Motorists Mutual Insurance v. Andrews

Holmes, J.,

dissenting. I strongly dissent from this court’s misinterpretation of Hill v. Allstate Ins. Co. (1990), 50 Ohio St.3d 243, 553 N.E.2d 658. In order to point out how the majority of this court has become misguided with respect to underinsurance coverage, it is necessary to resort to a factual analysis of Hill and the present case, and the law applicable to both.

*368In Hill, the tortfeasor had liability coverage of $50,000 per person injured in any one accident and $100,000 per occurrence. The tortfeasor’s insurance company settled with the estate of Shaw (“the decedent”) and another victim’s estate for $50,000 each. The decedent’s insurance company, Allstate Insurance Company, provided Shaw with uninsured/underinsured motorist coverage limits of $50,000 per person injured and $100,000 per occurrence. The executrix of the decedent’s estate filed a wrongful-death claim with Allstate in order to recover underinsurance. After Allstate denied the claim, the executrix filed a declaratory judgment action. This court ultimately held that:

“ * * * [Pjursuant to both the plain meaning of Ohio’s underinsurance motorist statute and the unambiguous terms of the subject Allstate policy, no underinsurance motorist coverage was available to the decedent’s estate here because the ‘limits of coverage available for payment’ to the decedent’s estate were not ‘less than the limits for’ the decedent’s underinsured motorist coverage ‘at the time of the accident.’ ” Hill v. Allstate, supra, 50 Ohio St.3d at 245, 553 N.E.2d at 661.

Moreover, this court stated:

“Therefore, under both the Ohio underinsured motorist statute and the relevant Allstate policy, there plainly can be no underinsured motorist coverage unless, at the time of the accident, the underinsured motorist limits of liability contained in the insured’s policy are greater than the liability coverage limits of the tortfeasor’s policy. Here, that was simply not the case.” (Emphasis sic.) Id. at fn. 3.

Thus, a plain reading of both the underinsured motorist statute and Hill would require a tortfeasor’s policy to have less liability insurance than an insured’s underinsured motorist coverage in order to trigger any recovery under the insured’s underinsurance policy. Therefore, in reviewing the facts of the case at bar, the emphasis of the inquiry should be on the “limits of coverage available for payment” from the tortfeasor compared to the insured’s underinsured motorist coverage “at the time of the accident.” R.C. 3937.18(A)(2).

In the present case the insurance covering Mac’s Transport, Inc. was a single liability limit of $750,000 with National Indemnity Insurance Company (“National”). Upon a settlement agreed to among all claimants, the entire $750,000 was paid to Richard Andrews for his severe injuries. Fairmont Homes, Inc., was also insured by National, and the policy named Mac’s Transport as an additional insured. National settled the matter for a total of $97,000 to Richard Andrews; $1,000 to Richard’s wife, Marian Andrews; $1,000 to Dennis Andrews as administrator of the estate of Nathan Andrews; *369and $1,000 to Dennis Andrews as parent and natural guardian of Shannon Andrews.

As father of Nathan and Shannon, Dennis Andrews was insured under a policy issued by Motorists Mutual Insurance Company (“Motorists”), and had uninsured/underinsured policy coverage in the amount of at least $25,000/ $50,000. The stipulated facts show that Dennis’ policy with Motorists “had uninsured/underinsured motorist coverage with limits less than the liability insurance limits of the insurance policy for the tortfeasor.” In other words, the tortfeasor’s liability policy had coverage greater than the insured’s under-insured coverage. Motorists brought a declaratory judgment action against appellees seeking a declaration that underinsured motorist coverage in its insurance policy was not available to appellees since the limits of the tortfeasor’s liability coverages were greater than the underinsured limits of Dennis’ policy. The trial court properly ruled that underinsured motorist coverage was not available to appellees under this court’s rationale in Hill. The court of appeals reversed the trial court and attempted to distinguish Hill from the present case, in that the result of denying recovery to appellees would violate public policy. The court reasoned that since there were no funds available for payment to appellees after the parties had settled with the tortfeasor’s insurance company, appellees’ underinsurance coverage was triggered, notwithstanding the fact that appellees’ underinsured motorist coverage was less than the face amount available under the tortfeasor’s insurance policies (which had been depleted by settlement).

Clearly, the facts in Hill are not distinguishable from the facts in the present case. In both cases the representatives (of the insureds and their families) settled with the tortfeasors’ insurance company. More importantly, the representatives, in the course of their settlements, agreed to share the proceeds from the liability provisions of the tortfeasors’ policies. See Hill, 50 Ohio St.3d at 243, 553 N.E.2d at 659.

It appears that the majority has simply ignored a comparison of the facts of both cases and has fashioned a new accident insurance policy for all insureds in Ohio. However, the underinsured motorist statute, R.C. 3937.18(A)(2), explicitly provides that coverage is triggered only:

“ * * * [WJhere the limits of coverage available for payment to the insured under all bodily injury liability bonds and insurance policies covering persons liable to the insured are less than the limits for the insured’s uninsured motorist coverage at the time of the accident. * * * ” (Emphasis added.)

In analyzing the above provision in R.C. 3937.18(A)(2), the following terminology must be defined:

*370(1) “available for payment,” and

(2) “at the time of the accident.”

In reviewing the phrase “available for payment,” I have discerned that it can only represent the cumulative amount of all policies “covering persons liable to the insured,” as explicitly stated in the statute. The General Assembly may have added this language in order to recognize potential exclusions within liability policies, or split limits in coverage, that would prevent the face amount of a tortfeasor’s liability policy from applying to the total amount of the proceeds available to the insured. On the other hand, the phrase “at the time of the accident” simply indicates that the calculation of the limits available for payment under the insured’s underinsurance coverage shall be conducted as of the moment the accident occurs. I note that my colleagues apparently have some difficulty determining the legislative intent behind the phrase “at the time of the accident.” The majority intimates that the phrase requires insurers to calculate the limits available under the tortfeasor’s policy (rather than the insured’s policy) at the moment the accident takes place. Thus, if there are several injured parties claiming proceeds under a tortfeasor’s liability insurance policy, the insured will be able to seek redress under his or her own underinsurance coverage, rather than be inadequately compensated for his or her injuries as a result of sharing among multiple claimants. I understand the argument that all injured parties should be compensated for their injuries; however, R.C. 3937.18(A)(2) does not provide such a remedy. Instead, the statute indicates that the sum of all the tortfeasor’s insurance policies must be less than the limits of the insured’s uninsured motorist coverage, which is fixed, at the time of the accident. The General Assembly’s purpose for looking to “the time of the accident” in order to review the limits of the insured’s underinsurance coverage reasonably was to ensure that any changes to the policy after the accident would not affect the insured’s potential for recovery. It is a leap in logic to imply that the insured should look to all sources of recovery, including his or her own underinsurance coverage at the time of the accident, where the statute clearly does not indicate such a result.

In addressing whether insurance companies could set off from underinsurance coverage amounts insureds receive from tortfeasors, this court stated in James v. Michigan Mut. Ins. Co. (1985), 18 Ohio St.3d 386, 18 OBR 440, 481 N.E.2d 272, paragraph two of the syllabus, that:

“An insurer may apply payments made by or on behalf of an underinsured motorist as a setoff directly against the limits of its underinsured motorist coverage, so long as such setoff (1) is clearly set forth in the terms of the underinsured motorist coverage and (2) does not lead to a result wherein the *371insured receives a total amount of compensation that is less than the amount of compensation that he would have received if he had been injured by an uninsured motorist.”

This result was premised on the fact that “persons injured by tortfeasors having extremely low liability coverage were being denied the same coverage that was being afforded to persons who were injured by tortfeasors having no liability coverage.” James, 18 Ohio St.3d at 389, 18 OBR at 443, 481 N.E.2d at 274-275. The General Assembly enacted the underinsurance statute to avoid this situation. Thus, an insured should not now be denied recovery in cases where the tortfeasor has minimal liability coverage and the insured has higher liability limits.

Assuming, arguendo, that the majority’s judicial amendment to R.C. 3937.-18(A)(2) is plausible, I believe the outcome of this case is still unreasonable. In this case appellees were entitled to receive up to $850,0004 under the cumulative amount of the tortfeasor’s liability policies, but voluntarily settled for $2,000. It is ludicrous to conclude that the General Assembly would allow an insured to settle with a tortfeasor’s insurance company in order to trigger his or her own underinsurance coverage. Here, the anomalous result is that the appellees could have received the entire amount of their underinsurance coverage from the tortfeasor’s insurance company, but for the fact that they settled with this company in order to benefit other family members not parties to Dennis’ insurance policy.

Accordingly, for the foregoing reasons, I would reverse the court of appeals on the authority of Hill v. Allstate Ins. Co., supra.

. As noted in the facts, Mac’s Transport, Inc. had a single liability limit of $750,000 with National Indemnity Insurance Company. Mac’s was also named as an additional insured under Fairmont Homes’ policy, from which National settled the matter for an additional $100,000.