Nationwide Mut. Fire Ins. Co. v. Delacruz

[Cite as Nationwide Mut. Fire Ins. Co. v. Delacruz, 2010-Ohio-6068.]

IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
HANCOCK COUNTY

NATIONWIDE MUTUAL FIRE
INSURANCE COMPANY,

PLAINTIFF-APPELLANT, CASE NO. 5-10-17

v.

ALFREDO J. DELACRUZ, JR., OPINION

DEFENDANT-APPELLEE.

Appeal from Findlay Municipal Court
Trial Court No. 09-CVE-1216

Judgment Affirmed

Date of Decision: December 13, 2010

APPEARANCES:

Steven J. Zeehandelar for Appellant

Bret A. Spaeth for Appellee
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WILLAMOWSKI, P.J.

{¶1} Plaintiff-appellant, Nationwide Mutual Fire Insurance Company

(“Nationwide”), appeals the judgment of the Findlay Municipal Court granting

summary judgment in favor of defendant-appellee, Alfredo J. Delacruz, Jr.

(“Delacruz”). The trial court found that Nationwide’s claim for indemnification

against Delacruz was time-barred by the statute of limitations and that Nationwide

was not entitled to recovery on the basis of unjust enrichment. For the reasons set

forth below, we affirm.

{¶2} On February 24, 2001, Delacruz and Nationwide’s insured, Joyce

Alt (“Alt”), were involved in an automobile accident. Delacruz suffered from

injuries as a result of the accident. Delacruz was insured by Guide One (“Guide

One”), which paid his medical expenses in the amount of $5,000.00. On February

8, 2003, Guide One submitted a subrogation claim to Nationwide for the

$5,000.00 it paid on Delacruz’ behalf. Both Nationwide and Guide One are

members of Arbitration Forums, Inc., a private organization used to settle claims

between insurers through arbitration. Arbitration Forums requires its members to

forego litigation and arbitrate any medical payment subrogation claims through

Arbitration Forums.

{¶3} Delacruz filed a civil suit against Alt in the Hancock Court of

Common Pleas (case number 2006-CV-203) within the two-year statute of

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limitations for bodily injury claims. The arbitration between Nationwide and

Guide One was placed in deferment until the resolution of the civil action between

Delacruz and Alt. Prior to trial, Nationwide settled Delacruz’ claim against Alt for

$15,000.00. Nationwide maintains that the settlement amount included

reimbursement of the $5,000.00 in medical expenses paid by Guide One on

Delacruz’ behalf.

{¶4} On March 19, 2007, Delacruz signed a “Receipt and Release” in

exchange for Nationwide’s payment of the $15,000.00 settlement. The “Receipt

and Release” provided, in pertinent part:

It is expressly understood and agreed that this Release includes,
but is not limited to, a release of all claims for property damage
and personal injuries sustained by Alfred DeLaCruz arising
from the [February 24, 2001] accident, including but not limited
to, * * * all third party subrogation claims, including, but not
limited to J.W. Hutton, Inc. for Wassau Benefits, Inc., Guide
One Insurance, and Therapy Works, and any and all further
expenses and damages of whatsoever nature sustained by the
undersigned, or on his behalf, or by anyone asserting a
derivative claim, as a result of the aforementioned accident.
***
It is further expressly understood and agreed that the
undersigned agrees to indemnify and hold harmless forever
[Joyce Alt], his [sic] agents, heirs, executors, administrators,
successors, insurers and assigns, and every other related person,
firm and corporation, against loss from any and all such further
claims, demands or actions, in law or in equity, that may
hereinafter be made or brought by the undersigned, or by
anyone on his behalf, or by anyone asserting a derivative claim
or third party claim for subrogation against [Joyce Alt] or any
other related person, firm and corporation, for the purpose of

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enforcing a further claim for damages of any kind sustained by
the undersigned in consequence of the aforementioned collision.

(Emphasis added).

{¶5} After Nationwide and Delacruz reached a settlement, the arbitration

of Guide One’s subrogation claim against Nationwide was placed into active

status. On April 3, 2007, an arbitration decision was rendered in favor of Guide

One in the amount of $5,000.00, the amount of Guide One’s purported subrogated

interest.1 On May 28, 2008, over a year later, Nationwide paid the full $5,000.00

arbitration award to Guide One.

{¶6} On May 27, 2009, Nationwide filed this action, seeking

reimbursement of the $5,000.00 from Delacruz. Nationwide’s complaint alleged

that Delacruz had breached the terms of the “Receipt and Release” by failing to

indemnify Nationwide for its payment of Guide One’s subrogation claim.2

Nationwide also argued that it was entitled to recovery against Delacruz under the

theory of unjust enrichment. Delacruz timely answered the complaint.

{¶7} The parties filed cross-motions for summary judgment. On May 14,

2010, the trial court denied Nationwide’s motion for summary judgment and

1
It should be noted that record before us contains no information regarding the specific details of the inter-
company arbitration between Guide One and Nationwide. Specifically, we have no indication as to
whether Nationwide attempted to raise the defense that it already paid Guide One’s subrogation interest
when it paid the $15,000.00 settlement amount to Delacruz or what factors were considered by the
arbitrator in reaching the decision.
2
We note that Delacruz contends that Nationwide never made a formal request for indemnification prior to
filing this lawsuit.

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granted Delacruz’ motion for summary judgment. The trial court ultimately

concluded that Delacruz did not breach the terms of the “Receipt and Release.”

Specifically, the trial court found that Guide One’s filing for inter-company

arbitration failed to preserve its claim against Nationwide because it did not

constitute a commencement of an action required to toll the two-year statute of

limitations. The trial court held that because Guide One’s subrogation claim was

not timely filed within the statute of limitations, Nationwide’s claim for

indemnification against Delacruz based on that claim was time-barred. In

addition, the court found that Nationwide was not entitled to recover from

Delacruz on the basis of unjust enrichment because an express contract existed

between the parties.

{¶8} It is from this judgment that Nationwide appeals, asserting the

following two assignments of error for our review.

First Assignment of Error
The trial court erred when it found that the filing of inter-
company arbitration by Defendant/Appellee’s insurer, Guide
One, failed to preserve its subrogation claim against
Plaintiff/Appellant.

Second Assignment of Error
The trial court erred when it found that the Defendant/Appellee
was not unjustly enriched by his failure to reimburse
Plaintiff/Appellee [sic] for the arbitration award
Plaintiff/Appellee [sic] was required to pay Defendant/Appellee’s
insurer, Guide One.

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{¶9} When reviewing a motion for summary judgment, courts must

proceed cautiously and award summary judgment only when appropriate. Franks

v. The Lima News (1996), 109 Ohio App.3d 408, 672 N.E.2d 245. “Civ.R. 56(C)

provides that before summary judgment may be granted, it must be determined

that (1) no genuine issues as to any material fact remains to be litigated; (2) the

moving party is entitled to judgment as a matter of law; and (3) it appears from the

evidence that reasonable minds can come to but one conclusion, and viewing the

evidence most strongly in favor of the nonmoving party, that conclusion is adverse

to the nonmoving party.” State ex rel. Howard v. Ferreri (1994), 70 Ohio St.3d

587, 589, 639 N.E.2d 1189. When reviewing the judgment of the trial court, an

appellate court reviews the case de novo. Franks, supra.

First Assignment of Error

{¶10} In its first assignment of error, Nationwide argues that the trial court

erred in granting summary judgment in favor of Delacruz based on its finding that

Guide One’s subrogation claim against Nationwide was barred by the statute of

limitations. Specifically, Nationwide argues that Guide One preserved its

subrogation claim against Nationwide when Guide One submitted the claim to

inter-company arbitration within the applicable two-year statute of limitations.

{¶11} In rendering its decision to overrule Nationwide’s motion for

summary judgment and to grant Delacruz’ motion for summary judgment, the trial

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court relied, in large part, on Nationwide Mutual Fire Insurance Company v.

Buckley, 9th Dist No. 06CA0013-M, 2006-Ohio-5362. The facts in Buckley are

similar to the case sub judice. Buckley was involved in an automobile accident

with a party named Cessna, who was insured by Nationwide. Id. at ¶ 2. Buckley

was insured by Farmers Insurance Company which paid some of Buckley’s

medical expenses. Id. Buckley then civilly sued Cessna, but eventually settled the

matter with Nationwide prior to the trial for $10,000.00. Id.

{¶12} In the settlement, Buckley signed a release which stated that “[i]t is

agreed that distribution of the above sum [$10,000.00] shall be as Payees see fit,

but must include all subrogation claims, including but not limited to Farmers

Insurance.” Id. at ¶ 3. The release also contained the following language. “We

further understand and agree that we will release and indemnify [Cessna] and

Nationwide Mutual Insurance Company of any and all subrogation claims that

may exist as a result of any and all medical and all hospital claims including, but

not limited to, Farmers Insurance.” Id.

{¶13} Despite the language in the release, Buckley refused to reimburse

Farmers for the money it paid on Buckley’s behalf. Id. at ¶ 4. Almost six years

after the collision, Farmers filed for inter-company arbitration against Nationwide

and was ultimately awarded the amount of its subrogated interest. Id. Nationwide

then sued Buckley for breach of contract and indemnification. Id. at ¶ 5.

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{¶14} The Ninth District Court of Appeals held that Nationwide’s claim

was barred by the statute of limitations noting that “where an insured’s tort claim

is subject to a statute of limitations, so too is the insurer’s subrogation claim.” Id.

at ¶14 citing United States Fid. And Guar. Co. v. Buckeye Union Ins. Co. (Sept.

30, 1986), 6th Dist. No. L-85-377; see, also, Nationwide Mut. Ins. Co. v.

Zimmerman, 5th Dist. No. 2004 VA 2007, 2004-Ohio-7115, at ¶ 16. The court in

Buckley noted that “the release agreement provided only that Buckley would

indemnify Nationwide for Farmer’s subrogation claims that may exist.” Id. at ¶

17. The court reasoned that at the execution of the release and when Farmers

sought reimbursement from Nationwide, Farmers’ subrogation claim no longer

existed because the statute of limitations had run and, therefore, Nationwide was

not entitled indemnification from Buckley.

{¶15} In the case sub judice, the trial court relied on the same reasoning as

the court in Buckley when it determined that Nationwide’s claim against Delacruz

was time-barred. On appeal, Delacruz’ contends that the trial court reliance on

Buckley was misplaced stating that “[n]one of the factors that led to the court’s

decision in Buckley are present in the case at hand.” (App. Brief at 10). We agree

with Nationwide that some of the facts present in this case are distinguishable

from the facts in Buckley. Specifically, unlike in Buckley, Guide One submitted its

subrogation claim for inter-company arbitration within the statute of limitations.

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Therefore, the essential question in this case is whether Guide One’s filing for

inter-company arbitration preserved its claim to toll the statute of limitations.

{¶16} Section 2305.10 of the Revised Code sets forth the statute of

limitations for causes of actions based on bodily injury and provides that “an

action for bodily injury or injuring personal property shall be brought within two

years after the cause of action accrues.” R.C. 2305.10. The statute further states

that “a cause of action accrues under this division when the injury or loss to person

or property occurs.” Id. It is undisputed by the parties that the accident giving rise

to this suit occurred on February 24, 2001, and that Guide One submitted its

subrogation claim against Nationwide to inter-company arbitration on February 8,

2003—within the two-year timeframe.

{¶17} However, as noted by the trial court, R.C. 2305.17 expressly defines

what constitutes a commencement of an action within the statute of limitations for

claims based on bodily injury and provides:

An action is commenced within the meaning of sections 2305.03
to 2305.22 and sections 1302.98 and 1304.35 of the Revised Code
by filing a petition in the office of the clerk of the proper court
together with a praecipe demanding that summons issue or an
affidavit for service by publication, if service is obtained within
one year.

(Emphasis added).

{¶18} Here, Guide One did not file a petition with the office of the clerk of

courts as required by the statutory language cited above. Rather, Guide One filed

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notice with a third-party private organization, Arbitration Forums, Inc., to provide

Nationwide notice of its subrogation claim. In addition, Nationwide cites us to no

authority in support its contention that Guide One’s submission of its subrogation

claim to inter-company arbitration constitutes a commencement of an action

within the meaning of R.C. 2305.17. To the contrary, at least one court has found

that a presentment of a creditor’s claim to an estate does not constitute a

commencement of an action within the meaning of R.C. 2305.10 to toll the statute

of limitations. Nationwide Mut. Ins. Co. v. Zimmerman, 5th Dist. No. 2004 VA

2007, 2004-Ohio-7115, at ¶ 18.

{¶19} Based on the reasoning articulated by the court in Buckley, the trial

court concluded that Delacruz did not breach the terms of the “Receipt and

Release.” Because that statute of limitations had expired, the trial court concluded

that Guide One’s claim for subrogation against Nationwide did not constitute an

action in law that “may hereafter be made or brought * * * by anyone asserting a

third party claim for subrogation” under the terms of the “Receipt and Release.”

Therefore, the court concluded that Nationwide was not entitled to indemnification

from Delacruz pursuant to the release.

{¶20} In light of the statutory authority cited above, we find no error in the

trial court’s conclusion that Guide One’s filing for inter-company arbitration failed

to preserve its subrogation claim after the expiration of the statute of limitations.

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Accordingly, we also find no error in trial court’s conclusion that Delacruz was

entitled to summary judgment as a matter of law. Nationwide’s first assignment of

error is overruled.

Second Assignment of Error

{¶21} In its second assignment of error, Nationwide argues that it is

entitled to recovery from Delacruz under the theory of unjust enrichment. Unjust

enrichment is an equitable doctrine, not based on contract law but upon quasi-

contract. Homan, Inc. v. A1 AG Serv., L.L.C., 175 Ohio App.3d 51, 2008-Ohio-

277, 885 N.E.2d 253, at ¶ 21, citing Campana v. Ford Motor Co., 8th Dist. No.

88616, 2007-Ohio-4040, 2007 WL 2269504, at ¶ 18. Liability in quasi-contract

“arises out of the obligation cast by law upon a person in receipt of benefits which

he is not justly entitled to retain.” Bickham v. Standley, 183 Ohio App.3d 422,

2009-Ohio-3530, ¶ 14, 917 N.E.2d 330 quoting Hambleton v. R.G. Barry Corp.

(1984), 12 Ohio St.3d 179, 183, 12 OBR 246, 465 N.E.2d 1298. However, the

doctrine of unjust enrichment cannot apply when an express contract exists.

Bickman at ¶ 14, citing Aultman Hosp. Assn. v. Community Mut. Ins. Co. (1989),

46 Ohio St.3d 51, 55, 544 N.E.2d 920. See also Davidson v. Davidson, 3d Dist.

No. 17-05-12, 2005-Ohio-6414, 2005 WL 3274853, at ¶ 19, citing Ullmann v.

May (1947), 147 Ohio St. 468, 479, 34 O.O. 384, 72 N.E.2d 63.

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{¶22} Nationwide erroneously argues that trial court found that the terms

of the “Receipt and Release” did not apply in this case and contends that it is

entitled to recover from Delacruz under a quasi-contract theory. However,

Nationwide obfuscates the trial court’s ruling regarding the first assignment of

error. The trial court did not find that the “Receipt and Release” was not a valid

contract between the parties. On the contrary, the trial court concluded that Guide

One’s subrogation claim did not constitute an action for indemnification under the

terms of the “Receipt and Release.” As previously discussed, the basis for the trial

court’s decision was that the statute of limitations had expired on Guide One’s

claim for subrogation against Nationwide, therefore, it was not action in law that

“may hereafter be made or brought * * * by anyone asserting a third party claim

for subrogation” under the terms of the “Receipt and Release.”

{¶23} In reviewing the trial court’s decision, it is apparent that the trial

court found a valid contract existed between the parties. The trial court simply

held that Nationwide was not entitled to identification from Buckley under the

terms of the agreement. Accordingly, because an express contract existed between

the parties, Delacruz was entitled to summary judgment on Nationwide’s claim for

unjust enrichment.

{¶24} Finally, we also note that Nationwide emphatically argues that

Delacruz “cannot and should not be allowed to escape his obligation to reimburse

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[Nationwide] for medical expenses that he incurred and for which Nationwide had

now paid twice.” (Reply Brief, at 2). However, Nationwide was the only party

present at both the settlement and the arbitration proceedings. Therefore,

Nationwide was the party in the best position to assert the defense that it should

not be required to pay Guide One’s subrogation claim because it had already paid

that amount to Delacruz.

{¶25} Based on all the above, Nationwide’s second assignment of error is

overruled.

{¶26} Having found no error prejudicial to the appellant herein in the

particulars assigned and argued, we affirm the judgment of the trial court.

Judgment Affirmed

ROGERS and PRESTON, J.J., concur.

/jlr

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