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Indiana Insurance Co. v. Barnes12/6/2005
me Court addressed a situation in which the insured was the owner of two separate vessels. One vessel that was operated by the insured's agents collided with the other, causing a loss. Though most of the opinion focused on the differentiation between a total loss and partial loss, the court also held:
The rule that an insurer who has paid the loss resulting from a peril insured against, may be subrogated to all the claims which the insured may have against any person by whose negligence the injury was caused, does not apply in a case where the injury was caused by the negligence of the insured himself. * * * Id., at paragraph three of the syllabus.
{ } Similarly, several of our sister appellate courts have addressed comparable circumstances, and each has held firm to the rule that an insurer has no right of subrogation against its own insured. "No right of subrogation exists where the tortfeasor is also an insured under the policy which gives rise to the right of subrogation," for an insurer has no cause of action against its insured for negligence. Aetna Cas. & Sur. Co. v. Urban Imperial Bldg. & Rental Corp. (1987), 38 Ohio App.3d 99, 100. See, also, Pilo v. Liberty Mut. Fire Ins. Co., Ashland App. No. 02-COA-038, 2003-Ohio-662; Craig v. Grange Ins. Co. (Nov. 5, 1999), Montgomery App. No. 17675; Fidelity & Guaranty Ins. Underwriters, Inc. v. Aetna Cas. & Sur. Co. of Illinois (June 30, 1993), Lucas App. No. L-92-024.
{ } The United States Court of Appeals for the Sixth Circuit, applying Ohio law, further visited the issue under circumstances analogous to the immediate case. In Builders & Manufacturers Mut. Cas. Co. v. Preferred Auto. Ins. Co. (C.A.6, 1941), 118 F.2d 118, the Sixth Circuit was faced with the following case. Dwight Hummon was hauling interstate freight in his own truck on behalf of the Buffalo and Ohio Transfer Company when he negligently caused an accident, resulting in the death of one person and serious injury to another. At the time of the accident, Hummon carried personal auto insurance with Preferred Automobile Insurance Company, while the transfer company was insured by Builder's predecessor-in-interest pursuant to applicable requirements of the Public Utilities Commission of Ohio. The injured third parties, personally or through representatives, sued the transfer company for damages. The Transfer Company's insurance provider settled the actions and paid a total of $9,000 to the respective plaintiffs.
{ } Subsequently, Builders filed an action against Hummon in the Northern District of Ohio seeking to recover the amounts paid in settlement, plus attorney fees.
Hummon did not appear, and default judgment was entered in favor of Builders. Builders then attempted to recover the unpaid judgment from Preferred pursuant to General Code of Ohio, Section 9510-4 (re-codified in R.C. 3929.06). The district court held that, under the language of the general code, Builders was precluded from asserting a claim against Preferred. Builders, supra, at 120.
{ } On appeal, the Sixth Circuit affirmed the district court and held that, regardless of the applicability of Section 9510-4, Builders was precluded from recovery. The court found that Hummon was an insured under the blanket policy issued to the Transfer Company. Thus, * * * [Builders] paid its own liability for the thing against which it had directly insured the Transfer Company when the settlements were consummated. It was primarily liable under the policy, and made the payments either in recognition of its liability or as a volunteer. In neither case can it recover from its own insured the payment made under its contract of insurance. The rule that an insurer w
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