Admiral Ins. Co. v. Seifert Technologies, Inc.

2011 Ohio 5196

• Court: Ohio Court of Appeals
• Decided: September 29, 2011
• Docket: 2011CA00002
• Status: Published

Opinion

[Cite as Admiral Ins. Co. v. Seifert Technologies, Inc., 2011-Ohio-5196.]

COURT OF APPEALS STARK COUNTY, OHIO FIFTH APPELLATE DISTRICT

ADMIRAL INSURANCE COMPANY : JUDGES: : : Hon. W. Scott Gwin, P.J. Plaintiff-Appellant/ : Hon. John W. Wise, J. Cross-Appellee Hon. Patricia A. Delaney, J. : -vs- : : Case No. 2011CA00002 SEIFERT TECHNOLOGIES, INC., ET : AL. : : : Defendants-Appellees/ : OPINION Cross-Appellants

CHARACTER OF PROCEEDING: Appeal from the Stark County Court of Common Pleas, Case No. 2010CV01184

JUDGMENT: CROSS-APPEAL DISMISSED

DATE OF JUDGMENT ENTRY: September 29, 2011

APPEARANCES:

For Cross-Appellant-Leonard For Cross-Appellee-Admiral Insurance Insurances Services Agency, Inc.: Company:

MARTIN T. GALVIN W. ROGER FRY 1400 Midland Building WILLIAM H. FRY 101 Prospect Ave., West One West 4th St., Suite 900 Cleveland, OH 44115 Cincinnati, OH 45202 [Cite as Admiral Ins. Co. v. Seifert Technologies, Inc., 2011-Ohio-5196.]

Delaney, J.

{¶1} Defendant-Cross-Appellant, Leonard Insurance Services Agency, Inc.,

appeals the December 20, 2010 judgment entry of the Stark County Court of Common

Pleas. Plaintiff-Cross-Appellee is Admiral Insurance Company.

STATEMENT OF THE FACTS AND CASE

{¶2} On May 4, 1999, the City of Massillon entered into a contract with CTI

Engineers, Inc. for professional engineering services during the design, construction,

and start-up of the upgrade/expansion of the Massillon Regional Wastewater Treatment

Plant. Thereafter, on June 15, 1999, CTI entered into a contract with Seifert

Technologies, Inc. for professional electrical engineering design services related to its

project with the City of Massillon. The City of Massillon also entered into a construction

contract with Kokosing Construction Company, Inc. for services related to the

construction of upgrades to its wastewater treatment plant.

{¶3} At all times relevant herein, Seifert maintained professional liability

insurance with Admiral Insurance Company. Seifert obtained its liability insurance from

Admiral through Leonard Insurance Services Agency, Inc. and each renewal of the

policies were submitted by Leonard to Admiral through a broker. W. Fred Kloots, Jr.

was the agent at Leonard responsible for Seifert’s Admiral policy.

{¶4} In January 2008, the City of Massillon filed suit against CTI for problems

relative to the project’s tertiary filter system, which had been designed by CTI.

Additionally, as part of that case, Massillon asserted claims against CTI for

indemnification for claims asserted by Kokosing against Massillon for additional

compensation as a result of delays encountered in the project. Seifert was not named Stark County, Case No. 2011CA00002 3

as a party to the Massillon-CTI litigation. CTI notified Seifert of the Massillon-CTI

litigation through a letter sent by William A. Dorman, President of CTI to Timothy J.

Seifert, President of Seifert (“February 2008 letter”). The letter, sent February 2008,

stated:

{¶5} “This letter is to notify you that CTI has been named as a defendant along

with others in a complaint filed by the City of Massillon regarding the alleged failure of

the tertiary filter system which is part of the Massillon Wastewater Treatment Plant

Upgrade project for which you provided professional electrical engineering services as a

subconsultant to CTI.

{¶6} “The complaint also requests compensation for damages claimed by

Kokosing Construction which the court may assign to Massillon and which may be

found to be the fault of CTI (and its subconsultant(s) for delays and/or other

considerations alleged such as electrical design omissions and changes during

construction.

{¶7} “There is a stay of the lawsuit with respect to CTI pending the outcome of

arbitration as required by the prime agreement with the City.

{¶8} “We will keep you informed as the complaint moves forward in the legal

system.”

{¶9} Upon receipt of the February 2008 letter, Seifert contacted Kloots. Seifert

did not give Kloots a copy of the letter but Timothy Seifert read the letter to Kloots over

the telephone. After discussions between Kloots and Seifert, the decision was made

not to file a claim with Admiral because there was uncertainty as to whether a claim was Stark County, Case No. 2011CA00002 4

going to be presented against Seifert by CTI. Kloots never requested that Seifert send

him a copy of the February 2008 letter.

{¶10} Seifert and Kloots later discussed the February 2008 letter when the

parties filled out the renewal application for Seifert’s policy with Admiral for the policy

term of February 1, 2009 to February 1, 2010. In response to questions on the renewal

application regarding current or possible claims against Seifert, the decision was made

not to mention the February 2008 letter, since Seifert did not believe that a claim would

be made against it. Admiral was never notified of the February 2008 letter by Kloots,

Seifert, or the renewal application.

{¶11} As part of a resolution to the Massillon-CTI litigation, Massillon assigned to

Kokosing “each and every, any and all, claims that it had or now has relating to or

arising out of the [contract between Massillon and CTI]” in September 2008. On March

17, 2009, counsel for CTI notified Seifert of the assignment of Massillon’s claims to

Kokosing and further litigation between CTI and Kokosing.

{¶12} After receiving the March 17, 2009 letter, Seifert contacted Kloots again

regarding notification to Admiral. Seifert sent a copy of the March 17, 2009 letter to

Kloots; however, the letter was not forwarded to Admiral and no claim was made on

Seifert’s behalf.

{¶13} Thereafter, by letter sent June 24, 2009, CTI notified Seifert that it opined

that Kokosing’s claims were, in part, the result of work performed by Seifert. CTI

demanded that Seifert participate in the arbitration and indemnify CTI for any damages.

{¶14} After receiving the June 24, 2009 letter, Seifert contacted Kloots seeking

advice on how to proceed. Kloots told Seifert that they should notify Admiral. Leonard Stark County, Case No. 2011CA00002 5

sent a copy of the June 24, 2009 letter to Admiral and submitted an ACORD claims

notice to Admiral and/or Admiral’s broker on behalf of Seifert. Admiral received a copy

of the June 24, 2009 letter on June 29, 2009. Thereafter, Admiral issued a reservation

of rights letter to Seifert and obtained counsel for Seifert in regards to the underlying

claim.

{¶15} On April 15, 2010, Admiral filed a declaratory judgment action with the

Stark County Court of Common Pleas. Admiral named Seifert, CTI, and Leonard as

defendants. Admiral’s declaratory judgment action sought a determination of Admiral’s

rights and obligations under its policy with Seifert regarding claims asserted against

Seifert by CTI. Alternatively, Admiral sought indemnification from Leonard stating in its

complaint for declaratory judgment:

{¶16} “45. Plaintiff, Admiral, states for its claim against Leonard Insurance

Agency that if it is held responsible to any party for the claims asserted by Seifert or CTI

based on agency relationship, i.e., that notice to the Leonard Agency was notice to

Admiral, with the Leonard Agency, which is expressly denied, it will be entitled to a

judgment against the Leonard Insurance Agency and full indemnification by it in any

amount assessed against Plaintiff.”

{¶17} In its answer, Seifert asserted a counterclaim against Admiral, seeking a

determination by the trial court that it was entitled to coverage for any claims asserted

against it by CTI and a cross-claim against Leonard, on the basis that it was an agent of

Admiral.

{¶18} The case proceeded to summary judgment before the trial court. Admiral,

Leonard, Seifert, and CTI filed separate motions for summary judgment. On December Stark County, Case No. 2011CA00002 6

20, 2010, the trial court ruled on the summary judgment motions and determined as

follows.

{¶19} The trial court found upon a review of the applicable terms of Seifert’s

professional liability policy with Admiral, there was no genuine issue of material fact that

the February 2008 letter triggered Seifert’s obligation to report a claim to Admiral. The

trial court further determined that Admiral received timely notice of the February 2008

letter, and therefore the claim, because Seifert gave notice to Kloots/Leonard of the

February 2008 letter and an agency relationship existed between Kloots/Leonard and

Admiral. Notice to Kloots/Leonard therefore constituted notice to Admiral. The trial

court found the agency relationship between Kloots/Leonard and Admiral also

prevented Admiral from rejecting the claim due to Seifert’s failure to include the litigation

on its 2009 renewal application for professional liability coverage because

Kloots/Leonard was already aware of the February 2008 letter.

{¶20} Specifically relevant to this appeal, the trial court finally examined the

claims of indemnification by Seifert and Admiral against Leonard. The trial court held:

{¶21} “Accordingly, notice was timely and proper under Seifert’s policy. As

such, Admiral is required to provide coverage and fulfill all other obligations under its

policy with Seifert for any and all claims against Seifert resulting from the

Massillon/Kokosing-CTI litigation, including, but not limited to, indemnification. Although

a principal may seek indemnity from an agent, see Carter v. Bernard, 7th Dist. No. 06

MA 54, 2006-Ohio-7058 (“under the doctrine of indemnification, the principal, from

whom the plaintiff seeks to recover, is only secondarily or passively liable and able to

seek reimbursement from the agent who is primarily or actively liable”), the Court finds Stark County, Case No. 2011CA00002 7

that any claim for indemnity from Kloots/Leonard premature and not ripe for

consideration by this Court.” (Dec. 20, 2010 Judgment Entry).

{¶22} The trial court then dismissed any claims concerning indemnification by

Kloots/Leonard as premature. The trial court found it had determined all issues

pertaining to the declaratory judgment action and stated the judgment entry was a final,

appealable order under Civ.R. 54(B).

{¶23} Admiral filed a Notice of Appeal of the trial court’s December 20, 2010

judgment entry. Seifert and Leonard filed Cross-Appeals. CTI submitted cross-

assignments of error.

{¶24} On April 29, 2011, Admiral filed a Motion for Voluntary Dismissal of its

Appeal. While the appeal was pending before this Court, the parties engaged in

mediation, which resulted in a settlement of claims on April 13, 2011. Admiral

committed to pay an agreed amount on behalf of Seifert to settle the claims and the

parties to that settlement were Admiral, Seifert, and CTI. Seifert moved to voluntarily

dismiss its Cross-Appeal on May 2, 2011. Finally, CTI withdrew its cross-assignments

of error. We granted the parties’ motions on May 31, 2011.

{¶25} Accordingly, the only matter pending before this Court is Leonard’s Cross-

Appeal of the December 20, 2010 judgment entry.

{¶26} Leonard raises one Assignment of Error:

{¶27} “THE TRIAL COURT ERRED WHEN IT DETERMINED THAT THE

FEBRUARY 2008 LETTER FROM CTI TO SEIFERT TECHNOLOGIES TRIGGERED

SEIFERT’S OBLIGATION TO REPORT A CLAIM UNDER ITS PROFESSIONAL

LIABILITY POLICY TO ADMIRAL.” Stark County, Case No. 2011CA00002 8

I.

{¶28} Leonard argues in its sole Assignment of Error that the trial court erred

when it found there was no genuine issue of material fact that the February 2008 letter

triggered Seifert’s obligation to report a claim to Admiral. The trial court interpreted the

February 2008 letter and concluded that it was “clear that CTI was considering including

Seifert in the Massillon/Kokosing-CTI litigation on the basis of its professional electrical

engineering services rendered in the Massillon project. As such, said letter constituted

written notice received by Seifert that a demand for money may be brought against it as

a result of a ‘professional incident,’ constituting a ‘claim’ under the policy.” (Dec. 20,

2010 Judgment Entry). The trial court went on to analyze that because of the agency

relationship between Leonard and Admiral, notice to Leonard of the February 2008

letter was notice to Admiral of the February 2008 letter.

{¶29} Before we consider Leonard’s Assignment of Error, we must first examine

the issues that are pending before this Court in light of the settlement of the underlying

claim by Admiral, Seifert, and CTI and dismissal of Admiral’s appeal, Seifert’s cross-

appeal, and CTI’s cross-assignments of error. The claim before the trial court was a

declaratory judgment action to determine Admiral’s rights and obligations under its

policy with Seifert regarding claims asserted against Seifert by CTI. Alternatively,

Admiral sought indemnification from Leonard. Seifert asserted a counterclaim against

Admiral, seeking a determination by the trial court that it was entitled to coverage for

any claims asserted against it by CTI and a cross-claim against Leonard, on the basis

that it was an agent of Admiral. Stark County, Case No. 2011CA00002 9

{¶30} The trial court ruled on December 20, 2010, that there was no genuine

issue of material fact that Admiral must provide coverage to Seifert under its

professional liability policy for the claims resulting from the Massillon/Kokosing-CTI

litigation. The trial court held an agency relationship existed between Admiral and

Leonard and pursuant to the relationship, notice of the claim through the February 2008

letter to Leonard was notice to Admiral of the claim. Finally, the trial court found the

issues of indemnification were premature because no claim had been paid at that time.

The trial court dismissed Admiral’s and Seifert’s indemnification claims.

{¶31} Admiral appealed the December 20, 2010 judgment of the trial court,

raising as Assignments of Error that (1) the trial court erred by not considering all of the

evidence and self-limiting its review of the same, (2) the trial court erred by finding that

Fred Kloots of Leonard Insurance was an agent of Admiral and the determination

erroneously conferred constructive notice of the claim to Admiral, and (3) the trial court

erred in determining that Admiral’s lawsuit against Leonard was premature. Seifert

stated its Assignments of Error as a cross-appellant were (1) the common pleas court

erred in finding the February 2008 CTI letter amounted to notice of a claim for purposes

of triggering liability coverage under the Admiral 2008 policy and (2) the common pleas

court erred to the extent it failed to address and conclude that liability coverage was

triggered for Seifert under the terms of the Admiral 2009 policy.

{¶32} Admiral, Seifert, and CTI settled their claims on April 13, 2011. Leonard

was not a party to the settlement. Admiral, Seifert, and CTI dismissed their appeal,

cross-appeal, and cross-assignments of error, respectively, on May 31, 2011. The first

question this Court must address is what effect the April 13, 2011 settlement and May Stark County, Case No. 2011CA00002 10

31, 2011 dismissal have on the trial court’s December 20, 2010 judgment entry and

Leonard’s pending Cross-Appeal of the same.

{¶33} Leonard argues the trial court erred in finding the February 2008 letter

triggered Seifert’s obligation to report a claim to Admiral of the Massillon/Kokosing-CTI

litigation. While Leonard expresses its argument as Seifert’s obligation, the February

2008 letter affects Leonard in two regards. First, it has implications on the agency

relationship between Admiral and Leonard. Second, it is relevant to Admiral’s and

Seifert’s claims for indemnification. However, due to the settlement between Admiral,

Seifert and CTI, Leonard acknowledged in its reply brief that “it is questionable whether

any justificiable claims remain pending for the purposes of this appeal”.

{¶34} We note Leonard did not separately assign as error the trial court’s

determination of the agency relationship between Admiral and Leonard. Under App.R.

16(A)(3), the brief shall contain “[a] statement of the assignments of error presented for

review, with reference to the place in the record where each error is reflected.” Admiral

raised the argument as an assignment of error, but then dismissed its appeal. Leonard

argues that under App.R. 12(A)(2), this Court can still consider the argument. App.R.

12(A)(2) states, “[t]he court may disregard an assignment of error presented for review if

the party raising it fails to identify in the record the error on which the assignment of

error is based or fails to argue the assignment separately in the brief, as required under

App.R. 16(A).” (Emphasis added). In this case, we decline to apply App.R. 12(A)(2)

because the agency relationship issue directly affects Leonard and the resolution of the

indemnification claims by Admiral and Seifert as seen by their complaints. In order to

preserve its rights on appeal, Leonard should have separately raised the error. Stark County, Case No. 2011CA00002 11

{¶35} We next examine the impact of the settlement and the February 2008

letter. Admiral stated in its Motion for Voluntary Dismissal of its Appeal and its

Response to Leonard’s Cross-Appeal that the April 13, 2011 settlement resolved the

disputed claim between Admiral, Seifert, and CTI. We find the disputed claims have

been settled by the parties and it is now moot for purposes of this Cross-Appeal as to

when Seifert was to notify Admiral of the Massillon/Kokosing-CTI litigation. Any

discussion that this Court may engage on whether the notice of the claim was timely

given would be perfunctory based on Admiral’s settlement of the underlying claim with

its insured, Seifert.

{¶36} Finally, we find this Court is without jurisdiction to make any determination

regarding Admiral’s and Seifert’s claim for indemnification against Leonard. On

December 20, 2010, the trial court found the claims for indemnification were premature

because no claim had been paid at that time. The trial court then dismissed the parties’

claims for indemnification. Admiral raised the dismissal as error on appeal, but then

dismissed its appeal. Consequently, there is no pending claim for indemnification

before the trial court or this Court. Furthermore, due to the settlement of the claims

between Admiral, Seifert and CTI, there are no claims pending at all in this matter.

{¶37} Furthermore, the issues raised by Leonard’s Cross-Appeal, such as

whether Leonard had a duty to transmit the February 2008 letter to Admiral and the

necessity of expert testimony on this issue, were never addressed by the December 20,

2010 judgment of the trial court, most likely due to the dismissal of the indemnification

claims. Stark County, Case No. 2011CA00002 12

{¶38} For the foregoing reasons, the Cross-Appeal of Leonard is dismissed as

moot.

By: Delaney, J.

Gwin, P.J. and

Wise, J. concur.

HON. PATRICIA A. DELANEY

HON. W. SCOTT GWIN

HON. JOHN W. WISE [Cite as Admiral Ins. Co. v. Seifert Technologies, Inc., 2011-Ohio-5196.]

IN THE COURT OF APPEALS FOR STARK COUNTY, OHIO

FIFTH APPELLATE DISTRICT

ADMIRAL INSURANCE COMPANY : : : Plaintiff-Appellant/ : Cross-Appellee : -vs- : JUDGMENT ENTRY : SEIFERT TECHNOLOGIES, INC. ET : AL. : : : Case No. 2011CA00002 Defendants-Appellees/ : Cross-Appellants

For the reasons stated in our accompanying Opinion on file, the Cross-Appeal of

Leonard Insurance Services Agency, Inc. is dismissed as moot. Costs assessed to

Cross-Appellant Leonard Insurance Services Agency, Inc.

HON. JOHN W. WISE