Counsel for Plaintiff-Appellee Allstat E-Mail: gjonsoncr ...James F. McCarthy III (0002245) Katz, Teller, Brandt & Hild 255 East Fifth Street, Suite 2400 Cincinnati, Ohio 45202 Telephone:

IN THE SUPREME COURT OF OHIO

08-12$3.CARTWRIGHT CHIROPRACTIC, INC.,

Plaintiff Appellee,On Appeal from the ButlerCounty Court of Appeals,Twelfth Appellate District

vs.

ALLSTATE INSURANCE COMPANY,

Defendant-Appellant.

Court of AppealsCase No. CA 2007-06-143

MEMORANDUM IN SUPPORT OF JURISDICTION OFAPPELLANT, ALLSTATE INSURANCE COMPANY

John P. Lowry (0034595)Kurt J. Boehm (0076047)Boehm, Kurtz & Lowry36 East Seventh Street, Suite 1510Cincinnati, Ohio 45202T'elephone: (513) 421-2255Facsimile: (513) 421-2764E-Mai1: ilowrXgbkllawfirm.comE-Mail: kboehm e bkllawfirm.comCounsel for Plaintiff-Appellee

George D. Jonson (0027124)Montgomery, Reimie & Jonson36 East Seventh Street, Suite 2100Cincinnati, Ohio 45202Telephone: (513) 241-4722Facsimile: (513) 241-8775E-Mail: gjonsoncr^mrj.ccCounsel for Plaintiff-Appellee

James F. McCarthy III (0002245)Katz, Teller, Brandt & Hild255 East Fifth Street, Suite 2400Cincinnati, Ohio 45202Telephone: (513) 721-4532Facsimile: (513) 762-0000E-Mail: iniccarthynkatzteller.comCounsel for Plaintiff-Appellee

Daniel J. Funk (0062931)BAKER, DUBLIKAR, BECK,

WILEY & MATHEWS400 South Main StreetNorth Canton, Ohio 44720Telephone: (330) 499-6000Facsimile: (330) 499-6423E-Mail: funkgbakerfinn.comCounsel for Defendant-Appellant,Allstat

JULCt.ERK pF COURT

SUPREME COURT OF OHIO

TABLE OF CONTENTS

Paee

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

STATEMENT IN SUPPORT OF JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

STATEMENT OF THE CASE AND FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ARGUMENT IN SUPPORT OF PROPOSITIONS OF LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Proposition of Law No. 1:

AN AGREEMENT BETWEEN AN INJURED PARTY AND HIS MEDICALPROVIDER IS NOT A VALID ASSIGNMENT OF THE INJURED CLAIMANT'SLEGAL RIGHT TO SETTLEMENT PROCEEDS FROM A CLAIM AGAINST ATORTFEASOR'S INSURANCE CARRIER WHERE SUIT HAS NOT BEENINITIATED AND WHERE THE INJURED PARTY HAS NOT RIGHTS TO ANYPROCEEDS TO THE CLAIM BEFORE PURPORTING TO ASSIGN THEM ......... 5

CONCLUSION ...............................................................11

CERTIFICATE OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

APPENDIX Appendix Pa¢e

Judgment Entry, Butler County Court of Appeals (June 4, 2008) . . . . . . . . . . . . . . . . . . . . . . . . . 1

Opinion of the Butler County Court of Appeals (June 4, 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Decision of Fairfield Municipal Court, Butler County, Ohio (May 25, 2007) . . . . . . . . . . . . . . 3

i

STATEMENT IN SUPPORT OF JURISDICTION

This is a purported assignment in which Appellee, Cartwright Chiropractic, Inc.

("Cartwright"), seeks to collect from Appellant, Allstate Insurance Company, on a settlement

agreement entered into between Appellee's patient, Jennifer Miller, and Allstate Insurance Company.

The underlying settlement was not obtained through litigation and liability of the Allstate insured was

not judicially determined. Accordingly, Appellee is claiming an assignment of rights greater than

those afforded to its patient as it pertains to Appellant, Allstate Insurance Company.

The trial court denied Allstate's motion for summary judgment and granted Appellee's motion

for summary judgment, finding that a valid assignment existed between the patient and Appellee, and

ordered Allstate to pay Appellee Cartwright One Thousand Six Hundred Fifty-Three Dollars ($1,653),

plus court costs.

This appeal raises an issue that is of public or great general interest. The Court of Appeals,

Twelfth Appellate District, has significantly extended the definition of an assignment. As stated by

the Court of Appeals, First Appellate District, "an assignment is a transfer to another of all or part of

one's property in exchange for valuable consideration." The alleged assignment in the case at hand

was executed at or near the time the claimant began receiving chiropractic treatment. In addition, it

was executed before the claimant pursued legal action against the alleged tortfeasor, Appellant's

insured. Accordingly, the claimant had no right to file an action against Appellee at the time the

alleged assignment was executed. Thus, the decision of the Court of Appeals, if allowed to stand

unreviewed, pronounces that such an assignment is valid even if the cause of action did not exist at

the time the alleged assignment was executed.

1

The Court of Appeals further ruled that a valid assignment existed and, as such, the Appellce

was entitled to rights greater than those of the claimant assignor. Clearly, the claimant would not have

a viable cause of action against a third party insurance carrier until liability and damages were

determined against the insured tortfeasor and judgment rendered accordingly. Thus, the decision of

the Court of Appeals, if not reviewed by this Court, establishes a new standard of law allowing a

medical provider assignee to stand in a better position than its patient.

This Court should accept jurisdiction of this case to clarify the conflict of opinion between the

Fifth and Tenth Appellate Districts, and the First, Ninth, Eleventh and Twelfth Appellate Districts on

this issue and to enforce the proposition that a claimant has no direct cause of action against a third

party insurance carrier and, therefore, cannot transfer a right to do so by way of an alleged assignment.

Further, this is an issue of great public interest, as the courts' interest in reducing unnecessary

litigation is frustrated by the First, Ninth, Eleventh, and Twelfth Appellate Districts' position on this

matter. The appellate court declined to follow the holding of Knop Chiropractic, Inc. v. State Farm

Insurance Company (Sept. 22, 2003), Stark Appl No. 2003CA00148, 2003 Ohio 5021, 2003 Ohio

App. LEXIS 4545, and West Broad Chiropractic v. American Family Insurance (June 3, 2008),

Franklin App. No. 07AP-721, 2008-Ohio-2647, concluding that establishing this rule would force

parties to litigate rather than encourage settlement. To the contrary, if third party insurance carriers

are bound by the holding of this Court as well as the First, Ninth, and Eleventh Appellate Districts,

they will be reluctant to settle any claims that are not currently being litigated inasmuch as doing so

would expose them to payment of double damages as was the case here. This would effectively

eliminate all pre-suit settlements as doing so would subject third party insurance carriers to multiple

exposure. Based upon the foregoing, Appellant requests that this Court accept jurisdiction of this

case and resolve these conflicting and far-reaching issues of importance.

2

STATEMENT OF THE CASE AND FACTS

Jennifer Miller was involved in an automobile accident on August 15, 2005, when her car was

struck by a vehicle driven by Michael Rice, an Allstate insured. On August 18, 2005, Jennifer Miller

executed a consent to treatment in order to initiate chiropractic treatment. At the inception of her

treatment, she was induced by Cartwright to execute documents allegedly obligating Allstate Insurance

Coinpany (hereinafter "Allstate") to pay for chiropractic treatment. The alleged assignment, executed

on August 18, 2005, contains the following inaccuracies, inconsistencies, and confusion:

5. NOTICE: I DIRECT ANY INSURANCE COMPANY,ATTORNF.Y, OR OTIIER PERSON WHO HOLDS ORLATER HOLDS ANY PROCEEDS FROM MY CLAIM TOAPPLY ANY PROCEEDS FROM MY CLAIM TO MYTOTAL ACCOUNT BALANCE OUT OF THE TOTALPROCEEDS HELD IN MY BEHALF. UNLESS TIIE CLINICCONFIRMS PRIOR PAYMENT OF IT IN WRITING,"TOTAL PROCEEDS' HELD BY AN ATTORNEY FOR MYCLAIM SHALL MEAN PROCEEDS AFTER DEDUCTIONOF ATTORNEY FEES.

The aforementioned document was allegedly mailed to Allstate by Cartwright, but Allstate

never acknowledged its receipt and/or promised to make payment to Cartwiight. Instead, Allstate

settled Miller's personal injury case. At the time of the settlement, Miller did not request that Allstate

issue payment to Cartwright. Despite the fact that Miller had received the settlement funds, she failed

to pay the bill from Cartwright. Thus, it is Miller who remains liable to appellees for the unpaid bills.

At the time the alleged assignment was executed, Miller had incurred no bills at Cartwright,

and owed it nothing. Furthermore, there were no "proceeds" that could be "assigned." At most, they

purported to "assign" to Cartwright the ability to collect unknown bills for fuhire treatment from an

insurance company that might pay "proceeds" to Miller in settlement of her claim.

3

The alleged obligation of Allstate to pay the bills was not its alone. Cartwright also presumed

to take from Miller her to collect other insurance benefits also, including medical payments under her

own insurance policy. In fact, Miller and Cartwright acknowledged that Allstate might not pay bills

out of the settlement, in which case Miller remained liable for the payment:

4. I understand that this is an express contract to pay for theservices rendered by this Clinic. I agree to pay my accountbalance in full, and/or direct its payment from My Claimproceeds regardless of whether any other person or entityattempts to or fails to fully reimburse me for it. If I dispute myaccount balance or treatment rendered, I agree that any remedywill be to resolve it with a separate action from My Claim.

Id. Miller agreed that she would direct payment ofthe bills from settlement proceeds. The document

does acknowledge that a future act was required to get the bills paid.

On March 12, 2007, Allstate filed its motion for summary judgment, requesting the trial court

to dismiss appellees' claims. On March 13, 2007, Appellee filed its motion for summary judgment.

The trial court, on May 29, 2007, entered judgment denying Allstate's motion and granting Appellee's

motion for summary judgment. (See Judgment Entry of May 29, 2007). Allstate appealed this

decision to the Court of Appeals, Twelfth Appellate District, on June 8, 2007. That Court affirmed

the trial court's decision on June 4, 2008, prompting this appeal.

4

ARGUMENT IN SUPPORT OF PROPOSITIONS OF LAW

Proposition of Law No. 1:

AN AGREEMENT BETWEEN AN INJURED PARTY AND HIS MEDICALPROVIDER IS NOT A VALID ASSIGNMENT AGAINST AN ALLEGED TORT-FEASOR'S INSURANCE CARRIER WHERE SUIT HAS NOT BEEN INITIATEDAND WHERE THE INJURED PARTY HAS NO RIGHT TO ANY PROCEEDSBEFORE PURPORTING TO ASSIGN 1'HEM.

In the instant case, Cartwright's patient, Jennifer Miller, had no existing right to money from

Allstate at the time the alleged assignment was created. She had been in an automobile accident with

an Allstate insured, but was "owed" no money by Allstate. In order to be entitled to "proceeds" that

would be assignable, Miller had to prove liability and the existence of damages that proximately

resulted from the accident. Chitlik v. Allstate Ins. Co., 34 Ohio App. 2d at 197, 299 N.E. 2d 295. At

the time that the document was assigned, Miller may have hoped that she would eventually be paid

settlement proceeds by Allstate, but hope alone could not be the subject of a valid assignment. Simply

stated, she had nothing to assign when she signed the document, because the liability of Allstate's

insured had not been determined nor had the proximate cause or existence of any damages.

In alleging that the assignment executed by Miller is valid, the appellee is essentially arguing

that Miller is a third party beneficiary of Michael Rice's liability insurance policy. However, Ohio

courts have held that an injured party is not a third party beneficiary to a tortfeasor's insurance

contract. Gerak v. Dentice (Apr. 12,2000), Ninth Dist. No. 19767, 2000 Ohio App. LEXIS 1598, at

5, n. 3; Chitlik v. Allstate Ins. Co. (1973), 34 Ohio App.2d 193, 197,299 N.E.2d 295; Estate of Shoff

v. Estate of Zimmerman (Dec. 16, 1998), Ninth Dist. No. 19045, 1998 Ohio App. LEXIS 6100, at 7.

It is also clear under Ohio law that the injured party must sue the alleged tortfeasor first in order to

5

establish the tortfeasor's liability to the injured party. Chitlik v. Allstate Ins. Co., 34 Ohio App.2d at

197, 299 N.E.2d 295. The tortfeasor

"is the one whose wrongdoing is alleged to have caused the injury, andif the facts are found as alleged, he will be primarily liable. Further,the policy of excluding any reference to the existence of insurance inan action to deterniine liability for personal injury would becircumvented by permitting the injured person to sue the insurancecompany and could constitute a prejudicial or harmful effect againstthe insurer.

"The injured party may, of course, proceed against the insurer afterobtaining judgment against the insured under R.C. 3929.06. Suchprocedure is well recognized and established and does not prejudice theright of the injured party in any way. Even if the injured party werepermitted to sue the insurer directly he would obtain little advantagesince the same elements would have to be proved as in an actionagainst the insured, namely: negligence, proximate cause and damages;and the same defenses -- contributory negligence, assumption of risk,etc., would be available to the insurer. Our holding therefore involvesno unfairness to the injured person."

Id. at 197-198, 299 N.E.2d 295. Even if the insurer settles with the injured party, the settlement is not

tantainount to an admission of liability. Fidelholtz v. Peller (1998), 81 Ohio St.3d 197, 210, 690

N.E.2d 502; Chitlik v. Allstate Ins. Co., 34 Ohio App.2d at 199, 299 N.E.2d 295, citing Hillyer v.

City of East Cleveland (1951), 155 Ohio St. 552, 99 N.E.2d 772.

Siinilarly, the document refers to the assignment of "proceeds from my claim" which did not

exist at the time of execution and were thus, not assignable. In fact, "proceeds" from the claim never

existed in the hands of Allstate. As the Ohio Supreme Court stated long ago, "Where a composition

is made between the tortfeasor and the person wronged, on the basis of a payment for a release, the

fund does not come into existence until the payment and the release are simultaneously exchanged.

Then the fund thus created is in the hands of the releasor, and the assignee may follow it there; but it

never existed in the hands of the releasee," Pennsylvania Company v. Thatcher (1908), 78 Ohio St.

6

175, 85 N.E. 55. Thus, Allstate never held "proceeds" from the claim and it could not have been

obligated to pay them to Cartwright.

In fact, Cartwright is trying, in this action, to make Allstate a guarantor or surety for Miller.

A surety ship is a contractual relation whereby one person (the surety) agrees to answer for the debt

of another, with the surety and the principal jointly liable. A surety ship agreement must be express

and it requires the clear agreement of the party sought to be bound. Shiepis Clinic of Chiropractic,

Inc. v. Stevenson (July 8, 1996), Stark App. No. 1995CA00343, 1996 Ohio App. LEXIS 3707.

In Shiepis, the defendant attorney and his clients signed a "doctor's lien" that stated as follows:

The undersigned, being attorney of record for the above patient, doeshereby agree to observe all the terins of the above and agrees towithhold such sums from any settlement, judgment or verdict as maybe necessary adequately to protect the said doctors name above.

After signing the document, the attorney settled the case and distributed the settlement proceeds to his

client without paying the doctor. The court of appeals held that the agreement in fact constituted a

surety ship agreement that could be enforced against the attorney. The obligation of the attorney

clearly would not have existed if he had not expressly signed the agreement.

A similar result as reached in Hsu v. Parker (1996), 116 Ohio App. 3d 629, 688 N.E. 2d 1099,

albeit under an assignment analysis. In Hsu, the plaintiff-physician's patient signed a "Security

Agreement" granting the physician a security interest in his pending personal injury action. The

docurnent also authorized the patient's attorney to pay the medical bills from any settlement and the

agreement was expressly aclcnowledged by the attorney. On these facts, the court held that the

attorney could be held liable for payment of the physician's fee.

7

Allstate did not in any way assume responsibility as the surety or guarantor for Miller. To do

so would have required Allstate to expressly accept responsibility to pay Cartwright. Without this

agreement by Allstate, the company cannot be held directly liable to Cartwright in this action.

The Fifth District Court of Appeals has recently confiimed this analysis in the case of Knop

Chiropractic. Inc. v. State Farm Insurance Company (Sept. 22, 2003), Stark App. No. 2003CA0o 148,

2003-Ohio-5021, 2003 Ohio App. LEXIS 4545. In short, the court held that State Farm clearly was

not in privity with the chiropractic clinic because of an agreement executed by its patient. Moreover,

the court held that the assignment was not founded on a right in being inasmuch as the patient had not

yet pursued legal action against the alleged tortfeasor, State Farm's insured, nieaning that thc patient

had not right to file an action against State Farm at that time.

In addifion, the Tenth District Court of Appeals recently confirmed this reasoning in the case

of West Broad Chiropractic v. American Family Insurance (June 3, 2008), Franklin App. No. 07AP-

721, 2008-Ohio-2647. The Court specifically held that until the injured party obtains a judgment

against the tortfeasor, the injury party has no right to recovery lrom the tortfeasor's insurer.

Certainly an insured can assign proceeds of a civil action before that action has been

commenced, where the insured is entitled to be paid insurance benefits. However, in the present case,

Cartwright's patient, Miller, is not Allstate's insured, nor was she entitled to any benefits from the

insurance policy issued by Allstate to its insured.

An injured party cannot directly sue the alleged tortfeasor's insurer absent a final judgment,

and therefore, cannot assign proceeds that the insurer might pay on the alleged tortfeasor's behalf.

Moreover, an injured party caunot assign the right to do so to her medical provider.

Even if Miller could have assigned her proceeds from a lawsuit, the specific assignment she

executed is invalid. It is clear that a valid assignment can exist at law. "Money due and to become

8

due under an existing contract is subject to assignment, which may attach to each installment as it

becomes due and payable to the assignor." The General Excavator Co., v. Judkins (1934), 128 Ohio

St. 160, paragraph one of the syllabus, 190 N.E. 389. However, an enforceable assignment requires

the existence of some fund or propcrty that is transferred to another for valuable consideration. Hsu

v. Parker, 116 Ohio App. 3d 629, citing Christmas Estate v. Griswold (1858), 8 Ohio St. 558, 563-564,

1858 Ohio LEXUS 125; Black's Law Dictionary (6'h Ed. 1990) 119. A future obligation that

constitutes a "mere expectancy or possibility" cannot be assigned. 6 Ohio Jur. 3d, Assignments, § 7.

While no specific words are required to create an assignment, any ambiguity will be construed against

the party who prepared it. Hsu v. Parker, 116 Ohio App. 3d 629, 688 N.E. 2d 1099.

The assignment at issue in this case was executed by Miller on August 18, 2005. Cartwright

claims that the document constitutes a blank check for payinent of its bills, whether or not they were

reasonable and necessary or related to the accident. Significantly, the document imposes no obligation

on Allstate to make payment to Cartwright. At the time they signed this document, Miller had

incurred no bills from Cartwright and owed it nothing. Furthermore, there were no "proceeds" that

could be assigned.

It is undisputed that Allstate never acknowledged the validity of the assigmnent nor did it

promise to make payment to Cartwright. Instead, Allstate settled Miller's personal injury case with

them by payment of One Thousand Six Hundred Fifty-Three Dollars ($1,653). At the time of the

settlement, Miller did not request that Allstate issue payment to Cartwright. After she received the

settlement funds, Miller failed to pay there bill from Cartwright, despite the fact that she had received

the settlement funds.

It is undisputed that Miller did not bring a lawsuit against the alleged tortfeasor, Allstate's

insured. No liability was established on the part of Allstate's insured and no evidence of damages was

9

established against Allstate's insured. Accordingly, Miller had no riglrt to file a complaint directly

against a third pai-ty insurance carrier without first establishing liability, proximate cause, and dainages

against the alleged tortfeasor, Allstate's insured. Thus, it logically follows that they cannot assign a

right to do so to their chiropractor, circumventing the existing law in this state as expressed in Chitlik

v. Allstate Ins. Co., supra.

10

CONCLUSION

The appellate court declined to follow the Knon and West Broad Chiropractic courts for public

policy reasons concluding that establishing the rule outlined in Knop and West Broad Chiropractic

would force parties to litigate rather than encourage settlement. To the contrary, if third party

insurance carriers are bound by the holding of the First, Ninth, Eleventh and Twelfth Appellate

Districts, they will be reluctant, to settle any claims that are not in suit inasmuch as doing so would

expose them to payment of double damages as was the case here. This would effectively eliminate

all pre-suit settlements as doing so would subject third party insurance carriers to multiple exposure.

Therefore, Appellant respectfully requests that this Court accept jurisdiction of this case and resolve

these conflicting and far-reaching issues of public and great general interest.

Daniel J. Funk (0062931)Baker, Dublikar, Beck, Wiley & Mathews400 South Main StreetNorth Canton, Ohio 44720Telephone: (330) 499-6000Facsimile: (330) 499-6423E-Mail: funkcr^bakerfirm.comCounsel for Defendant-Appellant,Allstate Insurance Company

11

CERTIFICATE OF SERVICE

A copy of this Memorandum in Support of Jurisdiction was served by ordinary U.S. mail this

^ day of June 2008, to the following:

John P. Lowry, Esq.Kurt J. Boehm, Esq.Boehm, Kurtz & Lowry36 East Seventh Street, Suite 1510Cincinnati, Ohio 45202Counsel for Plaintiff/Appellee

James F. McCarthy III, Esq.Katz, Teller, Brandt & Hild255 East Fifth Street, Suite 2400Cincinnati, Ohio 45202Counsel for Plaintiff/Appellee

George D. Jonson, Esq.Montgomery, Rennie & Jonson36 East Seventh Street, Suite 2100Cincinnati, Ohio 45202Counsel for Plaintiff/Appellee

Daniel J. Funk (0062931)BAKER, DUBLIKAR, BECK,

WILEY & MATHEWS

12

IN THE COURT OF APPEALSh J L. -n

TWELFTH APPELLATE DISTRICT O ^ OHÎO4 ^Î 2 1 i, O

BUTLER COUNTY c:.r=,i:r,f,:L.:r:'`„'.

CARTWRIGHT CHIROPRACTIC,

Plaintiff-Appellee, CASE NO. CA2007-06-143

JUDGMENT ENTRY-vs-

ALLSTATE INSURANCE CO.,


The assignment of error properly before this court having been ruled upon, it isthe order of this court that the judgment or final order appealed from be, and the samehereby is, affirmed.

It is further ordered that a mandate be sent to the Fairfield Municipal Court forexecution upon this judgment and that a certified copy of this Judgment Entry shallconstitute the mandate pursuant to App.R. 27.

Costs to be taxed in compliance OtlÂpp.R. 24.

IN THE COURT OF APPEALS

TWELFTH APPELLATE DISTRICT OF OHIOZO^B J;t^ _ 4 Pr, 2: L. p

BUTLER COUNTY



JUDGMENT ENTRY- vs -



The-assignment of error properly before this court having been ruled upon, it isthe order of this court that the judgment or final order appealed from be, and the samehereby is, affirmed.

It is further ordered that a mandate be sent to the Fairfield Municipal Court forexecution upon this judgment and that a certified copy of this Judgment Entry shalfconstitute the mandate pursuant to App.R. 27.

Costs to be taxed in compliance ^Âpp.R. 24.

IN THE COURT OF APPEALS

TWELFTH APPELLATE DISTRICT OF OHIO

BUTLER COUNTY



- vs -



OPINION6/2/2008

CIVIL APPEAL FROM FAIRFIELD MUNICIPAL COURTCase No. 2006-CVF-981

Boehm, Kurtz & Lowry, Kurt J. Boehm, John P. Lowry, 36 East Seventh Street, Suite 1510,Cincinnati, OH 45202, for plaintiff-appellee

Montgomery, Rennie & Jonson, George D. Jonson, 36 East Seventh Street, Suite 2100,Cincinnati, OH 45202, for plaintiff-appellee

Katz, Teller, Brant & Hild, James F. McCarthy, III, 255 East Fifth Street, Suite 2400,Cincinnati, OH 45202, for plaintiff-appellee

Baker, Dublikar, Beck, Wiley & Mathews, Daniel J. Funk, 400 South Main Street, NorthCanton, OH 44720, for defendant-appellant

POWELL, J.

{11} Defendant-appellant, Allstate Insurance, appeals a decision granting summary

judgment in favor of plaintiff-appellee, Cartwright Chiropractic. This case arose out of an

Butler CA2007-06-143

automobile accident and subsequent medical treatment of the injured party at Cartwright

Chiropractic. We affirm the decision of the trial court.

{12} On August 15, 2005, Michael Rice, an Allstate insured, was involved in an

automobile accident with Jennifer Miller. Following the accident, Miller sought treatment at

Cartwright Chiropractic. At the inception of treatment, Miller executed an assignment in favor

of Cartwright to pay the portion of any future proceeds she received from the accident to

cover her chiropractic bills. The proceeds assignment stated:

{¶3} "NOTICE: I DIRECTANY INSURANCE COMPANY, ATTORNEY, OR OTHER

PERSON WHO HOLDS OR LATER HOLDS ANY PROCEEDS FROM MY CLAIM TO APPLY

ANY PROCEEDS FROM MY CLAIM TO MY TOTAL ACCOUNT BALANCE OUT OF THE

TOTAL PROCEEDS HELD IN MY BEHALF."

{¶4} Cartwright then sent a copy of the assignment to Allstate.1 Thereafter, Allstate

settled directly with Miller, paying the full amount of the settlement funds directly to her. After

failing to reimburse Cartwright for the treatment charges, Miller filed for Chapter 13 bankruptcy

in the Western Division, Southern District of Ohio. As a result, Cartwright initiated the case at

bar against Allstate for failing to honor the assignment.2 The parties separately moved for

summary judgment. The trial court granted summary judgment in favor of Cartwright and

denied Allstate's motion, ordering Allstate to pay $1,653. Allstate timely appeals, raising one

assignment of error:

{¶5} "THE TRIAL COURT ERRED IN DENYING APPELLANT'S MOTION FOR

1. Allstate disputes its receipt and notice of the assignment, claiming that "Allstate never acknowledged its receiptnor promised to make payment to Cartwright." However, Cartwright has submitted a certified return receipt forthis document signed by "George Athinson" on behalf of Allstate on September 18, 2005.

2. Cartwright has submitted evidence demonstrating that Allstate has honored identical or virtually identicalassignments as part of its business practice. Cartwright has submitted documents from Allstate acknowledgingsix separate assignments. The documents generally state that, after receiving notice of an assignment, "We willproceed accordingly and honor your client's assignment of interest at the time of settlement."

-2-


SUMMARY JUDGMENT AND BY GRANTING APPELLEE'S MOTION FOR SUMMARY

JUDGMENT."

{16} The trial court in this case granted summary judgment in favor of Cartwright

consistent with the First Appellate District's decision in Roselawn Chiropractic Center, Inc. v.

Allstate Insurance Co., 160 Ohio App.3d 297, 2005-Ohio-1327; the Ninth Appellate District's

decision Akron Square Chiropractic v. Allstate, SummitApp. No. 21710, 2004-Ohio-1988; and

the Eleventh District's decision in Gloekler v. Allstate Insurance Co., Ashtabula App. No.

2007-A-0040, 2007-Ohio-6163.

{¶7} The Roselawn and Gloeklerfacts are almost identical. In Roselawn, the injured

party, Mrs. Tate, was involved in a car accident with Helen Stanton, an Allstate insured. Id. at

¶2. Tate sought medical treatment from Roselawn Chiropractic. Id. Before receiving

treatment, Tate signed a proceeds assignment. Id. After finishing the treatment, Roselawn

forwarded notice of the assignment to Allstate along with an itemized statement of the

treatment. Id. at ¶3. Allstate ultimately settled the claim directly with Tate and paid the entire

settlement amount directly to her, rather than first paying Roselawn. Id. As a result,

Roselawn sued Allstate. Id. at ¶4.

{¶8} The court in Rose/awn held that "the document executed by Tate was a valid

assignment obligating Allstate to pay Roselawn instead of Tate for the amount of her medical

treatment." Id. at ¶9, citing Hsu v. Parker (1996), 116 Ohio App.3d 629. "Once Tate had

assigned her potential proceeds from a lawsuit to Roselawn, Allstate was obligated to honor

the assignment and pay Roselawn." Id. at ¶13.

{¶9} The First District explained the rationale for its holding finding that "the law

should encourage settlement." Id. at ¶16. "Assignments such as the one made by Tate are

common. Injured parties who incur medical costs related to an injury for which another party

may be liable often assign the right to potential proceeds to a treating physician. Manytimes

-3-


an assignment is the only way the doctor can secure payment. And assignments are often

signed prior to the making of a formal claim. We see no reason to force a person to file a

lawsuit before he or she can assign the right to potential proceeds from a claim. Allowing the

creation of a valid assignment in such a situation gives some assurance to medical-care

providers that they will eventually be compensated. This fits with one of the purposes of

assignments -to encourage the assignee to trust that an assignor who may not have cash in

hand will be able to cover his or her debts." Id. at ¶19 and ¶20.

{¶10} Recently, the Eleventh District issued a decision on substantially similar facts

adopting the First District's view. Gloekler at ¶26. The court reasoned, "[the injured party]

specifically instructed Allstate to pay Gloekler pursuant to the assignment agreement. At that

time, Allstate had a duty to pay Gloekler directly prior to paying any additional proceeds to [the

injured party]." Id.

{711} In its sole assignment of error, Allstate argues the trial court erred in granting

summaryjudgment to Cartwright, presenting two issues for review. Allstate's first argument is

based on R.C. 3929.06(B), also referred to as the "direct action rule." R.C. 3929.06(B)

prohibits an injured party from directly filing a civil action against an insurance company until

30 days after liability is established for the insured tortfeasor and the insurance company has

failed to pay the judgment. Allstate claims that R.C. 3929.06(B) prevents Miller from

executing an assignment to Cartwright since no liability had been established for Michael

Rice, Allstate's insured, and, as a result, Miller had no existing right to money from Allstate.

Allstate claims that since Miller could not first directly sue Allstate, she had no existing rightto

money from Allstate and could not assign proceeds of her potential claim to Cartwright.

{¶12} Secondly, Allstate argues that the assignment itself is invalid under a similar

rationale. Specifically, Allstate claims that "an enforceable assignment requires the existence

of some fund or property" and that a "future obligation that constitutes a'mere expectancy or

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possibility' cannot be assigned."

{¶13} In regard to Allstate's first issue for review, the First District in Roselawn

addressed this same argument. The court stated that "without any legal action, Allstate

agreed to pay Tate over $4,000. But if we adopted the rule urged by Allstate, unless Tate had

sued Stanton and Allstate to establish liability, the assignment Tate executed directing Allstate

to pay Roselawn was invalid. This makes no sense." Id. at ¶17. Relying on the Ohio

Supreme Court's decision in First Bank of Marietta v. Roslovic & Partners, Inc., 86 Ohio St.3d

116, 1999-Ohio-89, the court noted "that an assignmentwas valid and that the account debtor

had become obligated to pay the assignee once the account debtor had received proper

notice of the assignment," which "preserved the goals of commercial stability and reliability."

Id. at ¶18, citing First Bank of Marietta at 118-119. "The same principle is applicable here."

Id. at ¶19.

{114} In the recent decision of Akron Square Chiropractic v. Creps, the Ninth District

Court of Appeals addressed the same arguments posed by Allstate under almost identical

facts to the case at bar.

{¶15} In Ohio, "Generally, all rights, ad rem and in re, vested or contingent,

possibilities coupled with an interest, and claims growing out of and adhering to property, both

from contract and tort, may be assigned." 6 Ohio Jurisprudence 3d (2006) 50, Assignments,

Section 5. Moreover, an expectancy or possibility is assignable unless it is "naked or

remote.i3 Id. at Sections 7 and 18. Such assignments are equitable assignments. Id. A

3. In support of its contention, Allstate cites 6 Ohio Jurisprudence 3d (2006) 57, Assignments, Section 7, claimingthat a "mere expectancy or possibility cannot be assigned." That section does not apply for that proposition oflaw. The full citation Allstate paraphrases is that "An assignment of a debt expected to arise in the future out of acontract existing at the time of the assignment is distinguished from the assignment of a contemplated debtbefore execution of the agreement by which it is to be created; applying the rule of law that an expectancy orpossibility is contemplated debt is not assignable at law before execution of the agreement, although such debtmay be assignable in equity." (emphasis added). Allstate inserts the word "mere" into this section and claimsthat an expectancy or possibility is never assignable. This is incorrect. The section confirms the historicaldifference between an assignment enforced in law and an assignment enforced in equity. Further, this section

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"present existing right, to take effect in the future on contingency, may be assigned." Id. at

Section 18. However, a mere "naked or remote" possibility cannot be assigned because an

assignment must be founded on a right in being. Id.

{¶16} Miller's cause of action existed at the time the assignment was executed; the

date of the accident. In re Petry (N.D. Ohio, 1986), 66 B.R. 61, 63; See also Fiorentino v.

Lightning Rod Mut. Ins., Co. (1996), 114 Ohio App.3d 188. Moreover, while the exact amount

of the recovery was uncertain, the claim and the source were clear. Specifically, Miller knew

the proceeds that were being assigned were from her claim against Rice following the

accident and the source of the proceeds would be Rice's insurance company, Allstate.

Allowing injured persons to assign potential future insurance proceeds "promotes timely

medical treatment for injured persons otherwise unable to pay, and it avoids needless

litigation." Akron Square Chiropractic v. Creps, 2004-Ohio-1988 at fn. 2.

{¶17} Further, Allstate attempts to argue that because Rice's liability had not been

established, Miller had nothing to assign, and since R.C. 3929.06(B) does not allow Miller to

directly sue Allstate, it was uncertain that she would be receiving payment from Allstate.

Under Allstate's rationale, R.C. 3929.06 would effectively preclude Miller from executing the

assignment with Cartwright until Rice is found liable for the accident following a trial (or at the

very least, Miller filing suit against Rice before executing the assignment).

{¶18} As examined by the Ninth Appellate District, this is not a proper reading of the

statute. R.C. 3929.06 merely operates to "provide a judgment creditor the opportunity to

assert a claim for insurance money, if the debtor was insured at the time of the loss." Salem

v. Worfman (August 30, 1978), Summit App. No. 8769,'2. R.C. 3929.06 does not impact "an

applies to contractual assignments, specifically arising out of a contract existing prior to the execution of theassignment. The assignment in this case was not a contractual assignment. Rather, the relationship betweenMiller and Allstate, and the settlement, arose out of an existing/potential tort claim, not a contract. Further,Alistate's proposition of law is misleading because expectancies or possibilities are assignable as long as they arenot "naked or remote."

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injured party's right to assign potential or prospective proceeds from claims not yet filed."

Akron Square Chiropractic v. Creps, 2004-Ohio-1988 at ¶10. Furthermore, the statute makes

no prohibitions or even mentions any applicability to assignments. Id.

{¶19} Due to Ohio assignment law, a prerequisite liability determination is unnecessary

as prospective proceeds and claims may be assigned as long as they are not "naked or

remote." Furthermore, R.C. 3929.06 is equally inapplicable because Allstate entered into a

settlement in this case and Miller never had to file suit against Rice to even determine liability.

Allstate's argument does not take into account that this case is not a matter of establishing

liability, this is a matter involving settlement. Liability is not an issue of this case, nor does

liability need to be established. Allstate entered into a settlement with Miller to extinguish any

potential claim she had against its insured, and Allstate as the insurer. The statutory section

Allstate cites is only relevant if a lawsuit is necessary to establish liability, and even then it

does not preclude a lawsuit against Allstate, it simply requires the lawsuit against Allstate be

delayed.

{120} Finally, R.C. 3929.06(A)(1) provides further certainty that Miller could recover

from Allstate. R.C. 3929.06 does not extinguish or prevent Miller from suing Allstate. Rather,

R.C. 3929.06(A)(1) allows an injured party to sue an insurance company 30 days after the

insured is found liable in a trial, requiring the insurance company to satisfy the judgment.

{121} In First Bank of Marietta v. Roslovic & Partners, Inc., the Ohio Supreme Court

held that an assignment was valid and that the account debtor had become obligated to pay

the assignee once the account debtor had received notice of the assignment. The court's

holding "preserves the goals of commercial stability and reliability. Lenders are willing to enter

into riskier deals if a good assignment is in place that creates solid incentives for an account

debtor to comply with its terms." 86 Ohio St.3d at 120. The same principle is applicable here.

"Allowing creation of a valid assignment in such a situation gives some assurance to medical-

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care providers that they will eventually be compensated. This fits with one of the purposes of

assignments-to encourage the assignee to trust that an assignor who may not have cash in

hand will be able to cover his or her debts." Roselawn, 2005-Ohio-1327 at ¶20.

{¶22} Allstate's sole assignment of error is overruled.

{¶23} Judgment affirmed.

YOUNG, P.J. and WALSH, J., concur.

This opinion or decision is subject to further editing by the Supreme Court ofOhio's Reporter of Decisions. Parties interested in viewing the final reported

version are advised to visit the Ohio Supreme Court's web site at:http://www.sconet.state.oh.us/ROD/documents/. Final versions of decisions

are also available on the Twelfth District's web site at:http://www.twelfth.courts.state.oh.us/search.asp

IN THE FAIRFIELD MUNICIPAL COURTBUTLER COUNTY, OHIO

CIVIL DIVISION

Cartwright Chiropractic, Inc. Case No. 2006-CVF-981

Plaintiff, . Judge Joyce A. CampbellV.

Allstate Insurance

Defendant.: ENTRY

This matter came before the Court upon submission of cross motions for summary

judgment filed by the parties. Plaintiff filed a memorandum in opposition to Defendant's

motion for summary judgment.

The Court, having reviewed the briefs of the parties, having reviewed the exhibits

submitted, and having carefully considered the applicable authority, hereby orders that Plaintiff

Cartwright Chiropractic, Inc., be granted judgment against the Defendant Allstate Insurance

Company in the amount of $1,653.00 and costs.

SO ORDERED. ENTER

CERTIFICATE OF SERVICE

The Clerk certifies that the foregoing Decision and Entry was served upon all parties ofrecord on the 2q day of May, 2007 by ordinary U.S. mail.

Deputy Clerk

Documents

Counsel for Plaintiff-Appellee Allstat E-Mail: gjonsoncr ...James F. McCarthy III (0002245) Katz, Teller, Brandt & Hild 255 East Fifth Street, Suite 2400 Cincinnati, Ohio 45202 Telephone: