Henry v. Wausau Business Ins ( 2003 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206 2 Henry v. Wausau Nos. 01-4105/4223
ELECTRONIC CITATION: 2003 FED App. 0430P (6th Cir.) Business Ins. Co.
File Name: 03a0430p.06
Michael Robert Thomas, PRATT, SINGER & THOMAS,
Middleton, Ohio, for Appellee. ON BRIEF: David J. Arens,
UNITED STATES COURT OF APPEALS LAW OFFICES OF NICHOLAS E. SUBASHI, Dayton,
FOR THE SIXTH CIRCUIT Ohio, for Appellant. Michael Robert Thomas, PRATT,
_________________ SINGER & THOMAS, Middleton, Ohio, for Appellee.
_________________
DARREL HENRY , X
Plaintiff-Appellee/ - OPINION
Cross-Appellant, - _________________
- Nos. 01-4105/4223
- JULIA SMITH GIBBONS, Circuit Judge. Plaintiff-
v. > appellee/cross appellant Darrel Henry’s wife, Carol Henry,
,
was killed in an automobile accident. At the time of her
-
WAUSAU BUSINESS death, Carol Henry was an employee of the Madison Local
-
School District (Madison). Henry filed insurance claims
INSURANCE CO ., -
pursuant to the uninsured and underinsured (UM/UIM)
Defendant-Appellant/ - motorist provisions in a business automobile liability
Cross-Appellee. - insurance policy and an education liability insurance policy
-
issued to Madison by defendant-appellant/cross-appellee
N
Wausau Business Insurance Company (Wausau). Wausau
Appeal from the United States District Court denied coverage and Henry sued seeking a declaratory
for the Southern District of Ohio at Cincinnati. judgment that Carol Henry was covered by the Wausau
No. 00-00642—Herman J. Weber, District Judge. policies at the time of her accident. The parties filed cross-
motions for summary judgment. The district court denied
Argued: August 1, 2003 Wausau’s motion with respect to Henry’s claims under the
business automobile policy and granted summary judgment
Decided and Filed: December 8, 2003 in favor of Henry. The district court granted Wausau’s
motion for summary judgment with respect to Henry’s
Before: KENNEDY, GILMAN, and GIBBONS, Circuit claims under the education liability policy on the grounds that
Judges. the policy was not subject to Ohio Revised Code (O.R.C.)
§ 3937.18's requirement that the insurer offer UM/UIM
_________________ coverage. For the reasons set forth below, we reverse in part,
affirm in part, and remand the case for further proceedings
COUNSEL consistent with this opinion.
ARGUED: Brian L. Wildermuth, LAW OFFICES OF
NICHOLAS E. SUBASHI, Dayton, Ohio, for Appellant.
1
Nos. 01-4105/4223 Henry v. Wausau 3 4 Henry v. Wausau Nos. 01-4105/4223
Business Ins. Co. Business Ins. Co.
I. district court granted summary judgment in favor of Wausau
as to Henry’s claims under the education liability policy on
On September 21, 1998, Carol Henry was killed when an the grounds that the policy was not subject to O.R.C.
automobile driven by Todd J. Hyde, Sr. collided with the § 3937.18’s requirement that the insurer offer UM/UIM
vehicle she was operating. The sole cause of the accident was coverage, but denied Wausau’s request for summary
Hyde’s negligence. Hyde did not have automobile liability judgment on Henry’s claims under the business automobile
insurance covering him for the operation of the vehicle policy. The district court granted summary judgment in favor
involved in the collision. At the time of the accident, Carol of Henry on the business automobile policy and referred the
Henry was an employee of the Madison Local School case to binding arbitration on the issue of damages under that
District. Wausau had issued a business automobile policy of policy.
insurance to Madison that was in full force and effect on the
date of the accident. The policy was issued for the period of On October 4, 2001, Henry filed a motion for certification
September 1, 1998, to September 1, 1999. Madison also had of questions of law to the Ohio Supreme Court. On
an education liability policy of insurance with Wausau that October 12, 2001, Wausau filed a timely notice of appeal
was in full force and effect on the date of the accident. regarding the district court’s summary judgment rulings. The
district court denied Henry’s motion to certify on October 24,
At the time of the accident, Carol Henry maintained an 2001. On October 29, 2001, Henry filed a notice of appeal.
automobile insurance policy with Westfield Insurance
Company that included both liability coverage and uninsured
motorist coverage. Darrel Henry settled with Westfield for II.
$100,000.00, the uninsured motorist coverage limit.
Although Carol Henry was not acting in the scope of her This court reviews de novo a district court’s grant of a
employment and was driving her own vehicle when the motion for summary judgment. Braithwaite v. Timken Co.,
accident occurred, Darrel Henry also sought UM/UIM 258 F.3d 488, 492-93 (6th Cir. 2001). This court reviews for
coverage under both of Wausau’s policies. Wausau denied an abuse of discretion an order denying summary judgment
coverage under the policies. on the grounds that there is a genuine issue of material fact;
however, if the denial is based on purely legal grounds, then
On June 27, 2000, Darrel Henry sued Wausau in the Butler review of the denial is de novo. Garner v. Memphis Police
County, Ohio Court of Common Pleas. Henry sought a Dep’t., 8 F.3d 358, 363 (6th Cir. 1993)). When reviewing the
declaratory judgment against Wausau seeking recovery of record, all inferences are to be drawn in the light most
uninsured motorist benefits under the business automobile favorable to the non-moving party. Braithwaite, 258 F.3d at
liability policy and the education liability policy. Wausau 493 (citing Woythal v. Tex-Tenn Corp., 112 F.3d 243, 245-46
removed the case to the United States District Court for the (6th Cir. 1997)). However, a party opposing a motion for
Southern District of Ohio on the basis of diversity summary judgment “may not rest upon mere allegations or
jurisdiction. denials of his pleading, but . . . must set forth specific facts
showing that there is a genuine issue for trial.” Id. (quoting
The parties filed stipulations of fact and then filed cross- Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
motions for summary judgment. On September 27, 2001, the The party opposing the motion must “do more than simply
Nos. 01-4105/4223 Henry v. Wausau 5 6 Henry v. Wausau Nos. 01-4105/4223
Business Ins. Co. Business Ins. Co.
show that there is some metaphysical doubt as to the material Coverage under the UM/UIM provision at issue is limited
facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., to an “insured,” a term defined in the provision as follows:
475 U.S. 574, 586 (1986). “If after reviewing the record as a
whole a rational factfinder could not find for the nonmoving B. WHO IS AN INSURED
party, summary judgment is appropriate.” Braithwaite, 258 1. You.
F.3d at 493 (quoting Ercegovich v. Goodyear Tire & Rubber 2. If you are an individual, any “family member.”
Co., 154 F.3d 344, 349 (6th Cir. 1998)) (citation omitted). 3. Anyone else “occupying” a covered “auto” or a
temporary substitute for a covered “auto.” The covered
III. “auto” must be out of service because of its breakdown,
repair, servicing, loss or destruction.
The district court had jurisdiction over this action pursuant 4. Anyone for damages he or she is entitled to
to 28 U.S.C. § 1332. Lee-Lipstreu v. Chubb Group Ins. Cos., recover because of “bodily injury” sustained by another
329 F.3d 898, 899-900 (6th Cir. 2003) (holding that federal “insured.”
courts have jurisdiction over actions by an insured against his
or her own insurance company if the two parties are diverse This definition is identical to the definition of “insured” in the
because such actions are not direct actions within the meaning policy that was at issue in Scott-Pontzer.
of 28 U.S.C. § 1332(c)(1)). This court has appellate
jurisdiction to review the district court’s order granting In Scott-Pontzer, the Ohio Supreme Court ruled that a
summary judgment pursuant to 28 U.S.C. § 1291. corporation’s employees, even though they are not named
insureds, are considered insureds entitled to UM/UIM
Because the court is exercising its diversity jurisdiction in coverage under a commercial automobile liability policy. 710
the present case, the substantive law of Ohio is controlling. N.E.2d at 1119. According to the court, where the definition
Talley v. State Farm Fire & Cas. Co., 223 F.3d 323, 326 (6th of “insured” in a UM/UIM provision includes the term “You”
Cir. 2000) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64 and the named insured is a corporation, the term “You” is
(1938)). In determining questions of Ohio state law, the court ambiguous. Applying the legal principle that ambiguous
must follow the controlling decisions of the Ohio Supreme provisions in an insurance contract will be “strictly construed
Court. Id. against the insurer,” the court held that the term “You” could
be construed to include the corporation’s employees because
A. Business Automobile Liability Policy a corporation can act only by and through live persons. Id. at
1119 (quoting King v. Nationwide Ins. Co., 519 N.E.2d 1380Henry claims that his wife was an insured covered under (1988)). Moreover, the court concluded that, unless the
the Wausau business automobile policy pursuant to Scott- UM/UIM provision contained a specific limitation or
Pontzer v. Liberty Mutual Fire Insurance Co., 710 N.E.2d exclusion, the corporation’s employees were entitled to
1116 (Ohio 1999), and therefore is entitled to UM/UIM UM/UIM coverage even when acting outside the scope of
motorist coverage pursuant to Ohio law. Wausau contends their employment. Id. at 1120.
that Scott-Pontzer is not applicable because this case involves
a policy of insurance issued to a public school district, not a Henry argues that his wife was covered by the UM/UIM
private corporation. provisions in Wausau’s business automobile liability policy
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Business Ins. Co. Business Ins. Co.
even though she was not acting within the scope of her question thus becomes whether the policy at issue is an
employment at the time of her accident because the rationale automobile liability or motor vehicle liability policy.1
in Scott-Pontzer should be extended to business automobile
liability policies issued to public school districts. We find it The education liability policy at issue provides the
unnecessary to address this argument due to the Ohio following automobile liability exclusion and exceptions to the
Supreme Court’s recent decision in Westfield Insurance exclusion:
Company v. Galatis, et al., No. 2002-0932, 2003 WL
22461833, *13 (Ohio Nov. 5, 2003). Westfield limits the This insurance does not apply:
holding of Scott-Pontzer so that it now applies only in those
situations where an employee is acting within the course and 2. To any liability arising from the ownership,
scope of her employment at the time of the accident. Id. The operation, maintenance or use of any owned or non-
parties in this case agree that Carol Henry was not acting owned “automobile,” watercraft or aircraft. Operation of
within the course and scope of her employment at the time of an “automobile” shall be considered to include
her accident. Under Westfield, she is not covered by the (1) “loading or unloading,” (2) the operation of any
UM/UIM provision in Wausau’s business automobile liability “automobile” in Driver’s Education classes,
policy regardless of whether Scott-Pontzer applies to public (3) “occupying” any “automobile,” (4) the training or
school districts. supervision of drivers and their aides and (5) the
activities of drivers or their aides in supervising people
B. Education Liability Policy “occupying” any vehicle, and (6) [t]he training or
supervision of employees who are “loading and
In his cross-appeal, Henry challenges the district court’s unloading” an “automobile.” This exclusion shall not
decision granting summary judgment in favor of Wausau with apply to:
respect to his claims under the education liability policy. He
argues that the policy is subject to the provisions in O.R.C. a. On premises activities which are necessary or
§ 3937.18(A), which provides that no automobile liability or incidental to an “automobile” vocational technical class
motor vehicle liability policy of insurance shall be delivered forming a regular part of the school’s instructional
or issued for delivery unless both uninsured and underinsured program.
motorist coverages are offered to persons insured under the
policy for loss due to bodily injury or death suffered by such b. On premises or between premises use of golf carts
insureds. Therefore, under the statute, an insurer must offer or tractors.
UM/UIM coverage whenever an automobile liability or motor
vehicle liability policy is offered. If UM/UIM coverage is not
offered, then it becomes part of the policy by operation of
1
law. See Davidson v. Motorists Mut. Ins. Co., 744 N.E.2d The parties dispute whether or not the amended version of O.R.C.
713, 715 (Ohio 2001). The parties do not dispute that the § 3937.18 , effective September 3, 1997, is applicable. We need not reach
education liability policy does not contain UM/UIM coverage this issue, however, because we find that under either version of the
statute, the education liability policy contains only incidental autom obile
and that such coverage was not offered. The relevant coverage which is insufficient to require Wausau to offer UM/UIM
coverage.
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Business Ins. Co. Business Ins. Co.
*** issue in this case is a homeowner’s policy that does not
include coverage for liability arising out of the use of
e. On premises activities involving the use of motor vehicles generally. Instead, the homeowner’s
stationary “automobile” or aircraft in a training or policy provides incidental coverage to a narrow class of
instructional program. motorized vehicles that are not subject to motor vehicle
registration and are designed for off-road use or are used
f. Items 2.(4), (5) and (6) above, if excluded under the around the insured’s property.
“named insured’s” automobile or fleet liability policy. These distinctions are significant. Clearly, the policy
in Selander was deemed an automobile or motor vehicle
Henry asserts that this policy provision is sufficient to provide policy precisely because there was express liability
motor vehicle liability coverage, pursuant to Selander v. Erie coverage arising from the use of the automobiles.
Ins. Group, 709 N.E.2d 1161 (Ohio 1999), thereby entitling
him to UM/UIM coverage under the policy. 744 N.E.2d at 717. The Davidson court distinguished
Selander primarily on the basis that the vehicles at issue in
In Selander, the insured was covered by a general business Davidson were “neither subject to motor vehicle registration
liability policy that generally excluded coverage for liability nor designed to be used on a public highway.” Id.
arising out of the use of motor vehicles, but provided limited
coverage for claims arising out of the use of hired or “non- Several Ohio courts have addressed the issue of whether an
owned automobiles” used in the insured’s business. Id. at education liability policy is an automobile policy subject to
1162. There was no dispute that automobile liability existed § 3937.18. Where an education liability policy contains a
in certain circumstances. Id. at 1163. The Selander court motor vehicle exclusion, Ohio courts have held that the cases
determined that “where motor vehicle coverage is provided, are analogous to Davidson and have concluded that § 3937.18
even in limited form, uninsured/underinsured coverage must is not applicable. See Attenson v. Nationwide Mut. Ins. Co.,
be provided.” Id. No. 00 M 00850 (Geauga Cty. Ohio Apr. 5, 2002) (holding
that education liability policies do not qualify as automobile
The Ohio Supreme Court clarified its Selander decision in liability policies); Hummel v. Hamilton, No. CV00-01-0170
Davidson. According to the Davidson court: (Butler Cty. Ohio Feb. 19, 2002) (applying Davidson in
In Selander, we were construing a general business finding that UM/UIM coverage is not imputed by operation
liability policy that expressly provided insurance against of law to an education liability policy containing motor
liability arising out of the use of automobiles that were vehicle exclusion with an exception for on premises or
used and operated on public roads. Since there was between premises use of golf carts and tractors); Bartlett v.
express automobile liability coverage arising out of the Nationwide Mut. Ins. Co., No. 2000-CV-338, at 2-3
use of these automobiles, we reasoned that UM/UIM (Ashtabula Cty. Ohio Oct. 29, 2001) (applying Davidson and
coverage was required. That holding comports with the concluding that plaintiffs were not entitled to UM/UIM
requirement under R.C. 3937.18 that UM/UIM coverage coverage under the education liability policy when the policy
must be offered where the policy is an automobile or contained a motor vehicle exclusion). But see Zirger v.
motor vehicle liability policy. In contrast, the policy at Ferkel, 2002 WL 1300769, at *8 (Ohio App. Ct. June 6,
2002) (holding that the education liability policy at issue was
Nos. 01-4105/4223 Henry v. Wausau 11 12 Henry v. Wausau Nos. 01-4105/4223
Business Ins. Co. Business Ins. Co.
an automobile liability policy under § 3937.18(L)(2), which employee exception” does not convert a homeowner’s policy
covers umbrella policies, where the policy provided direct into an automobile policy).
coverage for liability arising out of various driver’s education
activities if the commercial auto policy excludes coverage for The education liability policy in question expressly insures
that liability). against liability for damages resulting from claims made
against the school district. The policy, however, expressly
The Ohio Supreme Court has also declined to extend excludes claims relating to motor vehicles. The policy makes
Selander with regard to homeowner’s insurance policies very limited exceptions to the motor vehicle exclusion for “on
containing residence-employee exceptions. In Hillyer v. State premises” use of certain vehicles including golf carts, tractors,
Farm Fire and Casualty Co., 780 N.E.2d 262 (Ohio 2002), and vehicles used in vocational technical classes. An
the Ohio Supreme Court held that a “residence-employee exception is also made for training and supervision activities
clause” in a homeowner’s insurance policy does not convert relating to drivers and driver’s aides and for employees who
the policy into an automobile policy that requires insurers to are “loading and unloading” an “automobile.” In Davidson,
offer UM/UIM coverage. The Hillyer court noted that the the Ohio Supreme Court recognized the need to give effect to
homeowner’s policies at issue expressly insure against the intent of the parties when determining whether a policy is
property damage to the personal property owned by the a motor vehicle policy. 744 N.E.2d at 718. According to
insured and, under certain circumstances, against personal Davidson, “[c]ommon sense alone dictates that neither the
liability for bodily injury or property damages, but the insurer or the insured bargained for or contemplated that
policies expressly exclude automobile coverage. Id. at 265- homeowner’s insurance would cover personal injuries arising
66. The exclusions, however, do not apply to residence- out of an automobile accident that occurred on a highway
employees injured in the scope of their employment. Id. at away from the insured’s premises.” Id. at 719 (quoting
266. The insureds argued that, as in Selander, the policies Cincinnati Indemn. Co. v. Martin, 710 N.E.2d 677, 680 (Ohio
should be considered automobile policies because they could 1999)). Here, the coverage involving motor vehicles, or of
cover injuries to a residence-employee suffered while driving activities relating to motor vehicles, is remote from and
an automobile. Id. The court rejected that argument and insignificant to the type of overall coverage provided by the
extended the reasoning in Davidson to the policies at issue. policy. “The mere fact that a policy provides coverage for
Id. at 267. The court noted that the motor vehicle coverage in [some] motorized vehicles does not convert the policy into a
the policies is incidental because coverage of the motor motor vehicle liability policy.” Id. at 718. Accordingly, we
vehicles was “remote from and insignificant to the type of find that the education liability policy at issue is not an
overall coverage the policy provided.” Id. See also automobile liability policy for the purpose of O.R.C.
Zabukovec v. GRE Ins. Group, 2002 WL 1964777 (Ohio Ct. § 3937.18.
App. Aug. 23, 2002) (finding that a policy that excluded
automobile liability coverage generally, but provided IV.
coverage for use of motor vehicle by a residence employee
was not an automobile liability policy and, thus, not subject For the foregoing reasons, we affirm the district court’s
to O.R.C. § 3937.18); Davis v. Shelby Ins. Co., No. 78610 decision granting summary judgment in favor of Wausau
(Ohio Ct. App. June 14, 2001) (holding that a “resident under the education liability policy. We reverse the district
court’s decision granting summary judgment in favor of
Nos. 01-4105/4223 Henry v. Wausau 13
Business Ins. Co.
Henry under the business automobile liability policy, and we
remand the case with instructions to grant summary judgment
in favor of Wausau on that issue.