Skinner v. John Deere Ins. Co.

• Decision Date: 14 March 2000
• Docket Number: No. 91,963.,91,963.
• Citation: 998 P.2d 1219,2000 OK 18
• Parties: Lynn SKINNER, Individually, and Lynn Skinner, as Guardian Ad Litem for Kristie Skinner, and as Guardian Ad Litem for Lindsi Skinner, a minor, Appellants/Plaintiffs, v. JOHN DEERE INSURANCE COMPANY, Appellee/Defendant.
• Court: Oklahoma Supreme Court

998 P.2d 1219

2000 OK 18

Lynn SKINNER, Individually, and Lynn Skinner, as Guardian Ad Litem for Kristie Skinner, and as Guardian Ad Litem for Lindsi Skinner, a minor, Appellants/Plaintiffs, v. JOHN DEERE INSURANCE COMPANY, Appellee/Defendant.

No. 91,963.

Supreme Court of Oklahoma.

March 14, 2000.

Lloyd Payton, Jeff Payton, Muskogee, Oklahoma, for the appellant.

Mark E. Bialick, David B. Donchin, Oklahoma City, Oklahoma, for the appellee.

HODGES, J.

¶ 1 The dispositive issue in this case is whether the trial court erred in its denial of the plaintiff's motion for a new trial after it granted summary judgment for the defendant and denied the plaintiff's motion to supplement his response to the motion for summary judgment. We find that the trial court's denial of the plaintiff's motion for a new trial was proper.

I. FACTS

¶ 2 In December of 1993, a vehicle driven by Debbie Spencer, owned by Larry Spencer Chevrolet,¹ and insured by the defendant, John Deere Insurance Company (Deere) was involved in an accident. Kristie Skinner, a pregnant passenger in the vehicle, was severely injured. Debbie Spencer and passengers Donna Miller and Maxine Livingston were also injured. The driver and passengers filed underinsured (UM) motorist claims with Deere. The written policy stated that it included $20,000 in UM motorist insurance and $500,000 in liability coverage.

¶ 3 During the early stages of the investigation, Deere discovered that it did not have a written rejection of UM coverage equal to the liability coverage.² Because of the lack of the written rejection and the fact that Spencer Chevrolet could not remember being offered the higher limit, Deere determined there was a question whether the UM limits were the stated amount of $20,000 or an imputed amount equal to the liability limits of $500,000.

¶ 4 In its investigation, Deere found that there was no precedential legal authority clearly on the issue of the amount of UM coverage where there was no rejection of an amount equal to the liability coverage. To help resolve the policy limit issue, the defendant sought and received an opinion from attorney David Donchin. The opinion, dated April 14, 1994, stated that Donchin believed that the liability limits would be imputed to the policy if the insured had not been offered and rejected the higher amount. The attorney's opinion was ambiguous as to whether the liability provisions would apply.

¶ 5 Further complicating the issue was the fact that the UM claims exceeded $500,000 and the parties could not agree on the appropriate method of dividing the funds. In his deposition, the senior claims adjuster stated that even after reading the attorney's opinion, the adjuster believed that Deere was obligated for only $20,000 in UM coverage. The claim logs show that during this time, Deere was actively in the process of determining whether Spencer Chevrolet had rejected the higher limits of UM coverage, the amount of UM coverage for which Deere was legally bound, and Spencer Chevrolet's potential liability exposure for the accident. The facts show that there was an actual dispute of the amount of UM coverage and how the UM funds should be divided among the claimants.

¶ 6 Deere's logs show that on August 9, 1994, the adjuster thought that Deere should get additional information on the medical bills, file an interpleader, and let the court and attorneys determine how the proceeds should be divided. Nonetheless believing it was in the best interest of all involved, Deere apparently decided to offer the $500,000 to the parties to settle. It appears the offer was made some time before November 3, 1994. Deere's logs also indicate that Deere still thought that Spencer Chevrolet might have some liability exposure and that Deere needed to protect its insured, Spencer Chevrolet, from a liability claim. This would explain why Deere requested a general waiver of liability from the claimants. Nonetheless, the claimants could not agree on a division of the proffered amount and the plaintiff, Lynn Skinner,³ refused to sign a general waiver.

¶ 7 On October 25, 1994, the Court of Civil Appeals filed its decision in Perkins v. Hartford.⁴ In Perkins, the Court of Civil Appeals held that under title 36, section 3636, when an insurer fails to offer UM coverage equal to the liability limits, the liability limits are imputed to the UM coverage. Certiorari was denied on January 18, 1995. Perkins was ordered for publication by the Court of Civil Appeals only.⁵

¶ 8 On November 14, 1994, the plaintiff filed the present bad faith action against Deere for unreasonable delay in payment of his UM claim.⁶ The following day Deere filed an action in federal court (federal case). Although the petition was titled "Interpleader", it stated that there was a possible dispute concerning the amount of UM coverage. The federal court treated the case as an interpleader and a request for a declaratory judgment to determine the proper amount of UM coverage. ¶ 9 While the federal case was in the district court, all of the claimants except the plaintiff settled for $100,000 total and agreed on the division of the settlement. On November 22, 1995, the federal district court ruled that the UM coverage imputed to the policy was $500,000 because Deere had failed to obtain a rejection of the higher limit. Deere appealed the decision to the federal circuit court. During the pendency of the appeal, the plaintiff settled with Deere for approximately $400,000 ($500,000 minus the $100,000 paid the other claimants) and reserved the bad faith claim.

¶ 10 Shortly after Deere and the plaintiff settled, this Court issued its opinion in May v. National Union Fire Ins. Co.⁷ In May, this Court, expressly overruling Perkins, held that an insurer's failure to obtain a written rejection of uninsured motorist coverage equal to the amount of liability coverage resulted in an imputed uninsured motorist policy at the statutory minimum.

¶ 11 Thereafter on August 5, 1996, Deere filed a motion for summary judgment and brief in support thereof in the present case. A dispute arose concerning whether Deere's files generated after November 14, 1994, the date the petition was filed in this case, were discoverable. The trial judge ruled that Deere's files generated and assembled after the petition was filed were not relevant and, thus, not discoverable. In the same order, the trial court ordered the plaintiff to file a response to the motion for summary judgment within thirty days after the last deposition of the Deere claims personnel was taken.⁸ On October 23, 1996, Skinner filed a motion for sanctions for his perceived failure of Deere to comply with a discovery order. Deere responded that it had complied with the discovery order.

¶ 12 The plaintiff sought relief from the trial court's denial of its discovery request by filing an application for a writ of mandamus in this Court. On March 10, 1997, this Court issued an order assuming original jurisdiction and ordering the trial judge to conduct an in camera inspection of the documents generated by Deere after the petition was filed and determine if they were subject to an attorney-client or work-product privilege. This Court did not rule on whether the documents could be discovered. Specifically, this Court stated: "This writ is not to be treated as this Court's determination when the good-faith covenant of an insurance contact comes to an end or if the matters that will be discovered are admissible in evidence." Thereafter, the trial court conducted an in camera review of Deere's file and found that the documents requested by Skinner were privileged and that Deere did not have to produce them.

¶ 13 On March 5, while the plaintiff's petition for a writ of mandamus was pending before this Court, the plaintiff filed his response to Deere's motion for summary judgment. Then on March 20, 1997, the plaintiff filed an application to supplement his response to the motion for summary judgment. Even though this Court had refused to rule on the issue of when the good-faith covenant of an insurance contact comes to an end, the plaintiff argued before the trial court that this Court's order altered his position to include a claim for action occurring after the petition was filed. The trial court refused to allow the plaintiff to supplement his response. The trial court granted Deere's motion for summary judgment.

¶ 14 The plaintiff filled a motion for a new trial raising a number of errors. The trial court denied plaintiff's motion, and the plaintiff appealed. On appeal, the plaintiff argued that the trial court erred in overruling the motion for a new trial, granting the motion for summary judgment, overruling the motion for sanctions, refusing to obey this Court's order on the application for a writ of mandamus, and ruling that certain of Deere's documents were privileged. The Court of Civil Appeals held that there were factual questions regarding whether Deere acted reasonably and, thus, summary judgment for Deere was improper. This Court granted Deere's petition for certiorari.

II. SUMMARY JUDGMENT

¶ 15 Plaintiff's primary claim of error is that the trial court erred in granting Deere's motion for summary judgment. Summary judgment is proper when there is no genuine issue of material fact.⁹ On appeal, the parties may not rely on any fact or material referred to or included in the documents not submitted to the trial court.¹⁰ This Court's review of a judgment based on a motion for summary judgment is de novo.¹¹ The court must determine as a matter of law if the evidentiary material in the record, viewed most favorable to the non-moving party, supports the judgment.¹²

III. TORT OF BAD FAITH

¶ 16 This Court first recognized the tort of bad faith for the failure to settle an insurance claim in Christian v. American Home Assurance Company.¹³ In Christian, this Court adopted the general rule: "[A]n insurer has an implied duty to deal fairly...