Swickey v. Silvey Companies

• Decision Date: 19 March 1999
• Docket Number: 903.,No. 91,91
• Citation: 979 P.2d 266,1999 OK CIV APP 48
• Parties: David Michael SWICKEY, Sr. and Norma J. Nelson, Plaintiffs/Appellants, v. SILVEY COMPANIES, Defendant, and Insurance Resource Agency, Inc., formerly known as Harris-Gregg-Hughes-Bumgardner and Associates, Inc., Defendant/Appellee.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

979 P.2d 266

1999 OK CIV APP 48

1999 OK CIV APP 48

David Michael SWICKEY, Sr. and Norma J. Nelson, Plaintiffs/Appellants, v. SILVEY COMPANIES, Defendant, and Insurance Resource Agency, Inc., formerly known as Harris-Gregg-Hughes-Bumgardner and Associates, Inc., Defendant/Appellee.

No. 91,903.

Court of Civil Appeals of Oklahoma, Division No. 1.

March 19, 1999.

Rick W. Bisher, Oklahoma City, Oklahoma, For Plaintiffs/Appellants.

Tracy Pierce Nester, Oklahoma City, Oklahoma, For Defendant/Appellee.

Release for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 1.

OPINION

CARL B. JONES, Chief Judge:

¶ 1 Appellants contend the trial court should not have entered summary judgment in favor of Appellee Insurance Resources Agency, Inc. Agency. After review of the record before us, we conclude that the judgment must be affirmed in part and reversed in part.

¶ 2 We review entry of summary judgment de novo. Kirkpatrick v. Chrysler Corp., 1996 OK 136, ¶ 2, 920 P.2d 122, 124; Carmichael v. Beller, 1996 OK 48, ¶ 2, 914 P.2d 1051, 1053. All facts shown by the evidentiary materials, and inferences therefrom, are viewed in the light most favorable to the nonmovant. Pickens v. Tulsa Metropolitan Ministry, 1997 OK 152, ¶ 7, 951 P.2d 1079, 1082.

¶ 3 David Michael Swickey, Jr. "David" was struck and killed by an uninsured motorist on January 18, 1997. Appellants David Michael Swickey, Sr. "Mike" and Norma Nelson, David's father and grandmother, respectively, filed suit seeking recovery under the uninsured motorist UM coverage in an insurance policy Nelson purchased through Agency. It appears that Appellants asserted claims for breach of contract, fraud, and breach of fiduciary duty against Agency.¹

¶ 4 Nelson obtained the policy to cover a car she had purchased for Mike. The declarations page attached to the front of the insurance policy listed Nelson as the "named insured." The policy's definitions stated:

A. Throughout this policy, you and your refer to:

1. The named insured shown in the Declarations; and

2. The spouse if a resident of the same household.

* * * F. Family member means a person related to you by blood, marriage or adoption who is a resident of your household. ...

(Italics added.) The UM coverage applied in favor of "You any family member."²

¶ 5 The insurer denied Appellants' claim under the UM coverage, because neither David nor Mike were covered persons. Although Mike lived with Nelson when the policy was issued, he was not the named insured. Before the accident, Mike had moved out of Nelson's house, and so was no longer a covered "family member." David also did not live with Nelson, so she could not claim UM coverage for damages she might recover as a result of his death. Eventually, the insurer settled with Appellants for a fraction of the UM limits.

¶ 6 Agency then filed a motion for summary judgment. It asserted, because the covered vehicle was always titled in Nelson's name, that Mike had no insurable interest in it and he could not be the named insured on the policy. And, Agency asserted, Nelson never told anyone that Mike had moved out from Nelson's house. Agency argued that under the circumstances there was no proof of actionable misrepresentation, that no contract existed between it and either of Appellants, and that an action for "bad faith" would not lie against anyone but an insurer.

¶ 7 In their response Appellants said that when Nelson got insurance she told someone at Agency that she wanted full coverage for Mike, and she wanted him shown as the named insured. At no time was she told that Mike could not be shown as the named insured. Nelson claimed that Agency failed to properly advise her about UM coverage, and that it submitted erroneous information to the insurer showing that Nelson would be the driver of the vehicle. Appellants submitted deposition testimony from Mike that he had noticed on an amended declaration form that he was not shown as the insured, that he called Agency to make sure he was "the insured of the vehicle" sic and he was assured that he was by the same agent who had originally handled Nelson's application. Agency conceded for purposes of the motion that such a conversation took place (although the agent could not recall it), but argued that Mike misunderstood the distinction between being an insured and the insured (i.e., the "named insured").

¶ 8 We begin with the breach of contract theory, because it relates to the first relevant contacts between Agency and the Appellants. Agency correctly argues that it was not a party to the contract made with the insurer based upon Nelson's application. However, an insurance agent may be liable under either contract or tort theories for failure to obtain insurance. See A-OK Const., Inc. v. McEldowney, McWilliams, Deardeuff & Journey, Inc., 1992 OK CIV APP 66, ¶ 7, 844 P.2d 182, 183-84, cert. denied. The court in A-OK Construction said that the Supreme Court had at least tacitly accepted an agent's potential liability for negligence in Dewees v. Cedarbaum, 1963 OK 54, 381 P.2d 830.³ Although the court in Dewees did not expressly say so, we hold that an insurance agent may be liable for breach of contract or in tort for failure to procure an insurance policy.

¶ 9 The contract theory of an insurance agent's liability is often based on failure to obtain any insurance as promised, but may also consist of failure to obtain insurance as requested. In order to prevail on a claim for breach of contract to procure insurance, a plaintiff must show that the insurance agent agreed to procure insurance coverage effective as of a certain date and time, or of a certain breadth, and then failed to do so. See, e.g., Hause v. Schesel, 42 Wis.2d 628, 635, 167 N.W.2d 421, 424 (1969) (agent said coverage would be effective on certain date and time, but it did not become effective until insurer received application and first premium two days later). The proposed insured's agreement to pay the premiums and accept delivery of the policy provides consideration in exchange for the agent's promise to procure the insurance. Id.; see also Schuck v. Habicht, 672 So.2d 559, 562 (Fla.App.1996) (applicant's agreement to accept a policy if issued is sufficient consideration for the contract since it carries with it the implied promise to pay whatever premium would be due thereon). The measure of damages for breach of a contract to procure insurance is the amount which might have been recovered if the coverage had been procured as agreed. Mid-America Corp. v. Roach, 1966 OK 32, ¶ 8, 412 P.2d 188, 191.

¶ 10 The evidentiary materials submitted to the trial court support a claim by Nelson against Agency for breach of the implied contract she made with it to obtain insurance which showed Mike as the named insured. At this stage of the proceedings, on appeal from entry of summary judgment, we must accept the effect of Nelson's deposition testimony (because it was not controverted in Agency's reply brief) that she specifically informed Agency that she wanted an insurance policy which would show Mike, not her, as the insured. This is not a matter of weighing the evidence below, but merely considering the reasonable inferences which may be drawn from it. Nelson's testimony, viewed in context with the other evidentiary materials in the record, creates a substantial controversy about whether Agency agreed to procure insurance under those terms. We are therefore required to reverse the judgment below to the extent that it cut short Nelson's claim for breach of contract.

¶ 11 We pause to note that the breach of contract claim, if any, will lie only in favor of Nelson, because she was the person who made the request for coverage, and she was one who paid the premiums. There is no evidence to suggest a contract, even an implied one, between Agency and Mike. He had no contact with Agency until after the policy was issued.

¶ 12 The evidence in the record of Mike's contact with Agency and his mother's earlier discussion with Agency leads us next to consider Appellants' claim for breach of fiduciary duty. There are no Oklahoma cases holding that an insurance agent...