Court Rules Order Finding Insurance Coverage but Not Determining Damages Is Not ‘Final, Appealable Order’
2007-2150 and 2007-2302. Walburn v. Dunlap, Slip Opinion No. 2009-Ohio-1221.
Vinton App. No. 06CA655, 2007-Ohio-5398. Judgment reversed and cause remanded to the trial court.
Moyer, C.J., and Lundberg Stratton, O'Connor, O'Donnell, Lanzinger, and Cupp, JJ., concur.
Pfeifer, J., dissents and would dismiss the cause as having been improvidently accepted and certified.
http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2009/2009-Ohio-1221.pdf 
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(March 24, 2009) The Supreme Court of Ohio ruled today that an order in which a trial court finds that a party is entitled to coverage under an insurance policy, but does not decide whether that party is entitled to damages, is not a “final” order eligible for immediate review by a court of appeals.
The Court’s 6-1 decision, authored by Justice Evelyn Lundberg Stratton, reversed a ruling of the 4th District Court of Appeals.
The case involved a personal injury lawsuit in which plaintiffs Styrk and Betty Walburn sought to recover uninsured/underinsured motorist (UM/UIM) coverage from their employers’ insurance policies for injuries Mr. Walburn suffered in a traffic accident caused by a third party, Wendy Dunlap. The Walburns asked the Vinton County Court of Common Pleas to issue a summary judgment affirming that they were entitled to UM coverage under a policy issued by the National Union Fire Insurance Co. of Pittsburgh. On Aug. 28, 2006, the trial court entered an order granting summary judgment in favor of the Walburns on the issue of coverage. In that order, the court included language from Ohio Civil Rule 54(B) certifying that its ruling was “final” and that there was “no just cause for delay” in appealing its holding.
National Union filed a notice of appeal with the 4th District Court of Appeals, but also asked the trial court to reconsider its decision. The trial court granted the motion for reconsideration, and vacated its Aug. 28 summary judgment order. Accordingly, National Union voluntarily dismissed its appeal.
The Walburns filed a new motion in the trial court, again seeking partial summary judgment on the issue of whether they were entitled to UM coverage under the National Union policy. On Dec. 12, 2006, the court issued a new summary judgment, again finding that the Walburns were entitled to coverage. National Union again filed an appeal of the trial court’s ruling. In reviewing the trial court’s action, the 4th District determined that: 1) the trial court had acted without jurisdiction in reconsidering and vacating its original Aug. 28 summary judgment order; 2) the Aug. 28 order was a “final, appealable order” because it was an order made in a special proceeding that affected a substantial right, and the court had certified that there was “no just cause for delay” in seeking its reversal; and 3) because National Union had dismissed its initial appeal of the Aug. 28 order, and the 30 day time limit for appealing that order had since expired, National Union had waived its right to appeal the trial court’s ruling. The 4th District subsequently certified that its holding that the Aug. 28 order met the requirements of a “final, appealable order” was in conflict with decisions in three other appellate districts.
The Supreme Court agreed to review the case to resolve the conflict among districts.
Writing for the Court in today’s decision, Justice Stratton said the applicable statutory provision, R.C. 2505.02(B)(2), provides that a trial court order is “a final order that may be reviewed, affirmed, modified or reversed” by a court of appeals “when it is ... [a]n order that affects a substantial right made in a special proceeding.” After determining that the declaratory judgment sought by the Walburns in this case qualified as a “special proceeding,” Justice Stratton wrote that the remaining issue is whether the trial court order “affected a substantial right.”
She noted that the 4th District largely based its ruling in this case on the Supreme Court of Ohio’s 1989 decision in Gen. Acc. Ins. Co. of N. Am.,in which the Court held that an order finding that an insurer had a duty to defend an insured party against claims asserted by third party, but leaving other issues in the case unresolved, qualified as a final, appealable order because it affected a substantial right.
“In Gen. Acc., we held that the duty to defend involves a substantial right to both the insured and the insurer,” wrote Justice Stratton. “We discussed the immediate consequences to both the insured and the insurer of a decision regarding the duty to defend. If an insurer mistakenly refuses to defend its insured, that insurer is liable for the costs of defending its insured in the initial litigation and of defending itself in a subsequent action by its insured. On the other hand, the insurer may incur substantial costs if wrongfully required to defend an insured in a case that a court may later hold was not within the terms of the policy. Likewise, an insured, when not provided a defense, may have to choose a quick settlement over costly litigation, file a separate declaratory judgment action against the insurer, or incur great expense defending without insurance. Because the duty to defend was of great importance to both the insured and the insurer, we concluded that it involved a substantial right.”
Distinguishing the facts of this case from Gen. Acc., Justice Stratton wrote: “A declaration that an insured is entitled to UM coverage presents a different scenario. Here, the court ordered that National Union must provide UM coverage. However, the Walburns must still establish their damages in order to receive the UM benefits. National Union is obligated to pay the Walburns only if they are awarded damages. ... While a decision regarding the duty to defend immediately affects a substantial right of the insured or insurer, a decision that an insured is entitled to UM coverage, without a determination of damages, does not. Consequently, we hold that an order that declares that an insured is entitled to UM coverage but does not determine damages does not affect a substantial right for purposes of R.C. 2505.02(B)(2). The Aug.28, 2006, judgment entry in this case did not affect a substantial right made in a special proceeding and, therefore, was not a final order as defined in R.C. 2505.02(B)(2).”
Because neither the trial court’s Aug. 28, 2006, order or its subsequent Dec. 12, 2006, order finding UM coverage in the National Union policy qualified as a final order, Justice Stratton found the court’s inclusion of Civ.R. 54(B) language in those orders to be “of no effect” on the parties. “A trial court’s use of such language does not convert an otherwise nonfinal order into a final, appealable order,” she wrote. “ ... (B)ecause the trial court had not yet determined the issue of damages, neither judgment entry was a final, appealable order and the parties’ rights to appeal have not yet attached. Consequently, we reverse the judgment of the court of appeals and we remand this matter to the trial court for further proceedings consistent with this opinion.”
Justice Stratton’s opinion was joined by Chief Justice Thomas J. Moyer and Justices Maureen O’Connor, Terrence O’Donnell, Judith Ann Lanzinger and Robert R. Cupp. Justice Paul E. Pfeifer dissented, stating that he would dismiss the case as having been improvidently accepted for review.
Contacts
Steven G. Janik, 440.838.7600, for National Union Fire Insurance Co.
C. Russell Canaestro, 614.221.3318, for Styrk and Betty Walburn.