Thanks for visiting! Welcome to a new way to research case law. You are viewing a free summary from Descrybe.ai. For citation and good law / bad law checking, legal issue analysis, and other advanced tools, explore our Legal Research Toolkit — not free, but close.
Ross v. Farmers Insurance Group of Companies
Citations: 82 Ohio St. 3d 281; 695 N.E.2d 732Docket: Nos. 97-402, 97-551, 97-2056 and 97-2301
Court: Ohio Supreme Court; July 1, 1998; Ohio; State Supreme Court
The certified question pertains to the timing of when a cause of action for underinsured motorist coverage accrues, which is critical in determining the applicable law for such claims. The Montgomery County Court of Appeals ruled that appellants Ross and Davis could only access underinsured motorist coverage after exhausting the liability coverage of the tortfeasor. This exhaustion, a condition precedent, occurred post the effective date of Am. Sub.S.B. No. 20, leading the court to apply the revised version of R.C. 3937.18 to their claims. However, this conclusion conflicted with decisions from other appellate districts, specifically Brocwell and McBee, which held that the law in effect at the time of the accident governs entitlement to coverage. The court identified the need to decide between the date of contract, date of accident, and date of exhaustion concerning the impact of subsequent legislation on the insurer-insured relationship. The court found that the Montgomery County Court of Appeals erred by applying the newer statute to the appellants' claims. The appellee argued that under their insurance policy, the right to underinsured benefits accrues only after certain contractual preconditions are met, specifically the exhaustion of liability coverage, which did not happen until after the new law took effect. The appellee cited Kraly v. Vannewkirk to support this position, highlighting that claims for uninsured motorist coverage must be initiated within a specified time frame following an accident, as seen when the Kralys’ claim was barred for not being filed timely despite their situation involving a tortfeasor's insurer going insolvent. A contractual period of limitations for uninsured motorist coverage is deemed unreasonable if it expires shortly after the right to action accrues, as established in Kraly. The Kraly court determined that the claim for benefits did not arise until notification of the tortfeasor's insurance company insolvency, leaving insufficient time to file a claim. This case differs significantly from Kraly, which involved uninsured motorist claims, while the current matter pertains to underinsured motorist benefits. The distinction is clear and does not require elaboration. In Kraly, the court analyzed Civ. R. 15(C) and the validity of the contractual limitations period, focusing on fairness and public policy regarding the timing of claims. The insolvency of the tortfeasor’s insurer triggered the uninsured motorist coverage, and using the date of the accident as the accrual date was found unfair due to the short filing window following insolvency. The Montgomery County Court of Appeals incorrectly applied Kraly’s ruling to the current case, which involves different facts and legal issues. It is important to note that underinsured motorist coverage rights are not contingent on fulfilling contractual preconditions, as an insurance policy typically requires the exhaustion of the tortfeasor’s policy limits before underinsured benefits can be claimed. However, the exhaustion date does not dictate the applicable law for underinsured motorist claims. Appellants assert that the statutory law in effect at the time of contracting governs the rights and duties of parties involved in an insurance contract, a position supported by precedent. The law at the time of contract formation defines the responsibilities and rights of the involved parties, as established in multiple Ohio court decisions. In **Ady v. W. Am. Ins. Co.** (1982), the Ohio Supreme Court established that contractual restrictions on coverage mandated by R.C. 3937.18 must align with the statute's purpose. Additionally, in **Sexton v. State Farm Mut. Auto. Ins. Co.** (1982), the court ruled that any provisions in automobile liability insurance policies that diverge from statutory mandates are unenforceable. The court reiterated that while R.C. 3937.18 does not override standard contract principles, contracts contrary to law are not permissible, as stated in **Martin v. Midwestern Group Ins. Co.** (1994). The scope of automobile liability insurance coverage must conform to statutory law in effect at the time the contract is made. This principle is supported by Section 28, Article II of the Ohio Constitution, prohibiting the legislature from enacting laws that impair contractual obligations. Several precedents, including **Aetna Life Ins. Co. v. Schilling** (1993) and **Burtner-Morgan-Stephens Co. v. Wilson** (1992), affirm that subsequent legislative changes cannot retroactively alter existing agreements. For instance, in **Kiser v. Coleman** (1986), the court ruled that retroactive application of statutes to existing contracts violates constitutional protections against impairment of contracts. The contracts in the reviewed cases were formed before the enactment of Am. Sub.S.B. No. 20 on October 20, 1994, and expired prior to its effective date. The appellee acknowledged that the appellants held valid automobile liability insurance policies, which included underinsured motorist coverage, at the time of their accidents. Furthermore, as noted in **Benson v. Rosler** (1985), subsequent statutes apply to renewed insurance policies only if they constitute a new contract. In this case, no new contract or renewal occurred, precluding the incorporation of Am. Sub.S.B. No. 20 into the existing policies without breaching contract obligations. The statutory law governing the insurance contracts at the time of the parties' agreements was former R.C. 3937.18, as interpreted by the case Savoie. The subsequent enactment of Am. Sub.S.B. No. 20 on October 20, 1994, was intended to override Savoie. Accepting the appellee's argument that this new legislation should apply would retroactively alter the coverage agreed upon in existing insurance policies, which is not permissible. Thus, the law in effect at the time of contracting governs the rights and obligations of the parties regarding underinsured motorist claims. The accidents in question occurred on April 23, 1993, for Olivea Ross and on May 14, 1993, for David Davis, both while they held active policies with the appellee. At the time of their accidents, the prevailing law from Hill v. Allstate Ins. Co. (1990) dictated that underinsured motorist coverage was unavailable if the insured's policy limits matched those of the tortfeasor. However, the decision in Savoie (October 1, 1993) changed this interpretation, establishing that underinsured claims must be paid when damages exceed the tortfeasor's liability coverage, effectively overruling Hill. According to the Peerless doctrine, a court's decision that overrules a prior case is considered to have always been the law, rendering Savoie the applicable law at the time of the appellants' accidents. Consequently, under the former R.C. 3937.18 and the interpretation in Savoie, the appellants are entitled to underinsured motorist benefits from the appellee. Judgments from the court of appeals are reversed, and the cases are remanded for reinstatement of the trial courts’ decisions, with judges Resnick, Sweeney, and Pfeifer concurring. Chief Justice Moyer and Justices Cook and Lundberg Stratton dissent separately. The court in Kraly highlighted similarities between contractual and statutory limitations periods, referencing Gaines v. Preterm-Cleveland, Inc., which addressed the constitutionality of the four-year statute of repose for medical malpractice. In Gaines, the plaintiffs discovered their injuries shortly before the expiration of the statute, prompting the court to rule that the period was unreasonably brief, thereby allowing the cause of action to accrue upon discovery of the malpractice. Kraly’s ruling extends similar protections to plaintiffs facing onerous contractual provisions, aligning it with cases governed by the discovery rule.