Wagnon v. State Farm Fire and Cas. Co.

• Decision Date: 23 December 1997
• Docket Number: No. 89362,89362
• Parties: Charles WAGNON and Loralee Wagnon, husband and wife, Plaintiffs-Appellees-Cross-Appellants, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant-Appellant-Cross-Appellee.
• Court: Oklahoma Supreme Court

Page 641

951 P.2d 641

1997 OK 160

Charles WAGNON and Loralee Wagnon, husband and wife, Plaintiffs-Appellees-Cross-Appellants, v. STATE FARM FIRE AND CASUALTY COMPANY,

Defendant-Appellant-Cross-Appellee.

No. 89362.

Supreme Court of Oklahoma.

Dec. 23, 1997.

As Corrected April 3, 1998.

Steven L. Sessinghaus, Colorado Springs, CO, for Plaintiffs-Appellees-Cross-Appellants.

Neal E. Stauffer, Kent B. Rainey, Anthony J. Jorgenson, Stauffer, Rainey, Gudgel & Hathcoat, P.C., Tulsa, for Defendant-Appellant-Cross-Appellee.

ALMA WILSON, Justice:

¶1 Charles and Loralee Wagnon sued State Farm Fire and Casualty Company in the District Court of Tulsa County, State of Oklahoma, for breach of contract and bad faith after State Farm denied their insurance claim. The insurer, State Farm, removed the case to the United States District Court for the Northern District of Oklahoma. The federal court, in a non-jury trial, found for the Wagnons on the breach of contract claim, awarding $12,899.68 for their loss, but granted judgment to the insurer on the bad faith claim. Both parties appealed to the United States Court of Appeals for the Tenth Circuit. That court, pursuant to 20 O.S.1991, §§ 1601-1611, has certified a question of law concerning whether theft coverage in the Wagnons' homeowners/renters' insurance policy is subject to the one-year statute of limitations prescribed for fire insurance policies in 36 O.S.1991, § 4803(G). ¹ We answer that theft coverage is not subject to the one-year statute of limitations prescribed for fire insurance policies under § 4803(G). ²

¶2 The following facts are provided by the Tenth Circuit court. The Wagnons entered into a one-year insurance contract that protected their personal property against loss from multiple perils including fire, lightning, and theft. The policy provided that any suit against the insurer "must be started within one year after the date of loss or damage." Three months after entering into the contract, the Wagnons filed a claim alleging loss from a burglary occurring on April 4, 1992. The insurer denied coverage based on misrepresentations by the Wagnons. On April 4, 1994, the Wagnons sued the insurer for breach of contract and bad faith. The insurer moved for summary judgment on the breach of contract claim based on the one-year provision in the policy and the one-year limitation on actions provided in 36 O.S.1991, § 4803(G). The federal district court denied the motion, concluding that the one-year limitation in the Wagnons' policy was invalid. The court then determined the amount of the Wagnons' loss under the policy and awarded that amount on the breach of contract action.

¶3 State Farm begins its argument by stating that a policy of insurance insuring against the peril of fire must conform to the standard fire policy and any endorsements to that policy are subject to the statute of limitations provision contained therein. An examination of the policy reveals that it bears little, if any, resemblance to the "Standard Fire Insurance Policy" found in 36 O.S.1991, § 4803(G). The Wagnons' policy insures against accidental direct physical loss to property caused by seventeen perils including fire and theft. ³ Even when the Wagnons' policy concerns the same subject as the standard fire insurance policy, the wording is different. ⁴ Although the Wagnons' homeowners policy may include coverage for fire, it is no more a standard fire policy than it is a theft policy, a vandalism policy, an explosion policy, or any of the other named seventeen perils covered.

¶4 Section 4803(F)(1) does provide for a form of policy to be approved by the Insurance Commissioner that does not correspond to the standard fire insurance policy as provided in this section, if the coverage of the approved policy is not less than that contained in the standard fire insurance policy with respect to the peril of fire. The Tenth Circuit Court of Appeals has not asked this Court to rule whether the policy itself violates § 4803, and we express no opinion concerning this issue. But we see no reason to characterize this policy as a "standard fire insurance policy," and thereby force all the other coverages for the perils included to fit within the statutory provisions for the standard policy found in § 4803. Even though other courts have observed that the term "fire insurance" may be a generic term, ⁵ we see no reason to entertain this legal fiction.

¶5 While State Farm has attempted to sweep all perils under the umbrella of a "standard fire insurance policy," the Wagnons urge that there is an important statutory distinction between the peril of fire, and that of theft in the homeowners policy. The Wagnons observe that theft is defined as casualty insurance, and casualty insurance has its own statute of limitations. An examination of title 36 proves that this statement is correct. The definition is found in 36 O.S.1991, § 707, which provides in pertinent part:

" 'Casualty insurance' includes vehicle insurance as defined in Section 706 and accident and health insurance as defined in Section 703, of this article, and in addition includes ... 3. Burglary and theft insurance, which is insurance against loss or damage by burglary, theft, larceny, robbery, forgery, fraud, vandalism, malicious mischief, confiscation, or wrongful conversion, disposal, or concealment, or from any attempt at any of the foregoing...."

¶6 Section 3617 provides that:

"No policy delivered or issued for delivery in Oklahoma and covering a subject of insurance resident, located, or to be performed So a fire policy, being property insurance, ⁶ can be limited to a one-year period in which to file an action. But theft is covered as casualty insurance, which according to § 3617, cannot be limited to less than two years for bringing a court action. In addition, § 4801(A) specifically excludes casualty insurance from application to article 48. The statutory standard fire contract, § 4803(G), in the section entitled "Perils not included," specifically excludes theft from coverage. The Wagnons observe that casualty insurance has no specific statutory limitation and that either the five-year limitation period for contracts actions pursuant to 12 O.S.1991, § 95 (first) applies, or the two-year limit pursuant to 36 O.S.1991, § 3617 applies.

in Oklahoma, shall contain any condition, stipulation or agreement ... (3) limiting the time within which an action may be brought to a period of less than two (2) years from the time the cause of action accrues in connection with all insurances other than property and marine and transportation insurances; in property and marine and transportation policies such time shall not be limited to less than one (1) year from the date of occurrence of the event resulting in the loss. Any such condition, stipulation or agreement shall be void, but such voidance shall not affect the validity of the other provisions of the policy."

¶7 The Tenth Circuit cites three cases from other jurisdictions on the issue of whether the one-year statute of limitations for fire insurance is also applicable to theft insurance. In the first case, Grice v. Aetna Cas. & Sur. Co., ⁷ the Louisiana Supreme Court held that where a homeowners' policy is part of the same contract as the standard fire policy, the burglary and theft coverage of the homeowners' policy will be governed by the same limitation as the standard fire policy. In the second case, Simms v. Allstate Ins. Co., ⁸ the Washington Court of Appeals held that a theft loss covered by a homeowners' policy that incorporated the one-year limitation on fire insurance was controlled by the property insurance statute of limitations rather than a limitation for insurance other than property. But unlike the Louisiana and Washington cases, the Arizona Court of Appeals in Kearney v. Mid-Century Ins. Co., ⁹ held that the one-year statute of limitations would not apply to theft coverage in a homeowner's policy, because the coverage was casualty insurance, which by statute could not be limited to less than two years.

¶8 In the Louisiana case, the plaintiff sued Aetna when she was not reimbursed for the losses she claimed under her homeowners' policy when her home was burglarized. Aetna raised the issue of the failure of the plaintiff to commence the lawsuit within the twelve months after she had sustained her loss. Grice, 359 So.2d at 1289. Louisiana, like Oklahoma, has a standard fire policy that is mandatory, and which contains a clause requiring a suit to be filed "within twelve months next after the inception of the loss." Grice, 359 So.2d at 1289. The homeowners' policy insures against burglary and theft and provides other coverages in addition to the perils of fire and lightning covered by the standard fire insurance policy. Grice, 359 So.2d at 1289. The plaintiff in Grice argued to the Supreme Court of Louisiana that the limitation had been less than twelve months because a provision of the standard fire policy requiring the insured to wait sixty days before filing a lawsuit, thereby reducing the time for suit to ten months. Grice, 359 So.2d at 1290. But the court found that the provisions of the standard fire policy and the Louisiana statutes of limitation were both mandated by the legislature as part of the Insurance Code, and rejected the plaintiff's argument that the waiting period reduced ¶9 In the Washington decision, Simms, the Court of Appeals construed a Washington statute, RCW 48.18.200, that invalidates only those contract limitation clauses requiring suit to be brought in less than one year. Simms, 27 Wash.App. at 873-874, 621 P.2d at 156. But a major difference between this statute and Oklahoma's 36 O.S.1991, § 3617 is that in Washington no insurance contract could limit a right of action to a period of less than one year from the time "when the cause of action accrued," but in contracts of property insurance, the limitation "shall not be to a period of less than...