Oliver v. Farmers Ins. Group of Companies

• Citation: 941 P.2d 985,1997 OK 71
• Decision Date: 03 June 1997
• Docket Number: No. 87550,87550
• Parties: Joyce Carlene OLIVER, Appellant, v. FARMERS INSURANCE GROUP OF COMPANIES and Farmers Group, Inc., Appellees.
• Court: Supreme Court of Oklahoma

Page 985

941 P.2d 985

1997 OK 71

Joyce Carlene OLIVER, Appellant, v. FARMERS INSURANCE GROUP OF COMPANIES and Farmers Group Inc., Appellees.

No. 87550.

Supreme Court of Oklahoma.

June 3, 1997.

Jeff L. Hartmann, James M. Elias, Shdeed & Hartmann, Oklahoma City, for Appellant, Joyce Carlene Oliver.

Greg D. Givens, Michael Woodson, Edmonds, Cole, Hargrave, Givens & Witzke, Oklhoma City, for Appellees, Farmers Insurance Company, Inc., Farmers Insurance Group of Companies.

SUMMERS, Vice Chief Justice:

¶1 Plaintiff Joyce Carlene Oliver has a claim pending against her insurer for bad faith in the handling of her alleged loss under her uninsured motorist policy. She has named three other parties as defendants, claiming all are responsible as members of the Farmers Insurance Group. The order appealed grants summary judgment to two of the four defendants as being improper parties. ¹ The Court of Civil Appeals affirmed. On certiorari we reverse and remand.

¶2 Plaintiff's original suit was against Farmers Insurance Company, Inc. for uninsured motorist benefits and bad faith breach of contract. The trial court granted summary judgment to the defendant on the bad faith claim. She appealed and the Court of Civil Appeals reversed, finding material facts in dispute. During this time the uninsured motorist claim was settled.

¶3 Oliver refiled her bad faith claim against Farmers Insurance Company Inc., but added as additional defendants "Farmers Insurance Group of Companies", "Farmers Insurance Exchange" and "Farmers Group, Inc." Farmers Insurance Group of Companies and Farmers Group Inc. filed motions for summary judgment, alleging that they are improper defendants in this bad faith lawsuit. Farmers Insurance Exchange did not seek summary judgment. Farmers Insurance Group of Companies offered an affidavit that it is not a corporate entity; rather it is only a collective name for a group of corporations and inter-insurance exchanges. Farmers Group Inc. stated that it is not licensed to transact insurance business in Oklahoma; it is only a management company for various insurance branches of Farmers Insurance Company. It urges that it is separate and distinct, that it had no contractual relationship with Oliver, and cannot be liable for bad faith.

¶4 Oliver opposed the motions for summary judgment. She presented an organizational chart detailing the hierarchy of the Farmers companies, ² and an affidavit of the former Oklahoma Insurance Commissioner. The affidavit of former commissioner Gerald Grimes states:

... [I]t is my opinion that Farmers Insurance Group is comprised of property and casualty insurers including Farmers Insurance Company, Inc., and others, who operate under a common management through Farmers Group, Inc., and pool 100% of their business, and all premiums, expenses and losses are prorated among the pooled members in accordance with the percentages contained in the pooling agreement ... The economic reality is Farmers Insurance Group is but one entity that is supervised and managed by Farmers Group, Inc.

His opinion was based on an industry-accepted report which rates insurance companies.

¶5 The trial court granted summary judgment to the two defendants, and Oliver appealed. The Court of Civil Appeals affirmed.

We reverse and remand for further proceedings.

¶6 Summary judgment is proper when there are no material facts in dispute. Indiana Nat'l Bank v. Dept. of Human Serv., 857 P.2d 53, 59 (Okla.1993). A court may look beyond the pleadings at evidentiary materials to decide whether there are any material facts disputed which remain for resolution by the trier. Id.; Flanders v. Crane, 693 P.2d 602, 605 (Okla.1984). The court may not weigh the evidence, but may only review the evidence to determine whether there is a factual dispute. Id.; Stuckey v. Young Exploration Co., 586 P.2d 726, 730 (Okla.1978). All inferences must be taken in favor of the party opposing the motion. Seitsinger v. Dockum Pontiac Inc., 894 P.2d 1077, 1079 (Okla.1995). If reasonable people could differ as to the facts, the matter is not proper for summary judgment. Indiana Nat'l Bank, at 59.

¶7 Plaintiff is candid in disclosing her motive in naming the additional defendants. She bought the insurance through an agency that advertised as representing the "Farmers Insurance Group". Her policy was actually written with "Farmers Insurance Company, Inc.", a Kansas corporation and rather small subsidiary. In her bad faith claim for punitive damages she hopes to be allowed to show the worth of more than just the Kansas subsidiary.

¶8 First we consider the motion of Farmers Group, Inc. If one corporation is simply the instrumentality of another corporation, the separation between the two may be disregarded and treated as one for the purpose of tort law. Frazier v. Bryan Memorial Hosp. Authority, 775 P.2d 281, 288 (Okla.1989); Tara Petroleum Corp. v. Hughey, 630 P.2d 1269, 1275 (Okla.1981). The question hinges primarily on control. Frazier listed 10 factors which may be considered: (1) the parent corporation owns most or all of the stock; (2) the corporations have common officers or directors; (3) the parent provides financing to the subsidiary; (4) the dominant corporation subscribes to all the other's stock; (5) the subordinate corporation is under capitalized; (6) the parent pays the salaries, expenses or losses of the subsidiary; (7) a great deal of business is with parent corporation or assets of the former were conveyed to the other corporation; (8) the parent refers to the subsidiary as a division or department; (9) the subsidiary follows directions from the parent's officers or directors; (10) legal formalities for keeping the entities separate are observed. Id. at 288. Also important is the commonality of purpose between the corporations. Id.

¶9 Mr. Grimes' affidavit states that the entire Farmer's Insurance Group is "supervised and managed by Farmer's Group, Inc." The organizational chart before us shows that Farmer's Group, Inc. manages Farmers Insurance Exchange, one subsidiary of which is Farmers Insurance Co., Inc., the plaintiff's Kansas corporation. (Farmer's Insurance Exchange did not seek summary judgment.)

¶10 Two other courts faced with this exact question have dealt with this particular defendant. Farmers Group, Inc. v. Trimble, 768 P.2d 1243 (Col.Ct.App.1988); Delos v. Farmers Insurance Group, Inc., 93 Cal.App.3d 642, 155 Cal.Rptr. 843 (1979). Both courts held that as the management company and attorney-in-fact for all of its subsidiary and affiliated companies, it could be held liable for bad faith breach of contract. Trimble, at 1246; Delos, 155 Cal.Rptr. at 848. Delos specifically rejected the assertion that as the management company it was not involved in the business of insurance. Delos, at 850.

¶11 Clearly, there is conflicting evidentiary material in our record regarding the status of Farmers Group, Inc. as defendant. Without weighing the credibility of the evidence, but taking all inferences in favor of the party opposing the motion, it is clear that Farmers Group, Inc. is related to and involved in the same insurance group as Farmers Insurance Company, Inc., the original defendant. The issues posed by Frazier are questions for a fact finder, and will determine the management company's liability, or lack of it. Those issues, together with the former insurance commissioner's affidavit which states that all the assets of the companies are pooled, and liabilities paid from this ¶12 The Farmers Insurance Group of Companies asserts a different defense: that it is an improper defendant because it is not a legal entity, and is therefore not subject to legal process. The assistant secretary of Farmers Insurance Exchange stated in his affidavit that the association had never been a corporate entity. He stated that "Farmers Insurance Group of Companies" and "Farmers Insurance Group" were merely federally registered service marks ³ used in marketing the Companies' services.

common pool, raise questions which should be resolved by a trier of fact.

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