Ohio Business Groups Urge Supreme Court to Uphold Validity of Private Contracts

Three Ohio business groups are asking the state Supreme Court to affirm that the policy provisions and intent of two parties entering into a contract should not be usurped by judicial decisions rendered years after the contract was initiated.

The Ohio Manufacturers Association (OMA), the Ohio Farm Bureau Federation (OFBF) and the Ohio Chapter of the National Federation of Independent Business (NFIB) joined the American Insurance Association (AIA) late last month in filing a brief of amici curiae with the Ohio Supreme Court in the case of Monahan v. American States Insurance Co.

“When our members enter into contracts with other parties – whether they are selling their products or purchasing insurance for their businesses – they expect that the terms of their contracts will remain legally binding,” said OMA president Eric Burkland. “Our members believe very strongly that courts cannot and should not arbitrarily rewrite contracts with rights and responsibilities not agreed to by either party.”

In the Monahan case, the named insured elected to purchase uninsured motorist (UM) coverage in the amount of $25,000, rather than in the same amount of the policy’s liability coverage of $1 million. The named insured was the plaintiff’s decedent’s employer. The U.S. District Court ruled, on the basis of an Ohio Supreme Court decision (Linko vs. Indemnity Insurance Co.) rendered eight years after the effective date of the policy, that the forms used to request the lower coverage amount were invalid. Therefore, the District Court awarded the plaintiff the full UM coverage amount of $1 million, even though the named insured had only paid premiums on $25,000 worth of coverage.

“The question is whether the terms and conditions specifically agreed to by the parties in an insurance contract should be completely disregarded by a court simply because the offer of insurance did not comply with judicial criteria announced eight years later,” said Roger Geiger, Executive Director of NFIB Ohio. “Well-established Ohio law and common sense would dictate that the answer is no.”

“When our members sign insurance contracts, they do not consider — nor should they have to — that judicial decisions years down the road could force a retroactive expansion or contraction of their rights and responsibilities under that contract,” Burkland added. “The unintended consequences of such a precedent could have direct and dire consequences for any business that enters into a private contract.”

Topics Ohio