Coblentz v. Oklahoma Farm Bureau Mut. Ins. Co., 85529
| Decision Date | 17 October 1995 |
| Docket Number | No. 85529,No. 2,85529,2 |
| Citation | 1995 OK CIV APP 126,915 P.2d 938 |
| Parties | 1995 OK CIV APP 126 Ralph and Karla COBLENTZ, Appellants, v. OKLAHOMA FARM BUREAU MUTUAL INSURANCE COMPANY, Appellee. Court of Appeals of Oklahoma, Division |
| Court | United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma |
Lawrence A.G. Johnson, Johnson & Swenson, Tulsa, for Appellants.
Donald B. Bolt, Roger Williams, Williams & Bolt, P.A., Tulsa, for Appellee.
Plaintiffs, Ralph and Karla Coblentz, appeal an order granting summary judgment to Defendant, Oklahoma Farm Bureau Mutual Insurance Company (Insurer). In this contract action, the issue on appeal is whether the homeowner's policy provision limiting Insurer's liability to actual cash value of the property, unless replacement has been made, is void as unconscionable. We hold that it is and reverse the judgment for Insurer.
Plaintiffs purchased homeowner's insurance from Insurer. Plaintiffs paid Insurer an additional premium for a personal-property, replacement-cost endorsement to their homeowner's policy. The replacement-cost endorsement affixed to Plaintiffs' policy indicated that Insurer would pay the actual cost of repair or replacement, rather than the depreciated value of that which was damaged, but only if Plaintiffs actually repaired or replaced the personal property. Specifically, the endorsement provided:
If the replacement cost of the entire loss under this section is greater than $500, WE will not be liable for full replacement cost until actual repair or replacement is completed. (Emphasis added).
Plaintiffs' house and outbuildings were struck by a tornado, causing damage to and loss of personal property. Plaintiffs filed a claim with Insurer under their homeowner's policy. Plaintiffs were unable to replace the majority of the personal property that was destroyed because they did not have the money to do so. Accordingly, Insurer paid the Plaintiffs $16,855.18, the actual cash value of their destroyed or damaged personal property.
Plaintiffs sued Insurer, claiming a total loss of $36,683.88 based on the replacement value of the destroyed or damaged personal property. Insurer defended, claiming that Plaintiffs did not meet the condition precedent set out in the policy of insurance which required Plaintiffs to actually repair or replace the property before Insurer would become liable to pay replacement value. Plaintiffs countered that the condition precedent in the insurance contract violates Oklahoma's public policy.
The material facts that comprise this controversy are not in dispute. The question presented is one of law. Contested issues of law are reviewable in all actions, suits, and proceedings by a de novo standard. Weeks v. Cessna Aircraft Co., 895 P.2d 731, 732 (Okla.Ct.App.1994). Review of law is called "de novo," which means no deference, not necessarily a full rehearing or new factfinding. Bose Corp. v. Consumers Union of United States, Inc., 466 U.S. 485, 104 S.Ct. 1949, 80 L.Ed.2d 502 (1984).
The general nature of the relation between an insurer and its insured is purely contractual. Silver v. Slusher, 770 P.2d 878, 883 (Okla.1989). In reviewing contracts, courts are concerned only with their legality and not their wisdom or fairness. Barnes v. Helfenbein, 548 P.2d 1014, 1021 (Okla.1976). It is the duty of the court to enforce valid, voluntary contracts absent fraud, duress, undue influence, or mistake. Id.
The equitable concept of unconscionability is directly related to fraud and deceit. Id. at 1020. "An unconscionable contract is one which no person in his senses, not under delusion would make, on the one hand, and which no fair and honest man would accept on the other." Id. In other jurisdictions, it has been held as a matter of common law that unconscionable contracts are not enforceable. Williams v. Walker-Thomas Furniture Co., 350 F.2d 445, 448 (D.C.Cir.1965).
Unconscionability has generally been recognized to include: (1) an absence of meaningful choice on the part of one of the parties, and (2) contractual terms which are unreasonably favorable to the other party. Barnes, 548 P.2d at 1020. With regard to the first prong of this test, an insurance contract, by its very nature, is an adhesion contract. Rodgers v. Tecumseh Bank, 756 P.2d 1223, 1226 (Okla.1988). An adhesion contract is defined as follows:
"The term [adhesion contract]...
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