Owens et al v. National Indemnity Company

Filing 41

OPINION AND ORDER: For the foregoing reasons, Defendants Motion for Summary Judgment (Doc. 30) is GRANTED and Plaintiffs Motion for Summary Judgment (Doc. 31) is DENIED. Defendants Motion for Leave to File Affidavit of Jim Ross is DENIED AS MOOT. The Clerk shall remove Documents 30, 31, and 39 from the Courts pending motions list and close this case. IT IS SO ORDERED 4/3/2019 (sh).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION

JEREMY HUE OWENS, et al.,
Plaintiffs,
Case No. 2:17-cv-813
JUDGE GEORGE C. SMITH
Magistrate Judge Vascura

v.

NATIONAL INDEMNITY COMPANY,
Defendant.

OPINION AND ORDER
This matter is before the Court upon the parties’ cross-motions for summary judgment
(Docs. 30–31). The motions are fully briefed and ripe for disposition.1 For the following reasons,
Defendant’s motion is GRANTED and Plaintiffs’ motion is DENIED.
I.

BACKGROUND

The underlying facts are not in dispute. On March 13, 2015, Plaintiff Jeremy Owens was
seriously injured in an accident when he, a member of a road crew patching potholes, was struck
by a pickup truck owned and operated by Joseph Adkins. On August 4, 2015, Jeremy and his wife,
Plaintiff Brooke Owens, commenced a personal injury action against Joseph Adkins in the Court
of Common Pleas for Madison County, Ohio. (Doc. 1-2, State Court Compl.). Plaintiffs later
amended their complaint in the state action to add Joseph’s brother, Ernest Adkins, doing business
as Ernie’s Truck and Tire Repair, as an additional defendant. (Doc. 31-5, State Court Am.

1

Defendant also moved for leave to file a surreply brief in relation to Plaintiffs’ motion for summary judgment,
which Plaintiffs opposed. (Docs. 37–38). Defendant’s motion is hereby GRANTED and the Court will consider
the parties’ surreply arguments in deciding Plaintiff’s motion for summary judgment.

Compl.). Plaintiffs claimed that Joseph was an employee of Ernest’s garage business and was
acting within the scope his employment with Ernest at the time of the accident. (Id.).
Ernest maintained a policy of liability insurance for his garage business with Defendant
National Indemnity Company (“National”) that was in effect at the time of the accident. (Doc. 261, Policy). National learned of the accident when it received a copy of the Amended Complaint
from Plaintiffs’ counsel in October 2015. National denied coverage for the claim because, at the
time of the accident, Joseph was driving a vehicle that was not a “covered auto” under the Policy.
(Doc. 27-1, Denial of Coverage Letter).
On July 24, 2017, the state court entered a consent judgment submitted by Plaintiffs,
Joseph, and Ernest that granted judgment against Joseph and Ernest in favor of Plaintiffs in the
sum of $2,000,000. (Doc. 30-7, State Court Judgment). The judgment entry also stated that
Plaintiffs “shall affect [sic] satisfaction of this judgment by supplementary proceedings authorized
by statute, or other claims against liability insurers for Defendants, . . . including but not limited
to National Indemnity Company . . .” and that “Plaintiffs shall have no further recourse against
Defendants to satisfy this judgment except as set forth hereinbefore, by an action or actions,
including but not limited to a supplementary complaint against liability insurers of the
Defendants.”2 (Id.).
On August 14, 2017, Plaintiffs filed a supplemental complaint in the state action against
National under Ohio Revised Code § 3929.06, which permits a judgment creditor to seek
satisfaction of the judgment from the judgment debtor’s liability insurer. (Doc. 1-2, Suppl.
Compl.). National removed the supplemental complaint to this Court on September 15, 2017.
(Doc. 1).

2

Joseph was insured under a GEICO auto liability policy; as part of the consent judgment, GEICO agreed to pay its
policy limits of $25,000 and was expressly excluded from any further enforcement efforts by Plaintiffs. (Id.)

2

II.

STANDARD OF REVIEW

The parties move for summary judgment pursuant to Rule 56 of the Federal Rules of Civil
Procedure. Summary judgment is appropriate when “there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); Berryman
v. SuperValu Holdings, Inc., 669 F.3d 714, 716–17 (6th Cir. 2012). The Court’s purpose in
considering a summary judgment motion is not “to weigh the evidence and determine the truth of
the matter” but to “determine whether there is a genuine issue for trial.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249 (1986). A genuine issue for trial exists if the Court finds a jury
could return a verdict, based on “sufficient evidence,” in favor of the nonmoving party; evidence
that is “merely colorable” or “not significantly probative,” however, is not enough to defeat
summary judgment. Id. at 249–50.
The party seeking summary judgment shoulders the initial burden of presenting the Court
with law and argument in support of its motion as well as identifying the relevant portions of “‘the
pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact.”
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56). If this initial
burden is satisfied, the burden then shifts to the nonmoving party to set forth specific facts showing
that there is a genuine issue for trial. See Fed. R. Civ. P. 56(e); see also Cox v. Kentucky Dep’t of
Transp., 53 F.3d 146, 150 (6th Cir. 1995) (after burden shifts, nonmovant must “produce evidence
that results in a conflict of material fact to be resolved by a jury”).
In considering the factual allegations and evidence presented in a motion for summary
judgment, the Court “views factual evidence in the light most favorable to the non-moving party
and draws all reasonable inferences in that party’s favor.” Barrett v. Whirlpool Corp., 556 F.3d
502, 511 (6th Cir. 2009). But self-serving affidavits alone are not enough to create an issue of fact
3

sufficient to survive summary judgment. Johnson v. Washington Cty. Career Ctr., 982 F. Supp.
2d 779, 788 (S.D. Ohio 2013) (Marbley, J.). “The mere existence of a scintilla of evidence to
support [the non-moving party’s] position will be insufficient; there must be evidence on which
the jury could reasonably find for the [non-moving party].” Copeland v. Machulis, 57 F.3d 476,
479 (6th Cir. 1995); see also Anderson, 477 U.S. at 251.
That the parties have filed cross-motions for summary judgment does not alter the Court’s
standard of review. See Taft Broad. Co. v. United States, 929 F.2d 240, 248 (6th Cir. 1991) (“[T]he
standards upon which the court evaluates the motions for summary judgment do not change simply
because the parties present cross-motions.”). Thus, in reviewing cross-motions for summary
judgment, the Court must still “evaluate each motion on its own merits and view all facts and
inferences in the light most favorable to the non-moving party.” Wiley v. United States, 20 F.3d
222, 224 (6th Cir. 1994).
III.

ANALYSIS

National argues that Jeremy’s injuries are not covered by the Policy because Joseph was
using a vehicle that was not a “covered auto” at the time of the accident. For the following reasons,
the Court agrees.
A.

The Court assumes without deciding that the consent judgment is valid.
First, National argues that the consent judgment in the state action is invalid for various

reasons and cannot impose liability on National. Plaintiffs argue that the entry of judgment against
Ernest in addition to Joseph “at a minimum embraces judgment on [Plaintiffs’] allegation that Joe
Adkins was ‘acting within the scope and course of agency and/or employment’ by Ernie Adkins
when he negligently struck Jeremy Owens.” (Doc. 31, Pls.’ Mot. at 5). National disputes this
reading of the consent judgment because no evidence was introduced in the state action in support
of this allegation and the state court made no findings of fact to that effect. (Doc. 33, National’s
4

Resp. at 16–17). National also points out that Plaintiffs commenced the supplemental action
before the 30-day period provided for by Ohio Revised Code § 3929.06 had elapsed. (Id. at 18).
Further, National contends the state court was without jurisdiction to enter the consent judgment
because the $2,000,000 judgment exceeded the caps on recoverable non-economic losses imposed
by Ohio Revised Code § 2315.18. (Id. at 18). Finally, National argues the consent judgment was
the product of collusion—that is, because Plaintiffs agreed to never seek satisfaction of the
judgment directly from them, Joseph and Ernest “would have agreed to virtually anything
Plaintiffs’ counsel put in the Judgment Entry.” (Id. at 16–17).
Ultimately, however, none of these issues are material. Because, as explained below,
National is entitled to judgment even if the consent judgment is valid, the Court assumes its validity
without so deciding.
B.

National may raise contract defenses in a supplemental action based on a valid
judgment.
Assuming for the sake of argument that the consent judgment does everything Plaintiffs

argue it does—that it establishes as res judicata that Joseph was Ernest’s employee and acting
within the scope of his employment at the time of the accident—National is not liable to Plaintiffs
simply by virtue of the consent judgment’s existence. Liability ensues only if Joseph’s negligence
was covered by the Policy. O.R.C. § 3929.06(C)(1) (“[T]he insurer has and may assert as an
affirmative defense against the judgment creditor any coverage defenses that the insurer possesses
and could assert against the holder of the policy in a declaratory judgment action or proceeding.”).
As the Ohio Supreme Court has explained, “[i]t is well established that the rights of such
a plaintiff against the insurer cannot rise above those of the insured, and that any defenses which
would have been available to the insurer in an action by the insured are equally available to the
insurer when named a defendant in a supplemental petition filed under the provisions of Section
5

3929.06, Revised Code.” Bennett v. Swift & Co., 163 N.E.2d 362, 364 (Ohio 1959). See also
Transamerica Ins. Co. v. Taylor, 504 N.E.2d 15, 17 (Ohio 1986), overruled on other grounds
by Preferred Risk Ins. Co. v. Gill, 507 N.E.2d 1118 (Ohio 1987) (in a proceeding under § 3929.06,
“insurance companies may raise any defense that they would have against the insured.”). Thus,
for Plaintiffs to succeed, the language of the Policy must encompass the accident.
C.

The Policy does not provide coverage for the accident.
Ernest’s Policy is based on National’s standard Garage Coverage Form, CA 00 05 10 01.

(Doc. 26-1, Policy, PAGEID #432–47). Plaintiffs assert the accident is covered by the portion of
the Policy providing coverage for “‘Garage Operations’ — Other Than Covered ‘Autos.’” (Doc.
31, Pls.’ Mot. at 7). This section of the Policy provides as follows:
SECTION II – LIABILITY COVERAGE
A. Coverage
1. “Garage Operations” – Other Than Covered “Autos”
a. We will pay all sums an “insured” legally must pay as damages
because of “bodily injury” or “property damage” to which this
insurance applies caused by an “accident” and resulting from
“garage operations” other than the ownership, maintenance or use
of covered “autos”.
(Doc. 26-1, Policy at PAGEID #433). Several terms in this provision must be defined before the
extent of coverage can be ascertained.
First, “auto” means “a land motor vehicle, ‘trailer’ or semitrailer.” (Id. at PAGEID #445).
No party disputes that Joseph’s truck was an “auto” as defined by the Policy. Next, covered
“autos” are determined by consulting the “coverage symbols” listed next to a coverage on the
declarations page of the Policy. “The symbols entered next to a coverage on the Declarations
designate the only ‘autos’ that are covered ‘autos.’” (Doc. 26-1, Policy, PAGEID #432). In
Ernest’s policy, coverage symbol “30” is entered on the declarations page next to “Liability”

6

coverage. (Id. at PAGEID #428). Coverage symbol 30 is defined by the Policy as “‘Autos’ Left
With You For Service, Repair, Storage Or Safekeeping — Any customer’s land motor vehicle or
trailer or semitrailer while left with you for service, repair, storage or safekeeping. Customers
include your ‘employees’, and members of their households, who pay for the services performed.”
(Id. at PAGEID #433). Joseph was clearly not operating a covered “auto” at the time of the
accident, because the vehicle he was driving was out on the road and not “left with” Ernest’s
business “for service, repair, storage, or safekeeping.” Plaintiffs expressly concede that Joseph’s
pickup truck was not a covered “auto” under the Policy. (Doc. 31, Pls.’ Mot. at 6).
Further, “insured” is defined, for purposes of “Garage Operations Other Than Covered
‘Autos,” as including “your employees, directors or shareholders” “but only while acting within
the scope of their duties.” (Id. at PAGEID #434–35, 448). Thus, to the extent Joseph was
employed by Ernest and acting within the scope of that employment at the time of the accident (a
fact that the Court continues to assume without deciding), Joseph qualifies as an “insured” under
the Policy.
Finally, it is undisputed that Jeremy suffered “bodily injuries” “caused by an ‘accident.’”
As a result, the existence of coverage turns entirely on the definition of “garage operations.” In
the Garage Coverage Form, “garage operations” is defined as follows:
SECTION VI — DEFINITIONS
***
H. “Garage operations” means the ownership, maintenance or use of locations for
garage business and that portion of the roads or other accesses that adjoin these
locations. “Garage operations” includes the ownership, maintenance or use of the
“autos” indicated in Section I of this Coverage Form as covered “autos”. “Garage
operations” also include all operations necessary or incidental to a garage business.
(Doc. 26-1, Policy at PAGEID #445–46). Plaintiffs argue that this provision establishes coverage
because Joseph, acting in the scope of his employment, was on his way to perform an errand on
7

behalf of Ernest’s business, which constitutes “operations necessary or incidental to a garage
business.” (Doc. 31, Pls.’ Mot. at 7).
However, the Policy also includes an Endorsement titled “Garage Coverage—Exclusion
of ‘Autos’ Other Than Covered ‘Autos’” which provides:
SECTION VI — DEFINITIONS, “Garage operations” is deleted and replaced by the
following:
“Garage operations” means the ownership, maintenance, or use of locations for
garage business and that portion of the roads or other accesses that adjoin these
locations. “Garage operations” includes the ownership, maintenance, or use of the
“autos” indicated in SECTION I of this Coverage Form as covered “autos.”
“Garage operations” also includes all operations necessary or incidental to a garage
business. “Garage operations” does not include the ownership or use of any
“auto” which is not a covered “auto” under this policy.
(Id. at PAGEID #454) (emphasis added). It is incontrovertible that Plaintiffs’ injuries arise out of
an accident caused by the “use of an[ ] ‘auto’ which is not a covered ‘auto’ under [the Policy].”
Jeremy was injured when he was struck by a truck owned and operated by Joseph, a truck that
Plaintiffs expressly concede is not a covered “auto.” Thus, even if Joseph were an employee of
Ernest and Joseph was acting within the scope of that employment at the time of the accident, the
Endorsement specifically excludes coverage for the use of Joseph’s vehicle. As a result, Plaintiff’s
injuries are not covered by the Policy.3
D.

The exclusion for the use of non-covered autos is not ambiguous or unconscionable.
Although the Endorsement’s definition of “garage operations” expressly excludes

coverage for use of non-covered autos such as Joseph’s truck, Plaintiffs argue that the Endorsement

3

As further justification for denial of coverage, National also points to an additional provision of the same
Endorsement, which adds a new exclusion to liability coverage under the Policy for injuries “resulting from the
maintenance of any ‘auto’ which is not a covered ‘auto’ under this policy if such [injuries] occur[ ] while such ‘auto’
is being used for garage business.” (Doc. 26-1, Policy at PAGEID #454). However, it is not clear to the Court that
Plaintiffs’ injuries resulted from the “maintenance” of Joseph’s truck. Because coverage for the “use” of Joseph’s
truck is expressly excluded by the Endorsement’s revised definition of “garage operations,” the Court need not
decide the import of the “maintenance” exclusion.

8

is “buried at the end of the policy” and “any average person reading the Policy would expect that
National would not both grant coverage for ‘other than covered autos’ prominently at the
beginning of the Policy issued in 2014, only to remove that coverage by an Endorsement . . .”
(Doc. 31, Pls.’ Mot. at 7). Plaintiffs also suggest that “the average person would find such a Policy
ambiguous at a minimum, and much more likely unconscionable, as there was absolutely no
reasonable basis to use an old Policy form which granted liability coverage for garage operations
not involving covered autos, and another form excluding non-covered autos from garage
operations at the end of the same Policy.” (Id. at 8). The Court disagrees.
First, the Endorsement is not “buried” at the end of the policy. As with any contract, all
terms of an insurance policy must be considered as a whole to arrive at the contracting parties’
intent. Laboy v. Grange Indemn. Ins. Co., 41 N.E.3d 1224, 1227 (Ohio 2015) (“[t]he fundamental
goal when interpreting an insurance policy is to ascertain the intent of the parties from a reading
of the policy in its entirety and to settle upon a reasonable interpretation of any disputed terms in
a manner designed to give the contract its intended effect.”) (emphasis added). The Endorsement
expressly says that it “modifies insurance provided under” the Garage Coverage Form in standard
size type at the top of the page. (Doc. 26-1, Policy at PAGEID #454). The mere fact that the
endorsement is included near the end of the Policy documents is not evidence that it was, or was
intended to be, hidden. Moreover, it is commonplace for insurers to use standard coverage forms
as a starting point so that they need not craft entire policies from scratch for each insured. They
then achieve coverage tailored to the insured’s choices by adding endorsements that alter the
standard coverage form terms as appropriate. There is nothing deceptive about this practice.
Nor does the Endorsement create ambiguity. While “provisions in an insurance contract
that are reasonably susceptible of more than one interpretation will be construed liberally in favor

9

of the insured,” this rule “will not be applied so as to provide an unreasonable interpretation of the
words of the policy.” Laboy, 41 N.E.3d at 1227 (citing King v. Nationwide Ins. Co., 519 N.E.2d
1380 (Ohio 1988), syllabus, and Cincinnati Ins. Co. v. CPS Holdings, Inc., 875 N.E.2d 31, 34
(Ohio 2007)). The Court cannot see a reasonable interpretation of the Endorsement that leads to
more than one interpretation. The Endorsement expressly states that the definition contained in
the standard Garage Coverage Form is “deleted and replaced by” the definition excluding coverage
for the use of autos other than covered autos. (Doc. 26-1, Policy at PAGEID #454). This language
creates a single, clear result: that the original definition in the standard Garage Coverage Form is
not effective, and the definition in the Endorsement is.
Finally, the Endorsement is not unconscionable. The party asserting the unconscionability
of a contract bears the burden of proving that the contract involves “both an absence of meaningful
choice on the part of one of the parties together with contract terms which are unreasonably
favorable to the other party.” Hayes v. Oakridge Home, 908 N.E.2d 408, 412 (Ohio 2009) (quoting
Lake Ridge Academy v. Carney, 613 N.E.2d 183 (Ohio 1993)). That is, “the party challenging a
contract as unconscionable must prove ‘a quantum’ of both procedural and substantive
unconscionability.” Taylor Bldg. Corp. of Am. v. Benfield, 884 N.E.2d 12, 24 (Ohio 2008) (citing
Ball v. Ohio State Home Servs., Inc., 861 N.E.2d 553, 555 (Ohio Ct. App. 2006)).
While Plaintiffs allude to the Policy’s possible unconscionability, the Court finds they have
not offered evidence sufficient to raise a genuine issue of material fact as to either procedural or
substantive unconscionability. As to the substantive prong, Plaintiffs insist, without citation, that
a reasonable person would have “expected” that coverage for “‘Garage Operations’ – Other Than
Covered ‘Autos’” would include coverage for the use of autos other than covered autos. However,
as explained supra, that “expectation” is defeated by reading the Policy in its entirety.

10

Plaintiffs also suggest that National was obligated, at the time Ernest purchased the Policy,
to provide coverage for all vehicles used in his business. (Doc. 32, Pls.’ Resp. at 8). They rely on
Ohio’s financial responsibility law, which states:
No person shall operate, or permit the operation of, a motor vehicle in this State,
unless proof of financial responsibility is maintained continuously throughout the
registration period with respect to that vehicle or, in the case of a driver who is not
the owner, with respect to the driver’s operation of the vehicle.
O.R.C. § 4905.101(A)(1). Plaintiffs contend that, “[g]iven that Ernie Adkins had no other liability
insurance coverage for his trucks utilized in his proprietorship, Ernie certainly was entitled to
expect National would write a Policy compliant with Ohio law.” (Doc. 32, Pls.’ Resp. at 8). But
§ 4905.101(A)(1) does not impose a duty on insurers to provide any particular type of coverage.
Rather, the statute puts the onus on vehicle owners to obtain compliant coverage. In this case,
Ernest did not even own the vehicle at issue. Joseph did, and he apparently complied with
§ 4905.101(A)(1) by obtaining an auto insurance policy from GEICO, who already offered its
policy limits to Plaintiffs. (Doc. 30-7, State Court Judgment).
Nor have Plaintiffs introduced evidence or argument to suggest that Ernest was deprived
of any meaningful choice in purchasing the Policy. National seeks to underscore this point by
relying on Ernest’s application for the Policy as well as an affidavit by Jim Ross, Ernest’s insurance
agent through which he purchased the Policy. (Doc. 33-1, Application; Doc. 39-1, Ross Aff.).
Plaintiffs object to the introduction of the application at this juncture, relying on an agreement
between the parties to limit the exhibits used in the summary judgment motions. Because the
Court finds that the Endorsement is not substantively unconscionable, and because Plaintiffs have
not introduced any evidence as to procedural unconscionability, the Court need not consider the
application or Mr. Ross’s affidavit at this time. Accordingly, National’s Motion for Leave to File
Affidavit of Jim Ross is denied as moot.
11

In sum, the Endorsement expressly excludes coverage for Plaintiffs’ claims, and Plaintiffs
have not established that the Endorsement is invalid on any grounds. National is therefore entitled
to summary judgment.
IV.

CONCLUSION

For the foregoing reasons, Defendant’s Motion for Summary Judgment (Doc. 30) is
GRANTED and Plaintiffs’ Motion for Summary Judgment (Doc. 31) is DENIED. Defendant’s
Motion for Leave to File Affidavit of Jim Ross is DENIED AS MOOT.
The Clerk shall remove Documents 30, 31, and 39 from the Court’s pending motions list
and close this case.
IT IS SO ORDERED.
/s/ George C. Smith
GEORGE C. SMITH, JUDGE
UNITED STATES DISTRICT COURT

12