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When Supreme Court Denies Review, Disputed Issue Between the Parties Is Settled According to Lower Court’s Ruling
2005-0078 and 2005-0457. Sheaffer v. Westfield Ins. Co., 2006-Ohio-4476.
Holmes App. No. 03CA006, 2004-Ohio-6755. Judgment affirmed.
Moyer, C.J., Resnick, Pfeifer and Lanzinger, JJ., concur.
Lundberg Stratton, O'Connor and O'Donnell, JJ, dissent.
Opinion: http://www.supremecourtofohio.gov/rod/newpdf/0/2006/2006-Ohio-4476.pdf
(Sept. 13, 2006) The Supreme Court of Ohio held today that, under the “law-of-the-case” doctrine, when the Court denies jurisdiction (declines to hear) a discretionary appeal, that action settles the issue of law between the parties for which Supreme Court review was sought.
The case involved insurance claims filed by the husband and children of Judy Sheaffer of Millersburg, who was killed in a collision caused by an uninsured driver in June 2000. Sheaffer's estate sued Argonaut Great Central Insurance Company to recover uninsured/underinsured motorist (UM/UIM) coverage under two different policies purchased from Argonaut by Sheaffer's employer. Under the Supreme Court's 1999 rulings in Scott-Pontzer v. Liberty Mutual Ins. and Ezawa v. Yasuda Ins., auto liability policies purchased by business entities in Ohio that included certain policy language were presumed to provide UM/UIM coverage for company employees up to the stated policy liability limits, regardless of whether the employee was engaged in work-related travel at the time of injury. The parties agreed that Mrs. Sheaffer was not acting within the scope of her employment at the time of her accident.
Applying Scott-Pontzer and Ezawa to the facts of Sheaffer's case, the Holmes County Common Pleas Court entered summary judgment in August 2002 in favor of the Sheaffer estate. Its decision ( Sheaffer I ) allowed total UM/UIM money damages of $525,000 and held that both Argonaut insurance policies – a commercial general liability (CGL) policy and a second “umbrella” excess-liability policy – provided UM/UIM coverage payable to Sheaffer's survivors. The coverage limits of either policy, standing alone, were sufficient to satisfy the $525,000 award.
Argonaut appealed, and the 5th District Court of Appeals affirmed the trial court's finding of UM/UIM coverage under the Argonaut “umbrella” policy, but reversed the portion of the trial court judgment that found UM/UIM coverage under the CGL policy. The appellate decision remanded the case to the trial court for “further proceedings consistent with this decision.” On Oct. 15, 2003, the trial court entered a final judgment order (Sheaffer II) vacating the portion of Sheaffer I applicable to the CGL policy but holding that the portions of its earlier judgment applicable to the Argonaut umbrella policy “were affirmed by the Court of Appeals and remain valid … Plaintiffs are entitled to judgment against Argonaut for $525,000.”
On Oct. 24, 2003, Argonaut filed a motion seeking Supreme Court review of the 5th District ruling in Sheaffer I relative to the umbrella policy. On Jan.21, 2004, the Court declined to hear that appeal.
Meanwhile, on Nov. 5, 2003, the Supreme Court issued a decision, Westfield Ins. Co. v. Galatis, in which it partially overruled Scott-Pontzer and Ezawa by holding that the scope of implied UM/UIM coverage in an employer's auto insurance policy was limited to damages suffered by an employee while acting in the scope of employment.
On Nov. 12, 2003, eight days after Galatis was announced, Argonaut appealed the trial court's Sheaffer II decision to the 5th District. The insurer asserted a single assignment of error, arguing that the trial court had acted contrary to law (that is, contrary to Galatis) in finding that Judy Sheaffer was an insured party under the umbrella policy. On Dec. 3, 2004, the 6th District affirmed the trial court's judgment in Sheaffer II based upon the law of the case doctrine – that is that the legal issues had already been decided. Argonaut appealed the court of appeals Sheaffer II decision, and the Supreme Court agreed to hear that appeal.
Writing for the majority in today's 4-3 decision, Chief Justice Thomas J. Moyer wrote that, applying the “law of the case doctrine” to the specific facts of this case, the trial court's award of damages to the Sheaffers must be upheld as valid and enforceable.
“Argonaut argues that Galatis should be applied retroactively to foreclose liability because its appeal was pending at the time Galatis was decided. While Argonaut's argument is generally correct, it does not apply to the particular facts of this case,” wrote the Chief Justice. Because the trial court had entered a valid judgment in Sheaffer I applying the pre-Galatis interpretation of state insurance laws, and the 5th District had affirmed the Sheaffer I holding relative to the Argonaut umbrella policy before Galatis was announced, Moyer wrote that the Supreme Court's subsequent denial of jurisdiction over Sheaffer I settled the legal issue of when employees were covered by their employers' policies consistent with the court of appeals pre- Galatis ruling.
“Prior to the first round of appeals, a judgment had been entered against Argonaut for $525,000 … After the first round of appeals, Argonaut still had a judgment against it for $525,000,” the Chief Justice wrote. “Pursuant to this judgment, Argonaut was liable only under the umbrella policy. Because both policies limited the insurer's liability to $1,000,000, the court of appeals decision had no practical affect on the judgment. After this court denied jurisdiction, there was nothing for the Sheaffers to do but collect on the Oct. 15 judgment.”
The majority opinion was joined by Justices Alice Robie Resnick, Paul E. Pfeifer and Judith Ann Lanzinger.
Justice Evelyn Lundberg Stratton entered a dissent that was joined by Justices Maureen O'Connor and Terrence O'Donnell. Justice Stratton pointed out that the trial court issued its amended ruling in Sheaffer I on October 15, 2003, before the time limit had expired for Argonaut to appeal the court of appeals ruling in that case to the Supreme Court. She also noted that Argonaut had filed a timely appeal of Sheaffer II with the 5th District on Nov. 12, 2003 – after the Supreme Court's ruling in Galatis.
“When this Court declined jurisdiction over Sheaffer I, another appeal was pending in the appellate court. Until the appeals process expired, I believe this case remained pending, and our opinion in Hopkins v. Dyer mandated that the court in Sheaffer II apply the intervening case of Westfield v. Galatis as an exception to the law-of-the-case doctrine.”
Contacts
Steven J. Schrock, 330.674.3055, for
Ricky Lee Sheaffer and other survivors of Judy Sheaffer.
Amy S. Thomas, 614.228.1311, for the Argonaut Great Central Insurance Co.
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