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Ponser v. St. Paul Fire & Marine Insurance Co.12/30/2004
etter from Motorists (i.e., within the two-year statute of limitations) reflects that its delay in settling its insureds' claims was not due in any part to a concern that the insureds were not preserving Motorists' subrogation rights against Hofer but to the possible presence of other insurance in the case as a result of a so-called Scott-Pontzer claim being brought by Chenault's estate. See Scott-Pontzer v. Liberty Mut. Fire Ins. Co. (1999), 85 Ohio St.3d 660, 710 N.E.2d 1116.
{ } We note, however, that when an uninsured tortfeasor is not judgment-proof, an insurers' contractual subrogation rights would be harmed by the failure of an insured to bring a wrongful-death claim against the tortfeasor. Nationwide claims that affirming the court of appeals would allow an insured, "by his or her own activity or inactivity, to thwart the carriers' subrogation rights against a tortfeasor," and would "bring[ ] Ohio ever closer to a no fault state despite the fact that the legislature has clearly not done so." Motorists writes that an affirmance "would permit insureds to abandon their claims against the wrongdoer and proceed directly against their [uninsured-motorist] carrier" and that "the scope of all [uninsured-motorist] coverage would be altered such that it would be converted from a third-party coverage, requiring liability on behalf of the alleged tortfeasor to be proven, to a first party coverage much like health insurance."
{ } However, our decision in Ferrando v. Auto-Owners Mut. Ins. Co., 98 Ohio St.3d 186, 2002-Ohio-7217, 781 N.E.2d 927, remains a roadblock to any parade of horribles envisioned by appellants. As we held in paragraph two of the syllabus of that case:
{ } "When an insurer's denial of underinsured motorist coverage is premised on the insured's breach of a consent-to-settle or other subrogation-related provision in a policy of insurance, the insurer is relieved of the obligation to provide coverage if it is prejudiced by the failure to protect its subrogation rights. An insured's breach of such a provision is presumed prejudicial to the insurer absent evidence to the contrary."
{ } Thus, the contractual right to subrogation still protects insurers. Here, the insurers denied coverage not because valuable subrogation rights had been materially affected, but because appellees had failed to perform a ministerial act of no practical value. Appellees' failure to file suit against Hofer had no substantive effect on the insurers. The contracts are written such that only a prejudicial lapse by an insured can result in a denial of coverage. The insurers here were on notice of appellees' claims for a year, and waited while the clock ticked on the statute of limitations for a fruitless cause of action against a destitute tortfeasor. Appellants seek a result that elevates form over substance. But here, even the form, the insurance contract, does not support them.
{ } We conclude that appellees' failure to file a wrongful-death action against the uninsured tortfeasor in this case does not affect their ability to recover uninsured-motorist benefits pursuant to their insurance contracts.
{ } Accordingly, we affirm the judgment of the court of appeals.
Judgment affirmed.
RESNICK, F.E. SWEENEY, LUNDBERG STRATTON, O'CONNOR and CUPP, JJ., concur.
MOYER, C.J., concurs in judgment only.
ROBERT L. CUPP, J., of the Third Appellate District, sitting for O'DONNELL, J.
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