Johnson v. CSAA Gen. Ins. Co.

• Decision Date: 15 December 2020
• Docket Number: No. 118,689,118,689
• Citation: 478 P.3d 422
• Parties: Tokiko JOHNSON, Plaintiff, and Triple Diamond Construction LLC, Plaintiff/Appellant, v. CSAA GENERAL INSURANCE COMPANY, CSAA Insurance Exchange, CSAA Fire and Casualty Insurance Company d/b/a AAA Fire & Insurance Company, and Automobile Club of Oklahoma d/b/a AAA Oklahoma, Defendants/Appellees.
• Court: Oklahoma Supreme Court

478 P.3d 422

Tokiko JOHNSON, Plaintiff,

and

Triple Diamond Construction LLC, Plaintiff/Appellant,

v.CSAA GENERAL INSURANCE COMPANY, CSAA Insurance Exchange, CSAA Fire and Casualty Insurance Company d/b/a AAA Fire & Insurance Company, and Automobile Club of Oklahoma d/b/a AAA Oklahoma, Defendants/Appellees.

No. 118,689

Supreme Court of Oklahoma.

FILED DECEMBER 15, 2020

As Corrected: December 18, 2020

Aaron Stiles, Austin Meyer, Downtown Legal Group, Norman, Oklahoma, for Plaintiff/Appellant.

Gerard F. Pignato, Matthew C. Kane, Ryan, Whaley, Coldrion, Jantzen, Peters & Webber PLLC, Oklahoma City, Oklahoma, for Defendants/Appellees.

EDMONDSON, J.

¶1 This case involves an insured assigning a post-loss property insurance claim to a construction company for the purpose of the company repairing her property after a storm. Insurer argued the insured property owner was required to obtain written consent from the insurer prior to making the assignment. We agree with a majority of courts stating an insured's post-loss assignment of a property insurance claim is an assignment of a chose in action and not an assignment of the insured's policy. We hold insured's assignment was not prohibited by either the insurance policy or 36 O.S. § 3624. We conclude the District Court's judgment was erroneous when it dismissed the construction company as a party because written consent for the assignment was not provided by insurer to the insured. We reverse the judgment of the District Court and remand for further proceedings. The insurer's motion to dismiss the appeal is denied.

¶2 Tokiko Johnson's real property was damaged in a storm and she filed a claim with her insurance company. Johnson also executed an assignment of her insurance claim for the purpose of repairing the property with the execution in favor of Triple Diamond Construction LLC (the construction company). An appraiser retained by the construction company determined storm damage to the property in the amount of $36,346.06. The insurer determined the amount of damage due to the storm was $21,725.36.

¶3 Johnson and the construction company brought an action against Johnson's insurer and alleged related entities which are "part of a reciprocal inter-insurance exchange which pools its business among insureds and ‘exchange policies’ within the AAA/CSAA Insurance Group of companies sharing premiums, expenses and losses" (insurer).¹ Plaintiffs' petition in its labeled "first cause of action - breach of contract" alleges damages in the amount of $14,620.70, not including interest, attorneys' fees, and costs. Plaintiffs' petition also contains allegations labeled "second cause of action-bad faith (Johnson Only)." This part of the petition alleges the insurance company did not timely and adequately investigate the insurance claim or timely name an appraiser to determine the storm damage. These allegations are combined with others alleging the insurer failed to act in good faith with respect to the insurance contract obligations.

¶4 Insurer filed a motion to dismiss or an alternative motion for summary judgment for the purpose of dismissing the construction company as a party. Insurer raised one argument: Johnson's policy and 36 O.S. § 3624 prohibit an assignment of the policy. The construction company's response argues the assignment was a post-loss assignment of an insurance claim and not an assignment of an insurance policy. Defendants replied (1) an insurance claim is part of an insurance policy and a policy may not be split into smaller pieces, and (2) a "bad faith claim" may not be assigned.

¶5 The District Court sustained insurer's motion. Johnson dismissed her claims without prejudice to re-filing and the construction company appealed. In response to a show cause order by this Court, the parties agree that nothing remains pending in the District Court. However, insurer argues the construction company may not appeal without Johnson as a party in the appeal and insurer requests dismissal of the appeal. Insurer's argument is based upon (1) characterizing an insurance claim on an insurance policy as a single legal claim which may not be split between Johnson and the construction company, and (2) identifying Johnson as a necessary and proper party for this appeal involving a legal claim against her policy.

¶6 The Court's show cause order requested the construction company to address Mann v. State Farm Mutual Automobile Insurance Company , 1983 OK 84, 669 P.2d 768. The construction company responded and argued Mann applies in an appeal from a judgment which resolves fewer than all of the issues in a case, and all issues have been resolved due to the combined effect of the trial court's order and Johnson's dismissal without prejudice. The construction company argued Mann does not apply for this reason.

¶7 Insurer responded to the show cause order and argued the construction company is appealing "only part of a [legal] claim" or part of a cause of action and one principle stated in Mann applies. Insurer's approval of Mann was limited to citing it for the proposition that a cause of action includes all theories of recovery or types of damages stemming from one occurrence or transaction.² Insurer argued an action for breach of an insurance contract is the same cause of action as one based upon an insurer's failure to perform the contract in good faith. Insurer's response requested dismissal of the appeal based upon the same argument it made in the trial court, i.e. , Johnson's contractual rights created by the insurance agreement may not be assigned to the construction company. We address the request to dismiss the appeal after addressing the sole issue decided in the trial court and raised on appeal.

I. Standard of Review

¶8 The parties argued in the trial court a single question: May an insured assign a property insurance policy benefit to a third party without the consent of the insurer when (1) the policy requires insurer's consent for assignment of the policy, (2) a statute allows a policy to state it is or is not assignable, and (3) the insured's assignment relates to a previous covered loss to the insured's property? This issue was presented for adjudication by the insurer's motion to dismiss or alternative motion for summary judgment.

¶9 The appellate standard of review for an assignment of error is based upon the nature of the proceeding in District Court (e.g. , law, equity, and types of administrative proceedings), nature of the trial court's decision (e.g. , deciding an issue of law, fact, mixed law and fact), and the nature of the procedure used by the trial court (e.g. , dismissal of a petition, summary judgment, judgment on a jury verdict), with the procedure linked to a particular judicial power and judicial discretion exercised by the trial court.³ Generally, a legal question involving the District Court's statutory interpretation of law is subject to de novo appellate review.⁴ Similarly, when the meaning assigned by the trial court to an insurance contract and its terms is based upon a legal conclusion, then the assignment of error on appeal presents a legal question and is reviewed using a de novo standard.⁵

¶10 The trial court decided insurer's motion to dismiss or in the alternative summary judgment. Insurer's motion relied on 12 O.S. § 2017(D)⁶ in its reply to plaintiffs' response to a dismissal request, and insurer combined this authority with an argument stating a cause of action should not be split.⁷ Insurer raised "failure to state a claim" in its previously filed answers, and in its motion to dismiss relied on one opinion for a difference between a motion raising 12 O.S. § 2012(B) (6) and a motion for summary judgment.⁸ The construction company also relied on authority discussing review of an order deciding a 12 O.S. § 2012 (B)(6) dismissal for failure to state a claim.⁹ The parties do not identify in their filings either an additional § 2012 ground for dismissal or an issue of fact adjudicated by the District Court.

¶11 The trial court adjudicated the meaning of the language in both 36 O.S. § 3624 and insured's policy as issues of law. De novo appellate review is used for issues of law arising from both § 2012(B)(6) motion to dismiss and summary judgment adjudications.¹⁰ Review of both these types of adjudications involves an appellate court's exercise of a plenary, independent, and non-deferential reexamination of the trial court's rulings on issues of law.¹¹ We use de novo appellate review for appellant's assignments of error challenging the correctness of the District Court's judgment.

II. Insured's Assignment

¶12 Generally, when an insurance policy is deemed to be a personal contract between insured and insurer, a policy provision requiring insurer's consent for an assignment will be enforced. However, this Court has noted exceptions to this general rule. For example, in American Alliance Ins. Co. of N. Y. v. McCallie , 1957 OK 312, 319 P.2d 295, we noted an exception occurs when the subject of the assignment is not the policy and its coverage, but a right to receive funds for a policy-covered loss and the assignment occurs after the loss. We stated the following.

It seems to be the rule, followed by most courts, that where such a policy is in force and effect at the time the insured property burns, by the happening of the latter event, the relationship between the insurer and the insured becomes simply that of debtor and creditor; and that the chose in action, which the latter then has against the former, may be validly transferred to a third person, by assignment, without compliance with the policy's requirement that the insurer's consent thereto (by endorsement or otherwise) be obtained.

American Alliance Ins. Co. of N. Y. v. McCallie , 319 P.2d at 298 (relying on court opinions from Wisconsin and Iowa, cases cited in Annotations at 122 A.L.R. 144, 56 A.L.R. 139, and the then current 45 C.J.S. Insurance , 29 Am.Jur. Insurance , and 5 Appleman, Insurance Law...