Trinity Baptist Church v. Bhd. Mut. Ins. Servs., LLC

Citation341 P.3d 75,2014 OK 106
Decision Date09 December 2014
Docket Number113,072.
PartiesTRINITY BAPTIST CHURCH, Plaintiff/Appellant, v. BROTHERHOOD MUTUAL INSURANCE SERVICES, LLC, Defendant, and Sooner Claims Services, Inc., Defendant/Appellee.
CourtSupreme Court of Oklahoma

341 P.3d 75
2014 OK 106

TRINITY BAPTIST CHURCH, Plaintiff/Appellant
v.
BROTHERHOOD MUTUAL INSURANCE SERVICES, LLC, Defendant
and
Sooner Claims Services, Inc., Defendant/Appellee.

113,072.

Supreme Court of Oklahoma.

Dec. 9, 2014.


Ryan M. Oldfield, Oldfield & Buergler, P.L.L.C., Oklahoma City, Oklahoma, for Plaintiff/Appellant.

John Wiggins, Wiggins, Sewell & Ogletree, P.C., Oklahoma City, Oklahoma, for Plaintiff/Appellant.

George W. Dahnke, Abowitz, Timberlake & Dahnke, P.C., Oklahoma City, Oklahoma, for Defendant/Appellee.

Opinion

COMBS, J.:

¶ 1 The primary issues presented on appeal are: 1) whether a special relationship existed between an insured entity and an independent adjuster hired by the insurer, sufficient to subject the independent adjuster to the implied covenant of good faith and fair dealing arising under the insurance contract; and 2) whether an independent insurance adjuster owes a legal duty to the insured such that it may be liable to the insured for negligence in its adjustment of the claim. This Court determines the answer to both questions is no.

I.

FACTS AND PROCEDURAL HISTORY

¶ 2 Trinity Baptist Church (Trinity) purchased an insurance policy for its property from Brotherhood Mutual Insurance Company (Brotherhood)1 , effective (as amended) from July 1, 2009, through July 1, 2010. On December 24, 2009, a powerful winter storm struck the Oklahoma City area, which Trinity alleged resulted in significant damage to its church property due to accumulation of snow and ice on its sanctuary building. Trinity filed a claim with Brotherhood on or about January 12, 2010, asserting damage caused by the storm.

¶ 3 On January 15, 2010, Brotherhood retained Sooner Claims Services, Inc. (Sooner), as an independent adjuster to investigate Trinity's claim, pursuant to the provisions of

341 P.3d 78

a Limited Assignment sent to Sooner on the same day. The Limited Assignment provided, among other things, that Sooner was: 1) not to make coverage commitments to the insured; 2) not to send written correspondence to the insured except as necessary to confirm appointments, collect necessary documentation, or provide a complete estimate; 3) to personally inspect the losses; and 4) provide a descriptive report to if a loss was possibly not covered so that a Brotherhood adjuster could make a coverage determination.

¶ 4 Trinity disputes that Sooner stuck entirely to the terms of its Limited Assignment over the course of its investigation, arguing that Sooner's representative made coverage recommendations to Brotherhood in contravention of the Limited Assignment.2 Regardless, Trinity agreed that Sooner had no authority to make coverage determinations to it. Trinity also agreed that Sooner's evaluations and estimates of damages were submitted directly to Brotherhood and it was Brotherhood that determined what documentation generated by Sooner would be provided to Trinity. Trinity also agreed that Sooner's services were charged at Sooner's customary hourly rate and that Brotherhood reimbursed Sooner for its expenses.

¶ 5 After a lengthy investigation and claims process, that came to involve several other contractors and entities not party to the lawsuit, Trinity eventually filed suit in the District Court of Oklahoma County on February 18, 2011. In its First Amended Petition, filed on March 9, 2011, Trinity asserted bad faith and breach of contract claims against Brotherhood for its handling and investigation of Trinity's claim. Trinity also alleged bad faith and negligence on the part of Sooner Claims, alleging that Sooner: 1) assigned an adjuster to Trinity's claim when it knew or should have known that the adjuster was inadequately skilled for adjusting Trinity's type of commercial loss; 2) allowed its adjuster to drag out adjustment for over one year; 3) allowed its adjuster to “low ball” Trinity's loss on more than one occasion only to increase the covered loss when Trinity objected and hired third-parties; and 4) allowed its adjuster to engage in inadequate and incomplete adjustment of Trinity's loss, to Trinity's detriment.

¶ 6 After discovery and other proceedings in the trial court, Sooner filed two motions for summary judgment. In its First Motion for Summary Judgment, filed on January 14, 2014, Sooner argued that it was entitled to judgment as a matter of law because it owed no duty to Trinity that would subject it to liability for bad faith or negligent adjustment of Trinity's claim. Sooner also filed a Motion for Partial Summary Judgment on the Issue of Damages on January 21, 2014, arguing: 1) as a corporation, Trinity could not maintain a claim for emotional damages; and 2) Trinity could not establish any damages suffered as a result of any act or omission of Sooner or its adjuster Steve Hall.

¶ 7 The trial court entered summary judgment for Sooner on August 4, 2014. The trial court: 1) sustained Sooner's First Motion for Summary Judgment to the extent Trinity was attempting to maintain a claim against Sooner for bad faith; 2) denied Sooner's First Motion for Summary Judgment with respect to Trinity's claim of gross negligence; 3) Sustained Sooner's Motion for Partial Summary Judgment on the Issue of Damages; and 4) dismissed all claims asserted by Trinity against Sooner with prejudice.

¶ 8 Trinity filed its Petition in Error on July 25, 2014.3 Sooner filed a Counter–Petition in Error on August 14, 2014, to address the trial court's denial of its First Motion for Summary Judgment with respect to Trinity's claim of gross negligence. Trinity filed a

341 P.3d 79

motion to retain its appeal for disposition by this Court on July 25, 2014. We granted Trinity's motion to retain on August 15, 2014, and the cause as assigned to this office on August 19, 2014.

II.

Standard of Review

¶ 9 A moving party is entitled to summary judgment as a matter of law only when the pleadings, affidavits, depositions, admissions or other evidentiary materials establish no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Miller v. David Grace, Inc., 2009 OK 49, ¶ 10, 212 P.3d 1223 ; Wathor v. Mutual Assurance Administrators, 2004 OK 2, ¶ 4, 87 P.3d 559. In reviewing the grant or denial of summary judgment, this Court views all inferences and conclusions to be drawn from the evidentiary materials in a light most favorable to the nonmoving party. Miller, 2009 OK 49, ¶ 10, 212 P.3d 1223 ; Wathor, 2004 OK 2, ¶ 4, 87 P.3d 559. Because a grant of summary judgment is purely a legal issue, this Court's standard of review on appeal is de novo. Miller, 2009 OK 49, ¶ 10, 212 P.3d 1223 ; Carmichael v. Beller, 1996 OK 48, ¶ 2, 914 P.2d 1051.

III.

Sooner did not Owe Trinity a Duty of Good Faith and Fair Dealing Because it was a Stranger to the Insurance Contract and no Special Relationship Existed Between it and Trinity.

¶ 10 The trial court sustained in part and denied in part Sooner's First Motion for Summary Judgment alleging that Sooner owed no legal duty to Trinity. The trial court sustained Sooner's motion to the extent that Trinity was attempting to maintain a claim against Sooner for bad faith. On appeal, Trinity contends the trial court erred because under certain circumstances an independent adjuster may owe a duty of good faith and fair dealing to individuals insured by its client. Sooner asserts it owed no duty of good faith and fair dealing to Trinity. We agree.

A. The general rule in Oklahoma is that only the insurer owes a duty of good faith and fair dealing to its insured.

¶ 11 Oklahoma law recognizes an implied duty on the part of an insurer to deal fairly and act in good with regard to its insured. Timmons v. Royal Globe Ins. Co., 1982 OK 97, ¶ 12, 653 P.2d 907 ; Christian v. American Home Assur. Co., 1977 OK 141, ¶ 25, 577 P.2d 899. In Timmons, this Court examined whether this duty might be extended to cover individuals who were not a party to the contract between the insurer and the insured, and determined that it could not. 1982 OK 97, ¶¶ 16–17, 653 P.2d 907. Citing precedent from California on which this Court's recognition of the implied covenant of good faith and fair dealing was originally based, this Court in Timmons determined that as non-insurer defendants were not parties to the agreement for insurance, they could not be subject to an implied duty of good faith and fair dealing:

In Christian, supra, this Court analyzed and quoted at length from Gruenberg v. Aetna Ins. Co., 9 Cal.3d 566, 108 Cal.Rptr. 480, 510 P.2d 1032 (1973). Therein this Court termed Gruenberg, supra, to be a “clear analysis” of the implied duty of fair dealing and good faith [577 P.2d] at p. 904. Gruenberg, supra, itself specifically examined the liability of an agent for damages for violation of the implied covenant of fair dealing and good faith inuring in a contract of insurance:
“Obviously, the non insurer defendants were not parties to the agreement for insurance; therefore, they are not, as such, subject to an implied duty of good faith
...

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