United States District Court,

E.D. California.

TRAVELERS INDEMNITY COMPANY OF CONNECTICUT, et al., Plaintiffs,

v.

ARCH SPECIALTY INSURANCE COMPANY, Defendant.

 

No. 2:11–cv–1601 JAM CKD.

June 11, 2012.

 

John Tinley Brooks, San Diego, CA, for Plaintiffs.

 

Stephen V. Masterson, Glaser Weil, Alexander M. Kargher, Noah P. Perch-Ahern, Los Angeles, CA, for Defendant.

 

ORDER

CAROLYN K. DELANEY, United States Magistrate Judge.

In this diversity action, originally filed on June 13, 2011, defendant and cross-complainant Arch Specialty Insurance Company (“Arch”), an excess insurer, seeks reimbursement through subrogation of over $20 million that Arch paid to settle an underlying personal injury action, which Arch contends was handled in bad faith by the primary insurers, plaintiffs and cross-defendants Travelers Indemnity Company of Connecticut and Travelers Property Casualty Company of America (collectively, “Travelers”).

 

Travelers, as plaintiffs, originally commenced this action seeking declaratory relief as to this controversy, and Arch subsequently filed counterclaims.

 

Before the court is Arch’s motion for a protective order (dkt. no. 31), which came on regularly for hearing on June 6, 2012. Aaron Allan appeared on behalf of Arch and John Brooks appeared on behalf of Travelers. After considering the parties’ joint statement and supporting documentation, the arguments of counsel, and the applicable law, the court now issues the following order.

 

BACKGROUND

 

Facts Giving Rise to the Litigation

 

Travelers issued liability insurance policies to Freeway Transport, Inc. (“Freeway Transport”) and its affiliate United Salad Co. (“United Salad”) with a combined limit of $2 million dollars for the period of September 1, 2004 through September 1, 2005. Arch issued an excess liability policy to Freeway Transport and United Salad for that same period providing $24 million in excess coverage above the $2 million combined limit of the Travelers policies. During the covered period, on November 24, 2004, a nine-year old girl was severely injured in Northern California when she was tragically run over by her father in a semi-tractor-trailer on a trucking job that had been arranged by Freeway Transport to deliver a load of produce to United Salad in Portland, Oregon. Freeway Transport is a transportation logistics company that apparently owns no trucks of its own. Thus, Freeway Transport had arranged for the girl’s father, a licensed interstate trucker, to haul the load.

 

Subsequently, in 2006, Freeway Transport was sued in Sacramento County Superior Court in a case entitled Malaquias Mejia as guardian ad litem for Diana Yuleidy LozaJimenez v. Loza Trucking, et al. (the “Mejia Action”). The Mejia Action sought damages for the injuries suffered by the girl as a result of the November 2004 accident. As the primary insurer, Travelers accepted tender of the defense and appointed counsel to represent Freeway Transport. Because Freeway Transport itself was not negligent in causing the accident, the primary theory of recovery against Freeway Transport in the Mejia Action was vicarious liability based on a non-delegable duty owed by Freeway Transport to the injured girl. Whether Freeway Transport owed such a non-delegable duty in turn depended on whether Freeway Transport was acting as a “common carrier” under applicable law.

 

The Mejia Action was bifurcated into liability and damages phases. On December 14, 2009, the court concluded the liability phase by ruling that Freeway Transport was acting as a common carrier and thus liable for the girl’s injuries. At this point, Arch became actively involved in the Mejia Action and negotiated a “High–Low” agreement pursuant to which a cap of $22.5 million and a floor of $9 million were to be applied to any damages awarded against Freeway Transport in the damages phase. The jury for the damages phase ultimately awarded $24,307,273.56, which was then reduced to $22.5 million pursuant to the High–Low Agreement. Thereafter, Arch paid the $20.5 million of the judgment that exceeded the $2 million combined limit of Travelers’s policies.

 

In the instant federal action, Arch by subrogation seeks reimbursement from Travelers of the $20.5 million it paid on behalf of their mutual insured, Freeway Transport, primarily contending that Travelers, in the course of its defense of the Mejia Action, unreasonably failed to settle that action. The California Supreme Court has recognized the existence of such a claim:

 

It has been held in California and other jurisdictions that the excess carrier may maintain an action against the primary carrier for wrongful refusal to settle within the latter’s policy limits. This rule, however, is based on the theory of equitable subrogation: Since the insured would have been able to recover from the primary carrier for a judgment in excess of policy limits caused by the carrier’s wrongful refusal to settle, the excess carrier, who discharged the insured’s liability as a result of this tort, stands in the shoes of the insured and should be permitted to assert all claims against the primary carrier which the insured himself could have asserted. Hence, the rule does not rest upon the finding of any separate duty owed to an excess insurance carrier.

 

Commercial Union Assurance Cos. v. Safeway Stores, Inc., 26 Cal.3d 912, 917–18, 164 Cal.Rptr. 709, 610 P.2d 1038 (1980). An element of an insurer’s equitable subrogation claim is that “justice requires that the loss be entirely shifted from the insurer to the defendant, whose equitable position is inferior to that of the insurer.” Fireman’s Fund Ins. Co. v. Maryland Casualty Co., 65 Cal.App.4th 1279, 1292, 77 Cal.Rptr.2d 296 (1998).

 

In particular, Arch here contends that Travelers failed to conduct adequate investigations regarding the facts material to the insured’s liability (especially whether Freeway Transport was acting as a common carrier), failed to make reasonable attempts to settle the Mejia Action, failed to inform the insured of Travelers’s analysis of the case or the impact of Travelers’s decisions on the insured, and put its interests ahead of the insured by exposing the insured to the risk of an excess judgment. By way of example, Arch claims that Travelers allowed to expire a Cal.Civ.Proc.Code § 998 offer (“998 Offer”) to settle the Mejia Action for $2 million (which was within the combined limit of the Travelers policies) and failed to notify the insured of the settlement offer. Arch contends that this was unreasonable in light of the serious and permanent nature of the girl’s injuries and the potential liability of Freeway Transport.

 

On its part, Travelers generally contends that its handling of the Mejia Action was reasonable under the circumstances. Pertinent to the instant motion, Travelers asserts that Arch was aware of the risks and exposures facing the insured and never objected to, and in fact agreed with, Travelers’s handling of the defense and its decision not to settle the case prior to the liability determination .

 

Travelers also claims, inter alia, that it reasonably relied on the advice of counsel and that it was given inaccurate and incomplete information by Freeway Transport as to the material facts relating to liability and the existence of the Arch insurance policy. For example, Travelers contends that plaintiff’s 998 Offer was made by mistake and without knowledge of the Arch excess insurance policy and was therefore voidable. However, because these additional defenses do not implicate Arch’s conduct, they are not pertinent to the resolution of this motion.

 

Background Facts Regarding the Discovery Dispute

This discovery dispute arises from Travelers’s attempt to discover facts supporting a potential defense that Arch should be unable to recover from Travelers because Arch essentially agreed with Travelers’s handling of the case. In response to a document request by Travelers and subject to certain objections, Arch agreed to produce “copies of all unprivileged documents that evidence, reflect, or relate to Arch’s evaluation of the potential liability of Freeway Transport … and/or potential damages that might be awarded against [Freeway Transport] in the Mejia lawsuit….” (Dkt. No. 32–4 at 6.) One of the documents produced in response to this request was an e-mail by Arch employee Tom Houlihan to other Arch employees, which stated in part:

 

I just wanted to alert you that we have raised the reserves to $100,000 on the above captioned claim based on the severity of the injuries. The plaintiff is an 11 year old girl with a serious de-gloving injury of the lower half of her body. Liability is very questionable, however, as the insured is only a broker, not a common carrier. However, there are some discrepancies noted by the plaintiff’s attorney and this fact will have to be argued at trial.

 

(Dkt. No. 32–4 at 20.)

 

Subsequently, during the depositions of Mr. Houlihan and John Haluck, the attorney that was appointed by Travelers to represent the insured in the Mejia Action, Travelers attempted to solicit further information regarding this e-mail and any efforts by Arch to get Travelers to settle the Mejia Action prior to the liability determination. Although the deponents were allowed to answer, Arch’s counsel continually objected that these questions were neither relevant nor reasonably calculated to lead to the discovery of admissible evidence. (Dkt. No. 32–2 at 2–5; Dkt. No. 32–4 at 23–31.) Since then, the parties have extensively met and conferred concerning the discoverability of information regarding Arch’s conduct prior to the liability determination, particularly in regard to questioning at upcoming depositions, but have been unable to resolve the matter informally.

 

Consequently, Arch filed this motion for a protective order to preclude discovery by Travelers as to “Arch’s conduct, including claims handling, monitoring, evaluation, assessment, and level of involvement” regarding the Mejia Action prior to the December 14, 2009 liability determination. Arch claims that such information is irrelevant to any party’s claims and defenses and thus not reasonably calculated to lead to the discovery of admissible evidence. Furthermore, Arch contends that the discovery of such irrelevant information is wasteful and burdensome. For example, Arch asserts that Arch employee, Nora Deveau, one of the principal claims adjusters for Arch during the pendency of the Mejia Action and whose deposition has been noticed by Travelers, recently gave birth to a child with serious health issues requiring time-consuming medical attention and is presently working a very reduced schedule. As such, Arch asserts that it wishes to avoid any unnecessary lengthening of that deposition, and preparation for the deposition, by inquiry into issues that are not germane to this case. Travelers disputes that this evidence is irrelevant, that the discovery imposes any burden, and contends that no protective order is warranted.

 

DISCUSSION

Fed.R.Civ.P. 26 provides, in part, that unless otherwise limited by court order, “[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense … For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.” Fed.R.Civ.P. 26(b)(1). However, “[o]n motion or on its own, the court must limit the frequency or extent of discovery otherwise allowed by these rules or by local rule if it determines that: … (iii) the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.” Fed.R.Civ.P. 26(b) (2)(C)(iii). As such, “[t]he court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following: (A) forbidding the disclosure or discovery; … (D) forbidding inquiry into certain matters, or limiting the scope of disclosure or discovery to certain matters;….” Fed.R.Civ.P. 26(c)(1).

 

As the court observed at the hearing, although Arch makes much of the burden to Ms. Deveau in being deposed on the topics in dispute, Ms. Deveau’s personal concerns and obligations can easily be addressed by stipulation (or if necessary, a court order) regarding appropriate conditions and limitations on the deposition. Rather, if any true burden exists, it is by virtue of having to be deposed about irrelevant matter or having to respond to irrelevant discovery requests. “If discovery sought is not relevant, the court should restrict discovery by issuing a protective order.” Ginena v. Alaska Airlines, Inc., 2011 WL 4749104, at(D.Nev. Oct.6, 2011) (citing Roehrs v. Minnesota Life Ins. Co., 228 F.R.D. 642, 644 (D.Ariz.2005) and Herbert v. Lando, 441 U.S. 153, 177, 99 S.Ct. 1635, 60 L.Ed.2d 115 (1979)).

 

It is well established, and the parties appear to agree, that an excess insurer has no duty or right to participate in the defense of an action until the primary policy’s limits are exhausted. See e.g. Community Redevelopment Agency v. Aetna Casualty & Surety Co., 50 Cal.App.4th 329, 339, 57 Cal.Rptr.2d 755 (1996) (“It is settled under California law that an excess or secondary policy does not cover a loss, nor does any duty to defend the insured arise, until all of the primary insurance has been exhausted”); Eaton Hydraulics Inc. v. Continental Casualty Co., 132 Cal.App.4th 966, 975, 34 Cal.Rptr.3d 91 (2005) (accord); Del Real v. U.S. Fire Ins. Crum & Forster, 64 F.Supp.2d 958, 965 (E.D.Cal.1998) (accord); Continental Casualty Co. v. Royal Ins. Co. of America, 219 Cal.App.3d 111, 119, 268 Cal.Rptr. 193 (1990) (“The excess carrier has no duty or right to participate in the defense, absent contract language to the contrary, until the primary policy limits are exhausted”); Continental Casualty Co. v. U.S. Fidelity & Guaranty Co., 516 F.Supp. 384, 392 (N.D.Cal.1981) (holding that excess carrier has no duty to mitigate damages by attempting to settle the action on its own given that the primary carrier controls the litigation). Thus, any evidence regarding Arch’s failure to act or monitor the litigation prior to the exhaustion of the Travelers policies (or prior to the liability determination) would be plainly irrelevant.

 

However, this case presents a slightly closer question. Here, Travelers has put forth some evidence (in particular, the e-mail from Tom Houlihan to other Arch employees) that, despite having no duty to do so, Arch in fact made at least a cursory evaluation of the insured’s potential liability. This evaluation arguably tends to suggest that Arch agreed with Travelers’s assessment of the case at the time of the e-mail. Travelers argues that, because Arch’s case depends on proving that it was unreasonable for Travelers to conclude that Freeway Transport was not a common carrier and therefore not to settle the case prior to the liability determination, Arch’s contemporaneous assessments of potential liability, uncolored by the benefit of hindsight, are probative of the reasonableness of Travelers’s decisions—at least as probative as whatever after-the-fact arguments or expert opinions Arch may offer in the case. It is unclear whether further such assessments or evaluations exist, and Travelers would like to probe the issue further in depositions and other discovery.

 

On its part, Arch contends that such discovery is foreclosed by Lexington Ins. Co. v. Sentry Select Ins. Co., 2009 WL 4132140 (E.D.Cal. Nov.23, 2009), a case with strikingly similar facts. In Lexington, the primary insurer Sentry sought reconsideration of a protective order precluding discovery of excess insurer Lexington’s handling and monitoring of an underlying wrongful death action. Id. at *1. As in the instant case, such discovery was aimed at developing a defense to Lexington’s equitable subrogation claim against Sentry, which alleged that Sentry acted in bad faith in seeking to protect solely its own interests by, among other things, failing to accept reasonable settlement offers within Sentry’s policy limits. Id. at –––– 1–2.

 

More specifically, before the magistrate judge, Lexington had sought a protective order to preclude Sentry’s discovery, through depositions, interrogatories, and document requests “as to Lexington’s claims handling, monitoring and level of involvement regarding the [underlying] action prior to the jury verdict and whether Lexington agreed with Sentry’s assessment prior to the jury verdict.” Lexington Ins. Co., 2009 WL 4132140, at *2. In granting the protective order, the magistrate judge stated:

 

1. Lexington’s monitoring, handling, evaluation, decisions and conduct prior to exhaustion of Sentry’s policy limits is irrelevant in that as an excess insurer, “Lexington owed no duty related to the [underlying] action unless and until the [Sentry] primary policy was exhausted. Continental Casualty Co. v. Royal Ins. Co., 219 Cal.App.3d 111, 118–119, 268 Cal.Rptr. 193 (1990)”;

 

2. “Lexington’s internal handling of the claim related to its insureds Bear Trucking and Robert Knieling is not germane to a determination of whether or not Sentry breached its covenant of good faith and fair dealing to the same insureds as the primary carrier”;

 

3. Sentry failed “to articulate how Lexington’s adjustment, monitoring, evaluation and valuation, and decisions and conduct regarding rejections on behalf of Bear Trucking, pre-trial settlement negotiations, trial negotiations, communications and reports regarding the [underlying] action, as well as Lexington’s policies and procedures in place during the pendency of the [underlying] action, have any bearing on its own duties to its insureds” in that the “primary carrier controls the litigation”;

 

4. The “duty that is the subject of the litigation is Sentry’s to its insureds, rather than any duty of Lexington”; and

 

5. “[L]imiting Sentry’s discovery to matters other than Lexington’s handling of its own claim relative to the underlying [ ] action outweighs any likely benefit.” (Italics in original.)

 

Id. at –––– 2–3. Subsequently, Sentry sought reconsideration of the protective order for, among other grounds, that the “requested discovery is relevant to the merits of Lexington’s equitable subrogation claim, in particular, whether its position is inferior to Sentry’s, the determination of which depends on whether Lexington internally agreed with Sentry’s decision to try the underlying [ ] action.” Id. at *3.

 

The district judge denied Sentry’s request for reconsideration, reasoning as follows:

 

Sentry fails to explain how the information it seeks addresses the inferior position element of Lexington’s equitable subrogation claim. Lexington’s agreement or disagreement to try the [underlying] action is of no consequence given Sentry’s control of the [underlying] action up to the verdict and exhaustion of Sentry’s policy limits. See Continental Casualty, 516 F.Supp. at 392 (primary carrier’s control of litigation renders improper excess carrier’s interference, and excess carrier has no duty to contribute to settlement or defense until primary carrier’s policy limits have been exhausted). Although Lexington’s potential agreement to try the [underlying] action may take some of the sting out of Sentry’s decision to pursue a verdict, Sentry was the key decision maker to proceed to trial. Lexington’s pre-verdict conduct is irrelevant given Sentry’s control of the [underlying] action as primary carrier. Sentry demonstrated no clear error in [the magistrate judge’s] determination that Sentry’s discovery requests fail to support a defense to Lexington’s equitable subrogation claim.

 

Lexington Ins. Co., 2009 WL 4132140, at *5.

 

Travelers contends that Lexington is inapposite, because the primary carrier in that case (Sentry) relied on “an entirely different theory of relevance”—in particular, that the excess carrier’s conduct may be relevant to whether the excess carrier occupied a superior or inferior equitable position. By contrast, Travelers argues, its theory of relevance is much more straightforward—that Arch’s own determination that liability was “very questionable” provides at least some evidence suggesting that Travelers acted reasonably in reaching the same conclusion. However, Travelers’s distinction amounts to no more than semantics. Determining whether Travelers’s equities are inferior to Arch’s equities is simply a question of whether Travelers is at fault for causing the loss complained of in this case. In turn, whether Travelers is at fault, i.e. whether it breached its duties to the insured, is based on Travelers’s conduct. See Lexington Ins. Co., 2009 WL 4132140, at *5. The Lexington court clearly held that the excess carrier’s internal agreement or disagreement with the primary carrier’s defense strategy, or its level of monitoring of the case, prior to exhaustion of the primary policy is irrelevant given the primary carrier’s control of the litigation and the fact that such internal, undisclosed assessments and activities could not have influenced the primary carrier. Id. Furthermore, Travelers’s argument that the analysis in Lexington was based solely on the excess carrier’s lack of duty is without merit. The Lexington court plainly suggested that even if the excess carrier performs an internal assessment of the case, which it has no duty to make, such an assessment would still be irrelevant to whether the primary carrier breached its duties to the insured.

 

While Lexington is not binding authority, this court sees no reason to depart from its analysis, and Travelers offers no contrary authority addressing the discoverability of an excess carrier’s internal assessments and activities. For the reasons persuasively stated in Lexington, while one can conceive that another insurer’s internal contemporaneous assessment may in some sense be relevant to the general subject matter of the litigation, it is irrelevant to the parties’ claims and defenses. As noted in Lexington, the internal, undisclosed assessments and actions of the excess carrier could not have influenced the primary carrier’s decisions. In essence then, discovery of such information and its use at trial amount to little more than an attempt to use the excess carrier’s internal assessments as a type of “expert opinion” against itself. Moreover, as a policy matter, the probative value of excess carriers’ internal assessments prior to exhaustion of the primary policies is further reduced by the fact that excess carriers are not in charge of the litigation, do not interact with the insured to the same extent as the primary carrier during the litigation, and therefore do not necessarily possess the same universe of facts regarding the litigation as the primary carrier. Additionally, given that the excess carriers are not subject to the same duties as the primary carrier prior to exhaustion of the primary policies, their internal assessments may well be more cursory than those of the primary carriers. As such, good cause does not exist to allow discovery of such information under a broader scope of discoverability as “matter relevant to the subject matter involved in the action.” Fed.R.Civ.P. 26(b)(1).

 

At oral argument, Travelers did point to a footnote in a California Court of Appeal case, Continental Casualty Co. v. Royal Ins. Co. of America, where the appellate court noted that the trial court attempted to exclude all evidence of the excess carrier’s conduct prior to settlement of the claim, “except [the excess carrier’s] evaluation of the case.” Continental Casualty Co. v. Royal Ins. Co. of America, 219 Cal.App.3d 111, 117 n. 1, 268 Cal.Rptr. 193 (1990). However, that case primarily concerned the non-discoverability of evidence regarding the excess carrier’s failure to act, and the appellate court did not express an opinion one way or the other concerning the trial court’s admission of the excess carrier’s case evaluation. Indeed, it is unclear whether the assessment was an internal document or whether its admission into evidence was even challenged by the excess carrier in that case. As such, this court declines to give this isolated footnote significant weight and instead relies on Lexington, which explicitly addressed the issue.

 

That said, to the extent that Arch actually communicated its evaluations and assessments of the underlying case to Travelers, the court finds that such information is discoverable. This is because Arch would then have directly involved itself in the strategy for defense of the Mejia Action and would thereby have influenced, at least to some degree, Travelers’s decisionmaking. Of course, for obvious reasons, it is unlikely that any such communications are not already in Travelers’s possession, and it is unclear whether any even exist in this case. Nevertheless, Travelers should be entitled to explore the facts and circumstances surrounding any such communications further via deposition testimony or written discovery. Arch’s internal assessments, evaluations, and conduct regarding the Mejia Action, however, are irrelevant to the parties’ claims or defenses, not reasonably calculated to lead to the discovery of admissible evidence, and therefore not discoverable .

 

The parties disagree as to whether Lexington allows for discovery of communications between the primary insurer and the excess insurer prior to the exhaustion of the primary policies. The parties’ disagreement is based on their respective interpretations of the first footnote in that decision, which states: “Lexington does not challenge discovery as to its communications with Sentry or its internal handling, involvement and monitoring of the [underlying] action after the verdict.”   Lexington Ins. Co., 2009 WL 4132140, atn. 1. Travelers disagrees with Arch’s contention that the phrase “after the verdict” applies to the whole quoted sentence. While Arch’s interpretation may be grammatically correct, the Lexington decision as a whole, with multiple references to “internal handling” and “internal, undisclosed evaluation,” etc. suggests that external communications between the carriers are discoverable, at least those pertaining to evaluation and assessment of the underlying case and the strategy for defending it. However, the court express no opinion regarding the ultimate admissibility of such evidence, an issue which is not presently before the court.

 

Internal communications include communications among Arch employees as well as communications between Arch and its counsel.

 

CONCLUSION

For the foregoing reasons, IT IS HEREBY ORDERED THAT:

 

1. Arch’s motion for a protective order (dkt. no. 31) is GRANTED IN PART.

 

2. Travelers is precluded from conducting any discovery as to Arch’s internal conduct, including internal claims handling, monitoring, evaluation, assessment, and level of involvement regarding the Mejia Action prior to the determination of the underlying insured’s liability on December 14, 2009. Nothing in this order precludes Travelers from conducting discovery as to Arch’s external communications with Travelers pertaining to evaluation and assessment of the Mejia Action and the strategy for defending it.

 

It is unclear whether, or to what extent, resolution of the instant motion impacts Travelers’s pending motion to compel noticed for hearing on June 20, 2012. (Dkt. No. 30.) To the extent this order resolves the issues raised in that motion, Travelers shall withdraw that motion—if not, the parties shall limit discussion in their joint statement to issues that have not already been resolved by this order.

 

IT IS SO ORDERED.

Court of Appeals of Ohio,

Eighth District, Cuyahoga County.

Charles W. ROUSH, et al., Plaintiffs–Appellants

v.

Joann BUTERA, et al., Defendants–Appellees.

 

No. 97463.

Decided June 7, 2012.

 

Civil Appeal from the Cuyahoga County Court of Common Pleas, Case No. CV–490493.

David L. Meyerson, Seaman Garson, LLC, Cleveland, OH, for appellants.

 

Steven G. Janik, Crystal L. Maluchnik, Janik LLP, Cleveland, OH, for appellees, National Union Fire Insurance Co.

 

Aaron M. Minc, James A. Sennett, Sennett Fisher, LLC, Beachwood, OH, for Nationwide Mutual Insurance Co.

 

Joann Butera, Cleveland, OH, pro se.

 

Before: COONEY, J., CELEBREZZE, P.J., and E. GALLAGHER, J.

 

COLLEEN CONWAY COONEY, J.

{¶ 1} Plaintiffs-appellants, Charles Roush (“Roush”) and Dorothy Roush (collectively referred to as “appellants”), appeal the trial court’s grant of summary judgment in favor of National Union Fire Insurance Company (“National Union”) and Nationwide Insurance Company (“Nationwide”), on their claims for uninsured/underinsured motorist (“UM/UIM”) coverage. We find no merit to the appeal and affirm.

 

{¶ 2} In January 2001, Roush was driving a truck owned by U .S. Freightways Corp. (“USF”), a parent corporation of his employer, USF Holland, Inc. (“Holland”). The truck was insured under two National Union policies: Trucker’s Liability Policy No. 527–32–99, effective June 30, 2000 to June 30, 2001, with liability limits of $2 million (the “Trucker’s Policy”); and Umbrella Liability Policy No. BE 932–25–54, effective June 30, 1997 to June 30, 2002, with liability limits of $8 million in excess of the Trucker’s Policy limits (the “Umbrella Policy”). The Trucker’s Policy contained a deductible in the amount of $1,750,000. Roush also had his own individual insurance with Nationwide.

 

{¶ 3} While driving the truck within the course and scope of his employment, Roush was involved in a motor vehicle accident in January 2001. It is undisputed that Joann Butera (“Butera”), an uninsured driver, proximately caused the accident. Roush sued Butera for injuries sustained in the accident. He also sued National Union and Nationwide for UM/UIM coverage. Dorothy Roush alleged a loss of consortium claim.

 

{¶ 4} National Union filed a motion for summary judgment, claiming appellants were not entitled to UM/UIM coverage because the policyholders, Holland and USF, waived UM/UIM coverage when they accepted their insurance policies. To prove the waiver, National Union presented an Ohio UM/UIM rejection form and alleged that Thomas Clarke (“Clarke”), USF’s Vice President of Risk Management, signed the form in March 1999. Roush disputed the credibility of National Union’s rejection form and Clarke’s affidavit testimony on the grounds that the rejection form does not have a policy number, or a receipt or file stamp of the agency or insurer, and is not referenced in any other policy or lists of policies. Roush also asserted that the signature on the rejection form is not dated. In his affidavit, Clarke stated that he had written authority from Holland to waive UM/UIM coverage on Holland’s behalf.

 

{¶ 5} Nationwide also filed a motion for summary judgment, arguing that appellants’ insurance policy with Nationwide excluded UM/UIM coverage because Roush was operating an unlisted vehicle that was “furnished” to him and “available for regular use” at the time of the accident.

 

{¶ 6} On April 28, 2004, at National Union’s request, the trial court stayed the case pending the Ohio Supreme Court’s ruling in Gilchrist v. Gonsor, 118 Ohio St.3d 1511, 2008–Ohio–3369, 889 N.E.2d 1028. The Ohio Supreme Court released its decision in Gilchrist in July 2008, and the trial court reactivated this case in February 2009. After additional discovery and briefing on the motions for summary judgment, the trial court granted the motions in favor of both National Union and Nationwide, and found that Roush was not entitled to UM/UIM coverage under any policies issued by either insurer.

 

{¶ 7} Appellants now appeal and raise eight assignments of error.

 

Standard of Review

{¶ 8} An appellate court reviews a trial court’s decision on a motion for summary judgment de novo. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). Summary judgment is appropriate when, construing the evidence most strongly in favor of the nonmoving party (1) there is no genuine issue of material fact; (2) the moving party is entitled to judgment as a matter of law; and (3) reasonable minds can come to but one conclusion, that conclusion being adverse to the nonmoving party. Zivich v. Mentor Soccer Club, Inc., 82 Ohio St.3d 367, 369–370, 696 N.E.2d 201 (1998), citing Horton v. Harwick Chem. Corp., 73 Ohio St.3d 679, 653 N.E.2d 1196 (1995), paragraph three of the syllabus.

 

Waiver of UM/UIM Coverage

{¶ 9} In the first and second assignments of error, appellants argue the trial court erred in finding that USF and Holland rejected UM/UIM coverage. They contend that because the offer of UM/UIM coverage failed to contain the elements required under Linko v. Indemn. Ins. of N. Am., 90 Ohio St.3d 445, 739 N .E.2d 338 (2000), USF’s rejection of UM/UIM coverage is invalid and coverage arises by operation of law.

 

{¶ 10} The statutory law in effect at the time of entering into a contract for automobile liability insurance determines the rights and duties of the contracting parties. Ross v. Farmers Ins. Group, 82 Ohio St.3d 281, 1998–Ohio–381, 695 N.E.2d 732, syllabus.

 

{¶ 11} Appellants argue the trial court erred in finding that USF and Holland rejected UM/UIM coverage because there is no evidence that National Union’s offer of UM/UIM coverage complied with the requirements set forth in Linko and Gyori v. Johnston Coca–Cola Bottling Group, Inc., 76 Ohio St.3d 565, 568, 1996–Ohio–358, 669 N.E.2d 824.

 

{¶ 12} In Gyori, the plaintiff was injured in an automobile accident on December 12, 1990 and sued his employer’s insurance carrier for UM/UIM coverage. The insurer argued that Gyori was not entitled to UM/UIM benefits because it had rejected UM/UIM coverage. The Ohio Supreme Court disagreed and held that pursuant to R.C. 3937.18, as it existed at that time, there could be no rejection absent a written offer of UM/UIM coverage from the insurance provider. Gyori at 568. In Linko, the high court further held that:

 

To satisfy the offer requirements of R.C. 3937.18, the insurer must inform the insured of the availability of UM/UIM coverage, set forth the premium for UM/UIM coverage, include a brief description of the coverage, and expressly state the UM/UIM coverage limits in its offer.

 

Linko at 447–448.

 

{¶ 13} If the insurer failed to meet any one of these requirements, the insured’s rejection of coverage was invalid and UM/UIM coverage arose by operation of law equal to the policy’s liability limits. Id.

 

{¶ 14} As previously stated, the Trucker’s Policy was effective from June 30, 2000 to June 30, 2001. It is governed by R.C. 3937.18, as amended by H.B. 261 and S.B. 57, which became effective on September 3, 1997 and November 2, 1999, respectively. Gyori and Linko were both decided before the General Assembly passed H.B. 261 and S.B. 57. In Hollon v. Clary, 104 Ohio St.3d 526, 2004–Ohio–6772, 820 N.E.2d 881, the Ohio Supreme Court explained that H.B. 261 modified the strict Linko requirements. The written offer of UM/UIM coverage at issue in Hollon did not set forth the premiums for the coverage. Nevertheless, the court recognized that in light of the presumption of an offer of coverage created by the H.B. 261 version of R.C. 3937 .18(C), “Linko’s requirements are arguably less relevant.” Id . The court reiterated that the Linko requirements were chosen to ensure that an insurer makes a meaningful offer, which is “an offer in substance and not just in name,” and which allows the insured to make “an express, knowing rejection of [UM/UIM] coverage .” Id., quoting Linko, 90 Ohio St.3d at 449, 739 N.E.2d 338 (2000). Accordingly, the court went on to hold that “[o]nce a signed rejection is produced, the elements of the offer may be demonstrated by extrinsic evidence.” Id. at syllabus.

 

{¶ 15} The Hollon court determined the parties’ intent from an unrebutted affidavit of the insured, attesting that:

 

Before approving and signing these rejection forms, I was informed, aware, and understood: (a) that UM/UIM coverage was available; (b) the amount of the premium that would be charged for UM/UIM coverage if I selected UM/UIM coverage, or of the reduced premium if I selected reduced UM/UIM limits; (c) what UM/UIM coverage was; and (d) that I was rejecting UM/UIM coverage in its entirety.

 

Id. at ¶ 6.

 

{¶ 16} Based on this affidavit, the Hollon court concluded that the insured had made “an express, knowing rejection of UM/UIM coverage, under H.B. 261,” and that the court could presume that a valid offer had been made. Id. at ¶ 13.

 

{¶ 17} This court followed Hollon in Bossin v. Groves, 8th Dist. No. 92975, 2010–Ohio–664. In Bossin, an employee of Viacom Outdoor Group, Inc. (“Viacom”) sued Travelers, Viacom’s motor vehicle insurer, for UM/UIM coverage following an accident. Travelers denied coverage on the grounds that Viacom, through its director of insurance, had rejected UM/UIM coverage. Bossin asserted that the rejection was invalid because it failed to comply with Linko. This court disagreed and, following Hollon, found that despite the fact that the rejection form Travelers produced failed to contain the coverage premiums, the named insured’s knowledge of the premiums could be demonstrated by extrinsic evidence. Id. at ¶ 15.

 

{¶ 18} Travelers produced affidavits, one from a director at Travelers who had met with Viacom’s director of insurance, and the other from a Viacom manager. The Viacom manager attested that

 

the rejection was consistent with Viacom’s policy to reject UM/UIM coverage whenever possible, that Viacom was aware that an increase in premiums would be charged for such coverage and that Viacom made a knowing business decision to reject UM/UIM coverage for the state of Ohio.

 

Id. at ¶ 17.

 

{¶ 19} Based on this evidence, this court found that “the extrinsic evidence offered by Travelers was sufficient to demonstrate that Viacom was aware that additional coverage premiums would be charged and, that consistent with its company policy, made a knowing rejection of UM/UIM coverage.” Id. at ¶ 18.

 

{¶ 20} In support of its motion for summary judgment, National Union submitted the affidavit of Thomas Clarke, USF’s risk manager, which provided, in pertinent part:

 

3. Attached hereto as Exhibit A–1 is an authentic copy of ISO Form No. 62582 (5/95), titled “REJECTION OF UNINSURED/UNDERINSURED MOTORISTS COVERAGE OR SELECTION OF LOWER LIMIT OF LIABILITY (Ohio) (“Rejection Form”) which I executed on behalf of U.S. Freightways Corporation (“USF”) on March 19, 1999;

 

4. At the time I executed the Rejection Form, I was employed by USF in the capacity of Vice President of Risk Management. By reason of this position, I was familiar with USF’s insurance program, and duly authorized to act on behalf of USF including, but not limited to, the execution of the rejection of uninsured/underinsured (“UM/UIM”) coverage;

 

5. The Rejection Forms are part of Trucker’s Liability Policy No. 527–32–99 effective July 1, 2000 to July 1, 2001 (“Policy”), and manifests the intent of USF to reject UM/UIM coverage in Ohio.

 

6. Before approving and executing the Rejection forms, USF and I were informed, were aware, and understood:

 

a. that UM/UIM coverage was available in increments up to an amount equal to the Policy’s liability limits;

 

b. the method of calculating premiums for coverage under the Policy, the amount of additional premium that would be charged for UM/UIM coverage if USF selected full UM/UIM coverage, and the amount of premium that would be charged if USF selected a reduced limit of UM/UIM coverage;

 

c. the purpose of UM/UIM coverage; and that by signing the Rejection Form, USF was rejecting Ohio UM/UIM coverage in its entirety.

 

7. USF intended to reject UM/UIM coverage in all states where such coverage is not mandatory and intended to select the lowest limit of UM/UIM coverage required in the jurisdictions where UM/UIM coverage is mandatory, so as to avoid the payment of additional premium for such coverage.

 

{¶ 21} In a supplemental affidavit, Clarke explained that it was USF’s policy to reject UM/UIM coverage whenever possible for two reasons. First, National Union issued the insurance policies as part of a fronting agreement under which USF had agreed to reimburse National Union for all amounts paid under its Trucker’s policy. Thus, if USF selected UM/UIM coverage, it would be responsible for both general liability damage and UM/UIM benefits to its employees, as well as additional premiums. Second, USF did not see the need to purchase UM/UIM coverage when its employees were already protected within the scope of their employment under a state worker’s compensation law. USF’s purchase of UM/UIM coverage would duplicate this protection at additional cost to USF.

 

 

{¶ 22} In addition to Clarke’s affidavits, National Union submitted documentary evidence showing that: (1) USF had rejected UM/UIM coverage every year as far back as 1989, when it was insured by a different carrier; (2) USF repeatedly informed National Union over a period of six years that it wanted to reject such coverage in all states where permitted; and (3) for the policy year in question, USF signed rejection forms for every state where it did business, including Ohio.

 

{¶ 23} Appellants argue that Clarke’s affidavit should be rejected as self-serving because USF’s substantial deductible would render it personally liable for appellants’ damages up to $1,750,000. Appellant also claims there are suspicious inconsistencies in USF’s documentation that cast doubt on Clarke’s credibility.

 

{¶ 24} However, the documentary evidence unequivocally demonstrates USF’s intent to reject UM/UIM coverage. The evidence also shows that Clarke, as the risk manager of a trucking fleet, was familiar with UM/UIM coverage and understood the ramifications of any rejection of that coverage. Like Viacom in Bossin, USF made a knowing business decision to reject UM/UIM coverage in Ohio. Based on this evidence, we agree with the trial court’s finding that National Union made a valid offer of UM/UIM coverage, which was properly rejected.

 

Holland’s Rejection

{¶ 25} Appellants argue that even if USF rejected UM/UIM coverage, the rejection does not apply to its subsidiary, Holland. However, this court has recognized that the General Assembly altered the common law under post-H.B. 261 versions of R.C. 3937.18, and held that a parent corporation’s rejection of UM/UIM coverage is binding upon its subsidiary where the parent corporation was the named insured. Bossin, 8th Dist. No. 92975, 2010–Ohio–664; Rice v. Progressive Max Ins. Co., 8th Dist. No. 83970, 2004–Ohio–6107. Although Holland used the truck involved in Roush’s accident, USF owned and insured the truck.

 

{¶ 26} Moreover, Clarke stated in his affidavit that he was authorized by Holland to negotiate automobile insurance coverage and reject UM/UIM coverage on its behalf. Absent an express, statutory provision requiring a power of attorney, a parent corporation’s authority to act on behalf of its subsidiary can be established through extrinsic evidence. Lee v. Hennick, 52 Ohio St. 177, 181, 39 N.E. 473 (1894). Evidence in the record shows that Holland has relied on USF to negotiate insurance on its behalf for eleven years. This fact, coupled with Clarke’s affidavit, demonstrates that USF had authority to reject UM/UIM coverage on behalf of Holland.

 

The Umbrella Policy

{¶ 27} Appellants argue that even if USF rejected UM/UIM coverage under the Trucker’s Policy, they are entitled to drop down coverage from the Umbrella Policy. However, appellants never stated a claim for coverage under the Umbrella Policy in their complaint. Although they attempted to amend their complaint to assert a claim for coverage under the Umbrella Policy, the trial court denied the motion to amend as untimely. Thus, the trial court never determined whether there was coverage under the Umbrella Policy. As an appellate court, we do not consider arguments that the trial court did not address. In Murphy v. Reynoldsburg, the Ohio Supreme Court explained that “[a] reviewing court, even though it must conduct its own examination of the record, has a different focus than the trial court. If the trial court does not consider all the evidence before it, an appellate court does not sit as a reviewing court, but, in effect, becomes a trial court.” Id., 65 Ohio St.3d 356, 360, 604 N.E.2d 138 (1992). We, therefore, do not consider issues raised for the first time on appeal. Id.

 

Umbrella policies are different from standard excess insurance policies in that they are meant to fill gaps in coverage both vertically, by providing excess coverage, and horizontally (by providing primary coverage). The vertical coverage provides additional coverage above the limits of the insured’s underlying primary insurance, whereas the horizontal coverage is said to “drop down” to provide primary coverage for situations where the underlying insurance provides no coverage at all. Sarka v. Love 8th Dist. No. 85960, 2005–Ohio–6362, ¶ 12, quoting Wright v. Medamerica Internatl. Ins. Ltd., 2d Dist. No. 19809, 2003–Ohio–5723, ¶ 32.

 

Collateral Estoppel

{¶ 28} Appellants contend that National Union should be estopped from arguing that the UM/UIM rejection form is valid because the First District Court of Appeals has already held that this rejection form is unenforceable as a matter of law. See Oblinger v. State Auto Ins. Co., 163 Ohio App.3d 266, 2005–Ohio–4695, 837 N.E.2d 815 (1st Dist.). In Oblinger, the plaintiff was injured while driving a truck for his employer, USF Dugan, another subsidiary of USF. The plaintiff argued that USF’s rejection of UM/UIM coverage was invalid because it did not satisfy the strict Linko requirements. As in this case, National Union argued USF had rejected UM/UIM coverage on behalf of USF Dugan, and supported its argument with an affidavit from the same witness, Thomas Clarke.

 

{¶ 29} In reversing the trial court’s grant of summary judgment in favor of National Union, the Oblinger court held the UM/UIM rejection was invalid because extrinsic evidence did not satisfy the Linko requirements. Because the First District determined that National Union’s rejection of UM/UIM coverage was invalid in Oblinger, appellants argue the doctrine of collateral estoppel precludes National Union from relitigating this issue here.

 

{¶ 30} Collateral estoppel, also referred to as the doctrine of issue preclusion,

 

holds that a fact or a point that was actually and directly at issue in a previous action, and was passed upon and determined by a court of competent jurisdiction, may not be drawn into question in a subsequent action between the same parties or their privies, whether the cause of action in the two actions be identical or different.

 

Fort Frye Teachers Assn., OEA/NEA v. State Emp. Relations Bd., 81 Ohio St.3d 392, 395, 692 N.E.2d 140 (1998), citing Norwood v. McDonald 142 Ohio St. 299, 52 N.E.2d 67 (1943).

 

{¶ 31} Ohio courts have held that a judgment can operate as collateral estoppel only where all of the parties to the prior proceeding in which the judgment is relied upon were bound by the judgment. Goodson v. McDonough Power Equip., Inc., 2 Ohio St.3d 193, 443 N.E.2d 978 (1983). The operation of the rule must be mutual. Id. If a judgment cannot be effective as res judicata against a particular person, he cannot avail himself of the adjudication and contend that it is available against others. Id. Thus, “collateral estoppel can only be applied against parties who have had a prior ‘full and fair’ opportunity to litigate their claims. C.A. Hardy v. Johns–Manville Sales Corp. (C.A.5, 1982), 681 F.2d 334, 338.” (Footnote omitted.) Id. at 197–198. “In order to preclude either party from relitigating an issue, a judgment must be preclusive on both.” Goodson at paragraph one of the syllabus.

 

{¶ 32} Oblinger, 163 Ohio App.3d 266, 2005–Ohio–4695, 837 N.E.2d 815 (1st Dist.), was styled as a declaratory judgment action. Pursuant to R.C. 2721.12(A), only parties to a declaratory judgment action are bound by the judgment. Hence, appellants would not have been bound by Oblinger if the First District had reached a decision adverse to their interests. Without mutuality upon which the trial court could apply the doctrine of collateral estoppel, National Union was free to assert the validity of its rejection of UM/UIM coverage.

 

{¶ 33} Based on the foregoing, we find the trial court properly found that appellants were not entitled to UM/UIM coverage as a matter of law. The first and second assignments of error are overruled.

 

Insurance Expert Report

{¶ 34} In the third assignment of error, appellants argue the trial court erred in granting National Union’s motion to strike the affidavit and report of their expert, Daniel N. Sutherin (“Sutherin”). Appellants contend their expert report did not constitute discovery and should not have been subject to the discovery deadline.

 

{¶ 35} Appellants produced Sutherin’s report for the first time to support their brief in opposition to National Union’s motion for summary judgment. They never produced the expert report prior to the discovery or expert report deadlines.

 

{¶ 36} If an opposing party requires additional time to produce facts essential to the opposition motion, the party may seek a continuance under Civ.R. 56(F). Gates Mills Invest. Co. v. Pepper Pike, 59 Ohio App.2d 155, 169, 392 N.E.2d 1316 (8th Dist.1978). However, Civ.R. 56(F) requires that the motion for additional time for discovery be supported by the nonmovant’s affidavit, which must contain sufficient reasons showing why such party was unable to obtain an affidavit of facts to oppose the summary judgment earlier. Morantz v. Ortiz, 10th Dist. No. 07AP–587, 2008–Ohio–1046. A party who fails to seek relief under Civ.R. 56(F) in the trial court, fails to preserve the issue on appeal. Jackson v. Walker, 9th Dist. No. 22996, 2006–Ohio–4351, ¶ 17, citing R & R Plastics, Inc. v. F.E. Myers Co., 92 Ohio App.3d 789, 637 N.E.2d 332 (6th Dist.1993).

 

{¶ 37} Appellants argue their insurance expert report should have been admissible to support their opposition to National Union’s motion for summary judgment because they did not realize they would need an expert until National Union had produced all of its responses to their discovery requests. However, it is undisputed that appellants did not produce the expert report prior to filing their brief in opposition to National Union’s motion for summary judgment. It is also undisputed that they did not produce their expert report before the discovery or expert report deadlines had passed, and they never sought leave to produce an expert report under Civ.R. 56(F). Therefore, they failed to preserve this issue on appeal, and we find no abuse of discretion in the court’s striking appellants’ expert report.

 

{¶ 38} The third assignment of error is overruled.

 

Supplemental Evidence

{¶ 39} In the fourth and fifth assignments of error, appellants argue the trial court abused its discretion when it granted National Union’s motions for leave to file supplemental evidence. In the sixth assignment of error, they also argue the court abused its discretion in denying their motion to strike Clarke’s supplemental affidavit as untimely.

 

{¶ 40} Civ.R. 56(E) states that a “court may permit affidavits to be supplemented or opposed by depositions or by further affidavits.” McGuinness v. Hooper, 2d Dist.App. No. 16551, 1998 WL 46688 (Feb. 6, 1998). “The trial court has broad discretion in the admission of evidence, and unless it has clearly abused its discretion and the defendant has been materially prejudiced thereby, an appellate court should not disturb the decision of a trial court.”   State v. Joseph, 73 Ohio St.3d 450, 460, 653 N.E.2d 285 (1995), citing State v. Maurer, 15 Ohio St.3d 239, 473 N.E.2d 768 (1984), paragraph seven of the syllabus.

 

{¶ 41} National Union sought leave of court to produce supplemental evidence, including Clarke’s supplemental affidavit, as required by Civ.R. 56(E) and (F). In the motion, National Union explained that appellants raised for the first time the issue that National Union was collaterally estopped from arguing the validity of the rejection form pursuant to Oblinger, 163 Ohio App.3d 266, 2005–Ohio–4695, 837 N.E.2d 815 (1st Dist.). Further, despite the enactment of H.B. 261 and this court’s decision in Rice, appellants maintained that National Union still had to prove that USF had authority from Holland to reject UM/UIM coverage. Because much of this evidence was in the possession of Yellow Freight, the successor of USF, who was not a party to the case, National Union requested additional time to obtain and present this evidence.

 

{¶ 42} The Ohio Supreme Court has determined that a continuance, or extension of time, is based on a party’s right to have his case heard upon the merits.   State ex rel. Buck v. McCabe, 140 Ohio St. 535, 537, 45 N.E.2d 763 (1942). Appellants’ response brief raised new issues that National Union had not addressed in its motion for summary judgment. Granting leave to supplement the record to respond to the new issues allowed the trial court to consider all the evidence and hear the case on its merits.

 

{¶ 43} Furthermore, National Union did not delay in seeking leave and complied with Civ.R. 56(E) and (F) by explaining its need to submit additional evidence. National Union needed Clarke’s supplemental affidavit and other documentary evidence to address the new issues raised in appellants’ response brief. For these reasons, we find the trial court did not abuse its discretion in denying appellants’ motion to strike Clarke’s supplemental affidavit or in granting National Union leave to submit supplemental evidence.

 

{¶ 44} The fourth, fifth, and sixth assignments of error are overruled.

 

Amended Complaint

{¶ 45} In the seventh assignment of error, appellants argue the trial court abused its discretion in denying their motion to amend their complaint.

 

{¶ 46} A trial court’s decision whether to grant a motion for leave to amend a complaint will not be reversed on appeal absent an abuse of discretion.   Cselpes v. Cleveland Catholic Diocese, 109 Ohio App.3d 533, 541, 672 N.E.2d 724 (8th Dist.1996). If a plaintiff fails to make a prima facie showing of support for new matters sought to be pleaded, a trial court acts within its discretion to deny the motion to amend the pleading. Wilmington Steel Prods., Inc. v. Cleveland Elec. Illum. Co., 60 Ohio St.3d 120, 123, 573 N.E.2d 622 (1991).

 

{¶ 47} Appellants sought leave to add a claim for coverage under the Umbrella Policy and a bad faith claim. Appellants alleged that National Union acted in bad faith by failing to admit coverage and pay their claims pursuant to Oblinger, 163 Ohio App.3d 266, 2005–Ohio–4695, 837 N.E.2d 815 (1st Dist.). However, Oblinger was decided on September 9, 2005, almost four years before appellants filed their motion to amend the complaint. They filed the motion to amend the complaint after National Union had already filed its renewed motion for summary judgment. As previously discussed, National Union had a valid defense to appellants’ collateral estoppel argument based on Oblinger. Under these circumstances, the trial court properly concluded that appellants failed to make a prima facie showing in support of the bad faith claim.

 

{¶ 48} Appellants failed to challenge the trial court’s denial of their motion to add a claim under the Umbrella Policy in their merit brief. Pursuant to App.R. 12(A)(2), we may disregard any assigned errors if the party raising them “fails to identify in the record the error on which the assignment of error is based or fails to argue the assignment separately in the brief, as required under App.R.16(A).” App.R. 12(A)(2).

 

{¶ 49} Accordingly, the seventh assignment of error is overruled.

 

Nationwide Policy

{¶ 50} In the eighth assignment of error, appellants argue the trial court erred in granting Nationwide’s motion for summary judgment because Roush had UM/UIM coverage under his individual policy with Nationwide. Appellants contend the trial court erroneously found that Roush was excluded under his Nationwide policy because this conclusion is contrary to the parties’ intent and violates former versions of R.C. 3937.18.

 

{¶ 51} The sole issue raised in this assignment of error is the interpretation of an exclusion in Roush’s Nationwide policy. Insurance policies are contracts and their interpretation is a matter of law for the court. Sharonville v. Am. Emps. Ins. Co., 109 Ohio St.3d 186, 187, 2006–Ohio–2180, 846 N.E.2d 833, at ¶ 6, citing Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 271, 374 N.E.2d 146 (1978), paragraph one of the syllabus. Insurance coverage is determined by reasonably construing the contract in conformity with the parties’ intentions, as interpreted from the common and ordinary meaning of the language employed. King v. Nationwide Ins. Co., 35 Ohio St.3d 208, 211, 519 N.E.2d 1380 (1988). If an insurance contract provision is reasonably susceptible to more than one interpretation, its provisions will be construed strictly against the insurer and liberally in favor of the insured. Id. at syllabus. An exclusion in an insurance policy is interpreted as applying only to that which is clearly intended to be excluded. Hybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd., 64 Ohio St.3d 657, 597 N.E.2d 1096 (1992).

 

{¶ 52} The exclusion in Roush’s Nationwide policy states:

 

Coverage Exclusions:

 

This coverage does not apply to:

 

* * *

 

3. Bodily injury suffered while occupying a motor vehicle:

 

a) owned by you;

 

b) furnished to; or

 

c) available for the regular use of; you or a relative, but not insured for Auto Liability Coverage under this policy.

 

{¶ 53} It is undisputed that at the time of the accident, Roush was driving a truck his employer furnished to him for his regular use in his job as a truck driver. It is also undisputed that the truck he was driving was not insured under Roush’s Nationwide policy. Under the plain and unambiguous language of the exclusion, Roush was excluded from coverage under his policy.

 

{¶ 54} The exclusion in Roush’s Nationwide policy, which was issued on September 14, 2000, is enforceable under the applicable version of R.C. 3937.18, which was amended by H.B. 261. In H.B. 261, the General Assembly mandated that all automobile insurance policies offer UM/UIM coverage for loss due to bodily injury or death suffered by an insured. However, it also added a provision that UM/UIM coverage may include terms and conditions that would preclude coverage for bodily injury or death suffered by an insured. For example, R.C. 3937.18(J)(1) provides that coverage may be precluded:

 

While the insured is operating or occupying a motor vehicle owned by, furnished to, or available for the regular use of a named insured, a spouse, or a resident relative of a named insured, if the motor vehicle is not specifically identified in the policy under which a claim is made, or is not a newly acquired or replacement motor vehicle covered under the terms of the policy under which the uninsured and underinsured motorists coverages are provided.

 

{¶ 55} The language contained in R.C. 3937.19(J)(1) is unambiguous. Kyle v. Buckeye Union Ins. Co., 103 Ohio St.3d 170, 2004–Ohio–4885, 814 N.E.2d 1195. In very clear terms, R.C. 3937.18(J)(1) allowed Nationwide to exclude coverage to Roush, who was a operating motor vehicle furnished to him or available for his regular use by his employer. The vehicle was not specifically identified in the policy under which a claim was made. Therefore, we find Roush was excluded from UM/UIM coverage under his personal Nationwide policy.

 

{¶ 56} The eighth assignment of error is overruled.

 

{¶ 57} Judgment affirmed.

 

It is ordered that appellees recover of appellants costs herein taxed.

 

The court finds there were reasonable grounds for this appeal.

 

It is ordered that a special mandate issue out of this court directing the common pleas court to carry this judgment into execution.

 

A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.

 

FRANK D. CELEBREZZE, JR., P.J., Concurs in Judgment Only.

EILEEN A. GALLAGHER, J., Dissents (with Separate Opinion Attached).

 

EILEEN A. GALLAGHER, J., Dissenting.

{¶ 58} Because I conclude that USF failed to validly reject UM/UIM coverage in this case and that the trial court erred in striking appellants’ expert report, I respectfully dissent, in part and concur, in judgment only, in part, from the majority opinion.

 

{¶ 59} In their first and second assignments of error, appellants co-mingle several arguments as to why the trial court erred in granting defendant appellee National Union’s motion for summary judgment. The majority opinion addresses each of these arguments in turn, ultimately overruling each claim. It is only with respect to the majority’s analysis of appellants’ claim that USF failed to validly reject UM/UIM coverage offered in National Union’s policy, that I dissent. I find no issue with the remainder of the majority’s disposition of appellants’ remaining arguments contained within their first and second assignments of error.

 

{¶ 60} In the present case, there is no dispute as to the material facts concerning the accident. The parties agree that there remains the legal issue of whether the appellees’ owed coverage under R.C. 3937.18, as amended in 1997 by H.B. No. 261 and S.B. 57, which was in effect at the time of the accident. In granting summary judgment, and in affirming that grant on appeal, the trial court and the majority opinion, respectively, determined that no coverage existed as National Union made a valid offer of UM/UIM coverage, which USF properly rejected. I disagree.

 

{¶ 61} The requirements for a valid rejection of UM/UIM coverage are enumerated in Linko v. Indemn. Ins. Co. of N. Am., 90 Ohio St.3d 445, 739 N.E.2d 338 (2000). In Linko, the court held that an offer of UM/UIM coverage must inform the insured of the availability of UM/UIM coverage, describe the coverage, list the premium costs of the coverage, and expressly state the coverage limits. Id. If the offer or the rejection of coverage does not establish that these requirements have been met, coverage arises by operation of law. Id. More recently, the Ohio Supreme Court has held that once a signed rejection form has been produced, the elements of the offer, as required under Linko, may be demonstrated by extrinsic evidence. State v. Hollon, 104 Ohio St.3d 526, 2004–Ohio–6772, 820 N.E.2d 881.

 

{¶ 62} Applying this case law to the facts at hand, the majority concluded that the documentary evidence, which included the affidavits of Thomas Clarke, USF’s risk manager, unequivocally demonstrated USF’s intent to reject UM/UIM coverage.

 

{¶ 63} However, in Oblinger v. State Auto Ins. Co., 163 Ohio App.3d 266, 2005–Ohio–4695, 837 N.E.2d 815, the First District Court of Appeals analyzed the issue of rejection of UM/UIM coverage and, more importantly, analyzed the exact rejection form supplied by National Union, and determined that USF’s rejection was invalid.

 

{¶ 64} In Oblinger, the plaintiff was injured while driving a truck for his employer, USF Dugan, in December 2000. The truck was owned by USF, a parent corporation of USF Dugan, and both corporations were insured under National Union. The plaintiff sued the uninsured driver who caused the accident and filed a UM/UIM claim against his employer’s insurer, National Union. As in this case, National Union claimed that USF declined UM/UIM dp1coverage and the plaintiff argued that the UM/UIM rejection form was invalid because it did not meet the Linko requirements.

 

{¶ 65} The trial court granted summary judgment in favor of National Union. The court of appeals, however, reversed the decision and held that this UM/UIM rejection form was invalid, and that there was coverage as a matter of law. Id. In particular, the Oblinger court determined that the rejection form and the extrinsic evidence did not satisfy the Linko requirements for a valid rejection of UM/UIM coverage. More specifically, the court found that the rejection form, while it declared the availability of UM/UIM coverage and described in general terms the nature of such coverage, was utterly silent as to the premium costs of such coverage or the policy limits.

 

{¶ 66} Then, as held by the Ohio Supreme Court in Hollon, the Oblinger court looked to the affidavit of Thomas Clarke, which National Union provided to supplement the terms of the rejection form. The court quoted from Clarke’s affidavit, which stated that “Within the four corners of the * * * Policy, the Rejection Form describes the UM/UIM coverage, gives premium cost and expressly state [sic] the coverage limits.” Id. The First District determined that despite the recitation in Clarke’s affidavit that the rejection form included the Linko requirements, the form manifestly did not. Id.

 

[T]he form was completely silent as to premium cost and coverage limits. Clarke’s assertion that the form included that information did not make it so. And because Clarke did not aver that he had been informed of the Linko elements by any source other than the rejection form itself, the evidence did not support the trial court’s holding that U.S. Freightways had validly rejected UM/UIM coverage.

 

Id. at ¶ 23.

 

{¶ 67} In the present case, I agree with the First District’s conclusion that the rejection form supplied by National Union fails to satisfy the Linko requirements for rejection of UM/UIM coverage. The form does not describe the premium costs of UM/UIM coverage or the policy limits of such coverage. Thus, I am unable to determine whether USF made a meaningful rejection of the coverage. Next, I would look to the extrinsic evidence supplied by National Union. Similar to Oblinger, the affidavit supplied by National Union in the present case does not include the Linko requirements either. The affidavit does not specify the coverage premiums, it does not describe the coverage nor does it state the coverage limits in the offer. While National Union does supplement this affidavit with further evidentiary materials in an attempt to prove USF’s intent to reject UM/UIM coverage, I cannot ignore that the most basic elements of that offer are not included in those materials. As such, I cannot conclude that USF made a meaningful rejection of UM/UIM coverage.

 

{¶ 68} I am aware of this court’s decision in Bossin, and I find this case factually distinguishable. It is my opinion that, while not requiring form over substance, an entity wishing to validly reject UM/UIM coverage must make it clear that there was a meaningful offer of said coverage. This simply cannot be done without a detailing of the premium costs, a description of the coverage and the limits that coverage provides. As these elements were missing in both the rejection form and the extrinsic evidence provided by National Union, I would find that the trial court erred in deciding that there had been a valid rejection of UM/UIM coverage under the National Union policy. Thus, I would conclude that coverage arose by operation of law.

 

{¶ 69} Accordingly, I would affirm, in part, and overrule, in part, appellants’ first and second assignments of error.

 

{¶ 70} Lastly, while I cannot ignore that appellants failed to move for a continuance under Civ.R. 56(F), which would have preserved their issue of the stricken expert report for appeal, I concur in judgment only as to the majority’s resolution of the third assignment of error.

 

{¶ 71} This case involves complex issues of law, and the record reveals the parties thoroughly litigated and defended their positions. The record also reveals that the trial court, on several occasions, extended the discovery deadlines to accommodate the parties in their need to examine additional evidence. I find the trial court’s sudden rigidness to enforce discovery deadlines and outdated expert report cut-off dates to be arbitrary in light of its past practice.

 

{¶ 72} Based on the foregoing, I find it unreasonable that the trial court struck the affidavit and report of National Union’s expert, Daniel N. Sutherin. I, therefore, concur in judgment only with respect to this portion of the majority’s opinion.