Opinion
Case No. C-3-00-291
April 21, 2003
This mailer is before the Court on several motions, including two motions for summary judgment by Plaintiffs, one of which is against Defendant National Union Fire Insurance Company of Pittsburgh, Doc. 36, and another which is against Defendant, Counter-Claimant, General Motors Corporation. Doc. 40. National Union has countered with its own motion for summary judgment, as has General Motors. Docs. 37 38. Rutlin has also requested that the Court certify a question of law to the Ohio Supreme Court. Doc. 54.
I. Factual and Procedural Background
The Rutlins have charged Defendants with failure to pay under-insured motorist benefits, while General Motors' counterclaim seeks declaratory judgment that it has no liability to the Rutlins. Both of these claims hinge upon whether or not a program of risk management that General Motors maintains extends under-insured motorist protection to Herman Rutlin at the time of his accident. Because of General Motors' program was, in practical terms, a program of self-insurance, and also because General Motors' policy would not have extended under-insured motorist coverage to Herman Rutlin at the time of his accident even if it was not a self-insurance program, the court will grant the motions for summary judgment of General Motors and National Union, while denying the Rutlins' motion for summary judgment.
The instant case arises from a January 5, 1999, automobile accident in Harrison Township, Montgomery County, Ohio. The parties agree that accident was caused by Daniel Cockrell, who negligently failed to yield the right of way to Herman Rutlin, who was driving the car of his wife, Lauretta Rutlin. Herman Rutlin suffered severe injuries and other damages, while his wife suffered a loss of consortium. Cockrell was insured by the Grange Mutual Casualty Company under a policy with a maximum coverage of $100,000. Grange Mutual paid the policy limit of $100,000 to Herman Rutlin to settle Rutlin's claim of liability against Cockrell. This settlement is presumably not the full measure of the Rutlins' damages, as they seek to recover under-insured motorist benefits from Herman Ruthn's employer and the employer's alleged insurer.
Herman Rutlin worked for the General Motors Corporation at the time of the accident. On May 9, 2000, Plaintiffs filed an action against National Union Fire Insurance Company of Pittsburgh, Pa., in the Court of Common Pleas of Montgomery County, Ohio, alleging that Herman Rutlin was an "insured" under a risk-management program General Motors established with National Union. The Rutlins allege that this risk-management program, which contains an automobile policy and a general liability policy, is simply an insurance policy. Rutlin further alleged that National Union failed to make under-insured motorist payments to him for either the automobile policy or the general liability policy issued to General Motors, as allegedly required by either the terms of the contract or by Ohio Revised Code § 3937.18. Lauretta Rutlin brought a claim for failure to compensate her for her loss of consortium damages.
On February 28, 2001, the Rutlins amended their complaint, adding the General Motors Corporation as a defendant. The Rutlins allege that General Motors has asserted that it is the real party interest in the claim, prompting the Rutlins to demand judgment against defendants jointly and severally.
On March 13, 2001, General Motors replied with a counter-claim requesting declaratory judgment against the Rutlins to the effect that the Rutlins are not entitled to under-insured motorist benefits under the risk-management program General Motors had established with National Union. General Motors contends that what the Rutlins' complaint refers to as insurance policies is a risk-management program that is, in practical terms, a self-insurance program. If the risk-management program is a self-insurance program, then the Rutlins are not entitled to under-insured motorist benefits under Ohio Revised Code § 3937.18.
Now, all parties have filed motions for summary judgment. The Rutlins have filed a motion for partial summary judgment against National Union that asks the Court to determine that the Rutlins qualify as insureds under each policy and that the Rutlins are entitled to uninsured and underinsured motorist coverage under each policy. Doc. 36. National Union's motion for summary judgment requests a determination that General Motors' risk management program is exempt from the requirements of Ohio Revised Code § 3937.18, and further, that the terms of General Motors' agreement with National Union reduces the $12,500 of under-insured motorist coverage that would be available to the Rutlins, even if they qualified for under-insured motorist coverage under the plan, by any amounts received from the allegedly under-insured motorist's insurance company. Doc. 37. General Motors' motion for summary judgment echoes the requests made in National Union's motion for summary judgment, but adds a request that the Court determine that Michigan law should apply to the interpretation of the risk-management contract and that Michigan law does not recognize the rules of insurance contract interpretation established in Scott-Pontzer v. Liberty Mutual Fire Insurance Company, 710 N.E.2d 1116 (Ohio 1999). Doc. 38. The Rutlins' motion for summary judgment recognizes that this Court's treatment of whether or not the Rutlins qualify as insureds under each of the policies should result in the same answer in each case, and that whether or not the Rutlins are entitled to under-insured motorist coverage should also result in the same answer under each policy. The Rutlins' motion asks the Court to find that Ohio law controls the determination of the scope of the policies contested in this case and that the risk-management programs do not qualify as self-insurance programs that would free them from the force of Ohio Revised Code § 3937.18. Doc. 40. Finally, the Rutlins request that this Court certify a question to the Ohio Supreme Court that purports to resolve a conflict the Rutlins perceive in the holdings of Ohayon v. Safeco Insurance Company of Illinois, 747 N.E.2d 206 (Ohio 2001), and Henderson v. Lincoln National Specialty Insurance Company, 626 N.E.2d 657 (Ohio 1999).
II. Jurisdiction
Jurisdiction is premised on diversity. 28 U.S.C. § 1332.
III. Summary Judgment Standard
The standard of review applicable to motions for summary judgment is established by Federal Rule of Civil Procedure 56 and associated case law. Rule 56 provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Alternatively, summary judgment is denied "[i]f there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Hancock v. Dodson, 958 F.2d 1367, 1374 (6th Cir. 1992) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505 (1986)). Thus, summary judgment must be entered "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548 (1986).
The party seeking summary judgment has the initial burden of informing the court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, admissions and affidavits which it believes demonstrate the absence of a genuine issue of material fact. Id., at 323. The burden then shifts to the nonmoving party who "must set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S., at 250, 106 S.Ct. 2505 (quoting Fed.R.Civ.P. 56(e)).
Once the burden of production has shifted, the party opposing summary judgment cannot rest on its pleadings or merely reassert its previous allegations. It is not sufficient to "simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd v. Zenith Radio Corp., 475 U.S. 574, 586 106 S.Ct. 1348 (1986). Rule 56 "requires the nonmoving party to go beyond the pleadings" and present some type of evidentiary material in support of its position. Celotex Corp., 477 U.S., at 324, 106 S.Ct. 2548.
In determining whether a genuine issue of material fact exists, a court must assume as true the evidence of the nonmoving party and draw all reasonable inferences in the favor of that party. Anderson, 477 U.S., at 255, 106 S.Ct. 2505. If the parties present conflicting evidence, a court may not decide which evidence to believe by determining which parties' affiants are more credible. 10A Wright Miller, Federal Practice and Procedure, § 2726. Rather, credibility determinations must be left to the fact-finder. Id.
Finally, in ruling on a motion for summary judgment, "[a] district court is not . . . obligated to wade through and search the entire record for some specific facts that might support the nonmoving party's claim." Inter Royal Corp. v. Sponseller, 889 F.2d 108, 111 (6th Cir. 1989). Thus, in determining whether a genuine issue of material fact exists on a particular issue, the court is entitled to rely upon the Rule 56 evidence specifically called to its attention by the parties.
IV. Analysis
The Rutlins' claims are based upon the theory of recovery announced in Scott-Pontzer v. Liberty Mutual Fire Insurance Company, 710 N.E.2d 1116 (Ohio 1999), under which, if the language of the insurance contract of an injured person's employer so allows, an injured employee can collect on an uninsured or under-insured motorist policy maintained by the employer. Scott-Pontzer involved claims emanating from the death of Christopher Pontzer, who was an employee of Superior Dairy, Inc. Scott-Pontzer, 710 N.E.2d at 1117. While driving a car owned by his wife, he was hit and killed by a vehicle driven by Troy Taylor. Id. At the time of the accident, Pontzer was not within the scope of his employment. Taylor's liability insurance was capped at $100,000 per person; $300,000 per accident. Pontzer's wife, Kathryn Scott-Pontzer, sought under-insured motorist coverage under two policies owned by Superior Dairy.
The first policy under which she sought coverage contained a under-insured motorist provision. The liability provision expressly named Superior Dairy as the insured. The pertinent part of the under-insured motorist provision read:
B. Who Is An Insured.
1. You.
2. If you are an individual, any family member.
Id. at 1118. Apparently, this was boilerplate language in the form concerning uninsured and underinsured motorist coverage in all automobile insurance policies in Ohio at the time. See King v. Nationwide Ins. Co., 519 N.E.2d 1380, 1381 (Ohio 1988). The second policy ("Liberty Mutual policy") under which she sought coverage was an umbrella/excess insurance policy. The second policy was silent concerning the existence of under-insured motorist coverage.
The Ohio Supreme Court found that it was reasonable to think that the under-insured motorist provision of the first policy, to be effective, was intended to insure actual individuals, 710 N.E.2d at 1119, and in light of the canon of statutory construction that insurance contracts should be construed most favorably to the insured, it must have included the employees of Superior Dairy, even though Superior Dairy was the declared insured, and the dairy had no family members. Id.; see also Szabo v. CGU Intern. Ins., PLC, 227 F. Supp.2d 820, 829 n. 10 (S.D. Ohio 2002) (Rice, C.J.) (noting the novelty of applying this statutory construction cannon to determine whether or not one is an ""insured.").
With regard to the second policy, the Ohio Supreme Court held that because the insurance company failed to offer under-insured motorist coverage, such coverage extended by operation of Ohio Revised Code § 3937.18. Id. at 1120; see also Gyori v. Johnston Coca-Cola Bottling Group, Inc., 669 N.E.2d 824 (Ohio 1996). This was because under Ohio Supreme Court precedent, the burden of showing that uninsured and under-insured motorist coverage was offered and rejected falls on the insurer. See id. at 1120; Gyori, 669 N.E.2d at 827.
The Rutlins assert that they qualify as an "insured" under General Motors insurance policy in the same manner as Christopher Pontzer and Kathryn Scott-Pontzer. They further assert that General Motors did not reject uninsured and under-insured motorist coverage, and that they are entitled to such according to Ohio Revised Code § 3937.18 and Gyori.
Among General Motors' and National Union's contentions is one that Ohio law does not apply to the interpretation of the instant policy, foreclosing the application of Scott-Pontzer contractual hermeneutics, and another to the effect that, even if Ohio law applied, uninsured and under-insured motorist coverage does not apply by force of law because General Motors is self insured. As the reasoning which will follow explains, this Court finds that Michigan law governs the case, and that the General Motors risk management program renders General Motors a self insured entity in practice, such that it is exempt from the force of Ohio Revised Code 3937.18.
A. Choice of Law
A federal court sitting in diversity must apply the substantive law of the state in which it sits, including that state's choice of law rules. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496 (1941); Hisrich v. Volvo Cars of N. Am., Inc., 226 F.3d 445, 449 (6th Cir. 2000); Giant Eagle, Inc. v. Genesis Ins. Co., 2003 WL 1457150, *2 (S.D. Ohio 2003). As this Court sits in Ohio, Ohio choice of law analysis will determine what law properly governs the interpretation of General Motors' contract with National Union.
Ohio has decided that "[q]uestions involving the nature and extent of the parties' rights and duties under an insurance contract's under-insured motorist provisions shall be determined by the law of the state selected by applying [the choice-of law rules in the Restatement]." Ohayon v. Safeco Ins. Co. of Ill., 747 N.E.2d 206 (Ohio 2001); see also Redd v. National Union Fire Ins. Co. of Pittsburgh, PA, 241 F. Supp.2d 819, 823-24 (S.D. Ohio 2003). The choice-of-law rules in the Restatement for contracts provide that the law of the state chosen by the parties to a contract will govern their contractual rights and duties. Id. at 209 (quoting 1 Restatement (Second) of the Law of Conflict of Laws 2d (1971), § 188(1)). Absent such a choice by the parties, the Restatement directs courts to consider: (1) the place of contracting; (2) the place of negotiation; (3) the place of performance; (4) the location of the subject matter and (5) the domicile, residence, nationality, place of incorporation, and place of business of the parties. Id.
In the instant case, the contract reflects no express choice of law, necessitating an application of the Restatement factors. The policies were contracted and negotiated in Michigan. As for the place of performance, the policies were issued to General Motors in Michigan while adjusting services and payments made under the insurance program are coordinated and made in Michigan. Likewise, the subject matter of the policies points towards Michigan: a majority of General Motors employees are located in Michigan, over 70% of the vehicles owned by General Motors are located in Michigan and General Motors has more insurable property, by value, located in Michigan that in any other state. Finally, as concerns the location of the parties, General Motors principal place of business is at its global headquarters in Michigan and National Union is located in Pennsylvania. Although the location of the accident giving rise to the injuries was in Ohio and the alleged insureds were located in Ohio, the choice-of law rules of the Restatement overwhelmingly point to the use of Michigan law to determine the parties' rights and duties under the policies.
Having determined that Michigan law applies, the Court will now analyze the question under Michigan law. Michigan has rejected the Scott-Pontzer manner of deeming the definition of"you" in uninsured and under-insured motorist coverage forms to create an ambiguity in scope of insurance coverage. See Michigan Township Participating Plan v. Pavolich, 591 N.W.2d 325, 328 (1998) (rejecting a Scott-Pontzer type argument that an employee of a village was covered under the village's uninsured/under-insured motorist coverage); see also Redd, 241 F. Supp.2d at 824. In this case, there is no Rule 56 evidence before the Court that Rutlin occupied a covered automobile. The parties have stipulated that Rutlin was driving his wife's car. Therefore, pursuant to Michigan law, Rutlin, although an employee of General Motors, is not an insured under the policies for the injuries for which he complains.
B. Self-Insurance
An alternative basis for General Motors' motion for summary judgment is that, even if Ohio law applied, General Motors would be exempt from Ohio Revised Code § 3937.18's imposition by law of uninsured and under-insured motorist coverage unless the insurance company can prove that such coverage was offered and rejected. General Motors asserts that it is exempt from the statute by virtue of being, in a practical sense, self insured.
The Ohio Supreme Court recognized in Grange Mutual Casualty Co. v. Refiners Transport Terminal Corp., 21 Ohio St.3d 47, 487 N.E.2d 310 (1986), that companies that are self-insured in a practical sense are exempt from the force of Ohio Revised Code § 3937.18. In Grange, the Supreme Court of Ohio held that the employer "was not a `self insurer' in the legal sense . . . but rather in the practical sense in that Refiners was ultimately responsible under the term of its bond either to a claimant or the bonding company in the event the bond company paid any judgment claim." Id. at 49, 487 N.E.2d at 313. Because of the employer's risk-management program effectively left the employer liable for all damages, court concluded that Ohio Revised Code § 3937.18 did not apply to the employer.
A review of General Motors agreement with National Union reveals that it creates the practical equivalent of self insurance since, under the agreement, General Motors' deductible is equal to the maximum amounts of "insurance" provided, and General Motors is additionally obliged to indemnify National Union for any claims brought against the policy.
While Refiners Transport involved a company that had satisfied Ohio's financial responsibility requirements for its fleet by using a hybrid program consisting of a financial responsibility bond for the first $100,000 of loss coupled with excess insurance coverage, none of which contained uninsured motorist coverage, other courts have recognized its applicability to cases like the instant one, where the employer's insurance agreement includes deductibles equal to the total amount of coverage, effectively retaining all risk with the employer. See Lafferty v. Reliance Ins. Co., 109 F. Supp.2d 837, 842 (S.D. Ohio 2000); cf. Giant Eagle, Inc. v. Genesis Ins. Co., 2003 WL 1457150, *5 (S.D. Ohio 2003).
Because General Motors is, in a practical sense, self insured, summary judgment for General Motors and National Union and against the Rutlins would be warranted even if Ohio law applied to the instant case under Ohio choice-of law doctrine. In light of the foregoing determinations, it is unnecessary to resolve National Union's request that the amounts received from the insurance company of Cockrell, the tortfeasor, be offset against any amounts to which the Rutlins may have been entitled.
C. Certification to the State Supreme Court
The factors the Sixth Circuit recommends that district courts consider when deciding whether or not to certify a question to a state court are: 1) the existence of conflicting federal interpretations of an important question of state law, 2) whether or not the arguments on each side are substantial, and 3) whether the question is likely to recur in federal litigation without an opportunity for the state courts to decide it. Geib v. Amoco Oil Co., 29 F.3d 1050, 1060 (6th Cir. 1994). Putting aside whether or not the holdings of Ohayon v. Safeco Insurance Company of Illinois, 747 N.E.2d 206 (Ohio 2001), and Henderson v. Lincoln National Specialty Insurance Company, 626 N.E.2d 657 (Ohio 1999), create a conflict, which this Court does not find, they certainly do not create a conflict between federal interpretations of state law. Moreover, the questions the Rutlins seek to have certified are not likely to recur in federal litigation without an opportunity for state courts to decide them. The instant case is before this court on the basis of diversity jurisdiction alone. Most cases raising Scott-Pontzer claims between non-diverse parties are likely to be confined to state courts, providing the Ohio Supreme Court ample opportunity to refine any perceived conflicts in its decisions on the questions involved. Wherefore, this Court will not certify the requested questions to the Ohio Supreme Court.
V. Conclusion
For the reasons stated herein, Defendant General Motors Corporation's Cross-Motion for Summary Judgment is GRANTED. Doc. 38. Motion for Summary Judgment of Defendant National Union Fire Insurance Company of Pittsburgh, Pa., is GRANTED. Doc. 37. Plaintiffs' Motion for Partial Summary Judgment Against Defendant, National Union Fire Insurance Company of Pittsburgh, Pa., is DENIED. Doc. 36. Plaintiffs' Response to Defendant General Motors Corporation's Motion for Summary Judgment; Plaintiffs' Cross-Motion for Partial Summary Judgment Against Defendant, General Motors Corporation is DENIED. Doc. 40. As a final matter, Plaintiffs Motion for Certification of Question of State Law to the Supreme Court of Ohio is DENIED. Doc. 54. Plaintiffs' complaint is DISMISSED WITH PREJUDICE. The clerk will ENTER an appropriate declaratory judgment in favor of General Motors and TERMINATE the captioned cause upon the docket records of the United States District Court for the Southern District of Ohio, Western Division, at Dayton.
DONE and ORDERED