Hammond v. Lyndon S. Ins. Co.
| Decision Date | 19 August 2020 |
| Docket Number | Case No. CIV-19-245-D |
| Citation | 480 F.Supp.3d 1265 |
| Parties | Kyli HAMMOND, Plaintiff, v. LYNDON SOUTHERN INSURANCE COMPANY, et al., Defendants. |
| Court | U.S. District Court — Western District of Oklahoma |
Jason J. Waddell, Jason Waddell PLLC, Oklahoma City, OK, for Plaintiff.
Lori Christine B. McInnes, Michael G. McAtee, McAtee & Woods, Oklahoma City, OK, for Defendants.
Before the Court are Plaintiff's Motion for Partial Summary Judgment [Doc. No. 43] and Defendants’ Motion for Partial Summary Judgment [Doc. No. 47], filed pursuant to Fed. R. Civ. P. 56 and LCvR56.1. Plaintiff seeks a determination of a discrete issue: whether "the cancellation of her insurance policy by Defendants was improper as a matter of law." See Pl.’s Mot. at 1. Defendants seek a judgment in their favor on Plaintiff's tort claims of insurer's bad faith, fraud, and tortious interference with contract. Both Motions are fully briefed and at issue. See Defs.’ Resp. Br. [Doc. No. 52]; Pl.’s Resp. Br. [Doc. No. 53]; Pl.’s Reply Br. [Doc. No. 54].
Plaintiff Kyli Hammond brings suit to recover damages for an alleged breach of contract by Defendant Lyndon Southern Insurance Company ("Lyndon") due to its denial of an insurance claim under an automobile insurance policy. She also claims that Lyndon and Defendant Jupiter Managing General Agency, Inc. ("Jupiter"), which administered the policy, breached a duty of good faith and fair dealing in handling the insurance claim. Plaintiff further claims that Jupiter tortiously interfered with the insurance contract and engaged in fraudulent conduct in administering the policy and handling the claim. The case was filed in state court and timely removed based on federal diversity jurisdiction.
This is not a typical insurance case. Before removal, Defendants filed a joint answer in which they admitted Plaintiff suffered a covered loss, a breach of contract occurred, and Plaintiff's insurance claim "should have been handled differently." See Answer [Doc. No. 4-1], ¶¶ 8, 10, 13, 15, 20-22. Further, in the Joint Status Report filed before the initial scheduling conference, the parties stipulated to the following facts: Plaintiff was involved in a single-car accident on July 19, 2017; she had an insurance policy with Lyndon that included collision and comprehensive coverage for the vehicle involved in the accident; Jupiter was responsible for administering the policy, payments, notices, and claims; the policy was in full force and effect at the time of the accident; Plaintiff reported the loss to Defendants and initiated a claim; Lyndon denied coverage for the loss but later withdrew the denial; Lyndon breached the insurance contract; and Jupiter charged Plaintiff "reinstatement fees" for alleged lapses in coverage. See Joint Status Report [Doc. No. 10] at 3, ¶ 3. Other material facts are also undisputed, as discussed infra. Given this agreement, the parties seek summary judgment rulings on several issues.
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 material fact is one that "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute is genuine if the facts and evidence are such that a reasonable juror could return a verdict for either party. Id. at 255, 106 S.Ct. 2505. All facts and reasonable inferences must be viewed in the light most favorable to the nonmovant. Id.
A movant bears the initial burden of demonstrating the absence of a dispute of material fact warranting summary judgment. See Celotex Corp. v. Catrett , 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the movant carries this burden, the nonmovant must then go beyond the pleadings and "set forth specific facts" that would be admissible in evidence and that show a genuine issue for trial. See Anderson , 477 U.S. at 248, 106 S.Ct. 2505 ; Celotex , 477 U.S. at 324, 106 S.Ct. 2548. "To accomplish this, the facts must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein." Adler v. Wal-Mart Stores, Inc. , 144 F.3d 664, 671 (10th Cir. 1998) ; see Fed. R. Civ. P. 56(c)(1)(A). "Cross-motions for summary judgment are treated as two individual motions for summary judgment and held to the same standard, with each motion viewed in the light most favorable to its nonmoving party." Banner Bank v. First Am. Title Ins. Co. , 916 F.3d 1323, 1326 (10th Cir. 2019). The inquiry is whether there is a need for a trial – "whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson , 477 U.S. at 251, 106 S.Ct. 2505.
Along with the stipulated facts, additional facts are established by the summary judgment record. Plaintiff purchased the insurance policy on April 4, 2017, to cover her vehicle for a six-month period by making an initial premium payment and agreeing to make five installment payments due on the fourth day of each month. During each of the next three months, Plaintiff failed to make a timely payment (May 4, June 4, and July 4), but she did make late installment payments (May 16, June 10, and July 14). Each month, Jupiter mailed Plaintiff a billing notice ( an installment number, payment amount, and due date), a cancellation notice ( the policy would be cancelled if payment was not received by a later date – May 12, June 10, and July 10), and a reinstatement notice ( the policy had been reinstated upon payment – May 17, June 11, and July 15).
Each of the cancellation notices was sent before the deadline to make an installment payment had passed; the notices warned that coverage would be cancelled for nonpayment by a cancellation date and, if cancellation occurred, a $15 reinstatement fee would be required to reinstate coverage.1 Each time Plaintiff missed a payment deadline, the policy was terminated on the cancellation date (May 12, June 10, and July 10), and a $15 fee was assessed. Each cancellation date was less than 10 days after an installment was due, even though the policy required 10 days’ notice to cancel for nonpayment of premiums.
Within days after the third reinstatement notice, Plaintiff had a single-car accident in the insured vehicle on July 19, 2017, and promptly submitted an insurance claim.2 Jupiter immediately mailed a reservation of rights letter, stating "there is a potential coverage problem" and "[t]his loss requires further investigation." See Def.’s Mot., Ex. 11 [Doc. No. 47-11]. Specifically, Id. (emphasis in original).
Plaintiff contacted Jupiter by telephone on July 25, 2017, about submitting a photograph taken at the scene of the accident to prove the date of loss. Plaintiff submitted the photo the next day, but it lacked a date stamp. On August 18, 2017, Jupiter's claim adjuster recommended a "soft denial" of the claim "pending proof of date of loss within [the] coverage period;" Jupiter's claim file contains notes stating that Plaintiff had not provided such proof – "no towing[,] no police report[,] photo taken, however no timestamp to confirm date and time of loss." See Def.’s Mot., Ex. 12 at 3 (8/18/17 entry). A supervisor approved the recommendation on August 23, 2017, and a denial letter was sent to Plaintiff on August 24, 2017.
Despite the recommended "soft denial" (a term which is not explained by the record), Plaintiff received a letter that stated in full:
Defs.’ Mot., Ex. 13 [Doc. No. 47-13].
The vehicle was also covered by an insurance policy related to a car loan, and the lender made a claim under its policy after Defendants denied coverage. Securian Casualty Company paid the lender $10,966.06 in settlement of the claim in October 2017. Plaintiff filed this action in December 2017.3
Plaintiff seeks a ruling on whether Defendants properly cancelled the policy. She asserts Oklahoma law is clear that an anticipatory or conditional notice of cancellation – issued before an incident of nonpayment has occurred – is legally insufficient to permit cancellation of a policy that requires prior notice. See Pl.’s Mot. at 4-8. Plaintiff relies on two Oklahoma Supreme Court decisions as dispositive of the issue: Equity Insurance Co. v. City of Jenks , 184 P.3d 541 (Okla. 2008) ; and Equity Insurance Co. v. St. Clair , 196 P.3d 981 (Okla. 2008). Although not entirely clear, the Court understands that Plaintiff seeks a resolution of this issue in order to advance her claim that Defendants engaged in bad faith...
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