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

In Brown v. Oklahoma Farm Bureau, Brown was sued for negligently conducting a house inspection.  Although his policy was issued by AG Security, he sued both AG and Oklahoma Farm Bureau.  The court found that Oklahoma Farm Bureau was not liable on the claim because it did not issue the policy, even though it handled the claims for AG.  

The court found that Brown's alleged negligent inspection did not cause property damage, a requirement for coverage under the policy.  Further, even if it had, the professional services exclusion (the exclusion excluded coverage for property damage resulting from "rendering of or failure to render professional services in the performance of any claim, investigation, adjustment, engineering, inspection, appraisal, survey or audit services.") precluded coverage for the claim. 

There were coverage issues so that the bad faith claim was properly dismissed; further, the exclusion applied, so the contract claim was properly dismissed.

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In Guideone v. Shore, Guideone (Insurer) wanted Shore (Agent) to pay for all or part of a bad faith settlement it made with its insured.  Apparently Agent had told the insured that her UM coverage did not kick in until after the liability carrier paid its limits.  This is wrong under Oklahoma law.  But, when the insured repeated this information to the Insurer, the Insurer did not correct the error.  In addition, the Insurer did not timely investigate the claim.  As a result, the Insurer was sued for UM and for Bad Faith.  The Insurer settled with the Insured, and then went after the Agent for the money it paid in extracontractual damages.  Summary judgment to the Agent was affirmed.

There was no express indemnity in the Agency contract, so summary judgment was appropriate on that theory.  There was no right to implied indemnity because the Insurer was at fault for the Insured's claims.  There was no right to contribution under the contribution among joint torfeasors statute (12 O.S. § 832) because as an agent, Agency could not be liable to the insured for bad faith. 

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Plaintiffs got a judgment against Bowman and sought to garnish his alleged insurer, Acceptance. Acceptance insured the car dealer who sold Bowman’s dad the car. The car dealer never gave Bowman a title or signed the sales agreement. Acceptance said that it did not insure the car because Bowman (not Bowman’s dad) owned the car. Both parties filed for summary judgment, which was granted to plaintiffs. The Court of Appeals reversed. Acceptance said that Bowman’s dad owned the car, but the trial court said that Acceptance could not deny liability on a ground not identified in its denial letter. (This is commonly referred to as the "denial letter rule." ) An insurer, having denied liability on a specified ground, may not thereafter deny liability on a different ground. But, since the material issue was that the car dealer didn’t own the car, not whether Bowman or his dad owned it, there was no waiver, since this issue was raised in the denial letter.

The next issue was whether the uncontroverted facts established the ownership of the vehicle. Texas courts look to the transfer of possession and control of the vehicle, pursuant to the parties' intent to effect the sale to determine ownership for insurance purposes. Here, it was uncontroverted that Bowman’s dad paid the full sale price for the car. Furthermore, it was uncontroverted that the car was delivered to Bowman’s dad who took possession of it. But, since the car dealer didn’t sign the sales contract, there was a factual issue as to whether the car was sold to Bowman.

Sauvain v. Acceptance, Missouri Court of Appeals, Western District.

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In SHOLER v. ERC MANAGEMENT GROUP, LLC, 2011 OK 24,  the Oklahoma Supreme Court reversed summary judgment on a diving accident claim.  Sholer was rendered quadriplegic after diving into a swimming pool and hitting her head.  Although she admitted that she knew the danger of diving into water of unknown depth, a question of fact exists regarding whether the danger of diving head first into the pool was an open and obvious danger or whether the diver was presented with a deceptively innocent appearance of safety which cloaked the reality of danger making summary adjudication inappropriate.

The court states: 

We have rejected the "open and obvious defense" in a number of cases where the condition or defect was visible but unseen by the plaintiff. A danger need not be totally or partially obscured from vision or withdrawn from sight to be considered hidden. Rather, it may encompass a condition presenting a deceptively innocent appearance of safety, cloaking a reality of danger. It may also arise from circumstances diverting the plaintiff's attention from the danger. Therefore, not every "observable" condition is "open and obvious" as a matter of law. Whether harm from an open and obvious defect may be actionable depends on an objective due care standard, i.e., whether under similar circumstances a prudent person would be able to see the defect and avoid being injured. Nevertheless, it is well established in our jurisprudence that, where conflicting evidence is presented on the issue of the open and obvious nature of a defect, the question must be resolved by the trier of fact. What would normally be considered an open and obvious danger may become a latent defect because of the conditions existing at the time of injury.

Despite Sholer's admissions indicating that she understood the dangers of diving into waters with an unknown depth, she also indicated that the pool's lighting made her believe that it would be safe to do a shallow-water dive. Based on what she observed, Sholer thought the water was as deep as five or six feet. Sholer specifically stated that her perception was linked to the pool's lighting which created shadows. Her rescuer bolstered Sholer's contentions by indicating that he could not determine the depth of the water until he entered the pool. We hold that the openness and obviousness of the dangerous condition and whether Scholer appreciated the risk are questions for the trier of fact making the entrance of summary judgment inappropriate.

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Ms. Ellis had some work done on her house in 2002 when it was discovered a pipe had broken and there was a water leak.  It was fixed, but later, the concrete slab started to crack.  Ellis submitted a claim to State Farm, which denied it.  She then sued State Farm claiming that the slab was covered and that State Farm's denial was in bad faith.

Both parties moved for summary judgment and the trial court granted summary judgment to State Farm.  The 10th Circuit affirmed in Ellis v. State Farm, finding that the “continuous or repeated seepage or leakage” clause excludes coverage for the damage to the concrete slab.

Ms. Ellis contends that the district court erred in applying the “continuous or repeated seepage or leakage” clause for three reasons: (1) the evidence on summary judgment was disputed as to whether the sand fill under the foundation was washed away by water or whether “the sand sifted into the drain pipe and was washed out by effluent that stayed within the pipe,”; (2) the policy language refers to “water or steam,” not to sewage, so the clause is either ambiguous or simply does not apply to this situation where the sand fill was carried away by sewage; and (3) under the doctrine of “reasonable expectations,” Ms. Ellis is entitled to coverage because an insured would reasonably expect the clause to apply to “a water supply line or a steam line, both of which are under pressure, rather than a drain line,”

The court ruled:  1) reasonable expectations was raised for the first time on appeal and not considered; 2) didn't matter if it was a water or a sewage pipe, it contained liquid and a leak in the pipe caused the damage; and it also did not matter if the liquid contained sewage, it was still excluded; and 3) the evidence presented showed that the pipe leak washed supporting sand away from the foundation causing the cracking.  Summary judgment was affirmed.  

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