IN THE SUPREME COURT OF OHIO

BRANDON GEIGER, MICHAELGEIGER and ELLEN GEIGER

On Appeal from the Haniilton County,Ohio Court of Appeals, First District

Court of Appeals No. C-080355Appellees

vs

WESTFIELD NATIONAL INSURANCECOMPANY

Appellant

09-034"^̂L

MEMORANDUM IN SUPPORT OF JURISDICTION OFAPPELLANT WESTFIELD NATIONAL INSURANCE COMPANY

R. Gary Winters 0018680Bernard W. Wharton 0063487McCASLIN, IMBUS & McCASLINSuite 900 Provident Building632 Vine StreetCincinnati, OH 45202(513) 421-4646 phone(513) 421-7929 faxrgwintersna,mimlaw.combwwhartonna.mimlaw.com

Attorneys for Appellant

M. Austin Mehr (pro hac vice)AUSTIN MEHR LAW OFFICES, P.S.C.145 West Main Street, suite 300Lexington, KY 40507(859) 225-3731 phone(859) 225-3830 faxamehrnaustinmehr.com

Robert Sparks 0073573PARRY DEERING FUTSCHER &SPARKS, P.S.C.114 Garrard StreetP. O. Box 2618Covington, KY 41012-2618(859) 291-9000 phone(859) 291-9300 faxrsparks@pdfslaw.com

Attorneysfor Appellees

FEB 17 2009

CLERK OF COURTL SUPREME COURT OF OHIO

TABLE OF CONTENTSPage

1.

II.

WHY THIS CASE PRESENTS ISSUES OF PUBLICOR GREAT GENERAL INTEREST

STATEMENT OF THE CASE AND FACTS i

A. Procedural History and Posture 2

B. Statement of Facts 3

III. ARGUMENT 6

Proposition of Law No. 1: 6

V.

A stipulation of dismissal with prejudice in a UIMcase is a dismissal of all matters in controversyincluding any bad faith claim.

CONCLUSION 8

CERTIFICATE OF SERVICE 9

APPENDIX

I. WHY THIS CASE PRESENTS ISSUES OF PUBLIC OR GREAT GENERALINTEREST

In 1995, this Court issued its seminal decision on res judicata concluding that

a "valid final judgment rendered upon the merits bars all subsequent actions based upon any

claim arising out of the transaction or occurrence that was the subject matter of the previous

action."' The proposition of law present in this appeal goes to the heart of the public or great

general interest in the finality of judgments. The First District has erroneously interpreted this

Court's decisions on resjudicata leading to serious instability with respect to the finality of

judgments. In analyzing the plaintiffs' appeal from the trial court's granting of summary

judgment to Westfield, the First District held that the stipulation of dismissal of the underlying

LTIM case did not purport to do anything other than to dismiss that case. The First District's

misreading of the language of the stipulation of dismissal and the subsequent ruling that neuters

the doctrine of res judicata, poses a serious hazard to litigants in the First District and in the State

of Ohio. The net result of the First District's decision is that the finality of judgments,

particularly in the LJ1M area, is called into question. This anomalous result should not go

unheeded by this Court and this case presents timely and necessary opportunity to address this

destablizing result.

II. STATEMENT OF THE CASE AND FACTS

The appeal in this case presents the issue of whether the trial court properly granted

summary judgment to Westfield National Insurance Company ("Westfield") and dismissed

plaintiff's bad faith claims brought in a separate lawsuit following the plaintiffs' underlying UIM

Grava v Parkman Twu. (1995), 73 Ohio St.3d 379, syllabus

claim that was settled and all claims arising out of the plaintiffs' claim were dismissed.

Plaintiffs' assertion below that the issue to be decided is whether a bad faith claim arises out of

the same transaction, or common nucleus of operative facts, as an underlying UIIvl contract claim

is not correct as is demonstrated below.

A. Procedural History And Posture

The underlying UIM Complaint (hereinafter "the UlIV1 action") was initially filed on May

28, 2004 by plaintiffs against John Sulau and William Sulau2. That Complaint was subsequently

amended on April 18, 2005 to assert a claim against Westfield3. On August 11, 2006, a panel of

three arbitrators rendered a decision in the UIM action awarding plaintiff $1,494,176.70 along

with a finding that plaintiff Brandon Geiger was thirty percent negligent4. Westfield paid the net

amount due to plaintiffs and plaintiffs executed a satisfaction of arbitration award on August 27,

20065. Thereafter, plaintiffs dismissed the UIM action against Westfield with prejudice on

September 5, 20066.

This instant Complaint filed by plaintiffs against Westfield for bad faith (hereinafter "the

bad faith action") was commenced on August 1, 2007'. On November 30, 2007, Westfield

Z T.d. 11 at Ex. A

3 T.d. 11 at Ex. B

° T.d. 11 at Ex. C

5 T.d. 11 at Ex. D

6 T. d. 11 at Ex. E

7 T.d. 2

2

moved for summary judgment8. This motion was granted on April 1, 2008 by the trial court9.

B. Statement Of Facts

On May 28, 2004, plaintiffs filed a Complaint in Hamilton County Common Pleas Court

against John Sulau and William Sulau for personal injuries to Brandon Geiger, a minor at that

time, resulting from an accident that occurred on August 21, 2000.10 Then on April 18, 2005,

plaintiffs amended their Complaint to assert a claim against Westfield." Specifically, plaintiffs

asserted a claim for UIM benefits pursuant to an automobile liability insurance policy issued by

Westfield to plaintiffs, Michael and Ellen Geiger.

The tortfeasor, John Sulau, had liability insurance policy limits of $100,000.'Z

Westfield's underinsured motorists policy limits were $1,200,000 on top of Mr. Sulau's policy

limit of $100,000.13 Ultimately, the UIM action was resolved through a binding high/low

arbitration in August 2006, following extensive discovery, which included multiple depositions

and independent medical examinations due to plaintiffs' claim of brain injury.14 On August 11,

2006, the arbitrators rendered a decision finding that plaintiffs suffered damages totaling

$1,494,176.70 and that plaintiff, Brandon Geiger, was thirty percent negligent.15 The net amount

$ T.d. 12

9 T.d. 22

tOT.d. 11 at Ex. A

11 T.d. 11 at Ex. B

'ZT.d. 11 at Ex. B, ¶ 19

i3T.d. 11 at Ex. B, ¶ 4

14T.d. 11 at Ex. C, Ex. D

15T.d. 11 at Ex. C

3

due to plaintiffs as a result of the Arbitration Agreement was paid by Westfield and plaintiffs

signed the Satisfaction of Arbitration Award to this effect on August 27, 2006.16 Shortly

thereafter, plaintiffs dismissed all claims against Westfield with prejudice on September 5,

2006. "

hiterestingly, Westfield's involvement in the UIM action came at Westfield's request

because Westfield wanted the deposition of defendant John Sulau in order evaluate both liability

and damages following plaintiffs' settlement demand served upon Westfield.'g However,

because Mr. Sulau was represented by counsel and Westfield was not a party to the UI1VI action

at that time, the deposition was refused." As a result, Westfield's counsel contacted plaintiffs'

counsel to advise that Westfield wanted to become a party to the litigation in order to take the

deposition of John Sulau.20 Westfield extended plaintiffs the courtesy of petmitting them to

amend their Complaint to bring in Westfield as an additional party defendant instead of

Westfield moving to intervene in the pending action by the plaintiffs against John Sulau and his

father. Z' The plaintiffs then amended their Complaint and sued Westfield as a party defendant

on April 18, 2005 ZZ

At no time during the course of the UIM action did plaintiffs make a claim, or seek to

16 T.d. I1 at Ex. D

" T.d. 11 at Ex. E

18 T.d. 1 I at ¶¶ 8-9

19 T.d. l l at 18

20 T.d. 11 at ¶¶ 8-9

Z'T.d11at¶9

ZZ T.d I l at Ex. B

4

amend their Complaint to assert a claim, for bad faith against Westfield. On August 1, 2007,

nearly seven years after the automobile accident and nearly one year after Westfield was

dismissed from the original action, plaintiffs filed a second Complaint against Westfield alleging

(1) breach of duty of good faith and fair dealings; (2) fraud; and (3) punitive damages

surrounding the handling of the claim by the Westfield following the automobile accident Z'

Westfield filed a timely answer raising numerous defenses, including res judicata, claim

preclusion, estoppel by judgment, impermissible splitting of causes of action, laches, statute of

limitations, the doctrine of waiver, and accord and satisfaction.Z"

Plaintiffs' factual allegations in the bad faith action include multiple examples of

Westfield's alleged misconduct dating as far back as February 6, 2002. For instance, plaintiffs

claim Westfield intentionally misrepresented facts with regard to coverage at that time.25 Then,

in May of 2002, "Westfield first raised the possibility of having [plaintiffs] records reviewed by a

medical team". 26 Three months later, Westfield decided "they would need testing evaluation"

of plaintiffs?' Plaintiffs also alleged misconduct associated with the scheduling of this

independent examination.28

Further, plaintiffs alleged that based on Westfield's failure to make a good faith offer to

settle following the examination, despite Westfield's "promise to do so", plaintiffs assert they

z3 T.d. 2

24 T.d. 7

25 T.d. 2 at ¶¶ 15-16

26 T.d. 2 at 117

27 T.d. 2 at 117

28 T.d.2at119

5

were forced to file a lawsuit against Westfield in order to collect the UIM benefits.29 In fact,

plaintiffs assert they "had no altemative but to file suit to obtain a fair payment of their claims".

30 Nonetheless, despite these alleged acts of bad faith, plaintiffs chose not to include a claim for

bad faith in the Amended Complaint in the UI1VI action.

III. ARGUMENT

Proposition of Law No. 1:

A stipulation of dismissal with prejudice in a UIMcase is a dismissal of all matters in controversyincluding any bad faith claint.

In Ohio, it is well-settled that a "valid, final judgment rendered upon the merits bars all

subsequent actions based upon any claim arising out of the transaction or occurrence that was the

subject matter of the previous action31 Under Ohio law, a dismissal with prejudice by court

order is a dismissal on the merits.32 Moreover, a dismissal with prejudice on a settlement

agreement is the equivalent of ajudgment. In the underlying UTM case, plaintiffs filed claims for

UIIVI benefits against Westfield which were then extinguished by the stipulation of dismissal with

prejudice entered on September 5, 2006 following a binding arbitration. The stipulation of

dismissal specifically stated:

"All matters in controversy between the remaining parties in this case havingbeen amicably resolved by means of a binding arbitration award which has been

29 T.d. 2 at ¶¶ 20-21

30 T.d. 2 at 121

31

32

6

paid in full, this matter is dismissed with prejudice, costs to defendant WestfieldNational Insurance Company." (emphasis added).

The First District failed to acknowledge the specific language of the stipulation of

dismissal and simply referred to the stipulation of dismissal as an agreement to dismiss the

specific case. The language of the stipulation of dismissal expressly provides that all matters in

controversy between the parties were dismissed with prejudice. This language does not say that

only the matters in controversy in the underlying UIM case unresolved, rather, it refers to all

matters in controversy. Accordingly, the filing of this stipulation of dismissal with prejudice was

a bar to all subsequent actions based upon any claim arising out of the transaction or occurrence

that was the subject matter of the UIIvI action. Since all matters in controversy between the

parties were dismissed in the stipulation of dismissal, this necessarily includes the bad faith claim

that plaintiffs had knowledge of and could have brought at the time of the binding arbitration.

It has long been the law of Ohio that an existing final judgment between parties is

conclusive as to all claims which were or might have been litigated in a first lawsuit.13 This

Court also requires that a plaintiff must present every ground for relief in the first action, or be

forever barred from asserting it.34 In this case, the First District ignored these rules and failed to

take into account the fact that plaintiffs were aware of a potential bad faith claim at the time they

amended their Complaint to assert a claim against Westfield on April 18, 2005. Because the bad

faith claim might have been litigated in the underlying UIM lawsuit, the final judgment,

represented by the stipulation of dismissal with prejudice, is conclusive as to the bad faith claim.

33

34

Grava,sunra at382

Id.

7

The plaintiffs simply failed to avail themselves of all available grounds for relief in the

first proceeding. Refusing to allow plaintiffs to use an alternate legal theory overlooked in the

UIM proceeding does not work an injustice to them. Instead, by providing parties with an

incentive to resolve conclusively an entire controversy involving the same core of facts, such

refusal establishes certainty in legal relations and individual rights, accords stability to

judgments, and promotes the efficient use of limited judicial or quasi judicial time and resources.

The instability that would follow the establishment of the First District's precedent for

disregarding the doctrine of res judicata would be greater than the benefit that might result from

relieving some cases of individual hardship. Accordingly, because the stipulation of dismissal

with prejudice of the UIM case is a valid final judgment rendered upon the merits, the bad faith

claim filed subsequently is barred by the doctrine resjudicata.

IV. CONCLUSION

For the foregoing reasons, this case involves questions of public or great general

interest. Westfield respectfully requests that this Court accept jurisdiction in the case so that the

proposition set forth may be reviewed on the merits.

R. Cl* m rs 0018680B ard arton 0063487McCASLIN, IMBUS & McCASLINSuite 900 Provident Building632 Vine StreetCincinnati, OH 45202(513) 421-4646 phone(513) 421-7929 faxrewinters cni mimlaw.combwwharton@mimlaw.comAttorneys for Defendant-Appellee

8

is to certify tha^ll

° 2009, to:

Robert R. SparksPARRY DEERING FUTSCHER & SPARKS411 Garrard StreetP.O. Box 2618Covington, KY 41012-2618

M. Austin MehrAUSTIN MEHR LAW OFFICES145 West Main Street, Suite 300Lexington, KY 40507

Attorneys for Appellees

CERTIFICATE OF SERVICE

t a copy of the foregoing document was mailed this e day of

9

IN THE COURT OF APPEALS

FIRST APPELLATE DISTRICT OF OHIO

HAMILTON COUNTY, OHIO

BRANDON J. GEIGER,

MICHAEL GEIGER,

and

ELLEN GEIGER,

Plaintiffs-Appellants,

vs.

WESTFIELD NATIONALINSURANCE COMPANTY,

Defendant-Appellee.

APPEAL NO. C-080355TRIAL NO. A-0706868

nECIS1ON.

PRESENTED TO THE CLERKOF COURTS FOR FILING

DEC 3 12008

COURT OF APPEALS

Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Reversed and Cause Remanded

Date of Judgment Entry on Appeal: December 31, 2008

Austin Mehr Law Offices, P.S.C., and Austin Mehr, and Perry, pDeering, Futscher &Sparks, P.S. C., and Robert Sparks for Appellants,

McCaslin, Imbus, & McCaslin, R. Gary Winters, and Bernard W. Wharton, for Appellee.

Please note: This case has been removed from the accelerated calendar.

OFIIO FIRST DISTRICT COi7RT OF APPEALS

SYLVIA S. }IENDON, Judge.

{^[1) Plaintiff-appellants Brandon, Michael, and Ellen Geiger sued the

Westfield National Insurance Company, claiming bad faith and fraud in Westfield's

handling of an underinsured motorist ("UIM") claim. The Geigers also sought punitive

damages. The trial court granted summary judgment in favor of Westfield without

comment, but presumably on the grounds that cither (I) the Geigers' case was barred by

res judicata, or (2) the Geigers had previously released all claims against Westfield. The

Geigers now appenl. We reverse.

De Novo Review

(¶2) We review the trial court's judgment de novo.t Summary judgment is

appropriate if (i) no genuine issue of any material fact remains, (2) the moving party is

entitled to judgment as a matter of law, and (3) it appears from the evidence that

reasonable minds can came to but one conclusion, and construing the evidence most

strongly in favor of the nonmoving party, that conclusion is adverse to the party against

whom the motion for summary judgment is made. ^^A^ ^^ I^

The UIM Lawsuit DEC 3 1 Zppg{13) Fourteen-year old Brandon Geiger was hit by a car driven by Joh ulau.

He was seriously injured. Brandon and his parents sued John Sulau and his father,

William, for negligence, negligent entrustment, loss of consortium, and emotional

distress. -.Che Geigers' later amended their complaint and addad a claim for UIM

coverage, joining Westfield, their insurance company, as a defendant. Following binding

arbitration between the Geigers and Westfield, the Geigers were awarded over $1.4

' OraJton v. Ohio Edlson Co. (1996), 77 Ohio St.3d 102, 105,671 N.E.2d 241.z Civ.R. 56 (C); Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 364 N.E.2d 267; see, also,Dre.rher v. Burt, 75 Ohio St.3d 280, 293, i996-phio-107, 662 N.E.2d 264.

2

OIIIO FIRST DISTRICT COURT OF AYPEALS

million, and the parties signed a satisfaction of arbitration award. In the award, the

Geigers agreed to dismiss with prejudice the underlying lawsuit, "Case No. A-0404364."

1'he trial court in that case later journalized a document entitled "stipulation of

dismissal," which was signed by both parties. The stipulation stated that "all matters in

controversy between the remaining parties in this case having been amicably resolved, *

** this matter is hereby dismissed with prejudice."

= The Second Lawsuit

{14} Afier case number A-0404364 had been dismissed, the Geigers filed

another lawsuit against Westfield. In their complaint, the Geigers claimed that Westfield

had breached its duty of good faith and fair dealing in the way that it had handled the

Geigers' UIM claim. The Geigers also alleged fraud, and sought punitive damages.

Some of the facts pled inclnded claims that Westfield refused to promptly or fairly assess

their claim, and that Westfield had questioned coverage without reasonable justification.

The Geigers also took issue with the settlement amounts initially offered by W.es„tfield,

^^and with representations made by Westfield concerning the Geigers' policy. )f ENI' ERLIafNl j^

rRes.Iudicata pEC 8 12008

(¶S) In their first assignment of error, the Geigers argue that th

lawsuit against Westfield was not barred by the doctrine of res judicata. 'The Geigers are

correct.

{¶S} According to the Ohio Supreme Court in Grava v. Parkman 7wp.,3 under

the doctrine of res judicata, "[a] valid, final judgment rendered upon the merits bars all

subsequent actions based upon any claim arising out of the transaction or occurrence that

was the subject matter of the previous action." In Grava, the court cited with approval

' 73 Ohio St.3d 379, 1995-Ohio•331, 653 N.E.2d 226, syllabus.

3

OT-CTO FIRST DISTRICT COURT OF APPEALS

the Restatement of Judgments, defining the same transaction or occurrence as those

having a "common nucleus of operative facts."4

{17} Although it pre-dates Grava, the Ohio Supreme Court case of Norwood v.

McDonalds is helpful in determining what a "common nucleus of operative facts" is. The

Norwood court found that, to determine whether a second action is barred by a first, a

court should consider the facts essential to the maintenance of each cause of action., If

the same facts or evidence would sustain both, then the second action is barred by res

judicata.7 If, however, the two cases rely upon different facts, a judgment in one case is

no bar to the maintenance of the other.8 "Different facts" do not include "different

shadings of the facts" or an emphasis "of different elements of the facts."9

The Facts

(18} Here, in the Geigers' first lawsuit, the facts needed to prove UIM coverage

centered on the existence of a UIM policy, the extent of the Sulaus' liability, the amount

of damage to the Geigers, and damage in excess of what the Sulaus' insuran

EN^'E ^ Iwould pay.10

{19} By contrast, the facts needed to maintain the second laws revpo-Iae3 2005

around Westfield's actions in processing the Geigers' UIM claim. The tort o

exists when an insurer's refusal to pay a claim is not based on circumstances that would

° Id., at 382-383, 1995-Ohio•331, 653 N.E.2d 226.5(1943), 142 Ohio St. 299, 306, 52 N.6.2d 67, ovenvled, in pan, on other grounds as stated in Grava,supra.61d.'Id.' 1d.'Grava, at 383, 1995-Ohio- 1995, 653 N.E.2d 226; see, also Miami Valley Hospital v. Purvis, 2nd Dist. No.CA 21740,2007-OhEo-4721." See, gererally, Hammock v. Cincinnati Ins. Co., tst Dist. No. C-020783, 2003-Ohio-5090, ¶1I; R.C.3937.18.

4

OHIO FIY2ST DIST121CT COURT OF APPEALS

reasonably justify the refiasal.tt Likewise, the Geigers' fraud claim focuses on

Westfield's actions-namely the representations it made concerning the Geigers' policy

and the Geigers' UIM claim.tz Finally, to recover punitive damages, the Geigers would

have to demonstrate that Westfield acted with "actual malice," which is characterized by

hatred or ill-will.13 The facts necessary to maintain these claims, while perhaps

tangentially related to the first cause of action, are not the same as those needed for the

first. The first suit focused on Westfield's contractual liability and the Sulaus' negligence,

the second on Westfield's actions in the processing of the Geigers' claims.i4 So, res

judicata does not bar this cause of action. The Geigers' first assignment of error is

sustained.

The Dismissal was not a Release

(110) In their second assignment of error, the Geigers contend that the trial court

erred in granting summary judgment on the basis that the Geigers had released alI future

claims against Westfield in the satisfaction of arbitration award and the stipulation of

dismissal. The record is unclear as to whether this was the basis for summary judgment.

But, to the extent thirt it was, the trial court erred.

{¶11} Neither the satisfaction of arbitration award nor the stipulation of ^

dismissal purport to do anything other than to dismiss case number A-0404364. The isE NT E 4 E

no release language in either document.ts Viewing these documents in a light st DEC 3 1 2008

favorable to the Geigers, we interpret them to be nothing other than what they purpo

`iZoppo v. Homestead Ins. Co., 71 Ohio St.3d 552, 1994-Ohio-461, 644 N.E.2d 397, paragraph one of thesYllabus.' See State ex rel Illumtnating Co. v. Cuyalroga Cty. Court of Common Pleas, 97 Ohio St.3d 69, 2002-9hio-5312, 776 N.E.2d 92, 124; Russ v. TRW, lnc. (199I), 59 Ohio St.3d 42, 49, 570 N.E.2d 1076.

Preston v. Murty ( 1987), 32 Ohio St.3d 334, 512 N.E.2d 1174, syllabus; see, also, Calmes v. GoodyearTire & RubberCo. (1991), 61 Ohio St.3d 470, 472-073, 575 N.E.2d 416.1° See Buckeye Union Ins. Co. v. State Farm Mutual Auto7ns. (Apr. 16, 1997), 1 st Dist. No. C-960282 (Aninsurer's breach of the duty of good faith gives rise to a cause of action in tort, irrespective of any liabilitythat might arise from a breach of the underlying insurance contract)."Cf. TrmAer v. North Crest Equestrian Ctr. (1993), 86 Ohio App.3d 522, 621 N.E.2d 589

5

OfAO FIRST DISTRICT COURT OF APPEALS

be-an agreement to dismiss case A-0404364, and a dismissal. The Geigers' second

assignment of error is sustained.

(112) In sum, we reverse the trial court's summary judgment in favor of

Westfield, and remand this cause for further proceedings.

Judgment reversed and cause remanded.

PAiNTBR,P.J., and CUNNINGHAM, J., concur.

Please Note:The court has recorded its own entry on the date of the release of this decision.

EN''EUEC31p008

6

IN THE COURT OF APPEALS

FIRST APPELLATE DISTRICT OF OHIO

HAMILTON COUNTY, OHIO

BRANDON J. GEIGER,

MICHAEL GEIGER,

and

ELLEN GEIGER,

APPEAL NO. C-TRIAL NO -0706868

JU©GMENT GN1RY.

Plaintiffs-Appellants,

v5. .

WESTFIELD NATIONALINSURANCE COMPANY,

Defendant-Appellee.

ENTI:^^^}DEC 3 z Z008

This cause was heard upon the appeal, the record, the briefs, and arguments.

The judgment of the trial court is reversed and cause remanded for the reasons set

forth in the Decision filed this date.

Further, the court holds that there were reasonable grounds for this appeal, allows

no penalty and orders that costs are taxed under App. R. 24.

The court further orders that i) a copy of this Judgment with a copy of the Decision

attached constitutes the niandate, and 2) the mandate be sent to the trial court for execution

under App. R. 27.

To The Clerk:

Enter upon the Journal of theXourt on Aecember 31,2008 per Order of the Court.

By:

I

l 0815900010