Opinion
Nos. 74349 and 75914.
August 12, 1999.
Civil appeal from Court of Common Pleas Case Nos. CV-344493 and CV-352088.
AFFIRMED
APPEARANCES:
For plaintiff-appellants:
W. CRAIG BASHEIN, ESQ., PAUL W. FLOWERS, ESQ., JOHN R. CORRIGAN, ESQ., MICHAEL P. MALONEY, ESQ., Climaco, Lefkowitz, Peca, Wilcox Garofoli.
For defendant-appellee:
ERNEST E. VARGO, ESQ., THOMAS L. ANATOS, ESQ., KYLE B. FLEMING, ESQ., Baker Hostetler, ANDREW H. ISAKOFF, ESQ.
JOURNAL ENTRY AND OPINION
Defendant Progressive Insurance Company issued insurance policies in which it agreed to pay for damages caused by uninsured motorists. As applicable to the issues raised in this case, the policies in question broadly defined an uninsured motorist as a "hit-and-run whose operator or owner who cannot be identified." However, under exclusions for uninsured motorists property damages ("UMPD"), the Progressive policies excluded payment of property damages "if the owner or operator of the uninsured motor vehicle has not been identified." Plaintiffs William Brocious and David Voggenthaler, both insured by Progressive, were separately struck by unidentified hit and run operators who concededly fell within the policy definition of an uninsured motorist. Progressive denied their UMPD claims based on the exclusion for unidentified operators of uninsured motor vehicles.
Plaintiffs independently brought these declaratory judgment and bad faith actions against Progressive claiming that Progressive exhibited bad faith by denying their UMPD claims. The courts dismissed Brocious' action for failure to state a claim upon which relief could be granted under Civ.R. 12(B)(6) and granted Progressive's Civ.R. 56 motion for summary judgment in Voggenthaler's action. Both courts found the policies validly and unambiguously excluded UMPD benefits. Because of the similarity of the issues raised in both cases, we consolidated the appeals for disposition. To our knowledge, this is a case of first impression concerning the application of R.C. 3937.181(B) in the context of unidentified, uninsured motorists and UMPD coverage.
Before addressing the merits of the appeals, we must first consider what effect, if any, there is on our standard of review since Brocious's appeal comes to us from a Civ.R. 12(B)(6) motion for failure to state a claim upon which relief can be granted while Voggenthaler's appeal comes to us from a Civ.R. 56 motion for summary judgment.
Although the Brocious court issued a judgment entry deciding the case on Civ.R. 12(B)(6) grounds, the court's grounds are not dispositive under the circumstances. The parties have assumed, as did the court, that resolution of the legal issue whether Progressive could validly exclude UMPD claims resulting from property damages "if the owner or operator of the uninsured motor vehicle has not been identified" could be decided by a Civ.R. 12(B)(6) motion. We have some doubt as to the propriety of using Civ.R. 12(B)(6) as a grounds for deciding this issue.
A Civ.R. 12(B)(6) motion tests the legal sufficiency of the claim for relief, not the merits of the action. In other words, the rule seeks to cull only those cases that fail to state a valid claim for relief — not those cases in which the plaintiff may assert a valid claim but cannot succeed as a matter of law. Those cases in which a party claims it is entitled to judgment as a matter of law are more appropriately considered under a Civ.R. 12(C) motion for judgment on the pleadings. In State ex rel. Midwest Pride IV, Inc. v. Pontious, (1996), 75 Ohio St.3d 565, 569-570, the Supreme Court held that the standards for Civ.R. 12(B)(6) and (C) motions are similar, but Civ.R. 12 (C) motions are specifically for resolving questions of law. See also, Peterson v. Teodosio (1973), 34 Ohio St.2d 161, 166. The Supreme Court went on to say that, "[u]nder Civ.R. 12 (C). dismissal is appropriate where a court (1) construes the material allegations in the complaint, with all reasonable inferences to be drawn therefrom, in favor of the nonmoving party as true, and (2) finds beyond doubt, that the plaintiff could prove no set of facts in support of his claim that would entitle him to relief." Midwest Pride IV, 75 Ohio St.3d at 570.
In Brocious's action, the court's judgment entry shows it considered the terms of the insurance policy and whether the UMPD exclusions were legally valid. This analysis went beyond that permitted for a Civ.R. 12(B)(6) motion and into territory held by Civ.R. 12(C).
However, the Brocious's court use of Civ.R. 12(C) standard for disposing of the Brocious's class action complaint is not an impediment to our consolidation of the Brocious case with the summary judgment rendered in the Voggenthaler case because the standards of review under both cases are essentially the same. Midwest Pride IV cited to Burnside v. Leiznbach (1991), 71 Ohio App.3d 399, 403, for the proposition that "Civ.R. 12(C) requires a determination that no material factual issues exist and that the movant is entitled to judgment as a matter of law." The standard of review for Civ.R. 12(C) motions is functionally equivalent to that of motions brought pursuant to Civ.R. 56. See Harless v. Willis Day Warehousing Co. (1978), 54 Ohio St.2d 64, 66; Boraggina v. Harris (March 31, 1998), Lucas App. No. L-97-1371, unreported. In conformity with Midwest Pride IV, we choose to address the substance of Brocious's claims as being dismissed under Civ.R. 12 (C), and thus address both Brocious's and Voggenthaler's claims together.
II
The primary complaint by both plaintiffs is that Progressive should not be entitled to define broadly an uninsured motorist as an unidentified hit and run driver and agree to pay property damage caused by the uninsured hit and run driver, but later in the policy exclude from uninsured motorists coverage any damage caused by an unidentified hit and run driver.
R.C. Chapter 3937 distinguishes between uninsured motorists liability coverage for bodily injury (R.C. 3937.18) and uninsured motorists property damages coverage (R.C. 3937.181). Like its uninsured motorists liability coverage counterpart, R.C. 3937.181 (A) requires that insurers make UMPD coverage available to motorists. However, subsection (B) to R.C. 3937.181 states:
The losses recoverable under this section shall be limited to recovery for that destruction or damage to the automobile or motor vehicle specifically identified in the policy directly caused by an uninsured automobile or motor vehicle whose owner or operator has been identified. (Emphasis added).
The Progressive policy conforms to R.C. 3937.181 because it makes the UMPD coverage available as required under subsection (A), but properly excludes coverage for those insureds who suffer property damage "if the owner or operator of the uninsured motor vehicle has not been identified" as required by subsection (B).
Plaintiffs contend this exclusion is ambiguous because it conflicts with an earlier policy definition of an uninsured motorist and the ambiguity should be resolved in their favor.
An insurance policy is a contract. Ross v. Farmers Ins. Group of Companies (1998), 82 Ohio St.3d 281, 287. The insurer, being the one who selects the language in the contract, must be specific with the language it uses in the policy, and an exclusion from liability must be clear and exact in order to be given effect. Lane v. Grange Mut. Cos. (1989), 45 Ohio St.3d 63, 65, citing Am. Fin. Corp. v. Fireman's Fund Ins. Co. (1968), 15 Ohio St.2d 171; Beacon Ins. Co. of Am. v. Kleoudis (1995), 100 Ohio App.3d 79, 88. The courts generally presume that if something is not excluded in an insurance contract, it is included. Home Indemnity Co. v. Village of Plymouth (1945), 146 Ohio St. 96; King v. Nationwide Ins. Co. (1988), 35 Ohio St.3d 208, 214. If the policy contains any ambiguity or contradiction, we must construe the policy in favor of the insured. Thompson v. Preferred Risk Mutual Ins. Co. (1987), 32 Ohio St.3d 340.
Plaintiffs' argument that an ambiguity exists is without merit. It is true that the policy broadly defines an uninsured motorist as "a hit-and-run vehicle whose operator or owner cannot be identified" and which strikes either a covered person or vehicle. But that definition is merely a starting point, not an end, because it must be applied both to uninsured motorist liability coverage and uninsured motorist property damage coverage.
Exclusion 8 under the property damage section of the policy makes a clear and exacting limitation of coverage. Significantly, Progressive gave the following warning before listing exclusions:
"EXCLUSIONS — READ THE FOLLOWING EXCLUSIONS CAREFULLY. IF AN EXCLUSION APPLIES, COVERAGE WILL NOT BE AFFORDED UNDER THIS PART III." (emphasis sic.). The exclusions that follow this warning, including Exclusion 8, can in no way be mistaken as not applying under any circumstance.
Plaintiffs curiously maintain this warning "merely states the obvious." We think so too, but perhaps not in a manner suggested by plaintiffs. Contrary to plaintiffs' arguments, an exclusion does not have to offer any guidance as to whether the exclusion takes precedence over the definition of an uninsured motorist. In fact, it would be redundant for a policy to do so. The very nature of an exclusion is that it creates an exception to coverage that might otherwise be available under other terms of the policy. The Progressive policy follows normal application, first detailing the kinds of situations in which coverage will apply, and then excluding, with a conspicuous warning, coverage in certain enumerated circumstances.
Plaintiffs argue that Progressive should have made a clearer point of the exclusion by adding to the exclusion language something along the lines of "notwithstanding any other provision of this policy." This is nothing more than gilding the lily — plaintiffs' proposed language would merely add more words to the policy, not more meaning.
As a matter of law, we find the exclusions clearly and exactly preclude coverage for property damage when the damage is caused by a hit-and-run driver who cannot be identified.
Plaintiffs also complain that Progressive's exclusion is contrary to the public policy expressed in Girgis v. State Farm Mut. Ins. Co. (1996), 75 Ohio St.3d 302. In Girgis, the Supreme Court abrogated the "physical contact rule" in uninsured motorists insurance cases brought under R.C. 3937.18, and opted for a corroborative evidence test requiring independent third-party testimony before an insured can recover uninsured motorists benefits. Plaintiffs argue that Girgis represented a judicial recognition that uninsured motorists claims could be made even when the driver of the hit-and-run vehicle could not be identified.
It would be a mistake to characterize R.C. 3937.181 as mandating UMPD coverage on the one hand, but taking that coverage away on the other hand. Girgis was decided under R.C. 3927.18, not R.C. 3927.181. The Court noted R.C. 3927.18 neither requires nor prohibits insurance coverage for "hit and run" accidents. 75 Ohio St. 3D at 306. R.C. 3937.181(B), however, specifically does preclude coverage under the circumstances by providing, "[t]he losses recoverable under this section shall be limited to recovery for * * * damage * * * caused by an uninsured automobile or motor vehicle whose owner or operator has been identified." When the General Assembly uses the term "shall," it indicates mandatory application of the law, not discretionary application of the law. Ohio Dept. of Liquor Control v. Sons of Italy Lodge 0917 (1992), 65 Ohio St.3d 532, 534. UMPD coverage is simply not available when the operator of the vehicle has not been identified. This fact alone demonstrates that R.C. 3937.181(B) contains different language than R.C. 3927.18.
We also reject plaintiffs' claim that the Progressive policy is contrary to the public policy expressed in Girgis. As we previously noted, the Supreme Court decided Girgis under R.C. 3937.18, so Girgis cannot be said to have expressed a public policy applying to R.C. 3937.181.
Moreover, the Ohio Supreme Court long ago stated that "[c]ourts have nothing to do with forming public policy and declare such public policy only after the policy has been formulated by the General Assembly." Korr v. Thomas Emery's Sons, Inc. (1950), 154 Ohio St. 11, 18-19. The statement of public policy contained in Girgis came about from the Court's recognition of the implied intent behind the uninsured motorist statute, there being no other explicitly stated legislative intent. The prohibitory language used in R.C. 3937.181(B) clearly demonstrates that the General Assembly promulgated a policy of prohibiting recovery for property damage caused by unidentified drivers. It may be that property damage claims are more easily faked by insureds than personal injury claims under R.C. 3937.18 since uncorroborated damage to a vehicle is even more susceptible to fraudulent claims. In any event, as this is clearly a matter of public policy, we cannot question the wisdom of the General Assembly's decision. Korr, supra; Vance v. St. Vincent Hospital and Medical Center (1980), 64 Ohio St.2d 36, 41; Olin Mathieson Chemical Corp. v. Ontario Store (1967), 9 Ohio St.2d 67, 70. The assigned errors are overruled.
Judgment affirmed.
It is ordered that appellee recover of appellants its costs herein taxed.
The Court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the Court of Common Pleas to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.
TERRENCE O'DONNELL, P.J. DIANE KARPINSKI, J., CONCUR.
DISSENTING OPINION
The majority apparently sees this case as presenting the question of whether the uninsured motorist property damage exclusion contained in Progressive's policy is consistent with R.C. 3937.181. I on the other hand see this as a simple case in which an internal contradiction within the policy itself creates an ambiguity that should be construed strictly against Progressive and in favor of its insureds. In my view, Progressive's self-contradictory policy language makes consideration of R.C. 3937.181 beside the point. I therefore dissent.
Part III of Progressive's policy provides separate "Uninsured/Underinsured Motorist Bodily Injury Coverage" and "Uninsured Motorist Property Damage Coverage." The insureds paid separate premiums for these distinct coverages. With regard to uninsured motorist property damage (UMPD), the Progressive insuring agreement states, in relevant part:
Subject to the Limits of Liability, if you pay a premium for Uninsured Motorist Property Damage Coverage, we will pay for damages, other than punitive or exemplary damages, which an insured person is entitled to recover from the owner or operator of an uninsured motor vehicle due to property damage:
1. caused by accident; and
2. arising out of the operation, maintenance or use of an uninsured motor vehicle. (Emphasis in original.)
Under the "additional definitions" applicable to Part III, paragraph 5 states:
"Uninsured motor vehicle" means a land motor vehicle:
a. * * *
b. * * *
c. that is a hit-and-run vehicle whose operator or owner cannot be identified and which strikes:
i. you or a relative;
ii. a vehicle that you or a relative are occupying; or
iii. a covered vehicle; provided that the insured person, or someone on his or her behalf, reports the accident to the police or civil authority within twenty-four (24) hours or as soon as practicable after the accident. However, we shall not pay for property damage unless there is actual physical contact between the hit-and-run vehicle and the covered vehicle.
* * * (Emphasis in original.)
The Progressive policy then enumerates certain exclusions, and states in relevant part:
EXCLUSIONS — READ THE FOLLOWING EXCLUSIONS CAREFULLY. IF AN EXCLUSION APPLIES, COVERAGE WILL NOT BE AFFORDED UNDER THIS PART III.
* * *
Coverage under this Part III is not provided for property damage:
* * *
8. if the owner or operator of the uninsured motor vehicle has not been identified. (Emphasis in original.)
So according to Progressive's policy, it promises to provide UMPD coverage for an accident caused by a hit-and-run vehicle whose owner or operator cannot be identified, but then excludes UMPD coverage if the owner or operator of the hit-and-run vehicle has not been identified. This has the look and sound of the classic carnival shell game: "Now you see it, now you don't."
It seems obvious to me that an owner or operator who cannot be identified never will be identified. Yet Progressive's policy apparently says that unless an unidentifiable owner or operator has been identified, Progressive will not provide UMPD coverage. If Progressive intended to exclude UMPD coverage unless the owner or operator of the hit-and-run vehicle has been identified, then someone must explain to me what Progressive meant when it said that it would pay for property damage caused by a hit-and-run vehicle whose owner or operator cannot be identified. I do not see how we can brush over Progressive's self-contradictory policy language.
It may be that Progressive did not have to offer UMPD coverage caused by an uninsured automobile or motor vehicle whose owner or operator has not been identified, but nothing prohibits an insurer from providing coverage that is broader than the minimum that is required by statute. Cf. Berry v. Motorists Mut. Ins. Co. (1983), 13 Ohio App.3d 228, 230 (insurer is not precluded from providing uninsured motorists coverage that is broader than minimum requirements mandated by R.C. 3937.18).
As long as insurers comply with the minimum requirements of the statute, they are free to structure their policies in any way desired. Insurers may also provide coverage that exceeds the requirements of the statute, and it is only by looking at the policy provisions that a court can decide what coverage was actually afforded.
Fox v. Auto-Owners Ins. (Jun. 12, 1998), Montgomery App. No. 1456, unreported, at * * 4.
So while R.C. 3937.181(B) may indeed have permitted Progressive to exclude coverage if the owner or operator of the uninsured vehicle has not been identified, Progressive's contradictory policy language instead provides coverage with one hand and then denies coverage with the other. Whether Progressive's convoluted draftsmanship is considered sloppy or deceptive, I would in either event construe Progressive's contradictory language strictly against it and in favor of its insureds.
I am also bothered by the majority's statement that "an exclusion does not have to offer any guidance as to whether the exclusion takes precedence over the definition of an uninsured motorist." Ante at 8. A policyholder should not have to guess whether the policy will or will not provide coverage. The insurer who accepts its insureds' premiums should at least be clear in its policy language. The disputed policy language here does not involve a broad general insuring provision that is then narrowed and refined by precise language addressing a particular contingency. This policy instead says that it will provide coverage in the event that "A" occurs and then says that it will exclude coverage in the event that "A" occurs. The insurer that creates its own paradox and offers no guidance to resolve the paradox should bear the consequences.
I would hold that Progressive's policy language created an ambiguity that should be construed strictly against the insurer and in favor of its insureds. I would therefore reverse the judgments rendered below. ___________________________ JUDGE JOHN T. PATTON
N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc.App.R. 22. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the clerk per App.R. 22(E). See also, S.Ct.Prac.R. II, Section 2(A)(1).