An Ohio appeals court has officially blocked a group of crash victims from collecting underinsured motorist benefits because they settled their claims with the at-fault driver without their insurance company’s permission.
The Ohio Sixth District Court of Appeals on Friday upheld a lower court’s decision to throw out the lawsuit against State Farm Insurance Company. The legal battle stemmed from a July 2, 2019, traffic accident in Norwalk Township.
According to court records, Pamela Sapp struck a vehicle driven by Sabrena Hackathorn. Two passengers, Rachel Herrington and Verna Yontz, were inside Hackathorn’s vehicle during the collision. All three women suffered injuries and received medical treatment at Fisher-Titus Medical Center.
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Following the accident, Hackathorn, Herrington, and Yontz finalized independent settlement and release agreements with Sapp and her insurance carrier, Dairyland. Under those terms, Hackathorn received $25,000, Herrington received $10,000, and Yontz received $7,000.
Days after signing those papers, the plaintiffs filed a lawsuit against State Farm to pursue additional underinsured motorist benefits through a policy held by Johnny Hackathorn, Sabrena’s husband. The legal action also sought damages for vehicle property loss and loss of consortium.
State Farm pushed back, moving for summary judgment by pointing to explicit language in its policy. The contract mandated that policyholders must get written consent from State Farm before settling a claim with any legally liable party. The insurer argued that by signing away their rights to Dairyland without permission, the plaintiffs completely ruined State Farm’s ability to legally pursue the at-fault driver for reimbursement.
In March 2021, the plaintiffs’ attorney had sent a letter alerting State Farm that negotiations were underway regarding a $50,000 policy limit offer from Sapp’s insurer. State Farm replied two days later, demanding official proof of those policy limits. The court noted that the plaintiffs never replied to that request and proceeded to sign the final settlement paperwork anyway.
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The Huron County Court of Common Pleas initially ruled in favor of State Farm on February 26, 2025. The trial judge also dismissed Johnny Hackathorn’s property damage claim, noting that the plaintiffs failed to name Sapp as a defendant in the lawsuit before the statute of limitations ran out.
The plaintiffs appealed, arguing that State Farm had an obligation to step in and assist them during the initial settlement negotiations.
Appellate Judge Thomas J. Osowik, writing for a unanimous three-judge panel, rejected that argument entirely. The court emphasized that when contract language is explicit, it must be followed as a matter of law.
Under Ohio legal precedent, an unauthorized settlement creates a legal presumption that the insurance provider suffered financial prejudice. Because the plaintiffs failed to present any evidence to counter that presumption, the appeals court ruled that State Farm was completely off the hook for the claims.
Judges Christine E. Mayle and Gene A. Zmuda concurred with the decision, ordering the plaintiffs to cover all costs associated with the appeal.
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