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Stickovich v. City of Cleveland8/2/2001
ty insurance companies are not within the class of persons to be protected by R.C. 2305.31.
History of R.C. 2305.31
Both Ohio law and the Ohio General Assembly have recognized these distinctions for more than eighty years. In 1919, the General Assembly enacted Sections 9510-3 and 9510-4 of the General Code, which are now codified in the Revised Code at sections 3929.05 and 3929.06, respectively. The effect of these provisions was to mandate that insurance agreements covering injury to persons be in the form of liability rather than indemnity policies. Steinbach v. Maryland Cas. Co. (1921), 15 Ohio App. 392; 58 O.Jur.3d Insurance, Sections 966-967. Thus there is no way that the liability insurance contract in the case at bar can be construed to constitute an indemnity agreement.
The General Assembly understood this distinction, and courts have recognized these principles in this precise context when considering public policy under R.C. 2305.31. See Employers' Fire Ins. Co. v. Danis Bldg. Constr. Co. (S.D. Ohio July 12, 1999), No. 97-00241, unreported at 4-5. The Sixth Circuit recognized that trictly speaking, it is misleading to speak of indemnification in this context, but vacated the trial court's opinion because it should have abstained from ruling on the dispute. Employers' Fire Ins. Co. v. Danis Bldg. Constr. Co. (6th Cir. Aug. 22, 2000), No. 99-3987, 2000 U.S. App. LEXIS 22425, at *12.
Judicially announced principles of public policy generally forbid a party from shifting the risk of loss by insurance when its wrongdoing is deliberate and is reflected in policy terms such as accident, or occurrence. There is no claim (or evidence) that Cleveland deliberately injured ICC's employees, and there is less reason to believe that a public agency might indulge in moral hazard because of liability insurance.
Cases citing R.C. 2305.31 recognize these distinctions and generally reflect this carefully measured approach to invalidating agreements on public policy grounds. Most of the approximately fifty opinions citing R.C. 2305.31 involve indemnity agreements rather than liability insurance contracts and have found, for one reason or another, that the statute does not invalidate the challenged agreement.
The Ohio Supreme Court has never applied R.C. 2305.31 to liability insurance contracts. In only one of six cases citing the statute, moreover, has the Supreme Court held that the challenged agreement violated public policy. In its only case mentioning both R.C. 2305.31 and insurance, the Court recognized the distinction between liability insurance and indemnity agreements and also recognized that each party could provide against loss by insurance or other means. Glaspell v. Ohio Edison Co., supra at 47.
For a period of more than twenty years after the passage of R.C. 2305.31 in 1975, cases involving the claim that an insurance contract violated R.C. 2305.31 held that the insurance contract was not against public policy. See Brzeczek v. Std. Oil Co., supra; Lewis v. Ohio Edison Co. (Jan. 9, 1991), Mahoning App. No. 89 CA 150, unreported, mot. over. (1991), 61 Ohio St.3d 1412; and Legge Assoc. v. Dayton Power & Light (6th Cir. Apr. 22, 1997), Case Nos. 95-4043 and 95-4050, 1997 U.S. App. LEXIS 17567. Of these, Lewis v. Ohio Edison Co. is particularly instructive because it declined to invalidate insurance coverage for a utility on a claim by a contractor's employee injured by electricity adjacent to the worksite while he was performing the work as in the case at bar. In the case at bar, the two successive trial judges ruled consistent with Lewis.
Zavarella
To support its argument to the contrary, Comme
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