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Gerig v. Kahn6/19/2002
Contracts - Signatories to a contract may enforce an arbitration provision against a nonsignatory who seeks a declaration of the signatories' rights and obligations under the contract.
Submitted March 27, 2002
. On January 18, 1997, while under the care of Gary Kahn, M.D., Dawn Gerig gave birth to Matthew Gerig at St. Vincent Mercy Medical Center. After the birth, it was discovered that Matthew had several birth defects. On March 13, 1997, St. Vincent and Kahn signed an affiliation agreement memorializing Kahn's new status as a St. Vincent employee. The agreement also addressed St. Vincent's obligations to Kahn regarding medical malpractice insurance coverage. On August 4, 1997, Matthew's parents and Matthew Gerig, by and through his mother, filed a complaint against Kahn, alleging that Matthew's birth defects resulted from medical malpractice committed by Kahn during Matthew's delivery.
. At the time that the lawsuit was filed, St. Vincent had insured Kahn against medical malpractice claims through P.I.E. Mutual Insurance Company with liability limits up to $4 million. St. Vincent also funded a self-insurance plan to pay malpractice and general liability claims. While the Gerigs' medical malpractice action was pending, P.I.E. was found to be insolvent, and on March 23, 1998, it was ordered into liquidation pursuant to R.C. 3903.16. The liquidation order prompted appellant Ohio Insurance Guaranty Association ("OIGA") to get involved in the Gerigs' malpractice lawsuit. OIGA was created by the Ohio Insurance Guaranty Association Act ("Act") and pays "covered claims," as defined by the Act, brought against insolvent insurance companies. R.C. Chapter 3955.
. Although Kahn had been insured by P.I.E. for malpractice liability up to $4 million, recovery from OIGA is statutorily limited to $300,000. Moreover, pursuant to R.C. 3955.13(A), OIGA is obligated to pay claims only after claimants have exhausted their rights under all other insurance policies where recovery is possible.
. After learning of P.I.E.'s insolvency, the Gerigs reviewed the affiliation agreement and determined that, because of P.I.E.'s insolvency, the agreement required St. Vincent to insure Kahn through its self-insurance plan up to $4 million against medical malpractice claims such as the Gerigs' that were made after its date. On September 9, 1999, the Gerigs filed a complaint for declaratory judgment, pursuant to R.C. 2721.03, asking the court to declare that the affiliation agreement in fact so required. The Gerigs named St. Vincent, OIGA, and Kahn as defendants in the declaratory judgment action.
. OIGA also filed a cross-claim for declaratory judgment against St. Vincent, asking the court to declare that the affiliation agreement between St. Vincent and Kahn required St. Vincent to indemnify Kahn. OIGA further asked the court to declare that, pursuant to R.C. 3955.13(A), OIGA is not obligated to pay any damages that may be awarded to the Gerigs unless and until the Gerigs have exhausted St. Vincent's self-insurance.
. Kahn filed a counterclaim for declaratory judgment also asking the court to declare that St. Vincent had a contractual duty to allocate $4 million in self-insurance for his indemnification.
. St. Vincent, relying on an arbitration clause contained in the affiliation agreement, moved the court to stay the proceedings in the medical malpractice action and the declaratory judgment action and also sought an order compelling arbitration of the dispute regarding whether St. Vincent is legally required, pursuant to the agreement, to insure Kahn through its self-insurance plan.
. The Gerigs and OIGA opposed
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