: Plaintiff was seriously injured on the job while operating a hydraulic lift. His employer's CGL policies contained exclusions for an employee's injury arising out of his employment. He sued the employer on May 24, 1991. Over sixteen months after its decision to assume the defense, Grange sent a reservation of rights letter indicating it was reserving its right to deny coverage while it proceeded with the defense. After receiving the letter the employer settled the claims for $215,000.
    2. Issue: Whether Grange waived its right to assert its policy exclusions and was estopped from denying indemnification for the employer's settlement of the suit by its decision to assume the defense for sixteen months prior to issuing a reservation of rights letter.
    3. Holding: Grange's assumption of defense without a reasonable reservation of rights was prejudicial to its insured's defense of the claim, and Grange therefore waived its right to deny indemnification.
    4. Significance: This decision was policy driven as the court was very critical of the insurer's failure to timely assert a reservation of rights and any coverage defenses. The biggest implication is if there is even a question as to whether a coverage defense is viable, it is best to promptly assert it in a reservation of rights letter.
  3. Nationwide Mut. Fire Ins. Co. v. Kubacko (1997), 124 Ohio App.3d 282.
    1. Facts: A babysitter injured a baby and pled guilty to child endangering. His tenant's policy contained an exclusion stating personal liability and medical payment coverage do not apply to bodily injury or property damage "caused intentionally by or at direction of an insured, including willful acts, the result of which the insured knows or ought to know will follow from the insured's conduct." The trial court relied on the holding in Physicians Ins. Co. of Ohio v. Swanson (1991), 58 Ohio St.3d 189, in declining to uphold the exclusion.
    2. Issue: Whether the insured's criminal conviction and conduct were sufficient under the exclusion to preclude coverage.
    3. Holding: The court held the critical distinction between the policy exclusion in Swanson and the clause in the Nationwide policy is the exclusionary language in the Nationwide policy is more broadly worded since is precludes coverage for intentionally or wilfully caused injuries. In the civil context, recklessness has been held to be the functional equivalent of willfulness. Based upon the guilty plea, the court held Nationwide demonstrate some evidence the conduct fell outside the scope of the policy's coverage and recklessness was arguably otherwise demonstrated. Accordingly it was error to grant summary judgment in favor of the insured.
    4. Significance: The court noted the guilty plea, standing alone, was not sufficient to establish per se the injury was a result of reckless or willful conduct. It is proper for a court to examine the underlying facts of a crime when determining an exclusion of coverage under these circumstances.
  4. Emp. Ins. of Wausau v. Amcast Indus. Corp. (1998), 126 Ohio App.3d 124.
    1. Facts: From 1916 to 1984, Amcast operated a foundry and purchased one or more primary or excess commercial risk insurance policies from several carriers. From 1945 to 1977, Allied-Signal, Inc. used a former sand and gravel pit as a disposal site for hazardous waste from its tar plant. Amcast also used the disposal area for disposal of spent sand from its foundry operation. In 1989, the United States EPA issued an administrative order directing Allied-Signal and Amcast to clean up the disposal area at a cost estimated at twenty million dollars. Amcast chose not to assist with cleanup and Allied-Signal sued Amcast for contribution. Employers Insurance of Wausau, Nationwide, and another insurer filed declaratory judgment actions claiming their policies either did not cover losses from pollution or only covered losses resulting from "sudden and accidental" releases of hazardous substances and the contamination at the disposal area was not a result of a sudden or accidental release.
    2. Issue: Whether Amcast's release of foundry sand into the disposal site was a sudden and accidental polluting activity permitting coverage under the insurance policies.
    3. Holding: While the contamination of the environment was unintended, the release of foundry sand was not. The release of foundry sand occurred in the ordinary course of business and was not sudden and accidental. Amcast's disposal of foundry sand was not potentially or arguably sudden and accidental and the insurers therefore had no duty to defend Amcast even though their duty to defend may be broader than their duty to indemnify.
    4. Significance: Evaluating the evidence in this case, the court held Amcast's deposit of foundry sand at the disposal site was the polluting activity rather than subsequent chemical releases of contaminates from the foundry such as polynuclear aromatic hydrocarbons (PAH's) which became increasingly mobilized when foundry wastes were mixed with tar plant wastes at the disposal site.
  5. Noftz v. Ernsberger (1998), 125 Ohio App.3d 376.
    1. Facts: Defendant, age 17, was given permission by his parents to stay overnight on their docked boat. While on the boat, defendant engaged in sexual intercourse with plaintiff, then age 14; the parties dispute whether this was consensual. Defendant's parents carried both homeowner's insurance and watercraft owner's insurance. The homeowner's policy defined an "occurrence" as "an accident . . . resulting in bodily injury or property damage." The policy also contained an exclusion for intentional acts which provided "we do not cover any bodily injury . . . intended by, or which may reasonably be expected to result from the intentional or criminal acts or omissions of any insured person." The exclusion applied regardless of whether the insured person was actually charged with or convicted of a crime. The watercraft policy contained a similar exclusion.
    2. Issue: Whether the insurer owed a duty to defend or indemnify the defendant's family under either policy under the circumstances.
    3. Holding: The court held the intentional acts exclusion under both policies applied to defendant's intentional conduct, and precluded coverage for negligent supervision claims brought by plaintiff and her parents. An insurer has no duty to defend or indemnify when it demonstrates the acts of the insured were intentional. No coverage exists for the parents of a minor child whose intentional conduct causes damages. The court focused on plaintiff's complaint noting it expressly refers to defendant's intentional and wilful conduct and the negligent supervision claims flow from this alleged intentional behavior.
    4. Significance: The court explained whether defendant subjectively believed plaintiff consented to the activity or whether he felt he was not harming her is not relevant to the determination of his intent for purposes of insurance coverage. The harm could reasonably be expected as a result of defendant's intentional act, despite any protestation by defendant he did not mean to hurt anyone.
  6. Cincinnati Ins. Co. v. Haack (1997), 125 Ohio App.3d 183.
    1. Facts: Hageman leased a dump truck from the truck's owner, Fugate. Under the terms of the agreement, Fugate leased both the truck and driver to Hageman. Fugate kept his truck at Hageman's company lot. Subsequently, Fugate asked Haack to drive the truck to a site to haul away a load of dirt for Miller Brothers Construction Company. After Haack arrived he was informed the job was canceled and to return to Hageman. Haack left the job site with an empty load and headed back to Hageman. On the return trip, the truck was involved in a collision with another vehicle. Hageman's insignia as well as its Public Utilities Commission of Ohio placard were in the window of Fugate's truck at the time of the accident.
    2. Issue: Whether the lessee's insurer had a duty to defend and indemnify the truck's owner-lessor or the truck's driver in an action arising from an accident involving the subject vehicle.
    3. Holding: The insurer owed a duty to defend to indemnify Fugate's truck at the time of the accident. The court followed prior precedent set forth in Ohio Cas. Ins. Co. v. United S. Assur. Co., 85 Ohio App.3d 529 and Wyckoff Trucking, Inc. v. Marsh Bros. Trucking Serv. Inc. (1991), 58 Ohio St.3d 261. The court further held O.R.C. 2307.34(C) has not invalidated the Supreme Court's holding in Wyckoff, and the decision in Ohio Cas. remains good law. In Ohio Cas., the court held a lessee's insurer is presumed to be responsible for a leased motor vehicle if, at the time of the accident, the lessee's P.U.C.O. placard is in the window of the vehicle and valid lease is in existence. In the present case, the court extended the presumption Hageman is responsible for the truck at the time of the accident to Hageman's insurer.
    4. Significance: The court stated the presumption is limited to disputes between insurance carriers as to who is primarily responsible for the motor vehicle. Once the lessee's insurer satisfies its primary obligation to the injured party, it may seek contribution from other responsible parties, such as the secondary insurer, the insurer of the owner, because the vehicle under O.R.C. 2307.34 was being used in "non trucking activity" at the time of the accident. Cincinnati Insurance's exclusion for liability did not operate to bar coverage in this case. The fact Haack was dead heading at the time of the accident does not also mean the vehicle was not being used "in the service of" a lessee. The court stated one must still ask whether the truck is being used in the service of the lessee to determine whether such an exclusion applies.
  7. State Auto Ins. Co. v. Golden (1998), 125 Ohio App.3d 674.
    1. Facts: Golden filed a workplace intentional tort claim against his employer who had a CGL policy with State Auto, containing an exclusion for "bodily injury intentionally caused or aggravated by [the insured employer] or bodily injury resulting from an act which is determined to have been committed by [the employer] with the belief that an injury is substantially certain to occur." State Auto brought a declaratory judgment action.
    2. Issue: Whether the liability stopgap endorsement provided coverage for a workplace intentional tort claim.
    3. Holding: The liability stopgap endorsement did not provide coverage. Providing employers with insurance coverage for direct-intent employer torts is against public policy. However, coverage for substantial-certainty employer torts is not against public policy. Therefore, the court examined whether the stopgap endorsement in this case provided coverage for substantial certainty employer intentional torts. If the policy explicitly states it excludes coverage for direct-intent and substantial-certainty intentional torts, then there is no coverage for damages caused by an employer intentional tort.
    4. Significance: The true impact of this decision was limited by R.C. 2745.01 being ruled unconstitutional in Johnson v. BP Chemicals, Inc. (1999), 85 Ohio St. 3d 298. Johnson eliminated direct intent as a requirement for proving a workplace intentional tort claim, and instead an employee merely had to prove the injury was substantially certain to occur.
  8. USF & G v. St. Elizabeth Med. Ctr. (1998), 129 Ohio App.3d 45.
    1. Facts: USF&G appealed from a judgment of the trial court declaring it is obligated under the terms of eleven general liability insurance policies it issued to St. Elizabeth Medical Center to defend or indemnify it for negligent credentialing claims brought by 17 former patients of a hospital physician. USF&G argued the claims were barred from coverage under an exclusion for malpractice and professional services.
    2. Issue: Whether the policy exclusion for malpractice and professional services in the USF&G policy precludes coverage and whether the trust fund created by St. Elizabeth provided coverage for the negligent credentialing claims.
    3. Holding: The claims are barred from coverage under the exclusion for malpractice and professional services. The trust fund provided coverage for the negligent credentialing claims.
    4. Significance: USF&G policy contained an exclusion for malpractice and professional services which precluded coverage for "bodily injury or property damage due to . . . the rendering of or failure to render . . . medical, surgical, dental, x-ray or nursing service or treatment, or the furnishing of food or beverages in connection therewith[.]" The court held the bodily injuries allegedly sustained by former patients could have resulted from either the surgical procedures of the doctor or the negligent credentialing of the doctor. A claim of negligent credentialing provide the basis for a cause of action in and of itself but it is equally clear no plaintiff can maintain a cause of action for negligent credentialing without demonstrating her injuries were caused by the rendering or failure to render medical services.
2. NOTICE OF CLAIM
  1. Beaver Excavating Co. v. USF & G (1998), 126 Ohio App.3d 9.
    1. Facts: Beaver Excavating Company entered into a subcontracting agreement with general contractor Forest City on September 22, 1978 to perform excavating and subgrade fill work. Prior to performance of the subcontracting agreement, BEC secured a comprehensive general liability policy from USF&G. BEC maintained coverage with USF&G until November 12, 1982, when it obtained a new policy from Home Indemnity. BEC also secured an excess umbrella policy from USFIC effective November 1, 1982. On October 19, 1983, Forest City informed BEC of settlement of the slab on grade at the construction site. Forest City's letter advised BEC it was investigating the matter and the letter "shall serve to put you and your bonding company on notice that the problems encountered at the site may have been caused by a deficiency in your workmanship and/or materials." BEC neither informed any of the insurance carriers of the letter, nor did it become involved in the investigation or any settlement negotiations over the next six or seven years. Several underlying lawsuits ensued. On October 30, 1995, BEC filed a declaratory action against USF&G, Home and USFIC seeking a declaration the insurance companies had a duty to defend and indemnify BEC against the claims presented in the underlying lawsuits.
    2. Issue: Whether BEC's failure to provide prompt notice of an "occurrence," relieved the insurers of their duty to defend.
    3. Holding: The insurers were deprived of the ability to conduct their own investigations and precluded from resolving potentially covered damage claims in a timely and cost-efficient manner. The court found BEC's delay in providing notice of the occurrence foreclosed certain options which would have been available to the insurers. As a result there was no duty to defend or indemnify.
    4. Significance: The court stated the standard is one of due diligence and the inquiry rests upon the reasonableness of the claimant's conduct under the surrounding circumstances. The court concluded "as soon as practicable" requirements for notice set forth in the respective policies amounted to a "prompt" notice requirement of reasonableness. The plain meaning of the notice requirement language set forth in the policies was construed only as a condition precedent to coverage.
3. INTERFERENCE WITH INSURER'S SUBROGATION RIGHTS
  1. Erie Ins. Co. v. Kaltenbach (1998), 130 Ohio App.3d 542.
    1. Facts: Kaltenbach was injured in an accident and had med-pay coverage with Erie, containing a standard subrogation clause. Erie paid plaintiff $5,000 in medical payments. Without filing suit he settled his bodily injury claim with the tortfeasor's insurer but did not reimburse Erie. Erie sued their insured to recover on their subrogation claim.
    2. Issue: Whether Erie may recover against the settlement proceeds of its insured due to the insured's interference with its subrogation rights,.
    3. Holding: Erie was entitled to subrogation and their insured was fully compensated for his injury. The court noted even if he was not, the full compensation rule does not apply because of the interference with Erie's rights. Erie was owed the full amount of its claim without application of a pro rata distribution or setoff for Kaltenbach's costs in pursuing settlement.
    4. Significance: This is an important case to bear in mind in claims where plaintiffs' attorneys try to avoid honoring a subrogation claim. The court took a very strong stand against the attorney and insured for trying to dodge their duties.
4. BAD FAITH AS INSURABLE CONDUCT
  1. Buckeye Union Ins. Co. v. New England Ins. Co. (1999), 87 Ohio St.3d 280.
    1. Facts: An Erie County Deputy accidentally shot a citizen, rendering him a paraplegic. He and his parents sued the deputy and the Board of Commissioners of the county. The Board and its employees were insured by Buckeye. Claimants offered to settle for policy limits and Buckeye refused. An excess verdict resulted at trial and the Board reached a settlement agreement with claimants, assigning to them their rights against Buckeye. Claimants then sued Buckeye for bad faith refusal to settle their claim against the Board. The jury rendered a verdict against Buckeye for bad faith and failing to settle and also found their conduct motivated by actual malice. Buckeye paid $23,044,279.28 to satisfy the judgment including post judgment interest. Buckeye then made a claim for reimbursement under a professional liability policy issued by New England. New England refused the claim and Buckeye brought a declaratory judgment action.
    2. Issue: When an insurer is found culpable of "bad faith" with "actual malice" because it failed to settle a tort case against its insured, does such conduct constitute the type of intentional tort that is uninsurable?
    3. Holding: When an insurer is found to have acted in bad faith with actual malice for failing to settle a tort case against its insured, it has not necessarily committed the type of intentional tort uninsurable under Ohio law. The court stated "direct intent" harms are uninsurable in Ohio. A harm which is substantially certain to cause a particular result when the actor does not necessarily desire that result generally does not prohibit insurance coverage. Therefore, an intent to injure and not merely an intentional act is a necessary element to uninsurability and whether the conduct is insurable depends upon the specific facts of the case.
    4. Significance: The jury verdict involved an application of bad faith law prior to Zoppo. At the time malice was required to prove bad faith. Zoppo relaxed the standard and merely requires a lack of reasonable justification. As a result it is very likely bad faith claims will start to be recognized as insurable conduct with increased frequency unless specifically excluded from coverage.
LIABILITY CASES
1. ALCOHOL LIABILITY
  1. Klever v. Canton Sachsenheim, Inc. (1999), 86 Ohio St.3d 419.
    1. Facts: Plaintiff's decedent attended a wedding reception and was served alcoholic beverages although he was only 19 years old. He was killed in a single car accident while traveling home from the reception. His mother sued the establishment alleging its employees failed to properly verify his age prior to serving him, knew he was underage yet continued to serve him, and was negligent in serving him alcohol.
    2. Issue: Whether an underage adult who is served alcohol by a liquor permit holder is legally indistinguishable from an adult, as in Smith v. The 10th Inning, Inc. (1990), 49 Ohio St.3d 289, and may not maintain a cause of action against the liquor permit holder under Ohio's Dramshop Act.
    3. Holding: The act does not provide an intoxicated, underage adult with a cause of action against a liquor permit holder for self-inflicted injuries. The court construed the phrasing and structure of O.R.C. 4399.18 to connote two separate participants under the language "a person has a cause of action against a liquor permit holder or an employee of a liquor permit holder for injury, death, or loss to person or property caused by the negligent actions or omissions of an intoxicated person." The court placed emphasis on the fact Klever suffered death as a result of his own action and his death was not the result of actions of an intoxicated person as contemplated by the statute.
    4. Significance: As a matter of public policy the court continued to hold intoxicated persons to be responsible for their own conduct and unable to recover damages due to their own poor judgment.
2. DOG BITES
  1. Burgess v. Tackas (1998), 125 Ohio App.3d 294.
    1. Facts: Plaintiff brought an action against a trailer park for injuries sustained when she was bitten by a tenant's pit bull inside a trailer. Plaintiff alleged defendants were negligent when they allowed the tenants to possess two dogs in violation of a rule which limited trailer park tenants to one dog and required the consent of management for additional pets.
    2. Issue: Whether a trailer park is liable for a dog when it attacks someone on premises within the possession and control of a tenant.
    3. Holding: Plaintiffs failed to show defendant harbored the dog as required by O.R.C. 955.28(B) for strict liability or as required under the common law. The determination as to whether a landlord is a harborer does not depend upon whether the landlord knew about the existence of the dog, but whether the landlord permitted or acquiesced in the tenant's dog being kept in common areas or in an area shared by both the landlord and the tenant.
    4. Significance: For strict liability, a plaintiff is required under the dog-bite statute, O.R.C. 955.28(B), to show that defendant harbored the dog. In a common law claim not based on strict liability, plaintiff must show defendant harbored the dog with knowledge of its vicious tendencies.
3. WORKPLACE INTENTIONAL TORTS
  1. Johnson v. BP Chemicals, Inc. (1999), 85 Ohio St. 3d 298.
    1. Facts: An employee sued his employer for a workplace intentional tort. He claimed R.C. 2745.01 was unconstitutional and essentially required an employee to prove an act rising to the level of an assault occurred.
    2. Issue: Whether the legislature overstepped its bounds in enacting R.C. 2745.01.
    3. Holding: R.C. 2745.01 is unconstitutional in its entirety. The statutory language was so strict it would preclude nearly all such claims. Instead of requiring a finding of specific intent to injure by the employer, it is sufficient to show there was a substantial certainty of injury which was disregarded.
4. CONFIDENTIALITY
  1. Biddle v. Warren Gen. Hosp. (1999), 86 Ohio St.3d 395.
    1. Facts: Warren General Hospital was sued by a patient after it released to a law firm thousands of patient registration forms containing information about the medical condition of each patient, including the diagnosis of alcohol and drug abuse, mental illness and sexually transmitted diseases. Individual patient authorization was not obtained prior to the release of any medical records for this purpose. The law firm reviewed these forms for the purpose of finding potential social security claimants. The firm then contacted the patients to advise them concerning their right to obtain social security income. The hospital argued its general authorization for the release of information form was sufficient to permit such a disclosure.
    2. Issue: Whether the hospital may release patient information without specific consent from a patient.
    3. Holding: An independent tort exists for the unauthorized, unprivileged disclosure to a third party of non-public medical information that a physician or hospital has learned within a physician-patient relationship. In the absence of prior authorization, a physician or hospital may disclose otherwise confidential medical information only in those special situations where disclosure is made in accordance with a statutory mandate or common law duty, or to protect or further a countervailing interest which outweighs the patient's interest in confidentiality. The general authorization for release of information form was insufficient. A third party can be held liable for inducing the unauthorized, unprivileged disclosure of non-public medical information learned within a physician-patient relationship.
    4. Significance: The greatest implication of this case pertains to the sharing of information between insurers on claimants. It is no longer advisable to share medical records or the information in them without the express written consent of the treating person.
EVIDENCE
1. ADMISSIBILITY
  1. Cappara v. Schibley (1999), 85 Ohio St.3d 403.
    1. Facts: Plaintiff was injured in an accident caused by an alleged drunk driver who was driving a company vehicle. Plaintiff sued the driver for negligence and the employer for negligent entrustment of the vehicle, seeking compensatory and punitive damages alleging the driver was under the influence of alcohol at the time of the accident. Before trial, defendant filed a motion in limine to exclude evidence of his prior DUI convictions as character evidence that would be unduly prejudicial and not relevant toward the negligent entrustment claim because there was no evidence the accident was proximately caused by defendant's alleged intoxication. The trial court ruled the convictions would be allowed on the issue of punitive damage if plaintiff first introduced evidence defendant had left the scene of the accident. The trial court ruled plaintiff could not introduce subsequent DUI convictions to establish the claim of negligent entrustment. The jury returned a verdict in favor of plaintiff on negligent entrustment and awarded punitive damages finding both defendants acted with conscious disregard for the rights and safety of other persons.
    2. Issue: Whether evidence of defendant's record of DUI convictions, subsequent in time to an earlier accident, is admissible to prove defendant's state of mind (malice or conscious disregard) at the time of the earlier accident.
    3. Holding: Such evidence is not relevant and highly prejudicial and should not have been admitted. Allowing evidence of other DUIs to establish an ongoing "pattern of vehicular misconduct" would essentially allow a plaintiff to use a person's subsequent crimes and bad acts "in order to show he acted in conformity therewith" at the time of the accident in question.
  2. Lewis v. Alpha Laval Separation, Inc. (1998), 128 Ohio App.3d 200.
    1. Facts: Plaintiff suffered severe injuries, including hearing loss, in an explosion at the ethanol plant where he worked and sued the manufacturer of the exploding product. The jury awarded plaintiffs $650,000. The manufacturer appealed challenging the trial court's rulings prohibiting the manufacturer from introducing evidence plaintiff failed to wear mandatory hearing protection, permitting plaintiffs to introduce evidence of a settlement of the claims against his employer, and permitting plaintiffs to elicit expert testimony from their economists on the monetary value of plaintiff's loss of enjoyment of life.
    2. Issue: Whether the trial court's rulings concerning the admission or exclusion of the above-mentioned evidence at trial were an abuse of discretion.
    3. Holding: The court found no abuse of discretion with the decision to exclude evidence plaintiff failed to wear mandatory foam-style hearing protection. The defense expert did not know whether use of the inserts would have prevented or worsened plaintiff's injuries. Secondly, the court found no abuse of discretion with the trial court's decision to admit evidence of the settlement. Under Evid. R. 408, evidence of a settlement is inadmissible to prove liability for or in validity of a claim or its amount, but the rule permits evidence of a settlement when that evidence is presented for another purpose. Third, applying the relevance and reliability tests as explained in Daubert v. Merrill Dow Pharmaceuticals, Inc. (1993), 509 U.S. 579, and Evid. R. 702, the trial court did not abuse its discretion when it admitted testimony by plaintiff's economist concerning the value of loss of enjoyment of life's pleasurable activities.
    4. Significance: While an economist is certainly competent and qualified to testify on issues relating to ones earning capacity and potential, it is very baffling how the economist could be allowed to testify on the value of not being able to engage in certain non-income generating activities.
2. SPOLIATION OF EVIDENCE
  1. Drawl v. Cornicelli (1997), 124 Ohio App.3d 562.
    1. Facts: Plaintiff brought an unsuccessful sexual harassment action against her former employer and then sued the treating physician who testified on her behalf at trial for spoliation of plaintiff's medical records. During cross-examination at the trial in the original suit it became clear the records had been altered by the physician and the physician's credibility was severely damaged. The jury found in favor of the employer. Plaintiff alleged intentional interference with and spoliation of evidence causing her to lose her sexual harassment suit. The trial court granted the physician's motion for summary judgment concluding plaintiff failed to meet her burden to supply evidence the physician wilfully destroyed evidence with the intent to disrupt the case.
    2. Issue: Whether the trial court applied the proper standard for determining spoliation of evidence.
    3. Holding: The Court of Appeals affirmed the trial court's decision in favor of the physician. The court focused on the concept of "wilfulness," which contemplates not only intentional commission of the act, but also a wrongful commission of the act. The court stated if the cause of action alleged merely required a showing the physician intentionally altered evidence, the process of updating documentary evidence in the normal course of business would be halted pending the outcome of a case. Physicians would be unable to update their records when necessary and appropriate for fear of a potential spoliation claim.
    4. Significance: To recover on a claim for interference with or destruction of evidence, a plaintiff must prove all of the following elements: (1) pending or probable litigation involving the plaintiff, (2) knowledge on the part of defendant that litigation exists or is probable, (3) wilful destruction of evidence by defendant designed to disrupt the plaintiff's case, (4) disruption of the plaintiff's case, and (5) damages proximately caused by the defendant's acts.
3. PUNITIVE DAMAGES
  1. Wightman v. Consolidated Rail Corp. (1999), 86 Ohio St.3d 431.
    1. Facts: Plaintiffs were killed attempting to negotiate a railroad crossing despite the crossing's flashing lights and gates being activated. The jury awarded the estate of the driver $1,000,000 in compensatory damages, allocating sixty percent negligence to Conrail and forty percent to the driver, and also found Conrail liable for punitive damages. At the punitive damages trial, the court prohibited Conrail from introducing evidence of contributory negligence on the part of the driver and the jury awarded the estate $25,000,000 in punitive damages
    2. Issue: Whether the court's prohibition of evidence of contributory negligence at a trial to determine punitive damages was error and whether the jury award was grossly excessive.
    3. Holding: Evidence of contributory negligence was properly excluded at the punitive damages trial as it was not relevant to the issues before the jury. The jury was not be asked to consider issues of negligence, but rather conduct of a more wilful nature, thereby making comparative fault inapplicable. The verdict was not found excessive.
4. STATUTE OF LIMITATIONS
  1. Schaffer v. Gateway Harvestore, Inc. (1998), 129 Ohio App.3d 448.
    1. Facts: In 1989, two brothers were found dead at the bottom of a pit on their family farm. Each was survived by a wife and minor child. In 1997 the surviving spouses, on behalf of their minor children, brought a wrongful death action against the company that allegedly and constructed the manure-handling system used on the farm. The defendant filed a motion for summary judgment alleging plaintiffs failed to file suit within two years of the deaths as required. Plaintiffs argued the time period in which to proceed in a wrongful death claim was tolled due to the minority of the claimants in this case. The trial court found the two year statute of limitations barred the claims and dismissed the case.
    2. Issue: Whether a wrongful death action brought on behalf of a minor is tolled until the child reaches the age of majority under the circumstances in this case.
    3. Holding: The court held the two year statute of limitations barred the action. The right to bring a wrongful death action is statutorily created and based solely in O.R.C. 2125, et seq. The deaths of the decedents triggered the running of the limitations period and the time limit for filing suit expired in 1991. Minors are not unfairly disadvantaged as they are represented through the personal representative of the decedent just as any other adult beneficiary to the action.
    4. Significance: In a footnote to this case, the court pointed out since this cause of action arose in June, 1989, significant changes have affected many of the statutes discussed in this opinion.
PREMISES LIABILITY
1. PROOF
  1. Graham v. Cedar Point, Inc. (1997), 124 Ohio App.3d 730.
    1. Facts: Plaintiff sued an amusement park for injuries sustained when he slipped and fell on wet concrete in a park, alleging the park created a hazardous condition by painting over rough concrete and creating a slick surface which became unreasonably slippery when wet. He argued when the park painted the steps, it created a surface which would be unusually slick when covered with water from the lake or the nearby water theme park. Plaintiff claimed the park might have been responsible for the presence of the water because the accident occurred near a time during which the steps were normally mopped. During opening statements, plaintiff's counsel conceded he could not positively identify the source of the water upon which the patron slipped or the length of time it had been on the steps and as a result a directed verdict was granted.
    2. Issue: Whether the plaintiff could present his case to a jury even though he could not specifically prove the source of the water.
    3. Holding: Although counsel admitted in opening statement he could not with certainty prove the source of the water or the length of time it had been on the step, the court held the water was only a catalyst for the dangerous condition of the step created by painting and improper maintenance. The court concluded the trier of fact could reasonably find improper maintenance of a non-slip surface could create a latent defect and breach the required duty of care and the case should have been allowed to go forward at trial.
2. STATUTORY IMMUNITY
  1. Perkins v. Norwood City Schools (1999), 85 Ohio St.3d 191.
    1. Facts: Plaintiff suffered injuries when he slipped and fell in a hallway at school. He was using crutches to assist him in walking as a result of a prior knee injury. While passing a drinking fountain, one of the crutches slid out from under him. He claimed the fountain leaked and a small puddle of water formed underneath. The principal was aware of the leak and unsuccessfully tried to repair it. Plaintiff and his parents sued the school district but their case was dismissed on the basis the district was immune from liability.
    2. Issue: Whether the school district was entitled to statutory immunity under Ohio's provisions regarding tort liability for political subdivisions.
    3. Holding: The district was not entitled to immunity from liability pursuant to O.R.C. 2744.03(A)(5). The court construed the statute to provide political subdivisions are not liable for injuries resulting from the exercise of judgment or discretion in determining how to use personnel and resources. The court concluded the decision of whom to employ to repair a leaking drinking fountain is not the type of decision involving the exercise of judgment or discretion contemplated in the statute. The court categorized this type of decision as a routine maintenance decision requiring little judgment or discretion.

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