Lane v. Progressive N. Ins. Co.

Citation494 P.3d 345
Decision Date29 June 2021
Docket NumberNo. 118,638,118,638
CourtSupreme Court of Oklahoma
Parties Elissa LANE; and Kyle Stone, as father and next friend of L.S., a minor, Plaintiffs/Appellants, v. PROGRESSIVE NORTHERN INSURANCE COMPANY, Defendant/Appellee.

Rex Travis, Margaret Travis, Travis Law Office, Oklahoma City, Oklahoma, for Plaintiffs/Appellants.

Brad L. Roberson, Dawn M. Goeres, Roberson, Kolker, Cooper & Goeres, P.C., Edmond, Oklahoma, for Defendant/Appellee.

GURICH, J.

¶1 The United States Court of Appeals for the Tenth Circuit certified to this Court the following question of law:

Does Progressive's UM Exclusion—which operates to deny uninsured motorist coverage to insureds who recover at least the statutorily mandated minimum in the form of liability coverage—contravene Oklahoma's Uninsured Motorist Statute, codified at 36 O.S. § 3636 ?1

¶2 We answer with a "yes": Progressive's UM Exclusion violates the terms of 36 O.S. § 3636. Through this statute, Oklahoma requires insurers to supply uninsured-motorist coverage in addition to standard liability coverage. Where a policyholder has chosen to purchase uninsured-motorist coverage and the insurer has included it in the insurance contract in accord with section 3636 —as here—our public policy requires protection up to the contracted-for limits. Because of the sweeping nature of the UM Exclusion contained in the insurance policy at issue, Progressive found a way to entirely avoid providing the promised coverage. In other words, Progressive's UM Exclusion violates public policy because an insurer in Oklahoma cannot deprive its policyholder of uninsured-motorist coverage for which a premium has been paid through an exclusion that effectively erases its policyholder's choice to purchase that coverage in the first place. We conclude that Progressive's UM Exclusion contravenes section 3636 and is therefore void as against public policy.

Facts and Procedural History

¶3 The federal court's certification order presents the underlying facts. In answering a certified question, this Court will not presume facts presented outside the certification order. Gov't Emps. Ins. Co. v. Quine , 2011 OK 88, ¶ 14, 264 P.3d 1245, 1249. "[O]ur examination is confined to resolving legal issues." Id. Nonetheless, the Court may "consider uncontested facts supported by the record." Siloam Springs Hotel, LLC v. Century Sur. Co. , 2017 OK 14, ¶ 2, 392 P.3d 262, 263.

¶4 In 2017, the plaintiffs—Lane and Stone—were injured in a serious single-car rollover accident in Canadian County, Oklahoma while riding as passengers in a car driven by Stewart, a nonparty who was a minor at the time of the accident. Progressive Northern Insurance Company had insured the driver's vehicle under a policy issued to the parents of Stewart. Premiums were paid for both liability and uninsured-motorist coverage. The driver's policy provided liability coverage of $100,000 per person, with a $300,000 limit per accident (labeled under the policy as Part I—Liability to Others). Additionally, the policy provided uninsured-motorist coverage of $100,000 per person, with a $300,000 limit per accident (designated in the policy as Part III—Uninsured Motorist Coverage). Both Lane and Stone recovered the $100,000-per-person liability limit—but their injuries were substantial, and their damages exceeded $100,000. In light of their extensive injuries, Lane and Stone sought additional uninsured-motorist coverage from Progressive. Relying on an exclusion in the policy—referred to herein as the UM Exclusion—Progressive denied their claims.

¶5 Progressive's UM Exclusion states that uninsured-motorist coverage will not apply to "bodily injury sustained by an insured person where liability coverage for bodily injury in an amount equal to or greater than the minimum limits of liability required by the motor vehicle financial responsibility law of Oklahoma is available for said bodily injury under Part I—Liability to Others." In essence, the provision operates to exclude uninsured-motorist coverage when the insured receives liability coverage in an amount equal to or greater than the minimum limits of liability prescribed under Oklahoma law. Because Lane and Stone both recovered $100,000 under the policy's liability coverage—which is greater than the Oklahoma statutory minimum of $25,0002 —Progressive denied their uninsured-motorist claims by relying on the UM Exclusion.

¶6 Following Progressive's refusal to pay, Lane and Stone sued for breach of contract and bad faith in federal district court in the Western District of Oklahoma. Progressive moved for a judgment on the pleadings, arguing its denial of uninsured-motorist coverage was warranted based on the UM Exclusion. In opposition to the motion, Lane and Stone asserted that Progressive's UM Exclusion is void as a matter of public policy under state law. Finding that Oklahoma law permits the UM Exclusion, the federal district court granted judgment in favor of Progressive. Lane and Stone appealed to the Tenth Circuit Court of Appeals, which certified to us the controlling, first-impression question of whether our uninsured-motorist-coverage statute36 O.S. § 3636 —forbids the type of UM Exclusion at issue.

Analysis

¶7 The federal court's certified question asks us to decide whether the public policy underlying a provision of the Oklahoma Insurance Code, 36 O.S. § 3636, voids a specific exclusion of uninsured-motorist coverage.3 This question is one of first impression and is governed by "no controlling Oklahoma precedent." Barrios v. Haskell Cty. Pub. Facilities Auth. , 2018 OK 90, ¶ 6 n.6, 432 P.3d 233, 236 n.6.

¶8 Uninsured-motorist coverage is an important part of automobile-insurance coverage available to insureds in Oklahoma. An entire section of the Oklahoma Insurance Code is dedicated to defining the coverage and providing protections for policyholders. In pertinent part, our statute provides:

A. No policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be issued, delivered, renewed, or extended in this state with respect to a motor vehicle registered or principally garaged in this state unless the policy includes the coverage described in subsection B of this section .
B. The policy referred to in subsection A of this section shall provide coverage therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death resulting therefrom. Coverage shall be not less than the amounts or limits prescribed for bodily injury or death for a policy meeting the requirements of Section 7-204 of Title 47 of the Oklahoma Statutes, as the same may be hereafter amended; provided, however, that increased limits of liability shall be offered and purchased if desired, not to exceed the limits provided in the policy of bodily injury liability of the insured. ... The uninsured motorist coverage shall be upon a form approved by the Insurance Commissioner as otherwise provided in the Insurance Code ....4
C. For the purposes of this coverage the term "uninsured motor vehicle" shall include an insured motor vehicle where the liability insurer thereof is unable to make payment with respect to the legal liability of its insured within the limits specified therein because of insolvency. For the purposes of this coverage the term "uninsured motor vehicle" shall also include an insured motor vehicle, the liability limits of which are less than the amount of the claim of the person or persons making such claim, regardless of the amount of coverage of either of the parties in relation to each other.
* * *
G. A named insured or applicant shall have the right to reject uninsured motorist coverage in writing. The form signed by the insured or applicant which initially rejects coverage or selects lower limits shall remain valid for the life of the policy and the completion of a new selection form shall not be required when a renewal, reinstatement, substitute, replacement, or amended policy is issued to the same-named insured by the same insurer or any of its affiliates. Any changes to an existing policy, regardless of whether these changes create new coverage, do not create a new policy and do not require the completion of a new form.

36 O.S. Supp. 2016 § 3636(A)-(C), (G) (emphasis added).5

¶9 "Every provision of every Oklahoma statute ‘is presumed to have been intended for some useful purpose and every provision should be given effect.’ " Hamilton v. Northfield Ins. Co. , 2020 OK 28, ¶ 8, 473 P.3d 22, 26 (quoting Darnell v. Chrysler Corp. , 1984 OK 57, ¶ 5, 687 P.2d 132, 134 ). Before the Oklahoma Legislature amended section 3636 in 1979, the statutory text did not clearly address underinsured-motorist coverage. See 36 O.S. Supp. 1979 § 3636(C). But the 1979 amendment "significantly expanded the uninsured motorist provision to include underinsured motorist coverage." Russell v. Am. States Ins. Co. , 813 F.2d 306, 309 (10th Cir. 1987) (per curiam). Pre-1979, the statute measured recovery by the available amount of per-person liability coverage. See id. Since the 1979 amendment, the statute has measured recovery by the value of the claim. 36 O.S. § 3636(C). Further, the Legislature proscribed insurers' ability to set-off uninsured-motorist coverage by the insured's collected liability benefits. See 36 O.S. Supp. 1979 § 3636(E) ; Burch v. Allstate Ins. Co. , 1998 OK 129, ¶ 16, 977 P.2d 1057, 1064 ("When § 3636 was amended in 1979, the Legislature prohibited the reduction of a § 3636 claim by a set-off of benefits from the tortfeasor's liability policy.").

¶10 Our Legislature plainly differentiates between liability and uninsured-motorist coverage. The terms of 47 O.S. § 7-324 mandate the contents and...

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3 cases
  • Coates v. Progressive Direct Ins. Co.
    • United States
    • Oklahoma Supreme Court
    • May 3, 2022
    ...However, UM coverage is separate and distinct from liability coverage. Lane v. Progressive Northern Ins. Co. , 2021 OK 40, ¶ 10, 494 P.3d 345, 349. Insurers must provide UM coverage in order to "protect the insured from the effects of personal injury resulting from an accident with an unins......
  • McKinney v. Progressive Direct Ins. Co.
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    • U.S. Court of Appeals — Tenth Circuit
    • December 9, 2021
    ...that coverage in the first place." Lane, 494 P.3d at 346. It therefore voided the exclusion, effectively removing it from the policy. Id. at 353. resolution of the certified question, this court reversed the district court's grant of summary judgment. See Lane, 2021 WL 4592266 at *2. As Lan......
  • Lane v. Progressive N. Ins. Co.
    • United States
    • U.S. Court of Appeals — Tenth Circuit
    • October 6, 2021
    ...in the first place. We conclude that Progressive's UM Exclusion contravenes section 3636 and is therefore void as against public policy. Id. at *1 (emphasis in original). In other words, the Oklahoma Supreme Court reasoned that because of the sweeping nature of the UM exclusion contained in......

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