Bohannan v. Allstate Ins. Co.

• Decision Date: 02 July 1991
• Docket Number: No. 72262,72262
• Citation: Bohannan v. Allstate Ins. Co., 820 P.2d 787, 1991 OK 64 (Okla. 1991)
• Parties: Ruby M. BOHANNAN, Plaintiff-Appellant, v. ALLSTATE INSURANCE COMPANY, an Illinois Corporation, Defendant-Appellee.
• Court: Oklahoma Supreme Court

Page 787

820 P.2d 787

1991 OK 64

Ruby M. BOHANNAN, Plaintiff-Appellant, v.ALLSTATE INSURANCE COMPANY, an Illinois CorporationDefendant-Appellee.

No. 72262.

Supreme Court of Oklahoma.

July 2, 1991.

Rehearings Denied Sept. 24, 1991.

Rex K. Travis, Oklahoma City, for plaintiff-appellant.

Gerald E. Durbin, II, Durbin, Larimore & Bialick, Oklahoma City, for defendant-appellee.

ALMA WILSON, Justice:

The pertinent facts in this case are as follows.On April 8, 1984, in Oklahoma City, Oklahoma, a vehicle driven by James L. Grigsby, III, an Oklahoma resident, collided with a vehicle driven by Ola C. McIntosh, an Oklahoma resident.Plaintiff/Appellant, Ruby M. Bohannan, a California resident, was a passenger in McIntosh's vehicle and sustained bodily injury.The parties stipulated that the collision was entirely the fault of Grigsby and that the personal injury damages to Plaintiff equal or exceed $65,000.00.Grigsby had liability insurance coverage issued in Oklahoma by Farmers Insurance Company with $25,000.00 policy limits.McIntosh had uninsured/underinsured motorist coverage (UM) issued in Oklahoma by State Farm Mutual Insurance Company with $10,000.00 policy limits.Plaintiff had UM coverage issued in California by Allstate Insurance Company with $30,000.00 policy limits.

Plaintiff filed suit against both drivers in state district court to recover her personal injury damages.Plaintiff also made a claim for UM benefits from her insurer.Upon denial of her UM claim, Plaintiff was permitted to add her California UM carrier, Allstate Insurance Company, an Illinois corporation, licensed to do insurance business in California and Oklahoma, as an additional partydefendant.Allstate caused the action to be removed from the Oklahoma district court to the United States District Court for the Western District of Oklahoma.

After removal of the action to federal court and pursuant to agreement between Plaintiff and Allstate, Plaintiff accepted payment of $25,000.00, liability insurance limits, from Farmers and released Grigsby and $10,000.00, UM limits, from State Farm.The parties agreed that settlement would be without prejudice to Plaintiff's claim against Allstate.Upon Plaintiff's application, the two drivers, Grigsby and McIntosh, were dismissed as partiesdefendants by the federal district court.The parties remaining in this litigation are the injured California resident and her UM carrier, Allstate.

The threshold issue presented to the federal district court was whether Plaintiff's claim for UM benefits under her California insurance contract should be determined in accordance with Oklahoma law or California law.According to Allstate, under the California contract and California law, it may subtract from its UM coverage the amount of the Oklahoma tortfeasor's liability insurance payment ($25,000.00) and the amount of the Oklahoma driver's UM payment ($10,000.00), thereby diminishing the amount of its UM liability to its first-party insured, Plaintiff, to zero (0).The parties agree that under Oklahoma law Plaintiff is entitled to recover the $30,000.00 UM policy limits from Allstate.The parties do not agree that California law permits a credit or set off for the benefits paid under Oklahoma insurance contracts.

The federal district court viewed this controversy as an interpretation of the California insurance contract issue.Applying Oklahoma's lex loci contractus choice of laws rule, the court ruled that the amount of Allstate's UM liability to Plaintiff is governed by California law.Accordingly, the case was dismissed without prejudice to enable the parties to bring the action in the appropriate California court.However, the litigants did not seek resolution of their controversy in the California courts.For whatever reasons, the dismissal was appealed to the Tenth Circuit.

The Tenth Circuit Court of Appeals certified the following question of law to this Court, pursuant to 20 O.S.1981, § 1601 et seq.:

Under the circumstances of this case(all pertinent facts are detailed in the district court's order and the parties' stipulation appended hereto), involving a motor vehicle accident in Oklahoma causing injury to the passenger plaintiff, a California resident, does the law of Oklahoma or that of California determine the application and effect of the uninsured motorist provisions in plaintiff's California automobile insurance policy?CompareRhody v. State Farm Mut. Ins. Co., 771 F.2d 1416, 1421(10th Cir.1985)withPate v. MFA Mut. Ins. Co., 649 P.2d 809, 812(Okla.Ct.App.1982)(a published decision of the state court of appeals lacking precedential value pursuant to Okla.Stat. tit. 20, § 30.5).

The certified question does not require this Court to analyze and interpret provisions of the California insurance contract between the California parties.Plaintiff's California insurance contract is not a part of the record transmitted to this Court.Instead, the certified question seeks review and authoritative resolution of Oklahoma's choice of laws rule to be applied in this motor vehicle insurance contract case.That is, whether the express provisions in the insurance contract will be applied in conformity with the law of the place of contracting or the law of the forum.We answer: Under the circumstances in this case, the application and effect of the express provisions of the California UM insurance contract must conform to the public policy of the Oklahoma forum.An Oklahoma judgment which enforces a California uninsured motorist insurance contract so as to allow a set off for uninsured motorist benefits paid under an Oklahoma contract would be contrary to the public policy of this state.An express provision in the California uninsured motorist insurance contract which allows a set off for liability benefits paid under a foreign contract does not offend Oklahoma public policy and may be enforced in our courts.

THE CONFLICTING UNINSURED/UNDERINSURED MOTORIST STATUTES OF

CALIFORNIA AND OKLAHOMA

Our mobilized society and the divergent directions and purposes of the statutory and judicial developments in motor vehicle insurance law of the various states breed multistate conflict of laws issues in motor vehicle insurance or accident litigation.Comparison of the sharply opposed provisions of the California and Oklahoma UM statutes indicates the need for a choice of laws rule which will preserve the divergent public policies of the states in regulating the insurance industry.In this case, the California law allows reduction in the UM benefits for specified insurance benefits paid and prohibits stacking of UM benefits.Oklahoma law is the opposite.

California's insurance code, Ins.Code § 11580.2, subd. (p)(4), provides that the maximum liability for underinsured motorist coverage for bodily injury caused by one or more insured, underinsured or uninsured motor vehicles "... shall not exceed the insured's underinsured motorist coverage limits, less the amount paid to the insured by or for any person or organization that may be legally liable for the injury."And, § 11580.2, subd. (q) prohibits stacking of UM benefits, "Regardless of the number of vehicles involved ... in no event shall the limit of liability for two or more motor vehicles or two or more policies be added together, combined, or stacked to determine the limit of insurance coverage available to injured persons."

The purpose of California's UM statute is to assure that each person shall have $30,000.00 of coverage for personal injury damages caused by a financially irresponsible, tortious motorist.Thus, California allows the $30,000.00 minimum UM benefits to be reduced by the liability insurance benefits received and prohibits stacking of UM insurance provisions or contracts.This purpose is explained in California Casualty Indemnity Exchange v. Pettis, 239 Cal.Rptr. 205, 211, 193 Cal.App.3d 1597, 1607(Cal.App. 3 Dist.1987)at footnote 6:

6.California's nonstacking rule is not simply a stingy refusal to permit insureds to obtain full recovery.It reflects a policy choice by our Legislature that, unless expressly rejected, all persons insured under a California policy should have a minimum level of uninsured motorist coverage.Insureds are not precluded from purchasing, and paying for, additional insurance should they choose to do so.If they do not purchase additional insurance then their premiums will represent the reduced risk attributable to California's nonstacking rule, as in this case with the multi-vehicle discounts the defendants received when they insured more than one car.In this manner our Legislature has acted to keep down the cost of compliance with our financial responsibility law while guaranteeing that all persons will be offered the minimum appropriate level of uninsured motorist protection.The realization of this legislative purpose would be thwarted if, based upon some minimal and fortuitous contact with another state, insureds are allowed to reap an unexpected and unpaid for windfall in the level of their insurance coverage.

Pettis was a declaratory judgment action brought by the insurer to determine whether the California insurance contracts were governed by the laws of Hawaii or California.Pettis, his wife and another couple, all California residents, while vacationing in Hawaii, were involved in an automobile accident.No-fault insurance benefits were paid to the injured California residents, who then made claim for UM benefits under their California insurance contracts.Pettis contended that since the accident occurred in Hawaii he was entitled to full recovery of the personal injury damages under Hawaii law.That is, the UM coverage in his multi-vehicle policy should be stacked and the amount should not be reduced by the payments made under the Hawaii no-fault insurance.The trial court denied Pettis' stacking claim.The trial court also denied the insurer's claim to reduce Pettis' UM benefits by...