Persello v. Allstate Ins. Co. , 2011 Ohio 3230 ( 2011 )

[Cite as Persello v. Allstate Ins. Co., 2011-Ohio-3230.]
STATE OF OHIO, MAHONING COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
STEVEN F. PERSELLO ) CASE NO. 10 MA 18
)
PLAINTIFF-APPELLANT )
)
VS. ) OPINION
)
ALLSTATE INSURANCE CO., et al. )
)
DEFENDANTS-APPELLEES )
CHARACTER OF PROCEEDINGS: Civil Appeal from the Court of Common
Pleas of Mahoning County, Ohio
Case No. 08 CV 4333
JUDGMENT: Vacated and Remanded.
APPEARANCES:
For Plaintiff-Appellant: Atty. Gregg A. Rossi
Rossi & Rossi
26 Market Street, 8th Floor
P.O. Box 6045
Youngstown, Ohio 44503
For Defendants-Appellees: Atty. Adam E. Carr
The Carr Law Office, LLC
5824 Akron-Cleveland Road, Suite A
Hudson, Ohio 44236
JUDGES:
Hon. Cheryl L. Waite
Hon. Gene Donofrio
Hon. Joseph J. Vukovich
Dated: June 21, 2011
WAITE, P.J.
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{1} Plaintiff-Appellant, Steven F. Persello, appeals the decision of the
Mahoning County Court of Common Pleas denying a motion for prejudgment interest
on his uninsured motorist (“UIM”) claim against Appellee Allstate Insurance Company
(“Allstate”). Appellant contends that the trial court should have established the
accrual date for prejudgment interest as the date of the accident, in keeping with
Landis v. Grange Mutual Ins. Co. (1998), 82 Ohio St. 3d 339, 695 N.E.2d 1140.
Landis allows a trial court discretion in setting the accrual date for prejudgment
interest in underinsured motorist (“UM”) and UIM cases, but that discretion is not
unlimited. It appears that the magistrate in the instant case has effectively set the
date of final judgment as the accrual date for prejudgment interest by requiring that
the plaintiff be a creditor of a calculated sum of money before prejudgment interest
may accrue. This conclusion comports with neither the holding nor spirit of the
Landis opinion. Further, pursuant to Royal Elec. Constr. v. Ohio State Univ. (1995),
73 Ohio St. 3d 110, 652 N.E.2d 687, prejudgment interest is intended to compensate
a claimant for the period of time between the accrual of the claim and the final
judgment, without regard as to whether the claim was unliquidated or incapable of
ascertainment until final judgment is rendered. We hereby vacate the final judgment
and the magistrate’s decision in this case so that the matter of prejudgment interest
may be properly reconsidered pursuant to Landis and Royal Elec.
{2} Our review of this matter does not stop here, however. A second issue
that arose through Allstate’s response to this appeal is whether Appellant waived the
alleged error by failing to object to the magistrate’s decision. Appellant did not file
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objections to the magistrate’s decision due to a stipulation that was signed by both
parties and the trial judge. The stipulation states that the magistrate would preside
over the jury trial and would make all decisions and judgments in the case. The
parties also agreed that all findings of fact and conclusions of law would be binding,
and that the trial judge was merely given authority to approve all of the magistrate’s
decisions and orders. The stipulation also stated that the parties waived all
objections to the magistrate’s orders but preserved their rights of appeal. On review,
it is apparent that this stipulation attempts to abrogate the trial court’s oversight of the
objection and review process mandated by Civ.R. 53(D); hence, it is unenforceable to
that extent. As this was a court-sanctioned stipulation and waiver, it would be
inequitable for any party to be deemed to have waived its right to object to the
magistrate’s decision. Because it is invalid, we must vacate in part the September
29, 2009, Stipulation, Waiver and Consent. On remand, the trial court must proceed
pursuant to Civ.R. 53. Following the reissuance of a magistrate’s decision on
prejudgment interest, the parties will follow the rules governing objections to the
magistrate’s decision as set forth in Civ.R. 53(D)(3)(b)(1). Any further action,
including the filing of supporting transcripts, granting of continuances, and ultimate
review by the trial court, must proceed as set forth in Civ.R. 53.
{3} The January 13, 2010, judgment of the trial court and the December 10,
2009, magistrate’s decision (captioned as a “judgment entry”) are vacated, along with
part of the September 29, 2009, Stipulation, Waiver and Consent, as further
explained below. The case is remanded for further proceedings consistent with this
Opinion.
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Case History
{4} Appellant suffered bodily injury as a result of a car accident which took
place on November 6, 2007, between himself and Patrick J. Prest, an uninsured
motorist. At the time of the accident, Appellant had an automobile insurance policy
with Allstate Property and Casualty Insurance Company (hereinafter referred to as
“Allstate”). The policy included UM/UIM coverage with limits of $100,000 per person
and $300,000 per accident. On November 4, 2008, Appellant filed suit against Mr.
Prest and Allstate. Mr. Prest never defended the action and the parties stipulated to
the fact that he was uninsured at the time of the accident.
{5} The case was mediated to an impasse during which Allstate made
several settlement offers which were refused by Appellant. The case proceeded to a
jury trial before a magistrate on September 29-30, 2009, on disputed issues involving
the nature and extent of Appellant’s alleged injuries, proximate cause and damages.
At trial, Appellant sought $40,000 in lost wages, and $10,000 in medical bills and
injuries. The jury awarded a total verdict of $34,400.00 in favor of Appellant. On
October 2, 2009, the trial court entered judgment against Allstate in the amount of the
verdict. Allstate paid the judgment within two weeks of the filing of the judgment
entry.
{6} Appellant timely moved for prejudgment interest at the statutory rate,
asking for prejudgment interest to be calculated from the date of the automobile
accident through the date of judgment. After a hearing on the matter, the magistrate
denied the motion. Appellant appealed the magistrate’s decision to this Court. We
dismissed the appeal for lack of a final, appealable order. Persello v. Allstate Ins. Co.
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(Jan. 8, 2010), 7th Dist. No. 09 MA 212. The trial court entered a final judgment to
adopt the magistrate’s decision on January 13, 2010. Appellant then timely filed this
appeal.
General Law
{7} In Ohio, the leading case on the issue of prejudgment interest in an
UM/UIM claim is Landis v. Grange Mutual Ins. Co. (1998), 82 Ohio St. 3d 339, 695
N.E.2d 1140. In Landis, the Supreme Court of Ohio recognized that UM/UIM claims
are contractual in nature and therefore subject to R.C. 1343.03(A) with respect to the
award and calculation of interest. Id. at 341. R.C. 1343.03(A) provides in pertinent
part: “[W]hen money becomes due and payable upon any * * * instrument of writing *
* * and upon all judgments * * * for the payment of money arising out of tortious
conduct or a contract or other transaction, the creditor is entitled to interest at the rate
per annum determined pursuant to section 5703.47 of the Revised Code[.]”
{8} In Landis, the insured was covered by the UM provisions of his
employer’s automobile insurance policy, with limits of $1,000,000. The insured was
walking in Sandusky, Ohio, when he was struck by an underinsured motorist. The
tortfeasor’s insurer paid the liability limit of $100,000 to Mr. Landis, and he presented
a UM claim to Grange. Grange denied the claim, and Mr. Landis filed a declaratory
judgment action to determine coverage. The trial court eventually ruled in Mr. Landis’
favor and the case was submitted to an arbitrator to determine damages pursuant to
the terms of the insurance policy. The arbitrator awarded the full policy limits as
damages. Mr. Landis then filed a motion for prejudgment interest, which was denied.
The prejudgment interest issue was appealed to the Ohio Supreme Court.
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{9} Landis held that a UM/UIM claim sounds in contract rather than tort and
is governed by the section of the prejudgment interest statute dealing with contract
claims, R.C. 1343.03(A). The Landis Court further reasoned that whether
prejudgment interest “should be calculated from the date coverage was demanded or
denied, from the date of the accident, from the date at which arbitration of damages
would have ended if Grange had not denied benefits, or some other time based on
when Grange should have paid Landis is for the trial court to determine.” (Emphasis
added.) Id. at 342. Grange had argued that prejudgment interest could not begin to
accrue until the undetermined damages was settled by the arbitrator. Landis rejected
that view and held:
{10} “According to the declaratory judgment, the money was due and
payable. That the amount remained undetermined until arbitration does not bar
recovery of prejudgment interest. Royal Elec. Constr. v. Ohio State Univ., 73 Ohio
St.3d 110, 652 N.E.2d 687, syllabus.
{11} “If Grange had not denied benefits, the issue of damages would have
gone directly to an arbitrator and the benefits would have become due and payable
no later than upon entry of the arbitrator's award. But Grange did deny benefits, and
it scarcely seems equitable that the denial of benefits contractually owed to another
that led both parties on a lengthy and tortuous journey through the judicial system
should redound to Grange's benefit. A determination that the benefits became due
and payable upon the entry of the arbitrator's award would, in this case, work an
injustice by rewarding Grange for improperly denying benefits.” Landis at 341-342.
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{12} Landis further explained that “* * * [insurance companies] will be subject
to a prejudgment interest award, not as a punishment but as a way to prevent them
from using money then due and payable to another for their own financial gain.” Id.
at 341.
{13} A motion for prejudgment interest is committed to the discretion of the
trial court. Pruszynski v. Reeves, 117 Ohio St. 3d 92, 2008-Ohio-510, 881 N.E.2d
1230, ¶14. Therefore, a reviewing court may not reverse that decision absent an
abuse of discretion by the trial court. Abuse of discretion connotes more than an
error of judgment; instead, it implies that the trial court's attitude is unreasonable,
arbitrary, or unconscionable. Blakemore v. Blakemore (1983), 5 Ohio St. 3d 217, 219,
5 OBR 481, 450 N.E.2d 1140.
{14} An award of prejudgment interest is intended to encourage prompt
settlement and discourage defendants from opposing and prolonging, between injury
and judgment, the resolution of legitimate claims. Royal Elec., supra, 73 Ohio St.3d
at 116, 652 N.E.2d 687. A party seeking interest under R.C. 1343.03(A) need not
demonstrate that the insurer acted in bad faith. Craig v. Grange Ins. Co. (Nov. 5,
1999), 2d Dist. No. 17675. Prejudgment interest is not intended to punish the party
responsible for the underlying damages. Rather, it acts to compensate and ultimately
to make the aggrieved party whole. See, McCormick, Damages (1935), 205, Section
50 et seq.; 3 Restatement of the Law 2d, Contracts (1981), 150-151, Section 354(2).
{15} To determine the amount of prejudgment interest warranted in a
particular case, the trial court must inquire whether the aggrieved party has been fully
compensated. Royal Elec. at 116. The award of prejudgment interest is intended to
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compensate the plaintiff for the period of time between accrual of the claim and
judgment. Id. at 117. R.C. 1343.03(A) applies even when the judgment arises from
a disputed claim and when the sum due was not capable of being ascertained until
determined by the court. Yuhanick v. Cooper (March 14, 2001), 7th Dist. 99 CO 37.
ASSIGNMENT OF ERROR
{16} “THE TRIAL COURT ERRED IN DENYING APPELLANT’S MOTION
WHICH SOUGHT PRE-JUDGMENT INTEREST IN AN UNINSURED MOTORIST
CLAIM FROM THE DATE OF THE COLLISION TO THE DATE THE VERDICT WAS
PAID.”
{17} Appellant argues that he has a right to recover prejudgment interest
from his insurance company calculated from the date of the accident, and that we
should create a mandatory rule to this effect. Appellant acknowledges that
prejudgment interest in an UIM case is determined by R.C. 1343.03(A) and that
prejudgment interest is calculated from the date that the insurance claim is due and
payable. We have held that an insurer will not delay the running of prejudgment
interest by simply denying the claim and allowing the claim to be litigated. Lovejoy v.
Westfield National Ins. Co. (1996), 116 Ohio App. 3d 470, 476, 688 N.E.2d 563.
{18} Appellant relies on this Court’s decision in Rose v. Natl. Mut. Ins. Co.,
(1999), 134 Ohio App. 3d 229, 730 N.E.2d 1014, to support his proposition that
prejudgment interest should run from the date of the accident. However, in Rose, we
merely upheld the decision of the trial court to grant prejudgment interest beginning
on the date of the accident because the trial court did not abuse its discretion in
setting that date as the date of accrual. Id. at 246. Obviously, Rose supports the
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proposition that the date of the accident may be the proper date for accruing
prejudgment interest. Rose does not help us determine whether there was an abuse
of discretion in the instant case where the court chose another date of accrual.
{19} Appellant correctly argues that an award of prejudgment interest under
R.C. 1343.03(A) is mandatory and that the trial court only has discretion in
determining the date at which to begin accrual. Norfolk Southern Ry. Co. v. Toledo
Edison Co., 6th Dist. No. L-06-1268, 2008-Ohio-1572, ¶80; Hawkins v. True North
Energy, LLC, 11th Dist. Nos. 2002P0098, 2002P0101, 2002P0102, 04-LW-2872,
2004-Ohio-3341, ¶63; Slack v. Cropper, 143 Ohio App. 3d 74, 85, 2001-Ohio-8894,
757 N.E.2d 404 (11th District); Burke v. Auto-Owners Ins. Co., 5th Dist. No. 2008-
CA-00258, 2009-Ohio-429, ¶12; Soebermann v. Beacon Journal Publishing Co., 177
Ohio App. 3d 360, 2008-Ohio-3769, 894 N.E.2d 750, ¶33 (Ninth District).
{20} Although we have found one case holding that the initial decision of
whether or not to award prejudgment interest in a UM/UIM case is itself a
discretionary decision, that case relied on precedent dealing with R.C. 1343.03(C)
rather than R.C. 1343.03(A) and appears to be inapposite to the situation at hand.
See Disbennet v. Utica Natl. Ins. Group, 12th Dist. Nos. CA200204009, 03-LW-1595,
2003-Ohio-2013, ¶23. Prejudgment interest under R.C. 1343.03(C), dealing with tort
claims, involves considerations that are not part of R.C. 1343.03(A), such as whether
the parties made a good faith effort to settle. The Ohio Supreme Court has recently
reiterated that even though a UIM claim does involve an element of tortious conduct
surrounding the automobile accident, the insurance claim itself is a contractual claim
and prejudgment interest in UIM cases is governed by R.C. 1343.03(A) and not
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1343.03(C). Stoner v. Allstate Ins. Co., 116 Ohio St. 3d 1217, 2007-Ohio-6669, 879
N.E.2d 212. The issue pursuant to R.C. 1343.03(A) is when the money becomes
“due and payable,” and this is determined by the trial court using its own discretion.
Landis, supra, 82 Ohio St.3d at 342, 695 N.E.2d 1140.
{21} In this case, the judgment entry states that the pivotal word in R.C.
1343.03(A) is “creditor,” which, according to the entry, restricted how the court could
interpret the phrase “due and payable.” The entry stated that “the applicable statute
[R.C. 1343.03(A)] makes reference to the right of a creditor to an award of pre-
judgment interest when the ‘money’ becomes ‘due and payable’. Plaintiff did not
become a ‘creditor’ of Defendant nor did the money upon which interest might be
calculated become ‘due and payable’ until that amount was determined by the jury’s
verdict.” (1/13/10 J.E., p. 3; emphasis in original.)
{22} Using the court’s logic, it is difficult, if not impossible, to imagine a
scenario in which any court would ever award prejudgment interest because the due
and payable date would necessarily be the date of the final judgment. In fact, the
logic used by the trial court is similar to the logic used by the insurance company in
Landis and was specifically rejected by the Landis Court: “Grange argues that even
if prejudgment interest under R.C. 1343.03(A) is proper, no money was due and
payable until the arbitration award was reduced to judgment. We disagree.” Id. at
341. The crucial point of time to consider is when benefits would have been paid had
the insurance company not denied the claim. Id. Is that point in time the date of the
accident, because that is the date the uninsured or underinsured tortfeasor became
liable to Appellant, thus triggering UM/UIM coverage? Is it the date Appellant
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demanded payment of his claim from Allstate? Is it when Appellant submitted proof
of his claim to Allstate? There may be some other reasonable point of time
established by the trial court, but the triggering accrual date cannot be determined
simply by looking at the date final judgment was rendered.
{23} Most fundamentally, the trial court must consider whether “the
aggrieved party [has] been fully compensated,” regardless whether the due and
payable amount was “liquidated or unliquidated and even if the sum due was not
capable of ascertainment until determined by the court.” Royal Elec., supra, 73 Ohio
St.3d at 116-117, 652 N.E.2d 687. We reiterate that, when dealing with prejudgment
interest in a UM/UIM case, it matters little whether the insurance company made a
good faith effort to settle to claim prior to trial or final judgment. The requirement that
the parties make a good faith effort to settle is an issue under R.C. 1343.03(C),
dealing with tort claims, but is not an issue under R.C. 1343.03(A), dealing with
contract claims such as UM/UIM coverage. Landis, supra, 82 Ohio St.3d at 341, 695
N.E.2d 1140.
{24} It does appear that, since Landis, many courts have concluded that the
due and payable date for prejudgment interest in UM/UIM cases, when there is no
dispute that the insured is covered by the policy’s UM/UIM provisions and no dispute
about the liability of the uninsured motorist, is generally the date of the accident. This
was the result in the Landis case after it was remanded to the trial court. Landis v.
Grange Mutual Ins. Co. (1999), 100 Ohio Misc.2d 31, 717 N.E.2d 1199. Similar
results may be found in other cases: Norton v. Allstate Ins. Co. (Mar. 6, 2001), 5th
Dist. No. 2000CA00348; Horstman v. Cincinnati Ins. Co. (Nov. 17, 2000), 2d Dist. No.
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18430; Disbennet v. Utica Nat. Ins. Group, 12th Dist. No. CA2002-04-009, 2003-
Ohio-2013; Griffith v. Wausau Business Ins. Co., 10th Dist. Nos. 02AP-551, 02AP-
664, 2003-Ohio-955. Obviously, if there are disputes about the existence of
coverage at all, or the tortfeasor’s liability, a later date may be more appropriate.
Landis and subsequent decisions have rejected the idea of any bright-line rules in
these cases. See, e.g., Miller v. Gunckle, 96 Ohio St. 3d 359, 366, 775 N.E.2d 475,
2002-Ohio-4932. It appears, however, that if the only significant issue being litigated
is the amount of coverage, the date of the accident may be the most appropriate due
and payable date for purposes of determining prejudgment interest.
{25} The fact that the insurance company will be required to pay
prejudgment interest on an award once the amount of the award is finally determined
at trial should not deter the settlement of disputed issues by the parties: “[P]arties will
remain free to litigate reasonable issues. However, when they litigate, they will be
subject to a prejudgment interest award, not as a punishment but as a way to prevent
them from using money then due and payable to another for their own financial gain.”
Landis at 341.
{26} We must also note some dispute exists in the relevant caselaw about
the prejudgment interest accrual date when an automobile insurance contract
contains a general provision directing the parties to resolve any dispute in a court of
competent jurisdiction. This type of provision occurs in the Allstate policy in the case
at hand. The Twelfth District Court of Appeals has held that when such language
appears in the insurance contract, the date of final judgment may be used as the
accrual date, even if the insurance contract makes no mention of a due and payable
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date or prejudgment interest. Hance v. Allstate Ins. Co., 12th Dist. No. CA2008-10-
094, 2009-Ohio-2809. This also appears to be the view of the Ninth District Court of
Appeals. Foster v. State Auto Mut. Ins. Companies (Jan. 5, 2000), 9th Dist. No.
19464.
{27} In contrast, the Second District Court of Appeals takes the opposite
view in Mundy v. Roy, 2d Dist. No. 2005-CA-28, 2006-Ohio-993. In Mundy, the court
found that the jury verdict did not trigger the insurance company’s contractual
obligation but merely confirmed that the company clearly owed the money to the
insured pursuant to their contract. Id. at ¶32. Mundy held that the insurance contract
could not “reasonably be construed to relieve Allstate of its obligation to pay
prejudgment interest on the jury's verdict against it * * * merely because the parties
disputed the amount of his damages and contractually had agreed to have the
dispute resolved through arbitration or litigation.” Id.
{28} A result similar to that in Mundy occurred in Jewett v. Owners Ins. Co.,
5th Dist. No. 01 CA 38, 2002-Ohio-1282. In Jewett, the insurance contract provided
that the parties would resolve disputes about the existence or amount of coverage by
entering into arbitration. The Fifth District Court of Appeals found “the fact that the
amount of money appellees were entitled to was not determined until arbitration, in
1999, does not [a]ffect their right to recover prejudgment interest and does not
preclude them from recovering prejudgment interest from any date prior to the date of
arbitration.” Id. at ¶44, 695 N.E.2d 1140. The Jewett Court noted that the issue of
whether there was coverage under the policy was determined in 2007, even though
the monetary amount of coverage was not determined until 2009. The Jewett Court
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affirmed the decision of the trial court to award prejudgment interest from the date of
the accident.
{29} We do not agree with Hance that a general provision in an insurance
contract, such as the Allstate contract in this appeal, directing the parties to resolve
disputes in a court of competent jurisdiction, also prevents the insured from being
awarded prejudgment interest from the date of the accident. We believe this general
provision merely alerts the parties as to which tribunal has jurisdiction to resolve any
disputes. Consistent with Landis and Royal Elec., we hold that the insured is not
prevented from receiving an award of prejudgment interest that accrues on a date
prior to final judgment merely because the parties litigated a genuine dispute
regarding the amount of coverage or disputed the exact dollar amount of damages.
Again, consistent with Landis and Royal Elec., the court in this case could have made
a valid award of prejudgment interest from the date of the accident, the date the claim
was presented, the date proof was made of the claim, or some other reasonable date
prior to the date of final judgment. It was error, however, to adopt the date of final
judgment as the accrual date simply because the dollar value of the damages was
determined on that date. For all the aforementioned reasons, we sustain Appellant’s
sole assignment of error and vacate the January 13, 2010, final judgment entry.
{30} Allstate raises a further issue that must be resolved in this appeal.
Allstate argues that Appellant failed to object to the magistrate’s decision of
December 10, 2009, which denied the motion for prejudgment interest, and by failing
to object waived any error on appeal. Although a party who disagrees with the trial
judge’s adoption of any finding of fact or conclusion of law made by a magistrate is
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generally required to first file objections pursuant to Civ.R. 53(D)(3)(b)(4), this matter
involves a document that purports to abrogate that rule. On September 29, 2009, the
parties filed a “Stipulation, Waiver and Consent” agreement with the court. This
agreement begins by stating that “[a]ll counsel and parties hereby stipulate that this
case will be tried to a jury with Magistrate Timothy G. Welsh presiding.” This is an
acceptable stipulation and within the scope of a magistrate’s authority pursuant to
Civ.R. 53(C)(1)(c). The parties agreed to be bound by the magistrate’s decisions as
if they were made by the judge, including procedural, evidentiary and post-trial
motions. Again, we find nothing unusual about the stipulations up to this point.
{31} The second and third paragraphs of the stipulations, though, present us
with a different scenario. Those two paragraphs read as follows:
{32} “The undersigned further agree that the decisions of the Magistrate,
and if applicable, all findings of fact and conclusions of law which may be
incorporated into any Magistrate’s Decision shall be final and binding upon all parties.
The undersigned waive any and all objections to said Magistrate’s orders and/or
decisions and authorize the Judge of this Court to approve same and to enter
judgment, or an appropriate Order in conformity therewith.
{33} “Notwithstanding anything herein to the contrary, the undersigned do
hereby preserve their respective rights of appeal to the appropriate Court of Appeals
as with other judgments and orders of this trial court and/or Judgment upon the
Verdict.”
{34} It is clear to us that the intention of these paragraphs is to alleviate the
need for the parties to file objections to the magistrate’s decision by purporting to
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elevate the magistrate’s decision to the level of a final judgment, thus allowing the
parties to use a direct appeal to this Court to first raise any errors that occurred.
Such a stipulation is inconsistent with the clear wording and intent of Civ.R. 53. “[A]
stipulation running directly contrary to the clear import of a rule of civil procedure
should not be enforced.” Welsh v. Brown-Graves Lumber Co. (1978), 58 Ohio
App.2d 49, 52, 389 N.E.2d 514. The powers delegated to a magistrate under Civ.R.
53 are given merely “[t]o assist courts of record,” not to usurp or replace the ultimate
role of the trial judge. Civ.R. 53(C)(1); see also see, 1970 Staff Note to Civ.R. 53 (“a
[magistrate] shall aid the court in the expedition of the court's business and not be [a]
substitute for the functions of the court”).
{35} The Ohio Supreme Court has held that “Civ.R. 53 places upon the court
the ultimate authority and responsibility over the referee's findings and rulings. The
court must undertake an independent review of the referee's report to determine any
errors.” Hartt v. Munobe (1993), 67 Ohio St. 3d 3, 5, 615 N.E.2d 617. Hartt further
held that “even where a jury is the factfinder, the trial court remains as the ultimate
determiner of alleged error by a [magistrate].” Id. at 6.
{36} At least two courts of appeal have rejected stipulations very similar to
the stipulation filed in this case on the grounds that it improperly attempted to
abrogate the function and duty of the trial court in reviewing a magistrate’s decision.
In Yantek v. Coach Builders Ltd., Inc., 1st Dist. No. C-060601, 2007-Ohio-5126, the
stipulation provided that the trial court would sign a final judgment entry based on any
verdict and any motion rulings by the magistrate, and that the parties waived any
objection to the magistrate presiding over the trial, but retained the right to appeal the
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substance of any of the magistrate's rulings. Id. at ¶2. Yantek determined that “the
parties agreed to circumvent the minimal and essential procedural requirements of a
trial court's review of the face of a magistrate's decision and its adoption, rejection or
modification of the magistrate's orders.” Id. at ¶18. The Yantek court held that “there
is no provision in the civil rules that permits parties to waive the trial court's obligation
to review the magistrate's decision for errors of law and to adopt or modify the
decision, as the parties attempted to do here. The form stipulation thus fails to
comply with the civil rules. Permitting its use would allow parties to substitute
magistrates' decisions for those of the trial court and would, in effect, permit direct
appeal from a magistrate's decision.” (Citations omitted.) Id.
{37} In Constr. Sys., Inc. v. Garlikov & Assoc., Inc., 10th Dist. No. 09AP-
1134, 2010-Ohio-3893, the Tenth District rejected a similar stipulation with respect to
the factual findings made by the magistrate. The court noted that, prior to January
2006, Civ.R. 53(E)(3) permitted parties to stipulate in writing that a magistrate’s
findings of fact shall be final, but that this provision was removed from the rule and no
longer applies. The court held that, under the current version of Civ.R. 53, parties
must object to findings of fact in order to preserve any issues for review on direct
appeal, and that the trial court must use its discretion in conducting an independent
review of those objections. Id. at ¶19. The Tenth District found that the trial court,
when faced with the parties’ stipulation, was unable to make an independent review
of the magistrate’s decision, and thus, committed reversible error. The court held
that proper appellate review was impossible under such circumstances, and the case
was remanded for the trial court to consider the parties’ objections.
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{38} Although Allstate would have us enforce the stipulation against
Appellant by holding that he waived his right to appeal because no objections were
filed, it is clear that this remedy would be completely inequitable, given the facts of
this case. The stipulation was signed by the trial judge, thus giving it the appearance
of court sanction. It would be inconsistent with a court’s goal of providing substantial
justice that any or all parties be punished for a procedural error induced, at least in
part, by the court itself. Because the stipulation could not accomplish three of its
stated purposes (it could not waive the need for objections, it could not waive the trial
court’s duty to review the magistrate’s decision, and it could not preserve all rights of
appeal), we must remand the matter so that the parties have the opportunity to
properly object and so that the trial court may independently review any further
decisions issued by the magistrate. In sustaining Appellant’s assignment of error, we
do not simply substitute our judgment for that of the trial court. The trial court must
exercise its discretion in determining the due and payable date for prejudgment
interest in light of the reasoning and analysis presented in this Opinion. We hereby
vacate both the trial court’s final order of January 13, 2010, and the December 10,
2009, magistrate’s decision (captioned as a “judgment entry”), and remand the matter
for the issuance of a new magistrate’s decision disposing of Appellant’s motion for
prejudgment interest. We also hold that paragraphs two and three of the September
29, 2009, Stipulation, Waiver and Consent, are unenforceable and are hereby
rendered null and void and the matter is further remanded for the appropriate review
by the trial court.
CONCLUSION
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{39} The date on which prejudgment interest begins to accrue in an UM/UIM
claim is determined under R.C. 1343.03(A) based on the date the claim is due and
payable. This date is determined by the trial court using its own discretion. The trial
court determined that Allstate became a creditor to Appellant on the date final
judgment was rendered. Based on its status as creditor, the court held that the
accrual for prejudgment interest was the date of final judgment, thus denying
Appellant’s motion for prejudgment interest. This logic was specifically rejected,
however, by the Ohio Supreme Court in Landis and Royal Elec., and for that reason
the judgment must be vacated. On remand, the court must determine the date on
which prejudgment interest accrued based on its consideration of whether Appellant
has been fully compensated, regardless whether the exact amount of damages was
incapable of being ascertained until the jury rendered its verdict.
{40} We also reject Allstate’s argument that Appellant has waived his right to
appeal the trial court’s judgment regarding prejudgment interest. The parties in this
case entered into a partially unenforceable “Stipulation, Waiver and Consent” in
which they agreed to forego the requirement of filing objections to the magistrate’s
decision while also attempting to preserve their appellate rights. We hold that
paragraphs two and three of the stipulation are unenforceable, and that on remand
the parties and the trial court will follow the objection and review process required by
Civ.R. 53. The January 13, 2010, judgment of the trial court and the December 10,
2009, magistrate’s decision (captioned as a “judgment entry”) are hereby vacated,
along with paragraphs two and three of the September 29, 2009, “Stipulation, Waiver
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and Consent.” The case is remanded to the trial court for further proceedings
consistent with this Opinion.
Donofrio, J., concurs.
Vukovich, J., concurs.