COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NOS. 73589 AND 73590 KAREN STEFANOV, ADMINISTRATRIX : (Case No. 73589) : : Plaintiff-Appellee : : JOURNAL ENTRY AND : AND : OPINION MARTHA BATTON, ADMINISTRATRIX : (Case No. 73590) : Defendant-Appellee : and Cross-Appellant : : -vs- : : PERSONAL SERVICE INS. CO. : : Defendant-Appellant : and Cross-Appellee : DATE OF ANNOUNCEMENT OF DECISION: NOVEMBER 19, 1998 CHARACTER OF PROCEEDING: CIVIL APPEAL FROM THE COMMON PLEAS COURT CASE NOS. CV-319942 AND CV-319944 JUDGMENT: AFFIRMED DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-Appellee, Karen Stefanov: ALICE RICKEL (#0015688) 3690 Orange Place - Suite 440 Beachwood, Ohio 44122 For Appellees and Cross-Appellants, Karen Stefanov and Martha Batton: DONALD CYBULSKI (0002843) 1660 West Second Street 610 Skylight Office Tower Cleveland, Ohio 44113-1454 For Appellee and Cross-Appellant, Martha Batton: MICHAELE TYNER (#0007690) 7002 Worley Ave. Cleveland, Ohio 44105 For Appellant and Cross-Appellee, -2- Personal Service Insurance Co.: STEPHEN BOND 120 East Ave. Elyria, Ohio 44035 -3- SPELLACY, J.: This is a consolidated appeal of appellate case numbers 73589 and 73590. Defendant-appellant/cross-appellee Personal Service Insurance Company ( Personal Service ) appeals from the trial court's grant of partial summary judgment in favor of plaintiffs- appellees/cross-appellants Karen Stefanov and Martha Batton in a declaratory action brought under an insurance contract. Personal Service assigns the following errors for review: I. THE TRIAL COURT ERRED WHEN IT DENIED PERSONAL SERVICE INSURANCE CO.'S MOTIONS FOR SUMMARY JUDGMENT (BUT GRANTED PLAINTIFFS' MOTIONS FOR PARTIAL SUMMARY JUDGMENT) AND IN HOLDING THAT UNINSURED MOTORIST COVERAGE APPLIED TO THE FACTS OF THESE CASES, GIVEN THAT THE PURCHASER WAS A MUNICIPALITY WHICH HAD BOTH DENIED WANTING TO PURCHASE SUCH COVERAGE IN ITS BID SPECIFICATIONS AND HAD EXPRESSLY WAIVED SUCH COVERAGE, IN WRITING, BACKDATED TO THE EFFECTIVE DATE, OCCURRING PRIOR TO THE TRAFFIC ACCIDENT IN QUESTION. II. THE TRIAL COURT ERRED WHEN IT DENIED PERSONAL SERVICE INSURANCE CO.'S MOTIONS FOR SUMMARY JUDGMENT (BUT GRANTED PLAINTIFFS' MOTIONS FOR PARTIAL SUMMARY JUDGMENT) AND IN HOLDING THAT GYORI V. JOHNSTON COCA-COLA GROUP, INC., 76 OHIO ST.3D 565, SHOULD APPLY RETROACTIVELY TO A TRAFFIC ACCIDENT WHICH PRECEDED THE COURT'S ANNOUNCEMENT AND TO AN INSURANCE POLICY WHICH EXPIRED PRIOR TO THE COURT'S ANNOUNCEMENT. III. THE TRIAL COURT ERRED WHEN IT DENIED PERSONAL SERVICE INSURANCE CO.'S MOTIONS FOR SUMMARY JUDGMENT (BUT GRANTED PLAINTIFFS' MOTIONS FOR PARTIAL SUMMARY JUDGMENT) AND FAILED TO HOLD THAT AM. SUB. H.B. 261, AS IT AMENDED O.R.C. 3937.18, APPLIES TO THE FACTS OF THESE CASES. -4- IV. THE TRIAL COURT ERRED WHEN IT DENIED PERSONAL SERVICE INSURANCE CO.'S MOTIONS FOR SUMMARY JUDGMENT (BUT GRANTED PLAINTIFFS' MOTIONS FOR PARTIAL SUMMARY JUDGMENT) AND FAILED TO HOLD THAT APPLICATION OF GYORI V. JOHNSTON COCA- COLA BOTTLING, INC., TO THE FACTS OF THIS CASE WOULD BE VIOLATIVE OF PSI'S RIGHTS UNDER THE U.S. AND OHIO CONSTITUTIONS. Finding the appeal to lack merit, the judgment of the trial court is affirmed. I. On December 5, 1996, Karen Stefanov and Martha Batton filed separate complaints for declaratory judgment against Personal Service. Both complaints stemmed from the same accident which took the lives of Garfield Heights police officers Michael Brown and Robert Stefanov. On December 8, 1994, the two police officers were in pursuit of Anthony Taylor who was suspected of engaging in criminal activity. During the high-speed chase, the vehicle of the police officers collided with an automobile driven by Willie Love. The police cruiser then struck a utility pole. Both officers died as a result of the accident. Both Anthony Taylor and Willie Love were uninsured motorists. At the time, the city of Garfield Heights had a comprehensive liability insurance policy with Personal Service. Garfield Heights accepted the bid by Personal Service which did not include coverage for uninsured or underinsured motorist coverage as was specified by Garfield Heights. Garfield Heights' bidder specification stated that it would sign the uninsured motorist exclusion form. The -5- effective dates of coverage were from April 1, 1994, to April 1, 1995. Personal Service never made a written offer of uninsured motorist coverage to Garfield Heights. However, on May 3, 1994, an employee of Personal Service's agent, the Love Insurance Agency, faxed a form indicating uninsured motorist coverage was waived to Garfield Heights. That same day, the mayor of Garfield Heights and the city's finance director signed the waiver form, backdated it to April 1, 1994, and returned it to the Love Insurance Agency. Personal Service did not make a written offer of uninsured motorist coverage to Garfield Heights. The complaints for declaratory judgment asked that the trial court declare that the waiver of uninsured motorist coverage by Garfield Heights was invalid and that uninsured motorist coverage arose by operation of law. The two complaints were consolidated below. Personal Service filed a motion for summary judgment. Batton and Stefanov filed motions for partial summary judgment on the coverage issue. Damages would not be determined unless the plaintiffs' motions received a favorable ruling. The trial court granted the plaintiffs' motions for partial summary judgment. In doing so, the trial court applied Gyori v. Johnston Coca-Cola Bottling Group Inc. (1996), 76 Ohio St.3d 565, in which the court held that an insurance company must make a written offer of uninsured motorist coverage. If an insured rejects that written offer, the rejection must be in writing and received by the insurance company prior to the commencement of the policy year. -6- The trial court noted that Gyori does not provide any exception to the requirements of an offer and rejection. The trial court determined that there was no just reason for delay and Personal Service appealed from the trial court's ruling. Batton filed a cross-appeal from the denial of her motion for sanctions. II. In its first assignment of error, Personal Service advances a number of reasons why the trial court's application of Gyori to the instant case was erroneous. In Gyori, an employee of the Johnston Coca-Cola Bottling Group was injured in an automobile accident caused by an uninsured motorist. The employee, Gyori, had been told by Johnston that it had full insurance coverage. However, Gyori's uninsured motorist claim was denied by two insurance companies because Johnston had rejected uninsured motorist coverage. The specifications given the insurance companies by Johnston prior to entering into the contracts stated that Johnston's policy was to reject uninsured motorist coverage when legally able to due so or to obtain the statutory minimum where rejection was legally prohibited. The two insurance companies submitted proposals to Johnston which did not include uninsured motorist coverage. One insurance company never made an offer of uninsured motorist coverage to Johnston based on Johnston's specifications. The other company attached a form to its proposal which signified acceptance or rejection of uninsured motorist coverage. Johnston indicated on the form its rejection of uninsured motorist coverage but returned the form two months after -7- the effective date of the policy and one month after Gyori's accident. The Supreme Court of Ohio found that uninsured motorist coverage was provided by the insurance companies by operation of law. The court held: 1. There can be no rejection pursuant to R.C. 3937.18(C) absent a written offer of uninsured motorist coverage from the insurance provider. 2. In order for a rejection of uninsured motorist coverage to be expressly and knowingly made, such rejection must be in writing and must be received by the insurance company prior to the commencement of the policy year. Id., at syllabus. In the instant case, Personal Service admits that no written offer of uninsured motorist coverage was made to Garfield Heights prior to the effective date of policy coverage as mandated by Gyori. Personal Service contends that backdating the waiver form by Garfield Heights made that waiver a part of the contract. Personal Service asserts that there is nothing inherently wrong with backdating an insurance policy. But to accept Personal Service's contention would eviscerate the purpose and holding of Gyori. The Gyori syllabus requires a written rejection of an offer of uninsured motorist coverage prior to the commencement of coverage. To permit an insured or insurer to circumvent the holding of Gyori through backdating ignores the policy concerns expressed by the Gyori court which sought to uphold the purpose of uninsured motorist coverage to protect persons injured in automobile accidents from losses which, because of the tortfeasor's lack of liability coverage, would otherwise go -8- uncompensated. Id. at 567, citing Abate v. Pioneer Mut. Cas. Co. (1970), 22 Ohio St.2d 161, 165. The court noted that the uninsured motorist statute is to be liberally construed in favor of the injured party. Id. Backdating a written rejection of uninsured motorist coverage is not permissible. Personal Service next asserts that the real focus and intent of Gyoriwas expressed in the court's statement that the allowance of the employer to reject uninsured motorist coverage after the date of an accident would invite fraud and misrepresentation by corporate officers seeking low insurance rates. Personal Service points out that Garfield Heights returned its waiver of uninsured motorist coverage well before the date of the police officers' accident. Personal Service does not mention that the court went on the say that there was no suggestion of fraud or misrepresentation in Gyori.Personal Service's reading of Gyori ignores the syllabus law in favor of one statement made within the opinion which did not even apply to the facts of Gyori. Gyori requires an insurer to make a written offer of uninsured motorist coverage prior to the beginning of the policy year. Personal Service did not comply with the requirements set forth in the syllabus of Gyori. Personal Service differentiates between the factual situation in Gyori and the instant case by arguing that a public contract differs from a private contract. Personal Service contends that it had no choice but to submit a bid to Garfield Heights which did not include uninsured motorist coverage as no coverage was part of Garfield Heights' bid specifications. -9- Personal Service's argument is unpersuasive. Personal Service could have complied with Garfield Heights' desire to waive coverage by including a form to that effect with their bid. Personal Service did send such a form to Garfield Heights after the contract was executed. There is no reason why Personal Service could not have done so for their initial offer to Garfield Heights. There is no distinction between how an insurer must offer uninsured motorist coverage to private and public insureds. This case was decided by summary judgment. Civ.R. 56(C) provides that summary judgment is proper if the trial court determines that: (1) No genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to that party. Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327. Summary judgment is a procedural device designed to terminate litigation and to avoid a formal trial where there is nothing to try. Norris v. Ohio Std. Oil Co. (1982), 70 Ohio St.2d 1. Summary judgment is not appropriate where the facts are subject to reasonable dispute when viewed in a light favorable to the nonmoving party. Mers v. Dispatch Printing Co. (1985), 19 Ohio St.3d 100, 104. The moving party is entitled to summary judgment if the nonmoving party fails to establish the existence of an element essential to that party's case and on which that party will -10- bear the burden of proof at trial. Celotex Corp v. Catrett (1986), 477 U.S. 317, 322. The trial court did not err by granting the plaintiffs' motions for partial summary judgment and in denying Personal Service's motion for summary judgment based on Gyori. Personal Service's first assignment of error is overruled. III. In its second assignment of error, Personal Service argues that Gyori should be given prospective rather than retrospective application. Personal Service submits that the case law as it existed at the time the contract was entered into should be applied and not a case decided after the contract between the parties had terminated. The applicable law is set forth in Peerless Electric Co. v. Bowers (1955), 164 Ohio St. 209, 210, in which the court held: The equal protection clause of the federal Constitution does not assure uniformity of judicial decisions. The general rule is that a decision of a court of supreme jurisdiction overruling a former decision is retrospective in its operation, and the effect is not that the former was bad law, but that it never was the law. The general exception to this rule is where contractual rights have arisen or vested rights have been acquired under the prior decision. In Wagner v. Midwestern Indemn. Co. (1998), 83 Ohio St.3d 287, the court noted that blind application of the Peerless doctrine is not mandated. Instead, a court should give consideration to the purpose of the new rule or standard and to whether a remand is necessary to effectuate that purpose. Id., at 290. In Wagner, -11- the lower court applied the higher standard of proof required by a case that had been overruled. The court found that the insurance company was not prejudiced by the trial court's instructions using the higher standard of proof as the jury would have found the insurance company liable if the lesser standard was used. In the instant case, the purpose of Gyori would not be effectuated by the application of prior case law. The exceptions to the Peerless doctrine do not apply in the instant case. The vested right exception to the retrospective application of new case law does not apply to insurance cases where the parties are relying on R.C. 3937.18. Lanza-Costlow v. State Farm Fire & Cas. Co. (1996), 115 Ohio App.3d 106; Cartwright v. Maryland Ins. Group (1995), 101 Ohio App.3d 439, 443. Judicial decisions which alter the construction or interpretation of a statute do not constitute the contractual-rights exception. See King v. Safeco Ins. Co. (1990), 66 Ohio App.3d 157. There is no specific provision in Gyori which declares that it is to be given only prospective application. Without such a statement, a decision will be applied retrospectively as well. See State ex rel. Bosch v. Indus. Comm. (1982), 1 Ohio St.3d 94, 98. The case law in effect at the time the insurance policy was entered into does not control and is not a part of the insurance contract. Cartwright v. The Maryland Ins. Group (1995), 101 Ohio App.3d 439. Based on the foregoing, the trial court did not err by giving Gyori retrospective application. Personal Service's second assignment of error lacks merit. -12- IV. In its third assignment of error, Personal Service contends that Am.Sub.H.B. 261 should be applied to the within case. Am.Sub.H.B. 261 amended R.C. 3937.18 and provides, in part, that an insured's rejection of uninsured motorist coverage must be in writing and shall be effective on the day signed. The amendment went into effect on September 3, 1997, before the trial court entered judgment on the plaintiffs' motions for partial summary judgment. Personal Service initially argues that Am.Sub.H.B. 261 should be given retrospective application because R.C. 3937.18 is considered to be remedial legislation. R.C. 1.48 provides that: A statute is presumed to be prospective in its operation unless expressly made retrospective. Therefore, the preliminary question to be addressed is whether the legislature intended the statute to be applied retrospectively. Statutes are presumed to be applied prospectively only, unless the legislature specifically states otherwise. Van Fossen v. Babcock & Wilcox (1988), 36 Ohio St.3d 100. Am.Sub.H.B. 261 contains no provision expressing the legislature's intent that it be applied retrospectively. Therefore, the statute only may be given prospective application. See Cole v. Holland (1996), 76 Ohio St.3d 220. Personal Service further argues that the plaintiffs' cause of action has yet to vest because the conditions precedent to coverage have not been satisfied. Personal Service states that the plaintiffs have not established that they are legally entitled to -13- recover damages from the owners or operators of any uninsured vehicles and therefore do not now have a lawful claim which is a condition precedent to coverage. Personal Service contends that because the plaintiffs' cause of action has not vested, Am.Sub.H.B. 261 is applicable. In Ross v. Farmers Ins. Group of Cos. (1998), 82 Ohio St.3d 281, the court considered the question of when a cause of action for underinsured motorist coverage accrues so as to determine the applicable law. The court held: For the purpose of determining the scope of coverage of an underinsured motorist claim, the statutory law in effect at the time of entering into a contract for automobile liability insurance controls the rights and duties of the contracting parties. Id.at syllabus. The Ross holding applies to underinsured motorist coverage under R.C. 3937.18 and also would be applicable to uninsured motorist coverage under the same statute. Pursuant to Ross, the correct statutory law to be applied to the instant case is that which was in effect at the time Garfield Heights and Personal Service entered into the insurance contract. Am.Sub.H.B. 261 is not applicable. Personal Service's third assignment of error is overruled. V. Personal Service's fourth assignment of error addresses various constitutional concerns Personal Service raises with regard to the application of Gyori to the instant case. Personal Service first asserts that the application of Gyori amounts to a law which impairs its obligation of contracts. Article II, Section 28 of the -14- Ohio Constitution and Article I, Section 10, Clause 1 of the United States Constitution forbids a state from passing a law which impairs the obligation of contracts. Both constitutions are prohibitions against the retrospective application of legislation which impairs the obligation of contracts. Generally, judicial decisions do not constitute laws for the purpose of either constitution. See King v. Safeco Ins. Co. (1990), 66 Ohio App.3d 157. Therefore, the application of Gyori in this case is not constitutionally prohibited as an impairment on the obligation of contracts under either the federal or Ohio Constitutions. Personal Service contends that applying the holding of Gyori here results in Personal Service receiving different treatment than those to whom Am.Sub.H.B. 261 is applied. Personal Service maintains that this violates the equal protection provisions of the federal and Ohio Constitutions. The Fourteenth Amendment to the United States Constitution provides that: [n]o State shall * * * deny to any person within its jurisdiction the equal protection of the laws. Section 2, Article I of the Ohio Constitution provides that [a]ll political power is inherent in the people. Government is instituted for their equal protection and benefit* * *. These two provisions are functionally equivalent, and the standards for determining violations of equal protection essentially are the same under state and federal law. State ex rel. Dayton Fraternal Order of Police Lodge No. 44 v. State Emp. Relations Bd. (1986), 22 Ohio St.3d 1, 6. The purpose of the equal protection guarantee is to ensure that similarly situated persons are treated similarly under -15- the law. Andres v. Perrysburg (1988), 47 Ohio App.3d 51, 55, citing Colgate v. Harvey (1935), 296 U.S. 404. As quoted in Peerless, supra, uniformity of judicial decisions is not assured by the equal protection clause. Personal Service also raises due process violations by asserting that it will be deprived of substantial property as uninsured motorist coverage will be provided for which Personal Service never received a premium. The Fifth Amendment to the United States Constitution is not applicable. Personal Service also raises due process claims pursuant to the Fourteenth Amendment and the Ohio Constitution. In providing that no state shall deprive any person of life, liberty, or property, without due process of law, the Fourteenth Amendment to the United States Constitution requires that substantial procedural safeguards be provided in our legal system before one may be deprived of a property right. Peebles v. Clement (1980), 63 Ohio St.2d 314, 317. Section 16, Article I of the Ohio Constitution provides substantially the same safeguards as does the Fourteenth Amendment by specifying that injured persons shall have remedy by due course of law. Id. The requirements of procedural due process apply only to the deprivation of interests encompassed by the Fourteenth Amendment's protection of liberty and property. Board of Regents v. Roth (1972), 408 U.S. 564, 569. Therefore, the applicability of the constitutional guarantee of procedural due process depends in the first instance on the presence of a legitimate property or liberty interest within the meaning of the Fourteenth Amendment. Id. at -16- 571. To have a property interest, a person must have a legitimate claim of entitlement to that interest. Id. at 577. Legitimate claims of entitlement may be shown by existing rules or understandings that stem from an independent source such as state law or may be created by implied contract. Green Local Teachers Assn. v. Blevins (1987), 43 Ohio App.3d 71. Ohio law states that unless the provisions of R.C. 3937.18 are complied with, uninsured motorist coverage is provided in an insurance contract by operation of law. The lack of payment of a premium for that coverage does not constitute the denial of due process as Personal Service has no legitimate claim of entitlement to a premium for coverage given by operation of law. Lastly, Personal Service argues that the parties rights had vested which makes the instant case an exception to the retrospective applicationof Gyori. This argument was addressed in Personal Service's first assignment of error. Personal Service's fourth assignment of error is overruled. VI. Plaintiff-appellee/cross-appellant Martha Batton raises one assignment of error upon appeal. THE PLEADINGS OF PERSONAL SERVICE SEEKING TO OBTAIN INDEMNITY, SUBORNATION OR CONTRIBUTION AGAINST THE ESTATE OF ROBERT STEFANOV ARE FRIVOLOUS AND SHOULD SERVE AS A BASIS FOR SANCTIONS. Finding the appeal to lack merit, the judgment of the trial court is affirmed. -17- The review of a decision to award or deny sanctions pursuant to Civ.R. 11 requires the application of an abuse of discretion standard. State, ex rel. Fant, v. Sykes (1987), 29 Ohio St.3d 65. Under this rule, a trial court may award a party attorney fees and legal expenses if an opposing attorney filed a pleading for which the attorney lacks knowledge, information, and belief is supported by a good ground. The trial court may not award sanctions without first determining whether the attorney read the document, harbored good grounds to support it, and filed the pleading only for purposes of delay. Ceol v. Zion Indus., Inc. (1992), 81 Ohio App.3d 286, 290. The violation must be willful and not merely negligent. Id. The attorney must conduct a reasonable inquiry into whether the action is well grounded in fact and warranted by existing law or by a good faith argument for extending, modifying, or reversing existing law. Id. Personal Service filed a motion for leave to file a third- party complaint and/or join an additional defendant. The trial court denied the motion. There is no indication Personal Service filed the motion with the purpose to delay the case in any fashion. The decision of whether or not to award sanctions is well within the trial court's discretion. There is no showing the trial court abused its discretion by overruling Batton's motion for sanctions. Batton's assignment of error is overruled. Judgment affirmed. -18- 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 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. TIMOTHY E. McMONAGLE, P.J. and -19- JOHN T. PATTON, J. CONCUR. LEO M. SPELLACY JUDGE N.B. This is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc.App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(B) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the .