Griffith v. MacAllister Rental, L.L.C.

2021 Ohio 1800, 173 N.E.3d 115

• Court: Ohio Court of Appeals
• Decided: May 26, 2021
• Docket: C-200311
• Status: Published

Opinion

[Cite as Griffith v. MacAllister Rental, L.L.C., 2021-Ohio-1800.]

IN THE COURT OF APPEALS FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO

GLENN GRIFFITH, : APPEAL NO. C-200311 TRIAL NO. A-1801925 and :

LEONA GRIFFITH, : O P I N I O N.

Plaintiffs, :

vs. :

MACALLISTER RENTAL, LLC, :

Defendant-Third Party Plaintiff- : Appellant, : and : JOHN DOE COMPANIES #1-5, : JOHN DOE EMPLOYEE, : and : BUREAU OF WORKERS’ COMPENSATION, :

Defendants, :

ARCHITECTURAL GLASS & METAL : CO., INC., : Third Party Defendant-Appellee. : OHIO FIRST DISTRICT COURT OF APPEALS

Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Affirmed

Date of Judgment Entry on Appeal: May 26, 2021

McCaslin, Imbus & McCaslin, Thomas J. Gruber and Michael P. Cussen, for Defendant-Third Party Plaintiff-Appellant,

Green & Green, Lawyers, Jared A. Wagner and Jane M. Lynch, for Third Party- Defendant-Appellee.

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BERGERON, Judge.

{¶1} A construction worker suffered an injury after a boom lift allegedly

malfunctioned and ejected him from the lift platform. In addition to receiving

workers’ compensation benefits, the employee sued the rental company that

provided the lift for negligent maintenance and related claims. In turn, the rental

company sued the contractor that rented the lift from it, seeking to enforce an

indemnity provision contained in the parties’ rental agreement. The trial court

granted summary judgment in the contractor’s favor, reasoning that the indemnity

agreement could not overcome Ohio’s workers’ compensation immunity with respect

to claims arising from employment. After reviewing the law and the record, we agree

with the trial court’s decision and affirm its judgment.

I.

{¶2} The facts of this case are uncontroverted. Third-party defendant-

appellee Architectural Glass served as a subcontractor on a large construction project

in Cincinnati. To assist in completing the work, Architectural Glass rented a boom

lift from third-party plaintiff-appellant MacAllister Rental. Both companies are

located in Indiana, but MacAllister Rental agreed to deliver the lift to the job site in

Ohio. As part of the rental agreement, Architectural Glass promised to indemnify

MacAllister Rental from any liability arising out of the use of the lift, and to insure it

from “loss or damage.” MacAllister Rental delivered the lift and Architectural Glass

began using it, apparently without incident. However, Architectural Glass

subsequently loaned the lift to another subcontractor on the project, and that

subcontractor’s employee, Glenn Griffith, was injured after faulty settings allegedly

caused the lift to buck him off.

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{¶3} Mr. Griffith received workers’ compensation benefits from the general

contractor that managed the entire project. Unlike typical workers’ compensation

claims, Mr. Griffith filed his claim with the general contractor because it received

permission, pursuant to R.C. 4123.35, to self-insure for that project. And as

subcontractors on that project, both Architectural Glass and Mr. Griffith’s employer

were enrolled in that self-insured program, under the general contractor’s umbrella.

{¶4} Because the injury arose out of his employment, Mr. Griffith was

precluded from pursuing any legal claim against the general contractor, Architectural

Glass, or his employer. Ohio law generally provides liability protections to employers

that are compliant with workers’ compensation regulations, rendering them immune

from suit. And on a self-insured construction project, such as this one, that

immunity extends beyond the employer to all enrolled contractors.

{¶5} But MacAllister Rental was not an enrolled contractor on this project—

its only connection was supplying the lift to Architectural Glass. Mr. Griffith sued

MacAllister Rental, alleging negligent maintenance and related claims. MacAllister

Rental in turn filed a third-party complaint against Architectural Glass, seeking

indemnification and contribution pursuant to their rental agreement. MacAllister

Rental also alleged that Architectural Glass breached their agreement by failing to

insure the lift. For its part, Architectural Glass did not dispute the existence of the

indemnity agreement, instead arguing that the provision in question did not apply

because workers’ compensation immunity extends to third-party claims. As to the

failure-to-insure claim, Architectural Glass maintained that it should also be

dismissed because no “loss or damage” occurred to the lift.

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{¶6} The trial court agreed and granted summary judgment in Architectural

Glass’s favor, which we review de novo. Neyer, LLC v. Westfield Ins. Co., 2020-

Ohio-5417, 163 N.E.3d 106, ¶ 13 (1st Dist.) (“We review summary-judgment decisions

de novo.”). MacAllister Rental now appeals, presenting two assignments of error

that challenge the trial court’s dismissal of its claims and its decision to apply Ohio

law.

II.

{¶7} We first address MacAllister Rental’s second assignment of error

because it entails a threshold issue—whether Ohio law applies to this case. As the

forum court, we apply Ohio choice-of-law rules to this determination. Estate of

Sample through Cornish v. Xenos Christian Fellowship, Inc., 2019-Ohio-5439, 139

N.E.3d 978, ¶ 17 (10th Dist.) (“In resolving a conflict of law, the forum court applies

the choice-of-law rules of its own state.”). And we afford no deference to the trial

court’s choice of law. See Woodside Mgt. Co. v. Bruex, 2020-Ohio-4039, 157 N.E.3d

295, ¶ 18 (9th Dist.) (“[A]ppellate courts apply a de novo standard of review to a trial

court’s choice-of-law determination.”).

{¶8} Ohio has adopted the Restatement of the Law 2d, Conflict of Laws

(1971), “in its entirety,” for resolving choice-of-law conflicts. American Interstate

Ins. Co. v. G & H Serv. Ctr., Inc., 112 Ohio St.3d 521, 2007-Ohio-608, 861 N.E.2d

524, ¶ 7-8. And the “general principle” underlying the Restatement’s approach is

that the law of the state having the “most significant relationship” to the case should

apply. 1 Restatement of the Law 2d, Conflict of Laws, Section 6, comment c (1971);

see Estate of Sample at ¶ 17 (“The Restatement employs the significant-relationship

test, which seeks to identify and apply the law of the state that has the most

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significant relationship with the parties and dispute.”). However, the more precise

“choice-of-law rules depend on the ‘classification of a given factual situation under

the appropriate legal categories and specific rules of law.’ ” Ohayon v. Safeco Ins.

Co. of Illinois, 91 Ohio St.3d 474, 476, 747 N.E.2d 206 (2001), quoting Restatement,

Section 7, Comment b. For example, “different choice-of-law rules apply depending

on whether the cause of action sounds in contract or in tort.” Id. Here, both parties

agree that this case sounds in contract.

{¶9} MacAllister Rental, as the drafter of the rental contract, could have

included an Indiana choice-of-law provision, but it neglected to do so. And “in the

absence of an effective choice of law by the parties, their rights and duties under the

contract are determined by the law of the state that, with respect to that issue, has

‘the most significant relationship to the transaction and the parties.’ ” Ohayon at

477, quoting Restatement, Section 188(1). To assist with that determination, the

Restatement delineates the following factors:

(a) the place of contracting,

(b) the place of negotiation of the contract,

(c) the place of performance,

(d) the location of the subject matter of the contract, and

(e) the domicil, residence, nationality, place of incorporation and place

of business of the parties.

Restatement, Section 188(2); see Ohayon at 477.

{¶10} Here, the place of contracting and place of negotiation occurred in

Indiana, and both companies are incorporated in Indiana. Thus, the first, second,

and fifth factors weigh in favor of applying Indiana law. However, we conclude that

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these considerations are substantially outweighed by the third and fourth factors—

the place of performance and location of the subject matter. As already noted,

MacAllister Rental delivered the lift to Ohio, knowing that it would be used on a

construction project in Ohio.

{¶11} In affording the third and fourth factors more weight, we find the

Restatement comments instructive. As to the place of performance, comment e of

Section 188 explains: “When both parties are to perform in the state, this state will

have so close a relationship to the transaction and the parties that it will often be the

state of the applicable law even with respect to issues that do not relate strictly to

performance.” As to the location of the subject matter, the comments further

explicate that when a contract pertains to a specific item or risk (as in the matter at

hand), the law of the state containing the item or risk should apply. This is because

“it can often be assumed that the parties, to the extent that they thought about the

matter at all, would expect that the local law of the state where the thing or risk was

located would be applied to determine many of the issues arising under the

contract.” Restatement, Section 188, comment e.

{¶12} Reinforcing these points, the Ohio Supreme Court emphasizes the

centrality of workers’ compensation as a preeminent state interest. See American

Interstate, 112 Ohio St.3d 521, 2007-Ohio-608, 861 N.E.2d 524. In American

Interstate, the court evaluated whether tort choice-of-law principles should dictate

which state’s law applies to a workers’ compensation subrogation claim (a tort

action). Under tort choice-of-law principles, a presumption arises that the law of the

state where the injury occurred controls. Id. at ¶ 8. Although the employee suffered

injury in Ohio, the court nonetheless held that Louisiana law applied because “the

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laws of the state in which the workers’ compensation benefits were paid are

controlling.” Id. at ¶ 10 (adopting Restatement, Section 185).

{¶13} Driving American Interstate’s reasoning was the court’s conclusion

that workers’ compensation statutes represent a “social bargain.” Id. And “[b]ecause

they are a bargain codified in state law to ensure that both employers and employees

receive the benefit of their bargain, the laws of the state in which compensation is

paid must apply.” Id. Although American Interstate is not dispositive because it

considered workers’ compensation in the subrogation context (a tort claim) rather

than indemnity (a contract claim), we find its reasoning instructive in weighing the

factors here, particularly when we overlay the Restatement comments quoted above.

See, e.g., Mitchell v. Michael Weinig, Inc., S.D.Ohio No. 2:17-CV-905, 2018 WL

4051826, *6 (Aug. 24, 2018) (refusing to enforce an indemnity agreement, despite a

valid choice-of-law provision, because “enforcing the indemnity agreement would be

contrary to Ohio’s fundamental policy of employer immunity under Ohio’s workers’

compensation statutes and [because] Ohio has a materially greater interest than

North Carolina in the determination of the [third party’s] claims”).

{¶14} In light of the Restatement factors and Ohio’s strong interest in

implementing its workers’ compensation scheme, we conclude that Ohio has the

most significant interest in this case. Both parties fully appreciated that the contract

would be performed in Ohio because Architectural Glass requested—and MacAllister

Rental agreed—to deliver the lift to Cincinnati. Furthermore, the location of the lift,

and the risks that MacAllister Rental sought to eliminate through its indemnity

provision, weigh heavily in favor of applying Ohio law. MacAllister Rental should

have expected that Ohio law could override the indemnity clause. And any interest

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that Indiana might have in enforcing such an agreement must yield to Ohio’s well-

established interest in implementing its workers’ compensation scheme. We

therefore conclude that the trial court properly applied Ohio law and overrule

MacAllister Rental’s second assignment of error.

III.

{¶15} Having determined that Ohio law applies, we now turn to the merits of

this case and MacAllister Rental’s first assignment of error. As noted above, the trial

court reasoned that Architectural Glass enjoyed immunity from the indemnity and

contribution claims because the underlying injury fell within the ambit of workers’

compensation. Regarding the failure-to-insure claim, the court dismissed it on the

merits because MacAllister Rental did not substantiate any damage to the lift. On

appeal, MacAllister Rental musters no argument in its brief for why the trial court

wrongly decided the failure-to-insure claim, obviating our need to ponder that point.

Instead, it focuses its attention on the indemnity and contribution claims, effectively

faulting the trial court for viewing this case through a workers’ compensation lens

instead of as an independent contract dispute.

{¶16} “Ohio’s Constitution and workers’ compensation regime shield

employers who contribute to the state workers’ compensation fund from statutory or

common-law liability for injuries sustained by employees in the course of

employment.” Goodyear Tire & Rubber Co. v. G4S Secure Solutions (USA), Inc.,

N.D.Ohio No. 5:11CV01170, 2013 WL 256938, *3 (Jan. 23, 2013). See Stolz v. J & B

Steel Erectors, Inc., 146 Ohio St.3d 281, 2016-Ohio-1567, 55 N.E.3d 1082, ¶ 11 (“In

return for [workers’ compensation] payments, an employer, in most cases, receives

immunity from claims for common-law and statutory damages made by its

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employees * * * .”); Blankenship v. Cincinnati Milacron Chem., Inc., 69 Ohio St.2d

608, 614, 433 N.E.2d 572 (1982) (“The workers’ compensation system is based on

the premise that an employer is protected from a suit for negligence in exchange for

compliance with the Workers’ Compensation Act.”).

{¶17} Ohio’s Constitution provides:

[Workers’] compensation shall be in lieu of all other rights to

compensation, or damages, for such death, injuries, or occupational

disease, and any employer who pays the premium or compensation

provided by law, passed in accordance herewith, shall not be liable to

respond in damages at common law or by statute for such death,

injuries or occupational disease.

(Emphasis added.) Article II, Section 35, Ohio Constitution.

{¶18} Furthermore, “self-insuring employers receive the same protections

against employee claims as those paying into the state fund.” Stolz at ¶ 12, citing

R.C. 4123.74 (providing that self-insured employers “shall not be liable to respond in

damages at common law or by statute for any injury.”). Although MacAllister Rental

concedes that Architectural Glass was a self-insured employer, it nonetheless

contends that Architectural Glass waived its immunity through the vehicle of the

indemnity provision. In MacAllister Rental’s view, because it never enrolled in the

self-insurance program, no impediment stands in the way of its contractual claim

against Architectural Glass. While that premise carries some intuitive appeal, it

nevertheless runs headlong into Ohio Supreme Court precedent.

{¶19} In Kendall v. U.S. Dismantling Co., 20 Ohio St.3d 61, 485 N.E.2d 1047

(1985), an employee of a dismantling company was injured while disassembling

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pipelines at a sulfuric acid plant. Id. at 61. The employee sued the plant owner,

which then sought indemnification from the employer based upon the terms of their

contract. Id. That indemnification agreement provided that the contractor “shall be

liable for and protect, defend, indemnify and save [the plant owner], * * * against any

and all claims, losses, demands, causes of action, and any and all related costs and

expenses, of every kind and character.” Id. at 63.

{¶20} Despite this broad language, the court in Kendall held that the

indemnity provision could not overcome the employer’s workers’ compensation

immunity. Id. at 65. As the court explained, the “statutory and constitutional

immunity granted to complying employers is crucial to workers’ compensation law.”

Id. And for that reason, generalized indemnity agreements are not enforceable for

claims arising out of employment unless the waiver is “express” and “refer[s]

specifically to this particular immunity.” Id. And to remove any doubt, the court

underscored: “Although express indemnity agreements worded in general terms may

suffice for other purposes, we are not inclined to construe them as effective waivers

of [workers’ compensation] immunity absent a clear evocation of the parties’ intent

to that effect.” Id. Finally, the Kendall court also extended these principles to third

parties: “A general agreement of indemnity with a third party which does not

specifically express the employer’s intent to waive this particular immunity is

ineffective for that purpose.” Id. at paragraph two of the syllabus.

{¶21} Under Kendall, we conclude that the indemnification provision in this

case falls well short of waiving Architectural Glass’s worker’s compensation

immunity. It provided that Architectural Glass would “indemnify MacAllister Rental

from and against any and all loss, damage, expense, claim and/or penalty * * *

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occasioned by the operation, handling or transportation of * * * the equipment.” The

indemnity provision does not mention workers’ compensation, let alone purport to

expressly waive that immunity (another point that MacAllister Rental could have

addressed in drafting the form contract). Thus, under Kendall, we can only conclude

that this provision does not specifically express Architectural Glass’s intent to waive

workers’ compensation immunity. See Kendall at paragraph two of the syllabus.

{¶22} Perhaps anticipating this conclusion, MacAllister Rental responds that

Kendall doesn’t apply because Mr. Griffith was not an Architectural Glass employee.

We acknowledge that the employer in Kendall was seeking immunity from an

indemnity claim that arose from an injury to its own employee. See Kendall, 20 Ohio

St.3d at 61, 485 N.E.2d 1047. By contrast, Mr. Griffith worked for another

subcontractor that borrowed the lift from Architectural Glass. Nonetheless, the Ohio

Supreme Court recently clarified that workers’ compensation immunity also extends

to claims by other contractors’ employees on a self-insured project: “The

unambiguous language of R.C. 4123.35 and 4123.74 compels our conclusion that

subcontractors enrolled in a self-insured-construction-project plan are immune from

tort claims made by the employees of other enrolled subcontractors who are injured

or killed while working on [a] self-insured construction project * * * .” Stolz, 146

Ohio St.3d 281, 2016-Ohio-1567, 55 N.E.3d 1082, at ¶ 2. As Stolz explained, the

statutory scheme creates “a legal fiction that a self-insuring employer for a self-

insured construction project is the single employer, for workers’ compensation

purposes, of all employees working for enrolled subcontractors on that project.” Id.

at ¶ 27. Thus, under this “single employer” perspective, it makes no difference that

Mr. Griffith was not Architectural Glass’s employee—Architectural Glass is still

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immune from all claims arising from that employment because it was enrolled as a

subcontractor on this project.

{¶23} In sum, we conclude that the principles in Kendall and Stolz, working

in tandem, preclude MacAllister Rental’s third-party claim again Architectural Glass.

Under Kendall, the indemnity provision was too generalized to effectively waive

Architectural Glass’s immunity. And under Stolz, the Kendall principle extends to

claims originating from another subcontractor’s employee, in the context of a self-

insured project. Notably, against this backdrop, MacAllister Rental points to no

authority suggesting a contrary result. Following the Supreme Court’s guidance in

Kendall and Stolz, we therefore overrule MacAllister Rental’s first assignment of

error.

* * *

{¶24} In light of the foregoing analysis, we overrule both of MacAllister

Rental’s assignments of error and affirm the judgment of the trial court.

Judgment affirmed.

MYERS, P. J., and CROUSE, J., concur.

Please note:

The court has recorded its entry on the date of the release of this opinion