COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 69182 JOHN KEHOE, ET AL. : : Plaintiffs-Appellees : : JOURNAL ENTRY -vs- : AND : OPINION ALEXANDER PLINE : : Defendant : : : : [Appeal by Lightning Rod Mutual : Insurance Company : : Appellant] : DATE OF ANNOUNCEMENT OF DECISION FEBRUARY 22, 1996 CHARACTER OF PROCEEDING Civil appeal from Court of Common Pleas Case No. 231052 JUDGMENT Affirmed DATE OF JOURNALIZATION APPEARANCES: For Plaintiffs-Appellees For Appellant Lightning Rod John Kehoe, et al: Mutual Insurance Co.: DAVID B. HARE, ESQ. ROBERT J. FOULDS, ESQ. Dunn & Hare Co., L.P.A. CELESTE MANLEY, ESQ. 72 Public Square Dyson, Schmidlin & Foulds Medina, Ohio 44256 Co., L.P.A. 5843 Mayfield Road Mayfield Hts., Ohio 44124 - 2 - JAMES M. PORTER, J., Appellant Lightning Rod Mutual Insurance Co., an underinsured motorist carrier, appeals from the judgment of the trial court which held that the amounts paid to plaintiffs- appellees on behalf of the tortfeasor may not be applied to reduce the underinsured motorists policy limits. Lightning Rod contends that the trial court misinterpreted the applicable law in allowing the set-off against the underinsured's total damages only, rather than as a reduction of its underinsurance policy limits. For the reasons hereinafter stated, we affirm. This case arose from a motor vehicle collision on September 21, 1991. Plaintiffs John and Linda Kehoe sued Alexander Pline on March 24, 1992 for causing their injuries. Lightning Rod, the Kehoe's insurer, voluntarily entered the suit in February 1994 to protect its subrogation rights. Liability of defendant Pline was stipulated. The nature and extent of Kehoe's injuries and damages were highly disputed at the ensuing jury trial. At trial, Lightning Rod maintained that it was entitled to set-off amounts payable by Pline's insurer, State Auto Insurance, against the underinsured policy limits. Pline's liability policy with State Auto had limits of $50,000 per person and $100,000 per accident. The Lightning Rod policy had limits of $100,000 per person and $300,000 per accident. The jury was instructed that Pline and Lightning Rod would share any judgment depending upon - 3 - the extent of Pline's insurance, a sum that they were not permitted to know. The jury awarded $162,000 to John Kehoe and $3,000 to his wife for loss of consortium. The set-off issue between the policies was not submitted to the jury. In post-judgment proceedings, the court denied plaintiffs' motion for prejudgment interest. Lightning Rod submitted a supplemental brief regarding the set-off issue claiming that State Auto's $50,000 per person limits should be set-off against Lightning Rod's $100,000 per person underinsured policy limits. The uninsured/underinsured policy provided that: "Any amounts otherwise payable *** shall be reduced by all sums paid because of the bodily injury by or on behalf of persons or organizations who may be legally responsible." On June 9, 1995, the trial court ruled that Lightning Rod was liable for its policy limits of $100,000. Lightning Rod's timely appeal was filed. Its sole assignment of error states as follows: I. THE TRIAL COURT ERRED IN HOLDING THAT AN UNDERINSURED MOTORIST CARRIER MAY NOT SET OFF AMOUNTS PAID BY OR ON BEHALF OF THE TORTFEASOR AGAINST THE UNDERINSURED MOTORIST POLICY LIMITS. A brief factual recapitulation may be helpful to frame the legal discussion that follows. Disregarding the consortium award for simplicity, Kehoe recovered a judgment of $162,000. Pline's liability insurer, State Auto, is obligated for its per person policy limits of $50,000. The issue before this Court then is - 4 - whether State Auto's $50,000 offsets Lightning Rod's $100,000 limits, or whether State Auto's $50,000 offsets Kehoe's damages, leaving Lightning Rod liable for $100,000 of the $112,000 balance of damages. Put another way, does Lightning Rod's underinsured motorist's coverage of $100,000 functionally operate as excess insurance above State Auto's primary coverage of $50,000. The answer to these questions determines whether Lightning Rod pays $50,000 or $100,000 for its underinsured motorist's obligation toward the remaining $112,000 liability. In recent years, the issue posed has received intense and varied attention by the courts. "The underlying public policy for provision of uninsured and underinsured motorist coverage is to assure that an injured person receive at least the same amount of compensation whether the tortfeasor is insured or uninsured." Blue Cross v. Hrenko (1995), 72 Ohio St.3d 120, 123. To attain this result, the General Assembly enacted R.C. 3937.18 requiring every liability insurer in this state to offer uninsured/underinsured coverage with its liability policies. Underinsured coverage in effect at the time of the accident herein was required by R.C. 3937.18(A)(2) which states: Underinsured motorist coverage, which shall be in an amount of coverage equivalent to the automobile liability or motor vehicle liability coverage and shall provide protection for an insured against loss for bodily injury, sickness, or disease, including death, where the limits of coverage available for payment to the insured under - 5 - all bodily injury liability bonds and insurance policies covering persons liable to the insured are less than the limits for the insured's uninsured motorist coverage at the time of the accident. The limits of liability for an insurer providing underinsured motorist coverage shall be the limits of such coverage, less those amounts actually recovered under all applicable bodily injury liability bonds and insurance policies covering persons liable to the insured. (Emphasis added). This emphasized language would seem on its face to allow the underinsured carrier, in this case Lightning Rod, to pay its policy limits ($100,000) after reducing same by the $50,000 already paid by the tortfeasor's carrier, Safe Auto. At one time the Supreme Court so construed the statute. See James v. Michigan Mut. Ins. Co. (1985), 18 Ohio St.3d 386, upon which Lightning Rod still relies. In James, the Court held in paragraph two of the syllabus as follows: An insurer may apply payments made by or on behalf of an underinsured motorist as a setoff directly against the limits of its underinsured motorist coverage, so long as such setoff (1) is clearly set forth in the terms of the underinsured motorist coverage and (2) does not lead to a result wherein the insured receives a total amount of compensation that is less than the amount of compensation that he would have received if he had been injured by an uninsured motorist. The Court's conclusion in James was premised upon its review of the legislative history behind underinsured motorist coverage. The James Court further explained its holding as follows: A setoff from the limits of underinsured motorist coverage, therefore, is not contrary to the public policy behind the enactment of - 6 - R.C. 3937.181(C), so long as such setoff (1) is clearly set forth in the terms of the underinsured motorist coverage and (2) does not lead to a result wherein the insured receives a total amount of compensation that he would have received if he had been injured by an insured motorist. The setoff provision set forth in the endorsement to the Appellee's insurance policy states that "the limit of liability shall be reduced by all sums paid because of the bodily injury by or on behalf of persons or organizations who may be legally responsible." (Emphasis added). Even under a construction most favorable to the insured, this provision is clear and unambiguous, and we would be altering the plain terms of the appellee's insurance policy if we were to limit the application of the setoff described herein only to instances where the insured has been compensated for all of his injuries. See Gomolka v. State Auto Mut. Ins. Co., supra, at 168; cf. Gomolka v. State Auto Mut. Ins. Co. (1984), 15 Ohio St.3d 27, 29-30 (a provision that did not clearly provide for a setoff against the limit of uninsured/underinsured motorist coverage, when construed in favor of the insured, did not entitle insurer to such setoff). (Emphasis added). The holding in James was subsequently relied upon by the Supreme Court in In Re Nationwide Ins. Co. (1989), 45 Ohio St.3d 11. In permitting set-off, the Nationwide Court noted that whether the tortfeasor was uninsured or underinsured, the amount of total compensation that the plaintiff was entitled to receive was the same. The plaintiff in that case sustained injuries valued at $175,000. Nationwide, the underinsured carrier, paid its liability limit of $100,000 following denial of coverage by the tortfeasor's carrier. The trial court later ruled that the tortfeasor's carrier was obliged for coverage. The tortfeasor's - 7 - carrier issued a settlement check for its liability limit of $100,000 to the insured and Nationwide. The Supreme Court held that, as against the insured, Nationwide was entitled to the full $100,000 paid by the tortfeasor's insurer. In 1990, the Supreme Court reiterated this policy in Hill v. Allstate Ins. Co. (1991), 50 Ohio St.3d 243. The syllabus in that case states: Unless otherwise provided by an insurer, underinsured motorist liability insurance coverage is not available to an insured where the limits of liability contained in the insured's policy are identical to the limits of liability set forth in the tortfeasor's liability insurance coverage. (R.C. 3937.18[A][2], construed and applied Wood v. Shepard [1988], 38 Ohio St.3d 86, 526 N.E.2d 1089, distinguished and explained.) The law at that point seemed reasonably clear that the sums paid on behalf of the tortfeasor operated to reduce the underinsured carrier's policy limits dollar for dollar and that the underinsured insurance was not excess of the tortfeasor's coverage. However, those principles were soon drawn into question in Savoie v. Grange Mut. Ins. Co. (1993), 67 Ohio St.3d 500, where it was held, in paragraph three of the syllabus: An underinsurance claim must be paid when the individual covered by an uninsured /underinsured policy suffers damages that exceeds those monies available to be paid by the tortfeasor's liability carriers. (Hill v. Allstate Inc. Co. [1990], 50 Ohio St.3d 243, 553 N.E.2d 658, overruled.) In Savoie, at page 508, the following discussion appears: - 8 - In order to arrive at the proper conclusion in this case, it is critical to review the purpose of Revised Code 3937.18, which explains how monies received from a tortfeasor's liability insurer reduce, or do not reduce, the limits of an underinsurance policy. An individual covered by an insurance policy is entitled to receive compensation in an amount no less than what he would receive if he had been injured by an uninsured motorist. James v. Michigan Mut. Ins. Co. (1985), 18 Ohio St.3d 398, 18 OBR 440, 481 N.E.2d 272. Thus, underinsured motorists who suffer from injuries caused by an automobile accident are entitled to collect up to the full limits of their underinsurance policy to the extent that their damages exceed the amounts which the tortfeasor's insurer has already paid to them. The Savoie Court further reasoned: In Hill v. Allstate Ins. Co., supra, a majority of this court held without elaboration that an underinsurance carrier avoids responsibility to its insured when the limit of its policy are identical to the limits of the tortfeasor's liability policy. This decision incorrectly construes Revised Code 3937.18 and is now expressly overruled. Id. at 508-09. The Ohio Supreme Court decision in Savoie, which dealt primarily with anti-stacking clauses in underinsurance policies, was perceived to dramatically change the prior law regarding underinsured motorist coverage in wrongful death cases. It generated a legislative response that led to the passage of Senate Bill 20 (effective October 20, 1994) hereinafter discussed. Lightning Rod argues that Savoie neither overruled, - 9 - disapproved of, nor restricted the James and Nationwide cases. We cannot accept this analysis. Although Savoie did not expressly overrule James or Nationwide and did not deal squarely with the set-off issue, following the Savoie decision and prior to the effective date of Senate Bill 20 on October 20, 1994, various appellate districts reached opposite conclusions as to whether an insurer was entitled to set-off the tortfeasor's payments against the policy limits of uninsured and underinsured motorist coverage or only against the total damages. See Cole v. Holland (Oct. 19, 1994), Summit App. No. 16703, unreported (amounts received from the tortfeasor's carrier and other applicable insurance were to be offset from the plaintiff's damage award as opposed to the limits of the underinsured policy). The set-off was allowed against the policy limits in Nationwide Mut. Ins. Co. v. Baker (1993), 99 Ohio App.3d 433 and Leonard v. Peerless Ins. Co. (Dec. 1, 1993), Hamilton App. No. C-920739, unreported. However, more recently, the Supreme Court has had occasion to reconsider the issue in Newman v. United Ohio Ins. Co. (May 4, 1994), 69 Ohio St.3d 1204, 1205 where Justice Douglas, four other Justices concurring, stated: Appellee, United Ohio Insurance Company, has moved this court for reconsideration of our decision in Newman v. United Ohio Ins. Co. (1994), 68 Ohio St.3d 170, 624 N.E.2d 728. Appellee "seeks reconsideration in order that the Court may clarify the ambiguities and confusion created by the Savoie decision, specifically syllabus 3." - 10 - In seeking reconsideration, appellee argues that "*** Syllabus 3 of Savoie fails to mention the issue of setoff or to address whether the setoff is to be made from the insured's damages as opposed to the written limit of underinsured coverage. ***" (Emphasis added.) I concurred in Savoie v. Grange Mut. Ins. Co. (1993), 67 Ohio St.3d 500, 620 N.E.2d 809. My concurrence was based on my understanding (and it is still my belief) that Savoie (1) requires setoff; (2) requires that any setoff be against the insured's damages (not the written limits of underinsured coverage); and (3) that paragraph three of the syllabus of Savoie applies to "*** all personal injury cases ***" (emphasis added) (Hillman v. Hastings Mut. Ins. Co. [1994], 68 Ohio St.3d 238, 239, 626 N.E.2d 73, 74, Pfeifer, J., concurring) and not just to wrongful death cases. I write now only to reassert what Savoie, in part, stands for and to clarify any alleged confusion with the decision. We are compelled to follow the Supreme Court's ruling in Savoie as reinforced in Newman. Indeed, in a per curiam decision, this Court has already followed Savoie in holding that the tortfeasor's payments only reduce the damages and not the policy limits which the underinsured carrier is required to pay. Prather v. Liberty Mut. Ins. Co. (May 19, 1994), Cuyahoga App. No. 66131, unreported at 9-10. In doing so, we also follow the retrospective application of Savoie to claims arising prior thereto, as recently explained by this Court in Finneran v. Bestor (Nov. 2, 1995), Cuyahoga App. No. 68774, unreported at 4- 8. - 11 - Although the language of paragraph three of the Savoie syllabus may be open to debate, there is no doubt that the Supreme Court expressly overruled Hill v. Allstate Ins. Co. and unequivocally stated that: "[U]nderinsured motorists who suffer from injuries caused by an automobile accident are entitled to collect up to the full limits of their underinsurance policy to the extent that their damages exceed the amounts which the tortfeasor's insurer has already paid to them." Savoie at 508. In Hill v. Allstate Ins. Co. the Supreme Court had held that where the limits of the underinsured policy are identical to the limits of the tortfeasor's liability policy, the underinsurer had no coverage obligations. By expressly overruling Hill the Supreme Court made clear that the logic of their Savoie ruling prevailed. Further, in Newman: "*** Savoie (1) requires setoff; (2) requires that any setoff be against the insured's damages (not the written limits of underinsured coverage) ***." Id. (Emphasis added). Accordingly, we hold that the trial court herein did not err in allowing the plaintiffs to recover from Lightning Rod the difference between the amount paid by State Auto ($50,000) and the plaintiffs' damages ($162,000) up to the extent of Lightning Rod's policy limits ($100,000). Nor do we find that Senate Bill 20 (effective October 20, 1994) affects the outcome of this appeal. Senate Bill 20 was expressly enacted by the Legislature to overrule the impact of - 12 - Savoie, but in our view does not have retroactive effect. R.C. 3937.18(A)(2) as amended states: Underinsured motorist coverage, which shall be in an amount of coverage equivalent to the automobile liability or motor vehicle liability coverage and shall provide protection for an insured against loss for bodily injury, sickness, or disease, including death, suffered by any person insured under the policy, where the limits of coverage available for payment to the insured under all bodily injury liability bonds and insurance policies covering persons liable to the insured are less than the limits for the insured's uninsured motorist coverage. Underinsured motorist coverage is not and shall not be excess insurance to other applicable liability coverages, and shall be provided only to afford the insured an amount of protection not greater than that which would be available under the insured's uninsured motorist coverage if the person or persons liable were uninsured at the time of the accident. The policy limits of the underinsured motorist coverage shall be reduced by those amounts available for payment under all applicable bodily injury liability bonds and insurance policies covering persons liable to the insured. Section eight of Senate Bill 20 states: It is the intent of the General Assembly in amending division (A)(2) of section 3937.18 of the Revised Code to declare and confirm that the purpose and intent of the 114th General Assembly in enacting division (A)(2) of section 3937.18 in Am. H.B. 489 was, and the intent of the General Assembly in amending section 3937.18 of the Revised Code in this act is, to provide an offset against the limits of the underinsured motorist coverage of those amounts available for payment from the tortfeasor's bodily injury liability coverage. - 13 - Although it is now clear that the Legislature did not intend that underinsurance was excess of the tortfeasor's liability coverage, we are still bound to apply Savoie which was the prevailing law at the time the instant case was decided. For a careful analysis of the non-retroactive effect of the October 20, 1994 amendment on pending uninsured motorist cases, see United Services Auto Ass'n. v. Mack (May 17, 1995), Clark App. No. 94- CA-32, unreported at 3: *** We find, however, that unlike some statutes or amendments enacted by the General Assembly, there is no language in the amended statute or the uncodified sections of the statute that would make the Savoie amendment applicable to actions pending in court on the statute's effective date. We note that the General Assembly used the verbs "supersede" and "declare and confirm" to describe its purpose in amending R.C. 3937.18. We will not stretch the meaning of these verbs beyond their accepted and ordinary usage. Moreover, since the General Assembly has, in the past, used express language to apply new or amended statutes to pending actions, we will not infer its intent to do so without language expressing or clearly implying that intent. Without express language from the General Assembly that the Savoie amendment is to apply retroactively to pending actions, we lack the threshold requirement to examine the constitutional question under Section 28, Article II of the Ohio Constitution. Thus, we conclude that the Savoie amendment is not retroactive. To the same effect: Cartwright v. The Maryland Ins. Group (1995), 101 Ohio App.3d 439, 443-45; Finneran v. Bestor, supra at 9-11; Wilson v. Allstate Insurance Co. (Jan. 18, 1996), Cuyahoga App. No. 68982, unreported at 5. - 14 - For the foregoing reasons, we find Lightning Rod's sole assignment of error is not well taken. It is overruled. Judgment affirmed. - 15 - It is ordered that appellees recover of appellant 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 Court of Common Pleas 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. SPELLACY, C.J., and KARPINSKI, J., CONCUR. JAMES M. PORTER 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 .