Glen R. Pritchard Uninsured Motorist Law Update

1. CPR&S Glen R. PritchardUninsured MotoristLaw Update

2. www.GlenPritchard.com This slide show and all documents marked with “gw” are available for download. Click on “Glen’s Library”

3. Scott-Pontzer: Precursor • King v. Nationwide Ins. Co. (1988), 35 Ohio St.3d 208 Plaintiff’s corporate employer was the named insured. Defined “insured” to mean 1) you and 2) relatives living in your household. Held: “Relatives” could mean employees of the corporation.

4. Scott-Pontzer: Auto Policy Holding • Scott-Pontzer v. Liberty Mut. Fire Ins. Co. (1999), 85 Ohio St. 3d 660. Defined “insured” to mean 1) you and 2) if you are an individual, relatives living in your household. Held: “You” could mean employees of a corporation.

5. Scott-Pontzer: Relatives of Employees Defined “insured” to mean 1) you and 2) if you are an individual, relatives living in your household. Since employees are ‘individuals’, does that mean that their relatives are also “insureds”? Yes! Ezawa v. Yasuda Fire & Marine Ins Co of Am. (1999), 86 Ohio St. 3d 557.

6. SCOTT PONTZER DEFENSE 1: “Employer is a Political Subdivision”

7. Scott-Pontzer: (Political Subdivisions) • Mizen v. Utica National (Jan. 17, 2002), Butler App. No. 79554, unreported. • Auto policies issued to school districts. • Insurers contend that political subdivisions have statutory authority to purchase insurance to cover employees only while in the scope and course of employment. • Held: Employees is covered even while not on the clock.

8. Scott-Pontzer: (Political Subdivisions) • Other cases holding that policies issued to political subdivisions can provide coverage for employees: (All common pleas decisions on GW) Allen v. Johnson, 9th Dist. App. Nos. 01CA0046 and 01CA0047, 2002-Ohio-3404; Congrove v. Wausau Ins. Cos. (Oct. 2, 2000), Butler C.P. No. 2000-CI-006, unreported;Morgenstern v Nationwide (9-18-2001), SD Ohio ED Case No. C2-00-1284, unreported; Henry v Wausau Business (9-27-2001), SD Ohio WD Case No. C-1-00-642, unreported Roberts v. Enyart(May 1, 2001), Franklin C.P. No. 99CVC12-10958, unreported; Keagler v. Barisic (March 19, 2001), Lake C.P. 99CV000430, unreported; Wausau v. Chidester (5-11-2001), 2001 WL 506520 (S.D. Ohio), unreported.

9. Scott-Pontzer: (Political Subdivisions) • Other cases holding that policies issued to political subdivisions can provide coverage for employees (continued): (All on GW) Hummel v. Hamilton (2/13/2002), Butler C.P. No. CV00-01-0170, unreported; Griffith v. Wausau (9/27/2001), Franklin C.P. No. 00CVC 05-4488, unreported; Johnston v. Johnston (10/25/2001), Lake C.P. No. 00CV001494, unreported.

10. Scott-Pontzer: (Political Subdivisions) • Hydell v. Ohio Twp. Management Auth. (3/12/2002), Summit C.P. No. 2001 105168, unreported. • A political subdivision risk management pool is not required to provide UDM coverage. However, if the pool risk agreement provides for UDM coverage, then it is subject to the Scott-Pontzer analysis.

11. SCOTT PONTZER DEFENSE 2: “Other Owned Auto Exclusion”

12. Scott-Pontzer: ‘Other Owned Auto’ • The ‘other owned auto’ exclusion: “We do not provide uninsured motorists coverage for bodily injury sustained by any person: (1) while occupying or when struck by any motor vehicle owned by you or any family member which is not insured with this coverage under this policy.” Invalidated in Martin v. Midwestern Group Ins. (1994), 70 Ohio St. 3d 493. Revalidated by H.B. 261 effective Sept 3, 1997.

13. Scott-Pontzer: ‘Other Owned Auto’ • Response 1: The statute applies only to the “named insured” R.C. 3937.18(J): The coverages ... may include terms and conditions that preclude coverage for bodily injury or death suffered by an insured under any of the following circumstances: (1) While the insured is operating or occupying a motor vehicle owned by, furnished to, or available for the regular use of a named insured, a spouse, or a resident relative of a named insured, if the motor vehicle is not specifically identified in the policy. . .

14. Scott-Pontzer: ‘Other Owned Auto’ • Response 2: The policy may apply only to the “named insured” Some policies follow exactly the language of the statute. If the exclusion is limited to autos owned by the “named insured”, then it does not apply to autos owned by employee “insureds”. See Cartwright v. Cincinnati Ins. Co. (Feb. 15, 2001), Cuyahoga C.P. No. CV-414954, unreported. (GW. The briefs and postcard decision are available for download.); Kasson v. Goodman (9-25-2001), Lucas C.P. No. CI-00 1682, unreported. GW

15. Scott-Pontzer: ‘Other Owned Auto’ • Response 2: The policy may apply only to the “named insured” Cases Continued: Moran v. Cincinnati Ins. Co.(3/12/2002), Richland C.P. No. 01-279D, unreported; Johnston v. Johnston (10/25/2001), Lake C.P. No. 00CV001494, unreported; Hummel v. Hamilton (2/13/2002), Butler C.P. No. CV00-01-0170, unreported.

16. Scott-Pontzer: ‘Other Owned Auto’ • Response 3: If the exclusion applies to “you” instead of the “named insured”, argue that you means only the named insured. If the exclusion applies with respect to vehicles owned by “you”, the policy will define “you” as the “named insured” shown on the declarations page. The plaintiff is an “insured”, but not the “named insured”; therefore, the exclusion does not apply. Kasson v. Goodman, 6th Dist. App. No. L-01-1432, 2002-Ohio-3022; Purvis v. Cincinnati Ins., 2nd Dist. App. No. 2001-CA-104, 2002-Ohio-1803.

17. Scott-Pontzer: ‘Other Owned Auto’ • Response 4: Ambiguity in Wrongful Death Cases “We do not provide uninsured motorists coverage for bodily injury sustained by any person: (1) while occupying or when struck by any motor vehicle owned by you or any family member which is not insured with this coverage under this policy.” This exclusion does not apply to wrongful death cases. Leonhard v. Motorists Mut. Ins. Co (March 3, 1994), Franklin App. No. 93AP-449, unreported.

18. Scott-Pontzer: ‘Other Owned Auto’ • Defense Case Geren v. Westfield (3/8/2002), Lucas App. No. L-01-1398, unreported. The “other owned auto” exclusion is a valid defense to a Scott-Pontzer claim.

19. SCOTT PONTZER DEFENSE 3: “Consent to Settle/ Subrogation Defense”

20. Law of Subrogation (1) Subrogation clauses are valid and not against public policy. Bogan v. Progressive (1988), 36 Ohio St. 3d 22: “Such a clause is both a valid and enforceable precondition to the duty to provide UDM coverage.”

21. Law of Subrogation (2) It does not matter that the subrogation rights may have no value. If they have been impaired, UM coverage is lost even where there is no showing of prejudice. Nickschinski v. Sentry (1993), Case No. 62396 (8th District CA).

22. Howard v. State Auto (March 14, 2000), struck down the consent provisions of the policy because they seemingly conflicted with the notice provisions RESPONSE 1

23. Scott-Pontzer: Consent to Settle/Subrogation • Consent to Settle Condition: • A. We do not provide Uninsured/Underinsured Motorists Coverage for bodily injury sustained by any person: • 2. If that person settles the bodily injury claim without our consent. This exclusion does not apply to a settlement made with the insurer of a vehicle described in Section 2. of the definition of uninsured /underinsured vehicle. Section 2 defines uninsured/underinsured vehicle as one that is covered by liability coverage in an amount less than the insured’s UM limits.

24. Scott-Pontzer: Consent to Settle/Subrogation • Response: Policy too confusing “In essence, the provisions suggest no consent is necessary in those circumstances in which *** the tortfeasor has insufficient liability coverage to compensate American's insured for injuries sustained as a result of the tortfeasor's liability. On closer examination, however, the paragraph excluding the need for a consent only applies to a settlement made with the insurer of a vehicle; it is silent as to settlement with the tortfeasor. The provision thus confuses, if not misleads, an insured about when consent is unnecessary under the exclusion to the exclusion.” Howard v. State Auto Ins. Co. (March 14, 2000), Franklin App. No. 99AP-577, unreported.

25. Scott-Pontzer: Consent to Settle/Subrogation • Other cases holding that this policy language is too confusing: Jordan v. State Farm (Nov. 13, 2001), Licking C.P. No. 00 CV 167, unreported GW Burkhart v CNA Ins. (July 31, 2001), Stark C.P. No. 2001 CV 00470, 2001 WL 1152821 (Ohio Com.Pl.) But now, the 10th Dist. has reversed itself: Alatsis v Nationwide, 10th Dist. App. No. 01AP-1038, 2002-Ohio-2906 (6-11-2002).

26. Martin v. Liberty Mutual (11-6-2001), N.D. Ohio ED Case No. 5:00 CV 1864.While it is true that Plaintiffs settled with the tortfeasor and released her from all liability, the Plaintiffs did so approximately seven years and nine months before the Ohio Supreme Court decided Scott-Pontzer, which gives rise to this case. Before the holding in Scott-Pontzer was issued in June of 1999, Plaintiffs, and other similarly situated, could not predict that they would be covered under their employers’ insurance policy, even when outside the scope of employment, and that such coverage could include underinsured motorists coverage. Accordingly, the Court is not prepared to rely upon the destruction of Midwestern’s subrogation rights to bar Plaintiffs from recovering. RESPONSE 2

27. Burkhart v. CNA Insurance (2-25-2002), Stark App. No. 2001CA00265, unreportedandRienschield v. Nationwide (12/28/2001), Fairfield C.P. No. 00CV724, unreported. RESPONSE 2

28. Does a release invalidate UM coverage where the tortfeasor is not collectible?Ferrando v. Auto-Owners, Ashtabula App. Case No, 01-1843, cert. granted, 94 Ohio St. 3d 1451 RESPONSE 2(a)

29. Weiker v. Motorists (1998), 82 Ohio St. 3d 182, wrongful death beneficiary not precluded from underinsured motorist coverage because of failure to notify insurer of a wrongful death settlement. RESPONSE 3

30. The UDM carrier cannot complain of impaired subrogation rights when they concede that they would not have exercised such rights in the first place…. RESPONSE 4

31. Do an asset check of the tortfeasor, take a 30(B)(5) deposition of the UDM carrier regarding what criteria, if any, they employed to determine if they went after the uninsured or underinsured driver….

32. If subrogation rights have been impaired, the UDM carrier is entitled to set off the amount it would have received upon enforcement of its subrogation rights in lieu of a forfeiture of the UDM coverage. Oakar v. Farmers (1997), Cuyahoga CA, 1997 Ohio App. LEXIS 1518. RESPONSE 5

33. Assume that the client never released the tortfeasor but simply failed to file an action within the two year statute of limitations. Has the insured, by such failure, “impaired” the subrogation rights of the UDM carrier? COMMENTARY

34. First, such an argument is really a disguised “late notice” argument which would normally require a showing of prejudice. Don’t let the SP carrier confuse the impairment of subrogation rights with the defense of untimely notice. Impairment of subrogation rights arguable does not require a showing of prejudice. Untimely notice does. This becomes significant because the party that has the burden to show prejudice will, more likely than not, lose. COMMENTARY

35. Second, UDM policies generally do not require that the insured file suit against an uncollectible tortfeasor in order to preserve the insured’s UDM coverage, unless such requirement is very clearly and unambiguously stated in the policy. See Mehl v. Motorist (1992), 79 Ohio App. 3d 550. COMMENTARY

36. SCOTT PONTZER DEFENSE 4: “Late Notice Defense”

37. Scott-Pontzer: Late Notice Defense Unreasonable delay creates a presumption of prejudice TIG Insurance Company v. OK Freightways, 10th CA, 12-21-2000

38. Here, it is critical that you introduce into the record that the uninsured or underinsured motorist was not collectible to rebut the presumption of prejudice. In most of the cases so far, the Plaintiff has lost this issue because he has failed to introduce evidence into the record to rebut the presumption. COMMENTARY

39. Has the insured failed to give timely notice of the claim? Question: 1

40. Proposition of Law No. 1 The insured has no duty to notify the UDM carrier of their UM claims if, at the time of the accident, such claims did not exist under Ohio law. Hence, the duty to notify only arises after the date of the Scott Pontzer decision.

41. In Hamilton v. Perry (1993), Ohio App. LEXIS 1167, the Court held that there is no duty to notify an insurer of a claim when such claim is not recognized under Ohio law (dealing with the claim of child against parent, previously barred by parental immunity)

42. Argument 1: Plaintiffs gave timely notice of their UDM claims.

44. Argument 2: Assuming untimely notice, Plaintiffs have rebutted the presumption of prejudice.

45. MAKE YOUR RECORD

46. SCOTT PONTZER DEFENSE 5: “Legally Entitled to Recover Defense”

47. UM Coverage is dependent upon the insured being “legally entitled to recover” from the uninsured motorist. What happens if the insured never filed a suit against the uninsured driver within the two year period? Is his Scott Pontzer UM claim therefore barred?

48. Does the insured have to file a suit against the uninsured driver to preserve his UM claim? No: Hatcher v. Grange Mutual Casualty Co. (1993), WL 524886 (10th District CA) Yes: Stover v. State Farm, Seneca App. No. 13-98-12 (5-21-98)

49. SCOTT PONTZER DEFENSE 6: “Choice of Law Defense”

50. Scott-Pontzer: Choice of Law • 2 Common Situations: • The employer is a foreign corporation with an Ohio branch office. • The employer is an Ohio corporation which is a wholly owned subsidiary of an out-of-state corporation.