Gibson v. State Farm Mut. Auto. Ins. Co.

I respectfully dissent from the decision of the majority sustaining the first assignment of error, which I would overrule.

R.C. 3937.18(A)(2) requires insurers to provide underinsured motorist coverage to their automobile liability policyholders "where the limits of coverage available for payment to the insured under all bodily injury liability bonds and insurance policies covering persons liable to the insured are less than the limits for the insured's uninsured motorist coverage at the time of the accident." The extent of the coverage that the insurer must provide is an amount equal to the insured's own liability coverage. Id. The policy that plaintiff-appellant Gibson purchased from defendant-appellee State Farm requires it to "pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured (underinsured) motor vehicle" to the extent of the policy's coverage of the insured's own liability.

The obligation imposed on an insurer by R.C. 3937.18(A)(2) accrues when an occurrence takes place which gives rise to the tortfeasor's potential liability to the insured. The insurer's obligation to pay an amount pursuant to that provision terminates when the tortfeasor is determined not to be liable to the insured, or when the amount for which the tortfeasor is determined to be liable is equal to or less than the insured's own liability coverage. This latter alternative occurs when a judgment is rendered in such an amount or when the insured releases the tortfeasor from liability in exchange for a payment of money in such an amount.

Pursuant to R.C. 2125.02, an action for wrongful death must be brought in the name of the decedent's personal representative and is brought for the benefit of the surviving spouse, the children, and parents of the decedent. Wood v. Shepard (1988), 38 Ohio St. 3d 86, 526 N.E.2d 1089. The personal representative is but a nominal party to an action for wrongful death; the designated beneficiaries for whom the action is brought are the real parties in interest. Gibson v. Solomon (1939), 136 Ohio St. 101,23 N.E.2d 996. Each beneficiary is entitled to recover from his own underinsured coverage for any loss sustained in excess of his proportionate share of the proceeds from a wrongful death claim.Sexton v. State Farm Mut. Auto. Ins. Co. (1982), 69 Ohio St. 2d 431, 23 O.O.3d 385, 433 N.E.2d 555; Derr v. Westfield Cos. (1992), 63 Ohio St. 3d 537, 589 N.E.2d 1278.

Though the personal representative is but a nominal party, any judgment rendered for the beneficiaries on a wrongful death claim must be in favor of the personal representative, in that capacity. The power to settle with a defendant in a wrongful death action is exclusively in the personal representative, who acts on behalf of all interested persons. Tennant v. State FarmMut. Ins. Co. (1991), 81 Ohio App. 3d 20, 610 N.E.2d 437. Settlement by the personal representative is binding on the beneficiaries of a wrongful death claim, and it bars any further prosecution of that claim by them in their individual capacities.Id.

The personal representative is appointed by the probate court of the county in which the decedent resided at the time of death. If the personal representative receives an offer of settlement from the defendant in a wrongful death case, the personal representative must apply to the probate court to approve the proffered settlement and for an order to distribute the proceeds paid. Unless otherwise agreed by the beneficiaries, distribution of wrongful death proceeds must conform to the statute of decent and distribution. R.C. 2125.03. When the beneficiaries agree to a different distribution, a form of consent to the proposed distribution executed by each of them must be filed in the probate court by the personal representative. The particular form employed for that purpose is Standard Probate Form 14.2.

In support of its motion for summary judgment, defendant-appellee State Farm presented a certified copy of a Standard Probate Form 14.2 that Barbara Mack filed in the Probate Court of Clark County on August 10, 1993, asking to distribute the proceeds of $100,000 offered by Sandra Ehrman's insurer in settlement of the wrongful death claim arising from the death of Fred Jagger. Because Jagger's beneficiaries would receive less than the shares to which each was entitled by law, each beneficiary executed a consent to the distribution proposed. The form indicates that Sandra Gibson agreed to accept $5,000 from the proceeds received by the personal representative in settlement of her wrongful death claim. State Farm also filed a certified copy of an order that the probate court entered on August 10, 1993, approving the settlement and distribution.

It is undisputed that the settlement approved by the probate court is complete. Because the settlement cuts off Ehrman's liability to Gibson, she is no longer "legally entitled to collect" damages from Ehrman on account of her father's death. That fact operates as a condition subsequent that terminates any prior duty imposed on State Farm by its contract with Gibson to provide underinsured coverage for the losses that Gibson suffered as a result of her father's death. Therefore, the trial court did not err when it granted summary judgment to State Farm on Gibson's claim. Accord Love v. Nationwide Mut. Ins. Co. (1995),104 Ohio App. 3d 804, 663 N.E.2d 407; Weiker v. Motorists Mut.Ins. Co. (Aug. 16, 1996), Ottowa App. No. OT-96-012, unreported, 1996 WL 464166.

Judge Young has suggested that a settlement between the personal representative and the tortfeasor should not be binding on a beneficiary because the beneficiary is not a party to the settlement cutting off the tortfeasor's liability to him and because the existence and extent of the beneficiaries' underinsured loss cannot be known until the settlement is reached. I am not unsympathetic to that view. However, as the facts of this case demonstrate, a beneficiary is not necessarily unaware of the prospect of settlement or unable to object to it in the probate proceeding in a manner that will protect his interests. Any greater protections must, in my view, be afforded by the legislative branch, not judicially engrafted into a claim for relief that is wholly statutory or an obligation that is a creation of contract.

I would affirm the judgment of the trial court on the foregoing basis.