PER POLICY PREMIUM WILL DEFEAT STACKING, WITH PROPER ADVICE AND GIVING INSURED OPTION TO BUY INCREASED COVERAGE
Scott v. Cimarron Insurance Co., Inc.1 holds that an insurance company may deny UM stacking, where it charges a per policy, rather than a per vehicle, premium, provided the insurance company has clearly advised the insured that the per policy premium will result in a denial of stacking and offered the insured the opportunity to buy increased limits.
Scott insured four vehicles with Cimarron. Cimarron charged a single premium per policy, not a separate premium per vehicle insured. Cimarron sent Scott an explanatory brochure which clearly revealed this.
Scott was killed by an uninsured motorist. His widow sued to stack the coverage. The federal court certified to the Oklahoma Supreme Court whether, under these circumstances, Scott could stack the coverage. The Supreme Court answered that he could not.
The basis for stacking is the charging of multiple premiums. Since a single premium was charged, stacking was not required.
The Court notes (in footnotes 2 and 3) that it is important that Scott was clearly advised that the effect of the single premium would be to deny stacking and that he was given the option of selecting coverage which could have been stacked.
UM CARRIER WAIVES OBJECTION TO SETTLEMENT BY DENYING COVERAGE
Sexton v. Continental Cas. Co.2 holds that a car insurance company waives its right to deny uninsured motorist (UM) coverage by denying UM coverage.
A group of people rented a car from Avis. Continental wrote $100,000/300,000 liability limits on the car. The rental occurred before Moon v. Guarantee Insurance Co.,3 which held the car renter (not the rental company) must reject UM coverage, else the policy will provide UM. The car rental company had rejected coverage, but the renters were not offered the coverage.
One of the permitted drivers had an accident (which was apparently her fault), injuring some of the other renters, a passenger in the car. The injured passengers agreed among themselves to a distribution of the policy proceeds from both the liability and UM coverage on the vehicle.
Continental denied UM coverage, but paid one of the passengers, Sexton, $97,250 liability coverage. Sexton then sued Continental in federal court for the UM. Continental defended on the ground that Sexton had given up any right to UM coverage by releasing the driver and Avis and taking the liability payment. This would be the result under Porter v. MFA Mut. Ins. Co.4 Under that case, the insured who executed a release has destroyed the UM insurer’s subrogation and may not recover UM.
However, Sexton contended Continental was estopped to rely on the release and destruction of subrogation, since it had denied coverage. The federal court (Judge Brett, in the Northern District), certified to the Oklahoma Supreme Court the question:
Whether an insurer’s prior denial of the insured’s uninsured
motorist coverage claim operates to estop that insurer from later
invoking the Porter doctrine’s protection against the destruction
of its subrogation rights.
The Oklahoma Supreme Court, in a virtually unanimous opinion by Justice Summers, answered that the insurer is estopped. The Court noted that it would be particularly inappropriate for Continental, whose lawyer, acting on behalf of Continental’s insured, Avis, secured the release, to be able to assert that the release protected Continental from liability. However, the Court carefully did not base its decision on that narrow fact circumstance. The Court said:
The fact. . .that the UM carrier and the liability carrier were one
and the same company here is not dispositive. Neither is the
fact that the UM carrier’s attorney prepared the release. The
certified question is broader, and in our opinion, is deserving of
The Court noted that it had twice previously declined to answer this precise question, finding it not properly presented by the record. Uptegraft v. Home Ins. Co.5 was another question certified from federal court. The federal court did not certify that question.
In Frey v. Independence Fire & Cas Co.6 the trial court record did not include any material to support a contention that the insurer had denied coverage. The Supreme Court noted the question, but declined to decide it.
The Supreme Court answers the question here straightforwardly:
An insurer may not complain of its lack of consent to settlement
and the attendant loss of subrogation rights when the
settlement comes after the insurer denied coverage under the
Under this decision, it is clear that a settlement with the tort-feasor will not bar a UM recovery when the insurer has completely denied coverage. The effect is less clear when the insurer has not denied coverage, but has refused to pay, based on a claim the tort-feasor is not liable or that the liability payment adequately compensates the insured.
Even less clear is whether the Court will find waiver when the UM insurer has made an offer, but the offer is adequate: It says:
. . . when an insurer completely denies a claim for uninsured
motorist (UM) coverage by its insured the insurer is estopped
from later invoking the defense of loss of subrogation rights.
This language would seem to indicate a complete denial will give rise to the estoppel. An inadequate offer may not. All the Justices except Opala and Simmons concurred. Those two concurred in result, without separate opinion.
UM POLICY DEFINITION EXCLUDING RELATIVE WHO OWNS CAR FROM COVERAGE IS VALID
Shepard v. Farmers7 holds that a definition of an insured household member to exclude one who owns an automobile is valid and does not violate public policy under 36 O.S. 1981 §3636.
Few facts are given in this opinion. The United States District Court for the Western District of Oklahoma certified to the Supreme Court this question:
Is a clause in a contract of automobile insurance which denies
coverage for a relative of the insured living in the same
household if such relative or his/her spouse owns an automobile
void as unconscionable or against the public policy expressed in
Oklahoma’s Uninsured Motorist Act, 36 O.S. 1981 §3636?
The Oklahoma Supreme Court holds, in an opinion by Justice Barnes, that such a provision is valid and does not violate public policy. Section 3636 does not specify who must be “insured” under the policy. This is a matter of contract between the parties.
Further, the Court assumes that one owning his own car will have access to uninsured motorist coverage on that car.
INSURANCE COMPANY HAS NO DUTY TO MAKE EXPLANATORY UM COVERAGE OFFER
Silver v. Slusher and Farmers & Merchants Insurance Co.8 holds that an insurance company has no obligation to make a sufficiently explanatory offer of UM coverage to enable the insured to make a knowing decision to accept or reject the coverage.
Silver rejected uninsured motorist coverage. He testified his agent erroneously informed him the UM coverage would only cover property damage. When Silver’s daughter was killed by an uninsured motorist, he sued Farmers and Merchants. The trial court sustained the insurance company’s Motion for Summary Judgment. The Supreme Court affirmed.
The insurance company has no duty to make an explanatory offer of UM coverage, in order to obtain a valid rejection. Even a false explanation will not invalidate the rejection.
[Editor’s note: This is a strange case. While the opinion insists it does not reverse Hicks v. State Farm,9 it does. Hicks had held (as do all other cases addressing the issue under similar statutes in the country) that the insurance company has the duty to make an offer sufficient to enable the insured to make a knowing or intelligent decision to accept or reject the coverage. The Court of Appeals in the present case relied on Hicks in reversing the trial court.
The Petition for Rehearing in the present case pointed out that the only cases cited in support of the Court’s holding had been reversed or held the opposite of the holding in the present case. On rehearing, the Supreme Court took out the overruled cases but retained the same holding. Silver is legislatively overruled by the 1990 amendment to 36 O.S. §3636, which requires an explanatory offer, on a form specified in the statute.]
UM LIMITS ARE THOSE STATED IN POLICY WHERE NO REJECTION TAKEN OF UM LIMITS EQUAL TO HIGHER LIABILITY LIMITS
Skinner v. John Deere Ins. Co.10 holds that the UM limits stated in the policy control where no rejection was taken of UM limits in the amount of the higher liability limits; and that the portions of the claim file compiled after the petition is filed are not discoverable.
John Deere Insurance Company (John Deere) issued an automobile liability policy to Larry Spencer Chevrolet, a dealership. The policy had stated UM limits of $20,000 and a $500,000 liability limit. In December, 1993, Larry Spencer’s wife, Debbie Spencer, was driving a vehicle owned by the dealership when a collision occurred, injuring Debbie Spencer and her three passengers. Kristie Skinner, one of the passengers, and pregnant at the time, was severely injured.
John Deere was uncertain as to the amount of UM coverage because no written rejection was taken. In 1994, it sought a legal opinion on that issue and was advised that the higher $500,000 limit would be imputed to the policy. The UM claims exceeded $500,000 and the claimants could not agree on how to split the proceeds. Sometime before November 1994, John Deere offered to settle all the claims for $500,000 in exchange for a general waiver of liability. The claimants still could not agree on how to divide the money and Skinner refused to sign a general waiver.
On November 14, 1994, Skinner filed a bad faith action against John Deere for unreasonable delay in paying the UM claim. The next day, John Deere filed a declaratory judgment and interpleader action in federal court. All the claimants except Skinner settled their claims for $100,000 and agreed on how to divide the settlement.
The federal court ruled that $500,000 UM coverage would be imputed to the policy because John Deere failed to take a written rejection of UM in the amount of the liability, relying on Perkins v. Hartford.11 Skinner settled for $400,000 ($500,000 less the $100,000 paid to the other claimants) pending the appeal of the federal court decision, reserving the bad faith claim.
Shortly after Skinner settled the federal court claims, the Oklahoma Supreme Court decided May v. National Mutual Ins. Co.,12 which overruled Perkins and held that an insurance company’s failure to obtain a written rejection of UM coverage equal to the liability limit results in an imputed UM limit at the statutory $10,000/$20,000 minimum.
John Deere filed a motion for summary judgment, which the trial court ultimately granted. In the interim, Skinner and John Deere argued over which documents in John Deere’s file were discoverable. The trial court ruled that none of the documents Skinner requested that were generated after filing the petition were relevant to the bad faith claim and were, therefore, not discoverable. Skinner sought a writ of mandamus. Skinner responded to John Deere’s motion for summary judgment. The Supreme Court ordered the trial court to conduct an in camera hearing. This was done and the trial court determined that the requested documents were privileged and not discoverable. Based on the Supreme Court’s ruling on the writ, Skinner moved to supplement his response to John Deere’s motion for summary judgment; the trial court denied leave to supplement. The trial court granted summary judgment to John Deere. Skinner moved for a new trial, which the trial court denied. Skinner appealed.
Skinner claimed the trial court erred in many respects: (1) granting John Deere summary judgment; (2) denying Skinner’s motion for new trial; (3) refusing to obey the Supreme Court’s order on the writ of mandamus; and (4) ruling that certain John Deere documents were privileged. Additionally, Skinner argued John Deere was obligated to follow the Court of Civil Appeals’ decision in Perkins v. Hartford,13 that failure to obtain a written rejection of UM limits equal to higher liability limits resulted in UM limits equal to the higher liability limits.
The Court of Civil Appeals held summary judgment was not proper because factual issues existed on whether John Deere acted reasonably. On John Deere’s petition for certiorari, the Supreme Court vacated the Court of Civil Appeals opinion and affirmed the trial court. The Supreme Court stated the trial court complied with the writ, did not err in granting summary judgment and denying Skinner’s motion for new trial. Furthermore, John Deere was not obligated to follow the Perkins decision because it was a Court of Civil Appeals decision and only persuasive, not precedential.
UM CARRIER LIABLE ONLY FOR AMOUNT UM COVERAGE EXCEEDS TORT-FEASOR’S AVAILABLE COVERAGE
Smith v. American Fidelity Insurance Companies,14 holds that where the tort-feasor’s liability insurance is still available to the plaintiff, the plaintiff’s UM carrier is liable only for the amount of UM coverage exceeding the tort-feasor’s available coverage.
Smith was injured in a car wreck with Brown. Brown had a $10,000 liability insurance policy. Smith had a car policy with American Fidelity providing $50,000 UM coverage. Smith’s stipulated damages were $12,000, which she demanded that American Fidelity pay under her UM policy. American Fidelity offered only $2,000, instructing Smith to get the remaining $10,000 from Brown. Smith sued American Fidelity for the full $12,000 in damages and moved for summary judgment. The trial court denied Smith summary judgment, concluded that the denial disposed of all the issues before it, and granted American Fidelity summary judgment, holding it liable only for $2,000.
Smith appealed. The Court of Civil Appeals affirmed, holding that where the tort-feasor’s liability insurance is still available to the plaintiff, the plaintiff’s UM carrier is liable only for the amount of UM coverage exceeding the tort-feasor’s available coverage. The Court relied on the Justice Summers’ dictum in Buzzard v. Farmers,15 that states a UM carrier is liable only for the amount of damages that exceed the tort-feasor’s available coverage.
The Oklahoma Supreme Court denied petition for certiorari. OTLA filed an amicus curiae brief urging the Court to grant certiorari. The bad law set out in Buzzard continues.
FULL FAITH AND CREDIT REQUIRE OKLAHOMA FOLLOW FOREIGN JUDGMENT EVEN IF IT VIOLATES OKLAHOMA PUBLIC POLICY
Smith v. Shelter Mut. Ins. Co.16 holds that the United States Constitution’s Full Faith and Credit Clause requires that an Oklahoma court follow a foreign court’s judgment, even if that result violates Oklahoma public policy.
The Arkansas decedent was killed in Oklahoma, while riding with another Arkansas motorist, when the Arkansas vehicle collided with an Oklahoma driver’s car. Oklahoma law would permit decedent’s estate to recover the decedent’s UM coverage; Arkansas law would not.
The decedent’s insurance company filed a declaratory judgment action in an Arkansas state court. While that action was pending, the estate filed suit against the insurance company in Oklahoma. The Arkansas case was concluded first, with the Arkansas court holding Arkansas law applied and the estate could not recover UM benefits.
The Oklahoma trial court entered summary judgment for the insurance company, based on the Arkansas judgment. The Oklahoma Supreme Court affirmed, in an opinion by Justice Kauger.
The existence of the Arkansas judgment distinguishes this case from Bohannan v. Allstate Ins. Co.,17 Lewis v. State Farm Mut. Auto. Ins. Co.18 and Pate v. MFA Mut. Ins. Co.,19 on which the estate relied. Those cases stand for the proposition that the Oklahoma court need not follow foreign law if that law violates Oklahoma public policy. However, that provision does not apply where a judgment has been rendered in another state. The Full Faith and Credit clause requires Oklahoma courts to honor that judgment.
COMPANY NEED NOT TELL INSURED BASIS FOR UM PREMIUM OR THAT UM DOES NOT STACK
Spears v. Glens Falls Insurance Company20 expressly overrules two Court of Civil Appeals decisions, Mid-Continent Group v. Henry21 and Kinder v. Oklahoma Farmers Union Mut. Ins. Co.,22 while holding that an insurance company may deny UM stacking under a policy charging a per-policy UM premium without making any pre-policy explanation or warning to the insured that they are buying coverage that does not stack.
Nathan Spears was hit and severely injured by an uninsured motorist while riding his motorcycle. Nathan was insured under his parents’ auto policy which listed three vehicles in the declarations and had a $100,000 UM limit. His parents, Pam and Dennis Spears, submitted a claim under the UM coverage, demanding “stacked” limits totaling $300,000.
Unknown to the Spears, however, Glens Falls charged a “single”23 UM premium and the policy had an “anti-stacking” provision limiting the UM to one $100,000 limit “regardless of the number of: ... Vehicles insured by this or any other policy . . . .” Glens Falls tendered the $100,000, but refused to stack the UM.
Nathan’s parents filed suit in Cleveland County. Glens Falls removed the case to federal court (Western District of Oklahoma) and countered for a declaration that it had fulfilled its policy obligations. Both parties moved for summary judgment on stipulated facts; the insurance company also moved to certify the legal question to the Oklahoma Supreme Court. Over the Spears’ objection, Judge Thompson certified the following question of Oklahoma law:
Is an insurer required to give its insured pre-policy notice that the subsequently issued insurance policy will limit UM/UIM coverage to a single policy limit (i.e., UM/UIM coverage will not stack) where: 1) prior to the issuance of the policy, the insured is given the statutory election form and elects coverage equal to the insured's bodily injury liability limits (the maximum amount permitted by law); 2) the insured pays a single premium for UM/UIM coverage; 3) more than one vehicle is insured under the subsequently issued policy; and 4) the language of the subsequently issued policy limits UM/UIM coverage to a single policy limit regardless of the number of vehicles insured?
The Spears cited Mid-Continent Group v. Henry24 in which the Court of Civil Appeals held that an insurance company wishing to deny stacking when issuing a multiple vehicle policy must inform its insured, before issuing the policy, that it charges but a “single” premium and that the UM will not stack. Kinder v. Oklahoma Farmers Union Mut. Ins. Co.,25 also relied upon by the Spears, reflects a similar understanding of Oklahoma law. There, the Court of Civil Appeals remanded for a determination of whether an insured had been properly informed that the UM was based on a single premium and thus did not stack.
The Spears observed that both Mid-Continent and Kinder relied on Withrow v. Pickard,26 in which our Supreme Court said, in orbiter dictum:
We think that a clause limiting the liability of an insurer to single uninsured motorist coverage would be void and unenforceable as against public policy if the contract did not clearly show that it was the insured’s intent to agree to such a limitation.
Mid-Continent interpreted the above language to mean that the insured’s “intent” is not gleaned from the anti-stacking language in the policy, but rather, revealed by the insured’s acceptance of the policy after having been informed that the UM would not stack.
Glens Falls, by contrast, relied on Silver v. Slusher27 and Cofer v. Morton.28 Silver holds that an insurance company need not explain the benefits of UM in order to obtain a valid UM rejection. Cofer holds that when an insured is already aware that UM may be purchased with limits equal to liability limits but chooses minimum limits instead, failure on the part of the insurance company to inform the insured of the availability of the higher limits, as required under the UM statute, does not result in imputation of the higher limit by law. According to these cases, and Withrow and Scott, said Glens Falls, intent to buy non-stacked coverage is shown by the signed UM form, even if the form does not mention stacking.
In Withrow, the “insured’s intent” was revealed by an endorsement, signed by the insured, that acknowledged the insured’s awareness that a single premium was charged and that the UM did not stack. In Scott, similar evidence of the “insured’s intent” to accept non-stackable UM was found in the particular UM form used which went beyond the form found in 36 O.S. § 3636 by also explaining the single-premium basis and the resulting effect on stacking. In the Spears’ case, although never told of the single premium basis or that the UM would not stack, the Spears had signed the statutory UM form selecting UM limits matching their liability limits.
In an opinion by Justice Kauger, in which all the justices concurred, the Court rejected the Spears’ reliance on Withrow and Scott, saying “neither of [those] opinions strengthen [their] position.” The Court then agreed with Glens Falls that Silver and Cofer were dispositive.
The Court said Withrow “specifically” determined that an insurance company need not offer stackable UM; thus, by providing the statutory UM form, Glens Falls “had done all the law required.” Scott, said the Court, teaches that “without exception,” the issue of stackable coverage turns on whether a single or separate premium is charged for multiple vehicle coverage. Further, Silver holds that an insurance company has no affirmative duty to explain UM coverage in order to validate an insured’s UM rejection. Cofer teaches that an insurance company has no obligation to explain the terms of its tender or to list the advantages and disadvantages of UM coverage. Accordingly, the Court held that, “under the facts presented,”29 an insurance company need not give pre-policy notice that the UM does not stack.
The Spears Court made it clear that the pre-policy notice in Withrow and Scott, while “the better practice,” was not mandated by law. By providing the UM form, albeit one that does not mention stacking, Glens Falls satisfied its UM notification duties.
PASSENGER UM STACKING DENIED
Stanton v. American Mutual Liability Insurance Co.30 denies stacking of uninsured motorist coverage to a “Class 2" insured (one insured solely by reason of occupying an insured vehicle). This decision is based upon and follows Rogers v. Goad, et al.31
Stanton was occupying one of 379 vehicles belonging to his employer and insured by a fleet policy. The federal court certified the question whether he could stack coverage. Based on Rogers v. Goad, supra, the Supreme Court held he could not.
POLICY DEFINITION OF UM VEHICLE EXCLUDING GOVERNMENT VEHICLE VOID
State Farm Mut. Auto. Ins. Co. v. Greer32 holds that a policy definition of “uninsured motor vehicle” which excludes a government owned vehicle is void, as contrary to the UM statute.
The United States District Court for the Northern District of Oklahoma certified to the Oklahoma Supreme Court a question whether a definition of uninsured motor vehicle that excludes a vehicle owned by any government or any of its political subdivisions or agencies is void. The Oklahoma Supreme Court responded that it was, in an opinion by Justice Hodges.
The Oklahoma UM Statute, 36 O.S. §3636, defines uninsured motor vehicle. Any policy definition which deviates from this statutory definition is invalid.
BEATING IN MOTEL PARKING LOT, WHERE NO CAR IS BEING USED, DOES NOT TRIGGER UM COVERAGE
State Farm Mutual Auto. Ins. Co. v. Narvaez33 holds that beating a person with intent to use victim’s car may constitute an injury arising out of the use of a motor vehicle, but there is no causal connection between the use of the vehicle and the injury if the vehicle was not being used for a transportation purpose at the time of the injury.
Narvaez was using a pay phone in or near a hotel parking lot when an assailant beat him and stole his car. State Farm denied Narvaez’ UM claim and filed a declaratory judgment action seeking a declaration there was no UM coverage. State Farm filed a motion for summary judgment arguing that Narvaez’ injuries did not arise out of the ownership, maintenance, or use of an uninsured motor vehicle as the policy and the UM statute require.
Narvaez moved to amend his Complaint to add a bad faith claim because his UM claim was denied. Narvaez argued that the inquiry into the chain of events leading up to his injury should begin with the assailant’s intent to use his car, not the actual use of his car, citing Safeco v. Sanders34 for the proposition that whether one is an operator is determined by acts indicating an intent to operate the car.
The federal district court applied the four-part test the Oklahoma Supreme Court articulated in Safeco v. Sanders and Byus v. Mid-Century Ins. Co.,35 determined the injury was not caused by the transportation use of the vehicle, and granted State Farm summary judgment. The Court explained that beating Narvaez with intent to steal his car constituted an injury arising out of the use of a motor vehicle (the first part of the test), but there was no causal connection between the use of the car and the injury because the injury did not occur while the car was being used for a transportation purpose (the second part of the test). If the claim cannot pass all four parts of the test, UM coverage is not triggered. The court denied Narvaez’ motion to amend his complaint to allege bad faith, finding there was no bad faith because there was a legitimate coverage dispute. The case remains pending on appeal. It was argued recently in the Tenth Circuit Court of Appeals.
POLICY EXCLUDING “THE INSURED MOTOR VEHICLE” FROM DEFINITION OF “UNINSURED MOTOR VEHICLE” VOID; UM APPLIES WHERE LIABILITY COVERAGE EXCLUDED BY “NAMED INSURED” EXCLUSION; “VEHICLE FURNISHED FOR REGULAR USE” CLAUSE VOID
State Farm Mut. Auto. Ins. Co. v. Wendt36 holds that a policy excluding from the definition of “uninsured motor vehicle” the vehicle insured under the policy is void, UM coverage applied as to the driver’s negligence where liability coverage was excluded as to the injured owner-passenger by a “named insured” exclusion and that a policy provision excluding coverage while occupying a vehicle furnished for the regular use of the insured was void.
Wendt, a passenger in his own vehicle driven by his friend with no insurance, was hurt in a one-vehicle accident. He made claim under the policy covering his vehicle and his parents’ policies with State Farm, since he was a member of their household.
State Farm denied his claims contending his vehicle coverage did not apply since that policy (as to which liability coverage was excluded by “named insured” exclusion) excluded from the definition of “uninsured motor vehicle” a vehicle defined in the policy as “an insured motor vehicle.” State Farm denied coverage under his parents’ policies since his vehicle (which he was occupying) was a vehicle furnished for his regular use.
The Supreme Court held (in response to certified questions from federal court) that he was covered under his and his parents’ policies. The exclusion from the definition of “uninsured motor vehicle” of an insured vehicle was contrary to the definition of “uninsured motor vehicle” in 36 O.S. 1981 §3636. Since his liability coverage was excluded by the “named insured” exclusion, he was entitled to UM coverage on that vehicle.
The “vehicle furnished for regular use” clause was void as to UM coverage, since it was an exclusion not permitted by §3636.
BURDEN IS ON INSURER TO PROTECT ITS SUBROGATION RIGHT
Strong v. Hanover Insurance Company,37 holds that an insurer may not fail to protect its subrogation rights and then deny coverage when its insured settles with and releases the tort-feasor.
Strong’s car was rear-ended by an uninsured motorist when Strong stopped at a traffic light. The collision injured Strong and his wife.
Strong was the sole named insured on a car insurance policy with Hanover Insurance Company (Hanover) that provided $5,000 medical payments coverage and $250,000/$500,000 uninsured motorist coverage. The tort-feasor had a $100,000 liability policy limit.
Strong notified Hanover of the collision and received a series of medical payments checks that ultimately exhausted the $5,000 medical payments coverage.
Strong sued the tort-feasor for negligence in September 1998, and his attorney notified Hanover in writing in October 1998 of the lawsuit, attaching a copy of the Petition and Summons, and asserted a UM claim. Strong settled with the tort-feasor at mediation for the $100,000 liability limit and released the tort-feasor and vehicle owner. Hanover was notified beforehand of the mediation but failed to participate. Strong dismissed his lawsuit against the tort-feasor, with prejudice, in February 1999.
In November, 2000, Strong’s attorney sent Hanover a representation letter again asserting an uninsured motorist claim, stating that Strong had undergone surgery and had a pain management device implanted. Hanover requested an affidavit from the owner of the tort-feasor’s car indicating liability policy limits; names and addresses of all insurance companies involved; copies of medical reports and bills; statements from those associated with the collision; and enclosed authorizations forms for medical and wage loss information for Strong’s signature.
Strong sued Hanover when it did not pay the UM claim. Hanover answered asserting as affirmative defenses that Strong was barred from recovery because he had settled with, dismissed with prejudice, and released the tort-feasor, all of which prejudiced Hanover’s right to subrogation. Hanover moved for summary judgment alleging that its first notice of Strong’s claim was by his attorney’s November 2000 representation letter. Hanover relied on Porter v. MFA Mutual Insurance Company38 which holds that settlement with (and release of) the tort-feasor voids UM coverage.
Strong responded that he asserted his UM claim when he notified Hanover’s agent of the wreck and later notified Hanover of both the lawsuit against the tort-feasor and the mediation. The trial court (Honorable J. Michael Gassett, Tulsa County) denied Hanover summary judgment.
Upon completing discovery, Hanover renewed its motion for summary judgment, raising the issue of whether Strong had requested and was granted permission to settle with the tort-feasor. This time, the trial court granted Hanover summary judgment.
On Strong’s appeal, the Court of Civil Appeals reversed and remanded, holding that providing Hanover with a copy of the Petition and Summons and notice of the mediation schedule was ample opportunity for Hanover protect its subrogation rights against the tort-feasor.
The Court of Civil Appeals discussed the possibility of Hanover being estopped from demanding subrogation before payment of UM because of the insurance agent’s conduct. Apparently the agent urged Strong to settle with the tort-feasor for “a couple of thousand dollars and move on.” The agent had several conversations with Strong about a UM claim, one of which was heated. Strong’s testified that the agent was “quite anxious” that Strong settle with the tort-feasor.
Finally, 36 O.S. § 3636(E) provides that an insured must send written notice of a tentative settlement agreement, including documentation of pecuniary losses, copies of medical bills, and authorizations permitting the insurance company to obtain medical and wage information. The notice must be made by certified mail. The insurance company then has 60 days from receipt of the notice to substitute its payment for the tentative settlement amount. Failure to substitute payment results in the insurance company’s waiver of its subrogation right.
The COCA held that Strong complied with section 3636(E), although not strictly. Requiring strict compliance would result in a hurdle to recovery which is not the purpose of section 3636(E). The purpose of 3636(E) is to provide a speedy payment mechanism and to enable the insurance company to protect its subrogation rights.
Judge Ronald J. Stubblefield wrote the opinion, Judges Goodman and Reif (sitting by designation) concurred.
“ACCIDENTAL” vs. “INTENTIONAL” DETERMINED FROM INSURED’S VIEWPOINT; ASSAULT FOLLOWING TRAFFIC INCIDENT NOT COVERED
Stucky v. Long39 holds that whether an injury is accidental or intentional is to be determined from the viewpoint of the injured insured, not the assailant and that injuries from an assault following a traffic incident do not arise from the use of an insured vehicle. So as to be covered under UM.
The insured claimed another motorist tried to run him off the road and then chased him. The insured saw a police car and, thinking he would be protected, pulled up next to the police car and got out. The chasing motorist stopped, got out of his car and beat the insured. The UM insurer denied coverage, claiming the injury was not accidental, as the policy required, and that the injuries did not arise from the operation of the uninsured vehicle. The trial court granted the insured summary judgment.
The Court of Appeals affirmed, in an opinion by Presiding Judge Garrett. The injury was accidental, since that determination must be made from the viewpoint of the injured person, who certainly did not intend to be injured. The Court relies for this holding on the dictionary definition of “accident,” not the life insurance cases, holding to the same effect. However, the injuries were not covered, since the injuries did not arise out of the operation of the UM vehicle. There must be a causal connection between the use of the vehicle and the injury. The fact that the dispute arose out of a driving incident was not enough. The Court relies for the latter holding on Race v. Nationwide Mut. Fire Ins. Co.40
INSURED’S BREACH OF CONTRACT CLAIM AND INTENDED INSURED’S NEGLIGENCE CLAIM AGAINST AGENT ARE JURY QUESTIONS
Swickey v. Silvey Companies41 holds that whether the insurance company’s agent breached a contract with the insured and whether the agent negligently failed to list the insured’s son as a named insured are questions for the jury.
Mrs. Nelson (Nelson) bought a car liability and UM policy from Silvey Companies (Silvey) through the Insurance Resources Agency, Inc. (Agency). Nelson requested full coverage and that her son Michael Swickey be listed as a named insured because the insurance was to cover the car Nelson bought for Swickey. The car was titled in Nelson’s name; Swickey was never added to the title.
The declarations page listed only Nelson as the named insured. UM coverage applies to the named insured and any family member. The policy defined family member as a person related to the named insured by blood, marriage or adoption who is also a resident of the named insured’s household. At the time Nelson bought the policy, Swickey lived with Nelson. Swickey noticed on an amended declaration form that he was not shown as the named insured and called the Agency to make sure he was “‘the insured of the vehicle’ [sic].” The same agent that sold Nelson the policy assured Swickey he was an insured.
After Swickey moved out of Nelson’s home, Swickey’s son was struck and killed by an uninsured motorist. Swickey and Nelson sued Silvey and the Agency, asserting a claim under the UM coverage, alleging breach of contract, negligence, and fraud. Silvey denied the UM claim because neither Swickey nor his son were insureds under the policy, but ultimately settled with Nelson and Swickey for a fraction of the UM limits.
The trial court (Honorable Niles Jackson, Oklahoma County) granted Agency summary judgment. Nelson and Swickey appealed. The Court of Civil Appeals affirmed as to the fraud claim, holding there was no proof of actionable misrepresentation by the agency; reversed as to the breach of contract claim, but held the breach was as to Nelson, not Swickey, because there was no contract between Swickey and Agency; and reversed as to the negligence claim because the evidence supported an inference that Agency was negligent in failing to procure insurance listing Swickey as the named insured and failing to advise Nelson that the car she bought for Swickey had to be titled in Swickey’s name for him to be a named insured on the policy. The case was remanded to the trial court to proceed with the breach of contract and negligence claims.
Note: There was no evidence of actual fraud in Swickey. There may have been constructive fraud, however, pursuant to Gentry v. American Motorist Ins. Co.42 There, the insured asked for theft coverage. The agent wrote theft coverage but on a policy form that excluded embezzlement by a trustee. The agent did not tell the insured embezzlement would be excluded.
NO WORKERS’ COMP SUBROGATION AGAINST UM; SUIT AGAINST UM CARRIER DOES NOT REQUIRE FILING ELECTION IN WORKERS’ COMP COURT
Thrasher v. Act-Fast Labor Pool, Inc.43 holds that workers’ compensation does not attach to a UM claim and that filing suit against the UM carrier does not require the filing of an election in Workers’ Compensation Court.
The claimant was injured while riding with a fellow employee and on business. She filed a workers’ compensation claim against her employer, a suit against the uninsured tort-feasor and her fellow employee’s UM carrier. She never served the uninsured tort-feasor.
She settled the UM claim for the policy limit, executed a release releasing the UM insurance company “and all other persons,” and dismissed the case with prejudice. After the workers’ comp carrier contended she had destroyed her workers’ comp claim by suing without filing the “election” required by 85 O.S. 1981 §44, she got an order nunc pro tunc to show she was dismissing with prejudice only the UM carrier.
The Workers’ Compensation Court trial judge held for the claimant. The Court en banc vacated and held she had destroyed her workers’ comp claim. The Court of Appeals affirmed. The Supreme Court reversed, in an unanimous opinion by Justice Hodges.
The workers’ compensation carrier had no subrogation claim against the UM coverage. The purpose of the requirement to file an election is to enable the employer and workers’ compensation carrier to protect its subrogation. She did not collect anything from the tort-feasor.
INSURER AND POLICY LIMITS SHOULD NOT BE SUBMITTED TO JURY IN UNINSURED/UNDERINSURED MOTORIST CASE
Tidmore and State Farm v. Fullman44 holds that, while an underinsured motorist insurance company is a proper party to a suit between an insured and the tort-feasor, the existence and names of the liability and uninsured motorist carriers and the policy limits should not be submitted to the jury.
Plaintiff/insured sued defendant and plaintiff’s UM carrier. The parties stipulated that plaintiff had UM limits greater than defendant’s liability coverage [which under the 1976 statute, rendered defendant an “uninsured”].
At pretrial, the trial court ruled that the name of the UM insurance company together with defendant’s liability limits and plaintiff’s UM limits would be submitted to the jury. The trial court then certified for interlocutory appeal the question whether the defendant’s liability limits or the UM insurance company should be submitted to the jury. The Supreme Court, in an opinion by Justice Lavender reversed.
Such evidence of insurance coverage could only serve to prejudice the jury by advising that all or part of the judgment would be paid by insurance companies. While the UM insurance company may be joined in the suit under Keel v. MFA,45 the proper procedure is to submit the case to the jury in the name of the insured/plaintiff against the individual defendant. Following a liability and damages finding, the court may then enter judgment against the UM insurance company.
Justice Barnes concurred in part and dissented in part, without separate opinion. Justice Hodges dissented without separate opinion. Justice Doolin joined in a dissenting opinion by Justice Opala, who takes the position that certiorari should not have been granted. First, 12 O.S. 1981 §953(3) authorizes review of a certified interlocutory order only when it “affects a substantial part of the merits of the controversy.” [Emphasis by Justice Opala] This appeal deals not with the merits but with a subsidiary, evidentiary ruling. Further since this case arises under the now repealed 1976 version of the statute, the ruling will be of limited practical value since, under the expanded coverage benefits of the present (1979) version of the statute, relatively few suits will involve joinder of the underinsured motorist and the insurance company. Thus, the Court should devote their time and attention to other matters.
Justice Opala’s dissent does not disagree with the substance of the majority’s opinion but only with the correctness and wisdom of granting certiorari for the certified interlocutory appeal. Thus, none of the justices are on record as opposing the holding.
EMPLOYEE ENTITLED TO UM ON EMPLOYER’S POLICY WHEN OCCUPYING EMPLOYER’S VEHICLE; UM CARRIER LIABLE FOR PRE-JUDGMENT INTEREST
Torres v. Kansas City Fire and Marine Ins. Co.46 holds that an employee’s death while occupying the employer’s vehicle gives rise to an uninsured motorist claim against the employer’s vehicle insurer and that the UM insurer must pay pre-judgment interest.
The insured’s employee was killed while occupying a company vehicle, on which defendant insurance company had UM coverage. The trial court held the employee’s personal representative was entitled to UM coverage for the $350,000 verdict, plus $35,000 in pre-judgment interest.
The Court of Appeals affirmed and the Supreme Court affirmed the Court of Appeals. The policy provided coverage to “anyone occupying a covered auto.” The fact that the employer, not the employee, had nothing to do with whether the employee was covered. Neither did the fact that the UM insurer was precluded from subrogation against the decedent’s fellow employee, whose negligence caused the death preclude coverage.
The estate was entitled to pre-judgment interest, as an element of the damages due the estate against the tort-feasor. In this regard, this case is consistent with
Mellenberger v. Sweeney47, issued by another division of the Court of Appeals.
UM INSURED OWES GOOD FAITH DUTY TO PERMISSIVE OCCUPANT
Townsend v. State Farm Mutual Automobile Insurance Company48 holds that a UM insurer owes the same duty to deal fairly and in good faith with one insured as a permissive occupant of a vehicle as it owes to the named insured.
Townsend, insured while occupying a vehicle insured by State Farm made claim against the tort-feasor and State Farm, under his UM coverage. Contending State Farm had unreasonably refused to cooperate in reaching settlement with the tort-feasor’s liability insurer, Townsend sued State Farm on the UM policy and for bad faith.
The trial court dismissed the bad faith action, concluding State Farm had no duty to Townsend to deal fairly and in good faith with him, since he was not State Farm’s named insured, but was insured only by reason of occupying an insured vehicle. The Court of Appeals reversed, in an opinion by Judge Reif.
Under Christian v. American Home Assurance Co.,49 the UM insurance company had a duty to deal fairly and in good faith with all of its insureds, including permissive occupants. The court distinguished Allstate Insurance Co. V. Amick.50 That case held that a liability insurer had no contractual relationship with nor duty toward third-party claimants.
The court also distinguished Babcock v. Adkins.51 That case recognized a distinction between named insureds and permissive occupants. However, that distinction was only that permissive occupants were insured only under the policy covering the vehicle which they were occupying. The permissive occupant is an insured under the policy covering the vehicle which he is occupying. The insurer owes the permissive occupant the same duty it owes any insured.
FACT QUESTION WHETHER DAUGHTER HAD APPARENT AUTHORITY TO REJECT UM PRECLUDES SUMMARY JUDGMENT
Traders Ins. Co. v. Johnson52 holds that a fact question whether the named insureds’ daughter had apparent authority to reject UM coverage precluded summary judgment for the insureds and against the insurance company on a claim of imputed UM coverage.
Mr. and Mrs. Johnson had liability coverage on their vehicles and had rejected UM coverage on them. They acquired and added a vehicle. As had happened before, they sent their daughter, Amber Brown, to pay the premium and add the vehicle. She was a named insured on the earlier policies but not on the new policy they added. She signed a rejection of UM coverage, at the direction of the agent.
Mrs. Johnson was injured in a wreck, due to the fault of an uninsured motorist. The Johnsons sued their insurance company, Traders, claiming imputed UM coverage due to the failure to take a proper, written rejection. Traders moved for summary judgment, claiming the daughter had apparent authority to sign the rejection for her parents.
The trial court, Judge Tom Lucas, in Cleveland County, granted the Johnsons summary judgment, holding that the daughter had no authority to reject the coverage for them. The Court of Civil Appeals reversed, holding that there was a fact question as to whether the daughter had apparent authority and that this precluded summary judgment.
Under the version of the UM statute (36 O.S. § 3636G) which existed at the time of the added coverage, the UM carrier had the obligation to make a new offer of UM coverage and obtain a rejection or selection of coverage limits with the addition of a vehicle to the policy. (The 2009 Legislature changed that requirement so that now a new offer and rejection is not required with the addition of a vehicle to the policy.) This statutory change will make this decision less important than it might otherwise have been.
UM CLAIM SUBJECT TO FIVE-YEAR CONTRACT (NOT TORT) STATUTE OF LIMITATIONS; POLICY PROVISION SHORTENING TIME VOID
Uptegraft v. The Home Insurance Company, et al.53 holds that an uninsured motorist claim is subject to a five-year contract statute of limitation and not the two-year tort statute of limitation and that a policy provision purporting to avoid uninsured motorist coverage where the insured’s action against the tort-feasor is barred by limitation is void.
Plaintiff, insured under two UM policies, was injured in a collision. The two-year statute of limitation ran on the claim against the tort-feasor, following which the present federal court action was filed against the two UM carriers.
The Federal court certified to the Oklahoma Supreme Court the question:
Does an injured person, by failing to commence an action against
an uninsured motorist tortfeasor within the time established by 12
O.S. 1981 §95 Third, thereby discharge the injured person’s
insurer from liability upon its uninsured motorist insurance policy?
The Supreme Court answered “no,” in an opinion by Justice Opala. Further, the Court held as void a provision in one of the insurance policies:
The Company shall not be obligated to pay under this insurance
if an action against the uninsured motorist is barred by the
Statute of Limitations.
The language of the UM statute and policy that the insured must be “legally entitled to recover” does not preclude recovery under the UM policy where the tort-feasor is no longer liable because of the running of the two-year statute. The action on the UM policy is a contract action, covered by the five-year statute of limitation.
The policy provision purporting to preclude recovery where limitations have run against the tort-feasor is an impermissible restriction on recovery, contrary to 15 O.S. 1981 §21654 and the Oklahoma Constitution, Article 23, §9.55
The Court distinguishes Porter v. MFA.56 That case holds that the insured’s affirmative act of settling with the tort-feasor destroys subrogation rights and, therefore, bars recovery. The insurance company has a right under the standard UM policy to demand that the insured sue the tort-feasor within the limitations period.
NO FACT QUESTION BUT WHAT INSURED, RATHER THAN HIT-AND-RUN MOTORIST CAUSED WRECK SO INSURED NOT ENTITLED TO UM
Vincent v. Tri-State Ins. Co.57 holds that no fact question existed whether an identified, adequately insured motorist or a hit-and-run motorist caused a wreck, so that the insured could not recover UM benefits.
The insured, driving his employer’s truck, was run off the road by a blue car. He identified the particular car as one stopped at the scene when he was extricated from the wreck and sued the company which owned that car. However, during trial preparation, an eyewitness gave a statement that the car which the insured had identified as the responsible car was not at the scene until after the wreck. All agreed that the blue car which the insured identified had sufficient insurance.
In light of the statement from the eyewitness, the insured settled with the company he had sued and filed another suit against the employer’s UM carrier. The trial court granted the UM carrier summary judgment, holding as a matter of law that the uncontroverted evidence was that the insured vehicle, not the hit-and-run vehicle, had caused the wreck. The Court of Appeals affirmed, in an opinion by Judge Adams.
Judge Hansen concurred in result. She would hold that, having settled with the insured, claimed tort-feasor was estopped to claim the hit-and-run was the true tort-feasor.
This is a very fact-specific opinion. It has less to do with uninsured motorist law than with the procedural issue of how much evidence must there be before a judge may grant summary judgment.
UM, MED-PAY COVERAGE NOT APPLICABLE TO SHOOTING OUTSIDE CAR
Walker v. Farmers Ins. Co., Inc.58 holds that UM coverage does not apply when the tort-feasor vehicle is not sufficiently connected to the insured’s injury, and that med-pay coverage does not apply when the insured is shot outside his car.
Barry Walker and Wayne Enloe were neighbors harboring animosity toward each other because of a property dispute. Walker took his daughter to church and had parked in front of the church when his van was struck broadside by a pickup truck driven by Mr. Enloe’s son, Perry. The son had been following Mr. Enloe. Mr. Enloe stopped, got out of his truck, went to his son’s truck, got a gun, and shot into Walker’s van. Walker got out of his van and started running down the street. Enloe chased Walker, firing several rounds, until he hit Walker, taking him to his hands and knees. Enloe then walked to within ten feet of Walker and shot him in the head, killing him. Enloe was charged with first degree murder, but found not guilty by reason of insanity.
Enloe had no insurance. Walker had UM and med-pay coverage with Farmers. Farmers denied the coverage. The trial court granted Farmers summary judgment. The 10th Circuit Court of Appeals affirmed, in an opinion by Judge Tacha. The Court of Appeals held that UM coverage did not apply to Enloe’s actions because at the time of the shooting, Wayne Enloe was not using his car for a transportation purpose and because Enloe’s actions were a supervening cause that severed any causal connection between Enloe’s use of his truck and Walker’s death.
Walker’s medical payments coverage did not apply because Mr. Walker was not occupying his van at the time of his injury.
The Court applied the Oklahoma Supreme Court’s four-part “Safeco test”59 for determining whether uninsured motorist coverage applied to Mr. Walker’s injury.
1. Does the injury arise out of the use of the motor vehicle as contemplated by 36 O.S.A. §3636?
2. If the injury arose out of the use of the motor vehicle, was there a causal connection between the use of the vehicle and the injury?
a. Is the use of the vehicle connected to the injury, and
b. Is that use related to the transportation nature of the vehicle?
3. If the causal connection existed, did an intervening force sever the causal connection?
4. Was the insured an owner or operator of the vehicle during the commission of the wrongful act?60
If the facts establish that a car or any part of a car is the dangerous instrument that begins the chain of events leading to the injury, then the injury arises out of the use of the car. The court held that broadly applied, Wayne and Perry Enloe’s use of their trucks could have started the chain of events.
Therefore, the first step of the four-part test is met. The next step requires a connection between the transportation use of the car and the insured’s injury. Mr. Walker was shot while running down the street. Enloe was running down the street when he shot Walker. Here is where the causal connection between Enloe’s actions and Walker’s injury is broken. However, Perry Enloe was driving his truck at the time he ran into Mr. Walker’s van. According to Wayne Enloe, the wreck is the reason he shot Walker. The court could not say as a matter of law, that there was no connection between Perry Enloe’s transportation use of his truck and Walker’s injury. The third step of the test is to determine whether an intervening force severed the causal connection between Perry Enloe’s use of his truck and Mr. Walker’s injury. The court held that Wayne Enloe’s actions were an intervening force that severed Perry Enloe’s connection to Mr. Walker’s injury. Wayne Enloe’s actions were (1) independent of Perry Enloe’s actions, (2) adequate alone to result in Mr. Walker’s injury, and (3) not reasonably foreseeable to Perry Enloe (in spite of the ongoing feud between Mr. Walker and Wayne Enloe.).61
COLLATERAL SOURCE RULE APPLIES TO UM COVERAGE TO PREVENT TORT-FEASOR’S SETOFF AGAINST INSURED’S UM BENEFITS
Weatherly v. Flourney62 holds that a tort-feasor may not set-off damages owed the injured party by any amount the injured party receives from his/her own UM policy; even where the UM carrier pays its UM limit and waives subrogation, the insured is the real party in interest in suit against tort-feasor unless the insurance company pays its insured’s entire loss and retains its subrogation interest; and the injured party did not make a double recovery where he collected UM benefits in addition to the judgment against tort-feasor.
Weatherly’s wife was killed because of Flourney’s negligence. Weatherly sued Flourney. A jury awarded Weatherly $203,000 in damages. Flourney filed a post-trial motion to stay execution and to settle the journal entry, arguing that the judgment should be reduced by the $200,000 UM benefits Weatherly received from his UM carrier. The trial court (the Honorable Jane P. Wiseman, Tulsa County) denied Flourney’s motion because Flourney failed to post the required bond, and denied Flourney a credit against the judgment. Flourney appealed, arguing that the collateral source rule does not apply to UM coverage, that Weatherly was not the real party in interest (his UM carrier was), and that Weatherly received double compensation for the same tort. The Court of Appeals, Division I, affirmed the trial court.
BEFORE 1986, UM PRIMARY TO GUARANTY FUND; TORT-FEASOR PROTECTED ONLY TO LIABILITY LIMIT
Welch v. Armer63 holds that, before the 1986 Amendment to 36 O.S. §2012, an injured insured must first exhaust his own UM coverage, before recovering against the Oklahoma Property and Casualty Insurance Guaranty Fund (Guaranty Fund) and that the insolvent liability insurance company’s insured is protected against a UM subrogation claim, but only to the extent of his liability coverage with the insolvent insurer.
The tort-feasor’s liability insurer became insolvent. His UM insurer contended the Guaranty Fund must pay first, on behalf of the insolvent liability insurer. The Guaranty Fund contended 36 O.S. 1981 §2012 required that the claimant exhaust his UM coverage, before presenting the claim against the Guaranty Fund. The tort-feasor contended he was protected from a subrogation claim on the part of the UM carrier by 36 O.S. §3636E, providing that the UM insurer had no subrogation rights against the insolvent insurer’s insured, in excess of the proceeds of the insolvent liability insurer’s assets.
After the accident, 36 O.S. §2012 (an exhaustion of claims provision) was amended to provide that the subsection requiring exhaustion of claims against other coverage, before presenting claims to the Guaranty Fund, did not apply to UM coverage.
The trial court held that the Guaranty Fund’s coverage was primary and that the UM insurer had no subrogation rights against the tort-feasor. The Supreme Court affirmed in part, and reversed in part, in an opinion by Justice Doolin.
The Amendment to §2012 excluding UM coverage from the exhaustion of claims provision could not be applied retrospectively. Therefore, the injured claimant’s UM coverage must be exhausted before proceeding against the Guaranty Fund.
The insolvent insurer’s insured was protected from a UM subrogation claim, but only to the extent of his liability coverage with the insolvent insurer. This leaves the insured in no better and no worse condition than he would have been in had his insurer not become insolvent.
This case leaves unanswered the question whether another provision of §2012 that “the amount payable on a covered claim under this act shall be reduced by the amount of any recovery under such other insurance policy” gives the Guaranty Fund a credit or deduction from the total amount of the claim, the liability policy limit, or the statutory limit of the Guaranty Fund’s liability.
DEATH CLAIM GIVES RISE TO ONLY ONE “PER PERSON” LIMIT, NO MATTER HOW MANY PEOPLE SUSTAIN DAMAGE FROM THE DEATH
White v. Equity Fire & Cas. Co.64 holds that only one “per person limit is triggered by a single death, no matter how many people sustain damage from the death.
An insured under a UM policy died, due to the negligence of an uninsured motorist. Her children and her parents survived her. Under 12 O.S. 1981 §1053, each had a right to recover damages.
The insured’s survivors contended this entitled them to the “per accident” limits ($20,000 on a $10,000/20,000 policy). The insurance company contended only the “per person” limit ($10,000) was triggered, since only the one person sustained “bodily injury.” The trial court agreed and granted the insurance company summary judgment.
The Court of Appeals affirmed, in an opinion by Judge Garrett. The insured’s reliance on Gleason v. City of Oklahoma City65 was misplaced. That case, holding that multiple claims arising from a single death triggered multiple Political Subdivision Tort Claim Act limits involved different statutory language.
Here, the pertinent statute, 36 O.S. 1981 §3636, did not provide for a recovery by the survivors separate from that of the dead person. Under 12 O.S. 1981 §3636, did not provide for a recovery by the survivors separate from that of the dead person. Under 12 O.S. 1981 §1053, the survivors have only such claim as the deceased would have had if he had survived.
The policy provided that the “per person” limit applied to “all damages for bodily injury sustained by one person in any one accident.” Only one person (the decedent) sustained bodily injury, although both her parents and children sustained damage.
UM COVERAGE FOR INTENTIONAL ACTS ALLOWED
Willard v. Kelley66 holds that an injury intentionally inflicted on an insured by an uninsured motorist may be covered under UM and med-pay coverage.
The case involved the shooting of the insured, a police officer. The officer spotted Kelley, a suspected armed robber, and gave chase in his patrol car. He cornered Kelley, drew his pistol, and exited his police car to confront and apprehend him.
Kelley, seated in his car, with the engine running and the car in gear, opened fire on the officer. He shot the officer several times, then pushed the police car out of the way with his car and fled.
Willard sought to recover his personal automobile policy’s UM and medical payments coverage with Prudential. The insurer declined to pay, contending: (1) the injuries were not “accidental,” as the policy required, and (2) the injuries did not arise out of the use of the vehicle, but rather arose out of the use of the gun. Prudential argued the assault with the gun constituted an intervening cause, precluding the vehicle’s involvement from being the cause of the injury.
The trial court granted the insured summary judgment. The Court of Appeals affirmed. The Supreme Court reversed, but remanded the case for further proceedings, in an opinion by Justice Opala.
The substantial difference between this opinion and the earlier one is that this opinion holds the question whether the injury is accidental or intentional must be addressed from the viewpoint of the insured, not the assailant. The earlier opinion did not address that issue. Rather, it concluded the injury could not be covered, since it was intentional. The earlier opinion evidently approached the question from the assailant’s point of view.
One basis for the remand for trial, despite the parties’ stipulation that the facts were undisputed, its the question of the insured’s intent. The Court notes summary judgment is not justified unless both the facts and the inferences arising from the facts are undisputed. The jury could find the likelihood of injury to the officer so great that the officer’s action in confronting the criminal was equal to an intentional act.
Neither this nor the original opinion address the question whether the UM statute requires an intentional act be covered. The policy in this case (as is usual) requires that the injury inflicted by the uninsured motorist be accidental. The statute (36 O.S. 1990 Supp. §3636) does not.
Arguably, the policies’ requirement that the injury be accidental is an unpermitted deviation from the coverage the statute requires. The Court implies that argument would not have been successful, had it been made. The opinion refers to the public policy considerations against indemnifying an insured for the insured’s intentional act, in the liability policy context.
This would have certainly been an excellent case in which to advance the argument. The officer’s attempt to apprehend the criminal, even if fraught with a high likelihood of injury, may have been intentional, but it was not wrongful. It would seem the wrongful nature of the intentional act is what bars insureds from coverage for their own intentional acts.
Moving to the question whether the injury arose out of the use of the robber’s vehicle, the Court adopted a causation test somewhat different from the negligence test, and an easier test to meet. The test is more thoroughly developed in the next case to be discussed. In this case, however, the Court concludes that a jury could infer the robber was using the car for transportation (to effect a getaway) and that the use of the gun was intended to effectuate that “locomotion” use of the car.
With regard to the med-pay coverage, the Court held that the officer was still “occupying” the police car when he was shot, even if he had physically left it, since the policy’s definition of “occupying” included “alighting” from the vehicle. This was exactly what the officer was doing.
CAR’S USE AS AN INCINERATOR IS A SUPERVENING CAUSE AND SEVERS THE TRANSPORTATION USE FOR PURPOSES OF UM COVERAGE
Whitmire v. Mid-Continent Cas. Co.,67 holds that UM coverage does not apply when an insured is abducted, restrained in her car, then set on fire and burned in the car.
Whitmire’s husband’s former wife, Harris, entered Whitmire’s home and, at gunpoint, bound Whitmire’s feet and hands with tape and gagged her. Harris then forced Whitmire to get into the backseat floorboard of Whitmire’s car. Harris drove Whitmire’s car until she came to a bridge crossing. There, she got out of the car, put it in gear and caused it to roll down an embankment and into a tree. Harris then moved Whitmire into the driver’s seat, poured gasoline over Whitmire and the car, and ignited the gasoline. Whitmire managed to get herself out of the car, but not without suffering burns over 90% of her body.
Whitmire sued Harris and got a judgment for $87,500. Whitmire then made claim for UM benefits, which Mid-Continent denied. Whitmire sued Mid-Continent for bad-faith refusal to pay UM benefits. The trial court (Honorable Bill Ed Rogers, Sequoyah County) overruled Mid-Continent’s first motion for summary judgment but sustained a second one. Whitmire appealed.
The Court of Civil Appeals held that UM benefits did not apply where a car is used to incinerate the owner and not used for a transportation purpose. Any causal connection between the transportation use of the car and Whitmire’s injuries was severed when Harris poured gasoline over Whitmire and her car and struck the match. The court applied the rationale of Safeco Ins. Co. of Am. v. Sanders68 in reaching its decision: (1) The chain of events relating to Whitmire’s injuries started in her home where she was robbed and abducted, not in the car as required by Sanders; (2) the car was the situs of the injuries, not the cause; (3) kidnaping Whitmire from her home and setting fire to her and her car were contrary to the transportation use of the car and severed any causal connection; and (4) Harris was not the operator of Whitmire’s car when she poured gasoline over Whitmire and her car and ignited it. Judge Hansen wrote a dissenting opinion, stating that whether Harris was the operator of Whitmire’s car, whether the transportation use of the car was the heart of Harris’ plan to injure Whitmire, and whether Harris’ transportation use of the car before she ignited it were fact questions.
PERSON FIXING A FLAT IS CONSIDERED “OCCUPYING” THE VEHICLE FOR UM PURPOSES
Wickham v. Equity Fire and Casualty Company69 holds that “occupying” is broad enough to include a person who had searched the truck for tools, who was performing repairs to the car, and who was tightening a lugnut on a wheel.
Wickham stopped to help a driver, McClain, reattach a lost wheel to McClain’s car. The two men had searched McClain’s trunk for tools; Wickham had his knees on McClain’s bumper to better see into the trunk. While Wickham was knelt beside the car tightening a lugnut, a car driven by Wade struck Wickham, injuring him.
Wickham and his wife sued McClain’s insurer, Equity Fire and Casualty Company (Equity), asserting they were entitled to uninsured motorist coverage under McClain’s policy with Equity. The trial court (Judge Donald C. Lane, Tulsa County) granted Equity’s motion for summary judgment and denied Wickham’s motion to reconsider. The Court of Appeals reversed and remanded, in an opinion by Judge Carl B. Jones.
The Equity policy extended uninsured motorist coverage to “anyone occupying, with your permission, a car we insure....” The policy defined “occupying” as “in, on, getting in or on, or getting off or out of.” The court referred to Willard v. Kelley70 in its discussion of the interpretation of “occupying.” In Willard, a Tulsa policeman chased a robbery suspect, exited his car, then exchanged shots with the suspect. Willard claimed med pay coverage under his automobile insurance policy that defined “occupying” as both “alighting from” and “entering into” the car. There, the Oklahoma Supreme Court held the term “occupying” broad enough to include Willard’s conduct. In the case at bar, Equity argued that physical occupancy, or intent to do so, is required to occupy a vehicle. The parties stipulated that Wickham never physically occupied the interior of the vehicle, nor did he ever intend to. Wickham argued that Equity’s interpretation is too narrow and that the court should adopt a “physical contact” test used by other courts. The court declined to adopt a “bright-line” test to determine occupancy, stating that such determination should be left to a case-by-case analysis based on “the circumstances of the accident, the use of the vehicle, the relevant terms of the coverage at issue, and any underlying public policy considerations.” The court concluded that “occupying” was broad enough to include Wickham’s conduct, stating that a broad interpretation is consistent with the public policy underpinnings of the uninsured motorist statute. The court cited cases from other jurisdictions in support of its holding, which had considered similar situations and applied similar policy provisions.71
EMPLOYEE MAY NOT STACK EMPLOYER'S UM COVERAGE
Widmann v. Acceptance Insurance Co.72 holds that an employee may not stack his employer's UM coverage, even where employee owns the vehicle involved in the collision, the vehicle is insured under the employer's policy, and the employee pays for the coverage on his vehicle.
Widmann worked under a contract with Airport Express, Inc., under which he used his own van to shuttle people to and from the airport. The van was covered under a fleet policy Acceptance Insurance Co. (Acceptance) issued to Airport Express, Inc. and Express Shuttle, the named insureds. Widmann was listed as an additional insured. There were 25 vehicles, including Widmann's, listed on the policy. In exchange, Widmann paid Airport Express a weekly tariff.
Plaintiff was injured while driving the van, in a collision with an uninsured motorist, and incurred $200,000 in medical expenses. Acceptance paid Widmann $45,000 uninsured motorist (UM) coverage in exchange for a release. Acceptance told Widmann there was only $50,000 UM available; $5,000 was paid to Widmann's passenger.
Widmann sued Acceptance alleging it falsely represented there was only $50,000 available, alleging bad faith, and seeking damages, as well as punitive damages. Widmann sought partial summary judgment that Widmann signed the release based on Acceptance's representations that only $50,000 UM was available to him.
The trial court (the Honorable Niles Jackson, Oklahoma County) overruled Widmann's motion and granted Acceptance judgment. On appeal, the Oklahoma Court of Civil Appeals (opinion by Presiding Judge Carol M. Hansen) affirmed.
Widmann was an insured under the policy because he was listed as an additional insured and because he was occupying a covered auto, as specified by the "who is an insured" policy provision. The coverage available to him, however, was that specified in the policy's Limit of Insurance provision, which limits coverage to the injured insured's pro rata share of the limits shown in the schedule or declarations applicable to the vehicle the insured was occupying at the time of the collision.
Widmann argued he was entitled to stack the UM coverage times the 25 vehicles insured because other language in the Limit of Insurance section of the policy provides the coverage will stack if bodily injury is sustained by "you or any family member." The COCA disagreed with Widmann, stating that he is not the named insured or a family member of the named insured; therefore, he is entitled only to the coverage available to those who are not named insureds but who were occupying an insured vehicle.
The COCA relied on two earlier Supreme Court decisions. Babcock v. Adkins73, which holds that a passenger in an insured vehicle who is entitled to UM coverage solely because of his passenger status, cannot stack the car owner's UM coverage. Keel v. MFA Insurance Co.74, which limits stacking to a named insured as determined by the policy. The rationale behind these holdings is that the person paying the premiums for the policies on multiple cars has a contractual relationship with the insurance company and has a legitimate expectation of benefitting from all the policies. A person entitled to coverage but who is not a named insured and who has not paid the premiums on all the policies, cannot reasonably expect the same benefit as the named insured.
Here, however, Widmann argues that he owned the vehicle, is an insured and, although he did not make payment directly to Acceptance, he did pay a premium by way of a tariff to Airport Express. Therefore, he should be a Class I insured (named insured and relative in the household). Again the COCA disagrees, stating that Widmann did not pay the premium on all 25 vehicles, and to hold that he is a named insured would be rewriting the policy, which the court will not do.
The COCA did not address Widmann's bad faith claim because Widmann got all he was entitled only to: $45,000 of the $50,000 UM limit.
5-YEAR SOL ON UM CLAIM BEGINS TO RUN WHEN BREACH OF CONTRACT OCCURS
Wille v. GEICO Casualty Co.75 holds that the statute of limitations on a UM claim is five years and begins to run when the breach of contract occurs, not the date of the collision.
Wille had a car wreck on May 19, 1994, caused by Bryan Rampey’s negligence. Wille told GEICO on May 31, 1994, he would not file a UM claim because Rampey had adequate insurance.
In November, 1998, Wille made a UM claim under his policy with GEICO. After attempting unsuccessfully to get documentation from Wille to support his UM claim, GEICO denied the claim and closed its file. Wille contends that on March 30, 1999, he sent a detailed letter outlining his UM claim to GEICO’s claims adjuster, which GEICO denied receiving.
On May 21, 1999, Wille learned for the first time the amount of Rampey’s liability policy limits when Rampey offered to settle for those limits. Wille again demanded payment of his UM limit on May 24, 1999. GEICO denied the claim asserting the SOL ran May 19, 1999, five years from the date of the wreck.
Wille amended the Petition he filed against Rampey to include breach of contract and bad faith claims against GEICO. Wille then settled with Rampey for his policy limit and dismissed Rampey from the lawsuit. GEICO removed the action to federal court and moved to dismiss the lawsuit, arguing the SOL had run on the claim.
The federal district court (Honorable Frank Seay, Eastern District) certified to the Oklahoma Supreme Court the following question: “When does the five-year statute of limitations begin to run on an action by an insured against his insurer on a claim for the recovery of benefits under an uninsured/underinsured motorist insurance policy?”
The Oklahoma Supreme Court answered that the action accrues and the SOL begins to run when a breach of the insurance contract occurs, not the date of the accident. The court explained that its earlier decision in Uptegraft v. Home Ins. Co.76 established that the 5-year-SOL applicable to contracts applies to UM claims. A valid UM claim and the insurance company’s refusal to pay its insured constitutes a breach of contract. Uptegraft did not, however, establish when the SOL on a contract action begins to run.
The Supreme Court joined the majority of jurisdictions which hold that until there is a breach, there is no basis for the insured to sue on the contract. It is logical that the claim accrues and the SOL begins to run with the breach, rather than the date of the wreck.
Justice Kauger wrote for the majority, joined by Chief Justice Summers and Justices Hodges, Watt, and Boudreau. Justice Opala wrote a dissent, joined by Justices Hargrave and Lavender. Justice Opala believes the SOL should begin to run on the date of the wreck. That is the point at which the UM carrier’s duty of indemnity accrues.
MURDER IN CAR NOT COVERED UNDER UM
Williams v. Preferred Risk Group Ins. Co.77 holds that a murder of the insured driver of a car by a passenger in the car was not covered by UM.
A front seat passenger committed an assault and battery on the insured driver and killed him. (Very little of the facts are given in the opinion.) The trial court held neither the uninsured motorist (UM) nor the medical payments coverage applied and granted summary judgment for the insurance company. The Court of Appeals affirmed as to the UM but reversed as to medical payments coverage, in an opinion by Judge Hunter.
The Court of Appeals followed the analysis of the Supreme Court in Safeco Ins. Co. of Am. v. Sanders.78 There was no causal connection between the use of the car for a transportation purpose and the insured’s death.
Apparently, the Court concluded that the medical payments coverage was payable so long as the insured was injured in the car. The Court remanded for a factual determination as to the amount due under the med pay.
INSURED CAN STACK UM WHERE PREMIUM PAID ON MULTICAR POLICY WAS THE EQUIVALENT OF SEPARATE PREMIUMS; INSURER NOT REQUIRED TO OFFER STACKING ON MULTICAR POLICIES
Wilson v. Allstate Ins. Co.79 holds that where an insurance company charges the equivalent of separate premiums for UM coverage under a multicar policy, it is required to stack the UM coverage but is not required to offer UM which could be stacked.
Allstate issued what it called a single premium policy, covering two cars. However, Allstate had a “two-tier” premium scheme, under which it cost more to insure two or more cars than to insure only one car. Wilson claimed this, along with the fact that Allstate did not offer UM coverage which could be stacked, entitled her to stack the coverage. The trial court ordered the coverage stacked, granting summary judgment for the insured.
The Supreme Court, in an opinion by Justice Watt, reversed. The Court rejected the argument that Allstate must stack because Allstate failed to offer UM coverage that could be stacked, as required by Scott v. Cimarron Ins. Co.80 The Court did not overrule Scott. It just did not follow it.
However, the Court did hold that charging a larger premium for insuring multiple vehicles than for insuring a single vehicle constituted charging a multiple premium, which required stacking.
NO UM SUBROGATION AGAINST UM, EVEN IF UM IS EMPLOYER’S
Wise v. Wollery81 holds a Workers’ Compensation insurer had no subrogation right against a workers’ UM claim, even though the claim was against the employer’s UM.
Wise was injured on the job, while driving his employer’s car. He recovered Workers’ Compensation and then sued the adverse driver and his employer’s car insurance company, for UM. He settled that claim. The UM carrier (the State Insurance Fund) moved for apportionment, claiming it was entitled to subrogation for what it paid in Workers’ Compensation against the UM claim.
The trial court (Judge Niles Jackson, in Oklahoma County) held there was subrogation. The Court of Appeals reversed, in an opinion by Chief Judge Garrett.
Judge Jackson refused to follow Thrasher v. Act-Fast Labor Pool, Inc.,82 in which the Supreme Court held there was no Workers’ Compensation subrogation against UM coverage. He distinguished Thrasher because there the claim was against a co-employee’s UM coverage while here, it was against the employer’s UM. The Court of Appeals refused to follow that distinction, holding that Thrasher compelled a finding there was no Workers’ Compensation subrogation against UM coverage, no matter whose it was.