Mann v. Farmers Insurance Co., Inc.1 holds that an insurance company which writes UM coverage in an amount less than the liability limit is not required to take a written rejection of a higher UM limit and that a policy provision excluding from the definition of insured family member one who owns his own vehicle does not apply to preclude stacking where the owned vehicle is insured under the policy sued on.

Mann’s father owned numerous vehicles, insured with Farmers under a fleet policy. Mann also owned a vehicle insured under that policy.

When Mann was injured while occupying a non-owned vehicle, he sued Farmers claiming: (1) since his father had not executed a rejection of UM coverage equal to the liability limit (which Farmers was statutorily obligated to offer in UM coverage), the policy afforded UM limits equal to the higher liability limit and (2) he could stack the coverage, since he was a member of his father’s household. Farmers responded that Mann was precluded from stacking since he owned his own vehicle, he was not an insured family member, which Farmers defined as a relative not owning his or her own vehicle.

The trial court held that the higher UM limit, equal to the liability limit applied but that Mann could not stack, due to the family member definition. The Supreme Court reversed.

The requirement of 36 O.S. §3636 that the insured may reject “such coverage” means that a rejection is required only where no UM coverage is written. The coverage which must be rejected is not the higher coverage, equal to the liability limit, which the statute requires be offered.

The provision restricting insured family members to those who do not own their own vehicle is inapplicable where the vehicle which the family member owns is one insured under the policy. This distinguishes Shepard v. Farmers2 which upheld such a clause. In that case, the vehicle which the family member owned was insured under a separate policy.


Markham v. State Farm3 holds that a mother injured by the negligence of her unemancipated daughter was not “legally entitled to recover damages” from her daughter and was, therefore, not entitled to uninsured motorist benefits.

Mrs. Markham was injured, allegedly due to her 17-year-old daughter’s negligence. Liability coverage was apparently excluded by a “household” exclusion. Mrs. Markham sued State Farm under her uninsured motorist (UM) coverage. The District Court found coverage.

The Tenth Circuit Court of Appeals reversed. Since, under Oklahoma law, the mother could not se her unemancipated daughter, she was not “legally entitled to recover damages” as required by 36 O.S. 1871 §3636(B). Under Oklahoma law, parent-child immunity is not a defense but negatives existence of the cause of action.

[Editor’s Note: This decision is undoubtedly wrong and will not be followed. Oklahoma has since ruled to the contrary as to nonexistence of the cause of action between parent and child, to the extent of insurance coverage, in Unah v. Martin.4 Further, Karlson v. City of Oklahoma City5 and Barfield v. Barfield6 hold that governmental immunity and Workers’ Compensation exclusive remedy (respectively) do not preclude a UM recovery. The Oklahoma Court of Appeals has held directly to the contrary of this case in Rose v. State Farm Mut. Auto. Ins. Co.7


Martin v. Hartford Underwriters Ins. Co.8 holds that an insured could not recover UM benefits for injuries caused when a three-year-old passenger put the car in gear and ran over the insured, because the child was legally incapable of negligence.

Ms. Martin was getting into her car when a three-year-old child in the car moved the gear shift lever out of park, causing the car to roll backwards, knocking Martin down and rolling over her. She sued Hartford for UM. The trial court granted Hartford summary judgment. The Court of Appeals reversed. The Supreme Court on certiorari reversed the Court of Appeals and affirmed the trial court, in an opinion by Justice Watt.

Because the three-year-old was legally incapable of negligence, Martin could not establish fault on the part of an uninsured operator of the car, so as to be entitled to recover UM. Uptegraft v. Home Insurance9 and Barfield v. Barfield10 establish that the statutory language “legally entitled to recover”11 means that the insured must be able to establish fault on the part of the uninsured motorist, although not necessarily get a judgment against that driver. Because the infant could not be legally at fault, there is no UM coverage.


May v. Nat. Union Fire Ins. Co. of Pittsburg, Pa.12 holds that where a car insurer fails to make the statutorily required offer of UM limits equal to the liability limits, the statutorily imputed UM coverage is the minimum financial responsibility limits ($10,000/20,000), not the higher liability limits.

The corporate insured had a $5 million liability policy on which it had rejected UM. It reduced the liability limit to $3 million and did not make a new offer or take a new rejection of coverage, as required by 36 O.S. §3636. The plaintiffs, an injured employee of the insured and the estate of an employee killed by an underinsured motorist, claimed that the reduced policy limit created a new, rather than a renewal policy, so that a new offer and rejection of UM coverage was required and that the effect of failure to make such an offer was that the policy afforded UM limits equal to the $3 million liability limit. The insurance company claimed no new offer and rejection was required, because the policy was a renewal and not a new policy that, even if a new offer and rejection were required, the resulting coverage would be minimum financial responsibility limits coverage of $10,000 per person and $20,000 per accident, not the $3 million liability limits.

The Federal District Court (Judge Brett) held that the policy was a new one, requiring a new offer and rejection but that the resulting statutorily imputed coverage was for minimum limits.

The Tenth Circuit Court of Appeals agree that the policy was a new one, requiring a new offer and that it afforded statutorily imputed UM coverage. However, the Court certified to the Oklahoma Supreme Court whether the statutorily imputed coverage would equal the liability limits, which the statute requires the insurance company to offer, or the financial responsibility minimum (10/20) limits. The Supreme Court, in an opinion by Justice Watt, held that only minimum limits were required.

The basis for the Court’s decision is an earlier error in Cofer v. Morton13 saying that:

The intent of the legislature as mandated in §3636(F) is to have a statutory minimum of uninsured motorist coverage in all automobile liability insurance policies unless these minimum amounts are rejected in writing. . . .

Minimum financial responsibility limits were all that was required under the original statute. However, in 1976, the legislature amended 36 O.S. §3636 to require an offer of UM limits equal to the insured’s liability limits.14 This is the amendment which the Supreme Court seems to have overlooked in Cofer in 1989 and again now. This case overrules a Court of Appeals case which did recognize the amendment.15

What will happen where the policy, on its face, affords UM limits, but in less than the liability limits and there is no offer or rejection of the higher limits? If the same rule applies, the insurer would benefit by not following the law.


Mayer v. State Farm Auto. Ins. Co.,16 holds that the deaths and injuries in the Murrah Building bombing will not be covered by UM coverage because the truck was not being used for a transportation purpose when the concealed explosives were detonated.

This is one of the two bombing cases that came down during 1997. I took this one through the state court system, to the Supreme Court. The other one, Nichols v. Nationwide Mutual Insurance Company17 (discussed elsewhere in this material) went through the federal court system. The results were the same; no UM coverage for bombing victims.

Stanley Mayer worked for the State Historical Society, in the Journal Record Building. He was badly injured in the bombing. Further, he lived in Cleveland County, which is blessed with pretty good judges. His UM coverage was only $25,000, low enough that his insurance company, State Farm, could not remove the case to federal court.

The trial court (Judge Hetherington, Cleveland County) ruled against me on cross summary judgments, based on stipulated facts. The trial court held there was a transportation use of the truck; however, the detonation of the bomb was an intervening cause which precluded coverage under the UM policy. I appealed to the Supreme Court and filed a Motion to Retain the case in the Supreme Court, instead of assigning it to the Court of Civil Appeals. The Supreme Court sustained the motion, assuring me of a definitive ruling.

The Supreme Court agreed with the trial court’s result but not the reasoning. Justice Opala wrote the opinion, holding that there was not a transportation use of the truck because it was being used as a truck bomb, rather than as a means of transportation. Therefore, no UM coverage. All of the other Justices, except Summers and Watt, concurred. Vice Chief Summers concurred in Judgment, while Justice Watt concurred by reason of stare decisis.

The cases already decided in the Supreme Court dealing with injuries intentionally inflicted by use of a motor vehicle spell out the elements the insured is required to establish. The injury must have been caused by an accident. However, the question of what is an accident is decided from the point of view of the insured, not the assailant. Certainly, the Murrah building victims did not intend to be injured, so that was not a problem.

Next, is that the injury must have arisen out of the transportation use of a vehicle. The two cases best illustrating this requirement are Willard v. Kelley18 and Safeco Ins. Co. of Am. v. Sanders.19

McKinley v. Prudential Property and Casualty Insurance Co.20 holds that the 1976 amendment to 36 O.S. §3636(C) does not apply to an accident occurring after the effective date of the statute where the policy had not been written or renewed since the statute’s effective date.

Plaintiff had a UM policy with effective dates from February 20, 1976 through August 20, 1976. By amendment effective March 16, 1976, 36 O.S. §3636(C) was changed to afford underinsured, as well as uninsured, motorist coverage.

On July 21, 1976, plaintiff was injured in an accident with an underinsured motorist. The trial court declined to apply the new statute and afford plaintiff underinsured motorist coverage.

The Court of Appeals affirmed, in an opinion by Judge Reynolds. The statutory amendment was substantive and does not indicate in any way that it was meant to alter existing policies.


McSorley v. The Hertz Corp.21 holds that a self-insured car rental company need not offer UM coverage to its customers.

Ms. McSorley rented a car from Hertz, which is self-insuring. She was injured, due to the negligence of an underinsured motorist.

She sued Hertz, claiming that Hertz, as a self-insurer, had a duty to offer UM coverage to its customers who rent cars from it. The trial court, Judge Leamon Freeman, in Oklahoma County, sustained Hertz’s Motion for Summary Judgment. The Court of Appeals reversed. The Supreme Court granted certiorari and affirmed the trial court, in an opinion by Justice Kauger.

The UM statute22 speaks in terms of offering UM in conjunction with a “policy” of liability insurance. The self-insured company issues no “policy” to which UM coverage would attach.


Mellenberger v. Sweeney23 holds that a UM insurer is liable for pre-judgment interest, up to its policy limit, but only on the part of the judgment in excess of the adverse liability limits.

The insured got a verdict for $12,500 against a tort-feasor with a $10,000 liability limit. Pre-judgment interest brought the judgment to $4,484.70. The trial court ordered the liability carrier to pay its $10,000 and the UM carrier to pay the rest.

The Court of Appeals reversed, and ordered the UM carrier to pay pre-judgment interest only on the amount of the verdict over the $10,000 liability limit, in an opinion by Judge Bailey. The record did not contain the liability policy, nor was the liability insurer a party. The Court found, however, that 47 O.S. 1981 §7-601 (requiring liability policies to cover $10,000 in damages “exclusive of interest and costs”) required the liability carrier to pay pre-judgment interest on the part of the judgment within its limits.

Neither the majority nor the dissent (Judge Hansen) found applicable Nunn v. Stewart.24 That case found a UM carrier liable for pre-judgment interest, in excess of its policy limits, but only that accruing after liability was established. The dissent would hold that pre-judgment interest is an element of the insured’s damages, payable under UM.

While the opinion does not articulate it clearly, this case is consistent with Nunn. This case deals with payment of pre-judgment interest within UM policy limits. Nunn deals with payment of pre-judgment interest in excess of policy limits. It would seem the dissent has the better logic. If pre-judgment interest is payable, it should be payable on the entire amount. If it is covered under the liability, the UM carrier can recover it under subrogation. The majority’s statement that pre-judgment interest is covered under liability is dictum, and perhaps shaky dictum. Historically, pre-judgment interest in excess of liability limits has not been recoverable.


MFA v. Hankins25 holds that an amendment to 36 O.S. §3636(C) which expands uninsured motorist coverage is not retroactive and does not apply to an accident occurring before the statute’s effective date.

The insured was injured in an accident in 1974. The uninsured motorist (UM) statute in effect at the time of the accident provided uninsured, but not underinsured, motorist coverage. After 36 O.S. 1976 §3636(C) became effective and provided underinsured motorist coverage, plaintiff sued. The trial court held the statute was retroactive but certified on interlocutory appeal to the Supreme Court.

The Supreme Court granted certiorari and reversed the trial court. The amendment was substantive, not procedural, and could not be applied retroactively.


Moon v. Guarantee Insurance Co.26 holds that a car rental company’s customer who rents a car must reject UM coverage under the car rental company’s liability coverage or he will be entitled to UM coverage and that the rental company’s rejection of UM coverage is not sufficient to bar the customer’s claim.

Moon rented a car. He was not required to execute a UM rejection in conjunction with the liability coverage afforded him under the car rental contract. He was injured by an uninsured motorist. The car rental company had executed a rejection of UM coverage in conjunction with its liability policy affording coverage to the customer.

The federal court certified to the Supreme Court several questions, the thrust of which was whether the car rental company’s rejection was sufficient to bar the car renter’s claim and whether the car rental company was acting as the insurance company’s agent with regard to the insurance transaction. The Supreme Court held that the car renter, and not the car rental company, must execute the rejection. The car rental company was the insurance company’s agent under the “deeming” statute, 36 O.S. 1981 §1422(3), to the effect that any person who solicits an insurance policy shall be deemed the company’s agent.


Morris v. America First Ins. Co.27 holds that a policy provision excluding UM coverage where the insured is occupying a vehicle which he owns but which is not covered by UM coverage does not apply if the insured is covered by UM on policy on another vehicle which he owns.

Morris was a long-haul trucker who owned his own rig. The truck was insured for liability but not for UM. He also owned two personal vehicles which had 25/50 UM limits. He was also a resident of his Mother’s home. She had UM coverage with America First for $100,000, under which he was an insured. Morris was badly injured in a truck wreck in Washington state, due to the negligence of a motorist who had smaller liability limits than his damages.

America First denied the claim because of the exclusion. The suit ended up before Judge Robin Cauthron. She noted that Cothren v. Emcasco28 would invalidate the exclusion while the Court of Civil Appeals opinion in Conner v. American Commerce Insurance29 would uphold it. She certified to the Oklahoma Supreme Court which opinion was controlling.

The Supreme Court answered “Uh, neither exactly.” The Court, in an opinion by Justice Winchester, held that excluding coverage because the vehicle occupied did not have UM coverage would be to attach the UM coverage to the vehicle, not the insured. This would violate a long line of Oklahoma Cases, including Cothren and State Farm Mut. Auto. Ins. Co. v. Wendt.30
For this reason, the provision is invalid as applied to a case where the insured is covered by UM on other vehicles, such as Morris’ other vehicles.

America First moved for rehearing. It argued the exclusion was proper. Morris argued (as he had originally) that the Court should reverse the holding in Conner upholding the basic exception. The Court denied rehearing, without further opinion.

The result of all this is that if the insured is occupying a vehicle he owns but which has no coverage and he does not have other coverage, he will be completely without UM coverage. On the other hand, if he has other UM coverage, he will get yet more UM coverage on the policy containing the exclusion. This makes little sense.


Moser v. Liberty Mut. Ins. Co.31 holds no offer of uninsured motorist coverage is required by an umbrella liability policy.

The U.S. District Court for the Western District of Oklahoma certified to the Supreme Court two questions: (1) whether an umbrella liability policy requires the mandatory offer of uninsured motorist coverage under 36 O.S. 1981 §3636 and (2), if so, whether the umbrella policy must provide coverage beneath its excess limit where coverage has been rejected on the underlying policy. The Supreme Court answered the first question “no,” obviating the necessity to answer the second question.

The decedent was occupying a company car when an underinsured motorist came across the center median and killed him.

The company vehicle was insured under a primary liability policy in the amount of $1,000,000 and an excess or umbrella policy providing liability from $1,000,000 up to $25,000,000. The umbrella policy covered both automobile and general liability. The primary policy included a UM rejection.

Plaintiff claimed the language of §3636(A):

No policy insuring against loss resulting from liability imposed by
law for bodily injury or death...arising out of the ownership,
maintenance or use of a motor vehicle shall be issued [without
UM coverage]

required an offer of UM equal to the $25,000,000 liability limit. Plaintiff’s position was supported by an unpublished Tenth Circuit opinion in Crawford v. General Assurance Services Ltd.32 which held an offer was required, absent such an offer coverage was written, and that the coverage applied to plaintiff’s damages below the excess policy’s threshold where coverage had been rejected on the primary policy.

The Oklahoma Supreme Court declined to follow the Tenth Circuit. In an 8 to 1 decision by Justice Lavender, with Justice Wilson dissenting, the Court held the “no policy” language incorporated the definition of a motor vehicle liability policy, as defined in 47 O.S. 1981 §7-204. An excess or umbrella policy, the Court holds, is not such a policy and does not require equal UM limits be offered.
Justice Wilson’s dissent is simplicity itself: The statutory language “no policy” means no policy. That seems logical.


Mueggenborg v.Ellis33 holds that an agent has no duty to inform an insured of the availability of higher UM limits.

The Mueggenborgs (Plaintiffs) did insurance business for several years with Ellis and Payne County Farm Bureau (Farm Bureau). Plaintiffs explained to Ellis that they wanted to be adequately insured to protect their children and other children that would be riding with them. Ellis explained that Plaintiffs could carry $25,000 UM on one car and that coverage would roll from that car to the other six cars the Plaintiffs had insured with Farm Bureau, and sold them that policy.

The Plaintiffs’ 16-year-old son was injured in a car wreck. The other driver had liability limits of $25,000, which Plaintiffs contend was insufficient to cover the son’s injuries. The Plaintiffs sued Ellis, Farm Bureau, and Oklahoma Farm Bureau Mutual Insurance Company, alleging a negligent breach of professional duty. The Plaintiffs contend Ellis should have advised them they could buy higher UM limits.

The trial court (Honorable Donald Worthington, Payne County) granted the defendants’ motion to dismiss for failure to state a claim. Plaintiffs appealed.

The Court of Civil Appeals affirmed, holding that an insurance agent has no duty to advise an insured regarding coverage. The court explained that all insureds ask for “adequate coverage” and allege they have a special relationship with their agent. To hold that an agent or insurance company has a duty to properly advise an insured regarding coverage takes away from the insured the responsibility to take care of his own financial needs.


Murchison v. Progressive Northern Ins. Co., holds that there is no duty on the part of an insurance company to exercise ordinary care in the handling of a claim so that no negligence claim can exist for failure to pay a claim but that the potential for a fact question precludes summary judgment for the insurance company on the contract claim.
Plaintiff had a motor vehicle collision while insured by Progressive for uninsured motorist (UM) coverage. Apparently by error, Progressive told her she had no UM coverage. Six months later, Progressive paid its policy limit.

Plaintiff sued Progressive for negligence, breach of contract and bad faith. Progressive removed the case to federal court and moved to dismiss on the claims for negligence and breach of contract, leaving the bad faith claim for a motion for summary judgment to be filed later. The Eastern District federal court, Judge Ronald White, granted the motion to dismiss as to the negligence claim and denied the motion as to the contract claim. He also refused to grant leave to amend or do further discovery.


Mustain v. United States Fidelity and Guaranty Company, et al.,34 holds that, as between the insured and its uninsured motorist (UM) insurer, UM insurance is primary, and that a UM insurer’s responsibility to its insured cannot be conditioned on the amount of other coverage.

Mr. Mustain was injured while occupying a crane truck and working on a sign. Mr. and Mrs. Mustain sued the crane truck’s insurer, USF&G, and their own UM carrier, American Employer’s Insurance Company (American), in federal district court. While suit was pending, the Mustains settled their UM claim with USF&G for less than the policy limits and sought to recover UM benefits under their own policy with American. The trial court granted American’s motion for summary judgment, concluding that the excess coverage clause required exhaustion of the crane truck’s UM benefits.35 The Mustains appealed. The Tenth Circuit Court of Appeals certified the following question to the Oklahoma Supreme Court:

Are the decisions in Hibbs v. Farmers Insurance Co., 725 P.2d 1232 (Okla. 1985) and Smith v. Government Employers Insurance Co., 558 P.2d 1160 (Okla. 1976) that when an insurance policy contains an excess insurance clause, primary coverage must be exhausted before the secondary insurer is liable, still good law in light of Buzzard v. Farmers Insurance Co., 824 P.2d 1105 (Okla. 1991)?

The Oklahoma Supreme Court recast the question as follows:

(1) Based on this Court’s rulings in Buzzard v. Farmers Insurance Co., 824 P.2d 1105 (Okla. 1991) and State Farm Mutual Insurance Co. v. Wendt, 708 P.2d 581 (Okla. 1985) and pursuant to 36 O.S. 1991, §3636, should uninsured motorist insurance be treated as primary coverage?

(2) If uninsured motorist insurance must be declared primary coverage in Oklahoma, should the ruling be prospective?

That “recasting” of the certified question seemed certain to indicate the Supreme Court would revisit and clarify the dictum in Buzzard that the UM carrier is liable only for the amount of the insured’s damage which exceeds the tort-feasor’s liability coverage. Of course, that is contrary to the UM statute. Unfortunately, this opinion does not directly rescind the dictum.
In an opinion by Justice Alma Wilson, the Oklahoma Supreme Court answers the first question “yes”. Title 36 O.S. 1991 §3636 provides that UM insurance is first-party coverage that follows the person. The statute imposes a responsibility upon the UM carrier to deal fairly and in good faith with its insured which prohibits the insurer from withholding payment from its insured on the sole basis that some other insurance has not been exhausted. Section 3636 is silent regarding priority of payments among multiple UM carriers, but does create subrogation rights. These subrogation rights are to be sorted out among the multiple insurers in ancillary, post-judgment proceedings.

The Court answered the second question “no”. The 1979 amendments to 36 O.S. §3636(C), not this case, establish the UM carrier’s responsibility toward its insured.

Justice Summers,36 joined by Justices Lavender and Simms dissented, stating he disagrees with the majority’s reasoning that all UM coverage must be primary, but agrees that a UM insurer should not be permitted to escape liability through the use of an “other insurance” clause.

Mustain leaves us with the dilemma we have had ever since Buzzard: Can we sue only the UM carrier and forgo suing the tort-feasor without losing the part of the claim within the tort-feasor’s liability limit? The “yes” answer to the question whether UM coverage is primary would seem to indicate that we can. However, the Court’s failure to specifically disavow the Buzzard dictum leaves the issue in doubt.

There is further confusion based on a Court of Appeals opinion, Assalone v. Hartford Acc. & Indemn. Co.37 That case holds that the insured may sue the UM carrier directly and need not sue the tort-feasor. It does not, however, deal with whether the insured can recover all of his damages. Assalone cites and relies on Roberts v. Mid-Continent Casualty Co.38 which says you recover all damages from the first dollar. The Assalone court at least does not think the Buzzard dictum overrules Roberts. If it does not, then the answer to the real question is that the UM carrier does owe the whole claim (once there is a UM claim) and must subrogate against the tort-feasor and the liability coverage. This question will require more development.


Narvaez v. State Farm Mutual Automobile Ins. Co.39 holds that beating a person to gain access to the victim’s car does not constitute an injury arising out of the transportation use of the vehicle for UM purposes. 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 then stole his car. State Farm denied Narvaez’ UM claim and filed a declaratory judgment action in federal court in 199640 seeking a declaration there was no UM coverage. State Farm argued 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 requires. The Western District of Oklahoma granted State Farm summary judgment, concluding Narvaez was not entitled to UM benefits. The Tenth Circuit Court of Appeals reversed, concluding the amount in controversy was insufficient to trigger federal court jurisdiction.

Narvaez then filed suit in Oklahoma County District Court, asserting only a UM claim. The trial court (Judge Blevins) granted State Farm summary judgment. The Court of Civil Appeals affirmed.

UM coverage is triggered when the uninsured vehicle is in use as a motor vehicle at the time of injury. There was no evidence the assailant operated Narvaez’ car at the time Narvaez was injured. Narvaez was injured before the assailant used Narvaez’ car.


National American Ins. Co. v.Vallion41 holds that an insurance company may exclude from its uninsured motorist coverage an occupant of an insured vehicle who owns his or her own car subject to the compulsory motor vehicle liability law.

Vallion was an employee of a school district. He was injured while occupying a school district-owned vehicle insured by National American. He made an uninsured motorist (UM) claim, which National American denied, claiming he was not covered under the UM coverage.

The policy had provisions in it purporting to exclude coverage when the person insured as an occupant of the vehicle owned his or her own vehicle either covered by UM coverage or subject to being covered because of the compulsory insurance law.

The trial court, Judge Dan Owens in Oklahoma County, sustained National American’s summary judgment. The Court of Civil Appeals affirmed, in an opinion by Judge Bell, in which Judges Buetnner and Hansen concurred.


Newberry v. Allstate Ins. Co.42 holds that the injured party’s UM coverage is not triggered where the damages are less than the tort-feasor’s statutory liability limit; and that a government entity is not uninsured for purposes of UM merely because it is self-insured.

Newberry was involved in a car wreck with a city-owned vehicle and incurred $15,000 in damages. The city waived its sovereign immunity up to the $100,000 bodily injury limit imposed by the Governmental Tort Claims Act (GTCA).43 His representative recovered property damage from the city and then sued Newberry’s UM carrier, Allstate, for UM benefits, arguing that because the city was self-insured and had no insurance policy, its vehicle was an uninsured motor vehicle. The parties filed cross-motions for summary judgment. The trial court granted Allstate summary judgment, ruling that the city’s vehicle was not an uninsured motor vehicle.

The Court of Civil Appeals44 affirmed the trial court, holding that the city’s vehicle was not uninsured because Newberry’s damages did not exceed the city’s $100,000 tort liability. The court went further and held that a sovereign’s vehicles are not uninsured merely because the sovereign is self-insured. The GTCA authorized self-insurance and provides a method of paying judgment imposed against a sovereign.45


Newport v. USAA46 holds the insurance company cannot in good faith offer its own insured less than the insurance company’s evaluation of the claim.

Newport v. USAA affirms but sharply reduces, on a procedural ground, a UM bad faith award. Decided the same day as Barnes, discussed above, Newport affirms a bad faith verdict which the Court of Civil Appeals had reversed, but reduces the judgment from $16.5 million to $4.5 million.

Mr. Newport, insured by $1.5 million in stacked UM coverage by USAA, was badly hurt in an accident on an icy road. He lived 39 days with partial to complete paralysis from a neck injury and then died. USAA evaluated the case at between $750,000 and $900,000. However, it “low-balled” the insured, offering structured settlements worth $500,000, then $600,000 $700,000 and finally, a “once and for all” offer of $750,000. The jury ultimately found the damages caused by the uninsured motorist to be $6 million.

The jury first came back with a verdict for that amount on the negligence claim and $1.5 million actual and $7.5 million punitive damages on the bad faith claim. Because the amount recoverable on the UM policy could not exceed the $1.5 million limit and the punitive damages could not exceed the actual damages on the bad faith claim, the trial court (Judge Thomas Landrith, in Pontotoc County) rejected the verdict and sent the jury out to deliberate further. The jury evidently figured out the problem and came back with a new verdict for $1.5 million on the policy and $7.5 million each for actual and punitive damages on the bad faith claim.

The Court of Civil Appeals affirmed the policy damages but reversed the bad faith claim, holding there was no bad faith as a matter of law, because the insurance company made offers and negotiated. The Supreme Court reversed that holding, with the concurrence of all the Justices except Winchester, who would have agreed with the Court of Civil Appeals.

On the merits of the bad faith case, the Supreme Court held the “low-balling” (offering less than the insurance company’s own evaluation) presented a case of first impression, as to which there is little authority nationally. The Court held the insurance company cannot in good faith offer its own insured less than the insurance company’s evaluation. USAA had also first promised to pay medical bills as they were incurred but then failed to do so, for no apparent reason other than to put pressure on the widow to settle. This created a jury question whether USAA was acting in good faith.

The procedural point as to the handling of the verdict also presented a first impression issue. The Supreme Court held that, because the error in the original verdict could be corrected as a matter of law, the trial court should have done so instead of rejecting the verdict and sending the jury out to deliberate further. The Supreme Court ordered the trial court on remand to reduce the $6 million policy award to the $1.5 million policy limit and reduce the $7.5 million punitive damage award on the bad faith claim to the $1.5 million actual damage award on the bad faith claim.

The trial court had also awarded a $428,000+ attorney fee, pursuant to Brashier v. Farmers. Because, as discussed above, Barnes v. Oklahoma Farm Bureau reversed Brashier, the Newport court also reversed this attorney fee award with instructions like those in Barnes. Justice Opala dissented from this part of the decision, as he had in Barnes.


Nichols v. Nationwide Mutual Insurance Company47 is the second Murrah Federal Building bombing case to come down in 1997. It went through the federal court system. Nichols holds that no UM coverage is triggered where the use of the truck was not related to transportation; detonation of the concealed explosives in the truck was an intervening cause; the unidentified motorist who drove the truck was not operating the truck when the explosives detonated; and Nationwide’s refusal to pay the UM claim was not bad faith.

Richard and Bertha Nichols and Chad Kilgore were in or near the Nichols’ car parked one and one-half blocks from the Murrah Building when the truck bomb was detonated in front of the Murrah Building. The axle of the Ryder truck housing the bomb hit the hood of the Nichols’ car. The Nichols sought UM benefits under their car policy with Nationwide Mut. Ins. Co.; Nationwide denied the claim. The Nichols sued and both parties filed cross motions for summary judgment. Judge Robin Cauthron determined that the Nichols’ facts were most closely analogous to Safeco Ins. Co. of Am. v. Sanders48 and held that the detonation of the bomb that caused the injury was not a transportation use; therefore, no UM coverage applied.


Niemeyer v. United States Fidelity and Guaranty Company49 holds that a liability insurer owes no duty to an uninsured motorist (UM) insurer, so that the liability insurer had no claim to privilege in the UM insured’s suit for tortious interference with contract, based on furnishing the UM insurer false information in a claim file.

Niemeyer’s daughter was killed by an underinsured tort-feasor. The liability insurer paid its limit but furnished Niemeyer’s UM insurer a claim file containing false, defamatory information. The UM insurer refused to pay its limit. Upon the false information being corrected, the UM carrier paid its limit. Niemeyer sued the liability insurer for tortious interference with contract. The trial court granted a motion to dismiss, holding the liability coverage was primary to the UM coverage, which was excess, so that the liability carrier owed a duty to the UM carrier to furnish it claim information. Therefore, the trial court held, the information was privileged and Niemeyer had not pleaded that the claim information was not privileged.

The Court of Appeals affirmed. The Supreme Court reversed, in an opinion by Justice Kauger. Niemeyer did not have to plead that the information was not privileged, under the Pleading Code. Generally pleading tortious interference was sufficient.

The liability insurer owned no duty to the UM insurer. Rather, the UM insurer stood in relation to the liability insurer in the same relationship as the UM’s insurer’s insured. Since, under Allstate Ins. Co. v. Amick50 the UM insured could not have sued the liability insured for bad faith, neither could the UM insurer. Therefore, the liability insurer owed no duty to the UM insurer and the liability insurer’s communication to the UM insurer was not privileged.

Justices Hodges and Simms dissented. Justice Simms would hold that the UM insured (Niemeyer) suffered no damage from the interference, since the claim was ultimately paid.


Nunn v. Stewart and Farmers Insurance Co.51 holds that a UM insured gets interest above UM policy limits, but only from the date that the uninsured motorist’s liability is established.

Mrs. Nunn was injured by an underinsured motorist. After a lengthy dispute over the amount of her UM coverage, Farmers stipulated to the tort-feasor’s liability and Mrs. Nunn’s damages. The trial court ruled adversely to Mrs. Nunn on the question of the amount of her coverage and denied her interest during the lengthy period taken to resolve the coverage issue. The Court of Appeals reversed as to the amount of the coverage but refused to award Mrs. Nunn interest in excess of the policy limit. The Supreme Court reversed the Court of Appeals on the interest issue, but limited interest to that accruing after the stipulation established the uninsured motorist’s liability.

The Supreme Court rejected the contention that interest should be paid from a reasonable time after the accident, when the claim should have been paid. The obligation to pay interest on the policy did not accrue until the liability was established.


O’Brien v. Dorrough and Equity Fire and Cas. Co.52 holds that a named driver exclusion is enforceable as to uninsured motorist (UM) coverage.

O’Brien and Dorrough were involved in a wreck when the cars they were driving collided. The trial court found that Dorrough was negligent, that he was an uninsured motorist, and awarded O’Brien judgment of $50,000. O’Brien then joined Equity in the lawsuit seeking UM coverage under her father’s policy. O’Brien was driving her father’s car at the time of the wreck. O’Brien’s father, Lively, had liability and uninsured motorist coverage with Equity Fire and Cas. Co. (Equity). The policy had a named driver exclusion excluding O’Brien from coverage and no premium was paid for liability insurance coverage. The parties disagree as to whether the premium Lively paid would extend UM coverage to O’Brien. The parties filed joint stipulations of fact and cross-motions for summary judgment. O’Brien argued that excluding UM coverage under the named driver exclusion would violate public policy, and that the exclusion is an impermissible method of rejecting UM coverage. The trial court granted judgment to Equity. O’Brien appealed.

The Oklahoma Supreme Court has previously held that a named driver exclusion as to compulsory liability insurance does not violate public policy,53 but has not yet addressed whether it violates public policy as to UM coverage. The court held that the named driver exclusion is enforceable as to UM coverage because the policy provision excluded all insurance coverage afforded by the policy for any loss while O’Brien was “operating or in the care, custody or control of the vehicle.”54


Ouellette v. State Farm Mut. Auto. Ins. Co.55 holds that a claim for an insured’s wrongful death damages under a UM policy must be pursued by the decedent’s next-of-kin or personal representative and not by the insured.

The insureds’ adult son was killed. His widow concluded a wrongful death action against the tort-feasor and the son’s UM carrier. In a post-judgment proceeding to distribute the proceeds of that recovery, the parents were excluded from that recovery. The order found a “lack of legal interest.”

The parents sued on their own UM policy for grief and loss of companionship. The trial court denied recovery. The Court of Appeals reversed. The Supreme Court reversed the Appeals Court and affirmed the trial court, in an opinion by Justice Opala.

The Supreme Court holds that parents have no standing to sue their own UM carrier, since the wrongful death statute (12 O.S. 1991 §1054) requires such suit be brought by the personal representative or next-of-kin. The parents are not next-of-kin since the son left a surviving wife and children. Further, the parents’ exclusion from the distribution of the earlier recovery, based on “lack of legal interest,” bars recovery in this action.

The opinion contains language which indicates Opala thinks 12 O.S. §1053 requires that parents be next-of-kin before they will be held to have suffered a recoverable loss. If this is what he meant to say, he is clearly wrong. The statute doesn’t say that.


Pearson v. St. Paul Fire and Marine Ins. Co.56 holds, without elaboration that the St. Paul UM policy did not provide greater coverage than required by UM statute and that there was no causal relationship between plaintiff’s injury and the transportation mode of a bucket truck.

Judge Heaton addressed this issue on the parties’ supplemental briefs after granting partial summary adjudication to St. Paul on the question of whether the UM statute, 36 O.S. § 3636 mandated coverage of Pearson’s injuries (it did not). Pearson claimed the particular policy provided UM coverage greater than that mandated by the statute and that his injury was related to the transportation mode of a bucket truck and covered.

Judge Heaton simply said the policy language “result from” or “aris[e] out of” the ownership, maintenance or use of the uninsured vehicle “parallels” the UM statute57 such that the policy grant is the same as that mandated by statute. There was no causal relationship between the injury and the transportation mode and no coverage.


Pentz v. Davis, et al.,58 holds that the “other insurance clause” in a UM policy does not establish the priority of payment among multiple UM carriers as to an insured’s claim.

Pentz was traveling on ministry business along with his pastor, Frye, and another man, Green. Green was driving his mother’s car; Pentz and Frye were passengers. Green was stopped in a construction zone when the car was rear-ended by Davis, injuring Pentz. Davis had liability coverage with Farm Bureau in the amount of $10,000/$20,000. The car in which Pentz was a passenger was insured with American Western Home Ins. Co. (American) with liability and UM limits of $10,000/$20,000. Pentz had two car liability policies with UM coverage. One policy was with Allstate and the other with Farm Bureau. The church for whom Pentz was working at the time of the wreck had a liability policy issued by Church Mutual Ins. Co. (Church Mutual). The church policy did not have UM coverage. Church Mutual asserted that it was not required to offer UM coverage and that Pentz was not an insured under its policy.

Pentz sued Allstate, Farm Bureau, and Church Mutual for UM benefits; Davis was voluntarily dismissed. The trial court sustained the three insurance companies’ demurrers to Pentz’s case-in-chief. The trial court determined, among other things, that Pentz failed to prove he had exhausted the UM coverage on the car in which he was riding, and that he was an insured under Church Mutual’s policy. The Court of Appeals reversed.

The Supreme Court, in an opinion by Justice Alma Wilson, vacated the Court of Appeals opinion; affirmed the trial court as to Church Mutual because Pentz failed to prove lack of an offer of UM coverage or that he was an insured under Church Mutual’s policy; reversed the trial court as to Allstate and Farm Bureau because Pentz provided the evidence necessary to withstand the demurrers; and remanded the case back to the trial court.

On appeal, Allstate and Farm Bureau allege that, under the “other insurance” clauses in their policies, they can withhold UM benefits under Pentz recovers the UM coverage on the car in which he was riding. The court states that insurance is excess when the policy provides that the insurance company must pay the amount of the loss that exceeds the exhausted primary insurance coverage. Such provisions in a car liability policy are unenforceable if they would allow the insurance company to escape liability.59 The court stated that Allstate and Farm Bureau erroneously assert Keel v. MFA Ins. Co.60 holds that the UM coverage on the car is primary and must be exhausted before the other UM carriers can be held liable. Keel holds that an insurance company cannot avoid UM liability by inserting a provision in its policy that conditions UM coverage on exhaustion of other available insurance. “Other insurance clauses” apply to priority of payment among multiple UM coverages issued by the same insurance company to the named insured.61 In the present case, we have multiple insurance companies with policies covering an insured.

The court stated that 36 O.S. 1991 §3636 protects the injured person’s right to swift recovery from an insurance company. Likewise, the statute provides for subrogation which protects insurance companies from bearing the full burden of the loss when multiple insurance companies are involved. The trial court prematurely apportioned the burden of loss among the UM carriers. Pentz’s damages were not yet determined so as to establish which policies would apply. On remand, the trial court can determine Allstate’s and Farm Bureau’s subrogation and apportionment interests once Pentz’s is paid. Allstate and Farm Bureau should also be permitted to add Davis and his UM carrier as necessary parties.


Phillips v. New Hampshire Ins. Co.62 holds that a UM carrier cannot deny coverage and then after the insured settles with the tort-feasor, assert that coverage is precluded because the insured settled with the tort-feasor without giving the UM carrier notice, and absent the UM carrier’s showing of actual prejudice.

Phillips was injured in a car wreck while on her job. She filed a workers comp claim and sued the tort-feasor. Her damages exceeded the tort-feasor’s liability limit. As part of the workers comp action, Phillips requested information about her employer’s UM policy. Her employer had a commercial auto liability and UM policy with New Hampshire Ins. Co. (NHIC), but refused to answer discovery requests revealing this information and did not produce a copy of the policy until after the workers comp case was concluded.

Before the workers comp case was concluded, Phillips settled with the tort-feasor. She did not notify NHIC because she did not know her employer had a policy with NHIC and that it may provide UM coverage. Upon Phillips’ further inquiry, NHIC refused Phillips’ UM claim because, it asserted, UM coverage existed only for cars listed in the employer’s policy, and Phillips’ car was not listed. Phillips then sued NHIC in state court; NHIC removed the action to federal court (Western District of Oklahoma, the Honorable Judge Vicki Miles-LaGrange).

The trial court granted NHIC summary judgment, relying on Porter v. MFA Mutual Ins. Co.63 and 36 O.S. § 3636(E). The trial court also held NHIC did not commit bad faith because, under the policy, Phillip’s failure to notify NHIC of the tort-feasor’s settlement offer was a reasonable basis for denying her UM claim.

On appeal, the Tenth Circuit reversed the trial court, holding that it erred in holding that Porter applied absolutely in cases where the alleged insured was not aware of the existence of a policy or its terms at the time the insured settled with the tort-feasor.
The Tenth Circuit pointed out that the pivotal issues in Porter are whether the insured waived her right to the UM benefits, and whether the insurance company was prejudiced by the insured’s settlement with the tort-feasor. With regard to waiver, the primary consideration is whether the insured knew what she was doing when she signed the release — whether she voluntarily and intentionally relinquished a known right. Here, Phillips did not know that a UM policy existed at the time she settled with the tort-feasor, let alone that she had a right to the coverage. Therefore, releasing the tort-feasor was not a voluntary and intentional relinquishment of her right to UM coverage. Porter does not apply here to bar Phillips’ UM claim.

The Tenth Circuit went further and held that when the insurance company denies a UM claim on the basis that a contractual relationship does not exist, it is estopped from later arguing that the alleged insured is not entitled to coverage because she destroyed the insurance company’s subrogation right against the tort-feasor. This is because the insurance company cannot argue that a contractual relationship does not exist for the purpose of providing coverage but does exist for the purpose of providing a defense to coverage.

Prejudice is the second issue involved in Porter and is important for a number of reasons. There is the potential for the tort-feasor to use up assets available to satisfy the UM carrier’s subrogation claim, and, because of the passage of time, memories fade and witnesses disappear or become unavailable. The Tenth Circuit predicted that the Oklahoma Supreme Court would hold that Porter would not bar Phillips’ UM claim absent NHIC’s showing of actual prejudice because of its lack of notice of Phillips’ settlement with the tort-feasor.

The Tenth Circuit’s ruling is supported by Oklahoma caselaw: Torres v. Kan. City Fire & Marine Ins. Co., 1993 OK 32, 849 P.2d 407, 413; Robertson v. USF&G, 1992 OK 113, 836 P.2d 1294, 1297; Barfield v. Barfield, 1987 OK 72, 742 P.2d 1107, 1112; and Uptegraft v. Home Ins. Co., 1983 OK 41, 662 P.2d 681, 685-86 (all holding that the UM carrier must pay the insured even where the UM carrier is barred from exercising its subrogation rights unless payment would be unfair in light of the insured’s knowing, affirmative, and prejudicial conduct).


Phillips v. Oklahoma Farmers Union Mut. Ins. Co.64 holds that it was not error to deny the insured leave to amend to add a bad faith claim to his UM claim after the time for amendment in the pretrial order and after the court had already ordered bifurcation.

The insureds sued the tort-feasor and the UM carrier in the same action. Four months after the pretrial conference-established date to amend pleadings and after the trial court had ordered bifurcation pursuant to Tidmore v. Fullman,65 the insureds sought leave to amend to assert a bad faith claim and object to the birfurcation. The court denied leave to amend and overruled the objection to the bifurcation. The insureds then dismissed without prejudice their claim against the tort-feasor. The insurance company brought the tort-feasor back into the lawsuit on a third-party petition and moved to have the parties realigned to their original configuration and again moved for bifurcation. The court realigned the parties and granted bifurcation.

Trial resulted in a verdict for less than the liability limit. The insured’s appealed, arguing the bifurcation was error, under Buzzard v. McDanel66. The Court of Appeals affirmed, in an opinion by Judge Bailey.

Both amendment and bifurcation are matters addressed to the trial court’s discretion. The fact that the verdict ultimately was for less than the liability limit reinforced the court’s opinion that denying leave to assert the bad faith case was not error. This situation sort of left the insured’s attorney arguing that he was entitled to the prejudicial effect of the joinder which might have resulted in a higher verdict on the contract claim.


Phillips v. State Farm Mut. Auto. Ins. Co.,67 holds that a UM carrier is required to pay a reasonable part of the insured’s attorney fees and expenses for recovering subrogation if there was an implied contract that the insured’s attorney would recover the subrogation and if the attorney performed more than incidental services.

Robert Gregson (Gregson) wrecked a car in which Wendell Phillips was a passenger, injuring Phillips. Phillips assumed that Gregson did not have liability insurance and sued their insurer, State Farm, for uninsured motorist (UM) coverage. Phillips settled his claim with State Farm for $200,000 and executed a Release and Trust Agreement agreeing to hold in trust for State Farm’s benefit all his rights of recovery. Phillips claimed a right to pro rata reimbursement from State Farm for attorney fees and costs he would incur in pursuit of the injury claim. State Farm denied Phillips had such a right. The Release and Trust Agreement reserved this dispute for later resolution. Phillips then sued Gregson and settled for $400,000. Phillips owed a 1/3rd attorney fee and expenses.

State Farm moved for summary judgment claiming it was entitled to $200,000 of the $400,000 settlement without reduction for attorney fees or expenses. The district court granted State Farm summary judgment.

The 10th Circuit Court of Appeals reversed, in an opinion by Judge Brorby. The trial court must determine whether there was an implied contract that State Farm would pay its share of fees and expenses. If one existed, then the trial court must order State Farm to pay a reasonable attorney fee.

In determining a reasonable attorney fee, the court is to consider the sum recovered for State Farm, the difference between the fee State Farm is obligated to pay its attorney and what State Farm would have had to pay its attorney, or another competent attorney, to effectuate the settlement between Phillips and Gregson.

Because there was no Oklahoma Supreme Court decision on point, the court looked to analogous Oklahoma Supreme Court decisions and to decisions of lower Oklahoma courts and other federal courts. The court relied on Carter v. Wooley68 for its authority, finding the case virtually indistinguishable from the case before it.

Carter held that the Workers’ Compensation carrier, before the Workers’ Comp statute was amended to require the comp carrier to pay attorney fees, was obligated to pay a reasonable attorney fee to the lawyer who recovered its subrogation. It did so on the basis of an implied contract, holding that whether there was an implied contract was a question for the trier of fact.


Plaster v. State Farm Mut. Auto. Ins. Co.69 holds that all insureds named on the face of the policy must execute a rejection of UM coverage for that rejection to be binding as to an insured, other than the insured signing the rejection.
Mr. and Mrs. Plaster had a liability policy with State Farm, which named both as insureds. Mr. Plaster, but not Mrs. Plaster, executed a written rejection of UM coverage.

The Plasters’ son was killed. They sued State Farm in federal court. The federal court certified to the Supreme Court whether the rejection by one, but not all, named insureds, was valid. The Supreme Court held it was not, in an opinion by Justice Wilson.

The ruling may be narrower than it appears at first glance. The Court says:

We therefore hold that where an automobile insurance policy lists
more than one individual as a “named insured”, a written rejection
of uninsured motorist coverage by less than all named insureds is
not a complete rejection of that coverage within the four corners
of the policy. However, such partial rejection does operate to
estop an individual named insured who signs the rejection form
asserting the uninsured motorist provisions of the policy.

This language creates some doubt about the requirement for a written rejection to be signed by both husband and wife in policies which name one spouse and include the other spouse as a named insured by definition. Looney v. Farmers Ins. Group70 treats such a “definitional” named insured as a named insured for purposes of excluding her from liability coverage under an exclusion for injury to the named insured. It would seem, however, that the Court rather carefully limited its holding to one “listed” on the policy.

Justice Opala concurred in part and dissented in part, while Justice Simms dissented, each without separate opinion.

The effect of this opinion will be somewhat short-lived. It is legislatively overruled by the 1990 amendment to 36 O.S. §3636, which specifies any named insured may reject. Thus, Plaster will be of concern only as to policies issued before the effective date of the amendment, September 1, 1990.


Ply v. National Union Fire Insurance Company of Pittsburgh, PA,71 holds that a supervisor’s instructions regarding use of truck constitutes use for purposes of UM coverage and an employer’s non-contemporaneous negligent maintenance of the truck entitled injured employee to UM coverage where negligent maintenance caused the injury .

Dale Ply was working in the raised bucket of his employer’s truck when he came in contact with an energized electrical line, electrocuting him. Ply’s legs were amputated as a result of his injury. Ply’s employer, Elliot Company, owned and maintained the bucket truck. National Union Fire Ins. Co. (National) carried the UM coverage on Elliot Company’s trucks.

At the time of Ply’s injury, he was working alone with the bucket truck, as instructed by his supervisor, a fellow employee, even though Elliot Company’s Safety Handbook required that aerial bucket equipment should only be operated with two people present to operate the hydraulic controls. While up in the bucket, a tool belt hanging outside the bucket came in contact with an energized electrical line running just below the bucket. Ply alleged the contact resulted from a hydraulic leak in the truck’s hydraulic boom causing the bucket to sag.

Ply collected workers compensation benefits, then sued National in federal court for Elliot Company’s UM benefits and Safeco Ins. Co. Of America for his mother’s UM benefits. Ply lived with his mother at the time of his injury. Ply alleged his injury arose out of Elliot Company’s negligent use and maintenance of the truck. National moved for summary judgment, arguing that UM was not triggered because Ply’s injury was not caused by another’s use of the bucket truck, and that Ply’s injury was not caused by negligent maintenance.72

The district court (Honorable Sven Erik Holmes, Northern District), having found no controlling authority, certified the following questions to the Oklahoma Supreme Court:
1 Whether an employer’s or supervisor’s instructions or directions to its employee regarding work to be performed by that employee, which involved the use of a company-owned vehicle, can constitute “use” of the vehicle by the employer or supervisor so as to give rise to potential liability under Oklahoma’s uninsured motorist laws; and

2. Whether allegations of an employer’s non-contemporaneous negligent maintenance of an employer-owned vehicle, if proven, are sufficient to establish an employee’s potential entitlement to uninsured motorist benefits.

The Supreme Court reformulated the first question as follows:
1 Whether a supervisor, acting on behalf of the employer, provides faulty or negligent instructions or directions to an employee relating to the use of an employer-owned vehicle and the employee is injured while following the instructions, can the employer be considered at fault within the meaning of the phrase legally entitled to recover from the owner or operator” in § 3636 of title 36 of the Oklahoma Statutes.

and answered yes to both, in an opinion by Justice Boudreau, with five justices concurring and three dissenting (Vice Chief Justice Opala, and Justices Winchester and Hargrave) and one (Justice Kauger concurring specially.

The Supreme Court reformulated the first question because it considered the issue to be one of fault, not use. The Court explained that the first question to answer is whether a person is legally entitled to recover, which it says Ply is. Then the Court looked to whether the allegedly negligent party is an owner or operator of an uninsured/underinsured motor vehicle. The Court explained that the owner does not have to be operating the vehicle, ownership is enough. The Court declined to address the merits of Ply’s claim of negligent instruction.

The second certified question relates to Elliot Company’s negligent maintenance of its vehicle; specifically, whether negligent maintenance, done some time before Ply’s use of the truck, could trigger UM. The Court agreed with other jurisdictions’ broad meaning of “maintenance” and held the language “arising out of . . . maintenance” to mean that the maintenance does not have to be contemporaneous with the claimant’s injury. Maintenance includes acts of omission as well as commission relative to the external and mechanical condition of a vehicle. Here, whether Elliot Company omitted needed maintenance on the hydraulic system fits within the statutory scheme “bodily injury . . .arising out of . . . maintenance.” Again, the Court did not discuss the merits of Ply’s negligence claim.

Justice Kauger specially concurred by separate opinion. Justice Kauger explains that an employer’s supervisor’s instructions can be so clear and straightforward on the faulty or negligent operation of a vehicle as to leave the employee with the understanding that the operation is appropriate. In that situation, the employer may be considered responsible for the vehicle’s personal physical management.

Justice Winchester’s dissent, with which Vice Chief Justice Opala and Justice Hargrave join, states that the Court’s legal reasoning became so convoluted that the end result bears no resemblance to § 3636's intent. The purpose of § 3636 is to protect innocent parties from the negligence of an uninsured motorist. Who is that uninsured motorist? the dissent asks.


Porter v. MFA Mutual Insurance Co.73 holds an insured’s settlement with the tort-feasor bars recovery of uninsured motorist coverage.

Plaintiff was injured in an accident with a tort-feasor who had only $5,000 liability insurance limits. Plaintiff settled and gave a release to the “underinsured” tort-feasor and then attempted to proceed against his uninsured motorist (UM) insurer, MFA. The trial court granted MFA summary judgment, holding plaintiff’s settlement had destroyed MFA’s subrogation rights under its UM policy. The Supreme Court affirmed, in an opinion by Justice Barnes.

The Court declined to base its ruling on the “consent to settle” policy provision which purports to exclude coverage as to any claim which the insured has settled without the insurance company’s consent. The “consent to settle” clause is void.

However, by giving a release to the tort-feasor, plaintiff destroyed MFA’s “subrogation” rights under the Trust Agreement provided in the policy and sanctioned by the statute. The legal effect of releasing the tort-feasor was to preclude plaintiff from bringing an action on the uninsured motorist policy.

[Editor’s Note: This decision is correct but may contain some overly broad dictum. The case arose under the 1976 version of the statute (36 O.S. 1976 Supp. §3636). That statute specifically provides that the insurance company shall be entitled to the proceeds of any settlement or judgment against the tort-feasor. The Court quotes the 1976 statute and says: “This statute was subsequently amended on May 16, 1979, but the above quoted provision remains the same.”

Actually, the 1979 amendment adds a provision to subparagraph (E):

Provided further that any payment made by the insured tort
feasor shall not reduce or be a credit against the total liability
limits as provided in the insured’s own uninsured motorist

Thus, the 1979 amendment does alter the effect of the statute as to the underinsured claim. Under the 1979 statute, the insured should be permitted to settle with the underinsured tort feasor and still proceed against the underinsured motorist insurance company since the insurance company is probably not entitled to subrogation.]

Porter v. State Farm Mut. Auto. Ins. Co.74 holds that the insured who settles with the tort-feasor for less than the tort-feasor’s liability insurance limit cannot recover UM coverage.

Porter was involved in a “double insured” case while riding with another State Farm insured who was at fault. The tort-feasor had $100,000 liability limits. Porter had UM coverage with State Farm.

State Farm was willing to pay only $85,000 of its $100,000 limit. Porter took the $85,000 in liability limits and sued State Farm under her own UM coverage. State Farm took the position that the settlement with and release of its liability insured precluded Porter from recovering her own UM.

The trial court, Judge Cunningham, in Canadian County, sustained State Farm’s Motion for Summary Judgment. The Court of Civil Appeals (COCA) affirmed, in a unanimous opinion by Chief Judge Mitchell.

The COCA reasoned that the release of the tort-feasor caused Porter to no longer be legally entitled to recover from the tort-feasor, and so precluded the UM recovery. Further, the Court held, the settlement for less than the tort-feasor’s liability limit established that the value of the claim was less than the tort-feasor’s liability limit so that this requirement for UM coverage could not be established.

The COCA rejected Porter’s argument that she should be able to recover despite the release since State Farm could not subrogate against its own insured. The COCA seemed unaware of the rule that an insurance company cannot subrogate against its own insured.75 The COCA noted that Porter made that assertion “without citing legal authority.” The COCA likewise rejected without discussion Porter’s argument that the amount of the liability settlement did not establish the value of the claim because it was a compromise settlement.

The “take away” message is: Don’t take less than the liability limit and try to pursue UM


Price v. Mid-Continent Casualty Company76 holds that it is not bad faith for the insurance company to disagree with the insured on policy interpretation.

Mrs. Price’s son, who was under age 25, a college student, and lived with her, was killed in a car wreck while driving his own car. A wrongful death trial resulted in a $750,000 verdict in favor of Mr. and Mrs. Price. Mrs. Price had a car insurance policy with Mid-Continent that provided $250,000 uninsured motorist (UM) limit. The son had a $10,000 UM policy limit under his own policy with Mid-Continent. Mrs. Price accepted the $10,000 UM limit under the son’s policy but refused to accept Mid-Continent’s offer of $10,000 UM under her own policy. Mid-Continent contended the $10,000 UM limit under Mrs. Price policy applied because of the policy provision which reduced the UM coverage to $10,000/$20,000 when a wreck involves a person under 25. Mrs. Price filed a bad faith claim.

The trial court granted Mrs. Price summary judgment. On Mid-Continent’s appeal, the Court of Civil Appeals held the under-25 provision invalid and Mid-Continent tendered the $250,000 limit plus interest.

At the trial on the bad faith claim, the jury found for Mrs. Price and awarded her $60,000 actual damages and $500,000 punitive damages. Mid-Continent appealed.

The Court of Civil Appeals (COCA) reversed the trial court (opinion by Presiding Judge Kenneth Buettner), holding that an insurance company’s request for judicial interpretation of the insurance contract is not bad faith absent a showing the request was frivolous, dilatory, or motivated by bad intent.

Chief Judge Carol Hansen dissented with opinion. Chief Judge Hansen criticizes the COCA for hearing an appeal that was not well preserved. Mid-Continent’s appeal did not provide specific allegations of error in the jury instructions or trial court ruling as a basis for its appeal. Chief Judge Hansen believes the COCA, lacking specific allegations of error, took upon itself to find error and used the trial court’s instructions to the jury to frame the issues it deemed relevant.

Chief Judge Hansen would affirm the trial court and hold the evidence before the trial court sufficient to support the jury finding that Mid-Continent’s policy dispute was not legitimate. The evidence was that not all members of Mid-Continent’s executive review committee agreed it had a reasonable argument to deny the higher UM limit. This was indicated by markings on the loss notice that marked through the $10,000/$20,000 limits and handwrote in the $250,000/$500,000 figure. Also in evidence was testimony that someone at Mid-Continent made a preliminary decision early on that the policy limits were not limited by the under age provision.


Prideaux v. Allstate Insurance Company77 holds: (1) one insured solely as a passenger may not stack the owner’s UM coverage, (2) the uncontroverted facts show a legally sufficient offer of UM coverage equal to the liability limit, and (3) no rejection is required where UM coverage is written, but in an amount less than the liability coverage.

Plaintiff was a passenger in a friend’s car which was struck by an underinsured motorist. The friend’s car had $50,000/$100,000 liability limits, but only $10,000/$20,000 UM limits and insured 4 vehicles. The trial court granted summary judgment, holding plaintiff could not stack the UM limits and that the UM limits were only $10,000/$20,000. The Court of Appeals affirmed, in an opinion by Judge Garrett.

The Court’s decision denying stacking comes as no surprise. It follows Babcock v. Adkins78 denying stacking where multiple vehicles are insured under multiple policies and Rogers v. Goad79 which denies stacking where multiple vehicles are insured under a single policy.

The brief opinion does not contain much guidance as to the precise nature of the offer of UM coverage, noting only deposition testimony to the effect that the insured owner discussed higher UM limits, but did not feel the need to take them. The Court does not discuss the testimony with regard to an adequate explanation of the characteristics of the coverage.

The decision that no written rejection is required where UM is written, but in an amount less than liability limits is consistent with the Supreme Court’s later decision to the same effect in Mann v. Farmers80.


Provident Life & Accident Ins. Co. v. Ridenour81 holds that a health insurance company may not subrogate against uninsured motorist benefits pursuant to a policy provision granting subrogation for claims against third parties.

The health insurance policy provided for subrogation for claims against third persons, who cause an injury. The health insurance company claimed it was entitled to reimbursement from uninsured motorist benefits, since the UM benefits were intended to take the place of the third party’s liability coverage.

The trial court denied the health insurer a recovery. The Court of Appeals affirmed, in an opinion by Judge Bailey.

The UM coverage does not stand in the shoes of the liability carrier or the tort-feasor. The UM coverage is coverage the insured bought and paid for.

The case leaves open the question whether a health policy can be written with a subrogation provision sufficiently broad to reach UM coverage. That question was answered in the affirmative by Reeds v. Judge Walker/NAICO v. Reeds, below.


Government Employees Ins. Co. v. Quine82 holds that an uninsured motorist insurance (UM) carrier need not pay the amount of its evaluation of a UM claim without a release so long as the insured has been paid the insured’s special damages.

Ms. Watkins, a passenger in Ms. Quine’s car, insured by GEICO, was injured in a car wreck with an underinsured motorist. Because of multiple claims against the liability coverage, Watkins got only $13,890. Her medical bills (her only special or economic damages) were $9,904.05. GEICO evaluated the claim at between $6,014.05 and $11,014.05. It started with an offer of its low range number and finally came up to its top figure. When they were unable to agree on a figure, Watkins’ counsel demanded GEICO pay their “uncontested amount” (which he did not know because he didn’t know GEICO’s evaluation) without a release. GEICO refused.

GEICO sued Watkins in federal court for declaration it had no duty to pay the amount of its evaluation without a release but rather could decline to make any payment unless and until either Watkins agreed to accept GEICO’s offer or there was a judgment determining the amount GEICO owed. Judge Cauthron, in the Western District Court, certified a question to the Supreme Court:
If an uninsured/underinsured ("UM/UIM") insurer and its insured are unable to agree upon an overall settlement of the insured's UM/UIM claim and the insured demands payment of any undisputed benefits, does Oklahoma law require the UM/UIM insurer to promptly evaluate and unconditionally (i.e. without requiring a full and complete release) pay its insured any "undisputed amount" it determines it owes?

The Supreme Court didn’t seem comfortable with the term “uncontested amount.” In a move foreshadowing its decision, it “reformulated” the certified question to read:

Does an insurer's refusal to unconditionally tender partial payment of UIM benefits amount to a breach of the obligation to act in good faith and deal fairly when (1) the insured's economic/special damages have been fully recovered through tortfeasor's liability insurance; (2) the insurer promptly investigates and places a value on the claim; (3) there is a legitimate dispute regarding insured's noneconomic/general damages; and (4) benefits due have not been firmly established?

The Supreme Court then answers the reformulated, certified question in the negative, in an opinion by Justice Noma Gurich. The Court perceives that it already answered the question in Garnett v. Government Employees Insurance Company.83 Actually, the Court did not answer in Garnett the question whether the insurance company must pay an uncontested amount without a release. Rather, it simply found that factually, GEICO’s evaluation was not an “uncontested amount.” In the present opinion, the Court appears to explain that GEICO’s evaluation was not an “uncontested amount” because it was at least theoretically possible for a verdict and judgment to result at or above the amount of the uncontested special damages.

There was a question after Garnett whether the reason the evaluation was not an “uncontested amount” was that it might include defense costs. This case makes clear that GEICO’s evaluation was only for injuries and did not include defense costs and holds the insurance company can withhold payment of amounts of UM which its evaluation shows it owes, in an effort to get the insured to take that amount rather than attempting to recover the amount the insured believes is a proper amount. The UM carrier may withhold benefits so long as it does not withhold a sufficient amount that the insured’s special damages are unpaid. Justices Reif and Combs dissented, without separate opinion.


Reeder v. American Economy Ins. Co.84 holds that payment of separate premiums for UM coverage permits stacking, but does not permit the insured to recover more than actual damages and that an insurance company’s offer made less than four months after the trial court’s determination it had coverage is not bad faith.

In 1989, Reeder was hurt in a car wreck with an uninsured motorist. Reeder had three cars insured under a policy with American Economy Ins. Co. (American) that provided $500,000 UM coverage and for which separate premiums were paid. In 1993, Reeder’s lawyer first presented Reeder’s claim for UM coverage to American. Later in 1993, American filed a declaratory judgment action to determine its coverage. Reeder counter-claimed to recover under the policy and for bad faith. Both moved for summary judgment. The trial court ruled that Reeder was entitled to UM coverage but that American was not in bad faith. About four months later, American offered $1,000,000 to settle Reeder’s claim, which Reeder refused. The jury determined Reeder’s damages to be $612,000. Reeder appealed, claiming she was entitled to recover the $612,000 from each coverage. The Court of Appeals affirmed, in an opinion by Judge Kelly. Stacking does not pay more than actual damages. The insurance company made an offer soon after its coverage was determined.


Reeds v. The Honorable Thomas S. Walker, Judge of the District Court, Carter County. NAICO v. Reeds85 holds that the words “monies recovered from a third-party” in an ERISA plan’s subrogation clause includes payments made under an injured insured’s UM policy.

Phillip Reeds was badly injured in an auto accident. NAICO, Phillip’s father’s health insurance carrier, paid over $400,000 in medical benefits under an ERISA health plan (the plan). After the family settled with their UM carrier the plan sought reimbursement. Both sides moved for summary judgment–Judge Walker granted NAICO’s motion ordering the Reeds to reimburse the plan and pay nearly $150,000 in interest. The Reeds appealed, and while the appeal was pending filed a application with the Oklahoma Supreme Court invoking the Court’s original cognizance to direct the trial court not to enforce the judgment, and to dismiss the action for lack of subject matter jurisdiction. The Court agreed to assume original jurisdiction, withdrew its assignment to the Court of Civil Appeals and consolidated the separate proceedings for disposition by a single opinion. After first determining that the District Court’s subject matter jurisdiction was not preempted by ERISA, the Court turned to the language of the subrogation clause.

The plan required reimbursement from “any monies recovered [from] a third party as a result of a judgment or settlement with or otherwise paid by the third party.” The clause applies whenever the plan pays benefits and it is later determined that the third party is liable “for the same expense.” The Court determined that the clause reached the UM proceeds, saying: “A UM carrier’s ‘first-party’ status vis a vis its insured does not alter its third party status vis a vis the health insurance carrier.” Also, said the Court, the UM carrier’s indemnity payment is “for the same expense.” Thus, the plain language of the policy encompassed the UM proceeds and nothing in the laws of Oklahoma protects those proceeds from the plan’s reach. The Court still remanded, however, holding that the plan did not clearly override the make-whole rule; further proceedings were needed to determine whether Reed had been fully compensated for his injuries.

This case answers the question left open by Provident Life & Accident Ins. Co. v. Ridenour.86


Rhody v. State Farm Mut. Ins. Co.87 holds that an insurance policy issued in Texas but covering a car garaged in Oklahoma and where the accident occurs in Oklahoma, will be interpreted by Texas, not Oklahoma law. Under these facts, Oklahoma would permit stacking. Texas would not. The Court held Oklahoma had adopted the “most significant contact” rule only with regard to tort - not contract - cases, so Texas law applied.

Arguably, this case is contrary to Pate v. MFA Mut. Ins. Co.88 There, an Arkansas family, on vacation in Oklahoma, suffered serious injuries in an accident. They settled with the tort-feasor and then attempted to recover their med pay coverage. Under Arkansas (but not Oklahoma) law, their insurer would be entitled to subrogation so that the settlement with the tort-feasor barred the med-pay recovery. The Oklahoma Court found such a strong public policy interest in enforcing Oklahoma’s prohibition on subrogation and pay claims of a named insured that it applied Oklahoma, not Arkansas, law. The Rhody court does not cite nor distinguish Pate.


Richardson v. Allstate89 holds UM coverage on multiple vehicles insured under a single policy may be stacked, where a separate premium is paid for each vehicle.
The Richardsons insured 3 vehicles under a single policy. Each had $25,000/$50,000 uninsured (UM) coverage. It was stipulated the damages exceeded $150,000. Allstate paid one limit but declined to stack the remaining UM coverages. The U.S. District Court for the Western District certified the question whether the coverage could be stacked. The Supreme Court answered that it could, in an opinion by Justice Irwin.

Keel v. MFA90 held that coverage could be stacked where multiple vehicles are insured under multiple policies. Writing all of the vehicles on one policy should not alter that result.


Roberts v. Mid-Continent Casualty Co.91 holds that an insured may sue his uninsured motorist insurer without suing the tort-feasor and that, in such a case, the insurer is not entitled to a credit for the tort-feasor’s liability limits but must seek subrogation.

The insured chose to sue his uninsured motorist insurer directly, without suing the tort-feasor, who had only a $10,000 liability policy. The trial court entered judgment for the whole amount of the insured’s damages ($60,000) and refused to give the UM carrier credit for the tort-feasor’s $10,000 limit.

The Court of Appeals affirmed, in an opinion by Judge MacGuigan. Keel v. MFA92 gives the insured the right to sue the UM insurer directly, without joining the tort-feasor. Uptegraft v. Home Ins. Co.93 holds that the insured may still recover from the UM carrier, even if the statute of limitation has run against the tort-feasor. The burden of pursuing the tort-feasor and his liability limits is on the insurer.


Robertson v. United States Fid. & Guar. Co. And The Western Cas. & Sur. Co.94 holds that an insurance company which does not properly offer UM coverage and take a rejection of it is estopped to raise as a defense to a UM claim a release executed by the insured.

Each of two companies were claimed to have either failed to properly offer or take a rejection of UM coverage. The insured was badly injured in an accident. He took the policies to a lawyer and sought the lawyer’s advice before releasing the tort-feasor. The lawyer, discovering the policies contained no UM coverage, advised the insured to release the tort-feasor.

Later, the insured consulted another lawyer who found coverage may not have been properly offered or rejected. The trial court granted summary judgment, based on the release.

The Court of Appeals reversed, holding that the insurance companies had waived their right to object to the release, by failing to properly offer and take a rejection of UM coverage, thus leading the insured to believe that he had no UM coverage and should release the tort-feasor.

The Supreme Court granted Certiorari and likewise reversed the trial court, in a unanimous opinion by Justice Lavender. This case rounds out the rule of a waiver of subrogation rights.

Porter v. MFA Mut. Ins. Co.95 held that an insured who releases the tort-feasor, without a subrogation waiver from the insured’s UM insurer, forfeits his UM coverage, since he has destroyed the UM insurer’s subrogation rights. Frey v. Independence Fire and Cas. Co.96 extends that same ruling to a case where the insured executed a covenant not to sue the tort-feasor. The effect was the same: the insured had destroyed the UM carrier’s subrogation right.

Sexton v. Continental Cas. Co.97 held the UM insurer gave up the right to object to the insured’s release of the tort-feasor by denying coverage. Buzzard v. Farmers Ins. Co., Inc.98 held that the insurance company forfeited its right to object to settlement by refusing to pay the claim. This case finds yet another basis for loss of the insurance company’s right to object to a settlement with the tort-feasor. It seems an imminently sensible direction.


Roby v. Bailey99 holds that Oklahoma public policy does not require a policy written in Arkansas to afford underinsured motorist (UIM) coverage for an Oklahoma accident, where the policy would not afford UIM under Arkansas law.

Plaintiff, an Arkansas resident, was injured in an Oklahoma accident by an underinsured motorist. Under Oklahoma law, she would have had UIM coverage as part of her uninsured motorist (UM) coverage. Under Arkansas law, she would not, because Arkansas law provides for UIM as a separate coverage which must be elected. The trial court held for the insurance company. The Court of Appeals affirmed, in an opinion by Judge Adams.

Since the policy was written in Arkansas, Arkansas law applies unless application of Arkansas law would violate Oklahoma public policy, under Bohannan v. Allstate Ins. Co.100 Not every conflict of law results in a violation of public policy. Only where application of the foreign law would violate an Oklahoma statute made applicable to any policy in Oklahoma, will there be a finding of violation of Oklahoma public policy so as to require application of Oklahoma law.


Rogers v. Goad, et al.101 denies stacking of uninsured motorist coverage to a “Class 2" insured (one insured solely by reason of occupying an insured vehicle). This decision is an extension of the ruling in Babcock v. Adkins102 which reached the same result where the claimants were occupants of one of several cars insured under separate policies. Rogers applies Babcock where the claimant, not a named insured or member of the household, occupies one of several cars insured under a single policy.

Rogers was occupying his employer’s vehicle when an underinsured motorist crossed the center line and hit the vehicle. Rogers recovered a $49,500 judgment. The adverse driver had only $10,000 in liability coverage.

Rogers tried to get $5,000 UM limits each on 18 vehicles insured under his employer’s policy. The trial court let him stack.

The Supreme Court reversed, in a unanimous opinion by Justice Kauger. Stacking is limited to Class 1 insureds, named insureds and resident relatives of the named insureds’ household. Class 2 insureds, permissive occupants of the vehicle, may not stack.

The court couches its holding in terms of rejecting coverage to a permissive user under a commercial fleet policy. However, Babcock, upon which Rogers relies, involved a family policy, rather than a commercial policy. It would seem difficult to argue that Rogers should be restricted to commercial policies and not applied to family policies.


Rose v. State Farm Mut. Auto. Ins. Co.103 holds that a parent injured by the negligence of the parent’s minor child may recover UM benefits, even if an action against the child would be barred by parent-child immunity.

Mrs. Rose was injured in a collision caused by the negligence of her minor son, who was driving the car in which she was riding. State Farm contended she could not recover under the UM coverage, since her claim against the son would be barred by the rule of parent-child immunity. The insurance company contended Mrs. Rose was not “legally entitled to recover,” as the UM policy and statute required. The trial court agreed and granted the insurer summary judgment.

Since decisions of both the Oklahoma Court of Appeals and the federal courts, interpreting Oklahoma law, are only persuasive, and not precedential, we will need a Supreme Court opinion on this issue. It will undoubtedly be consistent with Rose.


Rush v. Travelers Indem. Co.104 holds that Oklahoma UM law applies to an out-of-state accident involving a policy issued in Oklahoma and that a policy provision increasing the policy limit to the other state’s minimum may apply, without incorporating the other state’s stacking law.

The Oklahoma insured, with a $10,000 UM limit, and two vehicles insured, was injured in an accident in Arkansas, which has $25,000 UM limits, but prohibits stacking. The policy contained a policy provision increasing the limits to the financial responsibility limits of the state where the accident occurred but had an endorsement providing the policy provided coverage under the Oklahoma UM statute. The insured claimed $50,000 UM limits (the Arkansas $25,000 limit X 2 vehicles, stacked under Oklahoma law). The insurance company claimed there was only a $10,000 limit, since the endorsement incorporated Oklahoma law, requiring only $10,000 coverage, and required Arkansas law, forbidding stacking, be applied to the policy. The District Court allowed $25,000 coverage, applying the Arkansas minimum limit and denying stacking, under Arkansas law.

The Court of Appeals held there was $50,000 coverage. The policy provision required Arkansas minimum limits but did not require application of Arkansas law to the policy. The endorsement did not require that the limits be the same as the Oklahoma minimum and, thus, did not conflict with the provision in the body of the policy requiring the limits of the state where the accident occurred. Rhody v. State Farm Mut. Ins. Co.105 required the law of the state where the policy was issued control policy interpretation.


Russell v. American States Ins. Co.106 holds a passenger injured by the negligence of the driver of the car he is occupying may recover both the liability and the UM motorist coverage on that vehicle and that the passenger could recover under the non-owner driver’s uninsured motorist coverage.

Russell was killed while occupying a vehicle insured by American States and driven by a driver with a separate policy with American States. American States paid its liability coverage under both the owner’s and the driver’s policies, but declined to pay its uninsured motorist coverage. The district court sustained the insurance company’s position in the insured’s declaratory judgment action. The Court of Appeals reversed.

The Court rejected the insurer’s argument there could be no UM recovery where the liability and UM coverage on the vehicle being occupied was the same. The trial court’s ruling to that effect was predicated on Heavner v. Farmers Ins. Co.107 There, an injured passenger in the Farmers’ insured vehicle recovered only $4,500 of the driver’s $10,000 policy limit, due to multiple claims against Farmers’ $20,000 aggregate or per accident liability limit. The Oklahoma Court held invalid Farmers’ policy provision that the term “uninsured motor vehicle” did not include “the insured vehicle.” This provision was contrary to the definition under the 1976 version of 36 O.S. §3636 that the term “uninsured motor vehicle” included a motor vehicle having available liability limits less than the UM coverage. However, due to the 1976 statute’s provision permitting such offset, Heavner was permitted to recover only the difference between the $4,500 paid under the liability coverage and the $10,000 UM limit, or $4,500.

The latter result of Heavner was inapplicable since the 1979 amendment to §3636 defines “uninsured motor vehicle” as a vehicle having liability limits less than the injured party’s claim. Under the 1979 statute (unlike the 1976 statute), the liability coverage does not credit against the UM coverage.

The passenger (Russell) was entitled to UM coverage under the driver’s policy since the UM portion of the policy included as an “insured highway vehicle” a vehicle being operated by the named insured. Since the vehicle was an insured vehicle Russell was occupying an insured vehicle, he was an insured under the UM provisions of the driver’s policy.

Babcock v. Adkins108 did not preclude coverage. It held that one insured only because he occupied the insured vehicle may not stack under separate policies on vehicles the named insured owns. Russell qualified as an insured under the policy sued on.

Heavner v. Farmers, supra, and State Farm v. Wendt109 invalidate policy definitions which excludes the definition of “uninsured motor vehicle,” the insured vehicle. The occupant of the insured vehicle injured by the driver’s negligence may recover both liability and UM coverage on that vehicle.


Safeco Ins. Co. of Am. v. Sanders110 holds that an intentional killing in a car is not covered, where the killer is not using the car for a transportation purpose at the time of the killing.

The case arises from a particularly brutal crime. The killers abducted a couple sitting in a car in a shopping center parking lot. They drove them to the country, put them in the truck and cut the gas lines of the car. They then set the car afire and left the couple to burn to death.

The couples’ survivors made UM claims. The insurers sued in federal court for a declaration that the claims were not covered.

The federal court (Judge Ellison, in Tulsa) submitted certified questions to the Oklahoma Supreme Court. The Supreme Court answered them, in a complex opinion by Justice Wilson.
First, the federal court asked whether the murders arose “out of the use of a motor vehicle.” The opinion answers that it does. An injury which results from a chain of events which start with the use of a motor vehicle, arises out of the use of the vehicle. Second, the federal court asked whether there was a causal connection between the use of the vehicle and the deaths. The opinion concludes there was. The Court adopts a two-pronged test: (1) is a use of the vehicle connected to the injury, and (2) is the use related to the transportation use of the vehicle. The Court rejects the insurance companies’ claim the vehicle was the “mere situs” of the injury. Rather, the vehicle was the cause of the deaths.

Third, the federal court asked whether the killers’ act in cutting the gas lines and burning the car constituted such an intervening act as to sever any causal use of the car for a transportation use.
The opinion holds that it did. The act of cutting the fuel lines and burning the car were “so contrary to its transportation nature of the vehicle that, as a matter of law, these events are not related to its transportation nature” and injury from it is not covered by UM.

Fourth, the federal court asked whether the killers were “operators of an uninsured motor vehicle” when they set the car on fire. They were not. The act of setting fire to the car did not involve the transportation nature of the car.

Justices Opala, Hodges, Doolin, and Kauger concurred with Justice Wilson’s opinion. Justices Hargrave, Lavender, Simms and Summers concurred in result (denying recovery). Justices Lavender and Simms joined in an opinion by Justice Summers. That opinion takes the position that the vehicle was the mere situs of the injury and no legal causal connection existed between the use of the vehicle and the deaths.

Each of these opinions constitute a virtual encyclopedia of cases from other jurisdictions dealing with what constitutes “use” or “occupying” a vehicle, for various insurance purposes, not just UM. The “bottom line” is that most med-pay claims from intentional assaults upon the insured in a vehicle. Many such assaults will be covered under UM.

Both opinions can be cited as significantly expanding the scope of automobile med-pay or automobile accident death or injury policies. Anyone litigating coverage questions in this area would be well advised to read these opinions (including the extensive footnotes) carefully.