Court Opinion

ID: 2970848
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:23:29.438068+00
Date Added: 2024-06-11T11:34:01.682644
License: Public Domain

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             Pursuant to Sixth Circuit Rule 206           2    Hindall v. Winterthur Int’l et al.           No. 01-3414
    ELECTRONIC CITATION: 2003 FED App. 0249P (6th Cir.)
                File Name: 03a0249p.06                    Hentemann, DAVIS & YOUNG, Cleveland, Ohio, for
                                                          Appellees. ON BRIEF: Matthew C. Huffman, GOODING,
                                                          HUFFMAN, KELLEY & BECKER, Lima, Ohio, for
UNITED STATES COURT OF APPEALS                            Appellant. Laura M. A. Faust, ROETZEL & ANDRESS,
                                                          Akron, Ohio, Henry A. Hentemann, DAVIS & YOUNG,
               FOR THE SIXTH CIRCUIT                      Cleveland, Ohio, for Appellees.
                 _________________
                                                                              _________________
 JAMES HINDALL ,                   X
          Plaintiff-Appellant,      -                                             OPINION
                                    -                                         _________________
                                    -  No. 01-3414
             v.                     -                        KAREN NELSON MOORE, Circuit Judge. The plaintiff
                                     >                    James Hindall (“Hindall”) appeals the district court’s grant of
                                    ,                     summary judgment to Winterthur International (“Winterthur”)
 WINTERTHUR                         -
 INTERNATIONAL and                                        and Travelers Indemnity Co. of Illinois (“Travelers”) as well
                                    -                     as the district court’s denial of his summary judgment motion.
 TRAVELERS INDEMNITY CO .           -                     Hindall was injured in a motor vehicle accident caused by the
 OF ILLINOIS,                       -                     negligence of an underinsured driver. At the time of the
         Defendants-Appellees. -                          accident, Hindall was an employee of Philips Display, a
                                    -                     subsidiary of Philips Electronics North America, which had
                                   N                      contracted for insurance with both Winterthur and Travelers.
       Appeal from the United States District Court       Hindall claims that he is an insured under these policies and
        for the Northern District of Ohio at Toledo.      is entitled to uninsured/underinsured (“UM/UIM”) coverage
      No. 00-07429—James G. Carr, District Judge.         under both of them.

                 Argued: June 12, 2003                      The district court premised its grant of summary judgment
                                                          to the defendants on its belief that Philips Display, Hindall’s
            Decided and Filed: July 25, 2003              employer, was validly offered and had validly rejected
                                                          UM/UIM coverage, and that the Winterthur and Travelers
Before: KEITH, MOORE, and GIBBONS, Circuit Judges.        policies therefore did not cover the injuries Hindall sustained.
                                                          In light of the Ohio Supreme Court’s recent decision in
                  _________________                       Kemper v. Michigan Millers Mutual Insurance Co., 781
                                                          N.E.2d 196 (Ohio 2002), however, we are bound to hold that
                       COUNSEL                            the offer and rejection of UM/UIM coverage here were
                                                          invalid, and that UM/UIM coverage therefore arises by
ARGUED: Matthew C. Huffman, GOODING, HUFFMAN,             operation of law under both the Travelers and Winterthur
KELLEY & BECKER, Lima, Ohio, for Appellant. Laura M.      policies. We therefore REVERSE the district court’s grant
A. Faust, ROETZEL & ANDRESS, Akron, Ohio, Henry A.        of summary judgment to Winterthur and Travelers, VACATE

                            1
No. 01-3414            Hindall v. Winterthur Int’l et al.     3    4    Hindall v. Winterthur Int’l et al.          No. 01-3414

the district court’s denial of summary judgment to Hindall,        within Philips Display to reject UM/UIM coverage on Philip
and REMAND the case for further proceedings consistent             Display’s behalf.
with this opinion.
                                                                     The second policy considered here is the commercial
                    I. BACKGROUND                                  umbrella policy issued by Winterthur to Philips Electronics.
                                                                   The Winterthur policy, as an excess policy, provides an
   On May 1, 1999, Hindall was involved in a motor vehicle         additional layer of insurance for occurrences resulting in
accident in Findlay, Ohio, when a car driven by Mandy              losses exceeding the coverage limits of the Travelers policy.
Klinger struck Hindall’s motorcycle. Although Klinger’s            The Winterthur policy was also in effect at the time of
insurance company paid Hindall the limit of Klinger’s              Hindall’s accident and had liability limits of $12 million. The
liability policy, Hindall’s damages exceeded the amount paid.      only discussion of UM/UIM coverage in the policy is a terse
                                                                   statement that UM/UIM coverage is provided only to the
  At the time of the accident, Hindall was an employee of          extent it is provided in the Travelers policy. There is no
Philips Display Components, Inc. (“Philips Display”), in           evidence of a written offer or rejection of UM/UIM coverage
Ottawa, Ohio, a subsidiary of Philips Electronics North            with regard to the Winterthur policy. This is consistent with
America (“Philips Electronics”). Philips Electronics, at that      the remarks of John Esile, who testified in his deposition that
time, was the named insured on two insurance policies.             he was not responsible for purchasing or rejecting umbrella or
                                                                   excess insurance, and that he was unaware of anyone
   The first of the policies was issued by Travelers. The          specifically rejecting UM/UIM coverage under the Winterthur
Travelers policy provided primary commercial automobile            policy.
liability coverage in the amount of $2 million per accident or
loss. The policy purported to cover subsidiaries of Philips           On July 17, 2000, Hindall filed a complaint in the United
Electronics, including Philips Display. The Travelers policy       States District Court for the Northern District of Ohio seeking
was agreed upon for Philips Electronics by John Esile, Philips     UM/UIM coverage under the Travelers and Winterthur
Electronics’s Risk Manager. On December 31, 1998, Esile            policies. All of the parties moved for summary judgment, and
filled out and signed a UM/UIM coverage rejection/selection        the district court issued an opinion denying Hindall’s motion
form associated with the Travelers policy. The form briefly        for summary judgment and granting Winterthur’s and
summarized the nature of UM/UIM insurance, and then                Travelers’s motions. The district court concluded that Esile’s
provided a series of boxes, which allowed Esile either to          written rejection of UM/UIM coverage with regard to the
accept or to reject UM/UIM coverage. Esile checked the box         Travelers policy was valid and sufficed to show that there was
rejecting UM/UIM coverage. Esile was given the authority           a valid offer of UM/UIM coverage as well. The district court
to waive UM/UIM coverage by Thomas Hassett, Philips                therefore held that UM/UIM coverage did not arise by
Electronics’s Director of Risk Management. However, while          operation of law under the Travelers policy. Since the
the form provided a brief description of UM/UIM coverage,          Winterthur policy only provided coverage for liabilities
it did not specify the premiums for UM/UIM coverage.               covered by the Travelers policy, the district court concluded
Moreover, although the form listed Philips Electronics as an       that the Winterthur Policy also provided no coverage for
insured, it did not mention Philips Display. Lastly, there is no   Hindall. Hindall filed a timely notice of appeal.
evidence in the record that Esile and Hassett (both officers of
Philips Electronics) were given written authority by anyone
No. 01-3414            Hindall v. Winterthur Int’l et al.    5    6       Hindall v. Winterthur Int’l et al.                No. 01-3414

                      II. ANALYSIS                                equal to the liability limits of the policy.1 If an insurance
                                                                  company did not offer UM/UIM coverage in such an amount,
A. Jurisdiction                                                   UM/UIM coverage was deemed to arise by operation of law
                                                                  in the full amount of the policy limits. Gyori v. Johnston
   The district court had jurisdiction over this diversity case   Coca-Cola Bottling Group, Inc., 669 N.E.2d 824, 827 (Ohio
pursuant to 28 U.S.C. § 1332, because Hindall’s citizenship       1996). Ohio courts stressed that “[t]he purpose of the
is diverse from the insurance companies’ citizenships. See        requirement is to protect persons injured in automobile
Lee-Lipstreu v. Chubb Group of Ins. Cos., 329 F.3d 898, 899-      accidents from losses which, because of the tort-feasor’s lack
900 (6th Cir. 2003) (holding that federal courts have             of liability coverage, would otherwise go uncompensated,”
jurisdiction over actions by an insured against his or her own    and therefore held that the “statute should be construed
insurance company if the two are of diverse citizenship           liberally in order to effectuate [this] legislative purpose.” Id.
because such actions are not direct actions within the meaning    at 826 (quotations omitted). As a result, “rejection of UM
of 28 U.S.C. § 1332(c)(1)). We have jurisdiction over the         coverage [had to] be made expressly and knowingly,” and it
district court’s final judgment pursuant to 28 U.S.C. § 1291.     was the “insurance companies [that bore] the burden of [this]
                                                                  showing.” Id. (quotation omitted).
B. Standard of Review
                                                                     In order to minimize the problems of proof in these
   This court reviews a district court’s grant of summary         UM/UIM cases, the Ohio Supreme Court in Gyori interpreted
judgment de novo. Gen. Elec. Co. v. G. Siempelkamp GmbH           the statute (as it was written before it was amended in 1997
& Co., 29 F.3d 1095, 1097 (6th Cir. 1994). A district court’s     by H.B. 261) to require both a written offer of UM/UIM
decision to deny a party’s motion for summary judgment is         coverage and a written rejection of that offer. Id. at 827. In
usually considered an interlocutory order and thus not            a later decision (again interpreting the pre-H.B. 261 statute),
appealable, see Phelps v. Coy, 286 F.3d 295, 298 (6th Cir.        the Ohio Supreme Court expanded upon those requirements.
2002), cert. denied, 123 S. Ct. 866 (2003), but “when the
appeal from a denial of summary judgment is presented
together with an appeal from a grant of summary judgment,
                                                                      1
we have jurisdiction to review the appropriateness of the                The Ohio legislature has subsequently amended the UM/UIM law
district court’s denial,” see Thomas v. United States, 166 F.3d   to eliminate any requirement that insurers offer UM /UIM cove rage. See
825, 828 (6th Cir. 1999). We review a district court’s denial     O H IO R EV . C ODE A N N . § 3937.18(A) (2002). The uncodified law
                                                                  accompanying this revision explains that a major purpose of the
of summary judgment based purely on legal grounds de novo.        amendment was to “[e]liminate the possibility of uninsured motorist
Id. Summary judgment is proper only if there is no genuine        coverage, underinsured motorist coverage, or both . . . being implied as
issue as to any material fact and the moving party is entitled    a matter of law in any insurance policy.” Id.
to a judgment as a matter of law. Fed. R. Civ. P. 56(c).                However, “[f]or the purpose of determining the scope of coverage of
                                                                  an underinsured motorist claim, the statutory law in effect at the time of
C. The Travelers Policy                                           entering into a co ntract for automobile liability insurance controls the
                                                                  rights and duties of the contracting parties.” Ross v. Farmers Ins. Group
                                                                  of Cos., 695 N.E.2d 732, 732 syllabus para. 1 (Ohio 1998). As the
  Former Ohio Revised Code § 3937.18 required insurance           relevant policies in this case were agreed upon (and became effective) on
companies, when they made an offer of motor vehicle liability     December 31, 1998 , the 200 2 am endments to this statute do not apply —
insurance, also to offer UM/UIM coverage in an amount             although H.B. 261, which amended the statute in 1997, does. Its impact
                                                                  will be discussed later.
No. 01-3414            Hindall v. Winterthur Int’l et al.    7    8       Hindall v. Winterthur Int’l et al.                  No. 01-3414

See Linko v. Indem. Ins. Co. of N. Am., 739 N.E.2d 338 (Ohio      there is simply no question here that the offer in this case does
2000). In Linko, the court explained that the written offer of    not comport with the Linko requirements.2
UM/UIM coverage had to include “a brief description of the
coverage, the premium for that coverage, and an express             The most apparent violation of Linko in this case is that the
statement of the UM/UIM coverage limits.” Id. at 342. The         written offer contains no discussion of the price of UM/UIM
Linko court also made it clear that a parent corporation could    premiums, which was something Linko explicitly required.
only reject insurance on behalf of its separately incorporated    Linko, 739 N.E.2d at 342 (“We agree with the following
subsidiary corporations if certain safeguards were met. The       required elements for written offers imposed by Ohio
Linko court required that “[s]eparately incorporated named        appellate courts: a brief description of the coverage, the
insureds must each be listed in a rejection form” and that        premium for that coverage, and an express statement of the
“[o]nly with a subsidiary’s written authorization may a parent    UM/UIM coverage limits.”).           The lack of premium
corporation reject UM/UIM coverage on the subsidiary’s            information makes the written offer in this case deficient in
behalf.” Id. at 341. The Linko court also made clear that         exactly the same respect as the written offer in Roberts, which
extrinsic evidence could not be used to show that there was a     was held legally inadequate because it similarly failed to state
valid offer or a valid rejection of UM/UIM coverage. Instead,     the required premium information. Under Roberts, we must
“the four corners of the insurance agreement control in           hold the written offer of UM/UIM coverage in this case to be
determining whether the waiver was knowingly and expressly        fatally defective. See Roberts, __ F.3d at __, 2003 WL
made . . . . [T]he issue of whether coverage was offered and      21503211, at *5 (pointing out that this “holding is consistent
rejected should be apparent from the contract itself.” Id. at     with numerous Ohio intermediate appellate court decisions
343. All of these conditions applied both to primary              that have held offers invalid under Kemper solely for not
insurance policies as well as to umbrella policies. Gyori, 669    containing premium information”). We therefore conclude
N.E.2d at 826 (“The mandates of R.C. 3937.18 apply to             that Travelers’s offer of UM/UIM coverage was not validly
providers of excess coverage as well as providers of primary      made, and therefore was not validly rejected.3 See Gyori, 669
liability coverage.”).
  In 1997, the Ohio legislature passed H.B. 261, which made           2
                                                                         Travelers has never disputed this key po int. Throughout this
several changes to § 3937.18. Although it was initially           litigation, Travelers’s only argument has been that the Linko requirements
uncertain how the passage of H.B. 261 would affect the Linko      no longer apply after H.B. 261; it has never argued that the Linko
requirements, it is now clear that the Linko requirements still   requirements were satisfied under the facts of this case.
apply to offers and rejections of UM/UIM coverage even after
                                                                      3
H.B. 261. See Kemper v. Michigan Millers Mut. Ins. Co., 781              There are two other violations of Linko here, although the failure of
N.E.2d 196 (Ohio 2002); see also Roberts v. Universal             Travelers to put the premiums in writing is sufficient to render T ravelers’s
Underwriters Ins. Co., __ F.3d __, 2003 WL 21503211, at *5        offer of UM/UIM coverage invalid .             First, Linko requires that
                                                                  “[s]eparately incorporated named insureds must each be listed in a
(6th Cir. July 2, 2003) (explaining that Kemper makes it          rejection form to satisfy the offer requirement of R.C. 3937.18.” Linko
“unmistakably clear that the Linko requirements still apply to    v. Indem. Ins. Co. of N. Am., 739 N.E.2d 338, 341 (Ohio 2000). The
policies after H.B. 261 went into effect”). With this point       Linko court later exp lained that “[a]n offer to the parent does not per se
established, Travelers has no defense to Hindall’s claim — as     constitute an offer to the subsidiary. Without the name of the entity on
                                                                  the selection form, no offer of UM/UIM coverage has been made to that
                                                                  entity.” Id. at 342. Here, the rejection form does not list Philips D isplay;
                                                                  it only names P hilips Electronics. Although Travelers argues that Philips
No. 01-3414                  Hindall v. Winterthur Int’l et al.              9    10       Hindall v. Winterthur Int’l et al.                 No. 01-3414

N.E.2d at 827 & n.3 (noting that there must be a valid offer                      policy and find it similarly defective.4 As an umbrella policy,
before there can be an express, knowing rejection). UM/UIM                        the Winterthur policy is subject to the same Gyori and Linko
coverage therefore arises by operation of law in the amount of                    requirements as a primary insurance policy. See Gyori, 669
the policy limits. Id. at 826 (noting that there is “only one                     N.E.2d at 826 (“The mandates of R.C. 3937.18 apply to
way to avoid the requirement that UM coverage be provided                         providers of excess coverage as well as providers of primary
— an express, knowing rejection of UM coverage by the                             liability coverage.”); see also Scott-Pontzer v. Liberty Mut.
customer” preceded by a valid offer). We therefore reverse                        Fire Ins. Co., 710 N.E.2d 1116, 1120 (Ohio 1999) (noting the
the grant of summary judgment to Travelers and vacate the                         Supreme Court holdings requiring that “excess liability
district court’s denial of Hindall’s motion for summary                           insurance must comport with R.C. 3937.18 and thus
judgment against Travelers.                                                       uninsured (and underinsured) motorist coverage must be
                                                                                  tendered” and that “failure by the insurer to offer such
D. Winterthur Policy                                                              coverage results in the provision of such coverage by
                                                                                  operation of law”).
  Having concluded that the Travelers policy was defective
under Linko and Kemper, we now turn to the Winterthur                               The Witherthur policy is clearly defective as regards
                                                                                  UM/UIM coverage under Linko and Kemper. John Esile
                                                                                  testified in deposition that there was never any written
                                                                                  rejection of UM/UIM coverage pursuant to the Winterthur
                                                                                  policy, and the record similarly contains no evidence of a
Display was clearly incorporated into the agreem ent via p art of a separate      written rejection. See Linko, 739 N.E.2d at 343 (“By
endorsem ent, Linko plainly requires that the separately incorporated             requiring an offer and rejection to be in writing, this court
named insureds each be listed on th e selection form itself, not that they        impliedly held in Gyori that if the rejection is not within the
just appear within the offer. Our conclusion that the offer and rejection
is therefore invalid under Linko is consistent with a post-Kemper Ohio
                                                                                  contract, it is not valid. In doing so, this court greatly
intermediate court that considered this sam e issue. See Inlow v. Da vis,         simplified the issue of proof in these types of cases — the
No. CA20 02-08-071, 20 03 W L 2137 3154, at *4 (Ohio C t. App.–1 2th              offer and rejection are either there or they are not.”).
Dist. June 16, 2003) (holding that because “[t]he written rejection simply
fails to nam e Bigg’s [the subsidiary] as an insured,” it is therefore              Winterthur’s only defense was that its policy, as an
defective under Kem per because “a rejection of UM/U IM co verage on              umbrella “follow-form” policy, excluded coverage whenever
behalf of Bigg’s cannot be inferred from Supervalu’s [the parent
company’s] rejection”).
                                                                                  the underlying policy also excluded coverage. As a result,
     Second, Linko “require[d] that a subsidiary’s authorization to a parent      Winterthur’s brief was devoted to arguing that the Travelers
corporation to waive UM /UIM coverage benefits on its behalf must be in
writing and must be incorporated into the contract.” Linko, 739 N.E.2d
at 343 ; see also id. at 341 (“O nly with a sub sidiary’s written authorization        4
may a parent corporatio n reject UM /UIM cove rage o n the sub sidiary’s                The district court granted summary judgme nt to W interthur because
behalf.”). This requirement also has not been satisfied. There is no              the Winterthur policy specified that it only provided coverage when the
evidence in the record that anyone at Philips Display authorized the              underlying policy also provided cove rage. Since there was no liab ility
waiver of UM /UIM coverage in writing. In fact, according to John Esile,          under the Travelers policy, the district court concluded that there could be
the risk manager o f Philips Electronics, no one at Philips Disp lay would        no liability under the Winterthur policy. We, however, have concluded
even have known about the offer of UM /UIM coverage, as it was Philips            that UM/UIM coverage did arise by operation of law under the Travelers
Electronics that was responsible for procuring insurance. T his is another        policy, and therefore cannot affirm the gran t of summ ary jud gment to
indisputable violation of Linko.                                                  W interthur on that basis.
No. 01-3414           Hindall v. Winterthur Int’l et al.   11

policy did not provide UM/UIM coverage and that
Winterthur’s “follow-form” exclusion (which stated that
Winterthur would only provide coverage when the underlying
policy also provided coverage) was valid.              Having
determined, however, that implied UM/UIM coverage was
created under the Travelers policy, we believe that it is
inescapable that coverage should exist under the Winterthur
policy as well to the extent that Hindall’s damages exceed the
Travelers policy’s limits.
                   III. CONCLUSION
  For the foregoing reasons, we REVERSE the district
court’s grant of summary judgment to the defendants on the
ground that the Travelers and Winterthur policies did not
contain UM/UIM coverage, as we hold that both of these
policies did in fact provide UM/UIM coverage as a matter of
law. For the same reason, we VACATE the district court’s
denial of summary judgment to Hindall. We REMAND the
case to the district court for further proceedings consistent
with this opinion.