Perjury

Plaintiff filed a personal injury lawsuit against the Defendant that arose out of a gas pressure vessel explosion on an oil and gas lease. During the discovery phase of the lawsuit, a deposition was conducted of the former co-plaintiff in which the deponent testified he had installed a safety pressure valve three weeks prior to the explosion. Approximately six months after the testimony was given, Plaintiffs’ counsel submitted a correction to the deposition revising the testimony to reflect the valve had actually been installed after the explosion. A second deposition was conducted in which the co-plaintiff admitted to giving false testimony in order to mislead the Defendant, the court, and ultimately the jury. Defendant moved to dismiss the lawsuit based on Plaintiff’s perjury and prevailed. Plaintiff appealed.

The Oklahoma Court of Civil Appeals affirmed the dismissal, holding:

1) the trial court acted properly within its authority to protect judicial process when it dismissed Plaintiff’s claim, and

2) Plaintiff’s rights to due process were not violated when the lawsuit was dismissed as a sanction to Plaintiff’s misconduct.

Agrawal v. Duke Energy Field Services, LP, 2013 OK CIV APP 61.

UM Insurance Coverage

A lawsuit arose from a claim presented by the Plaintiff to the insurance company for uninsured motorist coverage. In the claim, Plaintiff stated that he was injured while riding his motorcycle. A red car passed him and cut-off a beige car traveling in the lane in front of him causing the beige car to brake suddenly. As a result, Plaintiff locked his brakes and was forced to lay down his motorcycle to avoid a collision. Plaintiff collided with the center barrier wall at a high speed and sustained significant injuries.

Upon investigation, the insurance company found the Plaintiff to be 100% at fault. Since the beige car had been able to safely slow down without striking the red car, the insurance company reasoned the Plaintiff also should have been able to safely slow down unless he was following too closely. In addition, the police officer recorded Plaintiff’s blood alcohol level at 0.09 which is above the legal limit for operating a vehicle in Oklahoma. It was also noted Plaintiff was traveling at speeds 5-10 miles per hour above the speed limit. As such, the insurance company denied the claim concluding that UM coverage is not available when the insured was more than 50% at fault.

As a result of the denial of the claim, Plaintiff filed suit against the insurance company alleging breach of contract (a cause of action which was later dropped just before trial) and "bad faith".

The jury returned a verdict in favor of the Plaintiff agreeing that the insurance company had acted in bad faith by denying the claim. Shortly thereafter, the insurance company filed a motion for judgment as a matter of law arguing that it acted reasonably and relief upon legitimate reasons for denying the claim. Ultimately, the trial court granted the insurance company’s motion and ruled in favor of the insurer. Plaintiff appealed.

The Tenth Circuit Court of Appeals affirmed the trial court’s judgment in favor of insurance company agreeing that based upon the facts known, a reasonable jury could not find that the insurance company failed to act reasonably in denying the claim. Further, there was no evidence showing the insurance company failed to properly investigate the claim. Bannister v. State Farm Mut. Automobile Ins. Co.,692 F.3d 1117, (10th Cir. 2012).

Insurance - Bad Faith

An apartment complex sustained a fire loss to its business and hired a public adjuster to assist in preparing the property damage claims. Subsequently, the apartment complex assigned its interest in the bad faith claims against the insurance company and insurance agency to the public adjusting company and, in turn, the public adjuster filed suit alleging bad faith. The insurance company and agent filed motions for summary judgment in the trial court and prevailed. The public adjuster appealed.

On appeal, the Oklahoma Court of Civil Appeals found that the trial court properly granted summary judgment and held:

1) summary judgment for the insurer was appropriate because a bad faith claim arises from a tort and, under Oklahoma law, a tort cause of action is not assignable; and

2) summary judgment for the insurance agency was appropriate because, under Oklahoma law, an insured cannot bring a bad faith claim against an insurance agency or its agent because they are not parties to the insurance contract.

 

, 2013 OK CIV APP 67, 307 P.3d 400.

United Adjustment Services, Inc. v. Professional Insurors Agency, LLC

Insurance - Liquor Liability

A golf course was insured by an insurance policy which included "Liquor Liability Coverage". The parents of a 17-year-old girl working at a golf course brought a lawsuit against the golf course and its manager for allegedly providing alcohol to their daughter following a golf tournament. The girl attempted to drive after consuming a substantial amount of alcohol, crashed her vehicle into a tree, and sustained serious injuries to her spinal cord resulting in paraplegia.

The insurance policy provision obligated the insurance company to pay sums owed by the golf course if they were incurred "by reason of the selling, serving or furnishing of any alcoholic beverage." The insurance policy liability limits were set at $2 Million for the "Aggregate Limit" and $1 Million for "Each Common Cause Limit".

The insurance company subsequently filed a declaratory judgment action in Federal court asking the court to establish the maximum insurance coverage available to the golf course. A summary judgment was filed requesting the court rule that $1 Million was the applicable limit since all claimed damages arose from the injuries to one person and fell under "Each Common Cause". The girl’s parents argued the limit should be $2 Million.

The Federal court granted summary judgment in favor of the insurance company finding the maximum limit of liability was established at $1 Million for the pending county district court case and reasoned that an insurance policy is considered a contract governed by the rules for interpretation of contracts. The plain language of the policy set the limit in this circumstance at $1 Million. The court further declared that, since it did not have the ability to rewrite the policy, it must proceed based on the agreement therein. American Economy Ins. Co. v. Rutledge, et al., 833 F.Supp.2d 1320 (W.D. Okla. 2011).

Choice of Law Governing The Liability Under An Insurance Contract

A product distributor in the oil-drilling industry was sued by several individuals claiming they were exposed to asbestos in the products distributed. The distributor subsequently filed claims with its multiple insurance companies seeking liability coverage. The insurers disagreed there was coverage for the liability claims under the policies. A series of declaratory judgment actions ensued in which the parties requested the Court to determine which party(ies), if any, were responsible for the cost of the extensive asbestos litigation the distributor was defending.

In one of the declaratory judgment actions in Federal court, the distributor/insured filed a counterclaim adding the parent company of the insurer as a separate party even though there was no contract with the parent company. It was argued by the distributor that the parent insurance company was responsible for the claims of its subsidiary which was merely an alter ego of the parent company. The parent insurance company filed a motion to dismiss the action alleging it was not liable for the subsidiaries obligation as it was a separate corporation.

The Court decided Oklahoma law did not apply to the issue of liability as to the parent company since the subsidiary was incorporated in the state of Indiana. Despite being filed in an Oklahoma Federal court, the court was required to look to the laws of the state of incorporation of the subsidiary insurance company as to whether to pierce the corporate veil. The court granted the parent company’s motion to dismiss. Canal Ins. Co. v. Montello, Inc., et al., 822 F.Supp.2d 1177 (Okla. 2011).

Punitive Damages Are Exempted From A Supersedeas Bond

As part of the tort reform law passed in 2009, 12 O.S. § 990.4(I),‘exempted punitive damages from the obligation to post a bond on appeal as a means to stay execution of a judgment. The legislation was declared unconstitutional by the Oklahoma Supreme Court citing Douglas v. Cox Retirement Properties, 2013 OK 37, 302 P.3d 789. Some attorneys have erroneously rushed to the conclusion that a supersedeas bond is again required for punitive damage awards due to the determination the 2009 statute was held unconstitutional as violative of Oklahoma’s procedural requirements. The attorneys argue that the March 15, 2005, version of the statute is the existing law since the 2009 version was determined to be unconstitutional.  The position is entirely incorrect and ignores the Legislature’s 2010 amendment of the statute. The 2010 version, not the 2005 version, is the correct existing law.

The Oklahoma legislature revisited 12 O.S. § 990.4(I) effective November 1, 2010. The procedural defect in the 2009 statute was corrected by the passage of the 2010 version of the statute. Under settled Oklahoma law, the actions of the Legislature are not to be ignored and the courts are expected to follow the statutes enacted. In Douglas, supra, cited by the Plaintiff, the Supreme Court stated:

"Every presumption is to be indulged in favor of the constitutionality of a statute." Id. "It is also firmly recognized that it is not the place of this Court, or any court, to concern itself with a statute's propriety, desirability, wisdom, or its practicality as a working proposition." Fent, 1999 OK 64, ¶ 4, 984 P.2d 200, 204. "A court's function, when the constitutionality of a statute is put at issue, is limited to a determination of the validity or invalidity of the legislative provision and a court's function extends no farther in our system of government."  Id. 

A procedural defect in a statute can be cured by later adoption or re-enactment of the statute. See Atchley v. Board of Barber Examiners of State, 1953 OK 146, 257 P.2d 302, 304-305, citing Atlas Life Ins. Co., v. Rose, 1946 OK 52, 166 P.2d 1011. Accordingly, in our view the Legislature’s actions in amending Section 990.4 in 2010 cured any constitutional defect of the statute; therefore, Section 990.4 as amended in 2010 remains in full force and effect.

Oklahoma's Statute Of Limitations For Contracts

The statute of limitation under 12 O.S. § 95 requires that a lawsuit for breach of contract must be brought within five years if the claim arises from a written contract and within three years if the dispute comes from a contract not reduced to writing.  The time in which to file the lawsuit starts at the completion of the contract.  In the case of Kirby v. Jean's Plumbing Heat & Air, 2009 OK 65, the contract for installation of a new sewage pipeline was completed in 1996.  The homeowner did not file his breach of contract suit until eleven years later in 2007.  The statute of limitations had clearly expired and Oklahoma declined to apply the "discovery rule" to suits based upon breach of contract in construction cases. 

One reason for the court's refusal to extend the "discovery rule" to construction cases is that to do so would defeat the intention of the legislature with the statute of repose.  The court, in upholding the intention of the legislature, has determined there should be some outside limit on when a lawsuit can be brought regardless of the circumstances.

What Is A Statute Of Repose?

A statute of repose as well as a statute of limitation is a legislative means of ending or terminating the time in which a lawsuit may be brought.  "In practical terms, a statute of repose marks the outer time boundary for judicial enforcement of a substantive right whereas a statute of limitation interposes itself only procedurally to bar solely the remedy after a substantive right has vested and a claim accrued."  Kirby v. Jean's Plumbing Heat & Air, 2009 OK 65.

Many people are more familiar with statutes of limitation which bar a person from bringing a lawsuit after a certain period of time has expired.  Typically, statutes of limitation are more commonly thought about in situations in which there is a car accident or other negligent act committed.  The time in which to file the suit starts upon learning about the damages resulting from the negligent act.  The damaged party has a certain period in which to file a lawsuit or forever lose the right to do so.

In contrast, a statute of repose marks the absolute end of any available lawsuit.  The courts have allowed statutes of limitation to be tolled or extended because of the "discovery rule".  The discovery rule is simply the device used to trigger the time in which to file a lawsuit after learning about the damage.  Once a person learns about the damage, the lawsuit must be timely filed or the right to judicial relief is surrendered.  With a statute of repose, it doesn't matter if a person learns about the damage after the deadline or not.  The statute of repose bars the lawsuit simply because of the passage of time.

There are some other technical distinctions.  The statute of limitation does not bar the filing of the lawsuit but rather terminates the remedy available or the relief the court may allow.  The statute of repose blocks the entire lawsuit and prohibits it from going forward.

Is Deleting Photographs From A Cell Phone Spoliation Of Evidence?

The "tall building lawyer" found out during the EUO that Bubba took photos of all the hand guns one week before the fire. Bubba was going to send the photos to a disabled vet who just returned home due to a medical discharge for combat injuries.  Bubba has a big heart and wanted to do something for one of our soldiers wounded in the service of our country.  He was going to let this soldier have his pick of any gun he wanted and give it to him as a gesture of appreciation.  The fire destroyed the guns so he never sent the photos.  The insurer learned about the photos and wanted a copy to document the claim.  

The photos no longer exist.  Bubba, while scouting his favorite deer stand, saw a "buck with a rack that makes ya as giddy as a schoolgirl gettin' ready for her first date." He took so many pictures of the buck that he overwrote the photos of the guns.  

The Advisory Committee, in addressing Fed. R. Civ. P. 37(f), noted that once litigation is anticipated or is commenced, a party is under an obligation to halt or alter its destruction policies such that electronically stored information relevant to the litigation will be preserved.

The good faith requirement of Rule 37(f) means that a party is not permitted to exploit the routine operation of an information system to thwart discovery obligations by allowing that operation to continue in order to destroy specific stored information that it is required to preserve. When a party is under a duty to preserve information because of pending or reasonably anticipated litigation, intervention in the routine operation of an information system is one aspect of what is often called a litigation hold.

When evidence is destroyed, an adverse jury instruction can be imposed as a sanction.  See Stevenson v. Union Pac. R.R., 354 F.3d 739, 747-750 (8th Cir. 2003) (although audio tape recordings were destroyed prior to the litigation as a matter or routine subject to the destruction policy, the adverse inference jury instruction spoliation sanction was affirmed as voice recordings were related to the litigation and lawsuit was certain to arise rendering destruction unreasonable and inferring intent.); In re Prudential Ins. Co. Of Am. Sales Practices Litig., 169 F.R.D. 598,615 (D.N.J. 1997) (adverse inference would be drawn from destruction of computer records when company had a haphazard and uncoordinated retention policy). 

If it ends up with a jury deciding whether or not the photos were destroyed to keep the insurance company from seeing them, there better not be any animal rights activists sitting on the jury!

Oklahoma Attorneys Often Use Bad Faith To Increase Damage Awards

Oklahoma lawyers suing insurance companies for breach of contract in first-party cases find themselves limited by the damages which can be awarded for breach of contract.  Under 23 O.S. § 21, the measure of damages for breach of contract is the amount which will compensate a party for the damage.  In Osborn v. Comanche Cattle Industries, Inc., 1975 OK CIV APP 67, 545 P.2d 827, the Oklahoma Court of Appeals explained the reason for limiting damages:

This interest is given legal protection to achieve the paramount objective of putting the promisee injured by the breach in the position in which he would have been had the contract been performed.  

The law philosophically intends for people who have been harmed to receive compensation, not a windfall.  The concept can be illustrated by the employment relationship.  People are paid (compensated) for the work they do -- an employee receives a windfall if the business owner decides to give him a new Porsche!

Bad faith allegations asserted in Oklahoma courts allow the plaintiff lawyer to ask for money in addition to what might be recoverable under the insurance policy such as:

  • financial losses
  • embarrassment and loss of reputation
  • mental pain and suffering
  • punitive damages

Oklahoma plaintiff attorneys file bad faith claims to try to recover for damages not available under the terms of the insurance policy.  Although it is technically "compensation" for damages, a bad faith claim places the insurance company at greater risk than just what the policy covers.  Problems develop when unscrupulous attorneys or vindictive insureds falsely accuse the insurer of wrongdoing simply as leverage to get their claim paid.  Oklahoma judges, however, protect insurance companies from paying damages for bad faith if the underlying disagreement is a legitimate dispute.