RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206 2 Hindall v. Winterthur Int’l et al. No. 01-3414
ELECTRONIC CITATION: 2003 FED App. 0249P (6th Cir.)
File Name: 03a0249p.06 Hentemann, DAVIS & YOUNG, Cleveland, Ohio, for
Appellees. ON BRIEF: Matthew C. Huffman, GOODING,
HUFFMAN, KELLEY & BECKER, Lima, Ohio, for
UNITED STATES COURT OF APPEALS Appellant. Laura M. A. Faust, ROETZEL & ANDRESS,
Akron, Ohio, Henry A. Hentemann, DAVIS & YOUNG,
FOR THE SIXTH CIRCUIT Cleveland, Ohio, for Appellees.
_________________
_________________
JAMES HINDALL , X
Plaintiff-Appellant, - OPINION
- _________________
- No. 01-3414
v. - KAREN NELSON MOORE, Circuit Judge. The plaintiff
> James Hindall (“Hindall”) appeals the district court’s grant of
, summary judgment to Winterthur International (“Winterthur”)
WINTERTHUR -
INTERNATIONAL and and Travelers Indemnity Co. of Illinois (“Travelers”) as well
- as the district court’s denial of his summary judgment motion.
TRAVELERS INDEMNITY CO . - Hindall was injured in a motor vehicle accident caused by the
OF ILLINOIS, - negligence of an underinsured driver. At the time of the
Defendants-Appellees. - accident, Hindall was an employee of Philips Display, a
- subsidiary of Philips Electronics North America, which had
N contracted for insurance with both Winterthur and Travelers.
Appeal from the United States District Court Hindall claims that he is an insured under these policies and
for the Northern District of Ohio at Toledo. is entitled to uninsured/underinsured (“UM/UIM”) coverage
No. 00-07429—James G. Carr, District Judge. under both of them.
Argued: June 12, 2003 The district court premised its grant of summary judgment
to the defendants on its belief that Philips Display, Hindall’s
Decided and Filed: July 25, 2003 employer, was validly offered and had validly rejected
UM/UIM coverage, and that the Winterthur and Travelers
Before: KEITH, MOORE, and GIBBONS, Circuit Judges. policies therefore did not cover the injuries Hindall sustained.
In light of the Ohio Supreme Court’s recent decision in
_________________ Kemper v. Michigan Millers Mutual Insurance Co., 781
N.E.2d 196 (Ohio 2002), however, we are bound to hold that
COUNSEL the offer and rejection of UM/UIM coverage here were
invalid, and that UM/UIM coverage therefore arises by
ARGUED: Matthew C. Huffman, GOODING, HUFFMAN, operation of law under both the Travelers and Winterthur
KELLEY & BECKER, Lima, Ohio, for Appellant. Laura M. policies. We therefore REVERSE the district court’s grant
A. Faust, ROETZEL & ANDRESS, Akron, Ohio, Henry A. of summary judgment to Winterthur and Travelers, VACATE
1
No. 01-3414 Hindall v. Winterthur Int’l et al. 3 4 Hindall v. Winterthur Int’l et al. No. 01-3414
the district court’s denial of summary judgment to Hindall, within Philips Display to reject UM/UIM coverage on Philip
and REMAND the case for further proceedings consistent Display’s behalf.
with this opinion.
The second policy considered here is the commercial
I. BACKGROUND umbrella policy issued by Winterthur to Philips Electronics.
The Winterthur policy, as an excess policy, provides an
On May 1, 1999, Hindall was involved in a motor vehicle additional layer of insurance for occurrences resulting in
accident in Findlay, Ohio, when a car driven by Mandy losses exceeding the coverage limits of the Travelers policy.
Klinger struck Hindall’s motorcycle. Although Klinger’s The Winterthur policy was also in effect at the time of
insurance company paid Hindall the limit of Klinger’s Hindall’s accident and had liability limits of $12 million. The
liability policy, Hindall’s damages exceeded the amount paid. only discussion of UM/UIM coverage in the policy is a terse
statement that UM/UIM coverage is provided only to the
At the time of the accident, Hindall was an employee of extent it is provided in the Travelers policy. There is no
Philips Display Components, Inc. (“Philips Display”), in evidence of a written offer or rejection of UM/UIM coverage
Ottawa, Ohio, a subsidiary of Philips Electronics North with regard to the Winterthur policy. This is consistent with
America (“Philips Electronics”). Philips Electronics, at that the remarks of John Esile, who testified in his deposition that
time, was the named insured on two insurance policies. he was not responsible for purchasing or rejecting umbrella or
excess insurance, and that he was unaware of anyone
The first of the policies was issued by Travelers. The specifically rejecting UM/UIM coverage under the Winterthur
Travelers policy provided primary commercial automobile policy.
liability coverage in the amount of $2 million per accident or
loss. The policy purported to cover subsidiaries of Philips On July 17, 2000, Hindall filed a complaint in the United
Electronics, including Philips Display. The Travelers policy States District Court for the Northern District of Ohio seeking
was agreed upon for Philips Electronics by John Esile, Philips UM/UIM coverage under the Travelers and Winterthur
Electronics’s Risk Manager. On December 31, 1998, Esile policies. All of the parties moved for summary judgment, and
filled out and signed a UM/UIM coverage rejection/selection the district court issued an opinion denying Hindall’s motion
form associated with the Travelers policy. The form briefly for summary judgment and granting Winterthur’s and
summarized the nature of UM/UIM insurance, and then Travelers’s motions. The district court concluded that Esile’s
provided a series of boxes, which allowed Esile either to written rejection of UM/UIM coverage with regard to the
accept or to reject UM/UIM coverage. Esile checked the box Travelers policy was valid and sufficed to show that there was
rejecting UM/UIM coverage. Esile was given the authority a valid offer of UM/UIM coverage as well. The district court
to waive UM/UIM coverage by Thomas Hassett, Philips therefore held that UM/UIM coverage did not arise by
Electronics’s Director of Risk Management. However, while operation of law under the Travelers policy. Since the
the form provided a brief description of UM/UIM coverage, Winterthur policy only provided coverage for liabilities
it did not specify the premiums for UM/UIM coverage. covered by the Travelers policy, the district court concluded
Moreover, although the form listed Philips Electronics as an that the Winterthur Policy also provided no coverage for
insured, it did not mention Philips Display. Lastly, there is no Hindall. Hindall filed a timely notice of appeal.
evidence in the record that Esile and Hassett (both officers of
Philips Electronics) were given written authority by anyone
No. 01-3414 Hindall v. Winterthur Int’l et al. 5 6 Hindall v. Winterthur Int’l et al. No. 01-3414
II. ANALYSIS equal to the liability limits of the policy.1 If an insurance
company did not offer UM/UIM coverage in such an amount,
A. Jurisdiction UM/UIM coverage was deemed to arise by operation of law
in the full amount of the policy limits. Gyori v. Johnston
The district court had jurisdiction over this diversity case Coca-Cola Bottling Group, Inc., 669 N.E.2d 824, 827 (Ohio
pursuant to 28 U.S.C. § 1332, because Hindall’s citizenship 1996). Ohio courts stressed that “[t]he purpose of the
is diverse from the insurance companies’ citizenships. See requirement is to protect persons injured in automobile
Lee-Lipstreu v. Chubb Group of Ins. Cos., 329 F.3d 898, 899- accidents from losses which, because of the tort-feasor’s lack
900 (6th Cir. 2003) (holding that federal courts have of liability coverage, would otherwise go uncompensated,”
jurisdiction over actions by an insured against his or her own and therefore held that the “statute should be construed
insurance company if the two are of diverse citizenship liberally in order to effectuate [this] legislative purpose.” Id.
because such actions are not direct actions within the meaning at 826 (quotations omitted). As a result, “rejection of UM
of 28 U.S.C. § 1332(c)(1)). We have jurisdiction over the coverage [had to] be made expressly and knowingly,” and it
district court’s final judgment pursuant to 28 U.S.C. § 1291. was the “insurance companies [that bore] the burden of [this]
showing.” Id. (quotation omitted).
B. Standard of Review
In order to minimize the problems of proof in these
This court reviews a district court’s grant of summary UM/UIM cases, the Ohio Supreme Court in Gyori interpreted
judgment de novo. Gen. Elec. Co. v. G. Siempelkamp GmbH the statute (as it was written before it was amended in 1997
& Co., 29 F.3d 1095, 1097 (6th Cir. 1994). A district court’s by H.B. 261) to require both a written offer of UM/UIM
decision to deny a party’s motion for summary judgment is coverage and a written rejection of that offer. Id. at 827. In
usually considered an interlocutory order and thus not a later decision (again interpreting the pre-H.B. 261 statute),
appealable, see Phelps v. Coy, 286 F.3d 295, 298 (6th Cir. the Ohio Supreme Court expanded upon those requirements.
2002), cert. denied, 123 S. Ct. 866 (2003), but “when the
appeal from a denial of summary judgment is presented
together with an appeal from a grant of summary judgment,
1
we have jurisdiction to review the appropriateness of the The Ohio legislature has subsequently amended the UM/UIM law
district court’s denial,” see Thomas v. United States, 166 F.3d to eliminate any requirement that insurers offer UM /UIM cove rage. See
825, 828 (6th Cir. 1999). We review a district court’s denial O H IO R EV . C ODE A N N . § 3937.18(A) (2002). The uncodified law
accompanying this revision explains that a major purpose of the
of summary judgment based purely on legal grounds de novo. amendment was to “[e]liminate the possibility of uninsured motorist
Id. Summary judgment is proper only if there is no genuine coverage, underinsured motorist coverage, or both . . . being implied as
issue as to any material fact and the moving party is entitled a matter of law in any insurance policy.” Id.
to a judgment as a matter of law. Fed. R. Civ. P. 56(c). However, “[f]or the purpose of determining the scope of coverage of
an underinsured motorist claim, the statutory law in effect at the time of
C. The Travelers Policy entering into a co ntract for automobile liability insurance controls the
rights and duties of the contracting parties.” Ross v. Farmers Ins. Group
of Cos., 695 N.E.2d 732, 732 syllabus para. 1 (Ohio 1998). As the
Former Ohio Revised Code § 3937.18 required insurance relevant policies in this case were agreed upon (and became effective) on
companies, when they made an offer of motor vehicle liability December 31, 1998 , the 200 2 am endments to this statute do not apply —
insurance, also to offer UM/UIM coverage in an amount although H.B. 261, which amended the statute in 1997, does. Its impact
will be discussed later.
No. 01-3414 Hindall v. Winterthur Int’l et al. 7 8 Hindall v. Winterthur Int’l et al. No. 01-3414
See Linko v. Indem. Ins. Co. of N. Am., 739 N.E.2d 338 (Ohio there is simply no question here that the offer in this case does
2000). In Linko, the court explained that the written offer of not comport with the Linko requirements.2
UM/UIM coverage had to include “a brief description of the
coverage, the premium for that coverage, and an express The most apparent violation of Linko in this case is that the
statement of the UM/UIM coverage limits.” Id. at 342. The written offer contains no discussion of the price of UM/UIM
Linko court also made it clear that a parent corporation could premiums, which was something Linko explicitly required.
only reject insurance on behalf of its separately incorporated Linko, 739 N.E.2d at 342 (“We agree with the following
subsidiary corporations if certain safeguards were met. The required elements for written offers imposed by Ohio
Linko court required that “[s]eparately incorporated named appellate courts: a brief description of the coverage, the
insureds must each be listed in a rejection form” and that premium for that coverage, and an express statement of the
“[o]nly with a subsidiary’s written authorization may a parent UM/UIM coverage limits.”). The lack of premium
corporation reject UM/UIM coverage on the subsidiary’s information makes the written offer in this case deficient in
behalf.” Id. at 341. The Linko court also made clear that exactly the same respect as the written offer in Roberts, which
extrinsic evidence could not be used to show that there was a was held legally inadequate because it similarly failed to state
valid offer or a valid rejection of UM/UIM coverage. Instead, the required premium information. Under Roberts, we must
“the four corners of the insurance agreement control in hold the written offer of UM/UIM coverage in this case to be
determining whether the waiver was knowingly and expressly fatally defective. See Roberts, __ F.3d at __, 2003 WL
made . . . . [T]he issue of whether coverage was offered and 21503211, at *5 (pointing out that this “holding is consistent
rejected should be apparent from the contract itself.” Id. at with numerous Ohio intermediate appellate court decisions
343. All of these conditions applied both to primary that have held offers invalid under Kemper solely for not
insurance policies as well as to umbrella policies. Gyori, 669 containing premium information”). We therefore conclude
N.E.2d at 826 (“The mandates of R.C. 3937.18 apply to that Travelers’s offer of UM/UIM coverage was not validly
providers of excess coverage as well as providers of primary made, and therefore was not validly rejected.3 See Gyori, 669
liability coverage.”).
In 1997, the Ohio legislature passed H.B. 261, which made 2
Travelers has never disputed this key po int. Throughout this
several changes to § 3937.18. Although it was initially litigation, Travelers’s only argument has been that the Linko requirements
uncertain how the passage of H.B. 261 would affect the Linko no longer apply after H.B. 261; it has never argued that the Linko
requirements, it is now clear that the Linko requirements still requirements were satisfied under the facts of this case.
apply to offers and rejections of UM/UIM coverage even after
3
H.B. 261. See Kemper v. Michigan Millers Mut. Ins. Co., 781 There are two other violations of Linko here, although the failure of
N.E.2d 196 (Ohio 2002); see also Roberts v. Universal Travelers to put the premiums in writing is sufficient to render T ravelers’s
Underwriters Ins. Co., __ F.3d __, 2003 WL 21503211, at *5 offer of UM/UIM coverage invalid . First, Linko requires that
“[s]eparately incorporated named insureds must each be listed in a
(6th Cir. July 2, 2003) (explaining that Kemper makes it rejection form to satisfy the offer requirement of R.C. 3937.18.” Linko
“unmistakably clear that the Linko requirements still apply to v. Indem. Ins. Co. of N. Am., 739 N.E.2d 338, 341 (Ohio 2000). The
policies after H.B. 261 went into effect”). With this point Linko court later exp lained that “[a]n offer to the parent does not per se
established, Travelers has no defense to Hindall’s claim — as constitute an offer to the subsidiary. Without the name of the entity on
the selection form, no offer of UM/UIM coverage has been made to that
entity.” Id. at 342. Here, the rejection form does not list Philips D isplay;
it only names P hilips Electronics. Although Travelers argues that Philips
No. 01-3414 Hindall v. Winterthur Int’l et al. 9 10 Hindall v. Winterthur Int’l et al. No. 01-3414
N.E.2d at 827 & n.3 (noting that there must be a valid offer policy and find it similarly defective.4 As an umbrella policy,
before there can be an express, knowing rejection). UM/UIM the Winterthur policy is subject to the same Gyori and Linko
coverage therefore arises by operation of law in the amount of requirements as a primary insurance policy. See Gyori, 669
the policy limits. Id. at 826 (noting that there is “only one N.E.2d at 826 (“The mandates of R.C. 3937.18 apply to
way to avoid the requirement that UM coverage be provided providers of excess coverage as well as providers of primary
— an express, knowing rejection of UM coverage by the liability coverage.”); see also Scott-Pontzer v. Liberty Mut.
customer” preceded by a valid offer). We therefore reverse Fire Ins. Co., 710 N.E.2d 1116, 1120 (Ohio 1999) (noting the
the grant of summary judgment to Travelers and vacate the Supreme Court holdings requiring that “excess liability
district court’s denial of Hindall’s motion for summary insurance must comport with R.C. 3937.18 and thus
judgment against Travelers. uninsured (and underinsured) motorist coverage must be
tendered” and that “failure by the insurer to offer such
D. Winterthur Policy coverage results in the provision of such coverage by
operation of law”).
Having concluded that the Travelers policy was defective
under Linko and Kemper, we now turn to the Winterthur The Witherthur policy is clearly defective as regards
UM/UIM coverage under Linko and Kemper. John Esile
testified in deposition that there was never any written
rejection of UM/UIM coverage pursuant to the Winterthur
policy, and the record similarly contains no evidence of a
Display was clearly incorporated into the agreem ent via p art of a separate written rejection. See Linko, 739 N.E.2d at 343 (“By
endorsem ent, Linko plainly requires that the separately incorporated requiring an offer and rejection to be in writing, this court
named insureds each be listed on th e selection form itself, not that they impliedly held in Gyori that if the rejection is not within the
just appear within the offer. Our conclusion that the offer and rejection
is therefore invalid under Linko is consistent with a post-Kemper Ohio
contract, it is not valid. In doing so, this court greatly
intermediate court that considered this sam e issue. See Inlow v. Da vis, simplified the issue of proof in these types of cases — the
No. CA20 02-08-071, 20 03 W L 2137 3154, at *4 (Ohio C t. App.–1 2th offer and rejection are either there or they are not.”).
Dist. June 16, 2003) (holding that because “[t]he written rejection simply
fails to nam e Bigg’s [the subsidiary] as an insured,” it is therefore Winterthur’s only defense was that its policy, as an
defective under Kem per because “a rejection of UM/U IM co verage on umbrella “follow-form” policy, excluded coverage whenever
behalf of Bigg’s cannot be inferred from Supervalu’s [the parent
company’s] rejection”).
the underlying policy also excluded coverage. As a result,
Second, Linko “require[d] that a subsidiary’s authorization to a parent Winterthur’s brief was devoted to arguing that the Travelers
corporation to waive UM /UIM coverage benefits on its behalf must be in
writing and must be incorporated into the contract.” Linko, 739 N.E.2d
at 343 ; see also id. at 341 (“O nly with a sub sidiary’s written authorization 4
may a parent corporatio n reject UM /UIM cove rage o n the sub sidiary’s The district court granted summary judgme nt to W interthur because
behalf.”). This requirement also has not been satisfied. There is no the Winterthur policy specified that it only provided coverage when the
evidence in the record that anyone at Philips Display authorized the underlying policy also provided cove rage. Since there was no liab ility
waiver of UM /UIM coverage in writing. In fact, according to John Esile, under the Travelers policy, the district court concluded that there could be
the risk manager o f Philips Electronics, no one at Philips Disp lay would no liability under the Winterthur policy. We, however, have concluded
even have known about the offer of UM /UIM coverage, as it was Philips that UM/UIM coverage did arise by operation of law under the Travelers
Electronics that was responsible for procuring insurance. T his is another policy, and therefore cannot affirm the gran t of summ ary jud gment to
indisputable violation of Linko. W interthur on that basis.
No. 01-3414 Hindall v. Winterthur Int’l et al. 11
policy did not provide UM/UIM coverage and that
Winterthur’s “follow-form” exclusion (which stated that
Winterthur would only provide coverage when the underlying
policy also provided coverage) was valid. Having
determined, however, that implied UM/UIM coverage was
created under the Travelers policy, we believe that it is
inescapable that coverage should exist under the Winterthur
policy as well to the extent that Hindall’s damages exceed the
Travelers policy’s limits.
III. CONCLUSION
For the foregoing reasons, we REVERSE the district
court’s grant of summary judgment to the defendants on the
ground that the Travelers and Winterthur policies did not
contain UM/UIM coverage, as we hold that both of these
policies did in fact provide UM/UIM coverage as a matter of
law. For the same reason, we VACATE the district court’s
denial of summary judgment to Hindall. We REMAND the
case to the district court for further proceedings consistent
with this opinion.