Infocision Mgt. Corp. v. Michael D. Sammy Ins. Agency, Inc.

2014 Ohio 4653

• Court: Ohio Court of Appeals
• Decided: October 22, 2014
• Docket: 26939
• Status: Published

Opinion

[Cite as Infocision Mgt. Corp. v. Michael D. Sammy Ins. Agency, Inc., 2014-Ohio-4653.]

STATE OF OHIO ) IN THE COURT OF APPEALS )ss: NINTH JUDICIAL DISTRICT COUNTY OF SUMMIT )

INFOCISION MANAGEMENT C.A. No. 26939 CORPORATION

Appellant APPEAL FROM JUDGMENT v. ENTERED IN THE COURT OF COMMON PLEAS MICHAEL D. SAMMY INSURANCE COUNTY OF SUMMIT, OHIO AGENCY, INC., et al. CASE No. CV 2009-06-4531

Appellees

DECISION AND JOURNAL ENTRY

Dated: October 22, 2014

OSOWIK, Judge.

{¶1} This is an appeal from an April 23, 2013 summary judgment ruling of the Summit

County Court of Common Pleas, which granted summary judgment to appellees, Michael D.

Sammy (“Sammy”), Michael D. Sammy Insurance Agency (“Agency”), and Farmers Insurance

Exchange (“Farmers”), on the negligence claims of appellant, Infocision Management

Corporation (“Infocision”) made against appellees in connection to Infocision’s failure to

maintain vehicle liability insurance coverage for its employees traveling on company business in

either leased vehicles or personal vehicles. For the reasons set forth below, this court affirms the

judgment of the trial court.

{¶2} Appellant, Infocision, sets forth the following three assignments of error:

I. THE TRIAL COURT COMMITTED PREJUDICIAL ERROR IN HOLDING INFOCISION’S NEGLIGENCE CLAIMS BARRED AS A MATTER OF LAW UNDER THE PRIMARY ASSUMPTION OF RISK DOCTRINE. 2

II. THE TRIAL COURT COMMITTED PREJUDICIAL ERROR IN GRANTING SUMMARY JUDGMENT DISMISSING INFOCISION’S BREACH OF FIDUCIARY DUTY CLAIM AS A MATTER OF LAW BASED UPON THE COURT’S FACTUAL FINDING THAT THERE WAS NO EVIDENCE OF INFOCISION’S REPOSING A SPECIAL TRUST OR CONFIDENCE IN SAMMY.

III. THE TRIAL COURT COMMITTED PREJUDICIAL ERROR IN HOLDING ALL OF INFOCISION’S CLAIMS WERE TIME-BARRED AS A MATTER OF LAW BECAUSE INFOCISION DID NOT FILE THIS ACTION WITHIN FOUR YEARS AFTER SAMMY FIRST NEGLIGENTLY FAILED TO SECURE THE REQUESTED COVERAGE AND MISREPRESENTED IT WAS UNAVAILABLE.

{¶3} The following undisputed facts are relevant to this appeal. Infocision is a sizeable

telemarketing corporation headquartered in Akron, Ohio. Infocision employs in excess of 4,000

people at multiple call centers located in Ohio, Pennsylvania, and West Virginia. Given the

magnitude and geographical breadth of the company, a substantial amount of regional corporate

travel via motor vehicle by numerous Infocision employees occurs in the course of running the

business.

{¶4} Notably, despite vast amounts of motor vehicle corporate travel arising in its

operations, Infocision owned just three vehicles in its corporate fleet. Thus, virtually all

Infocision corporate travel was performed in either a rental vehicle or in the traveling employee’s

personal vehicle.

{¶5} In conjunction with the above scenario, Infocision employed a full-time travel

coordinator who would arrange rental cars from a number of different rental car agencies for

employees to utilize in their business travel. Although Infocision employees could utilize one of

four possible car rental agencies to secure a rental vehicle for business travel, Infocision only

secured liability coverage through one of the four car rental companies, Enterprise. Also, a

significant percentage of motor vehicle business travel was occurring in the personal vehicles of 3

Infocision employees. For example, in 2003, Infocision employees were reimbursed business

travel mileage in an aggregate amount of $201,212.88, reflecting 574,894 corporate travel miles

taking place in employee personal vehicles.

{¶6} In 2004, despite a sizable proportion of business travel occurring in vehicles not

owned by it, Infocision allowed its corporate liability coverage for non-owned motor vehicles to

lapse. Progressive Insurance (“Progressive”) had served as the insurance carrier for Infocision

for both owned and non-owned motor vehicles. In April 2004, Progressive notified Infocision

that given the extent of business travel occurring in non-owned vehicles, corporate liability

coverage for non-owned vehicles could be renewed if Infocision agreed to a premium increase of

approximately $30,000 per year. Rather than continue the existing corporate liability coverage,

Infocision contacted insurance agent Sammy, an agent for Farmers, to explore potential

alternative insurance coverage.

{¶7} On April 21, 2004, Sammy submitted an application for the desired coverage to

Farmers. The Farmers’ underwriter determined that it would only provide motor vehicle liability

coverage to Infocision on the three vehicles owned by the company. In May 2004, Infocision

was advised that Farmers would not provide liability coverage for non-owned vehicles.

Accordingly, both Sammy and Forrest Thompson, the Infocision vice-president of finance and a

former licensed insurance agent, explored other potential insurance carriers to provide liability

coverage for non-owned vehicles. Sammy subsequently located one insurance broker potentially

willing to provide the coverage. When Sammy informed Infocision of the proposed premium, it

was deemed unacceptable.

{¶8} Ultimately, Infocision secured alternative liability coverage solely for the three

owned vehicles, but not for the bulk of business travel occurring in non-owned vehicles. 4

Although Infocision employees no longer possessed company liability coverage when traveling

in non-owned vehicles for business purposes unless they obtained a rental vehicle provided by

Enterprise, they were still permitted to either rent vehicles from multiple companies other than

Enterprise or utilize their personal vehicles.

{¶9} This insurance scenario exposed Infocision to the risk of self-insuring its potential

liability in non-covered accidents. When Thompson was asked at deposition why employees

were not mandated to rent vehicles and utilize only Enterprise for business travel to negate the

risk of business travel in a vehicle lacking a corporate liability coverage he stated, “I guess at that

period of time that -- that approach may have been overlooked.”

{¶10} Tragically, in November 2007, three years after the above-described gap in

company liability vehicle insurance coverage occurred and Infocision was aware of same, a West

Virginia Infocision employee driving home from a company function in Akron struck and killed

two pedestrians walking aside a roadway in West Virginia. Infocision elected to voluntarily

settle the resultant West Virginia litigation arising from the dual fatality for $1,675,000.

{¶11} In June 2009, approximately two years after the fatal accident and more than five

years after the company liability vehicle insurance coverage gap occurred, Infocision filed suit

against appellees alleging negligence, breach of fiduciary duty, and vicarious liability against

appellees in connection to Infocision’s non-owned vehicle insurance lapse. Appellees

subsequently filed for summary judgment on the grounds of primary assumption of the risk,

statute of limitations, and the lack of a fiduciary relationship.

{¶12} On April 23, 2013, the trial court granted summary judgment to appellees. The

trial court determined that appellant was barred from recovery in negligence against appellees

based upon primary assumption of the risk, the applicable R.C. 2305.09 statute of limitations, 5

and that no fiduciary relationship existed. In conjunction with this, the trial court further

determined that because neither Sammy, individually, or the Sammy agency was liable, vicarious

liability wholly contingent upon a finding of liability against them could not be established as a

matter of law. As such, summary judgment was likewise granted to Farmers on the alleged

vicarious liability claim. This appeal ensued.

{¶13} On appeal, appellant maintains that the trial court erred in its summary judgment

determinations on the primary assumption of the risk doctrine, breach of fiduciary duty, and on

the statute of limitations.

{¶14} We note at the outset that appellate review of a trial court’s summary judgment

determination is conducted pursuant to a de novo standard of review. Grafton v. Ohio Edison

Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). Summary judgment will be granted only

when there remains no genuine issue of material fact and, when construing the evidence most

strongly in favor of the nonmoving party, reasonable minds can only conclude that the moving

party is entitled to judgment as a matter of law. Civ.R. 56(C).

{¶15} In the first assignment of error, appellant maintains that the trial court erred in

determining that appellant’s negligence claims are precluded pursuant to the primary assumption

of the risk doctrine.

{¶16} Significantly, although appellant unilaterally concludes that the trial court made a

factual finding that appellant rejected vehicle liability coverage on non-owned vehicles due to

financial considerations, the record unambiguously reflects that this was not based upon a factual

finding of the trial court, but rather based upon admission by appellant. The record is replete

with testimony that appellant was made aware in early 2004 that its present insurer would need

to increase the premium in order to continue liability coverage of non-owned vehicles, that the 6

premium increase was not accepted by appellant so as to cause that coverage to lapse, and that

costlier alternative sources of liability coverage of non-owned vehicles were not accepted by

appellant. The record is devoid of any contrary evidence on this point.

{¶17} In order to prevail upon a negligence claim, one must establish by a

preponderance of the evidence that the defendant owed a duty, that actions or omissions by the

defendant constituted a breach of that duty, and that the breach proximately caused the claimed

damages. Armstrong v. Best Buy Co., 99 Ohio St.3d 79, 81, 2003-Ohio-2573, 788 N.E.2d 1088.

{¶18} In conjunction with this, the Supreme Court of Ohio has consistently affirmed that

demonstrating the primary assumption of the risk is applicable to a matter prevents one from

recovering in negligence as a matter of law as it precludes a plaintiff from establishing the

essential element of duty in negligence cases. Anderson v. Ceccardi, 6 Ohio St.3d 110, 112, 451

N.E.2d 780 (1983). Primary assumption of the risk is demonstrated when one shows, “(1)

consent or acquiescence in (2) an appreciated or known (3) risk.” Benjamin v. Deffet Rentals, 66

Ohio St.2d 86, 89, 419 N.E. 2d 883 (1981). Significantly, primary assumption of the risk

operates as a complete bar to recovery. Anderson at 114.

{¶19} In applying these controlling principles to the instant case, we find that the record

of evidence encompasses ample evidence that appellant knew in early 2004 that multiple

employees were driving non-owned vehicles on company business with great frequency.

Consistently, the record reflects that in 2003 appellant reimbursed employees for driving 574,894

miles in their personal vehicles for company purposes. In conjunction with this, the record

reflects that appellant knew in early 2004 that it would not be renewing its corporate liability

coverage for non-owned vehicles following notification of a $30,000 premium increase. The

record reflects that as a result of declining to agree to the proposed premium increase by 7

Progressive, appellant contacted appellees for purposes of exploring alternative potential

insurance coverage. The record reflects that Farmers was willing to provide liability insurance

coverage for the three vehicles owned by appellant, but declined to do so for the numerous non-

owned vehicles being used by employees for business travel. The record shows that subsequent

to being advised that Farmers would not provide liability insurance coverage for non-owned

vehicles, appellant was advised of an alternative insurance broker interested in furnishing that

coverage. The record reflects that appellant failed to secure that coverage or any other liability

insurance coverage for non-owned vehicles while simultaneously continuing the practice of

employees utilizing non-owned vehicles for the bulk of company travel.

{¶20} Thompson, appellant’s vice-president of finance and a former licensed insurance

agent, was unambiguously asked whether he was aware that beginning in early 2004 that there

was no company liability insurance coverage in place for employees utilizing personal cars or

rental cars from agencies other than Enterprise when employees were traveling for company

business. Thompson unequivocally answered affirmatively. Upon further inquiry, Thompson

was asked why the company did not simply require employees to only travel for business with an

Enterprise rental since Enterprise furnished liability coverage to Infocision’s employees.

Thompson responded, “That’s a good question. I guess at that period of time that -- that

approach may have been overlooked.”

{¶21} The record shows that the amount of uncovered travel was extensive, requiring

appellant to reimburse employees in excess of $200,000 annually in mileage for such travel. The

record reflects that appellant failed to obtain liability insurance coverage for non-owned vehicles

utilized by employees engaged in company travel for the nearly four-year period of time that

transpired between appellant being aware of the liability insurance coverage gap and the accident 8

that occurred underlying this case. The record reflects that over five years transpired between

appellant being aware of the insurance coverage gap and this case being filed.

{¶22} Based upon the foregoing, we find that the record of evidence in this matter

clearly establishes appellant’s appreciation of and acquiescence to the known risk of employees

driving hundreds of thousands of miles in motor vehicles not owned by the company and lacking

any liability insurance coverage on behalf of the company while engaged in the course of

company business. Given that the record establishes appellant’s primary assumption of the risk

that underlies this matter, no duty was owed and appellant is barred from recovery as a matter of

law. Although this primary assumption of the risk determination inevitably encompasses the

remaining assignments of error, we will nevertheless address them on their merits, in addition to

their failure based upon the primary assumption of the risk determination. We find appellant’s

first assignment of error not well-taken.

{¶23} In the second assignment of error, appellant asserts that the trial court erred in

finding on summary judgment that there was no fiduciary relationship between Sammy and

Infocision.

{¶24} It is well-established that in cases alleging professional negligence constituting

breach of fiduciary duty, such as the present case, it must be established that a special confidence

and trust was placed in the defendant such that the defendant was in a position of superior

influence due to the special trust. Horak v. Nationwide Ins. Co., 9th Dist. Summit No. CA-

23327, 2007-Ohio-3744, ¶ 31.

{¶25} We note that the record shows that Thompson, appellant’s vice-president of

finance, formerly served as a licensed insurance agent, including having been previously licensed

to sell insurance on behalf of appellee Farmers. The record further shows that both Thompson 9

and Sammy were engaged in the process of researching potential alternative liability coverage

upon appellant’s failure to accept Progressive’s premium increase for liability coverage for non-

owned vehicles.

{¶26} The record is devoid of any objective or compelling evidence in support of the

notion that appellees were ever placed by appellant in a position of superiority in connection to

the issue of liability coverage for appellant’s employees traveling in non-owned vehicles on

company business. On the contrary, the record reflects that the five-year liability insurance

coverage lapse underlying this case occurred as a direct result of appellant not deeming coverage

options to be acceptable and not securing acceptable alternative coverage. Wherefore, we find

appellant’s second assignment of error not well-taken.

{¶27} In the third assignment of error, appellant asserts the trial court erred in

determining on summary judgment that appellant’s claims are time barred by the applicable four-

year statute of limitations set forth in R.C. 2305.09.

{¶28} The Ohio Supreme Court has clearly established that even in discovery rule and

delayed damages assertion scenarios, claims of professional negligence remain governed by R.C.

2305.09. It requires such cases to be filed within four years from the time the disputed action

was committed. Flagstar Bank v. Airline Union’s Mtg. Co., 128 Ohio St.3d 529, 947 N.E.2d

672, 2011-Ohio-1961.

{¶29} The record in this case demonstrates that the conduct of appellees allegedly

constituting professional misconduct commenced no later than May 2004. The record reflects

that this matter was not filed until June of 2009. Separate and apart from our determination that

appellant’s claims fail as a matter of law due to primary assumption of the risk applicability, we

find that appellant’s filing of this case more than five years after it became aware that it no 10

longer had liability coverage for non-owned vehicles being driven by employees on company

business constituted a failure to adhere to the applicable filing deadline established by R.C.

2305.09. Wherefore, we find appellant’s third assignment of error not well-taken.

{¶30} Lastly, given our determination that appellant is barred from recovery pursuant to

the doctrine of primary assumption of the risk underlying this case, we likewise conclude all

contingent claims of vicarious liability against Farmers thereby fail as a matter of law.

{¶31} Wherefore, the judgment of the Summit County Court of Common Pleas is

hereby affirmed in its entirety. Appellant is ordered to pay the costs of this appeal pursuant to

App.R. 24.

Judgment affirmed.

There were reasonable grounds for this appeal.

We order that a special mandate issue out of this Court, directing the Court of Common

Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy

of this journal entry shall constitute the mandate, pursuant to App.R. 27.

Immediately upon the filing hereof, this document shall constitute the journal entry of

judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the

period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is

instructed to mail a notice of entry of this judgment to the parties and to make a notation of the

mailing in the docket, pursuant to App.R. 30. 11

Costs taxed to Appellant.

THOMAS J. OSOWIK FOR THE COURT

SINGER, J. YARBROUGH, P. J. CONCUR.

(Judges Arlene Singer, Thomas J. Osowik, and Stephen A. Yarbrough, Sixth District Court of Appeals, sitting by assignment of the Chief Justice of the Supreme Court of Ohio.)

APPEARANCES:

DAVID P. BERTSCH, Attorney at Law, for Appellant.

JAMES M. ROBER, Attorney at Law, for Appellees.

THOMAS F. GLASSMAN, Attorney at Law, for Appellee.