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Stickovich v. City of Cleveland8/2/2001
nces, and subject to the terms and conditions, that are determined by the political subdivision in its discretion. * (Emphasis added.)
Enacted after R.C. 2305.31, R.C. 2744.08(A)(1) specifically governs political subdivisions obtaining insurance and controls in case of any conflict. In short, contrary to Commercial Union's argument and the dissent's novel and unsound assertion, there is no public policy against political subdivisions obtaining liability insurance coverage on public works projects.
In a free and democratic society, freedom of contract is the general rule; public policy limits are the exception. The doctrine does not grant courts a roving commission to police the terms of agreements and must be cautiously applied lest the exception swallow the rule. The Ohio Supreme Court has repeatedly admonished the courts against the loose application of public policy to invalidate agreements, even in the context of ordinary contracts between private parties not authorized by specific legislation as in the case at bar:
When judges come to apply the doctrine, they must take care not to infringe on the rights of the parties to make contracts which are not clearly opposed to some principle or policy of law. Lamont Bldg. Co. v. Court (1946), 147 Ohio St. 183, 185 (emphasis added.)
This is true, of course, even in the context of invalidating liability insurance coverage. E.g., Doe v. Shaffer (2000), 90 Ohio St.3d 388 (narrowing an appellate court's determination that public policy precluded insurance coverage for certain claims related to sexual molestation).
As a general rule, neither indemnity agreements nor liability insurance contracts are against public policy. See e.g., Glaspell v. Ohio Edison Co. (1987), 29 Ohio St.3d 44. In the context of insurance, one is more apt to encounter public policy arguments to mandate coverage or to override policy exclusions, rather than to invalidate coverage, because the predominate social purpose of liability insurance is to compensate injured persons. This is precisely why liability insurance is sometimes compulsory as in the case at bar.
Rather than simply invoking the nebulous catch phrase of public policy as Commercial Union requests, it is our duty to carefully review and apply the statute as written by the General Assembly. Careful review of the language used by the General Assembly reveals that R.C. 2305.31 does not invalidate commercial liability insurance coverage for construction projects let alone clearly invalidate such insurance particularly when such coverage is obtained by public agencies as in the case at bar.
R.C. 2305.31
R.C. 2305.31 contains two sentences. The first sentence is lengthy and prohibits certain construction indemnity agreements. The second sentence contains an exception for insurance. The argument that R.C. 2305.31 bars insurance coverage in the case at bar requires failing to distinguish between indemnity agreements and liability insurance contracts, a distinction long recognized by the General Assembly and Ohio law.
R.C. 2305.31 provides in its entirety as follows:
A covenant, promise, agreement, or understanding in, or in connection with or collateral to, a contract or agreement relative to the design, planning, construction, alteration, repair, or maintenance of a building, structure, highway, road, appurtenance, and appliance, including moving, demolition, and excavating connected therewith, pursuant to which contract or agreement the promisee, or its independent contractors, agents or employees has hired the promisor to perform work, purporting to indemnify the promisee, its independent contractors, agents, em
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