Klintworth v. Valley Forge Ins. Co.

Decision Date03 March 2021
Docket NumberCase No. 20-CV-0178-CVE-CDL
PartiesJASON KLINTWORTH, Plaintiff, v. VALLEY FORGE INSURANCE COMPANY, Defendant.
CourtUnited States District Courts. 10th Circuit. Northern District of Oklahoma

JASON KLINTWORTH, Plaintiff,
v.
VALLEY FORGE INSURANCE COMPANY, Defendant.

Case No. 20-CV-0178-CVE-CDL

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA

March 3, 2021


OPINION AND ORDER

Before the Court are cross-motions for summary judgment by the remaining parties in this action.1 Defendant Valley Forge Insurance Company's motion seeks summary judgment as to plaintiff Jason Klintworth's remaining claim for breach of the duty of good faith and fair dealing (bad faith) (Dkt. # 90). In its motion, defendant argues plaintiff cannot satisfy the required elements of his bad faith claim because i) any delays in the claims process were either attributable to plaintiff or due to defendant's reliance on Oklahoma legal counsel, ii) there was a legitimate dispute among the parties as to the appropriate amount due to plaintiff, and iii) there is no evidence of inadequate investigation. Plaintiff responds (Dkt. # 104) that defendant's bad faith is not excused by "unfounded" claims about a legitimate dispute and that defendant failed to investigate plaintiff's claim. The motion is fully briefed (Dkt. ## 90, 104, 125).

In his motion for partial summary judgment (Dkt. # 107), plaintiff argues that defendant's claims handling process was conducted in bad faith, for which he is entitled to partial summary judgment. First, he argues he is entitled to summary judgment because defendant failed to timely

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disclose coverage to plaintiff. Second, plaintiff asserts that defendant failed to investigate, evaluate, pay, or deny i) plaintiff's claim of loss of earning capacity; ii) plaintiff's claim of mental damages; and iii) plaintiff's claim for "the foreseeability" of plaintiff's diabetes-related hospitalization expenses. Third, he argues he is entitled to summary judgment because defendant failed to investigate, but denied as unrelated to the accident, iv) plaintiff's claim for right shoulder injury; v) plaintiff's claim for the permanency of his left shoulder injury, various sprains and strains, and tinnitus; and vi) plaintiff's future medical expenses. Dkt. # 107 at 6-7. Fourth, plaintiff argues defendant acted in bad faith by unreasonably delaying investigation for nine months. Id. at 7. Fifth, plaintiff asserts defendant engaged in bad faith regarding defendant's retention of attorneys, stating it was bad faith to "retain[] an attorney outside the parameters of the policy," use an attorney to "develop[] a conflict of interest with plaintiff," and "limit[] the representation of plaintiff" without plaintiff's knowledge. Id. at 7-8. Sixth, plaintiff argues that defendant acted in bad faith when it capped plaintiff's non-economic damages at $350,000. Id. at 8. Seventh, and finally, plaintiff argues that failing to continue to investigate plaintiff's claims after the suit was filed constitutes bad faith. Id. Defendant responds that none of the arguments raised in plaintiff's motion establishes bad faith as to delay or failure to investigate (Dkt. # 128). The motion is fully briefed (Dkt. ## 107, 128, 142).

I.
A. Accident and Initial Claims Handling

On March 9, 2016, plaintiff was involved in a three-car collision. Plaintiff was driving and had slowed due to highway congestion; he was subsequently struck by the vehicle directly behind him, driven by Linda Cervantes. Dkt. # 90-16, at 14. According to the police report, a third car, driven by DeMarco Metoyer, struck Cervantes's car and caused her car to strike plaintiff's car a

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second time. Id. The passenger in Metoyer's car died at the scene. Id. at 12. And, though Cervantes survived the crash, she later died as a result of the injuries she sustained. Plaintiff did not report any injuries to the police officers at the scene. Dkt. # 90-1, at 5.

At the time of the accident, plaintiff's business, ALK Enterprises, LLC (ALK), was insured under a Business Auto Policy issued by defendant. Dkt. # 90-2. The policy covers collision claims for insured vehicles, and includes auto medical pay ("medpay") limits of $2,000, and uninsured motorist ("UIM") limits of $1,000,000. Id. at 4-6. The "Business Auto Conditions" subsection of the "Business Auto Coverage Form" section of the policy provides that

[i]n the event of "accident", claim, "suit" or "loss", you must give us or our authorized representative prompt notice of the "accident" or "loss.' Include:

(1) How, when, and where the "accident" or "loss" occurred;

(2) the "insured's" name and address; and

(3) to the extent possible, the names and addressed of any injured persons and witnesses.

Id. at 23.

The "Oklahoma Uninsured Motorists Coverage" endorsement to the policy provides that defendant "will pay, in accordance with Title 36, Oklahoma Statutes, all sums the 'insured' is legally entitled to recover as compensatory damages from the owner or driver of an 'uninsured motor vehicle.'" Id. at 32. The endorsement further states that payment will be made "under this coverage only if . . . a. [t]he limit of any applicable liability bonds or policies has been exhausted by payment of judgments or settlements; or b. a tentative settlement has been made between an 'insured' and the insurer of [an underinsured vehicle] . . . and we (1) have been given prompt written notice of such

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tentative settlement; and (2) [a]dvance payment to the 'insured' in an amount equal to the tentative settlement within 30 days after receipt of the notification." Id. The policy also states:

c. A person seeking Uninsured Motorist coverage must also notify us, in writing, of a tentative settlement between the "insured" and the insurer of an "uninsured motor vehicle" and allow us 60 days to advance payment in an amount equal to the tentative settlement to preserve our rights against the insurer, owner or operator of such "uninsured motor vehicle." This notice must be sent by certified mail and must include:

(1) Written documentation of economic losses;

(2) Copies of all medical bills; and

(3) Written authorization or a court order allowing us to obtain reports from any employers and medical providers.

Id. at 34.2

Shortly after the accident, plaintiff called his insurance agent, Mark Tedford of Tedford Insurance, to discuss coverage. Dkt. ## 107, at 13; 128, at 8. On March 10, 2016, Tedford sent an "Automobile Notice of Loss" form to defendant. Dkt. # 107-1, at 1. The form noted there had been a three-car accident, that plaintiff was in the foremost vehicle, and that one person had died in the crash. Id. at 1. The form stated that ALK was the insured and that plaintiff was the primary contact. Id.

On March 11, 2016, defendant sent an "Acknowledgment of New Claim" letter to plaintiff, which identified ALK's auto-insurance policy number, and assigned an identification number to the claim. Dkt. # 107-6. Defendant was listed as the underwriting company. Id. The letter stated the

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type of claim as "auto," and included the contact information of the claims consultant in charge of the claim: J.W. "Dub" Graham. Id.3 Graham interviewed plaintiff that day. Dkt. ## 107, at 14; 128, at 9. The interview was not recorded, but a claim note was made in defendant's internal log system. Dkt. ## 107, at 14; 128, at 9. In the interview, Graham learned that plaintiff had been to a doctor after the crash and was possibly injured. Dkt. ## 107, at 15; 128, at 9. Plaintiff told Graham he would be going back to see the doctor. Dkt. ## 107, at 15; 128, at 9. After the call, Graham determined that plaintiff was not at fault in the accident. Dkt. ## 107, at 15; 128, at 9. Later that day, Graham sent an email to plaintiff regarding the call. Dkt. # 128-13. In the email, Graham states "[a]s discussed I am hiring defense counsel just as a precautionary measure for any possible future litigation. As soon as I get the name of who will handle I will advise you." Id. at 1. Shortly after that, Graham sent a follow up email stating that the "defense attorney assigned is Jim Secrest" of Secrest, Hill, Butler & Secrest. Id. at 2.

Plaintiff's initial doctor visit on March 11, 2016 was with Dr. Paul Harris, D.C., of Harris Chiropractic Clinic. Dkt. # 90-13, at 119. Plaintiff indicated that on that day he was experiencing diabetes, depression, pain in both hands, headache, low back pain, neck pain, pain in the upper arm or elbow, pain in the upper leg or hip, swelling and stiffness of joints, tinnitus, visual disturbances, and wrist pain. Id. Dr. Harris advised plaintiff he should get MRIs of several areas.

On March 14, 2016, plaintiff spoke to a lawyer with the firm hired to defend plaintiff, Secrest, Hill, Butler & Secrest. Dkt. # 128-16. The lawyer, James Daniel, followed up with plaintiff

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on March 15, 2016. Id. Daniel stated he was in touch with plaintiff's adjuster at CNA.4 Id. Daniel also requested that plaintiff request a redaction of certain false information relating to the March 9 accident that was published in The Tulsa World. Id.

On March 25, 2016, plaintiff underwent MRIs of his left shoulder, lumbar spine, and cervical spine. Dkt. # 90-13, at 94, 102, 104. The MRI report of the left shoulder states the clinical impression was that there was "mild tendinosis" and a series of abnormalities "possibly representing symptomatic bursitis." Id. at 107. The MRI reports of both the lumbar and cervical spine state that the impression was "multilevel degenerative disc disease." Id. at 103, 105.

On April 1, 2016 plaintiff visited an orthopedic doctor for his "left shoulder pain." The doctor reviewed the shoulder MRI and prescribed home exercise and 500mg NSAID as treatment, as well as a shoulder injection. Id. at 7-8. Plaintiff reported some relief from the injection. Id. at 8.

On April 13, 2016, plaintiff emailed Graham stating that "after speaking with several people it has come to my attention that I could get some financial relief by tapping into my uninsured motorist coverage. Could you help me in directing me as to with whom to speak." Dkt. # 104-8, at 2. However, Graham...

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