Ohio appeals court dismisses asbestos insurance appeal

CINCINNATI (Legal Newsline) - An Ohio appeals court has dismissed a valve manufacturer's claim seeking declaratory judgment against an insurer on the grounds that the trial court failed to enter a final summary judgment order.

Judge Patrick Dinkelacker delivered the July 9 opinion in the Court of Appeals First Appellate District of Ohio with Judge Sylvia Sieve Hendon concurring.

Judge R. Patrick DeWine concurred but filed a separate opinion.

Plaintiff William Powell Company was granted partial summary judgment in the Hamilton County Court of Common Pleas in response to its request for declaratory judgment against OneBeacon Insurance Company and Federal Insurance Company.

OneBeacon appealed the decision, arguing that the plaintiffs' insurance policy had been exhausted. The appeals court held that the trial court's judgment was not final, meaning the appeals court has no jurisdiction to hear the case.

William Powell, a manufacturer of industrial valves which included asbestos-containing component parts, carried liability insurance between 1960 and 1977 with OneBeacon's predecessor as a result of numerous asbestos lawsuits.

The plaintiff filed a complaint seeking a declaratory judgment of its rights under its primary and excess policies with the insurance company.

However, OneBeacon filed a counterclaim asking the court to declare the parties' rights under the policies.

In response, William Powell requested partial summary judgment, arguing that it had proved the existence of several missing policies, which contained annual limits of liability.

OneBeacon also filed a motion for summary judgment arguing that the asbestos claims against the plaintiff were caused by a single occurrence and that if the court found multiple occurrences, the plaintiff is not entitled to aggregate annualized limits because its policies had been exhausted.

The Hamilton County Court of Common Pleas granted William Powell's motion in part and denied OneBeacon's motion completely, holding that the dispute involves three questions:

-Whether the aggregate limitation of liability applies annually or for the term;

-What constitutes an "occurrence?"; and

-Whether the plaintiff can direct the allocation of funds.

The court ruled in favor of William Powell in regard to the first two questions.

As to the allocation issue, the court found that the issues of fact precluded summary judgment.

As a result, OneBeacon appealed the judgment.

However, Dinkelacker held that the Ohio Constitution limits an appellate court's jurisdiction to the review only final, appealable orders.

He explained that "an order 'that affects a substantial right made in a special proceeding' is a final order. A declaratory judgment action is a special proceeding."

An order affects a substantial right if, in the absence of an immediate appeal, it forecloses appropriate relief in the future, he added.

"When a trial court enters a judgment in a declaratory-judgment action, the order must declare all of the parties' rights and obligations to constitute a final, appealable order. The trial court does not fulfill its function if it does not construe the documents at issue," he wrote.

In this case, Dinkelacker stated that the trial court failed to decide the summary judgment request on the issue of allocation.

The Ohio Supreme Court has held that the issue of allocation deals with situations involving long-term injury or damage where it is difficult to determine which insurer must bear the loss.

The Supreme Court further held that an insurer is only obligated to pay if the insured is awarded damages.

In the case at hand, there is a determination of liability, but not of how much will be paid out of each insurance policy, the court ruled. Because the trial court did not decide any claim in its entirety and instead partially decided all the claims, the results are still unknown, it said.

"Consequently, the court has not completely declared the rights of the parties under the insurance policies at issue," Dinkelacker wrote. "Further, the absence of an appeal would not foreclose relief in the future. Therefore, the trial court's judgment does not affect a substantial right made in a special proceeding."

The court concluded that because the judgment is not a final appealable order, it has no choice but to dismiss the appeal.

While DeWine agrees with the majority that the appeal must be dismissed for lack of a final, appealable order, he disagreed with the how the majority arrived at the conclusion.

He explains that Civil Rule 54 does not apply to this case as it only allows a court to enter final judgment for one or more of the claims or parties.

Powell's complaint for declaratory judgment included six claims for relief. Each claim sought a declaration of rights under specific insurance policies.

"The decision issued by the trial court didn't decide any of Powell's claims; that is, it didn't fully declare the parties' rights under any of the enumerated policies," DeWine wrote. "Rather, the court decided certain issues and left others to be decided later."

Furthermore, a provision of R.C. 2505.02 may still render a judgment final and applies to orders affecting "a substantial right made in a special proceeding."

"An order affects a substantial right if it has immediate consequences, or if appropriate relief in the future would be foreclosed in the absence of an immediate appeal," DeWine explained.

However, he added that there is no immediate consequence of the court's order here and appropriate relief may be obtained through an appeal upon the trial court's conclusion of the case.

As a result, a substantial right is not affected, and the order is not final.

From Legal Newsline: Reach Heather Isringhausen Gvillo at asbestos@legalnewsline.com