Title: Stockberger v. Henry

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Stockberger v. Henry, Slip Opinion No. 2012-Ohio-5392.] 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in 
an advance sheet of the Ohio Official Reports.  Readers are requested 
to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 
65 South Front Street, Columbus, Ohio 43215, of any typographical or 
other formal errors in the opinion, in order that corrections may be 
made before the opinion is published. 
 
SLIP OPINION NO. 2012-OHIO-5392 
STOCKBERGER ET AL., APPELLANTS, v. HENRY, APPELLEE. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Stockberger v. Henry, Slip Opinion No. 2012-Ohio-5392.] 
Taxation—Restrictions on use of motor vehicle taxes and fuel taxes—Ohio 
Constitution, Article XII, Section 5a—Insurance premiums attributable to 
operation of county engineer’s highway department. 
 (No. 2011-0859—Submitted March 21, 2012—Decided November 27, 2012.) 
APPEAL from the Court of Appeals for Knox County, 
No. 10CA000018, 196 Ohio App.3d 153, 2011-Ohio-1710. 
__________________ 
 
CUPP, J. 
{¶ 1} In this appeal, we must determine whether Article XII, Section 5a 
of the Ohio Constitution permits the use of motor vehicle and gas tax (“MVGT”) 
funds to pay those costs of a county’s joint self-insurance pool attributable to 
covering the risk of liability and loss resulting from the operations of a county 
engineer’s highway department.  For the reasons that follow, we conclude that the 
use of MVGT funds to pay the costs of the joint self-insurance pool attributable to 
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a county engineer’s highway department is permitted by Article XII, Section 5a of 
the Ohio Constitution. 
I.  Facts and Procedural History 
A. Knox I 
{¶ 2} The issue involved in this case was before us previously in Knox 
Cty. Bd. of Commrs. v. Knox Cty. Engineer, 109 Ohio St.3d 353, 2006-Ohio-
2576, 847 N.E.2d 1206 (“Knox I”).  We adopt and incorporate the facts from 
Knox I into this opinion. 
{¶ 3} In Knox I, the Knox County engineer appealed the Fifth District 
Court of Appeals’ decision that the Ohio Constitution did not prohibit payment of 
the engineer’s share of the County Risk Sharing Authority (“CORSA”) liability-
insurance premiums out of MVGT funds, because that expense was a “cost of 
operation” of the engineer’s office within the meaning of R.C. 315.12.1  Id. at ¶ 1-
2.  Therefore, the issue in Knox I was whether the engineer’s share of the 
premiums constituted a cost of operating the engineer’s office, pursuant to R.C. 
315.12(A) and thus was not precluded by the restriction on the expenditure of 
MVGT funds in Article XII, Section 5a of the Ohio Constitution.  Id. at ¶ 8-9. 
{¶ 4} We began our analysis in Knox I by reaffirming the principle 
established in Grandle v. Rhodes, 169 Ohio St. 77, 157 N.E.2d 336 (1959), that 
“ ‘Section 5a, Article XII of the Constitution of Ohio closely restricts the 
expenditure of the fees and taxes received in relation to vehicles using the public 
highways to purposes directly connected with the construction, maintenance and 
                                                          
 
1 R.C. 315.12(A) states:  
 
 
Two thirds of the cost of operation of the office of county engineer, 
including the salaries of all of the employees and the cost of maintenance of 
such office as provided by the annual appropriation made by the board of county 
commissioners for such purpose, shall be paid out of the county's share of the 
fund derived from the receipts from motor vehicle licenses, as distributed under 
section 4501.04 of the Revised Code, and from the county’s share of the fund 
derived from the motor vehicle fuel tax as distributed under section 5735.27 of 
the Revised Code.   
January Term, 2012 
3 
 
repair of highways and the enforcement of traffic laws * * * .’ (Emphasis sic.)”  
Knox I at ¶ 10, quoting Grandle at syllabus.  Accordingly, “[d]espite the mandate 
of R.C. 315.12(A) that two-thirds of the cost of operation of the engineer’s office 
shall be paid from [MVGT] funds,” the expenditure of those funds by the 
engineer “is constitutionally restricted, [and he] may expend these moneys only 
for the purposes listed in Section 5a, Article XII of the Constitution or purposes 
directly connected thereto.”  Id. at ¶ 11. 
{¶ 5} We concluded that there was no evidence that established that the 
“CORSA insurance premiums [were] for a highway purpose or [were] directly 
connected with construction, maintenance, and repair of the highways or the 
enforcement of traffic laws.”  Id.  However, we did note that “if the record 
contained evidence that the CORSA premiums pertained to highway purposes or 
were directly related thereto, * * * our outcome might not be the same.”  Id. 
B. Events after Knox I 
 
1. 2007-2008 Knox County CORSA Premium 
{¶ 6} CORSA provided the Knox County commissioners with the 2007-
2008 Memorandum of Coverage.  The memorandum outlined the types of 
coverage that applied to Knox County:  general liability, law-enforcement 
liability, automobile liability, errors and omissions liability, excess liability, 
property, equipment breakdown, and crime.  Each type of coverage does not 
apply to every Knox County office or department. 
{¶ 7} CORSA’s actuary calculated the premiums for the coverages.  The 
premiums comprised three types of program costs:  loss-fund contributions, 
reinsurance cost, and administration cost.  Knox County’s loss-fund contributions 
were determined based on its exposures and loss experience.  Exposure is the 
measure of risk based upon the county’s property values, payroll, and the number 
of county vehicles, deputies, and inmates.  Loss experience is the individual 
county’s loss history for the previous five years. 
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2. Commissioners’ Invoice to the Engineer 
{¶ 8} In June 2007, the commissioners sent to the engineer an invoice for 
the portion of the 2007-2008 Knox County CORSA premium allocated to the 
engineer’s highway department.  This allocated portion was only for the following 
coverages:  general liability, public officials’ liability, automobile liability and 
physical damage, and property.  The engineer’s allocated portion for each type of 
coverage was calculated using a formula developed by CORSA under the 
direction of its actuary. 
 
3. General Liability Coverage and Public Officials’ Liability Coverages 
{¶ 9} With respect to calculating the general liability coverage and 
public officials’ liability coverage, the portion of the engineer’s payroll that was 
paid from MVGT funds was divided by the total county payroll.  The resulting 
percentage was multiplied by the CORSA premiums for the general liability 
coverage and public officials’ liability coverage.  The result was the engineer’s 
allocated portion for each of these coverages   
{¶ 10} General liability coverage provides coverage for personal injury 
and property damage caused by negligent acts of the engineer and his employees.  
Injury to a motorist resulting from the failure to properly maintain a road in a safe 
condition is an example of a covered event. 
{¶ 11} Public officials’ liability coverage provides insurance coverage for 
claims alleging errors in judgment or decision-making or violations of civil rights 
of employees or third parties.  Employment conduct such as discrimination, 
wrongful termination, and sexual harassment involving the engineer’s  employees 
are examples of covered events. 
 
4. Automobile Liability and Physical-Damage Coverage 
{¶ 12} The engineer’s allocated portion of the automobile liability and 
physical-damage coverage was obtained by dividing the number of the engineer’s 
vehicles purchased with MVGT funds and used for a highway purpose by the 
January Term, 2012 
5 
 
total number of county vehicles to obtain a percentage.  The total amount of the 
CORSA premium for Knox County’s automobile liability and physical-damage 
coverage was then multiplied by the resulting percentage.  This yielded the 
engineer’s allocated share of this premium. 
{¶ 13} The automobile liability and physical-damage coverage provides 
insurance coverage for personal injury and property damage caused by the 
engineer’s vehicles operated by the engineer and his employees.  An engineer’s 
vehicle striking another vehicle, causing personal injury to third parties, and 
property damage to vehicles owned by third parties is an example of a covered 
event.  Additionally, it provides coverage for damage to the engineer’s vehicles.  
Examples of covered events include damage to the engineer’s vehicles due to 
collisions with fixed objects or animals and damage by fire, windstorm, or 
vandalism. 
 
5. Property Coverage 
{¶ 14} The last component of the CORSA coverage of the engineer’s 
highway department is the property coverage.  The engineer’s property values 
were divided by the total county property values.  The total CORSA premium for 
Knox County’s property coverage was multiplied by the resulting percentage.  
This product was the engineer’s allocated portion of this premium.  The 
engineer’s property values included buildings used by the engineer for 
maintenance of vehicles and equipment used on the highway and to maintain 
roads and bridges.  Also included was the value of the road equipment, such as 
backhoes and graders, used to maintain roads and bridges. 
{¶ 15} Buildings, contents, and unlicensed off-road equipment that are 
damaged by a covered event are covered by the property coverage.  Covered 
events include fire, windstorm, crime, and flood. 
 
 
SUPREME COURT OF OHIO 
 
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6. Engineer’s Refusal 
{¶ 16} The engineer refused to authorize payment of the invoice from the 
MVGT funds.  He argued that the allocated portion of the annual CORSA 
premiums was not directly connected to a highway purpose. 
 
7. Litigation 
{¶ 17} The commissioner sued the engineer, seeking a declaration that the 
invoice sent to the engineer for the engineer’s allocated portion of the county’s 
2007-2008 CORSA premiums represented an expenditure for a highway purpose 
or was directly connected with highway purposes and thus properly payable from 
MVGT funds. 
{¶ 18} A bench trial was held.  The trial court held that the CORSA 
premium was directly connected to a highway purpose and could constitutionally 
be paid from MVGT funds. 
{¶ 19} On appeal, the Fifth District Court of Appeals reversed, holding 
that the commissioners had not presented sufficient evidence to establish a direct 
nexus between the CORSA premiums and a highway purpose. 196 Ohio App.3d 
153,  2011-Ohio-1710, 962 N.E.2d 828, ¶ 61. 
{¶ 20} We accepted the commissioners’ appeal under our discretionary 
jurisdiction to review whether Article XII, Section 5a authorizes the use of 
MVGT funds “to defray a county’s cost of participating in a joint self-insurance 
pool attributable to covering the risk of liability and loss resulting from the 
operations of a county engineer’s highway department.”  129 Ohio St.3d 1474, 
2011-Ohio-4751, 953 N.E.2d 841.  For the reasons that follow, we hold that the 
use of MVGT funds to pay for a county’s cost of participating in a joint self-
insurance pool to the extent reasonably attributable to covering the risk of liability 
and loss resulting from the operations of a county engineer’s highway department 
is authorized by Article XII, Section 5a of the Ohio Constitution. 
 
 
January Term, 2012 
7 
 
II.  Article XII, Section 5a 
{¶ 21} Article XII, Section 5a states:  
 
 
No moneys derived from fees, excises, or license taxes 
relating to registration, operation, or use of vehicles on public 
highways, or to fuels used for propelling such vehicles, shall be 
expended for other than costs of administering such laws, statutory 
refunds and adjustments provided therein, payment of highway 
obligations, costs for construction, reconstruction, maintenance 
and repair of public highways and bridges and other statutory 
highway purposes, expense of state enforcement of traffic laws, 
and expenditures authorized for hospitalization of indigent persons 
injured in motor vehicle accidents on the public highways. 
 
III.  Analysis 
{¶ 22} We have examined a number of challenges to the expenditure of 
MVGT funds for various purposes.  Our previous decisions have not limited the 
use of MVGT funds to expenses of physical construction, maintenance, and repair 
of highways and bridges.  We have held that MVGT funds may be expended to 
pay for the study of a turnpike project, Kauer v. Defenbacher, 153 Ohio St. 268, 
91 N.E.2d 512 (1950),  paragraph six of the syllabus, the lighting of urban 
portions of limited-access highways, State ex rel. Walter v. Vogel, 169 Ohio St. 
368, 372, 159 N.E.2d 892 (1959), the purchase of whole tracts of land for 
constructing a highway, even though only a part thereof might be used for the 
highway and the remainder sold for commercial or private use, State ex rel. 
Preston v. Ferguson, 170 Ohio St. 450, 462-463, 166 N.E.2d 365 (1960), and, 
most relevant here, the health-insurance premiums for the engineer’s highway-
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department employees,  Madden v. Bower, 20 Ohio St.2d 135, 254 N.E.2d 357 
(1969). 
{¶ 23} Whether Article XII, Section 5a authorizes the expenditure of 
MVGT funds for the engineer’s highway department’s allocated portion of the 
CORSA premium is guided by our analysis in Madden.  In Madden, the issue was 
whether the cost of health-insurance premiums for the employees of the county 
engineer’s highway department could properly be paid from MVGT funds.  We 
determined that the highway-department employees were directly connected to a 
highway purpose by virtue of the work they performed.  Id. at paragraph two of 
the syllabus.  Because the work of the employees was in furtherance of the 
purposes for which the MVGT funds could be constitutionally expended, the 
health-insurance premiums could also be properly paid with the MVGT funds. 
{¶ 24} The operations of the engineer’s highway department have an 
inherent risk.  This risk cannot be separated from the highway department’s 
operations and is thus directly connected to a highway purpose.  The evidence 
establishes that the CORSA premiums recognize this risk of loss inherent in the 
operation, activities, and duties of the engineer that are directly connected to the 
construction, maintenance, and repair of the highways or the enforcement of 
traffic laws, in the calculation of the premium.  Moreover, the above examples of 
claims covered by the four types of coverages demonstrate that the inherent risk 
of loss of the engineer’s highway department’s operations is included in the 
coverages.  Consequently, just as the health-insurance premiums provided 
coverage to the employees whose jobs were directly connected to a highway 
purpose, the CORSA premiums similarly provide coverage for the inherent risk 
directly connected to the construction, maintenance, and repair of the highways or 
the enforcement of traffic laws. 
{¶ 25} Moreover, the manner in which a county decides to ameliorate that 
risk, whether by being self-insured, purchasing its own insurance policy, or 
January Term, 2012 
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joining the CORSA risk pool, does not alter the directness of the connection.  
Rather, it merely represents a level of risk of financial exposure that the 
commissioners are willing to have their county assume.  
{¶ 26} The engineer argues that the prospective nature of the coverage, 
covering possible future payments of any county’s loss, rather than 
reimbursements for the actual past costs incurred specifically by the highway 
department, undermines any finding that the premiums are directly connected.  
However, the health-insurance premiums in Madden were also prospective in 
nature, collected to cover future health-related claims.  Further, in State ex rel. 
Preston, we rejected an argument that the purchase of land for the prospective 
development of a highway stripped the acquisition of its highway-purpose status.  
170 Ohio St. at 461-462, 166 N.E.2d 365. 
{¶ 27} Additionally, the engineer maintains that CORSA protects not only 
the highway department and its employees but also any department and employee 
of Knox County.  The engineer contends that if he does not suffer a loss, and 
another department does, the MVGT money paid by the engineer will benefit 
those other departments rather than only the directly connected costs attributable 
to highway purposes, as explicitly required by Article XII, Section 5a. 
{¶ 28} We are not persuaded by this argument.  This same concern was 
present in the payment of health-insurance premiums.  The highway- department 
employees’ premiums were not to be set aside to pay only those health-related 
claims incurred by the engineer’s employees.  Instead, the health-insurance 
premiums paid by MVGT funds were to be placed in a pool and mingled with the 
premiums paid by other county departments.  Therefore, just as the engineer 
argues currently, the premiums paid with MVGT funds may have paid the claim 
of county employees other than employees of the engineer, thus benefiting 
another department. 
SUPREME COURT OF OHIO 
 
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{¶ 29} Madden and State ex rel. Preston teach us that the focus of our 
inquiry is on whether the item for which the MVGT funds are being expended is 
directly connected to a highway purpose.  In State ex rel. Preston, we held that 
MVGT funds could be expended to purchase land for the construction of a 
highway because the land was directly related to a highway purpose.  170 Ohio 
St. 450, 462-463, 166 N.E.2d 365.  The fact that the remainder of the land not 
used for the construction of the highway could be sold “to private individuals for 
commercial or private use” did not remove the purchase’s direct connection to a 
highway purpose.  Id.  Similarly, since the CORSA premiums are to mitigate the 
inherent risk that is directly related to a highway purpose, Article XII, Section 5a 
is not violated.  How the funds may be expended by CORSA does not alter the 
premium’s direct connection to a highway purpose. 
{¶ 30} There is a significant difference between health insurance and 
CORSA coverage—the manner in which claims are incurred.  While health-
related claims may be incurred because of an injury or illness that resulted from 
the employee’s duties with the highway department, claims are not so limited.  In 
contrast, the engineer’s highway department’s allocated portion of the annual 
CORSA premiums provides coverage only for those covered events that arise 
from the risks directly connected to a highway purpose.  This fact provides even 
greater support for concluding that Article XII, Section 5a authorizes the 
expenditure of MVGT funds for the allocated premiums. 
{¶ 31} Next, we address whether the evidence presented by the 
commissioners establishes that the allocated portion sought to be paid for with 
MVGT funds is solely for that portion of the CORSA premiums attributable to the 
highway operations of the engineer and does not include that portion of the 
CORSA premium attributable to the engineer’s nonhighway activities.  We 
conclude that it does. 
January Term, 2012 
11 
 
{¶ 32} In Madden, we approved proportionality as an acceptable method 
to determine how much of the county employees’ group health-insurance 
premium could be attributed to the highway department’s employees.  20 Ohio 
St.2d 135, 254 N.E.2d 357, at paragraph two of the syllabus.  In the case now 
before us, the evidence demonstrated that the formula developed at the direction 
of the CORSA actuary used proportionality to calculate the premiums attributable 
to the engineer’s highway department.  Accordingly, the commissioners used the 
same mechanism we approved in Madden to calculate the engineer’s allocated 
portion. 
{¶ 33} Additionally, in calculating the allocated portion, CORSA 
considered only the salaries, equipment, vehicles, and property that were directly 
connected to a highway purpose.  The engineer’s nonhighway operations, such as 
the map department and work performed by the engineer related to county sewers, 
were not included in the calculations.  Excluding the nonhighway operations 
responded to our concern that “ ‘a board of county commissioners may ignore the 
fact that certain duties of the county engineer * * * involve functions unrelated to 
the planning, construction, improvement or repair of roads, streets and 
highways.’ ”  Knox I, 109 Ohio St.3d 353, 2006-Ohio-2576, 847 N.E.2d 1206, 
¶ 12, quoting Madden, 20 Ohio St.2d at 140, 254 N.E.2d 357, fn. 2.  Therefore, 
we conclude that the evidence presented by the commissioners established that 
the allocated premium amounts requested to be reimbursed from MVGT funds 
were directly connected to a highway purpose. 
IV.  Conclusion 
{¶ 34} We conclude that Article XII, Section 5a of the Ohio Constitution 
authorizes the use of MVGT funds to pay a county’s cost of participating in a 
joint self-insurance pool attributable to covering the risk of liability and loss 
resulting from the operations of a county engineer’s highway department. 
SUPREME COURT OF OHIO 
 
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{¶ 35} We reverse the judgment of the court of appeals and remand for 
consideration, if appropriate, of the commissioners’ cross-appeal, which the 
appellate court initially overruled based on the finding that Article XII, Section 5a 
of the Ohio Constitution does not authorize the use of MVGT funds to pay a 
county’s cost of participating in a joint self-insurance pool attributable to covering 
the risk of liability and loss resulting from the operations of a county engineer’s 
highway department. 
Judgment reversed  
and cause remanded. 
O’CONNOR, C.J., and PFEIFER, LUNDBERG STRATTON, O’DONNELL, 
LANZINGER, and MCGEE BROWN, JJ., concur. 
__________________ 
 
James E. Arnold & Associates, L.P.A., Gerhardt A. Gosnell II, and 
Damion M. Clifford; and Peck, Shaffer & Williams, L.L.P., and Thomas 
Luebbers, for appellants. 
 
Luper, Neidenthal & Logan, Luther L. Liggett Jr., and Heather Logan 
Melick, for appellee. 
 
Wiles, Boyle, Burkholder & Bringardner Co. L.P.A., Eugene L. Hollins, 
and Dale D. Cook, urging reversal for amici curiae County Commissioners 
Association of Ohio, County Risk Sharing Authority, Ohio Municipal League, 
Ohio Township Association, Auglaize County, Clermont County, Crawford 
County, Green County, Hancock County, Jackson County, Pike County, Stark 
County, VanWert County, and Wayne County. 
 
Frederick A. Vierow, urging affirmance for amicus curiae County 
Engineers Association of Ohio. 
 
Schottenstein, Zox & Dunn Co., L.P.A. and Patrick A. Devine, urging 
affirmance for amicus curiae Ohio Contractors Association. 
______________________