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Western Reserve Mutual Casualty Co. v. OK Cafe & Catering, Inc.

Court of Appeals of Ohio, Third District

August 5, 2013

WESTERN RESERVE MUTUAL CASUALTY COMPANY, PLAINTIFF-APPELLANT,
v.
OK CAFE & CATERING, INC., ET AL. DEFENDANTS-APPELLEES.

Appeal from Marion County Common Pleas Court Trial Court No. 10-CV-0284.

Shawn W. Maestle and David L. Jarrett for Appellant.

Jeff Ratliff for Appellee, Tracey Cooperider

OPINION

PRESTON, P.J.

{¶1} Plaintiff-appellant, Western Reserve Mutual Casualty Co. ("Western Reserve"), appeals the Marion County Court of Common Pleas' July 11, 2012 judgment entry granting summary, declaratory judgment in favor of defendant-appellee, Tracey Cooperider ("Cooperider"). For the reasons that follow, we reverse.

{¶2} On October 13, 2006, Cooperider allegedly was injured on the premises of OK Café & Catering, Inc. ("OK Café"). (Kulka Aff ¶ 2, Doc. No. 24, attached). From December 27, 2005 to December 27, 2006, Western Reserve insured OK Café under a commercial general liability policy ("CGL Policy"). (CGL Policy, Doc. No. 24, attached). Cooperider's original attorney sent letters to OK Café on May 10 and May 22, 2007 notifying it of his representation of Cooperider and requesting the contact information of OK Café's insurance provider. (Jensen Aff ¶ 1-2, Doc. No. 30, attached). One of OK Café's co-owners, Karen Gillespie, notified her insurance agent of the attorney's May 22, 2007 letter, and the agent notified Western Reserve. (Kulka Aff ¶ 2, Doc. No. 24, attached); (Kulka Depo. at 44-45). On June 12, 2007, a Western Reserve claims specialist, Thomas Kulka, sent a letter to Cooperider's original attorney confirming receipt of his May 22, 2007 letter. (Kulka Aff ¶ 3, Doc. No. 24, attached). That same day, Kulka sent a letter to OK Café notifying it that he would be investigating the claim under a reservation of rights. (Id. ¶ 4).

{¶3} According to Kulka, as of February 2008, Cooperider's allegations were unsupported by the information obtained from OK Café and the information provided by Cooperider's original attorney. (Id. ¶ 5). On February 7, 2008, Kulka sent a letter to Cooperider requesting that he or his counsel contact Kulka to discuss the claim. (Id ¶ 6). Kulka received no response from Cooperider. (Id.). Kulka closed the claim file after he determined that the statute of limitations had run on Cooperider's claim, and after he checked on November 10, 2008 with the Marion County Clerk of Courts, who did not locate a complaint filed by Cooperider. (Id.); (Kulka Depo. at 36-38); (Ratliff Aff. 1-3, Doc. No. 33, attached).

{¶4} Meanwhile, in late September or early October 2008, after no negotiations took place and Cooperider's claim remained unsettled, Cooperider's original attorney ceased representing him. (Jensen Aff ¶ 4, Doc. No. 30, attached). On October 14, 2008, Cooperider filed a pro se complaint alleging that he had suffered damages from a fall that occurred on OK Café's premises. (Western Reserve's Motion for Summary Judgment ("MSJ") at 4, Ex. E, Doc. No. 24); Cooperider v. OK Cafe & Catering, Inc., 3d Dist. Marion No. 9-09-28, 2009-Ohio-6715, ¶ 2. OK Café was successfully served on October 30, 2008 by certified mail when Gillespie's daughter and OK Café employee, Ryan Gillespie, signed for the certified mailing containing the complaint and summons. (Id); Id; (K. Gillespie Depo. at 68-69, 80-82). Although Ryan acknowledged signing for the certified mailing, neither she nor Gillespie knew what happened to it after she signed for it. (K. Gillespie Depo. at 68-69, 80-82); Cooperider, 2009-Ohio-6715, at ¶ 2. Gillespie never saw the complaint or summons, and she could only assume that they were accidentally thrown away or misfiled. (Id at 37, 80-82); Id m After OK Café failed to file an answer, Cooperider moved for default judgment as to the issue of liability on December 4, 2008. (Western Reserve's MSJ at 4, Ex. E, Doc. No. 24); Cooperider, 2009-Ohio-6715, at ¶ 2. Four days later, the trial court granted Cooperider's motion. (Id.); Id On February 5, 2009, Western Reserve received from OK Café and its insurance agent notice of Cooperider's lawsuit and the default judgment. (Boehm Aff. 2, 5, Doc. No. 24, attached). Under a reservation of its rights under the CGL Policy, Western Reserve retained an attorney for OK Café to attempt to have the default judgment set aside and, if necessary, to represent OK Café at the damages hearing. (Id ¶ 3, 5). On March 6, 2009, OK Café filed a motion to set aside the default judgment. (Western Reserve's MSJ at 4, Ex. E, Doc. No. 24); Cooperider, 2009-Ohio-6715, at ¶ 2.

{¶6} On March 31, 2009, the trial court denied OK Café's motion to set aside the default judgment, concluding that OK Café failed to demonstrate excusable neglect. (Id); Id . at ¶ 3. Western Reserve claims specialist, Horst Boehm, sent a letter to Gillespie on April 6, 2009, notifying her that Western Reserve's investigation revealed that OK Café was served with the complaint and summons and that OK Café failed to notify Western Reserve until after the trial court entered default judgment, which according to Western Reserve amounted to a failure to comply with OK Café's obligations under the CGL Policy. (Boehm Aff ¶ 5, Doc. No. 24, attached). Boehm also informed Gillespie that Western Reserve continued to reserve its right to deny coverage. (Id.).

{¶7} The trial court held a damages hearing on June 29, 2009, which neither Gillespie nor anyone from OK Café attended alongside OK Café's counsel, retained for it by Western Reserve. (Id. ¶ 6); (K. Gillespie Depo. at 40-44). On July 7, 2009, the trial court awarded Cooperider $130, 000 in damages, plus interest at 5% per annum. (Western Reserve's MSJ at 5, Ex. E, Doc. No. 24); Cooperider, 2009-Ohio-6715, at ¶ 3. OK Café appealed to this Court, and, on December 21, 2009, we affirmed the judgment of the trial court denying OK Café's motion to set aside the default judgment. Cooperider, 2009-Ohio-6715, at ¶ 15-17. OK Café appealed to the Supreme Court of Ohio, which on May 5, 2010, declined to accept the appeal for review. Cooperider v. OK Café & Catering, Inc., 125 Ohio St.3d 1414, 2010-Ohio-1893.

{¶8} On March 31, 2010-before the Supreme Court declined to accept the appeal-Western Reserve filed the underlying declaratory judgment action against OK Café and Cooperider. (Complaint, Doc. No. 1). Western Reserve sought a declaration that it owed neither a defense nor indemnity to OK Café, nor indemnity to Cooperider, based on OK Café's alleged failures to comply with the CGL Policy. (Id.). Cooperider filed an answer on June 4, 2010, followed by an amended answer and counterclaim with leave of court on October 4, 2010. (Doc. Nos. 5, 10). Cooperider's counterclaim contained two causes of action-statutory liability pursuant to R.C. 3929.06 and bad faith. (Doc. No. 10). On October 14, 2010, Western Reserve moved to strike Cooperider's amended answer and counterclaim. (Doc. Nos. 11, 15). Western Reserve filed an answer to Cooperider's counterclaim on November 8, 2010. (Doc. No. 13). In a December 27, 2010 entry, the trial court allowed Cooperider's amended answer to stand but concluded that Cooperider had no standing to assert a counterclaim for bad faith and dismissed "said counterclaim." (Doc. No. 16).[1]

{¶9} Western Reserve filed a motion for summary judgment on May 23, 2011, requesting that the trial court declare that Western Reserve was not required to pay Cooperider or OK Café because any coverage to which OK Café may have been entitled under the CGL Policy was void based on OK Café's failure to satisfy the CGL Policy's provisions. (Doc. No. 24). On June 2, 2011, Cooperider filed a motion for summary judgment, requesting that the trial court declare that OK Café satisfied the provisions of the CGL Policy and that, under R.C. 3929.06, Western Reserve was required to pay to Cooperider the judgment rendered against OK Café. (Doc. No. 30). On June 10, 2011, Cooperider filed a memorandum in opposition to Western Reserve's motion for summary judgment, attaching an affidavit of the Clerk of Court for the Marion County Court of Common Pleas. (Doc. No. 33). Western Reserve moved to strike the Clerk's affidavit on June 27, 2011. (Doc. No. 34). That same day, Western Reserve filed its combined reply in support of its motion for summary judgment and memorandum in opposition to Cooperider's motion for summary judgment. (Doc. No. 35).

{¶10} Cooperider filed his reply in support of his motion for summary judgment and his memorandum in opposition to Western Reserve's motion to strike on July 15, 2011. (Doc. Nos. 37-38). On August 1, 2011, Western Reserve filed its reply in support of its motion to strike. (Doc. No. 39). On August 2, 2011, Cooperider moved the trial court to reconsider its December 27, 2010 judgment entry, in which it dismissed his counterclaim for bad faith. (Doc. No. 40). The trial court denied Cooperider's motion for reconsideration the next day. (Doc. No. 41).

{¶11} On July 11, 2012, the trial court issued its summary, declaratory judgment in favor of Cooperider and against Western Reserve, finding insurance coverage. (Doc. No. 42). OK Café filed a "suggestion of stay" on July 23, 2012, based on its having filed for Chapter 7 bankruptcy protection in the United States District Court for the Northern District of Ohio. (Doc. No. 43). The trial court granted OK Café's request and stayed the case on July 30, 2012. (Doc. No. 44). That same day, Western Reserve filed a motion under Civ.R. 62 to stay the execution of judgment pending appeal. (Id.).[2] Cooperider filed a memorandum in opposition to Western Reserve's Civ.R. 62 motion to stay on August 2, 2012. (Doc. No. 45).

{¶12} On August 7, 2012, Western Reserve filed its notice of appeal and suggestion of stay.[3] (Doc. No. 47). On August 17, 2012, we stayed this appeal due to OK Café's pending bankruptcy proceeding. On December 21, 2012, we vacated our August 17, 2012 judgment entry staying the appeal, reactivated the appeal, and set a briefing schedule. Western Reserve raises two assignments of error for our review.[4] Because they are related, ...


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