776 P.2d 847 (Okla. 1989), 68427, Welch v. Armer

Docket Nº:68427.
Citation:776 P.2d 847, 1989 OK 117
Party Name:Addeller O. WELCH, Appellee, v. Larry Don ARMER, Appellee, v. UNION MUTUAL INSURANCE COMPANY OF PROVIDENCE, Appellant.
Case Date:June 27, 1989
Court:Supreme Court of Oklahoma

Page 847

776 P.2d 847 (Okla. 1989)

1989 OK 117

Addeller O. WELCH, Appellee,


Larry Don ARMER, Appellee,



No. 68427.

Supreme Court of Oklahoma.

June 27, 1989.

Page 848

Appeal from the District Court of Sequoyah County; A.J. Henshaw, Jr., Trial Judge.

Insurance carrier appeals from an order dismissing its cross-claim for indemnification against an allegedly negligent driver of a motor vehicle, his insolvent liability insurance carrier, and the Oklahoma Insurance Guaranty Association.


Paul Antonio Lacy, Oklahoma City, for appellee.

Best, Sharp, Thomas, Glass & Atkinson by Joseph A. Sharp and John H.T. Sheridan, Tulsa, for appellant.

DOOLIN, Justice.

The issues presented in this case are ones of first impression. First, must a claimant's uninsured motorist coverage be exhausted before a claim can be made against the Oklahoma Guaranty Association? Second, can the uninsured motorist carrier maintain a claim of indemnity against the tort-feasor?

We hold 36 O.S.1981 §§ 3636 and 2012 prior to amendment are controlling and require claimants to first exhaust claims against their own uninsured motorist carrier before they can recover against the Guaranty Association. Further, the uninsured motorist carrier may maintain a claim against the tort-feasor, but only for amounts above the limits of tort-feasor's policy with the insolvent insurer.


On November 30, 1984, a vehicle driven by Larry Don Armer (Tort-feasor) collided with a vehicle driven by Addeller O. Welch (Welch). Tort-feasor's liability insurer was insolvent. Union Mutual Insurance Company of Providence (Union Mutual) provides uninsured motorist coverage to Welch.

On December 10, 1985, Welch filed a Petition against tort-feasor for negligence and against Union Mutual for coverage of the accident. Union Mutual filed an Answer, and a Cross-Claim against Armer for indemnification pursuant to The Oklahoma Property and Casualty Insurance Guaranty Association Act (Guaranty Act). 36 O.S.1981 § 2001, et seq.

Tort-feasor then filed a motion to dismiss the cross-claim asserting Union Mutual's claim was barred by 36 O.S.1981, § 3636(E) because he was an uninsured motorist pursuant to 36 O.S.1981 § 3636(C). Tort-feasor also moved to strike defenses in Union Mutual's answer which denied he was uninsured or under-insured at the time of the accident.

In addition, tort-feasor filed a motion for declaratory judgment. He asked the court to declare that a judgment for Welch must first be satisfied by Union Mutual before any recovery against him or the Guaranty Association. Tort-feasor further requested the court to declare that the statutory amendments to § 2012 of the Guaranty Act could not be retroactively applied.

Union Mutual responded to tort-feasor's motions claiming: 1) the Guaranty Association's obligation is primary to that of the uninsured motorist carrier, 2) Union Mutual, as the uninsured motorist carrier, can maintain an action against tort-feasor, and 3) the amendments to § 2012 of the Guaranty Act must be applied retroactively.

The District Court issued an Order dismissing Union Mutual's cross-claim, and its defenses relating to tort-feasor being an uninsured motorist. The Order also overruled tort-feasor's motion for declaratory judgment as being moot.

Union Mutual appeals.


To establish primary liability, we first turn to 36 O.S.1981 § 3636. This section provides that liability insurers of motor vehicles are to provide uninsured motorist

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coverage to their policy holders. The purpose of this coverage is to provide insured persons who are are legally entitled to recover damages from owners or operators of an uninsured or under-insured vehicle with a means of recovery. Section 3636 is relevant to this case because it defines the term uninsured motor vehicle to include "... an insured motor vehicle where the liability insurer thereof is unable to make payment with respect to the legal liability of its insured within the limits specified therein because of insolvency."

Union Mutual, as the liability insurer of claimant Welch, provides uninsured motorist coverage to be used in the event Welch has a claim against an uninsured or under-insured motorist. Tort-feasor argues he is an uninsured driver in...

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