When a trial court grants partial summary judgment on an insurance coverage issue, a key question presented is whether the court's ruling can be immediately appealed. In a recent 6 to 1 decision, the Ohio Supreme Court concluded that, where a duty to defend is not at issue, an order declaring that there is coverage under a policy, but not awarding damages, is not final and appealable.
In Walburn v. Dunlap, 2009-Ohio-1221 (March 24, 2009) , the Plaintiffs Styrk and Betty Walburn asserted negligence and loss of consortium claims against the Defendant Wendy Sue Dunlap arising out of an automobile accident in which Mr. Walburn was injured. At the time of the accident, Mr. Walburn was in the course and scope of his employment. As Ms. Dunlap was an uninsured motorist, the Plaintiffs also brought a claim for uninsured motorist ("UM") benefits against National Union Fire Insurance Company, which provided automobile insurance policies to Mr. Walburn’s employer. In their Complaint, in addition to requesting damages from the tortfeasor, the Plaintiffs requested a declaration as to the "rights and responsibilities of the parties."
Plaintiffs and National Union each filed cross-motions for summary judgment on the issue of whether Plaintiffs were entitled to UM benefits. The trial court granted Plaintiffs' motion, concluding that they were entitled to UM coverage. Although not all claims were decided, the Court added language under Civil Rule 54(B) to render its decision “final and appealable.” The order expressly stated that it was final and appealable and that there was "no just cause for delay."
National Union accordingly filed a notice of appeal. The appellate court, however, dismissed National Union's appeal. The court concluded that the order was final and appealable under R.C. 2505.02(B)(2), as the order affected a substantial right made in a special proceeding and contained the appropriate 54(B) certification. Nonetheless, the appeal was dismissed because the court concluded that National Union had earlier waived its right of appeal. National Union appealed the decision to the Ohio Supreme Court.
The Ohio Supreme Court did not have to reach the issue of waiver, as it concluded that the order was not final and appealable in the first place. The Court noted that, generally, in order for an order to be final, an appellate court must first determine whether the order is "final" within the requirements of R.C. 2505.02 and whether the 54(B) "no just cause for delay" certification is required; and, if so, whether such certification was included in the order. The Court focused its inquiry on R.C. 2505.02(B)(2), which provides that "an order is a final order that may be reviewed, affirmed, modified, or reversed, with or without retrial, when it is . . . [a]n order that affects a substantial right made in a special proceeding . . . ."
The Supreme Court easily concluded that the order was made in a "special proceeding," as the Plaintiffs had brought a claim for declaratory judgment, which "is a special proceeding for purposes of R.C. 2505.02(B)(2)." However, the Court held that the order at issue did not affect a "substantial right" because National Union was not yet required to pay anything to Plaintiffs; Plaintiffs still had to litigate their claims against the alleged tortfeasor. Until an award of damages was entered the defendant tortfeasor, National Union would not have any obligation to pay UM benefits under its policies. Therefore, no "substantial right" was yet affected by the trial court's conclusion that the policies provided coverage.
The Court distinguished its prior decision in Gen. Acc. Ins. Co. v. Ins. Co. of N. Am. (1989), 44 Ohio St.3d 17, where it held that an order declaring that an insurer had no obligation to defend and indemnify an insured was final and appealable. The Court specifically noted that Gen. Acc. also involved the issue of whether the insurer had a duty to defend the insured. A decision on an insurer's duty to defend does involve a substantial right, because the trial court's decision will immediately affect either the insurer or the insured such as to cause irreparable harm if there is no immediate right of appeal. For instance, if the trial court incorrectly holds that an insurer has an obligation to defend, the insurer may end up incurring unnecessary defense costs. Conversely, if the trial court incorrectly holds that an insured is not entitled to a defense from an insurer, the insured "may have to choose a quick settlement over costly litigation, file a separate declaratory judgment action against the insurer, or incur great expense defending without insurance."
In sum, practitioners in future actions will want to consider the Walburn decision carefully in determining whether a summary judgment decision on coverage is ripe for immediate appeal. If, as with the parties in Walburn, no duty to defend is at issue and the parties are not subject to other irreparable harm in the absence of immediate appeal, the court's decision on certain coverage issues may not be appealable, regardless of whether the trial court declares it to be final and appealable.