An insurance company was sued for breach of contract and bad faith and received summary judgment by the trial court. The insured appealed to the Oklahoma Court of Civil Appeals who affirmed in part and reversed in part the trial court’s ruling holding that while a breach of contract did exist since the insurer denied coverage for a covered loss, the insurer was not guilty of bad faith as it had a reasonable basis for denying the claim. The appellate court remanded with instructions to find in favor of the insured on the breach of contract claim and to set the case for trial regarding the damages.

During the litigation of the remanded action, the insurer conducted discovery regarding the insured’s damages and made offers of judgment which were not accepted by the plaintiff. Instead, the plaintiff filed a separate lawsuit for bad faith claiming the insurer acted in bad faith for allegedly failing to properly investigate the plaintiff’s claims after the action was remanded. The insurer again moved for summary judgment and prevailed. The insured once again appealed and the Oklahoma Court of Civil Appeals affirmed summary judgment holding:

[o]nce a court . . . proceeding is commenced seeking insurance benefits, normal claim handling is superseded by the litigation proceeding. Allan D. Windt, 2 Insurance Claims and Disputes 5th: Representation of Insurance Companies & Insureds, § 9:28 (Database updated March 2012). The article continues:

The insurer retains counsel, and the insurer then relies upon its counsel to handle discovery in the context of the litigation proceeding. Accordingly, properly analyzed, an insurer cannot be guilty of bad faith because it does not conduct its own investigation, but instead relie[s] upon its counsel to conduct an investigation that is appropriate in a litigation context.

Andres v. Oklahoma Farm Bureau Mut. Ins. Co., 290 P.3d 15, 2012 OK CIV APP 93.

The appellate court went on to say "[s]ee Sims v. Travelers Ins. Co., 2000 OK CIV APP 145, ¶¶ 9-12, 16 P.3d 468, 471-72 (holding that an insurer’s litigation conduct could not be used as evidence of bad faith or to form the basis for a bad faith claim)" and "to hold an insurer’s acceptable litigation tactics as evidence of bad faith would be to deny the insurer a complete defense." Andres v. Oklahoma Farm Bureau Mut. Ins. Co., 2012 OK CIV APP 93 at ¶13, 290 P.3d 15.