Brambl v. GEICO Gen. Ins. Co.
| Decision Date | 04 November 2011 |
| Docket Number | Case No. 10-CV-474-TCK-PJC |
| Parties | JOHN C. BRAMBL, Plaintiff, v. GEICO GENERAL INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Northern District of Oklahoma |
Before the Court is Defendant's Motion to Dismiss (Doc. 34).
In his Second Amended Complaint, Plaintiff alleges that, on or around December 21, 2007, he was injured in a motor vehicle accident due to the negligence of a third party. Plaintiff has a policy of uninsured/underinsured motorist ("UM") coverage with Defendant GEICO General Insurance Company. Plaintiff requested benefits under the policy, "as the value of Plaintiff's claim clearly exceeded the tort-feasor's liability policy limits." (Second Am. Compl. ¶ 10.) In response, Defendant tendered the limits of Plaintiff's UM policy. However, "unbeknownst to Plaintiff, [Defendant] recovered the whole amount tendered to Plaintiff from the tortfeasor's liability insurer, reducing the amount of insurance available to Plaintiff to compensate for his injuries." (Id. ¶ 11.) Plaintiff alleges that Defendant (1) "breached its contract of insurance and has wholly refused or neglected to pay Plaintiff the value of his damages," (id. ¶ 16); and (2) "[i]n its handling of Plaintiff's claim . . ., including but not limited to the acts and manner in which Defendant evaluated Plaintiff's claim, and as a matter of routine practice in handling similar claims, Defendant breachedits duty to deal fairly and in good faith," (id. ¶ 19). Defendant moved to dismiss, arguing that its alleged conduct does not state a plausible claim for breach of contract or bad faith.1
In considering a motion to dismiss under Rule 12(b)(6), a court must determine whether the plaintiff has stated a claim upon which relief may be granted. The inquiry is "whether the complaint contains 'enough facts to state a claim to relief that is plausible on its face.'" Ridge at Red Hawk, LLC v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544)). In order to survive a Rule 12(b)(6) motion to dismiss, a plaintiff must "'nudge [ ] [his] claims across the line from conceivable to plausible.'" Schneider, 493 F.3d at 1177 (quoting Twombly, 127 S. Ct. at 1974). Thus, "the mere metaphysical possibility that some plaintiff could prove some set of facts in support of the pleaded claims is insufficient; the complaint must give the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual support for these claims." Schneider, 493 F.3d at 1177.
The Tenth Circuit has interpreted "plausibility," the term used by the Supreme Court in Twombly, to "refer to the scope of the allegations in a complaint" rather than to mean "likely to be true." Robbins v. Okla. ex rel. Okla. Dep't of Human Servs., 519 F.3d 1242, 1247 (10th Cir. 2008). Thus, "if [allegations] are so general that they encompass a wide swath of conduct, much of it innocent, then the plaintiffs have not nudged their claims across the line from conceivable to plausible." Id. (internal quotations omitted). "The allegations must be enough that, if assumed tobe true, the plaintiff plausibly (not just speculatively) has a claim for relief." Id. "This requirement of plausibility serves not only to weed out claims that do not (in the absence of additional allegations) have a reasonable prospect of success, but also to inform the defendants of the actual grounds of the claim against them." Id. at 1248. In addition, the Tenth Circuit has stated that "the degree of specificity necessary to establish plausibility and fair notice, and therefore the need to include sufficient factual allegations, depends on context" and that whether a defendant receives fair notice "depends on the type of case." Id.
The Court's rulings are informed by the following general principles of Oklahoma UM law.
By Oklahoma statute, any insurance company entering into a contract with an insured to provide motor vehicle liability coverage must also offer UM coverage. See Okla. Stat. tit. 36, § 3636(A) () (emphasis added); id. § 3636(B) (). The offer of UM coverage required by § 3636(B) must be presented to the insured in a particular form ("Form"), which gives the insured options of (1) carrying UM coverage in the amount of his bodily injury liability coverage; (2) carrying UM coverage in the minimum amounts of $25,000.00 per person/$50,000.00 per occurrence; (3) designating a specific amount; or (4) rejecting UM coverage.Id. §3636(H). The Form encourages the insured to accept UM coverage, stating that "YOU SHOULD SERIOUSLY CONSIDER BUYING THIS COVERAGE IN THE SAME AMOUNT AS YOUR LIABILITY INSURANCE COVERAGE LIMIT" and "THE COST OF THIS COVERAGE IS SMALL COMPARED WITH THE BENEFITS!" Id.
UM coverage "does not insure uninsured motorists, (third parties); nor does it insure vehicles; rather, uninsured motorist coverage affords first-party coverage to person(s) for whom the insurance contract is being written." Silver v. Slusher, 770 P.2d 878, 885 (Okla. 1988) (Silver, J., dissenting). UM coverage is "personal and portable," meaning it provides protection to the insured under all circumstances, regardless of whether the insured is in a vehicle covered by the policy, so long his injuries are caused by an uninsured motorist. See Johnny Parker, Uninsured Motorist Law in Oklahoma, 34 Okla. City U. L. Rev. 364, 368 (2009) [hereinafter Uninsured Motorist Law in Oklahoma]. The overarching purpose of Oklahoma's UM statutory scheme "is to assure insurance coverage for the protection of the insured from the effects of personal injury caused by a motorist who either carries no insurance or has inadequate coverage." Gates v. Eller, 22 P.3d 1215, 1218 (Okla. 2001) (footnote omitted); see also Uninsured Motorist Law in Oklahoma, 34 Okla. City U. L. Rev. at 409 ().
The statutory definition of "uninsured motor vehicle," as used in § 3636(B), extends to "an insured motor vehicle, the liability limits of which are less than the amount of the claim of the person or persons making such claim, regardless of the amount of coverage of either of the parties in relation to each other." Okla. Stat. tit. 36, § 3636(C). Thus, an insured motor vehicle may nonetheless qualify as an "uninsured motor vehicle," depending on the vehicle's liability coveragepolicy limits and the extent of the injured party's damages. This type of "uninsured motor vehicle" is often referred to as "underinsured motor vehicle," and such coverage is often referred to as UIM coverage. Consistent with the statute, the Court uses the term UM coverage as an inclusive term encompassing UIM coverage.
When the UM carrier's insured sustains injury by a negligently operated underinsured motor vehicle, there are necessarily two insurance policies in play (injured party's UM coverage and tortfeasor's liability coverage). This led to litigation regarding the nature and extent of the UM carrier's obligations in relation to the tortfeasor's insurer's obligations. In Burch v. Allstate Insurance Company, 977 P.2d 1057, 1058 (Okla. 1999), the Oklahoma Supreme Court held that UM coverage is "primary insurance." Primary insurance is defined as "that which pays a policyholder's first-dollar damages and is the first policy line to pay such damages." Id. at 1058 n.4. Primary insurance must be paid without regard to any other insurance available. Id. Thus, a UM carrier may not withhold payment of UM benefits, waiting until the tortfeasor's liability limits are exhausted. Id. at 1063. Instead, § 3636 "mandates that when the preconditions for the loss under uninsured motorist coverage exist, an uninsured motorist carrier is obligated to pay the entire loss of its injured from the first dollar up to the policy limits." Id. at 1064. The "'first-dollar damages' construction of § 3636" is intended to "facilitat[e] prompt payment to the insured." Id. at 1065.2
With respect to timing of payments under each policy, an insured may seek its UM coverage without first seeking recovery against the tortfeasor. See id. at 1064 ). Where UM coverage is sought first, the "insurer must go about the business of investigating and evaluating the claim," rather than wait for the insured to exhaust the tortfeasor's liability limits. Buzzard v. Farmers Ins. Co., Inc., 824 P.2d 1105, 1112 (Okla. 1991). "Once this is accomplished, if the insurer determines that the claim does not exceed [the tortfeasor's] liability limits, and such valuation is supported by reasonable evidence, the underinsurer may delay payment." Id. "[I]f the underinsurer does not conduct an investigation, or after investigation, determines that the likely worth of the claim exceeds the liability limits, prompt payment must be offered." Id.; see also Barnes v. Okla. Farm Mut. Bureau Ins. Co., 869 P.2d 852, 855 (Okla. Civ. App. 1994) (). In...
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