Settlement Agreement – Interest Begins to Accrue on the Day the Settlement Agreement is Reached
Layne v. Progressive Preferred Ins. Co. (2004), 104 Ohio St.3d 509, 2004-Ohio-6597
The Ohio Supreme Court recently addressed the issue of when statutory interest begins to accrue in a personal injury action settlement. In Layne, counsel for the plaintiff and counsel for the defendant reached an oral agreement at the initial pretrial which occurred on October 31, 2000 for the policy limits of $12,500. One week later, Progressive’s counsel sent the settlement check, a release agreement, and a stipulation for dismissal to the plaintiff who thereafter executed the documents. Eighteen months later, the plaintiff sued Progressive claiming that he was owed statutory interest pursuant to R.C. 1343.03(A) for the days that passed between the oral agreement and the actual issuance of the settlement check. The interest amounted to approximately $24.
The Court held that since the release contained an integration clause which read, “no promise, inducement or agreement not herein expressed has been made to [Layne], and that this release contains the entire agreement between the parties hereto” then the statutory interest would not accrue until the actual release was executed by the plaintiff. The Court upheld prior case law and stated, “[w]hen two parties have made a contract and have expressed it in a writing to which they have both assented as the complete and accurate integration of that contract, evidence, whether parol or otherwise, of antecedent understandings and negotiations will not be admitted for the purpose of varying or contradicting the writing.” Thus, the Court reasoned that the integration clause in the release clearly indicated that the parties intended to settle the plaintiff’s claim on the day the release was executed, not when the oral agreement was reached. Further, since the check accompanied the release and was in the plaintiff’s possession at the time he executed the release, then he was not entitled to any interest on the settlement amount.
When a Signed, Written Rejection of UM/UIM Coverage is Valid under Former R.C. 3937.18 (H.B. 261 version).
Hollon v. Clary (2004), 104 Ohio St.3d 526, 2004-Ohio-6772
In Hollon, the Ohio Supreme Court examined the effectiveness of an employer’s rejection of UM/UIM coverage in light of a former version of R.C. 3937.18 and the Supreme Court’s previous holding of Linko v. Indemn. Ins. Co. of N. Am. (2000), 90 Ohio St.3d 445. Linko mandated that before a rejection of UM/UIM coverage was valid, it had to set forth in writing “a brief description of the coverage, the premium for that coverage, and an express statement of the UM/UIM coverage limits.”
In Hollon, the plaintiff argued that the UM/UIM rejection was invalid because the offer did not set forth the premiums for UM/UIM coverage, and therefore, UM/UIM coverage was imposed by operation of law. However, the Supreme Court stated that Linko and its requirements were “a means to an end” and that although the employer’s “written offer, per se, did not satisfy all the Linko requirements” the Court would “not elevate form over substance or ignore the expressed intent of the parties to a contract.” The Supreme Court reasoned that the written UM/UIM offer in conjunction with the affidavit signed by the employer indicating that his rejection was done knowingly, met the purpose of Linko. As such, the Court held “that a signed, written rejection of UM/UIM coverage is valid under the H.B. 261 version of R.C. 3937.18 if it was made in response to an offer that included a brief description of the coverage and the coverage premiums and limits. Once a signed rejection is produced, the elements of the offer may be demonstrated by extrinsic evidence.”
The Law-of-the Case Doctrine and Galatis
Hopkins v. Dyer (2004), 104 Ohio St.3d 461, 2004-Ohio-6769
In Hopkins, the plaintiff sued, among others, her former employer’s liability carrier asserting a right to UM/UIM coverage under Scott-Pontzer. The case was decided at the summary judgment level in the trial court and then appealed. The appellate court reversed and remanded. Thereafter, the trial court was instructed to decide the issues of stacking, pro rata coverage, exposure, and other potential affirmative defenses. The trial court, on remand, concluded that as a matter of law, the plaintiff was insured under the employer’s UM/UIM policy pursuant to Scott-Pontzer. Thereafter the case was appealed a second time and the appellate court affirmed the trial court’s decision in an order issued November 17, 2004. However, twelve days prior to affirming the trial court, the Supreme Court issued Westfield v. Galatis which limited the availability of UM/UIM coverage under Scott-Pontzer to those employees who were injured within the course and scope of employment. Despite the holding in Galatis and the plaintiff’s own admission that she was not within the course and scope of employment when injured, the court of appeals did not apply the rule of law pronounced by the Supreme Court under the theory of the law of the case doctrine.
The law of the case doctrine is longstanding in Ohio. “[T]he doctrine provides that the decision of a reviewing court in a case remains the law of that case on the legal questions involved for all subsequent proceedings in the case at both the trial and reviewing levels.” “The doctrine is necessary to ensure consistency of results in a case, to avoid endless litigation by settling the issues, and to preserve the structure of superior and inferior courts…”
The Supreme Court went on to state that “Galatis constituted an intervening decision by a superior court that was inconsistent with the law of the case…[u]nder these extraordinary circumstances, the court of appeals should have followed Galatis.” The Court held, “the decision in Galatis constituted extraordinary circumstances that created an exception to the law-of-the-case doctrine and that the court below was obligated to apply Galatis.
The information contained in this newsletter is not a legal opinion and is for informational purposes only. Specific questions should be directed to an attorney for a legal opinion.
Settlement Agreement – Interest Begins to Accrue on the Day the Settlement Agreement is Reached
Layne v. Progressive Preferred Ins. Co. (2004), 104 Ohio St.3d 509, 2004-Ohio-6597
The Ohio Supreme Court recently addressed the issue of when statutory interest begins to accrue in a personal injury action settlement. In Layne, counsel for the plaintiff and counsel for the defendant reached an oral agreement at the initial pretrial which occurred on October 31, 2000 for the policy limits of $12,500. One week later, Progressive’s counsel sent the settlement check, a release agreement, and a stipulation for dismissal to the plaintiff who thereafter executed the documents. Eighteen months later, the plaintiff sued Progressive claiming that he was owed statutory interest pursuant to R.C. 1343.03(A) for the days that passed between the oral agreement and the actual issuance of the settlement check. The interest amounted to approximately $24.
The Court held that since the release contained an integration clause which read, “no promise, inducement or agreement not herein expressed has been made to [Layne], and that this release contains the entire agreement between the parties hereto” then the statutory interest would not accrue until the actual release was executed by the plaintiff. The Court upheld prior case law and stated, “[w]hen two parties have made a contract and have expressed it in a writing to which they have both assented as the complete and accurate integration of that contract, evidence, whether parol or otherwise, of antecedent understandings and negotiations will not be admitted for the purpose of varying or contradicting the writing.” Thus, the Court reasoned that the integration clause in the release clearly indicated that the parties intended to settle the plaintiff’s claim on the day the release was executed, not when the oral agreement was reached. Further, since the check accompanied the release and was in the plaintiff’s possession at the time he executed the release, then he was not entitled to any interest on the settlement amount.
When a Signed, Written Rejection of UM/UIM Coverage is Valid under Former R.C. 3937.18 (H.B. 261 version).
Hollon v. Clary (2004), 104 Ohio St.3d 526, 2004-Ohio-6772
In Hollon, the Ohio Supreme Court examined the effectiveness of an employer’s rejection of UM/UIM coverage in light of a former version of R.C. 3937.18 and the Supreme Court’s previous holding of Linko v. Indemn. Ins. Co. of N. Am. (2000), 90 Ohio St.3d 445. Linko mandated that before a rejection of UM/UIM coverage was valid, it had to set forth in writing “a brief description of the coverage, the premium for that coverage, and an express statement of the UM/UIM coverage limits.”
In Hollon, the plaintiff argued that the UM/UIM rejection was invalid because the offer did not set forth the premiums for UM/UIM coverage, and therefore, UM/UIM coverage was imposed by operation of law. However, the Supreme Court stated that Linko and its requirements were “a means to an end” and that although the employer’s “written offer, per se, did not satisfy all the Linko requirements” the Court would “not elevate form over substance or ignore the expressed intent of the parties to a contract.” The Supreme Court reasoned that the written UM/UIM offer in conjunction with the affidavit signed by the employer indicating that his rejection was done knowingly, met the purpose of Linko. As such, the Court held “that a signed, written rejection of UM/UIM coverage is valid under the H.B. 261 version of R.C. 3937.18 if it was made in response to an offer that included a brief description of the coverage and the coverage premiums and limits. Once a signed rejection is produced, the elements of the offer may be demonstrated by extrinsic evidence.”
The Law-of-the Case Doctrine and Galatis
Hopkins v. Dyer (2004), 104 Ohio St.3d 461, 2004-Ohio-6769
In Hopkins, the plaintiff sued, among others, her former employer’s liability carrier asserting a right to UM/UIM coverage under Scott-Pontzer. The case was decided at the summary judgment level in the trial court and then appealed. The appellate court reversed and remanded. Thereafter, the trial court was instructed to decide the issues of stacking, pro rata coverage, exposure, and other potential affirmative defenses. The trial court, on remand, concluded that as a matter of law, the plaintiff was insured under the employer’s UM/UIM policy pursuant to Scott-Pontzer. Thereafter the case was appealed a second time and the appellate court affirmed the trial court’s decision in an order issued November 17, 2004. However, twelve days prior to affirming the trial court, the Supreme Court issued Westfield v. Galatis which limited the availability of UM/UIM coverage under Scott-Pontzer to those employees who were injured within the course and scope of employment. Despite the holding in Galatis and the plaintiff’s own admission that she was not within the course and scope of employment when injured, the court of appeals did not apply the rule of law pronounced by the Supreme Court under the theory of the law of the case doctrine.
The law of the case doctrine is longstanding in Ohio. “[T]he doctrine provides that the decision of a reviewing court in a case remains the law of that case on the legal questions involved for all subsequent proceedings in the case at both the trial and reviewing levels.” “The doctrine is necessary to ensure consistency of results in a case, to avoid endless litigation by settling the issues, and to preserve the structure of superior and inferior courts…”
The Supreme Court went on to state that “Galatis constituted an intervening decision by a superior court that was inconsistent with the law of the case…[u]nder these extraordinary circumstances, the court of appeals should have followed Galatis.” The Court held, “the decision in Galatis constituted extraordinary circumstances that created an exception to the law-of-the-case doctrine and that the court below was obligated to apply Galatis.
The information contained in this newsletter is not a legal opinion and is for informational purposes only. Specific questions should be directed to an attorney for a legal opinion.