Case Title: Cole v. Holland

Citation: 1996-Ohio-105

Docket Number: 19942569

State: ohio

Court: Ohio Supreme Court

Date: 1996-08-07T00:00:00Z

Document:
Cole et al., Appellees, v. Holland; Nationwide Insurance Company, Appellant. 
[Cite as Cole v. Holland (1996), _____ Ohio St.3d _____.] 
Insurance -- Motor vehicles -- Pursuant to former R.C. 3937.18, an 
underinsurance claim must be paid, when -- Determining amount of 
underinsurance coverage to be paid. 
- - -  
Pursuant to former R.C. 3937.18, an underinsurance claim must be paid when the 
individual covered by an uninsured/underinsured policy suffers damages 
that exceed those monies available to be paid by the tortfeasor’s liability 
carriers.  In determining the amount of underinsurance coverage to be paid 
on a claim involving an accident governed by former R.C. 3937.18, the 
underinsurance provider is entitled to set off the amounts actually 
recovered from the tortfeasor’s liability carriers against the insured’s total 
damages, rather than against its policy limits.  (Savoie v. Grange Mut. Ins. 
Co. [1993], 67 Ohio St.3d 500, 620 N.E.2d 809, paragraph three of the 
syllabus, applied and followed.) 
- - -  
 
(No. 94-2569 -- Submitted February 21, 1996 -- Decided August 7, 1996.) 
 
Appeal from the Court of Appeals for Summit County, No. 16703. 
 
 
 
 
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On May 29, 1991, plaintiff-appellee Richard W. Cole, while driving alone 
in his auto, was injured in a motor vehicle accident with another vehicle.  Richard 
Cole (seeking recovery for personal injury) and his wife, appellee Marilou S. Cole 
(seeking recovery for loss of consortium), filed suit against the other driver, Bryan 
C. Holland, in the Summit County Court of Common Pleas.  The complaint was 
subsequently amended to include appellant Nationwide Insurance Company as a 
defendant, and claims for a declaratory judgment and breach of contract were 
added.  The amended complaint stated that Holland was insured under a policy 
with Colonial Insurance Company, with a liability limit of $12,500. 
 
The amended complaint also stated that appellees were insured under a 
policy with appellant, and that this policy provided uninsured/underinsured 
coverage with limits of $100,000 per person and $300,000 per occurrence.  The 
declaratory judgment portion of appellees’ suit sought to ascertain the rights and 
obligations pursuant to the underinsurance coverage of this policy. 
 
Appellant and appellees each moved for summary judgment.  At that time, 
they agreed that the $100,000 per person limit of underinsurance coverage applied.  
By conceding that the per person limit applied, appellees dropped their argument 
 
 
 
 
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that the derivative claim of Marilou Cole for loss of consortium constituted a 
separate claim for purposes of determining the applicable policy limit.  However, 
the parties disagreed as to how the $12,500 that appellees were to receive from the 
tortfeasor’s insurer affected appellant’s obligation under the policy.  Appellant 
argued that it was entitled to set off the $12,500 against the $100,000 policy limit, 
so that its obligation to pay appellees could not be greater than $87,500.  
Appellees argued that appellant was not entitled to a setoff against the policy limit, 
but only against their damages up to the policy limit, so that the full $100,000 of 
underinsurance coverage remained available to them. 
 
In its first ruling on these summary judgment motions, the trial court granted 
appellant’s motion, and found that appellant could set off the $12,500 payment 
against the policy limit.  The trial court considered the applicability of Savoie v. 
Grange Mut. Ins. Co. (1993), 67 Ohio St.3d 500, 620 N.E.2d 809, to the setoff 
issue, and determined that Savoie, because it did not overrule previous decisions 
of the Supreme Court of Ohio upholding setoffs against policy limits, did not 
require a contrary result.  Appellees filed a motion for reconsideration of the trial 
court decision, which was denied.  Shortly thereafter, the trial court sua sponte 
 
 
 
 
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determined that reconsideration might be appropriate “[b]ased on a recent Ohio 
Supreme Court decision” and gave leave to each side to file memoranda 
supporting their positions. 
 
The trial court ultimately determined that reconsideration was in order, and 
vacated its earlier decision that appellant was entitled to a setoff against the policy 
limit.  The trial court decided that a concurring opinion in Hillman v. Hastings 
Mut. Ins. Co. (1994), 68 Ohio St.3d 238, 239, 626 N.E.2d 73, 74, clarified Savoie 
on the setoff issue.  The trial court granted summary judgment for appellees, 
finding that the full policy limit of $100,000 in underinsurance coverage was 
available to them, despite the $12,500 to be received from the tortfeasor’s insurer. 
 
The court of appeals affirmed the judgment of the trial court. 
 
The cause is now before this court upon the allowance of a discretionary 
appeal. 
 
Patrick J. D’Andrea, Lee A. Schaffer and Dean A. Young, for appellees. 
 
Robert J. Drexler, for appellant. 
 
Mark W. Ruf, urging affirmance for amicus curiae, Ohio Academy of Trial 
Lawyers. 
 
 
 
 
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Weston, Hurd, Fallon, Paisley & Howley, Timothy D. Johnson, Gregory E. 
O’Brien and Daniel A. Richards, urging reversal for amicus curiae, Ohio 
Association of Civil Trial Attorneys. 
 
Roetzel & Andress Co., L.P.A., Ronald B. Lee and Laura M. Faust, urging 
reversal for amici curiae, Progressive Insurance Company, Leader National 
Insurance Company, Ohio Insurance Institute, and State Auto Insurance Company. 
 
Alice Robie Resnick, J.  The issue presented is whether a provider of 
underinsurance coverage may set off money received by its insured from a 
tortfeasor’s insurer against the insured party’s damages, or whether the setoff may 
be against the relevant policy limit. 
 
Former R.C. 3937.18(A)(2) required “[u]nderinsured motorist coverage, 
which shall be in an amount of coverage equivalent to the automobile liability or 
motor vehicle liability coverage and shall provide protection for an insured against 
loss for bodily injury, sickness, or disease, including death, 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.  
 
 
 
 
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The limits of liability for an insurer providing underinsured motorist coverage 
shall be the limits of such coverage, less those amounts actually recovered under 
all applicable bodily injury liability bonds and insurance policies covering persons 
liable to the insured.”  Am.Sub.H.B. No. 1, 142 Ohio Laws, Part I, 1661, 1739-
1740. 
 
At this point, we note that if an injured party’s damages do not exceed the 
amount of recovery available from the tortfeasor’s liability insurers, the tortfeasor 
is not underinsured and underinsurance coverage does not come into play.  
Likewise, if the injured party’s damages do exceed the amount available from the 
tortfeasor’s liability insurers, but do not exceed the relevant policy limit of the 
injured party’s underinsurance coverage, that injured party will recover the full 
extent of his or her damages, with the underinsurance provider paying those 
damages not covered by the tortfeasor’s liability insurers.  In that situation, the 
tortfeasor is underinsured, but the setoff issue does not come into play.  The setoff 
issue arises only when the party seeking to recover pursuant to underinsurance 
coverage suffers damages that exceed the policy limit of underinsurance coverage 
 
 
 
 
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after the injured party has been partially compensated for those injuries by the 
tortfeasor’s liability insurers. 
 
It is therefore clear that no issue of double recovery arises when considering 
setoff, because any analysis involving setoff begins at the starting point that the 
tortfeasor’s liability insurance is not sufficient to adequately compensate the 
injured party seeking the underinsurance coverage.  Furthermore, in cases of very 
serious injury when sizable damages are involved, the injured party as a practical 
matter faces severe undercompensation, even if the setoff question is resolved in 
the injured party’s favor, because the limit of the underinsurance policy acts as a 
cap on the amount of recovery. 
 
In James v. Michigan Mut. Ins. Co. (1985), 18 Ohio St.3d 386, 18 OBR 440, 
481 N.E.2d 272, this court construed a predecessor statute to former R.C. 
3937.18(C), virtually the same as current R.C. 3937.18(E),1 and held at paragraph 
two of the syllabus:  “An insurer may apply payments made by or on behalf of an 
underinsured motorist as a setoff directly against the limits of its underinsured 
motorist coverage, so long as such setoff (1) is clearly set forth in the terms of the 
underinsured motorist coverage and (2) does not lead to a result wherein the 
 
 
 
 
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insured receives a total amount of compensation that is less than the amount of 
compensation that he would have received if he had been injured by an uninsured 
motorist.” 
 
In In re Nationwide Ins. Co. (1989), 45 Ohio St.3d 11, 543 N.E.2d 89, we 
held at the syllabus:  “A setoff against the limits of underinsured and uninsured 
motorist coverage is permitted under R.C. 3937.18(E) provided the setoff is 
clearly set forth in the provisions of the insurance policy.” 
 
As a result of James and In re Nationwide, it was then settled that former 
R.C. 3937.18 allowed an insurer to set off payments received by its insured from 
other sources against the underinsured motorist coverage policy limit to reduce the 
amount to be paid to the insured. 
 
However, our decision in Savoie, supra, has affected the way the courts of 
this state have been resolving the setoff question.  Although Savoie did not 
overrule James and In re Nationwide, and moreover did not specifically find any 
provision of former R.C. 3937.18 to be ambiguous or unconstitutional relative to 
setoffs, courts of this state (including the trial court and the court of appeals in the 
case sub judice) have been relying on paragraph three of the syllabus of Savoie, as 
 
 
 
 
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well as on the discussion in Part III of that opinion, and on their own independent 
reasoning, to decide that insurers must set off proceeds received by their insureds 
from tortfeasors’ liability insurers against the insureds’ damages, rather than 
against the policy limit. 
 
In Savoie, this court held at paragraph three of the syllabus:  “An 
underinsurance claim must be paid when the individual covered by an 
uninsured/underinsured policy suffers damages that exceed those monies available 
to be paid by the tortfeasor’s liability carriers.  (Hill v. Allstate Ins. Co. [1990], 50 
Ohio St.3d 243, 553 N.E.2d 658, overruled.)” 
 
In concurring opinions in two cases summarily decided on the authority of 
Savoie, members of this court appeared to clarify paragraph three of the syllabus 
of Savoie to indicate that the insurer’s setoff applies against the insured’s 
damages, not against the policy limit of underinsurance coverage.  See Hillman v. 
Hastings Mut. Ins. Co. (1994), 68 Ohio St.3d 238, 239, 626 N.E.2d 73, 74 (Pfeifer, 
J., concurring) (“Savoie, in all personal injury cases, eliminates the setoff against 
underinsurance policy limits”); Newman v. United Ohio Ins. Co. (1994), 69 Ohio 
St.3d 1204, 1205, 631 N.E.2d 157, 158 (Douglas, J., joined by A.W. Sweeney, 
 
 
 
 
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Resnick, F.E. Sweeney and Pfeifer, JJ., concurring in denial of motion for 
reconsideration) (“Savoie [1] requires setoff; [2] requires that any setoff be against 
the insured’s damages [not the written limits of underinsured coverage]; and [3] 
that paragraph three of the syllabus of Savoie applies to ‘*** all personal injury 
cases ***’ *** and not just to wrongful death cases.”).  (Emphasis sic.) 
 
We note that, effective October 20, 1994, R.C. 3937.18(A)(2) was amended 
to provide, in part:  “Underinsured motorist coverage is not and shall not be excess 
insurance to other applicable liability coverages, and shall be provided only to 
afford the insured an amount of protection not greater than that which would be 
available under the insured’s uninsured motorist coverage if the person or persons 
liable were uninsured at the time of the accident.  The policy limits of the 
underinsured motorist coverage shall be reduced by those amounts available for 
payment under all applicable bodily injury liability bonds and insurance policies 
covering persons liable to the insured.”  Am.Sub.S.B. No. 20, 145 Ohio Laws, Part 
I, 204, 210-211. 
 
After reviewing the text of Sections 7, 8, and 9 of Am.Sub.S.B. No. 20, we 
recognize that the General Assembly, through the operation of that Act, intended 
 
 
 
 
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to explicitly supersede various holdings of Savoie.  Particularly relevant to our 
consideration here is Section 8 of Am.Sub.S.B. No. 20, which provides:  “It is the 
intent of the General Assembly in amending division (A)(2) of section 3937.18 of 
the Revised Code to declare and confirm that the purpose and intent of the 114th 
General Assembly in enacting division (A)(2) of section 3937.18 in Am.H.B. 489 
was, and the intent of the General Assembly in amending section 3937.18 of the 
Revised Code in this act is, to provide an offset against the limits of the 
underinsured motorist coverage of those amounts available for payment from the 
tortfeasor’s bodily injury liability coverage.” 
 
Appellant does not specifically argue, and we observe no indication in the 
text of Am.Sub.S.B. No. 20, that the General Assembly intended amended R.C. 
3937.18(A)(2) to have retroactive effect.  R.C. 1.48 provides that “[a] statute is 
presumed to be prospective in its operation unless expressly made retrospective.”  
Although the General Assembly was crystal clear in stating its desire to supersede 
Savoie, it would have had to specifically manifest an intention for the statute to 
have retroactive effect in order for the statute to so operate.  See Nease v. Med. 
College Hosp. (1992), 64 Ohio St.3d 396, 398, 596 N.E.2d 432, 434; Van Fossen 
 
 
 
 
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v. Babcock & Wilcox Co. (1988), 36 Ohio St.3d 100, 106, 522 N.E.2d 489, 495.  
Since Am.Sub.S.B. No. 20 contains no retrospective language, amended R.C. 
3937.18(A)(2) operates only prospectively.2  Consequently, pending causes of 
action accruing prior to October 20, 1994, the effective date of Am.Sub.S.B. No. 
20, are controlled by the third syllabus paragraph of Savoie, and by the 
underinsurance statute applicable at the time of the decision in Savoie, former R.C. 
R.C. 3937.18.  See Am.Sub.H.B. No. 1, 142 Ohio Laws, Part I, 1661, 1739-1740. 
 
Our view that Am.Sub.S.B. No. 20 does not operate retrospectively is 
consistent with the way the courts of appeals have been resolving this question.  
See, e.g., United Servs. Auto. Assn. v. Mack (May 17, 1995), Clark App. No. 94-
CA-32, unreported, 1995 WL 301437; Cartwright v. Maryland Ins. Group (1995), 
101 Ohio App.3d 439, 443-444, 655 N.E.2d 827, 829-830; Finneran v. Bestor 
(Nov. 2, 1995), Cuyahoga App. No. 68774, unreported, 1995 WL 643810; 
Brocwell v. King (Oct. 24, 1995), Richland App. No. 95-25, unreported, 1995 WL 
768520, discretionary appeal not allowed (1996), 75 Ohio St.3d 1219, 665 N.E.2d 
217. 
 
 
 
 
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The case at bar affords us an opportunity to state in syllabus law what a 
majority of this court has announced indirectly through the combination of 
Savoie’s third syllabus paragraph and the concurring opinions in Hillman and 
Newman. 
 
We hold that pursuant to former R.C. 3937.18, an underinsurance claim 
must be paid when the individual covered by an uninsured/underinsured policy 
suffers damages that exceed those monies available to be paid by the tortfeasor’s 
liability carriers.  In determining the amount of underinsurance coverage to be 
paid in a situation involving an accident governed by former R.C. 3937.18, the 
underinsurance provider is entitled to set off the amounts actually recovered from 
the tortfeasor’s liability carriers against the insured’s total damages, rather than 
against its policy limits. 
 
Our holding is made for much the same reason set forth by Chief Justice 
Moyer in his concurrence in Hillman, 68 Ohio St.3d at 239, 626 N.E.2d at 74, 
wherein he stated, “[Savoie] is the law on the issue in the above-styled case.  As I 
believe all parties should receive equal application of the law announced by this 
court, *** I concur in the judgment entry.”  Since Savoie was decided in 1993, 
 
 
 
 
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trial and appellate courts across this state have been deciding cases based upon 
that decision, as clarified by Newman and Hillman and their own independent 
reasoning reaching the same result.  This is not the time to do a turnabout on the 
setoff question previously addressed and answered by this court.  To do such an 
about-face would certainly not be in the best interests of justice or promote equal 
justice under the law.  Savoie was an attempt to bring some stability and 
consistency to the state of automobile insurance law in Ohio.  The General 
Assembly has responded to Savoie; we ourselves will not now undermine our own 
established precedent.  The citizens of Ohio must have the ability to rely upon the 
holdings of this court. 
 
Given the interplay of Savoie, Am.Sub.S.B. No. 20, and this case on the 
setoff issue we decide today, we do not specifically overrule James and In re 
Nationwide.  However, to the extent they are inconsistent with the holding herein, 
those cases are disapproved. 
 
Applying our holding to the facts of this case, appellant may set off the 
amount appellees received from the tortfeasor’s liability carrier against appellees’ 
 
 
 
 
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damages.  The maximum underinsurance payment appellant is obligated to make 
to appellees is $100,000.  The judgment of the court of appeals is affirmed. 
Judgment affirmed. 
 
DOUGLAS, T. BRYANT, F.E. SWEENEY and PFEIFER, JJ., concur. 
 
MOYER, C.J., and COOK, J., dissent. 
 
THOMAS F. BRYANT, J., of the Third Appellate District, sitting for WRIGHT, 
J. 
FOOTNOTES: 
1 
R.C. 3937.18(E) provides: 
 
“In the event of payment to any person under the coverages required by this 
section and subject to the terms and conditions of such coverages, the insurer 
making such payment to the extent thereof is entitled to the proceeds of any 
settlement or judgment resulting from the exercise of any rights of recovery of 
such person against any person or organization legally responsible for the bodily 
injury or death for which such payment is made ***.” 
 
 
 
 
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2 
We specifically note that our decision in this case involves no consideration 
on the merits of any issue that may arise due to the operation of statutory changes 
brought about by Am.Sub.S.B. No. 20. 
Cole v. Holland. 
 
DOUGLAS, J., concurring.     I concur.  I do so for three separate reasons. 
 
First, on the basis of stare decisis, about which we have heard much in the past, it is 
proper to support the law announced in Savoie v. Grange Mut. Ins. Co. (1993), 67 Ohio St.3d 
500, 620 N.E.2d 809.  This is especially so since courts all across this state have been relying on 
that decision to decide cases brought before them. 
 
Second, as I said in my concurrence in Savoie, a concurrence that appears to have been 
ignored in the ongoing Savoie debate, “we should recognize * * * that un insured-motorist cases 
are different from under insured-motorist cases; that multiple-claimant cases are different from 
single-claimant cases; that cases involving wrongful death are different from those where death is 
not involved; and that cases where there is a tortfeasor liability policy are different from those 
where there is no liability policy.”  Id. at 510, 620 N.E.2d at 816.  In the case at bar, we have a 
single claimant, an insured tortfeasor, underinsured motorist coverage, and the setoff question.  
While such a case appears to fit neatly into the statute, R.C. 3937.18, it now is apparent that this 
case cannot be decided in a vacuum while ignoring the impact of such a case on related cases 
 
 
 
 
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with different fact patterns.  All one need do to see the point clearly is review all the cases 
released today and decided on the authority of Cole. 
 
Third, and maybe most important, none of this can be fully decided until we hear and 
decide those issues concerning R.C. 3937.18 as amended by Am.Sub.S.B. No. 20, 145 Ohio 
Laws, Part I, 204, which issues are now pending before this court.  This all may be unfortunate, 
but it is the best that can be done under existing circumstances. 
 
Accordingly, for the reasons stated, I concur. 
 
Cook, J., dissenting.   I respectfully dissent because former R.C. 3937.18(A)(2) can be 
read just one simple way.  “The limits of liability for an insurer providing underinsured motorist 
coverage shall be the limits of such coverage, less those amounts actually recovered under all *** 
insurance policies covering persons liable to the insured.”  This sentence, meant to delimit the 
amount of underinsurance coverage available to an injured party, never uses the word “damages.”   
The word “limits” is used twice.   Yet, the majority holds that this sentence allows the insurer  to 
set off amounts recovered from the tortfeasor’s insurer against the “insured’s total damages” 
rather than against the “limits of such [underinsured motorist] coverage.”   
 
 Whatever the tortuous route the court took in Savoie and its progeny, this case just 
cannot be legitimately decided upon recent decisional law.  To do so ignores clear statutory 
language. 
 
In Savoie, the court determined under what circumstances a tortfeasor is underinsured in 
multiple-claimant situations.  Notwithstanding the language of Savoie’s third syllabus, that case 
 
 
 
 
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did not make a specific finding that the provision authorizing the setoff against policy limits is 
ambiguous or unconstitutional.  The setoff issue was not squarely presented to the Savoie court.  
Nowhere in that decision did the court engage in a supporting analysis that negated former R.C. 
3937.18(A)(2)’s clear provision on setoffs.  The Savoie court did not cite the relevant language of 
former R.C. 3937.18(A)(2), and the noun “setoff’ appears nowhere in the Savoie opinion.   
 
Here the court had an opportunity to concede the point that, despite all the jigsawing to 
this area of the law and overlays applied in the more complex, multiple-claimant cases, the 
statute itself decides this uncomplicated case.  I regret that it did not.   
 
I would reverse the judgment of the court of appeals. 
 
MOYER, C.J., concurs in the foregoing dissenting opinion.