Ohio Bar Liability Ins. v. INA Underwriters Ins.
Ohio Bar Liability Ins. v. INA Underwriters Ins.
Opinion of the Court
An Ohio legal firm held a polity of professional liability insurance issued by INA Underwriters Insurance Company ("INA") under the terms of which the members of the firm and its lawyer employees were the insured ("insured"). On March 5, 1985, at the termination of the policy period, as extended, an extended-discovery-period endorsement became effective. Also on March 5, 1985, the insured obtained coverage under a similar professional liability insurance policy issued by the Ohio Bar Liability Insurance Company ("OBLIC").
During the INA policy period, a complaint was filed against the insured in a California state court ("first case"). The first case was settled as reflected by a stipulated judgment and order in which, among other things, the California court retained jurisdiction to enforce the terms of the settlement agreement. The insured breached one of the terms of the settlement agreement relative to the notice to be given to the plaintiff in the first case ("Pettit") if there should be a default in payment of a certain installment obligation. The failure of the insured to give that notice and the subsequent commencement by the insured of an action in foreclosure occurred during the extended discovery period of the policy issued by INA. Specifically, the notice was not sent until December 3, 1985, and the foreclosure action was filed February 4, 1986.
On April 9, 1986, Pettit commenced an action in the California court against the insured alleging a breach of the settlement agreement ("second case"). The insured notified OBLIC of the pendency of the second case and when OBLIC denied coverage, the insured gave notice of the second case to INA. Coverage of the claim was also denied by INA on the contention that the acts constituting the basis for the second case occurred after the INA policy expired. OBLIC then agreed to defend the insured under a reservation of rights.
The case before this court for review was commenced on January 29, 1988, with OBLIC filing a complaint against INA seeking a declaratory judgment that OBLIC was not obligated to defend the insured in the second case; that the insured is not entitled to recover under its policy with OBLIC; that the INA policy in effect during the first case also covers the second case; and that INA be required to defend the second casa
In its appeal, INA advances two assignments of error:
"first, INA assigns as error the denial of its motion to set aside the decision and to reopen discovery and the striking of that motion; second, INA claims error in the denial of its motion for summary judgment and the granting of OBLIC's motion for summary judgment."
I
Orders made in discovery matters under the Ohio Civil Rules are in the discretionary power of the court. State, ex rel. Daggett, v. Gessaman (1973), 34 Ohio St. 2d 55, 295 N.E.2d 659, paragraph one of the syllabus. Therefore, the ruling of the common pleas judge on the motion to reopen discovery must stand unless there is an abuse of judicial discretion manifest upon the record before us. That term, abuse of discretion, "connotes more than an error of law or of judgment; it implies an unreasonable, arbitrary or unconscionable attitude on the part of the court." Pembaur v. Leis (1982), 1 Ohio St. 3d 89, 91, 437 N.E.2d 1199, 1201. Judicial discretion is to be "guided by the spirit, principles and analogies of the law, and founded upon the reason and conscience of the judge, to a just result in the light of the particular circumstances of the casa" Krupp v. Poor (1970), 24 Ohio St. 2d 123, 265 N.E.2d 268, paragraph two of the syllabus. The record does not reflect an abuse of discretion in the denial of the motion of INA to set aside the decision on the motions for summary judgment and to reopen discovery.
The entry of decision dated July 25, 1989, is not a final order. The trial judge did not intend it to be a final order because the final sentence of that entry orders that the judgment entry be presented by August 23, 1989. Therefore, the entry of decision was interlocutory in
II
As previously noted herein, this action was commenced by OBLIC seeking a declaratory judgment. We have in the past questioned the efficacy of summary judgment in an action for a declaratory judgment. In the case on review, the stipulation of all the facts would seem to answer that question, particularly, because the sole declaration sought was whether INA was obligated to defend the insured in the second casa In turn, that question depends on the origin of the second case: "is it a continuation of the first case or a new case?" The common pleas court ruled that the second case was "legally, a continuation or extension of the first action and [that] the claims in the second action arose out of conduct originally covered by [INA's] policy of coverage." Further, the trial court held in its entry of decision that "[INA's] contract covering 'claims made' incidents is applicable" to the facts stipulated. In this case the trial court failed to apply the law as announced in Bd. of Commrs. of Columbiana Cty. v. Samuelson (1986), 24 Ohio St. 3d 62, 493 N.E.2d 245. The Ohio Supreme Court there held that a compromise and settlement of a controversy "extinguishes or merges the original rights or claims and correlative obligations and, where the agreement is executory, substitutes for the original claim the new rights and obligations agreed to." Id. at 63, 493 N.E.2d at 247.
Applying Samuelson to the stipulated facts in the case on review, we hold that the claim made in the second case did not arise from an act of malpractice during the INA policy period. The trial court erred to the prejudice of INA when it granted summary judgment in favor of OBLIC and denied summary judgment in favor of INA. The second assignment of error is well made.
The judgment appealed from is reversed and the cause remanded to the trial court for further proceedings consistent with the law.
We note that the complaint sought, in part, a declaratory judgment that the insured is not entitled to recover under its policy with OBLIC. The trial court could not make any binding declaration of the rights of the insured because the insured was not made a party to the action by OBLIC. R.C. 2721.12. See Cannon v. Perk (1976), 46 Ohio St. 2d 301, 348 N.E.2d 342.
Caution is advised in the use of the "Entry of Decision." Although the appellee in this case has not questioned the timeliness of the appeal, the possibility of confusion exists when the journal reflects an "entry" of decision. Does the appeal time start to run on the date of the entry? It would seem that the possibility of confusion would be obviated by the usual practice of filing a memorandum of decision.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.