A husband and wife purchased a home in which the mortgage holder carried the property insurance policy in the name of the mortgage company. At some point, the couple’s home was damaged by a water leak resulting in significant flooding to their home. The homeowners submitted a claim to the insurance company requesting payment for the damages. When the insurance company failed to timely pay the damages and restoration costs, the homeowners filed suit in Federal court for bad faith and breach of contract alleging: (1) the insurer failed to properly adjust the claim, and (2) failed to timely pay for emergency remediation services and restoration expenses.

The insurance company filed a motion to dismiss for failure to state a claim upon which relief can be granted arguing that since the Plaintiffs were not the named insured or beneficiaries under the insurance policy and had no legal basis to file the lawsuit or recover under the insurance policy.

The Federal court granted the motion to dismiss agreeing with the insurer and dismissed the lawsuit. The court said that the insurance policy clearly existed between the mortgage holder and the insurance company to protect the lender’s interest in the property and that the lender was clearly the primary beneficiary of the insurance policy. Finally, the court noted that the policy is unambiguous that the Plaintiffs are not parties to the insurance policy and have no coverage for their property. Lumpkins v. Balboa Ins. Co., 812 F.Supp.2d 1280 (Okla. 2011).

Forced placed insurance is typically purchased by a lender to protect its interest when the homeowner who borrowed the money fails to carry insurance. These contracts have terms that differ from traditional homeowners’ coverage.

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.

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.
 

An insurance company provided liquor liability coverage to a restaurant/tavern including coverage for injuries "imposed" on the insured resulting from "selling, serving or furnishing of any alcoholic beverage".

The club was sued in an underlying state court action by the parent/guardians of three minor Plaintiffs who were purportedly injured as bystanders to a fight which broke out in the insured bar. As part of the state court lawsuit, the minors never presented evidence that showed their injuries resulted from "selling, serving or furnishing alcoholic beverages", nor were any allegations made that alcohol was a factor in the injuries sustained.

The insurance company filed a declaratory action in Federal court requesting the court to determine if the insurance policy covered the injuries in the state court action and required the insurance company to defend in the underlying lawsuit.

The Federal court ruled that since the injuries did not arise out of "selling, serving or furnishing of any alcoholic beverage", coverage did not exist, and, as such, there was no duty to defend the lawsuit. The court also noted that although there was an "assault and battery" endorsement in the insurance policy, the endorsement did not apply since the loss was not covered under the liquor liability policy. Mount Vernon Fire Ins. Co. v. Olmos, 808 F.Supp.2d 1305 (Okla. 2011).

An insurer sold a liability insurance policy to a municipality which specifically excluded coverage for inverse condemnation. The municipality was sued in an inverse condemnation action and filed a claim under the insurance policy after a verdict was returned against the municipality. The claim was denied under the insurance policy exclusion for inverse condemnation. As a result of the denial of the claim, the municipality sued the insurer seeking coverage under the policy.

The trial court granted summary judgment for the insured and the insurance company appealed.

The Oklahoma Supreme Court reversed and remanded the summary judgment entered by the trial court and instructed the trial court to enter summary judgment in favor of the insurer holding that: (1) the insurance policy contained an exclusion for claims of inverse condemnation; (2) the insurance company was not estopped from denying coverage; and (3) the municipality only obtained coverage for losses under the Governmental Tort Claims Act, and (4) a "cause of action grounded on inverse condemnation is not governed by the Governmental Tort Claims Act." City Of Choctaw v. Oklahoma Municipal Assurance Group, 2013 OK 6.

In September, 2010, a commercial auto insurance policy was issued to a county commissioner including uninsured motorist coverage for county vehicles. The liability limits of the policy included $125,000 per person and a maximum of $1 Million per accident.

A county worker was injured on the job while performing road-resurfacing duties and filed a claim for personal injury under the policy requesting coverage under the uninsured motorist portion of the policy contending he was operating a covered vehicle. The insurance company denied the claim and filed a declaratory judgment action stating the claimant could not be considered an insured as he was not occupying a covered vehicle and asked the court to rule there was no coverage. The claimant filed a counterclaim asserting he was entitled to policy limits of $1 Million in coverage for injuries sustained.

The claimant, as well as at least five other members of the road crew, were operating three vehicles as part of a chip-sealing method used to resurface the road; the oil distributor truck, chipper, and a dump truck. The injured claimant was riding on the back of the chipper being pushed by the dump truck when the chipper was pushed into the oil distributor truck and the claimant’s leg was pinned between the two pieces of equipment.

The parties agreed the dump truck was considered a covered vehicle under the insurance policy whereas the chipper was considered "mobile equipment". However, according to the insurance policy, mobile equipment is considered a covered auto when being "carried" or "towed" by a covered auto. These terms were not specifically defined in the insurance policy.

Plaintiff and the insurer both filed motions for summary judgment in the United States District Court for the Northern District of Oklahoma. The court held that the chipper was being towed by the dump truck when the accident occurred and was therefore considered a covered auto under the policy. However, the court ruled under the circumstances there was $125,000 in uninsured motorist coverage, not $1 Million, because the amount of uninsured motorist coverage could not exceed the amount of liability coverage, i.e., $125,000.  Argonaut Ins. Co. v. Earnest, 861 F.Supp.2d 1313 (N.D. Okla. 2012).

A homeowner searching for a low-cost insurance policy for his home purchased an insurance policy for his residence. The property coverage policy differed from a traditional homeowner’s insurance policy in that the property coverage provided reduced coverage for certain types of losses and didn’t cost as much as homeowners coverage would have. The contract provided coverage to the structure as a result of a burglary, however "theft" of personal contents was specifically an excluded loss.

After the policy was issued, the homeowner was burglarized and filed a claim with his insurance company for the loss of personal property associated with the theft. Since the insurance policy did not provide coverage for theft loss of personal contents, the insurer denied the claim.  The homeowner filed a lawsuit alleging there was an improper denial of the claim payment. The homeowner prevailed in the trial court and the insurer appealed.

The Oklahoma Court of Civil Appeals found in favor of the insurance company holding that theft loss was specifically excluded from coverage and that the policy was limited strictly to actual damage to the structure and reversed the trial court decision.  The Oklahoma Court of Civil Appeals stated:  "Loss of personal property arising out of burglary of insured’s home fell outside scope of covered peril for burglary damage to actual premises." Jones v. Union Mutual Insurance Company, 295 P.3d 612, 2013 OK CIV APP 12.

Some Oklahoma lawyers will tell that Opening Statements are the most important part of the case. They claim by the end that the jurors have already made up their mind. Maybe? In my experience, jurors try really hard and listen to the evidence. The statements of the lawyers are not evidence and jurors understand the lawyers are advocates for their clients.

Bubbas Jury Trial Day 2The Wewoka Worldwide attorney did a fine job. He was clearly skilled, smooth, and comfortable in the courtroom. He told the jury the evidence would show that Bubba submitted an inventory of damages that was fraudulent and that Wewoka denied the claim to protect its other policyholders from rate increases. The jurors listened attentively as he explained the inventory list of the contents in Bubba’s house had more guns than socks. He concluded his remarks by stating ” the evidence will prove Bubba engaged in false swearing in the submission of an insurance claim. ”

Bubba’s opening statement was slightly less polished, ” Folks, taint’ one bit a truth to it! My swearin’ ain’t dishonest!  I  go to cussin’ when I git  a little heated up or sometimes if I smash my thumb, but it’s honest cussin’ for sure!  ”

” As to insurance fraud, why thet squirrel that burnt’ down my house, ain’t no fraud. Found em’ sittin’ in the toilet after the fire. Crawled into the water to git outa so he didn’t git burnt!”

” More guns than socks, duh? You don’t wear but two socks at at time! That boy’s a few fries short of a Happy meal if he’s a sayin’  them guns weren’t in the fire! ”

It wasn’t eloquent, but Bubba had just given his first Opening statement. It ended with three of the jurors on the front row grinning. Wonder what’s in their minds?

Jury Trial Begins

The jury trial in Bubba’s fire insurance case started Monday at 9:00 a.m. Bubba decided to try the case ” hisself “.  It calls to mind the old saying that a man who represents himself has a fool for a lawyer.

Wewoka Worldwide Insurance showed up to trial with two of those ” tall building lawyers ” from Oklahoma City, experienced and fully prepared. They also brought a legal assistant to help with the details of the trial.

The initial phase of a jury trial is called ” voir dire ” or as Bubba puts it, ” jury picken’ “. The purpose is to find 12 unbiased people to listen to the evidence and make an impartial decision about disputes over the facts. The court clerk called the potential jurors  randomly after pulling names from a box full of names.

The lawyers are given the opportunity to ask questions about the jurors’  qualifications to serve in the trial. When Bubba’s turn came, he asked ” Any of ya’ll been cheated by Wewoka Worldwide “? Immediately, Wewoka Worldwide’s lawyers were on their feet objecting the remark was inflammatory.

Judge Smith told the jury to disregard the comment and instructed Bubba to ask appropriate questions. Bubba replied, ” Judge, I figured it was a good idee’ to find out if any these folks mighta’ been rooked out of their money like I wuz. ” The Wewoka attorneys  objected again. The judge explained to Bubba that he had to ask questions in a noninflammatory way. Bubba turned back to  the jurors and said, ” Alright, are there any of ya’ll that intend to vote for this cheap, no good insurance company that don’t pay folks “? The insurance lawyers were hot and asked for a recess to speak with the Judge in chambers.

Jury selection is often completed in 2 – 3 hours.  There’s now a new record for the longest voir dire ever in history of the county. Poor Judge Smith finally granted a mistrial to Wewoka Worldwide due to Bubba’s questions. The Judge also advised voir dire was not going to end in another mistrial when the process started all over again on Tuesday. This time, Judge Smith was going to be asking the potential jurors the questions.

By late afternoon on Tuesday, a large number of the potential jurors had been excused. Three of the prospective jurors were removed for cause by the court, two were drinking buddies of Bubba. Although both assured Judge Smith they could be fair and impartial, ” not giv’n Bubba a penny more than he deserved. ” The judge thought it might be more fair to start the trial without ” the preconceived notion that the insurance company was going to have to pay anything. ”

The third juror excused was Peggy Buthel. The mother of one of Bubba’s old girlfriends, she told Judge Smith that  ” Bubba outa get a fair trial before the jury hung em’ “!   Judge Smith reminded her there was no death penalty in an insurance lawsuit involving only money.  She finally acknowledged that it would be hard to be completely fair unless  ” there wuz atleast some hope of lockin’ Bubba up! ” Judge excused her for cause so Bubba could get a fair trial.

The jury panel consisting of 20 people was ” passed for cause ” meaning there are no legal reasons that prevents them serving as jurors.  Once a jury is passed for cause, the jury selection is still not over. Each side is allowed to strike three jurors from the panel of 20 people without having to state a reason. Once each side strikes three apiece, it leaves 12 actual jurors and two alternates. It is always a good idea to have alternates in case someone becomes ill or can’t continue for some reason.

Experienced trial lawyers use their jury strikes to remove  jurors perceived to be a worry or concern. The decision on who to strike is typically based upon something the person said while answering questions. No reason is given, the attorney just announces the juror’s number and the court allows the juror to leave.

Using a never seen before technique, Bubba looked directly at Juror No. 7 as he flipped a quarter. He told the juror, ” Heads you leave, tails you stay “! The juror won and got to leave. But before Bubba got his next turn to strike another juror,  Judge Smith banned the highly sophisticated selection method for the remainder of the trial.

It took nearly two full days and half a bottle of aspirin, but a jury was empaneled.

The next step is opening statements. I hear they start tomorrow morning at 9am.

 

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Litigation has a lot of conflicts that really slow down getting your day in court. Sometimes it has to do with the lawyer’s schedule in other courts. Bubba’s insurance case hit one of those snags. Judge Smith set the case on the trial docket that also happened to be the trial docket in a Federal court lawsuit in one of my other files.

Even Bubba could ” see how a feller’ caint be two places at oncest “. He hoped my client in the Federal case was going to understand. I explained to Bubba that the courts have their own ideas about conflicting dates and who case goes to trial. The general rule being Federal court jury trials take priority over the ones in a State court. Bubba’s case was not filed in Federal court.

Don’t ever try to out guess Bubba! When I told him that I was going to call Judge Smith to let him know that I had a conflict and need to continue Bubba’s jury trial, he ranted for a few minutes. That I expected! What I didn’t expect was for Bubba to ” fire me “. If I couldn’t be there, then ” he wus just a goin’ do her hisself”! The courts call a person that acts as their own lawyer ” pro se “. Most lawyers just call them ” fools “.

I’m going to see if maybe Judge Smith will let someone video this jury trial. It’s going to be a hoot for sure!