Case Title: Mid-American Fire & Cas. Co. v. Heasley

Citation: 2007-Ohio-1248

Docket Number: 20052399 and 20060249

State: ohio

Court: Ohio Supreme Court

Date: 2007-04-04T00:00:00Z

Document:
[Cite as Mid-American Fire & Cas. Co. v. Heasley, 113 Ohio St.3d 133, 2007-Ohio-1248.] 
 
 
 
MID-AMERICAN FIRE & CASUALTY COMPANY ET AL., 
APPELLANTS, v. HEASLEY, APPELLEE. 
[Cite as Mid-American Fire & Cas. Co. v. Heasley, 
113 Ohio St.3d 133, 2007-Ohio-1248.] 
Declaratory judgments — An automobile-liability insurer cannot maintain a 
declaratory judgment action to determine the rights of a party under its 
insurance contract if that party is barred from seeking insurance coverage 
by controlling legal authority — Dismissal of a declaratory judgment 
action is reviewed under an abuse-of-discretion standard. 
(Nos. 2005-2399 and 2006-0249 – Submitted December 12, 2006 — Decided 
April 4, 2007.) 
APPEAL from and CERTIFIED by the Court of Appeals for Lake County,  
No. 2004-L-115, 2005-Ohio-6072. 
__________________ 
SYLLABUS OF THE COURT 
1.  
 An automobile-liability insurer cannot maintain a declaratory judgment 
action to determine the rights of a party under its insurance contract if that 
party is barred from seeking insurance coverage by controlling legal 
authority. 
2.  
Dismissal of a declaratory judgment action is reviewed under an abuse-of-
discretion standard. (Bilyeu v. Motorists Mut. Ins. Co. (1973), 36 Ohio 
St.2d 35, 37, 65 O.O.2d 179, 303 N.E.2d 871, followed.) 
__________________ 
LANZINGER, J. 
{¶ 1} In this case, we address two issues: (1) when an insurance 
company may maintain a declaratory judgment action against an insured whose 
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claim for coverage was extinguished by Westfield Ins. Co. v. Galatis, 100 Ohio 
St.3d 216, 2003-Ohio-5849, 797 N.E.2d 1256, and (2) what the appropriate 
standard of review is for a trial court’s dismissal of such an action. 
{¶ 2} We have accepted a discretionary appeal and certification of a 
conflict and have consolidated them. The Eleventh District Court of Appeals 
certified its decision concerning the justiciability of a declaratory judgment as 
well as the standard of review of the trial court’s dismissal as in conflict with that 
of the Ninth District Court of Appeals in Indiana Ins. Co. v. Forsmark, 160 Ohio 
App.3d 277, 2005-Ohio-1635, 826 N.E.2d 915.  We agree that a conflict exists. 
Procedural History 
{¶ 3} In July 2001, appellee, William C. Heasley Jr., was injured in an 
auto accident caused by an unidentified driver.  He then had a personal insurance 
policy with $100,000 of uninsured/underinsured motorist (“UM/UIM”) coverage 
through Grange Mutual Insurance Company.  Heasley was employed by Slabe 
Machine Products Company.  Slabe was insured under a business auto insurance 
policy and an umbrella insurance policy by appellants Mid-American Fire & 
Casualty Company and Midwestern Indemnity Company (collectively “Mid-
American”). That policy provided $500,000 in UM/UIM coverage. 
{¶ 4} In July 2003, Heasley filed suit against Mid-American seeking 
payment of UIM benefits in reliance upon Scott-Pontzer v. Liberty Mut. Fire Ins. 
Co. (1999), 85 Ohio St.3d 660, 710 N.E.2d 1116.  Scott-Pontzer had expanded an 
employee’s recovery under the employer’s insurance policy to cover accidents 
involving employees who were off-duty and not driving a company car.  Id. at 
666, 710 N.E.2d 1116.  After Heasley filed suit, this court decided Galatis, which 
limited Scott-Pontzer and held that only those acting within their scope of 
employment were eligible for UM/UIM benefits under an employer’s insurance 
policy. Galatis, 100 Ohio St.3d 216, 2003-Ohio-5849, 797 N.E.2d 1256, 
January Term, 2007 
3 
paragraph two of the syllabus.  In March 2004, following Galatis, Heasley 
voluntarily dismissed his claim without prejudice pursuant to Civ.R. 41(A). 
{¶ 5} After Heasley’s dismissal, Mid-American filed an action in the 
Lake County Common Pleas Court, seeking a declaration that Mid-American 
owes Heasley no UM/UIM coverage.  Heasley filed a motion to dismiss the 
declaratory judgment action and a motion for sanctions pursuant to Civ.R. 
12(B)(6).  The trial court granted Heasley’s motion to dismiss, finding that no 
justiciable controversy existed because Galatis had extinguished Heasley’s claims 
to UM/UIM payments under Scott-Pontzer. 
{¶ 6} Mid-American appealed the trial court’s dismissal of the 
declaratory judgment action to the Eleventh District Court of Appeals.  Applying 
an abuse-of-discretion standard of review, the appellate court affirmed the 
decision of the trial court. Mid-American Fire & Cas. Co. v. Heasley, Lake App. 
No. 2004-L-115, 2005-Ohio-6072, ¶ 18.  The court of appeals concluded that the 
trial court had not erred in dismissing the declaratory judgment action for lack of 
a justiciable controversy. Id. at ¶ 17. 
{¶ 7} The Eleventh District certified a conflict, citing Forsmark, 160 
Ohio App.3d 277, 2005-Ohio-1635, 826 N.E.2d 915, ¶ 9, in which a trial court’s 
dismissal of a similar declaratory judgment action was reviewed de novo.  In 
Forsmark, the Ninth District concluded that the “ ‘lingering threat of future 
litigation,’ ” no matter how remote, was sufficient to create a justiciable question.  
Id. at ¶ 13, quoting Allstate Ins. Co. v. Long, 11th Dist. Nos. 2001-P-0038 and 
2001-P-0039, 2003-Ohio-61, ¶ 21.  We recognized a conflict regarding both the 
appropriate standard of review and “[w]hether an insurer may maintain a 
declaratory judgment action pursuant to R.C. 2721.01 et seq. to determine the 
rights of parties to an automobile accident under the terms and conditions of the 
contract for insurance even though the injured party is currently barred from 
seeking coverage because the authority supporting the insured party's claim for 
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coverage was superseded by new authority.” Mid-American Fire & Cas. Co. v. 
Heasley, 108 Ohio St.3d 1507, 2006-Ohio-1329, 844 N.E.2d 853. 
Presence of a Justiciable Controversy 
{¶ 8} A declaratory judgment action provides a means by which parties 
can eliminate uncertainty regarding their legal rights and obligations.  Travelers 
Indemn. Co. v. Cochrane (1951), 155 Ohio St. 305, 312, 44 O.O 302, 98 N.E.2d 
840. An insurer may institute a declaratory judgment action to determine “its 
rights and obligations under a contract of insurance.” Preferred Risk Ins. Co. v. 
Gill (1987), 30 Ohio St.3d 108, 30 OBR 424, 507 N.E.2d 1118, paragraph one of 
the syllabus.  The declaratory judgment action may be brought even before any 
contract breach.  R.C. 2721.04.  The purpose of a declaratory judgment action is 
to dispose of “uncertain or disputed obligations quickly and conclusively,” and to 
achieve that end, the declaratory judgment statutes are to be construed “liberally.”  
Ohio Farmers Indemn. Co. v. Chames (1959), 170 Ohio St. 209, 213, 10 O.O.2d 
164, 163 N.E.2d 367. 
{¶ 9} Although broad in scope, the declaratory judgment statutes are not 
without limitation.  Most significantly, in keeping with the long-standing tradition 
that a court does not render advisory opinions, they allow the filing of a 
declaratory judgment only to decide “an actual controversy, the resolution of 
which will confer certain rights or status upon the litigants.” Corron v. Corron 
(1988), 40 Ohio St.3d 75, 79, 531 N.E.2d 708. Not every conceivable controversy 
is an actual one.  As the First District aptly noted, in order for a justiciable 
question to exist, “ ‘[t]he danger or dilemma of the plaintiff must be present, not 
contingent on the happening of hypothetical future events * * * and the threat to 
his position must be actual and genuine and not merely possible or remote.’ ” 
League for Preservation of Civil Rights v. Cincinnati (1940), 64 Ohio App. 195, 
197, 17 O.O. 424, 28 N.E.2d 660, quoting Borchard, Declaratory Judgments 
(1934) 40. 
January Term, 2007 
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{¶ 10} In this case, Mid-American claims that a justiciable controversy 
exists because Heasley dismissed his original complaint without prejudice and 
theoretically remains free to refile his claim any time within the statute of 
limitations.  Arguing that a “lingering threat of future litigation still exists,” Mid-
American relies on Allstate Ins. Co. v. Long, 2003-Ohio-61, ¶ 21.  There, the trial 
court had dismissed as nonjusticiable an insurance company’s declaratory 
judgment action, characterizing it as moot because the injured parties had 
voluntarily dismissed their original tort claim. In reversing, the court of appeals 
held that “[the injured parties] retain their right to refile their court action. * * * 
Because the threat of a refiling of the tort action * * * remains, a justiciable 
controversy still exists * * *.” Id. 
{¶ 11} There are important points, however, that Mid-American 
overlooks. While Heasley remains free to refile his claim, such a claim would be 
frivolous.  Heasley voluntarily dismissed his claim, but any rights he might have 
had to UM/UIM payments as a result of Scott-Pontzer were extinguished by 
Galatis.  The plaintiffs in Long also voluntarily dismissed their claim, but unlike 
Heasley, still had a valid cause of action that could have been filed at any time.  
Heasley’s claim would not survive unless the rule announced in Galatis were 
overruled.  Although technically possible, the likelihood is remote.  Mid-
American’s theory, then, is nothing more than a remote possibility, and “the 
controversy is based upon a contingency which may never occur.” Bilyeu v. 
Motorists Mut. Ins. Co. (1973), 36 Ohio St.2d 35, 37, 65 O.O.2d 179, 303 N.E.2d 
871. 
Standard of Review 
{¶ 12} This court has previously addressed the question of the appropriate 
standard of review for a declaratory judgment action.  We have held that “[t]he 
granting or denying of declaratory relief is a matter for judicial discretion, and 
where a court determines that a controversy is so contingent that declaratory relief 
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does not lie, this court will not reverse unless the lower court’s determination is 
clearly unreasonable.” Bilyeu, 36 Ohio St.2d 35, 65 O.O.2d 179, 303 N.E.2d 871, 
syllabus.  Relying on our decision in that case, courts throughout Ohio have 
adopted an abuse-of-discretion standard for reviewing declaratory judgment 
actions. 
{¶ 13} In arguing for a de novo standard of review, Mid-American cites 
some cases that were decided before, or have failed to apply, Bilyeu. Other cases 
that Mid-American cites are similarly unpersuasive, for none of them expressly 
adopt a de novo standard of review. For example, in one case relied upon by Mid-
American, Commercial Union Ins. Co. v. Wheeling Pittsburgh Corp. (1995), 106 
Ohio App.3d 477, 666 N.E.2d 571, the court acknowledged that the question of 
whether to entertain a declaratory judgment action is committed to the trial court’s 
discretion. Id. at 481, 666 N.E.2d 571. 
{¶ 14} We will overrule a past decision only if “(1) the decision was 
wrongly decided at that time, or changes in circumstances no longer justify 
continued adherence to the decision, (2) the decision defies practical workability, 
and (3) abandoning the precedent would not create an undue hardship for those 
who have relied upon it.” Galatis, 100 Ohio St.3d 216, 2003-Ohio-5849, 797 
N.E.2d 1256, paragraph one of the syllabus. None of these considerations favor 
reconsideration of our decision in Bilyeu.  We therefore reaffirm that declaratory 
judgment actions are to be reviewed under an abuse-of-discretion standard. 
Conclusion 
{¶ 15} An automobile-liability insurer cannot maintain a declaratory 
judgment action to determine the rights of a party under its insurance contract if 
that party is barred from seeking insurance coverage by controlling legal 
authority.  Such an action is inappropriate because it would not decide an actual 
controversy, and the circumstances allowing for refiling of the claim for coverage 
are too remote. 
January Term, 2007 
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{¶ 16} Dismissal of a declaratory judgment action is reviewed under an 
abuse-of-discretion standard. Bilyeu, 36 Ohio St.2d at 37, 65 O.O.2d 179, 303 
N.E.2d 871. 
{¶ 17} We therefore affirm the judgment of the court of appeals. 
Judgment affirmed. 
 
MOYER, C.J., WALSH, LUNDBERG STRATTON and O’CONNOR, JJ., concur. 
 
PFEIFER, J., concurs in judgment only. 
 
O’DONNELL, J., dissents and would dismiss the cause as having been 
improvidently accepted. 
 
JAMES E. WALSH, J., of the Twelfth Appellate District, was assigned to sit 
for RESNICK, J., whose term ended on January 1, 2007. 
 
CUPP, J., whose term began on January 2, 2007, did not participate in the 
consideration or decision of this case. 
__________________ 
Weston Hurd, L.L.P., and Shawn W. Maestle, for appellants. 
Klein & Carney Co., L.P.A., Larry S. Klein, and Christopher J. Carney, 
for appellee. 
______________________