Brown v. State Farm Fire and Cas. Co.

• Decision Date: 22 July 2002
• Docket Number: No. 97,485.,97,485.
• Citation: 58 P.3d 217,2002 OK CIV APP 107
• Parties: Tammy BROWN, Plaintiff/Appellant, v. STATE FARM FIRE AND CASUALTY COMPANY and State Farm General Insurance Company, Defendants, and JJMA Investigations and Consultants and Jody Cooper, Defendants/Appellees.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

58 P.3d 217

2002 OK CIV APP 107

Tammy BROWN, Plaintiff/Appellant, v. STATE FARM FIRE AND CASUALTY COMPANY and State Farm General Insurance Company, Defendants, and JJMA Investigations and Consultants and Jody Cooper, Defendants/Appellees.

No. 97,485.

Court of Civil Appeals of Oklahoma, Division No. 3.

July 22, 2002.

Certiorari Denied October 15, 2002.

Richard D. Gibbon, Tulsa, for Plaintiff/Appellant.

Ray H. Wilburn, Michael J. Masterson, Philard L. Rounds, Paul A. Derks, Tulsa, for Defendants/Appellees.

Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 3.

MITCHELL, J:

¶ 1 Plaintiff/Appellant, Tammy Brown ("Brown"), seeks review of an order granting summary judgment in favor of Defendants/Appellees, JJMA Investigations and Consultants ("JJMA") and Jody Cooper ("Cooper"). Defendant State Farm Fire and Casualty Company ("State Farm") issued an insurance policy on Brown's Henryetta, Oklahoma home covering loss due to fire. On March 17, 2000, and again on March 18, 2000, fires occurred at the property causing damage alleged to be in excess of $60,000.00. State Farm engaged Defendants/Appellees, JJMA/Cooper, to investigate the cause of the blaze. In their report, JJMA/Cooper concluded, without interviewing either Brown or any of the fire-fighters involved, that there was only one fire, and that it resulted from "the deliberate act of a person or persons." The report also stated that some of the damage to the home that the fire-fighters caused in battling the blaze existed prior to the fire. Based at least in part on this report, which it believed to be accurate, State Farm denied Brown's claim under the policy.

¶ 2 Brown filed suit, alleging bad faith and breach of contract on the part of State Farm, as well as negligent investigation and tortious interference with contractual relations on the part of JJMA/Cooper. Brown settled her claims against State Farm for an undisclosed amount and State Farm is not a party to this appeal.

¶ 3 In granting JJMA/Cooper's motion for summary judgment on Brown's remaining claims, the trial court recognized that while there are no reported cases on point in Oklahoma, a majority of courts in other states have held that an insured cannot maintain a separate tort action for negligence directly against an independent insurance investigator employed by the insurer. Noting the lack of contractual privity between a policy holder and an independent insurance investigator, these out-of-state courts have concluded that an investigator owes no duty of care to an insured with regard to the handling of an investigation and that any liability in negligence exists solely between the insurer and its investigator. Consistent with this approach, the trial court held that Brown could not pursue a negligence claim directly against JJMA/Cooper as a matter of law.

¶ 4 Concerning Brown's claim for tortious interference with contract, the trial court also ruled in favor of JJMA/Cooper, citing "a complete lack of evidence" tending to show that JJMA/Cooper intentionally induced State Farm to deny Brown's insurance claim. Consequently, the trial court held that Brown also failed to make out a prima facie case of tortious interference with contract. This appeal ensued.

¶ 5 The novel question before this Court is what duty, if any, an independent investigator or adjuster retained by an insurance company owes to one who holds an insurance policy issued by said company. Also before this Court is the question of whether an insured may bring a tortious interference with contract action directly against an independent investigator hired by the insurance company and, if so, whether Brown offered evidence sufficient to defeat summary judgment on her tortious interference claim.

I. Negligence

¶ 6 "The threshold question in any suit based on negligence is whether defendant has a duty to the particular plaintiff alleged to have been harmed." Rose v. Sapulpa Rural Water Co., 1981 OK 85, ¶ 17, 631 P.2d 752, 756. Whether such a duty exists is a question of law. Wofford v. Eastern State Hosp., 1990 OK 77, ¶ 22, 795 P.2d 516, 521. We review questions of law de novo, which involves a plenary, independent and non-deferential examination of a trial court's legal rulings. Jackson v. Jackson, 2002 OK 25, ¶ 2, 45 P.3d 418, 422.

¶ 7 "Oklahoma courts have recognized that the existence of a duty depends on the relationship between the parties and the general risks involved in the common undertaking." Wofford, ¶ 10, 795 P.2d at 519. "Duty of care is not a concept that arises only by statute.... Whenever a person is placed in such a position with regard to another that it is obvious that if he did not use due care in his own conduct he will cause injury to the other, the duty at once arises to exercise care commensurate with the situation in order to avoid such injury." Id.,citing Union Bank of Tucson v. Griffin, 1989 OK 47, ¶ 13, 771 P.2d 219, 222.

¶ 8 The most important consideration in establishing duty is foreseeability. Wofford, ¶ 11, 795 P.2d at 519. "As a general rule, `a defendant owes a duty of care to all persons who are foreseeably endangered by his conduct with respect to all risks which make the conduct unreasonably dangerous.'" Id., citing Tarasoff v. Regents of Univ. of Cal., 17 Cal.3d 425, 131 Cal.Rptr. 14, 22, 551 P.2d 334, 342 (1976). "Foreseeability as an element of duty establishes a `zone of risk', that is, whether the conduct `creates a generalized and foreseeable risk of harming others.'" Smith v. Speligene, 1999 OK CIV APP 95, ¶ 11, 990 P.2d 312, 315, citing Delbrel v. Doenges Bros. Ford, Inc., 1996 OK 36, ¶ 8, 913 P.2d 1318, 1321 and McCain v. Florida Power Corp., 593 So.2d 500, 503.

¶ 9 While it is well-settled that a non-insurer defendant, such as an adjuster or investigator, who is not a party to the insurance contract is not subject to an implied duty of good faith and fair dealing vis-a-vis the insured,¹ see Timmons v. Royal Globe Ins. Co., 1982 OK 97 ¶ 17, 653 P.2d 907, 913, there are no reported decisions in Oklahoma addressing whether independent adjustors or investigators owe a duty of care to insureds, such that they may be held liable directly to insureds in negligence. The states are divided on the issue, with the majority holding that independent investigators are not directly liable to insureds in negligence.² ¶ 10 The decision of New Hampshire's Supreme Court in Morvay v. Hanover Ins. Co., 127 N.H. 723, 506 A.2d 333 (1986), is exactly on point. Plaintiffs, the Morvays, filed a claim under their insurance policy with Hanover after their property was damaged by fire. Hanover hired Verity Research Limited to investigate the fire. Norman Roberts, the Verity investigator assigned to the case, filed a report with Hanover indicating that the fire was incendiary. Consequently, Hanover refused payment on the Morvays' claim. In the resultant lawsuit, in addition to claims against Hanover, the Morvays alleged that Verity and Roberts were liable for negligent investigation. The trial court dismissed the claim, and the New Hampshire Supreme Court reversed. The court reasoned that the investigators "were fully aware that the plaintiffs could be harmed financially if they performed their investigation in a negligent manner and rendered a report to Hanover that would cause the company to refuse payment to the plaintiffs," and that they also knew that there was "a mutual duty of fair dealing between Hanover and the plaintiffs." Id. at 335. The court further reasoned that "[a]lthough the contractual relationship exists solely between the insurer and the investigators, and the investigators may give reports only to the insurer, the insured is a foreseeably affected third party." Id. Accordingly, the New Hampshire Supreme Court held that "the investigators owe a duty to the insured as well as to the insurer to conduct a fair and reasonable investigation of an insurance claim and that the motion to dismiss should not have been granted." Id.

¶ 11 While there is no comparable Oklahoma jurisprudence on point, there are several Supreme Court cases that shed light on this issue. For example, in Keel v. Titan Const. Corp., 1981 OK 148, 639 P.2d 1228, the Supreme Court analyzed whether homeowners could state a cause of action for negligent breach of contract as third-party beneficiaries of an agreement between their construction company and an architect who improperly designed an auxiliary solar heating system for homeowners' house in violation of the architect's contractual duty to the construction company. The Court reasoned that because the architect must have known of the homeowners' general existence, if not their specific identities, both the construction company and the homeowners were primary beneficiaries of the contract between the construction company and the architect, even though the homeowners were not actually parties to the contract. Id. ¶ 6, 639 P.2d at 1231.

¶ 12 Because the action was for negligent breach of contract, the Supreme Court concluded that "the question of whether there is or there is required to be privity ... is not here involved. This being an action in tort, the question ... becomes one of proximate cause." Id. ¶ 11, 639 P.2d at 1232. Noting that a negligent failure to perform the services promised in a contract "with care, skill, reasonable experience and faithfulness ... is a tort, as well as a breach of contract," the Court held that "liability for negligent breach of a contract with a third party is not necessarily dependent upon a pre-existing privity in legal relationship between the person injured and the person causing the injury" and that the allegations in the homeowners' petition were thus sufficient to state a cause of action for negligent breach of contract against the architect. Id. ¶¶ 14, 15, 639 P.2d at 1232.

¶ 13 Having determined in Keel that privity has no applicability in the realm of Oklahoma tort law, ...