PORTSMOUTH Ins. AGENCY v. Med. Mut. of Ohio

188 Ohio App.3d 111

934 N.E.2d 940

2009 Ohio 941

PORTSMOUTH INSURANCE AGENCY, Appellee,

v.MEDICAL MUTUAL OF OHIO, Appellant.

No. 08CA3218.

Court of Appeals of Ohio,Fourth District, Scioto County.

Decided Feb. 24, 2009.

David L. Day, Columbus, for appellee.

David J. Wigham, John H. Schaeffer, and Andrew P. Lycans, Wooster, for appellant.

PETER B. ABELE, Judge.

{¶ 1} This is an appeal from a Scioto County Common Pleas Court summary judgment in favor of Portsmouth Insurance Agency, plaintiff-appellee. The trial court determined that appellee did not have any obligation to indemnify Medical Mutual of Ohio, defendant-appellant, under an indemnity provision contained in appellee's agency contract with appellant.

{¶ 2} Appellant raises the following assignment of error for review:

The trial court erred in granting summary judgment in favor of Portsmouth Insurance Agency and against Medical Mutual of Ohio.

This case involves an indemnity dispute between appellant, an insurance company, and appellee, one of appellant's agencies, that arises out of a prior lawsuit that Luther and Donna Alley instituted against appellant, appellee, and Todd Skaggs, one of appellee's insurance agents. Appellant and appellee entered into an agency agreement that contained the following indemnity provision:

The Agent agrees to indemnify and save [appellant] harmless from all loss, expense, cost and liability resulting from unauthorized acts or transactions by said Agent or any other persons engaged or acting on the Agent's behalf.

In the prior lawsuit, the Alleys alleged that in December 2001, Skaggs completed an application for health-insurance coverage with appellant. After reviewing the application, appellant agreed to provide coverage to the Alleys. In February 2004, however, appellant terminated the Alleys' coverage, retroactive to January 1, 2002. Appellant took this action because of alleged misrepresentations in the health-insurance application. Appellant asserts that Skaggs did not provide correct information in the application regarding the Alleys' health conditions. The Alleys claimed that they completely disclosed their health conditions to Skaggs, but that Skaggs failed to accurately complete the application.

{¶ 3} In their complaint, the Alleys alleged that after appellant terminated their coverage, the Alleys requested that appellant question appellee or Skaggs concerning the information they provided to Skaggs. Appellant responded that Skaggs no longer worked as their agent. The Alleys then claimed that appellant (1) did nothing to confirm that they truthfully advised Skaggs of their medical background and history, (2) attempted to return $14,935.59 to the Alleys' premium refund and contacted the Alleys' medical providers to demand that they return the payments made for medical services provided to the Alleys, and (3) knew that Skaggs completed the Alleys' insurance application and that the Alleys did not make any willful or fraudulent misstatements regarding their application.

{¶ 4} Consequently, based upon these facts, the Alleys sought a declaratory judgment and asserted several causes of action against appellant: (1) fraud, (2) breach of contract, (3) false light, (4) breach of contract/bad faith, and (5) bad faith/tortious conduct. The Alleys also asserted several causes of action against appellee: (1) negligence, (2) breach of fiduciary duty, and (3) fraud. The Alleys further asserted the following causes of action against Skaggs: (1) negligence, (2) breach of fiduciary duty, and (3) fraud.

{¶ 5} Appellant brought a cross-claim in the Alley litigation against appellee and Skaggs and sought indemnification. Appellant alleged that it “was forced to defend a lawsuit that would not have occurred, if [appellee] had properly instructed the Alleys to fully and accurately complete to the [sic] entire medical health questionnaire and application.”

{¶ 6} Eventually, appellant notified appellee that it intended to settle the matter with the Alleys and demanded that appellee indemnify it. Appellant's letter stated that if appellee did not respond on or before March 19, 2007, appellant would proceed to execute the settlement agreement with the Alleys and look to appellee for recovery. Appellee did not respond. Appellant then settled with the Alleys for $70,000. On March 15, 2007, appellee filed a complaint for declaratory judgment against appellant and requested the court to declare the parties' rights and obligations under the agency agreement's indemnity provision.

{¶ 7} On April 13, 2007, before appellant filed its answer, appellee requested summary judgment and asserted that the Alleys' claims against appellant did not fall within the scope of the indemnity provision. Appellee argued that the causes of action all focused upon appellant's independent conduct, not appellee's or Skaggs' conduct for which appellant could be held vicariously liable. Appellee claimed that the causes of action were based upon appellant's “knowing and intentional conduct” and that indemnification is not available for intentional conduct.

{¶ 8} Appellant's memorandum contra asserted that it is entitled to be indemnified for damages paid to settle the Alleys' lawsuit because (1) it provided proper notice, (2) it is liable for the settled claims, and (3) the settlement is fair and reasonable. Appellant disputed appellee's claim that the Alleys asserted independent acts of negligence against appellant; rather, appellant asserted that all of the causes of action arose from appellee's agent's alleged misconduct. Thus, appellant argued that it was only vicariously liable for the Alleys' claims.

{¶ 9} The trial court overruled appellee's summary-judgment motion and determined that genuine issues of material fact remained. Appellant then answered and asserted a counterclaim for breach of the agency agreement.

{¶ 10} Subsequently, appellee filed a second summary-judgment motion. Appellee pointed out that since it filed the previous motion, it had settled the case with the Alleys. Appellee reiterated that the Alleys' causes of action against appellant did not fall within the scope of the indemnity provision. Rather, appellee asserted that the claims appellant settled with the Alleys related to appellant's own conduct in unilaterally terminating the insurance contract and that appellant did not settle any of the claims the Alleys asserted against appellee or Skaggs. Thus, appellee maintained that appellant could not use the indemnity provision to seek indemnity for its own intentional misconduct.

{¶ 11} In its memorandum contra, appellant noted that the trial court had denied appellee's earlier summary-judgment motion and that appellee's second motion raised no new issues.

{¶ 12} On January 18, 2008, the trial court granted appellee's summary-judgment request and determined that appellee had no obligation to hold appellant harmless, to reimburse or to indemnify appellant. Although the court did not provide specific reasons in its written decision, at an oral hearing the court stated that “it is inherently unfair for [appellant] to settle a case for which they are potentially liable and then to go back and tell [appellee] to pay us back.” The court also stated that because the parties settled the claims with the Alleys, the court could not determine the parties' actual liability so as to ascertain whether appellant is entitled to indemnity. This appeal followed.

{¶ 13} In its sole assignment of error, appellant asserts that genuine issues of material fact remain regarding appellee's indemnity obligation. Appellee argues that because appellant and appellee settled the issues in the Alley case, appellant is precluded from seeking indemnification. Appellee further claims that this controversy does not present a case in which a party secondarily liable seeks indemnification from a party primarily liable, but, instead, involves two primarily liable parties.

A STANDARD OF REVIEW

{¶ 14} Appellate courts review summary-judgment decisions de novo. Grafton v. Ohio Edison Co. (1996), 77 Ohio St.3d 102, 105, 671 N.E.2d 241. Accordingly, appellate courts must independently review the record to determine whether summary judgment is appropriate. In other words, appellate courts need not defer to trial court summary-judgment decisions. See Brown v. Scioto Cty. Bd. of Commrs. (1993), 87 Ohio App.3d 704, 711, 622 N.E.2d 1153; Morehead v. Conley (1991), 75 Ohio App.3d 409, 411-412, 599 N.E.2d 786. Thus, to determine whether a trial court properly determined summary judgment, an appellate court must review the Civ.R. 56 summary-judgment standard as well as the applicable law.

{¶ 15} Civ.R. 56(C) provides:

Summary judgment shall be rendered forthwith if the pleadings, 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 the evidence or stipulation, and only from the evidence or stipulation, 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, that party being entitled to have the evidence or stipulation construed most strongly in the party's favor.

Accordingly, trial courts may not grant summary judgment unless the evidence demonstrates that (1) no genuine issue as to any material fact remains to be litigated, (2) the moving party is entitled to judgment as a matter of law, and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and after viewing the evidence most strongly in favor of the nonmoving party, that conclusion is adverse...