Woods v. Progressive Direct Ins. Co. , 2018 Ohio 1867 ( 2018 )

[Cite as Woods v. Progressive Direct Ins. Co., 2018-Ohio-1867.]
IN THE COURT OF APPEALS OF OHIO
SIXTH APPELLATE DISTRICT
ERIE COUNTY
Anthony Woods, et al. Court of Appeals Nos. E-17-021
E-17-022
Appellants
Trial Court Nos. 2014 CV 0743
v. 2015 CV 0606
Progressive Direct Insurance Company DECISION AND JUDGMENT
Appellee Decided: May 11, 2018
*****
Joseph A. Zannieri, for appellants.
Christopher J. Ankuda and Paul R. Morway, for appellee.
*****
PIETRYKOWSKI, J.
{¶ 1} This consolidated appeal is from two judgments of the Erie County Court of
Common Pleas: in case No. E-17-021 (No. 2014 CV 0743), the trial court’s denial of
appellants’ motion for relief from judgment as to the default judgment granted on
appellee Progressive Direct Insurance Company’s declaratory judgment claims and
request to have admissions deemed admitted; and in case No. E-17-022 (2015 CV 0606),
the trial court’s August 14, 2017 judgment granting appellee’s motion for summary
judgment. For the reasons that follow, we affirm.
{¶ 2} This case involves successive lawsuits with identical parties and relating to
the question of automobile insurance coverage following the alleged insured, Ryan
Williams’ April 23, 2012 accident in a rental vehicle. For ease of discussion, we will
separately, to the extent practicable, set forth the procedural history of the cases.
Case No. E-17-021
{¶ 3} This case commenced on November 3, 2014, with appellants Anthony
Woods, Stephanie Woods, and Ryan Williams filing a complaint against Progressive
alleging breach of contract and bad faith in the denial of coverage. On January 2, 2015,
Progressive filed an answer and counterclaim for declaratory judgment. In its
counterclaim, Progressive asked the court to confirm that it had no duty to either defend
or indemnify appellants and that it acted reasonably in handling and evaluating the issue
of coverage.
{¶ 4} On February 6, 2015, Progressive served its discovery requests, including
requests for admissions, to appellants. On March 25, 2015, appellants filed a notice of
voluntary dismissal, without prejudice, of all the claims against Progressive. Appellants
did not file an answer to Progressive’s counterclaim.
{¶ 5} On April 9, 2015, Progressive filed a motion for default judgment pursuant
to Civ.R. 55. Progressive argued that appellants failed to answer or otherwise respond to
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their declaratory judgment counterclaim. On the same day, Progressive filed a motion to
deem the requests for admissions served upon appellants as admitted due to their failure
to respond within 28 days under Civ.R. 36.
{¶ 6} In response to the motion for default judgment, appellants argued that
because they dismissed their claims, the court lacked jurisdiction over the matter.
Appellants further argued that they did not default on the counterclaim because they had
raised the same issues in their initial complaint (a request for a declaration of their rights
under the contract). Appellants made similar arguments as to the requests for admissions.
{¶ 7} On September 17, 2015, the trial court denied Progressive’s motions finding
that appellants’ dismissal of the action ended the court’s jurisdiction over the matter.
Progressive appealed the ruling and on appeal this court reversed finding that a properly
asserted counterclaim was not extinguished by a plaintiff’s voluntary dismissal of its
claims. See Woods v. Progressive Direct Ins. Co., 2016-Ohio-8530, 79 N.E.3d 1248 (6th
Dist.) (“Woods I”).
{¶ 8} On remand, the trial court granted Progressive’s motions on March 15, 2017.
Appellants filed a motion for relief from judgment which was denied. Appellants
appealed the judgments. On May 24, 2017, we remanded the matter for the trial court to
enter a final and appealable order of its judgment granting default judgment to
Progressive. Specifically, we instructed the court, as requested by Progressive, to declare
the rights and obligations of the parties under the insurance policy. The court then filed
its amended judgment entry on August 2, 2017.
3.
Case No. E-17-0221
{¶ 9} Appellants refiled their voluntarily dismissed claims on September 25, 2015.
On January 19, 2017, Progressive filed its motion for summary judgment based upon res
judicata specifically, collateral estoppel. Appellants opposed the motion. On March 15,
2017, the court granted the motion, without written analysis. Appellants then
commenced the instant appeal. As in case No. E-17-021, we remanded the matter for the
court to declare the rights and obligations of the parties due to the nature of the prior
declaratory judgment action. The court filed its amended judgment entry on August 14,
2017.
{¶ 10} Appellants now raise five assignments of error for our review:
Assignment of Error Number 1: The trial court should have granted
relief from judgment in Case CV 0743.
Assignment of Error Number 2: The trial court abused its discretion
when it refused to grant relief from the judgment deeming the requests for
admissions admitted, even though the admissions were filed late.
Assignment of Error Number [3]: In its latest entry filed on
August 2, 2017, the trial court granted a default judgment to Progressive.
That default judgment should have never been granted because there was
1
On September 5, 2017 this court, sua sponte, consolidated the appeals in case Nos.
E-17-021 and E-17-022.
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no default. In case No. CV 0606, an answer to Progressive’s counterclaim
was timely filed.
Assignment of Error Number [4]: The trial court’s judgment entry,
found by the Court of Appeals to be not a final appealable order, does not
provide an explanation or a rationale for the prior grant of summary
judgment, making it difficult to determine the exact reason for the grant of
summary judgment. The complaint in this appeal (E-17-022, arising from
2015 CV 0606) stated a valid claim for fraud that withstood summary
judgment and any attempt at collateral estoppel.
Assignment of Error Number [5]: The court erred in attributing the
admissions deemed admitted in the companion case (Appeal No. E-17-021,
arising from case no. 2014 CV 0743) to the plaintiffs in this case. Ryan
Williams was an insured person, so he was entitled to coverage.
Denial of Relief from Judgment in case No. 2014 CV 0743
{¶ 11} Appellants’ first two assignments of error relate to the trial court’s
March 15, 2017 judgment denying their motion for relief from the grant of default
judgment and the judgment deeming the requests for admissions admitted. Civ.R. 55(B)
provides that a default judgment granted under Civ.R. 55(A) may be set aside in
accordance with Civ.R. 60(B).
5.
{¶ 12} Civ.R. 60(B) provides:
On motion and upon such terms as are just, the court may relieve a
party or his legal representative from a final judgment, order or proceeding
for the following reasons: (1) mistake, inadvertence, surprise or excusable
neglect; (2) newly discovered evidence which by due diligence could not
have been discovered in time to move for a new trial under Rule 59(B);
(3) fraud (whether heretofore denominated intrinsic or extrinsic),
misrepresentation or other misconduct of an adverse party; (4) the judgment
has been satisfied, released or discharged, or a prior judgment upon which
it is based has been reversed or otherwise vacated, or it is no longer
equitable that the judgment should have prospective application; or (5) any
other reason justifying relief from the judgment. The motion shall be made
within a reasonable time, and for reasons (1), (2) and (3) not more than one
year after the judgment, order or proceeding was entered or taken.
{¶ 13} To prevail on a Civ.R. 60(B) motion for relief from judgment, the movant
must demonstrate that:
the party has a meritorious defense or claim to present if relief is
granted; (2) the party is entitled to relief under one of the grounds stated in
Civ.R. 60(B)(1) through (5); and (3) the motion is made within a reasonable
time, and, where the grounds of relief are Civ.R. 60(B)(1), (2) or (3), not
more than one year after the judgment, order or proceeding was entered or
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taken. GTE Automatic Elec., Inc. v. ARC Industries, Inc., 47 Ohio St.2d
146, 351 N.E.2d 113 (1976), paragraph two of the syllabus.
{¶ 14} Where a movant fails to demonstrate any of these three requirements for
Civ.R. 60(B) relief, the motion is to be overruled. Strack v. Pelton, 70 Ohio St.3d 172,
174, 637 N.E.2d 914 (1994); Rose Chevrolet, Inc. v. Adams, 36 Ohio St.3d 17, 20, 520
N.E.2d 564 (1988). We review a trial court’s judgment granting or denying relief from
judgment under Civ.R. 60(B) on an abuse of discretion standard. Griffey v. Rajan, 33
Ohio St.3d 75, 77, 514 N.E.2d 1122 (1987). An abuse of discretion connotes that the trial
court’s attitude was unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore,
5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983).
{¶ 15} Appellants first argue that default judgment was not warranted because
they simply failed to respond to a counterclaim which raised no issues novel from the
ones already contained in appellants’ complaint. Thus, appellants contend that the valid
cause of action stated in the complaint acted as a “valid defense” to the counterclaim.
{¶ 16} Appellant relies on a case from this court where we affirmed the trial
court’s dismissal of a counterclaim for declaratory judgment. Roberts Express v.
Bauman, 6th Dist. Lucas No. L-89-197, 1990 Ohio App. LEXIS 1513 (Apr. 20, 1990).
In Roberts, an ex-employer sued an ex-employee for violation of a non-compete
agreement. The ex-employee filed a counterclaim for declaratory judgment requesting
that the court find that the agreement lacked consideration. Id. at *4. The counterclaim
was dismissed because the court found that it was an affirmative defense. Id.
7.
{¶ 17} Reviewing Roberts, we find that it is distinguishable from the present facts.
Roberts involved a declaratory judgment claim for lack of consideration which is an
affirmative defense specifically listed in Civ.R. 8(C). Civ.R. 8(C) further provides:
“When a party has mistakenly designated a defense as a counterclaim or a counterclaim
as a defense, the court, if justice so requires, shall treat the pleading as if there had been a
proper designation.”
{¶ 18} As stated in Roberts, “under the Declaratory Judgment Act, any person
interested under a contract may have determined any question of construction arising
under the contract and obtain a declaration of rights under R.C. 2721.03[.]” Id. at *6.
This court specifically found in Woods I that Progressive’s claim was not extinguished by
the dismissal of appellants’ complaint
{¶ 19} The Ohio Civil Rules clearly state that a counterclaim is a pleading and that
a reply thereto is mandatory. Civ.R. 8(A) defines a “pleading” not only as an original
claim for relief, but expressly as a “counterclaim.” Civ.R. 7(A) further provides that,
“[there shall be * * * a reply to a counterclaim denominated as such * * *.”
{¶ 20} Civ.R. 8(D) provides in part that, “averments in a pleading to which a
responsive pleading is required, other than those as to the amount of damage, are
admitted when not denied in the responsive pleading * * *.” Further, under Civ.R. 55(C),
a plaintiff who fails to serve a reply to a counterclaim is in default for failure to plead and
is subject to default judgment.
8.
{¶ 21} Based on the foregoing, we find that because appellants failed to respond to
the declaratory judgment counterclaim, the trial court did not err when it granted default
judgment. We further find that the court did not err when it denied appellants’ motion for
relief from judgment. Appellants’ first assignment of error is not well-taken.
{¶ 22} In their second assignment of error, appellants contend that the trial court
erred when it refused to allow the withdrawal of their deemed admissions. Civ.R. 36
provides, in part:
Availability; Procedures for use. (1) Each matter of which an
admission is requested shall be separately set forth. The party to whom the
requests for admissions have been directed shall quote each request for
admission immediately preceding the corresponding answer or objection.
The matter is admitted unless, within a period designated in the request, not
less than twenty-eight days after service of the request or within such
shorter or longer time as the court may allow, the party to whom the request
is directed serves upon the party requesting the admission a written answer
or objection addressed to the matter, signed by the party or by the party’s
attorney.
***
(B) Effect of admission. Any matter admitted under this rule is
conclusively established unless the court on motion permits withdrawal or
amendment of the admission. Subject to the provisions of Rule 16
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governing modification of a pretrial order, the court may permit withdrawal
or amendment when the presentation of the merits of the action will be
subserved thereby and the party who obtained the admission fails to satisfy
the court that withdrawal or amendment will prejudice the party in
maintaining his action or defense on the merits. Any admission made by a
party under this rule is for the purpose of the pending action only and is not
an admission by him for any other purpose nor may it be used against the
party in any other proceeding.
{¶ 23} In addition to a showing of prejudice, many courts including this one
require a showing of a compelling circumstance which led to the failure to respond.
B & T Distribs. v. CSK Constr., Inc., 6th Dist. Lucas No. L-07-1362, 2008-Ohio-1855,
¶ 18.
{¶ 24} Reviewing the arguments of the parties, we find that appellants failed to
provide a compelling circumstance to explain their failure to respond to the request.
Thus, we cannot find that the trial court abused its discretion when it denied appellants’
motion to allow for the withdrawal of their deemed admissions. Appellants’ second
assignment of error is not well-taken.
Summary Judgment in Case No. 2015 CV 0606
{¶ 25} In appellants’ third assignment of error, they argue that the trial court erred
in granting default judgment on August 2, 2017, because an answer to Progressive’s
counterclaim was timely filed.
10.
{¶ 26} First, the default judgment was granted in the prior action (case No.
2014 CV 0743) following the December 30, 2016 reversal and remand from this court.
On that date, appellants’ refiled action had been pending since September 25, 2015, and
Progressive had again filed a declaratory judgment counterclaim. Appellants filed a
timely response to that counterclaim.
{¶ 27} Upon review, we reject appellants’ argument. Progressive never filed a
motion for default judgment in the 2015 case. On January 19, 2017, it filed a motion for
summary judgment under the theory of collateral estoppel arguing that because
Progressive was granted a default judgment in the prior, identical action between the
parties, the current action was barred. The court granted the motion on March 15, 2017,
and appellants commenced this appeal. On appeal, this court as in the default judgment
appeal, sua sponte, remanded the matter for the trial court to provide an explanation of
the parties’ rights and obligations pursuant to the trial court’s judgment granting
Progressive’s motion for summary judgment. The amended judgment entry was filed in
the 2014 case on August 2, 2017; the same entry was filed in the 2015 case on August 14,
2017. Although the trial court failed to rename the judgment entry as pertaining to
Progressive’s motion for summary judgment, it did provide a factual basis for the court’s
award as was required by this court. Accordingly, appellants’ third assignment of error is
not well-taken.
{¶ 28} In their fourth assignment of error, appellants contend that the trial court’s
March 15, 2017 order, which was found by this court not to be final and appealable, did
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not provide an adequate explanation for the court’s award of summary judgment.
Appellants further argue that their fraud claim had not been litigated in the prior action
and, thus, could not be disposed of by collateral estoppel.
{¶ 29} We agree that the court’s March 15, 2017 judgment entry granting
summary judgment contains no legal analysis or reasoning. As discussed above, in
accordance with our May 24, 2017 order, the court did file its declaration of
Progressive’s rights and obligations under the disputed insurance policy. In addition, this
court reviews motions for summary judgment de novo; that is, an appellate court applies
the same standard in determining whether summary judgment should be granted as the
trial court. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996).
Under Civ.R. 56, to prevail on a motion for summary judgment the moving party must
demonstrate:
(1) that there is no genuine issue as to any material fact; (2) that the
moving party is entitled to judgment as a matter of law; and (3) that
reasonable minds can come to but one conclusion, and that conclusion is
adverse to the party against whom the motion for summary judgment is
made, who is entitled to have the evidence construed most strongly in his
favor. Harless v. Willis Day Warehousing Co., 54 Ohio St.2d 64, 66, 375
N.E.2d 46 (1978).
{¶ 30} Thus, we review the merits of Progressive’s summary judgment motion in
order to determine whether the trial court erred. The doctrine of res judicata states that a
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final judgment on the merits issued by a court of competent jurisdiction is conclusive as
to the rights of the parties and constitutes an absolute bar to a subsequent action involving
the same claim, demand or cause of action. Holzemer v. Urbanski, 86 Ohio St.3d 129,
712 N.E.2d 713 (1999).
Res judicata applies where four elements are present:
(1) there was a prior valid judgment on the merits; (2) the second
action involved the same parties as the first action; (3) the present action
raises claims that were or could have been litigated in the prior action; and
(4) both actions arise out the same transaction or occurrence. Reasoner v.
Columbus, 10th Dist. Franklin No. 04AP-800, 2005-Ohio-468, ¶ 5.
{¶ 31} Res judicata encompasses both claim preclusion and issue preclusion. In
this case, Progressive argued that collateral estoppel, also known as issue preclusion,
applied to bar appellants’ second action. Collateral estoppel prevents the relitigation of
an issue that has been actually and necessarily challenged and determined in a prior
action which was based on a different case. Patrick T. v. Michelle L., 6th Dist. Wood No.
WD-02-015, 2002-Ohio-3574, ¶ 13. Even where the cause of action is different in a
subsequent suit, a judgment in a previous matter may still affect the outcome of the
second suit. Fort Frye Teachers Assoc. v. State Emp. Relations Bd., 81 Ohio St.3d 392,
395, 692 N.E.2d 140 (1998).
{¶ 32} Appellants argue that collateral estoppel has no preclusive effect in this
case because the matter was not actually litigated, a default judgment was granted. On
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review, it appears that Ohio lacks definitive case law on whether collateral estoppel acts
to bar a subsequent action when the prior action was dismissed by a default judgment.
See Merkle v. Estate of Hodary, 1st Dist. Hamilton Nos. C-990223, C-99230, C-990244,
C-990249, 2000 Ohio App. LEXIS 428 (Feb. 11, 2000). We would agree that a default
judgment generally does not determine legal issues for purposes of res judicata. An
exception can be made, however, where a default judgment contains express findings and
legal conclusions. In re Sweeny, 276 B.R. 186 (Bankr.Ohio 2002), relying on In re
Robinson, 242 B.R. 380 (Bankr.N.D.Ohio 1999). The Sweeney court reasoned, after
reviewing Ohio statutory law, that in order to give preclusive effect to a default judgment
based upon collateral estoppel, there must be
some reliable way of knowing that the decision was made on the
merits. The best evidence would be findings of fact and conclusions of law
by the court entering the default judgment. These need not be entered in
any special or formal way, but the default court must state what findings
and conclusions, if any, it has reached in arriving at the judgment. Those
findings and conclusions will have preclusive effect. Id. at 194.
{¶ 33} In the present action, the court granted a default judgment as to
Progressive’s declaratory judgment action. Its August 2017 judgment entry, which was
filed in both actions, specifically delineated the rights and obligations of the parties; these
rights and obligations were precisely at issue in the second case. Specifically, the court
determined that based upon the clear and unambiguous language in the automobile
14.
insurance policy Progressive had no duty to indemnify or defend appellants, acted with
reasonable justification in denying coverage to Anthony Woods, that appellants were not
entitled to any recompense, punitive or otherwise, and that any and all claims in the
underlying litigation were dismissed with prejudice.
{¶ 34} Upon review, we find that the court’s declaratory judgment findings
provide the basis for the court’s subsequent determination that the claims in the second
action were barred. Thus, because the court had already determined the relevant issues,
the application of collateral estoppel was not in error. Appellants’ fourth assignment of
error is not well-taken.
{¶ 35} In appellants’ fifth and final assignment of error, they contend that the trial
court erred in attributing admissions admitted in the prior, 2014 action to the refiled, 2015
action. We find that this argument lacks merit. The court granted summary judgment in
the 2015 case based upon a collateral estoppel argument. The issue of insurance
coverage had already been decided and did not need to be re-litigated. Appellants’ fifth
assignment of error is not well-taken.
{¶ 36} On consideration whereof, we find that substantial justice was done the
parties complaining and the judgments of the Erie County Court of Common Pleas are
affirmed. Pursuant to App.R. 24, appellants are ordered to pay the costs of this appeal.
Judgments affirmed.
15.
Woods v. Progressive
Direct Ins. Co.
C.A. Nos. E-17-021
E-17-022
A certified copy of this entry shall constitute the mandate pursuant to App.R. 27.
See also 6th Dist.Loc.App.R. 4.
Mark L. Pietrykowski, J. _______________________________
JUDGE
Arlene Singer, J.
_______________________________
Christine E. Mayle, P.J. JUDGE
CONCUR.
_______________________________
JUDGE
This decision is subject to further editing by the Supreme Court of
Ohio’s Reporter of Decisions. Parties interested in viewing the final reported
version are advised to visit the Ohio Supreme Court’s web site at:
http://www.supremecourt.ohio.gov/ROD/docs/.
16.