Brown v. Patel

Decision Date27 March 2007
Docket NumberNo. 102,402.,102,402.
Citation157 P.3d 117,2007 OK 16
PartiesJohnny Weldon BROWN and Beth Ann Brown, Plaintiffs/Appellants, v. Tejas Sanmukh PATEL, Defendant, and Commercial Union Insurance Company, One Beacon Insurance Group, and Employers Fire Insurance Company, Intervenors/Appellees.
CourtOklahoma Supreme Court

Appeal from the District Court of Payne County.

¶ O An insured brought an action against an alleged tortfeasor. The insured's uninsured motorist carrier/workers' compensation carrier intervened. Insured objected to the intervention and alleged that the non-payment of workers' compensation benefits, non-payment for subrogation, and insurer's assertion of claims also asserted by the alleged tortfeasor showed bad faith conduct on the part of the insurer towards its insured. Intervenor/insurer sought summary judgment on insured's bad-faith claim and the Honorable Donald L. Worthington, District Judge, granted the motion for summary judgment. Subsequent to a defendant's verdict and judgment thereon, the insured appealed the order granting summary judgment to insurer. We granted the insurer's motion to retain the appeal. We hold that an uninsured motorist insurer may, under certain circumstances, intervene in the action brought by its insured against an alleged tortfeasor, and that a judgment for the alleged tortfeasor does not relieve the insurer of all bad-faith claims relating to its handling of the uninsured motorist claim.


Joe E. White, Jr., Charles C. Weddle III, White Law Firm, Oklahoma City, OK and William J. Baker, Hert, Baker & Koemel, Stillwater, OK, for Plaintiff/Appellant.

Loyal J. Roach, Steven V. Buckman and Diane M. Black, Buckman and Roach, Tulsa, OK, for Intervenors/Appellees.


¶ 1 The issues in this appeal are (1) whether a UM insurer may, without either denying or granting a UM claim, seek intervention in the action brought by its insured against the alleged tortfeasor and assert both potential subrogation rights and the defenses raised by of the tortfeasor; and (2) whether a subsequent judgment for the tortfeasor necessarily relieves the UM carrier of any bad-faith liability arising from its handling of the UM claim. We hold that a UM insurer may, in certain circumstances, intervene in the action brought by its insured against the alleged tortfeasor and assert certain defenses, and that a subsequent judgment for the tortfeasor does not relieve the insurer of all possible bad-faith claims based upon the insurer's handling of the UM claim.


¶ 2 Brown and Patel were involved in a motor vehicle collision. Brown1 brought an action against Patel in the District Court and Patel answered. Brown also notified his uninsured motorist carrier, One Beacon Insurance Group (OneBeacon), of his legal action. The uninsured/underinsured motorist coverage in this controversy was also part of a policy providing workers' compensation coverage for Brown.

¶ 3 OneBeacon Insurance Group was granted leave to intervene via two different motions, once in the name of OneBeacon and once in the name of Commercial Union Insurance Company. The first in time, Commercial Union's petition to intervene, was based upon the carrier's status as Brown's UM carrier. Approximately four months later, OneBeacon filed a petition to intervene alleging that it had paid $2,841.45 for Brown's medical expenses as a result of a workers' compensation policy. Brown answered and, while admitting that OneBeacon was his workers' compensation insurance carrier and that he had filed a Form 3 seeking workers' compensation benefits, denied that OneBeacon had paid $2,841.45 for his medical expenses. Commercial Union Insurance Company had previously changed its name to OneBeacon and we treat the intervenors as a single entity, OneBeacon, for the purpose of this opinion.2

¶ 4 Brown's allegation of OneBeacon's bad faith centers on one of the petitions to intervene. This petition combined (1) a petition for intervention that adopted allegations from Brown's petition, asserted a potential subrogation interest and sought a determination of the rights of OneBeacon; (2) an answer that denied certain allegations of Brown's petition, adopted Patel's defenses and requested that Brown's petition be dismissed; and (3) a cross-petition that asserted a cross-claim against Patel and requested a judgment against Patel for any amount One-Beacon would be required to pay Brown.3

¶ 5 Brown filed an amended petition that added claims against OneBeacon. Brown alleged that (1) OneBeacon was his uninsured/underinsured carrier; (2) in the year 2000, Brown had put the carrier "on notice of the claim for underinsured motorist benefits and medical pay benefits" and (3) his insurer had breached its duty to deal fairly and in good faith.

¶ 6 OneBeacon filed a motion for summary judgment, Brown responded and OneBeacon replied. The motion for summary judgment states that OneBeacon did not commit bad faith because (1) An uninsured/underinsured obligation was never "triggered" because Brown's damages were below Patel's (alleged tortfeasor's) $300,000.00 insurance coverage, (2) OneBeacon's employees reasonably questioned the causation of Brown's claim and (3) OneBeacon's employees reasonably questioned the value of Brown's claim.

¶ 7 Brown responded and stated that OneBeacon did not question the cause of Brown's injuries prior to OneBeacon's intervention. Brown argued that OneBeacon was not sued for bad faith in evaluating the amount of Brown's claims. Instead, he argued that OneBeacon's conduct showed bad faith when it (1) intervened and asserted a subrogation claim against Patel, and thus adopted Brown's allegation's that his injuries were in excess of $300,000 and (2) asserted a subrogation interest while "actively defending Patel." Plaintiffs' Brief at p. 22. Brown's complaint is that OneBeacon never denied or granted the claim, but sought intervention to assert judicial remedies based upon both granting and denying the claim.

¶ 8 The District Court granted the motion for summary judgment. A verdict was returned for Defendant Patel, judgment entered on that verdict, and then Brown appealed the summary judgment granted to OneBeacon. This Court retained the appeal. OneBeacon filed motions for oral argument and permission to file appellate briefs in addition to those that were before the trial court.4 Oral argument and additional briefs would not materially assist the Court, and the motions for oral argument and additional briefing are denied.


¶ 9 Generally, an implied duty of an insurer to act in good faith and deal fairly with its insured is imposed by law upon the insurer-insured relationship, and a breach of that duty arises from a breach of the insurance contract where the breach occurs in a manner constituting a lack of good faith; i.e., constituting bad faith. Christian v. American Home Assurance Company, 1977 OK 141, 577 P.2d 899, 901-902, 904-905.5 In our case today, Brown has not included the insurance contract as part of the record on appeal. Brown does not reference any express language of the insurance contract as the basis for an obligation that has been allegedly breached in a bad-faith manner.

¶ 10 Of course, a part of every contract in this state is the law applicable to that contract. Public Service Co. of Oklahoma v. State ex rel. Oklahoma Corp. Com'n, 2005 OK 47, ¶ 54, 115 P.3d 861, 884. Contracts of insurance are no exception to this rule, and this Court has recognized the well-known principle that provisions of an insurance contract may arise from statute as opposed to the express writing contained in the document agreed to by the parties.6 Similarly we recently explained that a bad-faith action could be based upon an insurer's refusal to satisfy statutory obligations imposed upon or resulting from the insurance contract. Sizemore v. Continental Cas. Co., 2006 OK 36, ¶ 15, 142 P.3d 47 (refusal to pay workers' compensation award).7 In our case today, Brown does not point to the breach of a statutory duty imposed by law upon the insurer-insured relationship.

¶ 11 The bad-faith action may also be based upon an insurer's failure to perform an act that is derivative or secondary in nature; that is, an insurer's duty that owes its existence to a preexisting implied contractual,8 or statutory, or status-based duty arising from the insurer-insured relationship. For example, a duty to timely and properly investigate an insurance claim is intrinsic to an insurer's contractual duty to timely pay a valid claim.9 Similarly, bad-faith actions have been based upon an insurer's failure to follow judicial construction of insurance contracts10 or available applicable law,11 as well as upon duties that are necessary for an insurer's timely determination of a claim.

¶ 12 In our case today, this latter category of derivative or secondary duties is raised by Brown, in that he asserts bad faith is shown by OneBeacon's litigation efforts to both press a subrogation claim while denying that such a claim exists, all without either granting or denying a UM claim. Specifically, Brown asserts that OneBeacon acted in bad faith by intervening in Brown's action against Patel and asserting a subrogation claim against Patel and adopting Plaintiffs' allegations, and secondly, that OneBeacon acted in bad faith by asserting a subrogation interest "as a ruse to actually harm" Brown by OneBeacon's litigation conduct in defending Patel. Brown also asserts in his brief that he has not sued OneBeacon for bad faith in evaluating the amount of his claim. Brown contends questions of disputed fact exist regarding the reasonableness of OneBeacon's litigation conduct in light of its claims file showing a claim and the tortfeasor's liability.

¶ 13 OneBeacon asserts a right to intervene, and that an exercise of this right cannot be the basis for a breach of a duty owed to Brown....

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