Title: Bellman v. Am. Internatl. Group

State: ohio

Issuer: Ohio Supreme Court

Document:

[Cite as Bellman v. Am. Internatl. Group, 113 Ohio St.3d 323, 2007-Ohio-2071.] 
 
 
 
BELLMAN, APPELLANT, v. AMERICAN INTERNATIONAL 
GROUP ET AL., APPELLEES. 
[Cite as Bellman v. Am. Internatl. Group,  
113 Ohio St.3d 323, 2007-Ohio-2071.] 
Settlements — R.C. 1343.03 — Postsettlement interest — Accrual — Interest on 
settlement accrues from date of settlement agreement, unless parties 
negotiate different date and incorporate it into agreement — Parol 
evidence may not be introduced to vary terms of written agreement — 
Postsettlement-interest claim properly brought against tortfeasor, not 
tortfeasor’s insurer. 
(No. 2005-2162 – Submitted December 12, 2006 – Decided May 16, 2007.) 
APPEAL from the Court of Appeals for Lucas County,  
No. L-03-1301, 163 Ohio App.3d 540, 2005-Ohio-5250. 
__________________ 
SYLLABUS OF THE COURT 
1. 
The date of a written settlement agreement becomes the date from which 
postsettlement interest accrues, unless the parties to such a settlement 
agreement negotiate a different due and payable date and incorporate that 
into the written settlement agreement. 
2. 
A claim for postsettlement interest is properly brought as a postdecree 
motion against the tortfeasor and properly filed in the underlying action. 
__________________ 
O’DONNELL, J. 
{¶ 1} On June 19, 2002, Kevin Bellman, together with 23 other 
claimants, filed a class action lawsuit against 21 insurance carriers alleging that 
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each had engaged in a regular practice of delaying payments on case settlements 
in an effort  to derive  financial  benefit from  the “float” on  the settlement  funds.  
“ ‘Float’ refers to the artificial balance created due to delays in processing credits 
and debits to an account.”  In re Cannon (C.A.6, 2002), 277 F.3d 838, 843, fn. 1.  
Although the record establishes that the claims presented here emanated from 
different causes of action including torts arising from motor vehicle accidents, in 
each case, the claimant and the tortfeasor or the tortfeasor’s insurance carrier 
negotiated a settlement.  However, according to the complaint, the insurance 
carriers did not issue settlement checks at that time; instead, the carriers issued 
settlement drafts and settlement agreements at a later time.  This period between 
the time of the oral agreement to settle the case and the payment date represents 
the “float.”  The complaint contained a prayer for relief seeking class action 
certification and a judgment entitling the claimants to postsettlement interest from 
the date of the oral settlements in accordance with R.C. 1343.03(A). 
{¶ 2} Although the record reflects that the claimants filed motions to 
certify the class, the trial court never certified a class, but rather, ordered the clerk 
of courts to assign a separate case number to each claimant and each cause of 
action presented in the proposed class action complaint, and further ordered that 
each individual case contain the name of a single claimant and a corresponding 
insurance carrier.  The court then set a deadline for each claimant to refile an 
individual complaint and for the carriers to file answers.  The court reserved 
judgment on the issue of class certification. 
{¶ 3} Upon refiling of the separate complaints, the court consolidated 
them for disposition.  The carriers individually moved for summary judgment, 
contending, inter alia, that the claimants named the insurance carrier instead of the 
tortfeasor as a party, that res judicata precluded some of the claims, and that the 
parol-evidence rule barred the admission of an oral statement to contradict a later 
written agreement.  The claimants maintained that because the written agreements 
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3 
did not contain integration clauses, the parol-evidence rule did not preclude 
admission of evidence of the prior oral negotiations.  They also urged that res 
judicata did not apply and that an insurance carrier would be a proper party 
because it wrongfully delayed payment of the claims.  After consideration, the 
trial court granted summary judgment in favor of the carriers and denied the 
motions for class certification. 
{¶ 4} Eight claimants appealed that determination to the Lucas County 
Court of Appeals, which affirmed the trial court’s judgment, holding that the 
written releases signed in the respective cases constituted integrated writings 
barring admission of parol evidence to contradict those writings, and further 
holding that a tortfeasor is the proper party in an action for postsettlement interest.   
{¶ 5} The appellate court’s opinion reflects that of all the original 
claimants, all but eight did not settle with their respective carriers during the trial 
and appellate proceedings.  Kevin Bellman, individually and on behalf of all 
others similarly situated, filed this appeal, and we accepted jurisdiction on two 
issues:  (1) whether parol evidence is admissible to establish a settlement date for 
purposes of calculating postsettlement interest different from the date specified in 
a written settlement agreement and (2) identification of the proper defendant in a 
claim for postsettlement interest. 
The Parol-Evidence Rule and Contract Integration 
{¶ 6} The first issue for our consideration concerns whether parol 
evidence is admissible to contradict a settlement date contained in a written 
settlement agreement.  Bellman urges that because the written releases do not 
contain an integration clause, the date of the prior oral agreements is the date of 
settlement for purposes of calculating postsettlement interest.  The carriers, citing 
Layne v. Progressive Preferred Ins. Co., 104 Ohio St.3d 509, 2004-Ohio-6597, 
820 N.E.2d 867, contend that the executed written releases in each case compose 
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the entire agreement between the parties and bar the use of parol evidence to 
contradict a later written agreement. 
{¶ 7} The parol-evidence rule is a principle of common law providing 
that “a writing intended by the parties to be a final embodiment of their agreement 
cannot be modified by evidence of earlier or contemporaneous agreements that 
might add to, vary, or contradict the writing.”  Black’s Law Dictionary (8th 
Ed.2004) 1149; see, also, Galmish v. Cicchini (2000), 90 Ohio St.3d 22, 26, 734 
N.E.2d 782, quoting 11 Williston on Contracts (4th Ed.1999) 569-570, Section 
33:4.  The rule “operates to prevent a party from introducing extrinsic evidence of 
negotiations that occurred before or while the agreement was being reduced to its 
final written form,”  Black’s Law Dictionary at 1149; see, also, Ed Schory & 
Sons, Inc. v. Francis (1996), 75 Ohio St.3d 433, 440, 662 N.E.2d 1074, and it 
“assumes that the formal writing reflects the parties’ minds at a point of 
maximum resolution and, hence, that duties and restrictions that do not appear in 
the written document * * * were not intended by the parties to survive.”  Black’s 
Law Dictionary at 1150. 
{¶ 8} We considered a similar issue in Layne, where the Progressive 
Insurance Company and Allen Layne reached an oral agreement to settle their 
lawsuit during a pretrial conference. 104 Ohio St.3d 509, 2004-Ohio-6597, 820 
N.E.2d 867.  Progressive sent Layne a settlement check and a written settlement 
agreement containing a release one week after the pretrial settlement, which 
Layne signed and returned.  The agreement contained an integration clause and 
indicated that “this release contains the entire agreement between the parties 
hereto.”  In that case Layne argued, as Bellman does here, that the date of the oral 
agreement served as the date from which to accrue interest for purposes of 
postsettlement interest calculation.  We rejected that argument because the written 
settlement agreement in Layne referenced only one date on the release.  Id. at ¶ 
11.  The settlement agreement did not reference any oral agreement, contained no 
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5 
ambiguity, and could not therefore be contradicted by evidence of a prior 
agreement.  Id. 
{¶ 9} In Layne, we also pointed out that the parties are responsible to 
negotiate and incorporate into a written agreement the dates of settlement.  We 
stated that “the parties to an oral agreement such as this one must be responsible 
for ensuring that the date of settlement, and the due and payable date, if different, 
are negotiated and agreed upon.”  Id. at ¶ 13. 
{¶ 10} While Layne is similar to the instant case, Bellman argues that it is 
distinguishable, because, unlike in Layne, the releases in the cases before us do 
not contain integration clauses.  This, however, is a distinction without a 
difference, because the written settlement agreements here purport to be complete 
documents, and because there is no ambiguity with regard to the date stated in 
them. 
{¶ 11} A contract that appears to be a complete and unambiguous 
statement of the parties’ contractual intent is presumed to be an integrated writing.  
Galmish, 90 Ohio St.3d at 27, 734 N.E.2d 782; see, e.g., Fontbank, Inc. v. 
CompuServe, Inc. (2000), 138 Ohio App.3d 801, 808, 742 N.E.2d 674.  Whether a 
contract is integrated, therefore, is not dependent upon the existence of an 
integration clause to that effect, and “[t]he presence of an integration clause 
makes the final written agreement no more integrated than does the act of 
embodying the complete terms into the writing.”  Galmish, 90 Ohio St.3d at 28, 
734 N.E.2d 782.  Therefore, the absence of an integration clause does not 
preclude a finding that all or part of a contract is, in fact, an integrated writing, 
and we need not consider whether the parties entered into an agreement to agree 
with respect to their prior oral settlement negotiations or whether those prior oral 
agreements constituted separate contracts. 
{¶ 12} In reviewing the signed releases executed here, we recognize that 
none of the parties could have followed our direction and counsel in Layne with 
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respect to negotiating the date for payment of postsettlement interest and 
incorporating it into any final settlement agreement, because negotiations had 
been completed several years before we announced our decision in Layne. 
{¶ 13} In forecasting that cases like this one would be forthcoming, 
however, Justice Pfeifer wrote in his concurring opinion in Layne about the need 
for a “permanent, workable rule” that would “recognize the role of settlements in 
the administration of justice, allow for the practical realities of paperwork, and 
encourage cases to be settled and debts paid in an orderly manner.”  Layne, 104 
Ohio St.3d 509, 2004-Ohio-6597, 820 N.E.2d 867, ¶ 16 (Pfeifer, J., concurring). 
{¶ 14} Today we adopt such a rule.  The date of a written settlement 
agreement becomes the date from which postsettlement interest accrues, unless 
the parties to such a settlement agreement negotiate a different due and payable 
date and incorporate that into the written settlement agreement.  When an 
agreement fails to incorporate a separate due and payable date, the parol-evidence 
rule assumes that the formal written agreement embodies all of the terms of the 
agreement between the parties and therefore precludes extrinsic evidence to vary 
or contradict its terms.  Thus, unless otherwise specified, a claimant is entitled to 
postsettlement interest from the date of settlement agreement until the date of 
payment.  Those who delay in forwarding settlement drafts incur postsettlement 
interest from the date of the agreement unless a different due and payable date is 
specified in the settlement agreement. 
Identification of the Proper Party for Postsettlement Interest 
{¶ 15} Bellman contends that the insurance carriers are the proper parties 
in a claim filed in accordance with R.C. 1343.03(A) because the carrier negotiated 
and settled the claim on behalf of the tortfeasor. 
{¶ 16} The carriers, on the other hand, maintain that the tortfeasor is the 
proper party despite the carriers’ involvement in the settlement. 
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{¶ 17} In Hartmann v. Duffey, 95 Ohio St.3d 456, 2002-Ohio-2486, 768 
N.E.2d 1170, syllabus, we held that “a plaintiff who enters into a settlement 
agreement that has not been reduced to judgment is entitled to interest on the 
settlement, which becomes due and payable on the date of settlement.”  
Hartmann, however, does not specify the party against whom a motion for 
postsettlement interest may be pursued. 
{¶ 18} In that regard, R.C. 1343.03(A) provides that “when money 
becomes due and payable * * * upon any settlement between parties, * * * the 
creditor is entitled to interest at the rate per annum determined pursuant to section 
5703.47 of the Revised Code.”  (Emphasis added.)  As the insurance carriers are 
not parties to the underlying suit, they are not proper respondents in a motion for 
postsettlement interest. 
{¶ 19} We confronted a related issue in Peyko v. Frederick (1986), 25 
Ohio St.3d 164, 25 OBR 207, 495 N.E.2d 918, which involved prejudgment 
interest pursuant to R.C. 1343.03(C).  In that case, we stated that “the defendant, 
individually, is ultimately responsible for payment of a judgment rendered against 
her and for payment of any prejudgment interest thereon * * * .”  Id. at 166, 25 
OBR 207, 495 N.E.2d 918.  And in Lovewell v. Physicians Ins. Co. of Ohio 
(1997), 79 Ohio St.3d 143, 145, 679 N.E.2d 1119, we again stated, “In the 
absence of statutory mandate or contractual agreement, the liability for a 
prejudgment interest award must fall upon the named party.”  (Emphasis added.) 
{¶ 20} Thus, based upon our review of R.C. 1343.03(A) and other 
relevant authority, a claim for postsettlement interest is properly brought as a 
postdecree motion against the tortfeasor and properly filed in the underlying 
action. 
{¶ 21} For the foregoing reasons, the judgment of the Sixth District Court 
of Appeals is affirmed. 
Judgment affirmed. 
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MOYER, C.J., WALSH, LUNDBERG STRATTON, O’CONNOR and WISE, JJ., 
concur. 
 
PFEIFER, J., concurs in judgment only. 
 
JAMES E. WALSH, J., of the Twelfth Appellate District, was assigned to sit 
for RESNICK, J., whose term ended on January 1, 2007. 
 
JOHN W. WISE, J., of the Fifth Appellate District, was assigned to sit for 
LANZINGER, J. 
 
CUPP, J., whose term began on January 2, 2007, did not participate in the 
consideration or decision of this case. 
__________________ 
 
Dworken & Bernstein Co., L.P.A., Patrick J. Perotti, and Melvyn E. 
Resnick; and E.J. Leizerman & Associates, L.L.C., and Michael Jay Leizerman, 
for appellant. 
Sonnenschein, Nath & Rosenthal and Alan S. Gilbert, for appellee Allstate 
Insurance Company. 
Baker & Hostetler, L.L.P., Ernest E. Vargo, Ronald S. Okada, and Brett A. 
Wall, for appellee Progressive Insurance Company. 
Baker & Hostetler, L.L.P., Mark A. Johnson, and Roger L. Eckleberry, for 
appellee State Farm Mutual Automobile Insurance Company. 
Hanna, Campbell & Powell, L.L.P., Frank G. Mazgaj, and Robert L. 
Tucker, for appellee Grange Mutual Casualty Company. 
Porter, Wright, Morris & Arthur, L.L.P., Charles W. Zepp, and Daniel F. 
Gourash, for appellee Great Northern Insurance Company. 
Ritter, Robinson, McCready & James and Shannon J. George, for appellee 
Safe Auto Insurance Company. 
Zeiger, Tigges, Little & Lindsmith, L.L.P., John W. Zeiger, Steven W. 
Tigges, and Stuart G. Parsell, for appellee State Automobile Mutual Insurance 
Company. 
January Term, 2007 
9 
Roetzel & Andress, Laura M. Faust, Jennifer Souza, and Bradley A. 
Wright, for appellee Leader Insurance Company. 
______________________