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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Oklahoma has a statute of repose for "improvements to real property".  If you are hurt by an improvement to real property more than 10 years after it is substantially completed, you may not sue.  See, 12 Okla.Stat. § 109.  In Goad v. Buschman, the 10th Circuit affirmed the trial court's grant of summary judgment to the owner of a building which had a conveyer belt system.  The building was used for grocery warehouse operations.  The court found that the factors favored finding that the conveyor system was part of the property and therefore fell within the ambit of the statute of repose.

The evidence presented to the district court shows that in 1985, Buschman contracted for the design, construction, and installation of the conveyor system. Buschman designed and installed the system. It was constructed from several conveyor “standards” that were installed to fit within the building’s existing footprint. The system is hardwired into the building, is three stories high, and originally contained about 6,155 feet of conveyor. It is attached to the floor by anchors set in concrete and bolts, and further attached to the building by a variety of bolts, angle bracing, stabilizing legs, floor-support columns, and ceiling hangers. The conveyor system is not welded to the building or embedded in the floor. The purchase price of the system was approximately $776,852.

The evidence presented to the district court shows that in 1985, Buschman contracted for the design, construction, and installation of the conveyor system. Buschman designed and installed the system. It was constructed from several conveyor “standards” that were installed to fit within the building’s existing footprint. The system is hardwired into the building, is three stories high, and originally contained about 6,155 feet of conveyor. It is attached to the floor by anchors set in concrete and bolts, and further attached to the building by a variety of bolts, angle bracing, stabilizing legs, floor-support columns, and ceiling hangers. The conveyor system is not welded to the building or embedded in the floor. The purchase price of the system was approximately $776,852.

The fact that the conveyor was taxed as personal property, not real property was not dispositive, but was merely one factor to consider.  The other factors were:

(1) is the improvement permanent in nature; (2) does it add to the value of the realty, for the purposes for which it was intended to be used; [and] (3) was it intended by the contracting parties that the “improvement” in question be an improvement to real property or did they intend for it to remain personalty.

The court disregarded statements by two of the building employees that the conveyor belt was not intended to be permanent since it was not apparent that the statements were made on personal knowledge.  Further, the fact that the conveyor could be theoretically removed was mere speculation. 

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