The general rule in Ohio is that an injured or damaged plaintiff cannot file a direct action against a tortfeasor’s insurer because they have no contractual relationship. However, a plaintiff who believes that the tortfeasor’s insurer should pay for the plaintiff’s damages is not without recourse.
Ohio’s supplemental complaint statute allows a plaintiff to compel a tortfeasor’s insurer to pay for a judgment the plaintiff obtains against the tortfeasor, despite no direct contractual relationship between the plaintiff and the insurance company. R.C. § 3926.06 allows a plaintiff who (1) obtains a final judgment against a defendant, and (2) waits at least thirty (30) days after the final judgment during which the defendant’s insurer does not indemnify its insured, to file a supplemental complaint against the insurer to compel the payment of the judgment under an applicable insurance policy. In essence, the plaintiff becomes a judgment creditor and is allowed to stand in the shoes of the defendant-tortfeasor to assert a direct claim against the insurance company.
Critically for insurance companies faced with a supplemental complaint, they are entitled to assert all the coverage defenses that they could have asserted directly against the insured. Policy provisions that may constitute coverage defenses to the supplemental complaint include:
- Failure to provide notice of the suit in a timely manner – Decker v. Kolleda, 57 Ohio App. 442, 14 N.E.2d 417 (3d Dist. 1938);
- Failure to allow the insurer to defend against the suit – McCann v. Nationwide Mut. Fire Ins. Co., 9th Dist. Lorain No. 88CA004433, 1989 WL 52635;
- Failure to cooperate and assist the insurer in its investigation and defense – Weaver v. Ballard, 174 Ohio St. 59, 186 N.E.2d 834 (1962)(syllabus paragraph one);
- Failure to comply with the terms and conditions of the indemnity policy – In re Basmajian Estate, 142 Ohio St. 483, 52 N.E.2d 985 (1942)(syllabus).
The terms of the policy will control which coverage defenses apply, and other coverage defenses, such as fraud of the insured, are available to the insurer. Asserting all potential coverage defenses is crucial when responding to any supplemental complaint.
This material has been prepared by professionals and should not be utilized as a substitute for legal guidance. Readers should not act upon information contained in these materials without professional legal guidance. ©2019 Gallagher Sharp