COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 67664 ANTHONY CASCONE, ET AL. : : : PLAINTIFFS-APPELLANTS : JOURNAL ENTRY : v. : AND : ALPHA TRANSPORTATION : OPINION SYSTEMS, ET AL. : : DEFENDANTS-APPELLEES : DATE OF ANNOUNCEMENT OF DECISION: JUNE 15, 1995 CHARACTER OF PROCEEDING: Civil appeal from Common Pleas Court, No. CV-188735. JUDGMENT: AFFIRMED. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiffs-Appellants: Andrew J. Simon, Esq. Cameratta & Simon 7976 Broadview Road Suite 100 Broadview Heights, OH 44147 For Defendants-Appellees: John F. Gannon Alpha Transportation Co. c/o Donald J. O'Connor Rockefeller Building Cleveland, OH 44113 -2- DAVID T. MATIA, P.J.: Plaintiffs-appellants, Anthony Cascone, et al., appeals the judgment of the Cuyahoga County Common Pleas Court in favor of new party defendants-appellees, Cincinnati Insurance Company, et al. Appellants' sole assignment of error concerns the liability of a common carrier's insurance company to an injured creditor under R.C. 3929.06. This court, finding no error, affirms the judgment of the trial court. I. STATEMENT OF FACTS On April 29, 1988, plaintiff-appellant, Anthony Cascone, was involved in an automobile accident with a driver/employee of defendant, Alpha Transportation Systems ("Alpha"). Defendant- appellee, Cincinnati Insurance Company, insured Alpha and attempted to adjust appellants' claim on several occasions. After receiving no response, appellee closed its claims file. On April 24, 1990, appellants filed a complaint against Alpha and its employee for bodily injury resulting from the automobile accident. While service was perfected, neither Alpha nor its employee filed an answer or otherwise responded to appellants' complaint. On June 25, 1991, appellants obtained a default judgment against Alpha and its employee and was awarded $19,390.60 plus interest and costs. On October 7, 1992, appellants filed a supplemental petition against Cincinnati Insurance Company since it insured Alpha at the time of the accident. Appellants filed the supplemental petition pursuant to R.C. 3929.06 seeking satisfaction of the money damages -3- the trial court had previously awarded. Appellee timely filed its answer and included a counterclaim for declaratory judgment. Appellee requested the court to declare the insurance policy issued to Alpha does not obligate appellee to indemnify Alpha or satisfy the judgment since Alpha failed to notify appellee of the pending lawsuit thereby breaching said policy. On December 21, 1992, the trial court dismissed appellants' supplemental petition. Appellants subsequently filed a Civ.R. 60(B) motion for relief from judgment arguing the trial court's dismissal was contrary to law. On January 19, 1993, appellants filed a notice of appeal (case no. 64953). This court remanded the case back to the trial court for a ruling on appellants' Civ.R. 60(B) motion. The trial court granted appellants' motion for relief from judgment and the first appeal was dismissed by recommendation of the conference attorney and agreement of counsel. On July 29, 1994, the trial court entered judgment in favor of appellee. Appellants timely filed this appeal. II. ASSIGNMENT OF ERROR Plaintiffs-appellants, Anthony Cascone, et al., state as their sole assignment of error: THE TRIAL COURT ERRED IN DENYING PLAINTIFFS' SUPPLEMENTAL COMPLAINT AGAINST NEW PARTY DEFENDANT. -4- A. ISSUE RAISED: WHETHER AN INSURER OF A COMMON CARRIER CAN BE LIABLE TO A THIRD PARTY UNDER R.C. 3929.06 AND R.C. 4921.11 IF IT WAS NOT NOTIFIED OF THE PERSONAL INJURY COMPLAINT AGAINST THE COMMON CARRIER AS REQUIRED BY THE INSURANCE CONTRACT. Plaintiffs-appellants, Anthony Cascone, et al., argue the trial court erred by entering judgment for new party defendant- appellee, Cincinnati Insurance Company. Specifically, appellants argue a special duty to protect the general public applies to insurance companies of a common carrier pursuant to R.C. 4921.11. Appellants argue not only that appellee is obligated to satisfy the judgment rendered against the insured creditor pursuant to R.C. 3929.06, but the special duty to protect the public cannot be thwarted by the insured's failure to notify the insurer of a pending claim. To rule otherwise, appellants argue, would be contrary to the general intent of R.C. 4921.11. Appellants' sole assignment of error is not well taken. B. DUTY OF INSURER UNDER R.C. 3929.06 Appellants brought a supplemental complaint against appellee to collect the default judgment awarded against Alpha pursuant to R.C. 3929.06 which provides in pertinent part: Upon recovery of a final judgment against any firm, person, or corporation *** for loss or damage on account to bodily injury or death, for loss or damage to tangible or intangible property of any person, firm, or corporation, or for loss or damage to a person on account of bodily injury to one's spouse or minor child or children, if the defendant in such action was insured against loss or damage at the time when the rights of the action arose, the judgment creditor or the successor in interest is entitled to have the insurance money provided for in the contract of insurance between the insurance company and -5- the defendant applied to the satisfaction of the judgment. If the judgment is not satisfied within thirty days after it is rendered, the judgment creditor or successor in interest, to reach and apply the insurance money to the satisfaction of the judgment, may file a supplemental petition in the action in which said judgment was rendered, in which the insurer is made a new party defendant in said action, and whereon service of summons upon the insurer shall be made and returned as in the commencement of an action of law. Thereafter the action shall proceed as to the insurer as in an original action. It is well established that the rights of an injured creditor against an insurer in a supplemental petition cannot rise above the rights of the insured against the insurer. Bennett v. Swift & Co. (1959), 170 Ohio St. 168. Generally, when an insured fails to comply with the terms of the insurance policy the insurance company may avoid its obligations to the insured. See Walker v. Buck (1993), 86 Ohio App.3d 846; Teter v. Kenilworth Ins. Co. (July 30, 1975), Lorain App. No. 2283, unreported. Accordingly, not only is an injured creditor limited to collect only what the insured is entitled to under the policy under R.C. 3929.06, but an insurance company may raise any defense against the injured creditor that it may have raised against the insured. See Transamerica Ins. Co. v. Taylor (1986), 28 Ohio St.3d 312; Sanderson v. Ohio Edison Co. (1994), 69 Ohio St.3d 582. With these principles in mind, we turn towards appellants' sole assignment of error. -6- C. THE TRIAL COURT DID NOT ERR IN ENTERING JUDGMENT FOR APPELLEE. "An insured's duty to notify its insurance carrier that he has been sued is fundamental." Sutton v. Arnold (Sept. 27, 1994), Perry App. No 93-458, unreported. In the present case the parties have stipulated that Alpha breached its insurance contract obligation by not notifying appellee of the lawsuit filed against it. Therefore, Alpha's breach of the "notice" condition of the policy would have prevented it from seeking recovery from appellee. As such, since Alpha is precluded from seeking recovery, the injured creditor is likewise precluded from recovering on the supplemental petition. See In re Estate of Basmajian (1944), 142 Ohio St. 483, paragraph three of the syllabus; Teter v. Kenilworth Ins. Co. (July 30, 1975), Lorain App. No. 2283, unreported. The thrust of appellants' argument is that R.C. 4921.11 imposes a duty upon an insurer of a common carrier to protect the general public from the negligence of the common carrier. Since this duty to insure is compulsory, appellants argue an insured's failure to notify the insurer does not prevent a judgment creditor from recovering against said insurer. We find this argument unpersuasive. This court has interpreted the scope of R.C. 4921.11 in Nationwide Mutual Ins. Co. v. Peerless Ins. Co. (1963), 27 O.O.2d 293, 296: When used as these terms are used in this section, "liability insurance" means that the insurer will pay the obligation coming within -7- the terms of the policy of the insured. Both the insured and the third person, whose claim for damage is covered by the terms of the policy, are protected by the insurance contract. Contrary to appellants' assertions, nothing in R.C. 4921.11 suggests an insurer of a common carrier is absolutely liable for injuries and/or damage resulting from the negligence of such company. Rather, the statute, as well as our previous interpretation, recognizes R.C. 4921.11 mandates only a common carrier maintain either liability insurance or a bond to protect the interest of the public. The obligation imposed on common carriers under R.C. 4921.11 neither establishes absolute liability on the part of the carrier or its insurer, nor abrogates the effect of the valid terms and conditions of an insurance policy. Thus, an injured creditor, through R.C. 3929.06, may seek satisfaction of a judgment against a common carrier within the valid terms and conditions of the company's insurance policy. Since we have already concluded under the terms and conditions of this insurance policy that the insured as well as the injured creditor are precluded from recovering against appellee, the trial court did not err in entering judgment for new party defendant-appellee, Cincinnati Insurance Company. The judgment of the trial court is affirmed. -8- -9- It is ordered that appellees recover of appellants their costs herein taxed. The court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this court directing the Common Pleas Court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. TERRENCE O'DONNELL, J. and DIANE KARPINSKI, J., CONCUR. DAVID T. MATIA PRESIDING JUDGE N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announcement of decision (see Rule 26). Ten (10) days from the date hereof this document will be stamped to indicate .