Opinion ID: 2971710
Heading Depth: 3
Heading Rank: 1

Heading: Retroactive Application of Galatis

Text: On appeal, Pollard makes three arguments concerning retroactivity: (1) Galatis cannot be applied retroactively because her claim falls under the “vested rights” exception to Ohio’s retroactivity doctrine; (2) the Ohio Supreme Court did not intend that Galatis apply retroactively; and (3) U.S. Supreme Court law alters the probable course of Ohio’s retroactivity doctrine, such that Galatis should not apply retroactively in this case. In Peerless Electric Company v. Bowers, 129 N.E.2d 467 (Ohio 1955) the Ohio Supreme Court set forth the law governing retrospective application of an Ohio Supreme Court decision: The general rule is that a decision of a court of supreme jurisdiction overruling a former decision is retrospective in its operation, and the effect is not that the former was bad law, but that it never was the law. The one general exception to this rule is where contractual rights have arisen or vested rights have been acquired under the prior decision. Peerless, 129 N.E.2d at 468. The Peerless doctrine is strengthened by a presumption of retroactivity. “In the absence of a specific provision in a decision declaring its application to be prospective only...the decision shall be applied retrospectively as well.” State ex. rel. Bosch v. Indus. Comm. 438 N.E.2d 415, 418 (Ohio 1982).
No. 03-4634 Pollard v. State Farm, et al. In this case, Pollard argues that her claim falls within the vested rights exception to the Peerless rule because her right to benefits under GM’s insurance policy vested under the Ohio Supreme Court’s decision in Scott-Pontzer. Pollard’s claim for benefits vested, if at all, in February of 1997, more than 2 years prior to the Ohio Supreme Court’s decision in Scott-Pontzer. Thus, Pollard argues that the Scott-Pontzer decision should apply retroactively but that the Galatis decision should not. Pollard does not explain this contradiction. Additionally, in order to demonstrate that she possessed vested rights under Scott-Pontzer, Pollard must prove that she detrimentally relied on that decision. In Galatis, the Court concluded the application of Galatis would not unfairly interfere with the rights of persons with pending claims to UM/UIM coverage: No reliance interest will be jeopardized by limiting Scott-Pontzer...the overwhelming majority of Scott-Pontzer cases are resurrected claims from the years prior to the Scott-Pontzer decision. Because no one was aware of this form of uninsured motorist coverage before it was created by that decision, no one could have relied upon it. Finally, the potential that anyone would have reduced his personal uninsured motorist coverage based upon the belief that his employer’s insurer, or his family member’s employer’s insurer, would provide this coverage is practically nonexistent. Thus, there is no individual or societal reliance upon ScottPontzer outside of the courtroom. Galatis, 797 N.E.2d at 1270-71. In this case, Pollard’s complaint and affidavit state that she was not aware of any UM/UIM benefits available through her employer’s insurance policy until December of 2001. Therefore, she did not rely on the UM/UIM provision in the commercial policy held by GM. No. 03-4634 Pollard v. State Farm, et al. Additionally, Ohio cases applying Galatis recognize that an employee cannot rely upon an insurance contract entered into by her employer and the insurer where she was not aware that she may have been a third-party beneficiary to the insurance contract. For example, in Parks v. Rice, 809 N.E.2d 1192 (Ohio App. 2004), the Ohio Court of Appeals held that Galatis applied retroactively to bar recovery under an employer’s UM/UIM coverage because the injured employee was driving home at the time of his accident and was therefore not acting within the scope of his employment. The employee argued that his rights had arisen or vested under Scott-Pontzer. The court rejected that argument: The reason why we do not retrospectively apply decisions in a case where contractual rights have arisen or vested rights have been acquired under the prior decision is because courts generally will not disturb the operation of contracts formed in contemplation of and reliance upon law that is later overturned by judicial decision. This is related to the rule that the statutory law in effect at the time of entering into a contract for automobile liability insurance controls the rights and duties of the contracting parties. The contract in question here was not between the [employee] and this insurer, but between the employer and insurer. It could not have been the basis for any reliance on the part of the [employee]. More importantly as to the [employee’s] argument, we are bound to reject it. Immediately after the Ohio Supreme Court decided Galatis, it resolved numerous other Scott-Pontzer-related appeals that were pending before it. In one of those cases, German v. Therm-O-Disc, Inc., the plaintiff made this same argument in a motion for reconsideration. The Ohio Supreme Court rejected this argument and continued to apply Galatis retroactively to German and the other cases it resolved. No. 03-4634 Pollard v. State Farm, et al. Parks, 809 N.E.2d at 1271. Under the interpretation of Galatis set forth in Parks, the appellant is not shielded from the application of Galatis by any vested rights in her claim for UM/UIM benefits through her employer.
In support of her claim that the Ohio Supreme Court did not intend that Galatis apply retroactively, Pollard cites one case, Fish v. Ohio Casualty Insurance Company, 802 N.E.2d 149 (Ohio 2004), in which Justice Stratton issued a concurring opinion expressing her view that Galatis applies to all pending cases where a “Scott-Pontzer” claim has been raised. One other justice (O’Donnell) concurred in Justice Stratton’s opinion. Pollard argues that because the remaining five justices of the Ohio Supreme Court did not concur in Justice Stratton’s opinion, it may be presumed that they all are of the view that the Peerless doctrine applies to determine the retroactive effect of Galatis. We reject Pollard’s argument. First, the fact that the five justices other than Justices Stratton and O’Donnell did not join the concurrence in Fish does not indicate the court’s intent to bar retrospective application in Galatis. The inference that a majority of the Ohio Supreme Court would disagree with the concurrence is inconsistent with the Ohio Supreme Court’s denial of a motion for reconsideration in the Galatis case which raised the retroactivity issue. Further, the Ohio Supreme Court has applied Galatis retroactively to at least 90 pending cases, and we have recently recognized that Galatis properly applies to cases pending at the time the Galatis decision issued. See In re Uninsured & Underinsured Motorist Cases, 798 N.E.2d 1077 (Ohio 2003) No. 03-4634 Pollard v. State Farm, et al. (consolidating approximately 90 pre-Galatis cases and applying Galatis to all of them); Posante v. Cambridge Mut. Fire Ins. Co., 383 F.3d 407, 408 (6th Cir. 2004). Finally, under the rule set forth in Ex Rel Bosch, supra, decisions of the Ohio Supreme Court are presumptively retrospective in their effect unless the Supreme Court explicitly states otherwise. The Galatis opinion does not state that it is to have prospective effect only. Therefore, there is no basis upon which to dispute its retroactivity.
Pollard argues that “U.S. Supreme Court opinions must be taken into account in an effort to ascertain the probable course of future developments in the Ohio doctrine of retroactivity.” Thus, Pollard argues that pursuant to Chevron Oil Company v. Huson, 404 U.S. 97 (1971), Galatis cannot be given retrospective effect because it “announced a new rule of law...[o]verruling the clear past precedent of Scott-Pontzer upon which many litigants relied.” Pollard’s argument is unpersuasive to the extent that it depends upon Pollard’s reliance interest in Scott-Pontzer. Pollard’s claim to UM/UIM benefits vested, if at all, at least 2 years prior to Scott-Pontzer. Therefore, Pollard’s claim would not be entitled to Chevron protection. More importantly, the U.S. Supreme Court has unambiguously overruled Chevron. In Harper v. Virginia Department of Tax, 509 U.S. 86, 97-98 (1993), the Court held: No. 03-4634 Pollard v. State Farm, et al. Although James B. Beam Distilling Co. v. Georgia, 501 U.S. 529 (1991) did not produce a uniform opinion for the Court, a majority of Justices agreed that a rule of federal law, once announced and applied to the parties to the controversy, must be given full retroactive effect by all courts adjudicating federal law. In announcing the judgment of the Court, Justice SOUTER laid down a rule for determining the retroactive effect of a civil decision: After the case announcing any rule of federal law has “appl[ied] that rule with respect to the litigants” before the court, no court may “refuse to apply [that] rule...retroactively.” Justice SOUTER’s view of retroactivity superseded “any claim based on a Chevron Oil analysis. Harper, 509 U.S. at 96-98. Pollard relies on the Court’s division in the Jim Beam case for the premise that Chevron is still good law. Under Harper, Pollard’s argument fails. Galatis has been given retroactive effect under Ohio and federal law.