Biondic v. Nationwide Mutual Insurance

Nahra, C.J. This is an appeal from the court of common pleas’ decision granting summary judgment in favor of the defendant. The plaintiffs filed a declaratory judgment action against their insurance company, Nationwide Mutual Insurance Company (“Nationwide”), seeking a declaration of their rights pursuant to the underinsured motorist provision of their policy. The following stipulated facts give rise to this appeal. The plaintiffs’ claim involved damages arising out of the death of their daughter, Laura Ann Biondic, on September 11, 1982. She was killed while a passenger in an automobile operated by a driver who lost control of the car. Both the owner and driver of the car were New York residents. The operator of the car was insured by Allstate Insurance Company (“Allstate”), which provided a maximum of $50,000 for a wrongful death claim. Nationwide provided $100,000 in underinsured motorist coverage to the plaintiffs. The plaintiffs settled their claim for the wrongful death of Laura Ann Biondic with Allstate for $27,000. As a part of the settlement, the plaintiffs released the tortfeasor from any further claims. The wrongful death claim was settled with Allstate under the New York wrongful death statute. The plaintiffs additionally presented a claim to Nationwide for compensation under their underinsurance coverage. Defendant Nationwide advised the plaintiffs that it did not feel the claim qualified as an underinsured claim. The plaintiffs brought this declaratory judgment action to determine their rights under their insurance contract. The trial court, without an opinion, granted summary judgment in favor of the defendant insurance company. The plaintiffs have timely appealed, raising the following assignments of error: “I. The lower court erred in finding as a matter of law that appellants were not entitled to the benefit of ap-pellee’s uninsured motorist coverage (underinsured motorist coverage) because they failed to exhaust the available liability insurance limits of the tortfeasor. “II. The lower court erred in *180 finding as a matter of law that ap-pellee’s uninsured (underinsured) motorist coverage did not apply because appellants settled with and released the tortfeasor without ap-pellee’s written consent. “III. The lower court erred in finding that appellants failed to timely commence legal action or demand arbitration against appellee.” We will address these assigned errors together. Because no opinion was written by the trial court, the appellants made certain assumptions in determining their assignments of error. The record is silent as to the reasoning for the court’s granting of the appellee’s motion for summary judgment and. we will not engage in speculation as to why the trial court made its determination. We do find a basis to uphold the trial court’s decision, which concerns the issues raised in the first assignment of error. Because of our determination of the first assignment of error, we do not reach the assumptions presented by the remaining assignments of error. The appellants contend that the trial court erroneously granted summary judgment in favor of the appellee as the appellants had exhausted the limits of the tortfeasor’s policy and were entitled to assert an underin-sured motorist claim. Appellee Nationwide filed its motion for summary judgment asserting that there was no issue of material fact and that it was entitled to judgment as a matter of law as the appellants failed to exhaust the available insurance limits of the tortfeasor, a prerequisite to an underinsured claim under the Nationwide policy. As stipulated, the tort-feasor had available $50,000 in liability insurance and the appellants’ claim against the tortfeasor was settled for $27,000. The appellants filed a brief in opposition to the motion, asserting that under the New York wrongful death law they had exhausted the limits of the wrongdoer’s policy and that since under the Ohio wrongful death statute additional damages were allowed, they should receive underin-surance coverage for the damages not compensable by the New York law. It is apparent that the New York wrongful death statute is more restrictive in allowable damages than the Ohio law. The Nationwide policy of insurance issued to the appellants included these provisions: “[Nationwide] will pay bodily injury damages that you or your legal representative are legally entitled to recover from the owner or driver of an uninsured motor vehicle.” (Nationwide’s Century 11 Auto Policy, uninsured motorists coverage, at 9.) “An uninsured motor vehicle includes an underinsured motor vehicle.” “No payment will be made until the limits of all other liability insurance and bonds that apply have been exhausted by payments.” (Endorsement 1604, Supplementary Uninsured Motorist Coverage.) The central issue here concerns the meaning of the word “exhausted.” The appellee argues that the term should be literally interpreted and that since the appellants settled for $27,000, while there was $50,000 available under the tortfeasor’s policy, the appellants did not exhaust the limits of other liability insurance. The appellants argue for a more liberal interpretation of “exhausted,” contending that they need only exhaust what was available to them under New York law, regardless of the amount of liability insurance held by the tortfeasor. The Ohio Supreme Court has just recently discussed the meaning of the term “exhaust” as it relates to underinsurance motorist coverage. In *181 Bogan v. Progressive Cos. Ins. Co. (1988), 36 Ohio St. 3d 22, 521 N.E. 2d 447, the court conceded that the plain meaning of the exhaustion requirement is that an insured is not entitled to an underinsurance payment until he has recovered the full amount of the tortfeasor’s available policy limits, but the court failed to strictly apply that requirement. In that case, the plaintiffs settled with the tortfeasor for $21,000, while the tortfeasor had coverage of $25,000. In their claim against their insurance company plaintiffs had argued that they were underinsured as their claim had a minimum value of $30,000. The court held that “an injured insured satisfies the ‘exhaustion’ requirement in the underinsured motorist provision of his liability insurance policy when he receives from the underinsured tort-feasor’s insurance carrier a commitment to pay an amount in settlement, the injured party retaining the right to proceed against his underinsured motorist insurance carrier only for those amounts in excess of the tort-feasor’s policy limits.” Id. at 28, 521 N.E. 2d at 453. Although the court held that there could be recovery from a party’s insurance company for underinsurance coverage without literally exhausting the tortfeasor’s policy limits, we do not find that determination applicable to the facts in the instant case. Here the insured settled with the tortfeasor for $27,000 when $50,000 was available under the tortfeasor’s policy. Obviously under New York law, then, the tort-feasor was adequately insured. What the claim might be worth in Ohio is not relevant as the appellants negotiated and settled their wrongful death claim under New York law, which under choice-of-law principles was the appropriate controlling substantive law. See Morgan v. Biro Mfg. Co. (1984), 15 Ohio St. 3d 339, 15 OBR 463, 474 N.E. 2d 286. The appellants cannot split their wrongful death action, applying New York law to the claim against the tortfeasor and applying Ohio law to the underinsured claim against appellee-Nationwide. Appellants concede that the tortfeasor’s policy limits exceeded the value of the claim in New York, whereas in Bogan plaintiffs argued that their claim was worth an amount in excess of the tortfeasor’s policy. The appellants rely on Tracy v. State Farm Ins. Co. (Sept. 20, 1984), Cuyahoga App. No. 46333, unreported, to support their argument. That case is distinguishable, however, as there the court determined that as a matter of law the Ohio plaintiff could recover nothing from the New York tortfeasor. Here the appellants did have a wrongful death action against the New York tortfeasor, which they settled for less than the policy limits. Appellants additionally rely on Repasy v. Nationwide Ins. Co. (1980), 67 Ohio App. 2d 118, 21 O.O. 3d 426, 425 N.E. 2d 959. That case, however, concerned a different issue, that of uninsured motorist coverage and an “other insurance” clause. Our decision that appellants may not recover from their insurance company is consistent with the goal of underinsurance coverage to place the insured in the same position he would have been in if the tortfeasor had been adequately insured. Under the appropriate choice-of-law jurisdiction, the tortfeasor was adequately insured, as seen in the settlement for substantially less than the policy limits. Considering this, we find no policy reasons to justify a triggering of the appellants’ underinsurance coverage. The appellants’ assignments of error are overruled. Judgment affirmed. Dyke, J., concurs. *182 Patton, J., concurs in judgment only.