Plaintiffs Hutchisons were injured when their automobile collided with a horse-drawn buggy. The accident was the fault of the buggy driver, who was not insured. Plaintiff's insurance company, defendant Erie Insurance, paid plaintiffs under the collision provisions of plaintiff's insurance policy.
Plaintiffs wanted to recover more under the uninsured motorist provision of the policy, but the trial court denied this on the ground that a horse-drawn buggy is not included as a motor vehicle under the policy provisions. The Court of Appeals affirmed the trial court's decision on this issue.
In addition, the Insurance company settled plaintiff's claims against the driver of the buggy to recover the amounts it had paid plaintiffs. However, the settlement purported to block all claims plaintiffs might have against the buggy driver. The trial court held this barred plaintiff's suit against the buggy-driver, but the Court of Appeals disagreed and said that the Insurance company could release only its own claims and not also those of the plaintiff.
Plaintiffs Leota M. and Curtis Hutchison appeal a summary judgment of the Court of Common Pleas of Stark County, Ohio, entered in favor of defendant Erie Insurance Company on plaintiffs' claims arising out of a collision between plaintiffs' vehicle and a horse-drawn buggy. Appellants assign two errors to the trial court.
The record indicates appellant Leota M. Hutchison was injured when her vehicle collided with a horse-drawn buggy in Wayne County, Ohio. The Ohio State Patrol cited the operator of the buggy, but neither the buggy operator nor the owner were insured.
Appellants made a claim for uninsured motorists coverage against their insurance company, appellee Erie. Appellee denied the coverage on the grounds appellants did not collide with an uninsured motorist. Appellee did provide collision coverage to reimburse appellants for property damage to the automobile, and medical payment coverage to reimburse them for medical expenses incurred. In July of 1991, appellee notified appellants of its intention to sue the tortfeasors pursuant to the subrogation agreement between appellants and appellee. Appellee advised appellants to contact Erie if they had any further claims against the tortfeasors. Appellee proceeded against the tortfeasors for the amounts it had expended on behalf of appellants, and eventually settled its claims in April of 1992. As part of the settlement, appellee Erie Insurance Company executed a release and settlement of claim in favor of the tortfeasors. Appellee argues the release was intended to apply only to the claims presented by Erie Insurance Company, and not those of appellants, but language in the release states:
* * * For itself, its officers, directors, shareholders, employees, insureds, successors and assigns. * * *
Thereafter, appellants brought suit against the tortfeasors in Wayne County, but the Wayne County Court of Common Pleas held their claims were barred by the principles of res judicata. That decision was not challenged by appeal.
Also in April of 1992, appellants brought suit in Stark County Court of Common Pleas seeking a declaratory judgment regarding the uninsured motorists claim. After the Wayne County Court of Common Pleas dismissed appellants' claim on res judicata grounds, appellants amended their complaint in Stark County, to allege appellee's subrogation action and settlement interfered with appellants' right to recover their damages from the tortfeasors.
Eventually, the trial court entered summary judgment on February 4, 1993, on the issue of whether appellants were entitled to uninsured motorists coverage. The court found under the terms of the policy appellants were covered for collisions with uninsured motor vehicles, but a horse-drawn buggy is not included in the commonly accepted meaning of the term "motor vehicle," nor is it considered a motor vehicle in the language of the policy.
On September 7,1995, the trial court entered summary judgment on the issue of whether appellee's actions precluded appellants from recovering compensation for injuries and damages directly from the tortfeasors. The trial court found appellants were represented by counsel, and were notified of the subrogation action initiated by appellee. Appellants did not respond to the notice, nor did they join in Erie's subrogation suit. The court also noted appellants abstained from responding to the tortfeasor's motion for summary judgment in the personal injury case in Wayne County. The court concluded appellants could not prevail on their claims against appellee. From these two judgments this appeal is taken.
In its judgment entry, the trial court cited the language of the insurance policy:
"Motor vehicle: means any land motor vehicle or trailer except: (1) a vehicle operated on rails or crawler treads; or (2) a vehicle located for use as a residence or premises. "Uninsured motor vehicle" means: (1) a motor vehicle for which there is no liability bond or insurance at the time of the accident in the amounts required by the Financial Responsibility Law where the auto we insure is principally garaged; or (2) a motor vehicle for which the insuring company denied coverage or is or becomes insolvent; or (3) a "hit and run" motor vehicle. The vehicle must hit you, an auto we insure or a vehicle you occupy. The identity of the driver and the owner of the "hit and run" vehicle must be unknown. The accident must be reported to the police or other proper governmental authority with 24 hours or as soon as possible. You must notify us as soon as possible; or (4) an underinsured motor vehicle.
Appellants dispute that language, and instead, appellant's brief in opposition to the motion for summary judgment argued the policy language in effect at the time of the accident stated:
For purposes of this coverage only [uninsured motorist] the definition of motor vehicle ... is changed to read: (8) any land motor vehicle, trailer, or miscellaneous vehicle.
The policy cited by appellants as the one in effect at the time of the accident defines "miscellaneous vehicle" as "... a motorcycle, moped, snowmobile, golf cart and any similar recreational vehicle ..."
Appellants argued the language is ambiguous and should be construed in their favor to include horse-drawn buggies within the term " miscellaneous vehicle."
As the trial court noted, the general rule in Ohio is that words in a contract are to be given their natural and commonly accepted meanings, Gomolka v. State Auto. Mutual Insurance Co. (1982), 70 Ohio St.2d 166, 436 N.E.2d 1347. On the other hand, if the policy contains ambiguous terms, the language must be construed against the insurer and liberally in favor the insured, see Buckeye Union Ins. Co. v. Price (1974), 39 Ohio St.2d 95, 313 N.E.2d 844. The trial court found the term "motor vehicle" does not include a horse-drawn buggy. For this reason, even though this horse-drawn buggy did not carry insurance, it was not an uninsured motor vehicle for purpose of the contract language.
Civ.R. 56(C) states in pertinent part:
Summary judgment shall be rendered forthwith if the pleading, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence in the pending case, and written stipulations of fact, if any, timely filed in the action, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. No evidence or stipulation may be considered except as stated in this rule. A summary judgment shall not be rendered unless it appears from such evidence or stipulation and only therefrom, that reasonable minds can come to but one conclusion and that conclusion is adverse to the party against whom the motion for summary judgment is made, such party being entitled to have the evidence or stipulation construed most strongly in his favor.
A trial court should not enter a summary judgment if it appears material facts are genuinely disputed, nor if, construing the allegations most favorably towards the non-movant, reasonable minds could draw different conclusions from the undisputed facts, Hounshell v. American States Insurance Co. (1981), 67 Ohio St.2d 427 at 433, 424 N.E.2d 311. A trial court may not resolve ambiguities in the evidence presented, Inland Refuse Transfer Co. v. Browning-Ferris Industries of Ohio, Inc. (1984), 15 Ohio St.3d 121, 472 N.E.2d 1072. A reviewing court reviews a summary judgment by the same standard as the trial court, Smiddy v. The Wedding Party, Inc. (1987), 30 Ohio St.3d 35, 506 N.E.2d 212.
We agree with the trial court neither the language of the contract nor the commonly accepted meaning of the term motor vehicle includes a horse-drawn buggy.
We conclude the trial court was correct when it found reasonable minds could come to but one conclusion, namely, appellants were not entitled to uninsured motorist coverage for this action. Even though there appears to be a dispute regarding the actual contract language, it is not a material dispute because under either language, a horse-drawn buggy is not a motor vehicle. We also agree with the trial court the commonly accepted meaning of the term "motor vehicle" does not include a horse-drawn vehicle. Finally, pursuant to the policy definition, a horse-drawn buggy is not a trailer.
The first assignment of error is overruled.
Appellants next urge the trial court erred in finding they could not recover against appellee Eric Insurance Company for compromising appellants' claims against the tortfeasors. Appellants assert appellee's attorney is vicariously liable to them for releasing appellants' claims without their authorization. Appellants characterize appellee's actions as being done in bad faith. Appellee points out appellants were placed on notice of the subrogation action and were represented by counsel, but failed to promptly exercise their rights against the tortfeasors.
It is clear to this court appellee could not, as a matter of law, release the tortfeasors from liability to appellants, and in fact, appellee asserts its intent in executing the release was only to discharge the tortfeasors for the amount the appellee expended on behalf of appellants.
The factor which led the Wayne County Court of Common Pleas to hold res judicata barred appellant's recovery from the tortfeasors is the inclusion in the release of the word "insureds." The evidence is undisputed the inclusion of that word was inadvertent. Nevertheless, this negligence in executing the release including the Hutchison's claim is the act that compromised their ability to recover for their damages.
The relationship between an insured and an insurance company is not merely a contractual one. The parties owe one another reciprocal duties of good faith and reasonable diligence in dealing with one another, see, e.g. LISN, Inc. V. Dawson Ins. (September 27, 1995) Lorain App. # 94CA006012, unreported; Bechman v. Prudential Ins. Co. (1994) 69 Ohio Misc.2d 1, 647 N.E.2d 884.
We find when the appellee elected to pursue its rights independent of appellants' claims, it had a duty of good faith to make sure its actions would not compromise it's insureds' rights just as pursuant to the subrogation clause, appellants could not do anything to impair appellee's subrogation rights. Reasonable minds could find on these facts that appellee negligently breached its duty to appellants in executing the incorrect release. Summary judgment was inappropriate.
The second assignment of error is sustained.
For the foregoing reasons, the judgment of the Court of Common Pleas of Stark County, Ohio, is affirmed in part and reversed in part and the cause is remanded for further proceedings in accord with law and consistent with this opinion.
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