Edens v. Neth. Ins. Co.
| Decision Date | 22 August 2016 |
| Docket Number | No. 15-5092,15-5092 |
| Citation | 834 F.3d 1116 |
| Parties | David Edens and Rhonda Edens, individually and as next of kin of Zachery Edens, deceased; Edens Structural Solutions LLC, Plaintiffs-Appellants, v. The Netherlands Insurance Company, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Tenth Circuit |
834 F.3d 1116
David Edens and Rhonda Edens, individually and as next of kin of Zachery Edens, deceased; Edens Structural Solutions LLC, Plaintiffs-Appellants,
v.
The Netherlands Insurance Company, Defendant-Appellee.
No. 15-5092
United States Court of Appeals, Tenth Circuit.
August 22, 2016
Jody R. Nathan (Neal E. Stauffer, Lawrence W. Zeringue, and Timothy P. Clancy, with counsel on the briefs), Stauffer & Nathan, Tulsa, Oklahoma, for Plaintiffs-Appellants.
William W. O'Connor (Keith A. Wilkes, Jerrick L. Irby, and Harrison M. Kosmider, with counsel on the brief), Newton, O'Connor, Turner & Ketchum P.C., Tulsa, Oklahoma, for Defendant-Appellee.
Before LUCERO, GORSUC H, and PHILLIPS, Circuit Judges.
PHILLIPS, Circuit Judge.
Zachery Edens was killed in a roadway accident when an oncoming car turned in front of his motorcycle. David Edens, Zachery Edens's father and the Chief Executive Officer of Edens Structural Solutions LLC (Edens LLC), and Rhonda Edens, Zachery Edens's mother, sent a demand letter to The Netherlands Insurance Company (Netherlands), claiming that Zachery Edens was an insured under Edens LLC's Netherlands insurance policy and demanding $1,000,000 in underinsured-motorist benefits. After Netherlands denied coverage, David Edens, Rhonda Edens, and Edens LLC sued Netherlands.
On summary judgment, the district court concluded that David Edens was an insured under the policy because he was an executive officer of Edens LLC, and that Zachery Edens was an insured as David Edens's family member. Even so, because David and Rhonda Edens owned Zachery Edens's motorcycle, the district court concluded that the Netherlands policy didn't cover his accident. David and Rhonda Edens and Edens LLC have appealed, arguing, among other things, that the policy's coverage terms were ambiguous and should be construed in their favor. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.
BACKGROUND
On May 8, 2013, 22-year-old Zachery Edens was driving a motorcycle owned by his parents, David and Rhonda Edens (the Edenses). As Zachery Edens was driving northbound on a two-way street in Tulsa, Oklahoma, Neva Whiteman turned left in front of his oncoming motorcycle from her southbound lane. Unfortunately, Zachery Edens couldn't avoid a collision and was pronounced dead at the scene. The Edenses had insured the motorcycle under their policy with Progressive Insurance, and Whiteman had insured her car under her policy with State Farm Insurance.
In a letter dated September 5, 2013, the Edenses, through counsel, notified Netherlands of Zachery Edens's accident. In their letter, they claimed that a Netherlands policy issued to Edens LLC covered the accident. Specifically, they claimed that Zachery Edens was “a named insured” under the policy's underinsured/uninsured motorist (UM) coverage “because he was a member of the LLC listed as a named insured.” R. vol. 1 at 52. The letter demanded payment of the $1,000,000 policy limits.
On the accident date, Edens LLC did indeed have an auto1 policy in force with Netherlands. The standard policy provided liability coverage for autos that Edens LLC employees used during the course of business (the Policy). Under two separate endorsements, the Policy also provided UM coverage to certain insureds up to $1,000,000 per accident.
In a September 18, 2013 letter, Netherlands advised the Edenses that it needed additional information to evaluate their demand, including documents verifying Zachery Edens's relationship with Edens LLC, copies of invoices for funeral expenses, and “[c]opies of any insurance coverage Zachery Edens had on the motorcycle he was riding when this loss occurred.” R. vol. 2 at 547. Despite soliciting this information, Netherlands's letter ended inconsistently, saying, “Based on the above, I will be closing this file at this time. Should you receive any additional communications regarding this matter, or be served with a lawsuit, please contact me or Michael Woodson Attorney immediately.” Id. at 548. Alison Hood, the claims adjuster who drafted and signed the September 18 letter, later swore in her affidavit that this file-closing language was “accidental and a mistake.” Id. at 550.
In fact, instead of closing the file, Hood said that on September 19, 2013, she spoke with the Edenses' counsel, requesting “information pertinent” to her investigation of their claim. Id. at 551. In Hood's claim notes for that call, she wrote that she had “explained that I had already mailed a letter advising of the information needed so it will be duplicate to the call.” R. vol. 3 at 556 (capitalization altered). Hood never received a response to her September 18 letter or any of the requested documents.
On November 22, 2013, Hood drafted and sent a letter to the Edenses' counsel denying coverage and explaining that, from the documents Netherlands could obtain, Zachery Edens wouldn't qualify as an insured under the Policy's UM coverage. Hood never received a response to her November 22 letter, and on January 7, 2014, she closed the Edenses' file.
On July 9, 2014, the Edenses and Edens LLC (collectively, “Plaintiffs”) sued Netherlands. In their complaint, Plaintiffs alleged five claims: (1) “Netherlands failed to adequately investigate the claim”; (2) “Netherlands acted negligently in the evaluation
and denial of Plaintiffs' claim”; (3) “Netherlands failed to follow applicable Oklahoma law in the investigation and evaluation of Plaintiffs' claim,” thereby breaching the Oklahoma Unfair Claims Settlement Practices Act, Okla. Stat. tit. 36, §§ 1250.1 –1250.17 (2015); (4) Netherlands “breach[ed] ... the insurance policy”; and (5) Netherlands acted in “bad faith.” R. vol. 1 at 13.
The parties moved for summary judgment. The district court granted Netherlands's summary-judgment motion, relying on a Policy provision disallowing UM coverage for insureds injured while occupying an auto owned by Edens LLC executive officers or their family members. Although the district court found that David Edens was an executive officer of Edens LLC, meaning that Zachery Edens would qualify as an insured, the district court still held that the Policy didn't cover Zachery Edens's accident because David Edens owned the motorcycle Zachery Edens was occupying. This being so, the district court dismissed all of Plaintiffs' claims. Plaintiffs timely appealed.
DISCUSSION
Plaintiffs appeal the district court's grant of Netherlands's motion for summary judgment. Specifically, they argue five points: (1) the district court erroneously concluded that the Policy unambiguously excluded UM coverage for Zachery's accident; (2) the district court erroneously considered the Policy's exclusion despite Netherlands's failure to produce in discovery a complete version of the Policy in effect at the time of Zachery's accident; (3) Netherlands failed to timely provide a privilege log and, therefore, it waived any alleged privilege regarding its claim file; (4) the district court erred in dismissing Plaintiffs' bad-faith claim; and (5) the district court erred in failing to conclude that the UM coverage would stack in this case (providing $1 million in coverage for each of the 24 separate premiums paid for UM coverage). We address each of these claims in turn and affirm the district court's grant of summary judgment in Netherlands's favor.
“We review a district court's decision to grant summary judgment de novo, applying the same legal standard the district court used.” Greystone Constr., Inc. v. Nat'l Fire & Marine Ins. Co. , 661 F.3d 1272, 1277 (10th Cir. 2011). Summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
A. Whether the Policy Is Ambiguous
Plaintiffs first argue that the Policy's coverage terms are ambiguous and should be construed in their favor. We disagree. To explain why, we first review Oklahoma's approach to construing insurance policies. Second, we provide an overview of the Policy. Third, we address Netherlands's argument that Plaintiffs have waived or forfeited their ambiguity argument. Finally, we address whether the Policy's coverage terms are ambiguous.
1. Interpreting Insurance Policies Under Oklahoma Law
“In diversity cases, the substantive law of the forum state governs the analysis of the underlying claims....” Haberman v. Hartford Ins. Grp. , 443 F.3d 1257, 1264 (10th Cir. 2006). Under Oklahoma law, “an insurance policy is a contract. When its terms are unambiguous and clear, the employed language is accorded its ordinary, plain meaning and enforced so as to carry out the parties' intentions.” Bituminous Cas. Corp. v. Cowen Constr., Inc. , 55 P.3d 1030, 1033 (Okla. 2002) (emphasis omitted). But when a policy's language is ambiguous—or when an exclusion within a policy is masked by
technical or obscure language or hidden in the policy's provisions—Oklahoma courts apply the doctrine of reasonable expectations. Am. Econ. Ins. Co. v. Bogdahn , 89 P.3d 1051, 1054 (Okla. 2004). “Under the reasonable expectations doctrine, when construing...
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