Reinsurance Law Blog : Oklahoma Insurance Lawyer & Attorney : Stauffer & Nathan Law Firm

In Moses v. Halstead, the court was faced with a choice of law issue:  should the court apply the law of the place of the insurance policy or the law of the place of  performance?  The court found that Kansas law applied under both the place of the contract and the place of performance analysis.

Moses was the passenger in her car when Halstead ran off the road, injuring her.  The insurance policy was issued by Allstate in Kansas.  The accident occurred in Missouri.  When Allstate failed to settle Moses' claim for policy limits, Moses sued Halstead in Missouri and got a judgment in excess of limits.  The judgment was registered in Kansas state court, and Moses started garnishment proceedings.  Allstate removed the case to federal court.

The trial court ruled that Missouri law applied and that Allstate was entitled to judgment since Missouri required an assignment from the insured before a judgment creditor can file an action agaisnt the insurance company for bad faith refusal to settle.  Kansas does not require such an assignment.

The Tenth Circuit reversed, finding that Kansas law applied to the claim.  It noted that in Kansas, while an insurer's duties are contractually based, breach of the duty is judged by a tort standard of care.  The court reviewed various Kansas decisions and determined that a claim for negligent or bad faith refusal to settle goes to the substance of an insurer's contract duties, rather than the manner of performance of those duties. Therefore, the claim would be govered by the law of the place of the contract, Kansas.  Furthermore, the court determined that a failure to settle claim went to the manner and method of performance, and that the place of performance would apply to this issue.  Since the demand for performance and the rejection of that demand was made in Kansas, the court found that Kansas law applied to this issue, as well. 

The court then remanded the case for the trial court to apply Kansas law in the first place. 

Summary judgment had been argued without any mention of choice of law rules.  The court also discusses the differences between Kansas and Missouri law on bad faith failure to settle claims.

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When an Oklahoma resident is injured in Oklahoma by an uninsured motorist, you might expect Oklahoma law to apply.  But not if the UM policy was issued or delivered in another state on a vehicle registered or principally garaged in another state.  In Bernal v. Charter County Mutual Insurance Co., the Oklahoma Supreme Court said that Oklahoma's UM statute only applies to vehicles registered in or principally garaged in Oklahoma.  Thus, even though the accident occurred in Oklahoma, and the insured was from Oklahoma, Texas law would apply because that was where the vehicle was registered. Since Oklahoma law does not apply, there was no need to do a choice of law analysis -- and really, who wants to do that?  

The court says that Oklahoma's statute applies solely to cars registered or garaged in Oklahoma.  It then concludes that this a legislative mandate to use the law of the state of the policy or where the car is garaged and/or registered. 

There is no discussion as to whether there is any choice of law provision in the policy, and whether that would make any difference.  Certainly, under Oklahoma (and most other states laws), the parties may choose to be governed by a specific state's laws.  Whether and to what extent this may affect other types of insurance is not yet known.

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