Court Opinion

ID: 6758817
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:29:38.914253+00
Date Added: 2024-06-11T16:02:32.093214
License: Public Domain

Sweeney, J.
The instant cause presents a question of first impression before this court in which we must decide whether punitive damages and reasonable attorney fees are recoverable by the plaintiff under the uninsured motorist provisions of her father’s insurance policies. The uninsured motorist provisions each provide as follows:
*197“We will pay damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by a covered person and caused by an accident. * *
The defendant insurance company contends on cross-appeal that the foregoing provision allows coverage solely for compensatory damages, and cannot be construed to encompass an award for exemplary damages and attorney fees. In support of its argument defendant submits that Ohio adheres strictly to the punishment theory of punitive damages as evidenced by this court’s prior rulings in Roberts v. Mason (1859), 10 Ohio St. 277; Saberton v. Greenwald (1946), 146 Ohio St. 414 [32 O.O. 454]; and Detling v. Chockley (1982), 70 Ohio St. 2d 134 [24 O.O.3d 239]. The defendant asserts that the sanctioning of punitive damages in the instant cause will thwart the central purposes of punishment and deterrence that these types of damages were designed to foster.
The plaintiff counters that the defendant undertook to indemnify her for those damages that she would be legally entitled to recover if she were to sue the tortfeasor directly in a bodily injury action. Plaintiff argues that the subject uninsured motorist provision does not exclude other types of damages, except property damages, and that a liberal construction of this ambiguous provision necessarily permits the recovery of punitive damages in a proper case, inasmuch as the subject provision is not qualified in a manner that expressly excludes such damages. Plaintiff submits that approximately thirty-five jurisdictions around the country have allowed the recovery of punitive damages under various insurance policies; see, e.g., Hensley v. Erie Ins. Co. (W. Va. 1981), 283 S.E. 2d 227; see, also, Annotation (1982), 16 A.L.R. 4th 11; and that the rationale for allowing punitive damages is much stronger with respect to an uninsured motorist clause, given the fact that this court has interpreted uninsured motorist coverage to be a much broader form of coverage than that found in an ordinary liability policy. See Kish v. Central Natl. Ins. Group (1981), 67 Ohio St. 2d 41 [21 O.O.3d 26], where we held, inter alia, that an uninsured motorist provision extends to injuries which were intentionally inflicted by an uninsured motorist.
In determining the scope of the subject uninsured motorist provision, one can readily ascertain the plausibility of the arguments advanced by both parties with respect to the recoverability of exemplary or punitive damages. However, given the nature of the provision in issue, our interpretation is guided by that central canon of insurance contract construction which states that “[ljanguage in a contract of insurance reasonably susceptible of more than one meaning will be construed liberally in favor of the insured and strictly against the insurer.” Buckeye Union Ins. Co. v. Price (1974), 39 Ohio St. 2d 95 [68 O.O.2d 56]; see, also, Ohio Farmers Ins. Co. v. Wright (1969), 17 Ohio St. 2d 73 [46 O.O.2d 404]; Gomolka v. State Auto. Mut. Ins. Co. (1984), 15 Ohio St. 3d 27; and 57 Ohio Jurisprudence 3d (1985) 348, Insurance, Section 285.
*198Based on the arguments submitted by both parties, we are persuaded that the uninsured motorist provision in issue is reasonably susceptible to differing interpretations, and that, therefore, a liberal construction of this provision in plaintiffs favor is necessary.
In applying the principles of liberal construction to the subject uninsured motorist provision, we find plaintiffs arguments to be well-taken in that punitive damages are the type of damages which a party would be legally entitled to recover from an uninsured motorist where the facts and circumstances of the particular case warrant such an award. By structuring the language of the uninsured motorist provision as it did, the defendant insurance company has agreed to subrogate itself into the position of the uninsured motorist tortfeasor. Since the subject provision is not limited or qualified so as to clearly prohibit an award of punitive damages, it is logical and reasonable to assume that punitive damages could be proper in an appropriate case as a consequence of a bodily injury accident. Thus, in a proper case, such as the one sub judice, and given the language employed in the subject provision, we find that the defendant has contractually agreed to stand in the shoes of the tortfeasor and pay those damages which the insured would have been able to recover from the uninsured motorist as if she had sued the uninsured motorist herself. Such an interpretation is consonant with the reasoning enunciated in Kish, supra. Moreover, the punishment or deterrent effect of punitive damages is not ignored under this analysis, since the defendant insurance company may subrogate and bring an action against the tortfeasor for the full measure of damages that it agreed to indemnify plaintiff, its insured.
Therefore, we hold that as a matter of public policy, and in the absence of specific contractual language to the contrary, punitive or exemplary damages may be awarded to an insured under an uninsured motorist provision, where the issuer of the policy promises to pay damages for which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by a covered person and caused by an accident.
Such an approach is not novel in the state of Ohio as evidenced by the court’s holding in Cuppett v. Grange Mut. Co. (1983), 12 Ohio App. 3d 82. Accordingly, we affirm the decision of the court of appeals that punitive damages are recoverable under the uninsured motorist provision in the subject policies.
Having decided that punitive damages could be properly awarded in the instant cause, the next issue presented will determine whether the court of appeals was correct in remanding the determination of the amount of punitive damages to the trial court. This second issue asks us whether the arbitration award was limited to the amount demanded by the complaining party.
The defendant submits that the policies in question provide with respect to arbitration that “[ljocal rules of law as to procedure and *199evidence will apply.” It is the defendant’s contention that since the policies herein incorporate the local rules of procedure in the binding arbitration clause, the plaintiff is limited pursuant to Civ. R. 54(C) to the amount requested in her original demand for arbitration, since her amended amount demand was proffered only six days prior to the arbitration hearing.1
The plaintiff argues that the appellate court erred in remanding the case to the trial court and should have instead reinstated the arbitration award. Plaintiff maintains that Civ. R. 54(C) has no application to arbitration proceedings, and that defendant’s position would inhibit realistic settlement negotiations.
Civ. R. 54(C) provides in relevant part:
“* * * j-^j ¿eman¿ for judgment which seeks a judgment for money shall limit the claimant to the sum claimed in the demand unless he amends his demand not later than seven days before the commencement of the trial. * * *”
In order for this rule to have any application by its terms, there must be “a demand for judgment which seeks a judgment for money.” Plaintiff’s letters to counsel for the defendant demanding a certain amount in settlement of the claim should not be considered the type of demand contemplated under Civ. R. 54(C). The type of demand envisioned by Civ. R. 54(C) is that made in a civil complaint seeking judgment from the court. The instant case does not contain a complaint or judgment demand as suggested by the Civil Rules. If we were to adopt the position advanced by the defendant, we believe that such a course could very well result in unrealistic settlement negotiations. While the defendant is correct in maintaining that the parties agreed to apply local rules of procedure, and that such rules are indeed binding in the instant arbitration, we find that Civ. R. 54(C) does not have any effect on the amount of the arbitration award. It follows, therefore, that the appellate court erred in vacating the arbitration award and remanding the cause to the trial court on that issue in light of Civ. R. 54(C). Thus, we reverse the decision of the court of appeals in remanding the cause to the trial court on this issue, and we reinstate the amount of punitive damages awarded by the arbitration panel.
*200Directing our attention to the issue of attorney fees, we note that it has long been a basic tenet of Ohio law that “[i]f punitive damages are proper, the aggrieved party may also recover reasonable attorney fees.” Columbus Finance v. Howard (1975), 42 Ohio St. 2d 178, at 183 [71 O.O.2d 174]; Locafrance United States Corp. v. Interstate Dist. Serv., Inc. (1983), 6 Ohio St. 3d 198, at 202. Nevertheless, our inquiry turns to whether the court of appeals correctly remanded the cause to the trial court for a determination of attorney fees.
The plaintiff argues that the award of attorney fees by the arbitration panel appropriately reflects the agreement made between plaintiff and her counsel that plaintiffs attorney would receive one-third of all damages recovered. Plaintiff further contends that the defendant never objected to the admission of the fee arrangement.
The defendant contends that the arbitration award of attorney fees is not supported by the record since only plaintiffs counsel’s statement related to attorney fees and the written confirmation of the contingent fee agreement was submitted after the arbitration hearing and without the knowledge of defendant.
Our review of the record in this cause leads us to conclude that the determination of the amount of reasonable attorney fees should be remanded to the trial court for further proceedings. The record before us reveals a dearth of evidence concerning the proper measure of attorney fees that can be awarded to plaintiff. What little evidence there is concerning the appropriate amount that should be awarded as attorney fees is in our view conflicting and incomplete. Accordingly, we affirm the decision of the court of appeals in remanding the determination of attorney fees to the trial court. Upon remand, the trial court is directed to consider the factors we set forth in State, ex rel. Montrie Nursing Home, Inc., v. Creasy (1983), 5 Ohio St. 3d 124, in calculating the amount of reasonable attorney fees that should be awarded the plaintiff. These factors include: “* * * (i) the time and labor involved in maintaining this litigation, (2) the novelty, complexity, and difficulty of the questions involved, (3) the professional skill required to perform the necessary legal services, (4) the experience, reputation, and ability of the attorneys, and (5) the miscellaneous expenses of this litigation.” Id. at 128.
Therefore, for the reasons expressed herein, the judgment of the court of appeals is reversed in part and affirmed in part, and the cause is remanded to the trial court for further proceedings consistent with this opinion.

Judgment accordingly.

Celebrezze, C.J., C. Brown and Douglas, JJ., concur.
Looker, J., dissents separately.
Holmes and Wright, JJ., dissent separately.

 The briefs filed in the trial court indicate that plaintiffs counsel directed a letter to defendant dated September 8, 1980 stating:
“* * * Our demand for the purpose of arbitration is $27,000.00 compensatory damages and $25,000.00 exemplary damages and attorneys’ fees.”
Prior to the arbitration hearing, another letter was directed by plaintiff’s counsel to defendant stating: “* * * [A]ll previous demands of record are withdrawn. Present claim for payment is $120,000.00.”
It should be noted that this correspondence is not included in the record compiled at the arbitration level; however, we have included it here simply for the sake of factually understanding the issue presented.