Helfrich v. Allstate Ins. Co.

[Cite as Helfrich v. Allstate Ins. Co., 2013-Ohio-4335.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
James C. Helfrich, :
Plaintiff-Appellant, :
v. : No. 12AP-559
(C.P.C. No. 11CVH-06-7724)
Allstate Insurance Company, :
(REGULAR CALENDAR)
Defendant-Appellee. :
D E C I S I O N
Rendered on September 30, 2013
Christopher M. Corrigan, for appellant.
Crabbe, Brown & James LLP, and Daniel J. Hurley, for
appellee.
APPEAL from the Franklin County Court of Common Pleas
CONNOR, J.
{¶ 1} Plaintiff-appellant, James C. Helfrich ("appellant"), appeals from a
judgment of the Franklin County Court of Common Pleas in favor of defendant-appellee,
Allstate Insurance Company ("appellee"). For the following reasons, we affirm.
I. FACTS AND PROCEDURAL HISTORY
{¶ 2} The underlying facts of this case began in 2007, when appellant commenced
a civil action against various defendants in the Licking County Court of Common Pleas.
In April 2007, the Licking County defendants filed a counterclaim against appellant
seeking a declaration that appellant was a vexatious litigator pursuant to R.C. 2323.52.
Appellant forwarded a copy of the counterclaim to appellee seeking coverage under two
No. 12AP-559 2
separate policies of insurance. Appellee denied coverage and refused to provide appellant
with a defense in the Licking County action.
{¶ 3} On March 4, 2011, the trial court entered judgment against appellant on the
counterclaim and declared him to be a vexatious litigator as defined in R.C.
2323.52(A)(3). In its judgment entry, the trial court expressly retained jurisdiction of
Licking County defendants motion for frivolous conduct. Appellant subsequently
dismissed his complaint pursuant to Civ.R. 41(A). On August 19, 2011, the trial court
ruled that appellant had engaged in frivolous conduct and ordered appellant to pay the
Licking County defendants' attorney fees in the amount of $118,451.08.
{¶ 4} Appellant subsequently brought the instant action against appellee in the
Franklin County Court of Common Pleas, seeking a declaration that appellee had a
contractual duty to indemnify and defend him in the Licking County action, pursuant to a
policy of insurance. Appellant also asserts claims for damages sounding in breach of
contract and bad faith.
{¶ 5} The facts of the case being undisputed, the parties filed cross-motions for
summary judgment. The trial court granted summary judgment in favor of appellee and
denied appellant's motion for summary judgment. In so doing, the trial court determined
that appellee did not owe a duty to provide either a defense or indemnification to
appellant in the Licking County litigation. The trial court also determined that the denial
of coverage was consistent with the policy terms and not in bad faith.
II. ASSIGNMENTS OF ERROR
{¶ 6} Appellant appealed to this court from the judgment of the Franklin County
Court of Common Pleas. Inasmuch as the two assignments of error present a single issue
for review, we will consider them together. Appellant presents the following assignments
of error for our review:
I. THE TRIAL COURT ERRED IN DENYING THE
PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT.
II. THE TRIAL COURT ERRED IN GRANTING THE
DEFENDANT'S MOTION FOR SUMMARY JUDGMENT.
No. 12AP-559 3
III. STANDARD OF REVIEW
{¶ 7} Appellate review of summary judgment motions is de novo. Helton v.
Scioto Cty. Bd. of Commrs., 123 Ohio App. 3d 158, 162 (4th Dist.1997). "When reviewing a
trial court's ruling on summary judgment, the court of appeals conducts an independent
review of the record and stands in the shoes of the trial court." Mergenthal v. Star Bank
Corp., 122 Ohio App. 3d 100, 103 (12th Dist.1997). We must affirm the trial court's
judgment if any of the grounds raised by the movant at the trial court are found to support
it, even if the trial court failed to consider those grounds. Coventry Twp. v. Ecker, 101
Ohio App. 3d 38, 41-42 (9th Dist.1995).
{¶ 8} Summary judgment is proper only when the party moving for summary
judgment demonstrates that (1) no genuine issue of material fact exists, (2) the moving
party is entitled to judgment as a matter of law, and (3) reasonable minds could come to
but one conclusion and that conclusion is adverse to the party against whom the motion
for summary judgment is made, that party being entitled to have the evidence most
strongly construed in that party's favor. Civ.R. 56(C); State ex rel. Grady v. State Emp.
Relations Bd., 78 Ohio St. 3d 181, 183 (1997).
{¶ 9} An insurance policy is a contract between the insurer and the insured.
Ward v. United Foundries, Inc., 129 Ohio St. 3d 292, 2011-Ohio-3176, ¶ 18, citing
Pilkington N. Am., Inc. v. Travelers Cas. & Sur. Co., 112 Ohio St. 3d 482, 2006-Ohio-6551,
¶ 23. The rules of construction of an insurance contract are well-settled. Heritage Mut.
Ins. Co. v. Ricart Ford, Inc., 105 Ohio App. 3d 261, 265-66 (10th Dist.1995), citing German
Fire Ins. Co. v. Roost, 55 Ohio St. 581 (1897). The interpretation of that insurance contract
is a question of law to be decided by a judge. Erie Ins. Group v. Fisher, 15 Ohio St. 3d 380
(1984). Where language in a contract of insurance is doubtful, uncertain or ambiguous,
the language will be construed strictly against the insurer and liberally in favor of the
insured. Guernsey Bank v. Milano Sports Ents., 10th Dist. No. 09AP-1015, 2011-Ohio-
2162, ¶ 36. If a contract is clear and unambiguous, then its interpretation is a matter of
law, and there is no issue of fact to be determined. Inland Refuse Transfer Co. v.
Browning-Ferris Industries of Ohio, Inc., 15 Ohio St. 3d 321 (1984).
{¶ 10} Appellant seeks recovery under two policies of insurance with appellee: A
Landlord Package policy, and a Personal Umbrella Package policy. The relevant
No. 12AP-559 4
provisions of the two policies differ materially. Accordingly, we will consider them
separately: The Landlord Package policy reads in relevant part as follows:
Losses We Cover Under Coverage X:
Subject to the terms, conditions and limitations of this policy,
Allstate will pay compensatory damages which an insured
person becomes legally obligated to pay because of * * *
personal injury * * * arising from a covered occurrence.
***
"Personal injury"—means damages resulting from:
***
c) libel; slander; humiliation; defamation of character;
invasion of rights of privacy.
(Emphasis sic.)
{¶ 11} Appellant concedes that the counterclaim in the Licking County action does
not include a prayer for monetary relief. Appellant argues, however, that appellee is
required to provide a defense, even if there are no damages alleged, where the insured is
sued as a result of a "personal injury," even if damages are not alleged. Appellee argues
that, the counterclaim does not state a claim that falls potentially or arguably within policy
coverage and, hence, it had no duty to defend appellant.
{¶ 12} An insurer's duty to defend is broader than and distinct from its duty to
indemnify. Ohio Govt. Risk Mgt. Plan v. Harrison, 115 Ohio St. 3d 241, 2007-Ohio-4948,
¶ 19. The scope of the allegations in the pleading filed against the insured determines
whether an insurance company has a duty to defend the insured. Id. The insurer must
defend the insured in an action when the allegations state a claim that potentially or
arguably falls within the liability insurance coverage, but the insurer need not defend any
action or claims within the complaint that are clearly and indisputably outside the
contracted coverage. Id. citing Motorists Mut. Ins. Co. v. Trainor, 33 Ohio St. 2d 41 (1973).
{¶ 13} The controlling language of the Landlord Package policy is the definition of
"personal injury." The policy specifically states that a personal injury "means damages."
Accordingly, absent damages, a claim for relief sounding in libel, slander, humiliation,
defamation of character, or invasion of rights of privacy, is not a personal injury as the
No. 12AP-559 5
term is defined in the policy. In other words, damages are a necessary and indispensable
element of every personal injury covered under the policy. There is simply no other
reasonable interpretation of the policy.
{¶ 14} Likewise, there is no question that damages are unavailable in an action
brought pursuant to the vexatious litigator statute. In distinguishing remedies available
under the vexatious litigator statute from those available under the frivolous conduct
statute, this court noted that R.C. 2323.51 (frivolous conduct) and R.C. 2323.52 (vexatious
litigator) offer complementary remedies, but the remedies are not the same. See Roo v.
Sain, 10th Dist No. 04AP-881, 2005-Ohio-2436, ¶ 15. Although the two statutes share the
same definition of reprehensible conduct, R.C. 2323.51 allows attorney fees for past
frivolous conduct in a civil action, while R.C. 2323.51 is a protective remedy in the form of
a restriction on future frivolous filings. Id.
{¶ 15} To the extent that appellant argues that the damages requirement in the
policy is satisfied by the attorney fees leveled against him for frivolous conduct, the court
of appeals in Siemientkowski v. State Auto. Mut. Ins. Co., 8th Dist. No. 87299, 2006-
Ohio-4122, held that the award of costs and attorney fees imposed against insured's for
frivolous conduct in a prior litigation do not constitute an "injury" covered by the
insured's homeowner's insurance policy. Id. at ¶ 6. See also Tejada-Hercules v. State
Auto. Ins. Co., 10th Dist. No. 08AP-150, 2008-Ohio-5066 (there is a distinction in the law
"between cases in which attorney fees are awarded as costs and those in which the fees are
awarded as part of the aggrieved party's damages"). The court also stated that "frivolous
conduct, is not akin to malicious prosecution, libel, slander or defamation for the purpose
of this insurance policy." Id. Having determined that damages are a necessary and
indispensable element of every "personal injury," and that damages are not available
under the vexatious litigator statute, the court concludes that the counterclaim filed
against appellant in the Licking County action does not state a claim that falls potentially
or arguable within the coverage provided by the Landlord Package policy. Accordingly,
appellee owed no duty to appellant under the policy to indemnify or defend appellant in
the Licking County action. The Personal Umbrella Package policy contains the following
provisions that are pertinent in this case:
No. 12AP-559 6
DEFENSE; SETTLEMENT; SUPPLEMENTARY
PAYMENTS
Coverage - When We Pay
Allstate will pay when an insured becomes legally obligated
to pay for personal injury, property damage or bodily
injury caused by an occurrence.
Allstate will defend an insured if sued as the result of an
occurrence covered by this policy even if the suit is
groundless, false or fraudulent.
"Occurrence" - means * * * [a]n occurrence includes
personal injury, property damage and bodily injury
caused by an insured while trying to protect persons or
property from injury or damage
"Personal injury" - means:
***
b) libel; slander; misrepresentation; humiliation; defamation
of character; and invasion of rights of privacy.
(Emphasis sic.)
{¶ 16} Appellant argues that the counterclaim filed against him in the Licking
County action states a claim for defamation which falls within the definition of "personal
injury." Appellant relies on the following paragraphs of the counterclaim in support of
that argument:
6. James Helfrich ("Helfrich") is a resident of Licking County,
Ohio, who also owns the real property commonly known as
185 Isaac Tharp Street, Pataskala, Ohio (the"Property").
***
8. On February 9, 2004, Helfrich initiated a lawsuit against
Strickland, Garner, and Coldwell Banker King Thompson in
the Licking County Municipal Court, Case No. 04-CVF-00225
... pertaining to Helfrich's alleged "excessive damage and
repair costs" to the Property.
***
No. 12AP-559 7
12. On January 27, 2005 Helfrich initiated a lawsuit against
Strickland, Garner, and Coldwell Banker King Thompson in
the Licking County Court of Common Pleas Court, Case No.
05-CV-0120 ... also pertaining to Helfrich's alleged "excessive
damage and repair costs" to the Property.
***
16. In blatant contravention of Ohio Civ.R. 11 and in violation
of O.R.C. 2323.52, Plaintiff's pleadings in the Municipal
Litigation and the Common Pleas Litigation have contained
"scandalous and indecent material" and Helfrich has engaged
in conduct that obviously serves to harass or maliciously
injure another party, ...
***
36. On January 3, 2007, Helfrich filed a document in Licking
County Common Pleas Court Case No. 05-CV-0018, which he
allegedly faxed "to the Judges of Licking County" ... that
contains at least the following "scandalous and indecent
matter":
a. While I could go on and on with examples, all of you
know that attorney's professions are built on lies,
and/or misleading facts. You operate in a court system
where there is no civil repercussion for person who lie under
oath, or attorney's who can be proven that they
encourage their client to lie cannot be sued civilly.
b. Most recently, I have been involved in litigation with one
attorney for more than two years, the docket is
filled full of twisted facts or blatant lies.
****
37. Helfrich did not send a copy of the January 3, 2007, letter
to Madison even though such letter not-so-indiscreetly
references the Common Pleas Litigation and false accusations
about Madison.
****
39. A cursory review of James Helfrich v. Sherri Mellon ...
demonstrates Helfrich (sic) disrespect for the judicial system
and his inclusion of "scandalous and indecent material" in his
pleadings: . . .
****
No. 12AP-559 8
42. Helfrich's conduct throughout the Municipal Litigation,
the Common Pleas Litigation, the case sub judice, and other
litigation serves merely to harass or maliciously injure
Counterclaimants and other parties in violation of O.R.C.
2323.52.
(Emphasis sic.) (Appellant's brief, 1-3.)
{¶ 17} Unlike the Landlord Package policy, the Personal Umbrella Package policy
does not specifically state "personal injury means damages." However, as noted above, the
duty to defend arises only when the pleading filed against the insured potentially or
arguably falls within the liability insurance coverage. Harrison; Trainor. The Personal
Umbrella Package policy employs the phrase "when we pay" in defining the limits of
liability insurance coverage. Accordingly, liability insurance coverage is tied inextricably
to instances where the insured may be legally required to pay damages. The policy
employs the phrase "occurrence covered by this policy" in defining the limits of appellee's
duty to defend. Thus, the duty to defend is also tied inextricably to instances where the
insured may be legally required to pay damages.
{¶ 18} Appellant contends that the duty to defend arises whenever the insured is
sued for a "personal injury," even though the pleading does not seek payment. In other
words, appellant believes that the duty to defend arises even though the alleged personal
injury does not invoke liability insurance coverage. Such a reading ignores the plain
language of the policy limiting appellee's duty to defend to an "occurrence covered by this
policy."
{¶ 19} Thus, the court finds that, in the absence of a prayer for damages, the
counterclaim filed in the Licking County action did not state a claim against appellant that
arguably or potentially fell within the coverage provided by the Personal Umbrella Package
policy. Accordingly, appellee did not owe appellant a duty to defend him in the Licking
County action.
{¶ 20} Moreover, even if the court were to accept appellant's argument that the
duty to defend under the Personal Umbrella Package policy arises whenever the insured is
sued for a personal injury, the court finds that the counterclaim filed in Licking County
does not allege a personal injury.
No. 12AP-559 9
{¶ 21} There is no question that the counterclaim alleged a meritorious claim
under the vexatious litigator statute. Indeed, the court of appeals affirmed the trial court
judgment against appellant on the counterclaim. See Helfrich v. Madison, 5th Dist. No. 11
CA 26, 2012-Ohio-551. The specific question raised by this appeal is whether the
counterclaim also alleges a claim for defamation.
{¶ 22} As noted above, the insurer must defend the insured in an action when the
allegations state a claim that potentially or arguably falls within the liability insurance
coverage. Harrison; Trainor. In undertaking the analysis, this court will not stretch the
allegations beyond reason in order to impose a duty on the insurer. Hahn's Elec. Co. v.
Cochran, 1oth Dist. No. 01AP-1391, 2002-Ohio-5009. Nor will we impose a duty to defend
based on allegations outside the complaint, where the allegations in the complaint are not
vague or ambiguous and do not state a claim potentially or arguably within policy
coverage. Id. The court will relieve appellee of its duty to defend only if the claim(s)
alleged in the pleadings are clearly and indisputably outside the contracted coverage.
Harrison; Trainor.
{¶ 23} In Roo, we observed that " ' "[t]he purpose of the vexatious litigator statute
is clear. It seeks to prevent abuse of the system by those persons who persistently and
habitually file lawsuits without reasonable grounds and/or otherwise engage in frivolous
conduct in the trial courts of this state. Such conduct clogs the court dockets, results in
increased costs, and oftentimes is a waste of judicial resources-resources that are
supported by the taxpayers of this state. The unreasonable burden placed upon courts by
such baseless litigation prevents the speedy consideration of proper litigation." ' " Id. at
¶ 6, quoting, Mayer v. Bristow, 91 Ohio St. 3d 4, 13 (2000), quoting Cent. Ohio Transit
Auth. v. Timson, 132 Ohio App. 3d 41, 50 (10th Dist.1998).
{¶ 24} In Mehta v. Ohio Univ., 194 Ohio App. 3d 844, 2011-Ohio-3484 (10th Dist.),
we set forth the elements of a claim for defamation:
(a) a false and defamatory statement concerning another; (b)
an unprivileged publication to a third party; (c) fault
amounting at least to negligence on the part of the publisher;
and (d) either actionability of the statement irrespective of
special harm or the existence of special harm caused by the
publication.
No. 12AP-559 10
(Citations omitted.) Id. at ¶ 26
{¶ 25} The vexatious litigator statue vindicates the right of the courts and the
taxpayers of this state to be free from the delay and expense associated with baseless
litigation, whereas common-law defamation vindicates an individual's right to be free from
false statements that injure the individual's character or reputation. See id. The two
claims are nothing alike.1
{¶ 26} Moreover, to the extent that the counterclaim attributes any "statements" to
appellant, such statements pertain largely to lawyers and judges who were not parties in
the Licking County action. With the single exception of the statements about "Madison"
referenced in paragraph 37 of the counterclaim, it is impossible to tell from the
counterclaim what the "scandalous and indecent material" consists of and whether any of
it pertains to parties in that action. Similarly, there is no detail provided about the alleged
"false accusations about Madison" referenced in paragraph 37. It is only by innuendo that
one can deduce that Madison is a target of the allegations of dishonesty made in paragraph
36.
{¶ 27} Under Ohio law, when a complaint alleges defamation per se, damages are
presumed, but when a complaint alleges defamation per quod, the complaint must allege
special damages. Williams v. Gannett Satellite Information Network, Inc., 162 Ohio
App.3d 596, 2005-Ohio-4141, ¶ 7 (1st Dist.). Defamation per se occurs when a statement is
defamatory on its face; defamation per quod occurs when a statement is defamatory
through interpretation or innuendo. Akron-Canton Waste Oil, Inc. v. Safety-Kleen Oil
Servs., Inc., 81 Ohio App. 3d 591, 601 (9th Dist.1992), citing 3 Restatement of the Law 2d,
Torts, Section 558, at 155 (1977). As the court has noted, there is no prayer for damages in
the counterclaim. Thus, the only properly pleaded claim in the counterclaim is appellee's
vexatious litigator claim.
{¶ 28} In Montgomery v. Ohio St. Univ., 10th Dist. No. 11AP-1024, 2012-Ohio-
5489, ¶ 13, we were required to determine whether a pleading stated a claim sounding in
1 Compare Siemientkowski at ¶ 6 (frivolous conduct "is not akin to * * * defamation," for purposes of
liability coverage); William J. Templeman Co. v. Liberty Mut. Ins. Co.., 316 Ill.App.3d 379 (1st Dist.2000)
(In the context of homeowners' insurance, there was no possibility that judicially imposed sanctions for
frivolous conduct would support recovery for malicious prosecution.).
No. 12AP-559 11
negligence or a claim sounding in defamation for purposes of the statute of limitations.
This court relied on the following guiding principle in making the determination:
" ' "[C]ourts must look to the actual nature or subject matter of the case, rather than to the
form in which the action is pleaded. The grounds for bringing the action are the
determinative factors, the form is immaterial." ' " Id., quoting Love v. Port Clinton, 37
Ohio St. 3d 98, 99 (1988), quoting Hambleton v. R.G. Barry Corp., 12 Ohio St. 3d 179, 183,
(1984).
{¶ 29} Although the counterclaim at issue in this case contains certain words and
phrases that might also appear in a pleading alleging defamation, the actual nature and
subject matter of the counterclaim is the vexatious litigator statute. The counterclaim
clearly and unambiguously seeks a declaration that appellant is a vexatious litigator
pursuant to R.C. 2323.52. The counterclaim does not allege defamation. The context in
which the allegations of the counterclaim are framed, including the prayer for declaratory
relief and the absence of a prayer for damages, the court can come to no other conclusion.
We will not stretch the allegations of the counterclaim beyond reason to impose a duty on
appellant in this case. See Hahn's Elec. Co.
{¶ 30} Based on the foregoing, we find that appellee was justified in denying
coverage under the Personal Umbrella Package policy and in refusing to defend appellant.
Having determined that appellee was justified in refusing to defend or indemnify appellant
under either of the policies at issue, appellee is entitled to judgment as a matter of law on
appellant's claims for breach of contract and bad faith. See Zoppo v. Homestead Ins. Co.,
71 Ohio St. 3d 552 (1994).
{¶ 31} In short, the trial court did not err in granting appellee's motion for
summary judgment and by denying appellant's motion for summary judgment. Therefore,
appellant's first and second assignments of error are overruled.
IV. DISPOSITION
{¶ 32} Having overruled each of appellant's assignments of error, we affirm the
judgment of the Franklin County Court of Common Pleas.
Judgment affirmed.
SADLER and DORRIAN, JJ., concur.
_________________