ADR
Assignment 2
Ashley Graham

Shaeffer, Whiting v. Grange Mutual Casualty Company
, 1981 Ohio App. LEXIS 14351
In this case Plaintiffs, an injured passenger and his mother, sought review of an order from the Franklin County Common Pleas Court (Ohio), which dismissed their personal injury action and sustained a motion for summary judgment filed by defendant liability insurance carrier.he only contractual duty of Grange to plaintiffs was to pay medical payment expenses pursuant to the terms of their insurance contract. It is conceded that all medical payment obligations were discharged. Grange's remaining duty under the insurance contract was owed to their insured, which was to defend in good faith and to pay any judgment assessed against its insured which was covered under the terms of the policy. If Grange fails to discharge its obligations to its insured, the insured has a claim against Grange for breach of contract. Plaintiffs argue that a liability insurance carrier has a duty outside the terms of its insurance contract to deal in good faith with the public, including those persons injured by the actions of its insured. There may be such a duty, but it does not create an independent cause of action that may be enforced by the injured party through a direct action against the insurance carrier.
The Superintendent of Insurance has the power to take action against an insurance company who engages in unfair acts or practices in the business of insurance. That is the remedy available in Ohio against an insurance carrier who is guilty of unfair practices contrary to the interest of the public. An injured third party is not vested with a claim directly against the tortfeasor's liability insurer who refuses, even arbitrarily, to negotiate a claim that he has against the insured. So it is seen through this case that even though the Plaintiffs believe that the carrier should negotiate the settlement in good faith, there must be a duty that creates an independent cause of action. The Insurance company however must be within the realm of the contract and cover such expenses as listed within the contract that the insured as agreed upon.
However, if it is proven that the carrier had a duty to pay Donna Driver the amount that was secured under Liability while negotiating in good faith . Then I believe this warrants an appeal.

In the 2nd case of Schneider v. Eady, 2008­Ohio­6747, P1, 2008 Ohio App. LEXIS 5655, 1, 2008 WL 5274876
(Ohio Ct. App., Lorain County Dec. 22, 2008) On appeal, the claimant argued that the trial court incorrectly granted the insurer summary judgment. Specifically, the claimant argued that she was a third­party beneficiary of the contract between the insured and the insurer and, therefore, had a valid claim against the insurer for bad faith. The appellate court concluded that the trial court correctly granted the

insurer summary judgment on the bad faith claim because the claimant was only an incidental beneficiary to the insurance contract. Because insurance was mandatory under R.C.
4509.101, a driver who obtained coverage could not be said to have intended to benefit third parties. The contract was made with the intention of benefiting the insured, not the person who was injured. Thus, because the claimant was not an intended third­party beneficiary of the contract between the insurer and the insured, she could not recover from the insurer for failing to negotiate in good faith. In addition, the appellate court declined to announce a new rule of law that recognized innocent victims of a negligent driver as third party beneficiaries of contracts between the tortfeasor and their insurance companies.An insurance company has a duty to act in good faith in settling claims and a breach of that duty will give rise to a cause of action by the insured. That duty, however, runs only from the insurer to the insured, not to third parties. A third party, therefore, generally has no cause of action for bad faith against the tortfeasor's insurance company.Because insurance is mandatory under R.C. 4509.101, a driver who obtains coverage cannot be said to have intended to benefit third parties. Even though its purpose is to ensure that persons injured in motor vehicle collisions are compensated for their injuries, R.C. 4509.101 does not transform a standard liability insurance policy into a contract for the benefit of a third person. The contract is made with the intention of benefiting the insured, not the person whom she injures.
[A] promisee must intend that a third party benefit from [a] contract in order for that third party to have enforceable rights under the contract; if the promisee has no intent to benefit a third party, then such party merely becomes an incidental beneficiary with no enforceable rights under the contract." Laverick v. Children's Hosp. Med. Ctr. of Akron Inc., 43 Ohio App. 3d
201, 204, 540 N.E.2d 305 (1988); see also Grant Thornton v. Windsor House Inc., 57 Ohio St.
3d 158, 161, 566 N.E.2d 1220 (1991) ("Only a party to a contract or an intended third­party beneficiary of a contract may bring an action on a contract in Ohio."). HN5 Because insurance is mandatory under Section 4509.101, a driver who obtains coverage cannot be said to have intended to benefit third parties. Even though its purpose is to ensure that persons injured in motor vehicle collisions are compensated for their injuries, Section
4509.101 does not transform "a standard liability insurance policy [into] a contract for the benefit of a third person." Chitlik v. Allstate Ins. Co., 34 Ohio App. 2d 193, 197, 299 N.E.2d
295 (1973). "The contract is made with the intention of benefiting the insured, not [the person] whom [s]he injures." Id. This Court, therefore, concludes that Ms. Schneider is only an incidental beneficiary to the insurance contract. The trial court correctly granted Allstate summary judgment on her bad faith claim. [P9] Ms. Schneider has also argued that this Court "should follow the growing number of jurisdictions that recognize innocent victims of a negligent driver as third party beneficiaries of contracts between the tortfeasor and their insurance companies." HN6 "[A] major change in public policy should emanate from either the General Assembly or the Supreme Court."
McDaniel v. Brandywine Mills Inc., 9th Dist. No. 11913, 1985 Ohio App. LEXIS 7658, 1985
WL 10815 at *1 (May 8, 1985). This Court declines to announce a new rule of law. Ms.
Schneider's assignment of error is overruled. However In the case of PLaintiff Donna Driver and the Defendant Vic the Victim there was not a third party involved and If Donna Driver can

prove that the insurance company was negligent in acting on good faith. Then I see no reason why she will not receive positive judgment on appeal.