Persello v. Allstate Ins. Co.

2011 Ohio 3230

STEVEN F. PERSELLO PLAINTIFF-APPELLANT v. ALLSTATE INSURANCE CO., et al. DEFENDANTS-APPELLEES

CASE NO. 10 MA 18

COURT OF APPEALS SEVENTH DISTRICT

Dated: June 21, 2011

STATE OF OHIO, MAHONING COUNTY

OPINION

CHARACTER OF PROCEEDINGS: Civil Appeal from the Court of Common

Pleas of Mahoning County, Ohio

Case No. 08 CV 4333

JUDGMENT: Vacated and Remanded.

APPEARANCES:

For Plaintiff-Appellant: Atty. Gregg A. Rossi

Rossi & Rossi

P.O. Box 6045

Youngstown, Ohio 44503

For Defendants-Appellees: Atty. Adam E. Carr

The Carr Law Office, LLC

Hudson, Ohio 44236

JUDGES:

Hon. Cheryl L. Waite

Hon. Gene Donofrio

Hon. Joseph J. Vukovich

WAITE, P.J.

{1} Plaintiff-Appellant, Steven F. Persello, appeals the decision of the Mahoning County Court of Common Pleas denying a motion for prejudgment interest on his uninsured motorist ("UIM") claim against Appellee Allstate Insurance Company ("Allstate"). Appellant contends that the trial court should have established the accrual date for prejudgment interest as the date of the accident, in keeping with Landis v. Grange Mutual Ins. Co. (1998), 82 Ohio St.3d 339, 695 N.E.2d 1140. Landis allows a trial court discretion in setting the accrual date for prejudgment interest in underinsured motorist ("UM") and UIM cases, but that discretion is not unlimited. It appears that the magistrate in the instant case has effectively set the date of final judgment as the accrual date for prejudgment interest by requiring that the plaintiff be a creditor of a calculated sum of money before prejudgment interest may accrue. This conclusion comports with neither the holding nor spirit of the Landis opinion. Further, pursuant to Royal Elec. Constr. v. Ohio State Univ. (1995), 73 Ohio St.3d 110, 652 N.E.2d 687, prejudgment interest is intended to compensate a claimant for the period of time between the accrual of the claim and the final judgment, without regard as to whether the claim was unliquidated or incapable of ascertainment until final judgment is rendered. We hereby vacate the final judgment and the magistrate's decision in this case so that the matter of prejudgment interest may be properly reconsidered pursuant to Landis and Royal Elec.

{2} Our review of this matter does not stop here, however. A second issue that arose through Allstate's response to this appeal is whether Appellant waived the alleged error by failing to object to the magistrate's decision. Appellant did not fileobjections to the magistrate's decision due to a stipulation that was signed by both parties and the trial judge. The stipulation states that the magistrate would preside over the jury trial and would make all decisions and judgments in the case. The parties also agreed that all findings of fact and conclusions of law would be binding, and that the trial judge was merely given authority to approve all of the magistrate's decisions and orders. The stipulation also stated that the parties waived all objections to the magistrate's orders but preserved their rights of appeal. On review, it is apparent that this stipulation attempts to abrogate the trial court's oversight of the objection and review process mandated by Civ.R. 53(D); hence, it is unenforceable to that extent. As this was a court-sanctioned stipulation and waiver, it would be inequitable for any party to be deemed to have waived its right to object to the magistrate's decision. Because it is invalid, we must vacate in part the September 29, 2009, Stipulation, Waiver and Consent. On remand, the trial court must proceed pursuant to Civ.R. 53. Following the reissuance of a magistrate's decision on prejudgment interest, the parties will follow the rules governing objections to the magistrate's decision as set forth in Civ.R. 53(D)(3)(b)(1). Any further action, including the filing of supporting transcripts, granting of continuances, and ultimate review by the trial court, must proceed as set forth in Civ.R. 53.

{3} The January 13, 2010, judgment of the trial court and the December 10, 2009, magistrate's decision (captioned as a "judgment entry") are vacated, along with part of the September 29, 2009, Stipulation, Waiver and Consent, as further explained below. The case is remanded for further proceedings consistent with this Opinion.

Case History

{4} Appellant suffered bodily injury as a result of a car accident which took place on November 6, 2007, between himself and Patrick J. Prest, an uninsured motorist. At the time of the accident, Appellant had an automobile insurance policy with Allstate Property and Casualty Insurance Company (hereinafter referred to as "Allstate"). The policy included UM/UIM coverage with limits of $100,000 per person and $300,000 per accident. On November 4, 2008, Appellant filed suit against Mr. Prest and Allstate. Mr. Prest never defended the action and the parties stipulated to the fact that he was uninsured at the time of the accident.

{5} The case was mediated to an impasse during which Allstate made several settlement offers which were refused by Appellant. The case proceeded to a jury trial before a magistrate on September 29-30, 2009, on disputed issues involving the nature and extent of Appellant's alleged injuries, proximate cause and damages. At trial, Appellant sought $40,000 in lost wages, and $10,000 in medical bills and injuries. The jury awarded a total verdict of $34,400.00 in favor of Appellant. On October 2, 2009, the trial court entered judgment against Allstate in the amount of the verdict. Allstate paid the judgment within two weeks of the filing of the judgment entry.

{6} Appellant timely moved for prejudgment interest at the statutory rate, asking for prejudgment interest to be calculated from the date of the automobile accident through the date of judgment. After a hearing on the matter, the magistrate denied the motion. Appellant appealed the magistrate's decision to this Court. We dismissed the appeal for lack of a final, appealable order. Persello v. Allstate Ins. Co.(Jan. 8, 2010), 7th Dist. No. 09 MA 212. The trial court entered a final judgment to adopt the magistrate's decision on January 13, 2010. Appellant then timely filed this appeal.

General Law

{7} In Ohio, the leading case on the issue of prejudgment interest in an UM/UIM claim is Landis v. Grange Mutual Ins. Co. (1998), 82 Ohio St.3d 339, 695 N.E.2d 1140. In Landis, the Supreme Court of Ohio recognized that UM/UIM claims are contractual in nature and therefore subject to R.C. 1343.03(A) with respect to the award and calculation of interest. Id. at 341. R.C. 1343.03(A) provides in pertinent part: "[W]hen money becomes due and payable upon any * * * instrument of writing * * * and upon all judgments * * * for the payment of money arising out of tortious conduct or a contract or other transaction, the creditor is entitled to interest at the rate per annum determined pursuant to section 5703.47 of the Revised Code[.]"

{8} In Landis, the insured was covered by the UM provisions of his employer's automobile insurance policy, with limits of $1,000,000. The insured was walking in Sandusky, Ohio, when he was struck by an underinsured motorist. The tortfeasor's insurer paid the liability limit of $100,000 to Mr. Landis, and he presented a UM claim to Grange. Grange denied the claim, and Mr. Landis filed a declaratory judgment action to determine coverage. The trial court eventually ruled in Mr. Landis' favor and the case was submitted to an arbitrator to determine damages pursuant to the terms of the insurance policy. The arbitrator awarded the full policy limits as damages. Mr. Landis then filed a motion for prejudgment interest, which was denied. The prejudgment interest issue was appealed to the Ohio Supreme Court.

{9} Landis held that a UM/UIM claim sounds in contract rather than tort and is governed by the section of the prejudgment interest statute dealing with contract claims, R.C. 1343.03(A). The Landis Court further reasoned that whether prejudgment interest "should be calculated from the date coverage was demanded or denied, from the date of the accident, from the date at which arbitration of damages would have ended if Grange had not denied benefits, or some other time based on when Grange should have paid Landis is for the trial court to determine." (Emphasis added.) Id. at 342. Grange had argued that prejudgment interest could not begin to accrue until the undetermined damages was settled by the arbitrator. Landis rejected that view and held:

{10} "According to the declaratory judgment, the money was due and payable. That the amount remained undetermined until arbitration does not bar recovery of prejudgment interest. Royal Elec. Constr. v. Ohio State Univ., 73 Ohio St.3d 110, 652 N.E.2d 687, syllabus.

{11} "If Grange had not denied benefits, the issue of damages would have gone directly to an arbitrator and the benefits would have become due and payable no later than upon entry of the arbitrator's award. But Grange did deny benefits, and it scarcely seems equitable that the denial of benefits contractually owed to another that led both parties on a lengthy and tortuous journey through the judicial system should redound to Grange's benefit. A determination that the benefits became due and payable upon the entry of the arbitrator's award would, in this case, work an injustice by rewarding Grange for improperly denying benefits." Landis at 341-342. {12} Landis further explained that "* * * [insurance companies] will be subject to a prejudgment interest award, not as a punishment but as a way to prevent them from using money then due and payable to another for their own financial gain." Id. at 341.

{13} A motion for prejudgment interest is committed to the discretion of the trial court. Pruszynski v. Reeves, 117 Ohio St.3d 92, 2008-Ohio-510, 881 N.E.2d 1230, ¶14. Therefore, a reviewing court may not reverse that decision absent an abuse of discretion by the trial court. Abuse of discretion connotes more than an error of judgment; instead,...