Title: Hillyer v. State Farm Fire & Cas. Co.

State: ohio

Issuer: Ohio Supreme Court

Document:

[Cite as Hillyer v. State Farm Fire & Cas. Co., 97 Ohio St.3d 411, 2002-Ohio-6662.] 
 
 
HILLYER, APPELLANT, v. STATE FARM FIRE & CASUALTY COMPANY, 
APPELLEE. 
LEMM ET AL., APPELLANTS, v. THE HARTFORD, APPELLEE. 
PANOZZO, APPELLANT, v.  ALLSTATE INSURANCE COMPANY, APPELLEE. 
BURNETT, APPELLANT, v. AMEX ASSURANCE COMPANY ET AL., APPELLEES. 
[Cite as Hillyer v. State Farm Fire & Cas. Co., 97 Ohio St.3d 411, 2002-Ohio-
6662.] 
Insurance — Motor vehicles — Uninsured/underinsured motorist coverage — 
Limited liability coverage that may arise under the residence-employee 
exception in a homeowner’s insurance policy is insufficient to transform 
the policy into a motor vehicle policy for purposes of former R.C. 
3937.18(A). 
(Nos. 2001-1474 and 2001-1867 — Submitted October 15, 2002 — Decided 
December 13, 2002.) 
APPEAL from and CERTIFIED by the Court of Appeals for Cuyahoga County, No. 
79176. 
(No. 2001-1786 — Submitted October 15, 2002 — Decided December 13, 2002.) 
CERTIFIED by the Court of Appeals for Franklin County, No. 01AP-251. 
(No. 2001-1955 — Submitted October 15, 2002 — Decided December 13, 2002.) 
APPEAL from the Court of Appeals for Cuyahoga County, No. 79083. 
(No. 2001-1977 — Submitted October 15, 2002 — Decided December 13, 2002.) 
APPEAL from the Court of Appeals for Cuyahoga County, No. 79082. 
__________________ 
 
LUNDBERG STRATTON, J. 
Hillyer v. State Farm, Nos. 2001-1474 and 2001-1867 
SUPREME COURT OF OHIO 
2 
{¶1} 
On 
November 
6, 
1994, 
Christina 
Hillyer, 
daughter 
of 
plaintiff/appellant, Martin Hillyer, was a passenger in a vehicle when she was 
fatally injured in an accident.  Martin Hillyer filed a claim for uninsured (“UIM”) 
coverage under a homeowner’s policy issued to him by defendant/appellee, State 
Farm Fire and Casualty Company.  When State Farm denied the claim, Hillyer 
filed this action for declaratory judgment.  Hillyer asserted that the residence-
employee exception to the policy exclusions qualified the policy as a motor 
vehicle liability insurance policy.  Therefore, according to Hillyer, State Farm had 
been obligated under R.C. 3937.18(A) to offer UIM coverage as part of the 
policy.  Because State Farm had not offered the coverage, he asserts, it exists as a 
matter of law. 
{¶2} 
The trial court awarded summary judgment to State Farm, and the 
Eighth District Court of Appeals affirmed.  The appellate court, relying on 
Davidson v. Motorists Mut. Ins. Co. (2001), 91 Ohio St.3d 262, 744 N.E.2d 713, 
held that the policy at issue provided only incidental automobile liability 
coverage, which was not enough to invoke the requirement of R.C. 3937.18(A).  
The court of appeals subsequently determined that its decision was in conflict 
with Wodrich v. Farmers Ins. of Columbus, Inc. (May 21, 1999), Greene App. 
No. 98CA103, 1999 WL 317448. 
{¶3} 
This cause is now before this court upon our determination that a 
conflict exists (case No. 2001-1867), and pursuant to the allowance of a 
discretionary appeal (case No. 2001-1474). 
Lemm v. The Hartford, No. 2001-1786 
{¶4} 
On March 21, 1997, plaintiffs/appellants, Ernest and Alice M. 
Lemm, were injured in an automobile accident.  The Lemms settled with the 
tortfeasor’s liability insurance carrier for the policy limits.  Thereafter, the Lemms 
sought UIM coverage through their homeowner’s policy issued by The Hartford.  
When The Hartford denied the claim, the Lemms filed for declaratory relief. 
January Term, 2002 
3 
{¶5} 
The trial court granted summary judgment to the plaintiffs, 
declaring that UIM coverage existed under the homeowner’s policy as a matter of 
law.  The appellate court upheld the summary judgment award, specifically 
finding that the homeowner’s policy issued by The Hartford was a motor vehicle 
liability policy subject to the requirements of former R.C. 3937.18.  The appellate 
court, relying on Selander v. Erie Ins. Group (1999), 85 Ohio St.3d 541, 709 
N.E.2d 1161, concluded that the policy expressly provided liability coverage 
arising from the use of automobiles subject to motor vehicle registration and used 
on public highways. 
{¶6} 
The Franklin County Court of Appeals found that its decision was 
in conflict with Davis v. Shelby Ins. Co. (2001), 144 Ohio App.3d 468, 760 
N.E.2d 855.  Although the Lemms want the judgment upheld, they first filed here 
the order certifying a conflict.  They are therefore “considered the appellant[s]” 
under S.Ct.Prac.R. IV(1). 
{¶7} 
This cause is now before this court upon our determination that a 
conflict exists. 
Panozzo v. Allstate Insurance Co., No. 2001-1955 
{¶8} 
On January 28, 1988, plaintiff/appellant, James Panozzo, was 
injured when he was struck by a vehicle driven by an uninsured motorist.  He 
sought uninsured motorist (“UM”) coverage under his homeowner’s policy issued 
by Allstate.  Allstate denied the claim.  Panozzo filed this action for declaratory 
judgment.  The trial court held that the policy in question was not a motor vehicle 
liability policy for purposes of R.C. 3937.18.  Therefore, the court held, Allstate 
had not been required to provide UM coverage, and there was no coverage as a 
matter of law.  The court awarded summary judgment to Allstate.  The court of 
appeals affirmed. 
{¶9} 
This cause is now before this court pursuant to the allowance of a 
discretionary appeal. 
SUPREME COURT OF OHIO 
4 
Burnett v. AMEX Assurance Co., No. 2001-1977 
{¶10} On July 27, 1997, plaintiff/appellant, Dorothy D. Burnett, was 
struck and injured by an automobile.  She collected benefits under the tortfeasor’s 
liability policy and also UIM benefits under her own motor vehicle policy. 
{¶11} Burnett subsequently filed this action for UIM benefits under her 
tenant’s policy issued by defendant/appellee AMEX Assurance Company, 
claiming that benefits arose as a matter of law.  The trial court awarded summary 
judgment in favor of the defendant.  The court of appeals, relying on its decision 
in Hillyer v. State Farm Fire & Cas. Co. (Aug. 2, 2001), Cuyahoga App. No. 
79176, 2001 WL 898424, affirmed. 
{¶12} This cause is now before this court pursuant to the allowance of a 
discretionary appeal. 
Analysis 
{¶13} In each of these cases, the appellant is seeking UM/UIM coverage 
under the residence-employee clause of a homeowner’s policy.  Appellants 
contend that the homeowner’s policies expressly provide automobile liability 
coverage against liability to residence employees injured in the course of 
employment, making them motor vehicle policies for purposes of former R.C. 
3937.18.  Because UM/UIM coverage was not offered, the appellants assert that it 
must be provided as a matter of law.  For the reasons that follow, we hold that a 
residence-employee clause in an insurance policy that provides coverage 
incidental to home ownership does not convert the policy into a motor vehicle 
policy subject to the mandates of former R.C. 3937.18.1 
{¶14} Former R.C. 3937.18 provided that “[n]o automobile liability or 
motor vehicle liability policy of insurance insuring against loss resulting from 
liability imposed by law for bodily injury or death suffered by any person arising 
January Term, 2002 
5 
out of the ownership, maintenance, or use of a motor vehicle shall be delivered or 
issued for delivery in this state with respect to any motor vehicle registered or 
principally garaged in this state” unless both uninsured and underinsured motorist 
coverages are provided.2 
{¶15} Therefore, the issue is whether these insurance policies constitute 
motor vehicle liability policies for purposes of former R.C. 3937.18.  Our analysis 
begins with the language of the insurance contract.  Davidson v. Motorists Mut. 
Ins. Co., 91 Ohio St.3d at 264, 744 N.E.2d 713. 
{¶16} Each of the four policies at issue is labeled a homeowner’s policy 
or an analogous tenant’s policy.3  We will refer to all of them generally as 
homeowner’s policies.  This title, however, is not determinative, because it is the 
type of coverage provided, not the label affixed by the insurer, that determines the 
type of policy.  Selander v. Erie Ins., 85 Ohio St.3d at 545, 709 N.E.2d 1161.  
Therefore, we look at the contents of the policies for the type of coverage they 
provide. 
{¶17} Each policy at issue expressly insures against property damage to 
personal property owned or used by the insured.  This coverage, however, 
expressly excludes motor vehicles that are licensed for use on public highways.4  
Each policy also insures against personal liability of the insured for accidents or 
injuries.  This coverage, however, expressly excludes liability for bodily injury or 
                                                                                                                   
1. 
Our analysis of the issues presented in the discretionary appeals disposes of the two 
certified questions. 
2. 
The quoted language of subsection (A) was in effect when all the policies in these cases 
were issued.  1987 Am.Sub.H.B. No. 1, 142 Ohio Laws, Part I, 1739-1740;  1994 Am.Sub.S.B. 
No. 20, 145 Ohio Laws, Part I, 210.  R.C. 3937.18 has since been amended effective September 3, 
1997, to apply only to umbrella policies or policies that serve as proof of financial responsibility.  
Former R.C. 3937.18(L), Am.Sub.H.B. No. 261, 147 Ohio Laws, Part II, 2372, 2377. 
3. 
Dorothy Burnett’s policy was a so-called tenant’s form of a homeowner’s insurance 
policy and also includes the residence-employee exception that is at issue. 
4. 
Throughout the opinion, we shall refer to the State Farm policy issued to the Hillyers.  
The language in the policies belonging to the other plaintiffs is substantially similar.  Because of 
the similarity, and for the sake of brevity, we will not repeat the language from each policy. 
SUPREME COURT OF OHIO 
6 
property damage arising out of intentional or willful acts, business pursuits, and 
“damage arising out of the ownership, maintenance, use, loading or unloading of 
* * * a motor vehicle owned or operated by or rented or loaned to any insured.” 
{¶18} The policy makes an exception from these exclusions for liability 
to residence employees.  The “residence employee” is defined as “an employee of 
an insured who performs duties, including household or domestic services, in 
connection with the maintenance or use of the residence premises.  This includes 
employees who perform similar duties elsewhere for you.  This does not include 
employees while performing duties in connection with the business of an 
insured.”  The exception states, “This exclusion does not apply to bodily injury to 
a residence employee arising out of and in the course of the residence employee’s 
employment by an insured.” 
{¶19} Appellants contend that, like the policy at issue in Selander, the 
policies at issue here provide express liability coverage against liability to 
residence employees who are injured by automobiles in the scope and course of 
their employment.  In Selander, the general business policy provided liability 
coverage in limited form for hired, nonowned vehicles.  According to the 
appellants, the residence-employee clauses subject these policies to former R.C. 
3937.18 because “[w]here motor vehicle liability coverage is provided, even in 
limited form, uninsured/underinsured coverage must be provided.”  Selander v. 
Erie Ins., 85 Ohio St.3d at 544, 709 N.E.2d 1161. 
{¶20} The defendants, however, contend that Davidson v. Motorists Mut. 
Ins. Co. applies because the motor vehicle liability coverage in these policies, like 
that in Davidson, is remote and incidental.  Davidson held that the mere fact that a 
policy affords some incidental liability coverage for certain motor vehicles not 
subject to registration and not for use on public highways does not convert the 
policy into a motor vehicle liability policy for purposes of UM/UIM coverage.  91 
Ohio St.3d at 270, 744 N.E.2d 713.  Defendants contend that these policies do not 
January Term, 2002 
7 
generally provide coverage for motor vehicles.  The residence-employee 
exception merely extends liability coverage for accidents involving an employee 
who is injured in the course of domestic employment.  Thus, the coverage arises 
because of the employee’s employment by the insured homeowner, not because a 
motor vehicle is involved. 
{¶21} In Davidson, we distinguished Selander by focusing on the type of 
coverage each policy provided.  Selander involved a business liability policy 
issued to a partnership.  The policy generally excluded coverage for automobiles; 
however, it provided some automobile liability coverage for claims of vicarious 
liability arising from the use of unspecified hired or nonowned vehicles used in 
the course of the business.  Because the business policy provided some liability 
coverage in limited circumstances, we held that UM/UIM coverage must be 
provided.  Selander, 85 Ohio St.3d at 544-545, 709 N.E.2d 1161.  The policy in 
Davidson was a homeowner’s policy that excluded liability coverage resulting 
from the use of motor vehicles generally, but provided some limited motor 
vehicle liability coverage for a narrow class of motor vehicles excepted from the 
policy’s general exclusions.  Id., 91 Ohio St.3d at 267, 744 N.E.2d 713. 
{¶22} The appellants argue that Davidson should be distinguished on the 
basis that it involved recreational motor vehicles not subject to registration and for 
use off public roads.  They contend that because the residence-employee 
provision covers standard motor vehicles, it should be compared to Selander.  
However, the descriptive factors in Davidson—whether the vehicle was subject to 
registration and designed for use on a public road—did not alone support our 
opinion in Davidson or differentiate it from Selander.  We looked to the type of 
coverage each policy provided.  The appellate court in Lemm v. The Hartford 
(Oct. 4, 2001), Franklin App. No. 01AP-251, 2001 WL 1167585, misinterpreted 
our use of the word “incidental” in Davidson.  The coverage in Davidson was not 
incidental merely because it involved recreational vehicles.  Instead, it was 
SUPREME COURT OF OHIO 
8 
incidental primarily because coverage of those vehicles was remote from and 
insignificant to the type of overall coverage the policy provided.  Plaintiffs’ 
narrow perspective misses the point. 
{¶23} Like the policy in Davidson, the policies at issue expressly exclude 
liability coverage for injuries arising from the use of motor vehicles.  The 
residence-employee exception allows liability coverage when an employee is 
injured in any manner while in the course of employment, whether or not a motor 
vehicle is involved.  If coverage arises under this exception, it is because the 
residence employee was injured, not because a motor vehicle was involved.  The 
use of a motor vehicle is merely incidental to coverage against liability to the 
residence employee.  Therefore, we hold that Davidson applies. 
{¶24} We agree with the analysis of the Cuyahoga County Court of 
Appeals in Panozzo v. Allstate Ins. Co. (Sept. 13, 2001), Cuyahoga App. No. 
79083, 2001 WL 1075772, that “the defining characteristic of coverage is the 
person injured [the residence employee], not the fact that a motor vehicle was 
involved.”  “[T]he fact that an automobile may be involved is incidental to 
coverage * * *.”  Id.  Therefore, the policies at issue are not subject to the 
requirement of former R.C. 3937.18(A). 
{¶25} This result comports with R.C. 4509.01 et seq., Ohio’s motor 
vehicle financial-responsibility statute.  The policies at issue were not intended to 
satisfy the statutory requirement of financial responsibility against liability arising 
from the ownership or operation of vehicles used for transportation on the 
highway.  See Delli Bovi v. Pacific Indemn. Co. (1999), 85 Ohio St.3d 343, 345, 
708 N.E.2d 693.  “Common sense alone dictates that neither the insurer nor the 
insured bargained for or contemplated that such homeowner’s insurance would 
cover personal injuries arising out of an automobile accident that occurred on a 
highway away from the insured’s premises.”  Davidson, 91 Ohio St.3d at 269, 
744 N.E.2d 713. 
January Term, 2002 
9 
{¶26} We find that the limited liability coverage that may arise under the 
residence-employee exception in a homeowner’s insurance policy is insufficient 
to transform the policy into a motor vehicle policy for purposes of former R.C. 
3937.18(A).  Consequently, we affirm the judgments of the court of appeals in 
Hillyer, Panozzo, and Burnett v. AMEX Assur. Co. (Sept. 13, 2001), Cuyahoga 
No. 79082, 2001 WL 1110335.  We reverse the judgment of the court of appeals 
in Lemm and remand for proceedings consistent with this opinion. 
Judgments accordingly. 
 
MOYER, C.J., concurs. 
 
DOUGLAS, RESNICK, F.E. SWEENEY, PFEIFER and COOK, JJ., concur in 
judgment only. 
__________________ 
 
Friedman, Domiano & Smith Co., L.P.A., Stephen S. Vanek and Jeffrey 
H. Friedman, for appellant in case Nos. 2001-1474 and 2001-1867. 
 
Davis & Young, Henry A. Hentemann and J. Michael Creagan, for 
appellee in case Nos. 2001-1474 and 2001-1867. 
 
Frank E. Todaro, for appellants in case No. 2001-1786. 
 
Jones, Day, Reavis & Pogue and Jeffrey S. Sutton, for appellee in case No. 
2001-1786. 
 
Robert W. Kerpsack Co., L.P.A., and Robert W. Kerpsack, urging reversal 
for amicus curiae Ohio Academy of Trial Lawyers in case No. 2001-1786. 
 
Ulmer & Berne, L.L.P., and Alexander M. Andrews, urging reversal for 
amicus curiae National Association of Independent Insurers in case No. 2001-
1786. 
 
Bricker & Eckler, L.P.A., Kurtis A. Tunnell, Anne Marie Sferra and 
Robert Katz, urging reversal for amicus curiae American Insurance Association in 
case No. 2001-1786. 
SUPREME COURT OF OHIO 
10 
 
Betty D. Montgomery, Attorney General, and Ann E. Henkener, Assistant 
Attorney General, urging reversal for amicus curiae Ohio Department of 
Insurance in case No. 2001-1786. 
 
David L. Jarrett, urging reversal for amicus curiae Western Reserve Group 
in case No. 2001-1786. 
 
Keener, Doucher, Curley & Patterson, W. Charles Curley and Jenifer J. 
Murphy, urging reversal for amicus curiae Municipal Mutual Insurance Company 
in case No. 2001-1786. 
 
Bashein & Bashein Co., L.P.A., and W. Craig Bashein; Paul W. Flowers 
Co., L.P.A., and Paul W. Flowers, for appellant in case No. 2001-1955. 
 
Keller & Curtin Co., L.P.A., and Stanley S. Keller; Ross & Hardies and 
Peter J. Valeta, for appellee in case No. 2001-1955. 
 
Bashein & Bashein Co., L.P.A., and W. Craig Bashein; Paul W. Flowers 
Co., L.P.A., and Paul W. Flowers, for appellant in case No. 2001-1977. 
 
Reminger & Reminger Co., L.P.A., Clifford C. Masch and Erin 
Stottlemyer Gold, for appellee in case No. 2001-1977. 
__________________