Wille v. Geico Cas. Co.

• Decision Date: 15 February 2000
• Docket Number: No. 93457.,93457.
• Citation: 2 P.3d 888,2000 OK 10,2000 Okla. 10
• Parties: Jimmy John WILLE, Plaintiff, v. GEICO CASUALTY COMPANY, Defendant.
• Court: Oklahoma Supreme Court

2 P.3d 888

2000 OK 10

2000 Okla. 10

Jimmy John WILLE, Plaintiff, v. GEICO CASUALTY COMPANY, Defendant.

No. 93457.

Supreme Court of Oklahoma.

February 15, 2000.

Rehearing Denied June 6, 2000.

Albert R. Matthews, Martha J. Cherbini, Muskogee, Oklahoma For Plaintiff

Chris Harper, Phillip P. Owens, II, Oklahoma City, Oklahoma For Defendant

¶ 1 KAUGER, J

¶ 2 We are asked to answer the question of when the statute of limitations begins to run on an action for the recovery of benefits under an uninsured/underinsured motorist policy. The insured argues that the limitation period is not triggered until the breach of the contract occurs. The insurer asserts that the cause of action accrues on the date of the accident giving rise to the claim. We are persuaded by our earlier decision in Uptegraft v. Home Ins. Co., 1983 OK 41, 662 P.2d 681 in which we held that actions on a claim for recovery of uninsured motorist benefits are governed by the statute of limitations applicable to contracts, and by the rationale of the majority of states which have held an action for the recovery of uninsured/underinsured motorist benefits accrues and the statute of limitations begins to run when the insurance contract is breached.

DISPUTED FACTS

¶ 3 On May 19, 1994, Jimmy John Wille, (Wille/insured) was involved in an automobile accident in Muskogee, Oklahoma, allegedly caused by the negligence of Bryan Lloyd Rampey. At the time of the accident, Wille was insured by an uninsured/underinsured motorist insurance policy (UM) issued by GEICO Casualty Company (GEICO/insurer). According to GEICO, Wille notified it on May 31, 1994, that he would not file a claim under his GEICO policy because Rampey had adequate insurance coverage. GEICO closed its file. Subsequently, Wille sued Rampey in state court.

¶ 4 GEICO acknowledges that in November of 1998, it received a letter from Wille's attorney advising it that his client wanted to make a UM claim under his GEICO policy. GEICO alleges that despite its efforts over the next several months, the necessary documentation was never provided by Wille; and because it could not evaluate the claim, the claim was denied and the file was again closed. Wille contends that on March 30, 1999, he mailed a detailed letter outlining his claim for UM benefits to GEICO's claims adjuster. However, GEICO denies receiving the letter.

¶ 5 On May 21, 1999, Rampey's insurance company offered the policy limits in settlement of Wille's claim. In a letter dated May 24, 1999, which GEICO acknowledges receiving, Wille informed GEICO that he was unaware of Rampey's policy limits until May 21, 1999, and he demanded payment of his UM policy limits. GEICO denied Wille's claim, asserting that the statute of limitations for bringing the claim expired as of May 19, 1999 — five years from the date of the accident. On June 9, 1999, Wille amended his state court petition against Rampey to include claims of breach of contract and bad faith against GEICO. Wille settled with Rampey for his policy limits, an amount less than the value of Wille's injuries, and dismissed his negligence action against Rampey on June 22, 1999, leaving GEICO as the only defendant.

¶ 6 On June 25, 1999, GEICO removed the cause to federal court and sought to dismiss Wille's claim. It argued that Wille had failed to state a claim for which relief could be granted because the lawsuit was filed in state court more than five years after the accident, and that the statute of limitations applicable to contract actions had expired.¹ The federal district court certified the question to this Court pursuant to the Uniform Certifications of Questions of Law Act, 20 O.S. Supp.1997 § 1601 et seq., on August 3, 1999. We set a briefing cycle which was completed when the final reply brief was filed on October 4, 1999.

¶ 7 AN ACTION ON A CLAIM FOR RECOVERY OF UNINSURED/UNDERINSURED MOTORIST BENEFITS ACCRUES AND THE STATUTE OF LIMITATIONS BEGINS TO RUN WHEN A BREACH OF THE INSURANCE CONTRACT OCCURS, RATHER THAN THE DATE OF THE ACCIDENT.

¶ 8 We first addressed the controlling statute of limitations concerning uninsured motorist provisions in Uptegraft v. Home Ins. Co., 1983 OK 41, 662 P.2d 681. In accord with the majority of jurisdictions,² we held that actions to recover a loss under uninsured motorist coverage are governed by the five-year statute of limitations applicable to written contracts. We also recognized that a provision in a policy which limits the time for bringing suit to less than the statutory period is void. The Uptegraft Court said:

". . . A suit founded upon the insured's allegations (a) that he is entitled to payment under one of the first-party coverage clauses in the contract and (b) that the carrier has refused payment thereby breaching its promise, is clearly a contract action. The circumstances of the uninsured motorist's culpability and of the insured's damages are matters which the insured must prove in order to recover from the insurer, but these are really conditions of the insurer's promise. The recovery of the insured is based ultimately upon the policy without which no liability could be imposed upon the insurer for the tort of another. . . ." (Emphasis added. Citations omitted.).

¶ 9 However, we have not previously determined at what point in time the limitations period begins to run on an action for recovery of uninsured/underinsured benefits.³ Neither Wille nor GEICO dispute that the controlling limitation period for the cause of action is five years. The only dispute is over when the statute of limitations begins to run. Wille argues that an insured's claim is not justiciable and, therefore, not subject to the running of the statute of limitations unless and until the insurance contract has been breached. He urges us to join the majority of jurisdictions which have considered the issue and which have determined that the statute of limitations period begins to run upon some event constituting a breach of the insurance contract by the insurer.⁴ GEICO asserts that an action on a claim for uninsured motorist benefits accrues on the date of the accident. In support of its argument,⁵ it cites the minority view from jurisdictions which have found that such an action accrues on the date of the accident.⁶

¶ 10 A statute of limitations begins to run when a cause of action accrues. This happens when a litigant can first maintain an action to a successful conclusion.⁷ It does not commence until a plaintiff has a legal right to sue.⁸ The determinative issue is whether the cause of action is based on a tort or a contract. A few jurisdictions rely on the underlying tort claim to use the date of the accident as the starting point.⁹ The majority of the jurisdictions which have considered this question have decided that the recovery of the insured is premised upon the insurance contract without which no liability could be imposed upon the insurer.¹⁰ These courts recognize that until a breach of the insurance contract occurs, there is no controversy under the contract upon which a party may sue.¹¹ We have crossed that bridge. In Uptegraft, we held that the insurer's refusal to pay it's insured on a valid claim constituted a breach of contract.

¶ 11 An insured may not be aware until long after the accident that a claim against his or her UM insurer is necessary or needed. At the time of the accident an insured may not know the extent of the injuries suffered, the amount of the tortfeasor's available coverage or whether the cost of medical treatment will exceed the value of the tortfeasor's insurance policy and available assets. Accordingly, we adopt the majority view.¹² We believe that this conclusion follows both logic and law.

CONCLUSION

¶ 12 An action on a claim for recovery of uninsured/underinsured motorist benefits accrues and the statute of limitations begins to run when a breach of the insurance contract occurs, rather than the date of the accident.

QUESTION ANSWERED.

SUMMERS, C.J., HODGES, KAUGER, WATT, and BOUDREAU, JJ., concur.

OPALA, J., with whom HARGRAVE, LAVENDER, JJ. join dissenting. OPALA, J., with whom HARGRAVE, V.C.J., and LAVENDER, J., join, dissenting.

¶ 1 The United States District Court for the Eastern District of Oklahoma certified to this court pursuant to the Revised Uniform Certification of Questions of Law Act, 20 O.S. Supp.1997 §§ 1601 et seq. the following question: When does the five-year statue of limitations begin to run on an action by an insured against his insurer for the recovery of benefits under uninsured/underinsured motorist coverage? The court holds that the statute in contest begins to run upon a breach of the insurance contract. I recede from today's pronouncement because it disregards the distinctive nature of a contract for uninsured/underinsured ("UM/UIM") coverage as an undertaking for indemnification. Moreover, the court's decision is neither compelled by any earlier authority nor warranted by reference to case law from other jurisdictions. I would hold instead, in accordance with the legal precepts governing indemnity contracts, that the statute of limitations which governs an action to recover UM/UIM benefits runs from the date of the accident giving rise to the insurer's contractual indemnity obligation.

I BACKGROUND

¶ 2 This case arises from an automobile accident which occurred in Muskogee, Oklahoma, on 19 May 1994. A car driven on that date by Jimmy John Wille ("plaintiff") was struck from behind by Brian Lloyd Rampey ("Rampey"), allegedly causing plaintiff to suffer personal injuries and property damage. At the time of the accident, plaintiff was covered by a policy of automobile insurance, including uninsured motorist ("UM") coverage, issued by Geico Casualty Company ("Geico"). Shortly after the accident, plaintiff informed Geico that Rampey had automobile insurance and that he would therefore not be making a claim for UM benefits under his policy with Geico. Geico closed its...