Kuhn v. 21st Century Ins. Co. , 2012 Ohio 2598 ( 2012 )

[Cite as Kuhn v. 21st Century Ins. Co., 2012-Ohio-2598.]
COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
ESKIN KUHN, on behalf of himself and JUDGES:
all other persons similarly situated Hon. Patricia A. Delaney, P. J.
Hon. W. Scott Gwin, J.
Plaintiff-Appellant/Cross-Appellee Hon. John W. Wise, J.
-vs-
Case No. 2011 CA 00232
21ST CENTURY INSURANCE
COMPANY
Def.-Appellee/Cross-Appellant OPINION
CHARACTER OF PROCEEDING: Civil Appeal from the Court of Common
Pleas, Case No. 2009 CV 01588
JUDGMENT: Affirmed in Part; Reversed in Part
and Remanded
DATE OF JUDGMENT ENTRY: June 11, 2012
APPEARANCES:
For Plaintiff-Appellant/Cross-Appellee For Defendant-Appellee/Cross-Appellant
ALLEN SCHULMAN, JR. STEPHAN C. KREMER
BRIAN L. ZIMMERMAN REMINGER CO. LPA
SCHULMAN ZIMMERMAN & ASSOC. 200 Courtyard Square
236 Third Street, S.W. 80 South Summit Street
Canton, Ohio 44702 Akron, Ohio 44308
THEODORE R. SCARBOROUGH
SIDLEY AUSTIN LLP
1 South Dearborn
Chicago, Illinois 60603
Stark County, Case No. 2011 CA 00232 2
Wise, J.
{¶1} Appellant Eskin Kuhn appeals the decision of the Court of Common Pleas,
Stark County, which dismissed his complaint for breach of contract, bad faith, fraud,
and punitive damages against Appellee 21st Century Insurance Company. The relevant
facts leading to this appeal are as follows.
{¶2} In early December 2008, Appellant Kuhn purchased an “Ohio Personal
Automobile Policy” from Appellee 21st Century. One of the coverage options in the
policy was captioned “Coverage C – Medical Payments,” which stated in pertinent part
as follows:
{¶3} “OUR PROMISE TO YOU – PART II
{¶4} “We will pay reasonable expenses incurred within one year from the date
of accident by or on behalf of a person insured for necessary medical and funeral
services because of bodily injury caused by an auto accident and sustained by a
person insured under this part.”
{¶5} Plaintiff’s Exhibit A at page 5.
{¶6} On December 21, 2008, after the aforementioned policy went into effect,
appellant was involved in an automobile accident. Appellant has alleged that he sent
copies to appellee of his medical bills regarding injuries sustained in the accident, but
that appellee failed to make full payments on his behalf.
{¶7} On April 21, 2009, appellant filed a complaint in the Stark County Court of
Common Pleas on behalf of himself and other similarly situated individuals against
Defendants AIG National Insurance Company, Inc., AIG Casualty Company, AIG
Centennial Insurance Company, AIG Premier Insurance Company, 21st Century
Stark County, Case No. 2011 CA 00232 3
Insurance Company, AIU Insurance Company, the Insurance Company of the State of
Pennsylvania, National Union Fire Insurance Company of Pittsburgh, and American
Home Assurance Company.
{¶8} On May 26, 2009, the aforementioned insurance companies, as
defendants, removed appellant’s action to the United States District Court for the
Northern District of Ohio, Eastern Division, which became assigned as case number
5:09CV1202. Following the removal, the insurance companies jointly filed a motion to
dismiss appellant’s complaint pursuant to Fed.R.Civ.P. 12(b)(6). On December 31,
2009, the United States District Court granted in part the aforesaid motion to dismiss
and dismissed all insurance company defendants except 21st Century Insurance
Company, appellee herein. The District Court remanded appellant’s action against
Appellee 21st Century to the Stark County Court of Common Pleas for further
proceedings. See Kuhn v. AIG National Insurance Co., Inc., (N.D. Ohio 2009), 2009
WL 5219034.
{¶9} On December 8, 2010, appellant filed his “First Amended Class Action
Complaint” for damages in the Stark County Court of Common Pleas.1 On February 18,
2011, Appellee 21st Century filed a motion to dismiss appellant’s said first amended
complaint, pursuant to Civ.R. 12(B)(6) and 9(B). Appellee therein claimed that the first
amended complaint failed to state a cause of action upon which relief could be granted
and that appellant failed to set forth sufficient allegations to support his claims.
Appellant filed a memorandum in opposition to appellee’s motion to dismiss on
March 3, 2011.
1
As of the time of the filing of the briefs in this appeal, no class certification had been
formally sought by appellant in this matter.
Stark County, Case No. 2011 CA 00232 4
{¶10} On August 26, 2011, a mediation hearing between appellant and appellee
took place, with the trial court acting as the mediator. On August 30, 2011, the trial
court granted, in part, appellee’s motion to dismiss, finding that appellant did not have
standing to sue appellee. The court further determined that there had been no
provision of depositions and/or discovery, and that appellant had failed to produce
evidence during the mediation in support of his allegations set forth in the first
amended complaint. The court thereupon dismissed Counts II, III, and IV of appellant’s
first amended complaint. Count I (breach of contract) was ordered set for trial.
{¶11} On September 13, 2011, appellant filed a motion asking the trial court to
reconsider its decision of August 30, 2011. In the meantime, appellee filed a motion to
dismiss for lack of subject matter jurisdiction and failure to prosecute on September 7,
2011. The court denied appellee’s motion to dismiss and appellant’s motion for
reconsideration on September 21, 2011.
{¶12} Based upon the trial court's ruling at that point, appellant conceded at the
final pre-trial that the court had effectively dismissed all claims against appellee. The
trial court thereupon dismissed Count I of appellant’s first amended complaint via
judgment entry filed September 23, 2011. The court then dismissed the entire action
with prejudice.
{¶13} On October 20, 2011, appellant filed a notice of appeal. He herein raises
the following two Assignments of Error:
{¶14} “I. THE TRIAL COURT ERRED IN DISMISSING PLAINTIFF'S FIRST
AMENDED COMPLAINT.
Stark County, Case No. 2011 CA 00232 5
{¶15} “II. THE TRIAL COURT ERRED IN CONSIDERING CONFIDENTIAL
COMMUNICATIONS MADE AT MEDIATION WHEN RULING UPON DEFENDANTS'
(SIC) MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT IN
VIOLATION OF R.C. §2710.07 AND LOC. R. 16.1 OF THE COURT OF COMMON
PLEAS OF STARK COUNTY, GENERAL DIVISION.”
{¶16} Appellee 21st Century filed a notice of cross-appeal on October 31, 2011.
It herein raises the following two Assignments of Error on cross-appeal:
{¶17} “I. EVEN IF PLAINTIFF HAD NOT SURRENDERED HIS CONTRACT
CLAIM, IT WAS CLEARLY MOOT.
{¶18} “II. THE TRIAL COURT SHOULD HAVE EXERCISED ITS DISCRETION
TO DISMISS THE ACTION FOR WANT OF PROSECUTION.”
{¶19} As an initial matter, we address appellee’s procedural response that
appellant effectively waived his present appellate arguments, at least as to the breach
of contract count, by informing the court at the final pre-trial, via counsel, that he had
no remaining claims following the court’s ruling of August 30, 2011. See Judgment
Entry, September 23, 2011. However, in Ohio appellate jurisprudence, the waiver
doctrine is not absolute. See, e.g., Gross v. State Med. Bd. of Ohio, Franklin App.No.
08AP-437, 2008-Ohio-6826, ¶ 11, citing Belvedere Condominium Unit Owners' Assn.
v. R.E. Roark Cos., Inc. (1993), 67 Ohio St.3d 274, 279, 617 N.E.2d 1075. Because
waiver is a discretionary doctrine, an appellate court may decline to apply it in the
interests of justice. See State v. Ruby, 149 Ohio App.3d 541, 778 N.E.2d 101, 2002-
Ohio-5381, ¶ 86. Under the circumstances of this case, we find appellant’s
acquiescence against further pursuit of the breach of contract claim in his amended
Stark County, Case No. 2011 CA 00232 6
complaint, following the trial court’s decision to dismiss all other counts, should not act
as a waiver of the entire appeal presently before us.
Direct Appeal
I.
{¶20} In his First Assignment of Error, appellant contends the trial court erred in
dismissing his first amended complaint under Civ.R. 12(B)(6). We agree.
{¶21} A Civ.R. 12(B)(6) motion to dismiss alleging failure to state a claim upon
which relief can be granted is procedural and tests the sufficiency of the complaint.
State ex rel. Hanson v. Guernsey Cty. Bd. of Commrs. (1992), 65 Ohio St.3d 545, 548,
605 N.E.2d 378. Therefore, the court will determine only whether the allegations
contained in the complaint are legally sufficient to state a claim. Id. Our appellate
standard of review on a Civ.R. 12(B)(6) motion is de novo. Bratton v. Couch, Morgan
App.No. CA02-012, 2003-Ohio-3743, ¶ 8. Under a de novo analysis, we must accept
all factual allegations of the complaint as true and all reasonable inferences must be
drawn in favor of the nonmoving party. Kramer v. Installations Unlimited (2002), 147
Ohio App.3d 350, 353, 770 N.E.2d 632, 2002-Ohio-1844.
{¶22} In reviewing a Civ.R. 12(B)(6) motion to dismiss for failure to state a claim,
a trial court may not consider matters outside the pleadings unless the court converts
the motion to dismiss into a motion for summary judgment. Smith v. Lurie, Cuyahoga
App.No. 97360, 2012-Ohio-499, ¶ 11. In addition, a court must notify all parties that it
has so converted a Civ.R.12(B)(6) motion into a motion for summary judgment. See
State ex rel. Baran v. Fuerst (1990), 55 Ohio St.3d 94, 97, 563 N.E.2d 713.
Stark County, Case No. 2011 CA 00232 7
{¶23} In the case sub judice, the trial court noted in its August 30, 2011
judgment entry that appellant had incurred a bill for ambulance services totaling
$878.00 from Tri-Division Ambulance. The trial court concluded that the “case revolved
around” the sum of $133.56, the difference between what appellee originally deemed
reasonable to pay the ambulance company ($744.44) and the total bill ($878.00). Id. at
2. The court further noted, in pertinent part: “Defendant contends that Tri-Division
Ambulance accepted the reduced payment made by 21st Century and did not seek
reimbursement from Plaintiff and that Plaintiff assigned the claim at issue to Tri-
Division Ambulance in December 2008 and that assignment divested Plaintiff of his
right to sue for payment. Therefore, Plaintiff does not have standing to sue 21st
Century. *** In the present case, there have been no depositions taken and practically
no discovery has been conducted. Plaintiff contends that he was billed by Tri-Division
Ambulance, yet he was unable to produce a bill at the Court’s mediation session,
despite that session having been requested by the parties and scheduled for over a
month. ***.” Id. at 2-3, emphasis in original.
{¶24} It is thus evident that the trial court utilized information it gleaned from a
court-run mediation proceeding and not solely from the pleadings in order to address
the pending 12(B)(6) motion and determine that three of four counts would thereby be
dismissed. Upon review, we find the amended complaint contained sufficient
allegations as to the four counts which should have, at minimum, survived a 12(B)(6)
challenge. Furthermore, as we recognized in CitiMortgage, Inc. v. Potvin, Stark
App.No. 2010CA00112, 2010-Ohio-6561, ¶ 25, under Loc.R. 16.02(A) of the Stark
County Court of Common Pleas, General Division, “mediation” is intended to be a
Stark County, Case No. 2011 CA 00232 8
“non-binding process involving a neutral mediator who acts as a facilitator to assist the
parties to craft a mutually acceptable resolution for themselves.” We hold, under the
circumstances presented in this case, the trial court committed reversible error in
utilizing the mediation process as a means of considering matters outside of the
pleadings in order to rule on appellee’s motion to dismiss under Civ.R. 12(B)(6).2
{¶25} Appellant's First Assignment of Error is sustained.
II.
{¶26} In his Second Assignment of Error, appellant contends the trial court erred
in considering certain confidential information from the court’s mediation proceedings.
We disagree.
{¶27} Although appellant’s argument is arguably moot in light of our above
holding, we note that pursuant to R.C. 2710.02(B)(3), “[s]ections 2710.01 to 2710.10
of the Revised Code do not apply to a mediation in which *** [t]he mediation is
conducted by a judge or magistrate who might make a ruling on the case.” Although
the trial court did not discuss the parameters of the issue of confidentiality under R.C.
Chapter 2710 in its judgment entry of August 30, 2011, we find the confidentiality rules
found in R.C. 2710.07 would not be applicable to the court-run mediation proceeding in
this case, and we find no error per se on confidentiality grounds in the trial court’s
utilization of evidence or information obtained as a result of mediation.
{¶28} Appellant’s Second Assignment of Error is overruled.
2
Although appellant’s brief focuses on Civ.R. 12(B)(6), we reach a similar conclusion
at this point regarding Civ.R. 9(B) vis-à-vis appellant’s fraud allegations.
Stark County, Case No. 2011 CA 00232 9
Cross-Appeal
I.
{¶29} In its First Assignment of Error on cross-appeal, appellee contends the
trial court erred in concluding that appellant’s breach of contract claim was still valid
despite a settlement offer.
{¶30} In support of its argument, appellee directs us to Woods v. Oak Hill
Community Med. Ctr., Inc. (1999), 134 Ohio App.3d 261, 268 for the proposition that
appellant has lost his “personal stake” in the controversy based on the purported offer
appellee has made to settle the ambulance bill for the sum of $1,000.00. However,
based on our prior holdings in the within appeal, we find this issue premature at this
time. Moreover, it appears that the tender of any settlement offers would be dehors the
pleadings, and it would be inconsistent with our previous rulings in this appeal for this
Court to consider same at this juncture.
{¶31} Appellee’s First Assignment of Error on Cross-Appeal is denied.
II.
{¶32} In its Second Assignment of Error on cross-appeal, appellee contends the
trial court erred in failing to dismiss appellant’s breach of contract claim for failure to
prosecute. We disagree.
{¶33} “Trial judges are entitled to exercise considerable discretion in the
management of the cases on their dockets[.]” MBNA Am. Bank, N.A. v. Bailey, Summit
App.No. 22912, 2006-Ohio-1550, ¶ 10, additional citations omitted. Appellee correctly
notes that there was no docket activity in this case from on or about December 31,
2009, when the case was remanded from federal court, until November 15, 2010, when
Stark County, Case No. 2011 CA 00232 10
appellant filed his request for leave to amend his complaint. However, upon our review
of the record, we find no basis to conclude that the trial court’s maintenance of the
action following this period of dormancy after federal remand constituted an abuse of
the trial court’s discretion.
{¶34} Appellee’s Second Assignment of Error on Cross-Appeal is overruled.
{¶35} For the reasons stated in the foregoing opinion, the judgment of the Court
of Common Pleas, Stark County, Ohio, is hereby affirmed in part and reversed in part.
The trial court’s dismissal with prejudice of appellant’s amended complaint is hereby
vacated. The matter is remanded for further proceedings consistent with this opinion.
By: Wise, J.
Delaney, P. J., and
Gwin, J., concur.
___________________________________
___________________________________
___________________________________
JUDGES
JWW/d 0515
Stark County, Case No. 2011 CA 00232 11
IN THE COURT OF APPEALS FOR STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
ESKIN KUHN, on behalf of himself and :
All other persons similarly situated :
:
Plaintiff-Appellant/Cross-Appellee :
:
-vs- : JUDGMENT ENTRY
:
21ST CENTURY INSURANCE COMPANY :
:
Defendant-Appellee/Cross-Appellant : Case No. 2011 CA 00232
For the reasons stated in our accompanying Memorandum-Opinion, the
judgment of the Court of Common Pleas of Stark County, Ohio, is affirmed in part,
reversed in part and remanded for further proceedings consistent with this opinion.
Costs to be split evenly.
___________________________________
___________________________________
___________________________________
JUDGES