Hammon v. McLaughlin

¶1The dispositive question in this appeal is whether Henderson was a proper party in the supplemental litigation. If the trial court had not dismissed Henderson as a party, then certain statements allegedly made by Henderson to the appellees and their attorney at the hospital to which appellees were taken after the accident would stand as party admissions, which could properly be introduced into evidence pursuant to Evid. R. 801(D)(2).1 The admission of this testimony would have raised a question upon which reasonable minds could have come to more than one conclusion, thereby precluding a directed verdict. If, however, Henderson was not a proper party in the supplemental proceeding, then the trial court correctly excluded the aforementioned statements as inadmissible hearsay. To resolve this question *229we must consider the nature of a supplemental proceeding brought pursuant to R.C. 3929.06.

¶2The statute states as follows:

¶3“Upon the recovery of a final judgment against any firm, person, or corporation by any person, including administrators and executors, for loss or damage on account of bodily injury or death, for loss or damage to tangible or intangible property of any person, firm, or corporation, for loss or damage on account of 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 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 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 the 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 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 at law. Thereafter the action shall proceed as to the insurer as in an original action.”

¶4In the instant case, appellees recovered a final judgment against “any … person” (McLaughlin) who was arguably insured. If, as appellees allege, McLaughlin was driving the truck with Henderson’s permission at the time of the collision, then McLaughlin would have been an insured under Henderson’s policy by operation of R.C. 4509.51(B), which requires that insurers denominate as additional insureds “… any other person … using any such motor vehicles with the express or implied permission of the [named] insured … The question of whether Henderson had expressly or impliedly granted McLaughlin permission to use the truck was not before the trial court in the negligence phase of the case because that issue relates to the scope of insurance coverage, not negligence. While the initial jury finding that Henderson was not liable under respondeat superior or general agency principles was res judicata in the supplemental proceeding, the first jury had no reason to consider whether McLaughlin’s use was permissive for insurance purposes and, therefore, this question remained open in the supplemental proceeding.

¶5Appellant contends in its first proposition of law that “[i]n a supplemental proceeding brought pursuant to R.C. 3929.06, a named insured who has prevailed on the merits in the principal action and has no interest in the supplemental proceeding may be dismissed therefrom upon a finding that the supplemental petition fails to state a claim upon which relief can be granted against him, and the action shall thereafter proceed against, inter alia, the insurance carrier.”

¶6*230Appellant relies primarily on the final sentence of R.C. 3929.06, which states that “[thereafter the action shall proceed as to the insurer as in an original action,” to support its contention that a proceeding brought pursuant to this section is a totally new action, unrelated to that which has gone before.

¶7Appellant’s contention misapprehends the nature of the proceeding brought under R.C. 3929.06. The statute permits a judgment creditor to file “… a supplemental petition in the action in which said judgment was rendered … This language indicates that the additional proceeding merely supplements the initial action. It does not create a new lawsuit even though once the insurer becomes a party the action “[thereafter … shall proceed as to the insurer as in an original action.”

¶8The court of appeals correctly recognized that “the trial court erred in dismissing Henderson from the suit inasmuch as the cause was not finally concluded. Until the final resolution of the R.C. 3929.06 petition, the court had an obligation to preserve the status quo and could not dismiss one of the parties until the matter was fully concluded.” Henderson’s continued presence in the case was required not because of his status as McLaughlin’s employer, for which he was determined not to be liable to appellees, but because of his status as the party who had entered into the controverted insurance contract with appellant. Henderson had certain contractual rights, specifically the right to extend coverage to permissive users of his insured vehicle, which had not been litigated. Whether he had exercised this right was the determinative issue in the supplemental proceeding.2 The dismissal of Henderson at this juncture would thwart the legislative intention underlying R.C. 3929.06 and severely limit an injured party’s right of recourse, particularly in the permissive user context. Accordingly, we hold that a named insured remains a party in a supplemental proceeding brought pursuant to R.C. 3929.06 when the question of whether the named insured had granted the tortfeasor permission to use the named insured’s vehicle must be ascertained in the supplemental proceeding.

¶9The judgment of the court of appeals is affirmed.

¶10Judgment affirmed.