Beagle v. Walden

[This opinion has been published in Ohio Official Reports at 78 Ohio St.3d 59.]

BEAGLE, PETITIONER, v. WALDEN ET AL.; STATE FARM MUTUAL AUTOMOBILE

INSURANCE COMPANY, RESPONDENT.

[Cite as Beagle v. Walden, 1997-Ohio-234.]

Insurance—Motor vehicles—Mandatory offering of uninsured and underinsured

motorist coverage—Amended R.C. 3937.18(A)(2) is constitutional.

(No. 95-2409—Submitted November 12, 1996—Decided March 26, 1997.)

ON ORDER from the United States District Court for the Northern District of Ohio,

Eastern Division, Certifying a Question of State Law, No. 5:95CV1146.

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Jeffrey S. Wilkof, for petitioner.

Buckingham, Doolittle & Burroughs and David W. Hilkert; Meyers,

Hentemann, Schneider & Rea and Henry A. Hentemann, for respondent.

Clark, Perdue, Roberts & Scott, Edward L. Clark and Glen R. Pritchard, in

support of petitioner, for amicus curiae Ohio Academy of Trial Lawyers.

Vorys, Sater, Seymour & Pease, John J. Kulewicz and William D. Kloss, in

support of respondent, for amicus curiae Ohio Insurance Institute.

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COOK, J.

{¶ 1} The United States District Court for the Northern District of Ohio,

Eastern Division, has certified the following question to this court pursuant to

S.Ct.Prac.R. XVIII:

“Is Ohio Revised Code § 3937.18(A)(2) unconstitutional on any grounds

under the facts of this case, including those stated by Plaintiff[?]”

{¶ 2} We respond to the certified question as follows: We do not find R.C.

3937.18(A)(2) unconstitutional on any ground argued by the plaintiff.

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{¶ 3} The statement of facts as presented to this court in the federal district

court’s certification order follows:

“This case involves a claim by Plaintiff, Jason Beagle, for benefits under an

insurance policy issued by Defendant, State Farm Mutual Automobile Insurance

Company.

“On November 23, 1994, Plaintiff was operating a motor vehicle on I-76,

eastbound, in Westfield Township, Medina County, Ohio. As Jason was

proceeding on the interstate, a motor vehicle driven by Katherine Walden crossed

the median and collided with the Beagle vehicle head-on. Mr. Beagle sustained

serious injuries. To date, the medical bills for Jason Beagle are in excess of One

Hundred Thousand Dollars ($100,000.00).

“Katherine Walden was insured by Farmers Insurance Company with One

Hundred Thousand Dollars ($100,000.00) per person and Three Hundred Thousand

Dollars ($300,000.00) per accident liability coverage. Jason was an insured under

automobile liability policies issued by Defendant State Farm, which policies

provided for uninsured/underinsured limits of One Hundred Thousand Dollars

($100,000.00) per person and Three Hundred Thousand Dollars ($300,000.00) per

accident.

“Under the provisions of amended Ohio Revised Code 3937.18(A)(2),

effective October [20], 1994, Jason Beagle would not be entitled to any

underinsured motorist proceeds.”

{¶ 4} The petitioner raises several grounds for finding that the amendment

violates the Ohio Constitution. Petitioner argues that R.C. 3937.18(A)(2) invades

the judiciary’s exclusive province (Section 1, Article IV) and violates the “one-

subject” rule (Section 15[D], Article II), the Right to a Remedy Clause (Section 16,

Article I) and the Equal Protection and Privileges and Immunities Clauses (Section

2, Article I) of the Ohio Constitution.

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{¶ 5} In addressing the petitioner’s arguments, we adhere to two well-

established legal principles. The first requires that “[s]tatutes are presumed to be

constitutional unless shown beyond a reasonable doubt to violate a constitutional

provision.” Fabrey v. McDonaldPolice Dept. (1994), 70 Ohio St.3d 351, 352, 639

N.E.2d 31, 33. The second cautions that “[t]he legislature is the primary judge of

the needs of public welfare, and this court will not nullify the decision of the

legislature except in the case of a clear violation of a state or federal constitutional

provision. Williams v. Scudder (1921), 102 Ohio St. 305, 131 N.E. 481, paragraphs

three and four of the syllabus.” Savoie v. Grange Mut. Ins. Co. (1993), 67 Ohio

St.3d 500, 515, 620 N.E.2d 809, 820 (Moyer, C.J., dissenting).

The One-Subject Rule

{¶ 6} The amendment to R.C. 3937.18(A)(2) in question was accomplished

by the enactment of Am.Sub.S.B.No. 20, 145 Ohio Laws, Part I, 204, 210 (“Senate

Bill 20”). The bill as originally introduced did not affect R.C. 3937.18. Its scope

was limited to Revised Code sections dealing with financial responsibility law. It

was only after the bill had been passed by the Senate and considered by the House

on several occasions that this court announced its decision in Savoie, and that

Senate Bill 20 was amended to include a legislative response.

{¶ 7} Petitioner and his amicus curiae urge that the late amendments to

Senate Bill 20 constitute legislative logrolling -- the practice that the one-subject

provision is intended to eliminate. Hoover v. Franklin Cty. Bd. of Commrs. (1985),

19 Ohio St.3d 1, 6, 19 OBR 1, 5, 482 N.E.2d 575, 580. Specifically, petitioner

contends that the amendments related to uninsured/underinsured motorist coverage

do not share the required commonality with the financial responsibility

amendments of the Act to satisfy the one-subject rule.

{¶ 8} In determining whether Senate Bill 20 passes muster under the one-

subject rule, we follow State ex rel. Dix v. Celeste (1984), 11 Ohio St.3d 141, 11

OBR 436, 464 N.E.2d 153. In Dix, this court stressed the directory nature of the

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one-subject rule, holding that a judicial finding of unconstitutionality is proper only

when a violation of the rule is manifestly gross and fraudulent. Id. at 145, 11 OBR

at 440, 464 N.E.2d at 157. In order to find a legislative enactment violative of the

one-subject rule, a court must determine that various topics contained therein lack

a common purpose or relationship so that there is no discernible practical, rational

or legitimate reason for combining the provisions in one Act. Id.

{¶ 9} No doubt, Senate Bill 20 addresses multiple topics. A common

thread, however, ties each of these topics together. Each amendment works as part

of a legislative scheme to reduce the dangers posed by uninsured and underinsured

motorists. This court recognized the nexus between financial responsibility

requirements and the availability of uninsured/underinsured motorist coverage in

Savoie, 67 Ohio St.3d at 507-508, 620 N.E.2d at 815, wherein the majority noted:

“This interpretation of R.C. 3937.18(G) is consistent with the concerted

effort of the General Assembly to force all motorists to maintain liability insurance

coverage on motor vehicles being operated within the state of Ohio. The Financial

Responsibility Act requires that all motorists have the ‘ability to respond in

damages for liability,’ and provides severe penalties for failure to comply. R.C.

4509.01(K).

“Regrettably, the General Assembly has not succeeded in its effort to force

every motorist to maintain liability insurance coverage. *** The purchase of full

uninsured/underinsured coverage is the only possible means for responsible

motorists to protect themselves and their families.”

{¶ 10} Accordingly, we conclude that there exists a common relationship

among the topics contained in Senate Bill 20, and, therefore, combination of those

topics does not offend the one-subject rule.

Separation of Powers

{¶ 11} Petitioner argues that by legislatively overruling this court’s decision

in Savoie, the General Assembly usurped the exclusive province of the judiciary.

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Contrary to the petitioner’s assertions, however, the Savoie court did not rely upon

constitutional considerations in reaching its conclusions. Instead, the Savoie court

interpreted the legislative purpose behind R.C. 3937.18.

{¶ 12} Interpretation of the state and federal Constitutions is a role

exclusive to the judicial branch. In the absence of a constitutional concern,

however, the judiciary’s function is to interpret the law as written by the General

Assembly. “‘[T]he legislature is the final arbiter of public policy, unless its acts

contravene the state or federal Constitutions.’” State v. Smorgala (1990), 50 Ohio

St.3d 222, 224, 553 N.E.2d 672, 675, quoting State v. Kravlich (1986), 33 Ohio

App.3d 240, 246, 515 N.E.2d 652, 657-658 (Markus, C.J., concurring).

{¶ 13} The interpretation of R.C. 3937.18(A)(2) advanced in Savoie did not

meet with legislative approval. It was the General Assembly’s prerogative to

redress its dissatisfaction with new legislation. See Hearing v. Wylie (1962), 173

Ohio St. 221, 223, 19 O.O.2d 42, 43, 180 N.E.2d 921, 923, overruled on other

grounds in Village v. Gen. Motors Corp. (1984), 15 Ohio St.3d 129, 131, 15 OBR

279, 280, 472 N.E.2d 1079, 1081.

Equal Protection

{¶ 14} Petitioner alleges that R.C. 3937.18(A)(2) violates the Equal

Protection Clause of the Ohio Constitution because it denies “certain insurance

consumers the benefit of the underinsured coverage they had purchased, while

permitting others access to those benefits.” Again, we disagree.

{¶ 15} The standard for determining violations of equal protection is

essentially the same under the state and federal law. Beatty v. Akron City Hosp.

(1981), 67 Ohio St.2d 483, 491, 21 O.O.3d 302, 307, 424 N.E.2d 586, 591-592.

{¶ 16} The preliminary step in analyzing an equal protection challenge

involves scrutiny of classifications created by the legislation. “[W]here there is no

classification, there is no discrimination which would offend the Equal Protection

Clauses of either the United States or Ohio Constitutions.” Conley v. Shearer

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(1992), 64 Ohio St.3d 284, 290, 595 N.E.2d 862, 868. Moreover, “[o]nly when it

is shown that the legislation has a substantial disparate impact on classes defined in

a different fashion may analysis continue on the impact of those classes.” Califano

v. Boles (1979), 433 U.S. 282, 294, 99 S.Ct. 2767, 2774, 61 L.Ed.2d 541, 551.

“‘[W]henever the law operates alike on all persons and property, similarly

situated, equal protection cannot be said to be denied.’” Union Sav. Assn. v. Home

Owners Aid, Inc. (1970), 23 Ohio St.2d 60, 63, 52 O.O.2d 329, 330, 262 N.E.2d

558, 560, quoting Walston v. Nevin (1888), 128 U.S. 578, 582, 9 S.Ct. 192, 193, 32

L.Ed. 544, 546. Insureds carrying identical policy limits are treated the same under

R.C. 3937.18(A)(2). The only classifications of insureds treated differently under

R.C. 3937.18(A)(2) are those who, by contract, have chosen different policy limits.

{¶ 17} Insureds purchase their levels of protection. If an insured purchases

uninsured/underinsured motorist coverage in the amount of $100,000 per accident

and $300,000 per occurrence, the insured is guaranteed total recovery for an

accident up to those policy limits, regardless of the tortfeasor’s insurance status. If

the insured purchases higher or lower policy limits, those limits will dictate the total

recovery available stemming from an accident with an uninsured or underinsured

tortfeasor.

{¶ 18} Differences in treatment based on the individual contract between

the insurer and the insured do not impinge upon a fundamental right or burden a

suspect class. Moreover, a rational basis undeniably supports giving effect to the

policy limits bargained for by the parties.

Right to a Remedy

{¶ 19} Petitioner claims that R.C. 3937.18(A)(2) destroyed a remedy

created by Savoie. Savoie, however, did not create a remedy. The Savoie court

interpreted what coverage R.C. 3937.18(A)(2) then mandated. The Savoie

controversy involved the amount which the insureds were entitled to receive in

accordance with insurance contracts which were subject to the requirements of R.C.

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3937.18. Savoie was not based on constitutional or common-law principles of full

recovery in tort.

{¶ 20} R.C. 3937.18 results from legislative policymaking. Coverage in

accordance with R.C. 3937.18 is not a common-law right. Any contractual right

to coverage prescribed under R.C. 3937.18 does not, therefore, come within the

protection of Section 16, Article I of the Ohio Constitution. Fabrey v. McDonald

Police Dept., 70 Ohio St.3d at 355, 639 N.E.2d at 35; Mominee v. Scherbarth

(1986), 28 Ohio St.3d 270, 291-292, 28 OBR 346, 364-365, 503 N.E.2d 717, 733-

734 (Douglas, J., concurring). To the extent that the legislature may exercise its

policymaking authority to alter the contractual relationship between insurer and

insured to provide greater protection to the insured, it may also limit or remove

those protections once given. See Byers v. Meridian Printing Co. (1911), 84 Ohio

St. 408, 422, 95 N.E. 917, 919; see, also, Mominee v. Scherbarth, 28 Ohio St.3d at

292, 28 OBR at 365, 503 N.E.2d at 734 (Douglas, J., concurring).

Privileges and Immunities

{¶ 21} R.C. 3937.18 places a statutory obligation on all motor vehicle

liability insurers to offer uninsured/underinsured motorist coverage. To this extent,

the parties’ freedom to contract is superseded in furtherance of important public

policy concerns. In placing this obligation on insurers, the General Assembly

dictates the terms of the mandatory offering of uninsured/underinsured motorist

coverage. Petitioner takes issue with those portions of Senate Bill 20 that limit an

insurer’s statutory obligation, claiming that those limitations violate the Privileges

and Immunities Clause of the Ohio Constitution.

{¶ 22} Because the obligation to offer uninsured/underinsured motorist

coverage is rooted in public policy and imposed by the legislature, the legislature

is free to delimit the obligation. By obligating all motor vehicle liability insurers

in a like manner, the General Assembly does not grant special privileges or

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immunities. Accordingly, the Privileges and Immunities Clause is inapplicable to

this case.

Conclusion

{¶ 23} In accordance with the foregoing analysis, we determine that R.C.

3937.18(A)(2) survives each of petitioner’s constitutional challenges.

MOYER, C.J., and LUNDBERG STRATTON, J., concur.

PFEIFER, J., concurs in part.

DOUGLAS and F.E. SWEENEY, JJ., dissent.

RESNICK, J., dissents and finds the statute unconstitutional.

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PFEIFER, J., concurring in part.

{¶ 24} I concur in the answer to the certified question given in the lead

opinion with respect to the one-subject rule. I express no opinion on the other parts

of the answer to the certified question given in the lead opinion.

{¶ 25} Section 15(D), Article II of the Constitution states that “[n]o bill

shall contain more than one subject, which shall be clearly expressed in its title.”

The Constitution does not state that all provisions of a bill must affect the same

chapter of the Revised Code. The Constitution does not prohibit legislative

logrolling, whatever exactly that is. Rather, the Constitution requires a bill to

contain no more than one subject.

{¶ 26} Am.Sub.S.B.No. 20, 145 Ohio Laws, Part I, 204 is titled: “An Act:

To amend sections 3301.07, 3937.18, *** 4509.102, 4509.103, 4509.104, and

4513.022 of the Revised Code to revise the Financial Responsibility Law relative

to the maintenance and demonstration of proof of financial responsibility and to the

law’s administration, enforcement, and sanctions; *** to permit automobile

liability insurance policies to preclude all stacking of coverages; to declare that

underinsured motorist coverage is not excess coverage ***.” Senate Bill 20

diminishes the protection provided by underinsured motorist coverage and is

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logically inconsistent with the General Assembly’s ongoing attempt to ensure that

all drivers in this state are covered by insurance. Nevertheless, using “one subject”

in its commonsense meaning compels the conclusion that Senate Bill 20’s

amendment of R.C. 3937.18(A)(2) does not violate the one-subject rule. To

conclude otherwise would put legislation through too fine a strainer and result in a

less responsive General Assembly, if not a paralyzed one.

{¶ 27} This is not to say that the process of enactment used by the General

Assembly in this instance was not distasteful. R.C. 3937.18 (A)(2) was amended

without due deliberation and as a last-minute change at the end of the legislative

session, even though the decision to be superseded had been decided nearly a year

earlier. Further, the General Assembly’s supersedure of a decision of this court by

name is highly unusual. See Am.Sub.S.B.No. 20, Sections 7, 9 and 10, 145 Ohio

Laws, Part I, 238-239. However ugly the process may have been, it was not

unconstitutional.

{¶ 28} An unduly narrow interpretation of the one-subject rule would lead

to insuperable problems. States that have an extremely narrow interpretation of

their versions of the one-subject rule are deluged with thousands of legislative

proposals to amend statutes each year. The resulting profusion of legislation

necessarily means that little attention can be paid to each matter. Often, in those

states, as many as fifty different bills are presented and voted on as a single package.

This practical response to an untenable situation defeats the purpose of a narrow

interpretation of “one subject.”

{¶ 29} A narrow interpretation of “one subject” could lead the General

Assembly to contemporaneously enact multiple amendments, creating attendant

problems. See State v. Wilson (1997), 77 Ohio St.3d 334, ___ N.E.2d ___.

{¶ 30} I continue to believe that the common understanding of the term

“underinsured motorist coverage” encompasses all damages not covered by the

tortfeasor’s liability insurance, up to the independent limit of the underinsured

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motorist coverage. To expect purchasers of underinsured motorist coverage to

comprehend the technical import of the language of their insurance contracts, not

to mention the impact of R.C. 3937.18, is not realistic. As a possible solution to

the inherent confusion concerning the meaning of “underinsured motorist

coverage,” I recommend a new term, for the consideration of the General Assembly

and liability insurers, as a substitute for “underinsured motorist coverage”:

“combined motorist coverage.”

{¶ 31} “Combined motorist coverage” means logically what the General

Assembly has defined “underinsured motorist coverage” to mean. This term could

be readily understood by judges, lawyers and insurance agents, not to mention the

insurance-consuming public. Though it may be anathema to some, I believe

purchasers of insurance should be able to understand the extent of their coverage

without the intercession of an attorney.

{¶ 32} Senate Bill 20 returns Ohio to the state of confusion concerning

underinsured motorist coverage that reigned until Savoie v. Grange Mut. Ins. Co.

(1993), 67 Ohio St.3d 500, 620 N.E.2d 809, was decided. Much of the confusion

has been generated by the failure to appreciate the difference between uninsured

and underinsured. These terms represent two distinctly different concepts and

should be treated differently.

{¶ 33} Pursuant to the current version of R.C. 3937.18(A)(2), underinsured

motorist coverage applies only when the tortfeasor’s liability coverage does not

provide as much coverage as the victim’s underinsured motorist coverage.

According to the statute, “underinsured motorist coverage” is always less than the

dollar amount listed on the policy and the billing to the insured. In fact, to collect

the full stated amount of underinsured motorist coverage, the insured has to collect

under his or her uninsured motorist coverage.

{¶ 34} Until R.C. 3937.18(A)(2) is amended to put consumers on notice as

to what is actually being purchased, the ongoing viability of R.C. 3937.18(A)(2),

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on grounds other than the one-subject rule challenge rejected today, will be in

question.

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