United States District Court, E.D. Oklahoma
HONORABLE RONALD A. WHITE, UNITED STATES DISTRICT JUDGE
the court is the motion of the defendant Northfield Insurance
Company (“Northfield”) for summary judgment.
Summary judgment is appropriate if “the movant shows
that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.”
Rule 56(a) F.R.Cv.P. An issue is genuine if there is
sufficient evidence on each side so that a rational trier of
fact could resolve the issue either way. An issue of fact is
material if under the substantive law it is essential to the
proper disposition of the claim. J.V. v. Albuquerque
Public Schs., 813 F.3d 1289, 1296 (10th
Cir.2016). When applying this standard, the court views the
evidence and draws reasonable inferences therefrom in the
light most favorable to the nonmoving party. Wright v.
Experian Info. Sols., Inc., 805 F.3d 1232, 1239
is the owner of a commercial building located at 117 South
Broadway in Council Hill, Oklahoma, which was insured at all
times pertinent to this litigation by defendant under
insurance policy #WS219672. In December, 2015, plaintiff
filed an insurance claim with defendant for damage to the
roof and interior of the building. Defendant denied the claim
on the grounds that the policy did not cover the loss.
Defendant also declined to renew plaintiff's insurance
policy. Plaintiff contends that defendant's denial of the
insurance claim constitutes a breach of the insurance policy
and that defendant's conduct in connection with the
handling of the claim constitutes a breach of the duty of
good faith and fair dealing. Plaintiff is seeking recovery of
actual and punitive damages.
case is before the court based on diversity jurisdiction and
therefore Oklahoma law applies. See Automax Hyundai S.,
L.L.C. v. Zurich Am. Ins. Co., 720 F.3d 798, 804
(10th Cir.2013). “Insurance policies are
contracts interpreted as a matter of law.” BP Am.,
Inc. v. State Auto Prop. & Cas. Ins. Co., 148 P.3d
832, 835 (Okla.2005). To recover on a breach of contract
claim, plaintiff must prove: (1) formation of a contract; (2)
breach of the contract; and (3) damages as a direct result of
the breach. Digital Design Grp., Inc. v. Info. Builders,
Inc., 24 P.3d 834, 843 (Okla.2001).
policy provisions are unambiguous and clear, the employed
language is accorded its ordinary, plain meaning; and the
contract is enforced carrying out the parties'
intentions” BP, 148 P.3d at 835. On the other
hand, “[a]n insurance contract is considered a contract
of adhesion in Oklahoma, and is construed in favor of the
insured when ambiguity remains after applying the rules of
construction.” Mansur v. PFL Life Ins. Co.,
589 F.3d 1315, 1319 (10th Cir.2009).
“[C]ourts must examine the policy language objectively
to determine whether an insured could reasonably have
expected coverage.” Max True Plastering Co., v.
U.S. Fid. & Guar. Co., 912 P.2d 861, 865
essentially bases the present motion (as to breach of
contract) on a separate motion: defendant's motion to
strike or exclude plaintiff's expert testimony (#47).
That is, defendant argues that without plaintiff's
proffered expert testimony, plaintiff has no evidence that
wind was the cause of the leak, and therefore no evidence of
breach. In a companion order, the court has denied the
separate motion. The court finds there are genuine issues of
material fact as to breach of contract.
court now addresses plaintiff's claim that defendant
breached an insurer's duty of dealing fairly and in good
faith. This tort arises from the insurer's implied duty
to deal fairly and act in good faith with its insured.
Southern Hospitality, Inc. v. Zurich Am. Ins. Co.,
393 F.3d 1137, 1142 (10thCir, 2004). The duty is
not breached, however, if the insurer refuses to pay a claim
or litigates a dispute with its insured if there is a
legitimate dispute as to coverage or the amount of the claim,
and the insurer's position is reasonable and legitimate.
Id. The elements plaintiff must prove are: (1)
claimant was entitled to coverage under the insurance policy
at issue; (2) the insurer had no reasonable basis for
delaying payment; (3) the insurer did not deal fairly and in
good faith with the claimant; and (4) the insurer's
violation of its duty of good faith and fair dealing was the
direct cause of the claimant's injury. Toppins v.
Minnesota Life Ins. Co., 460 Fed.Appx. 768, 771
decisive question is whether the insurer had a good faith
belief, at the time its performance was requested, that it
had justifiable reason for withholding payment under the
policy. Ozment v. Amer. Cas. Prop. & Cas. Co.,
2013 WL 3179522, *5 (N.D.Okla.2013)(citations omitted). In
order to succeed on a claim for bad faith, the claimant must
be able to prove that the insurer's actions went beyond
an act of simple negligence; however, it is not necessary to
prove that the insurer acted recklessly to prove liability,
even though recklessness is a requirement for punitive
damages in a bad faith claim. Id. The court can
consider only the facts known or knowable about the claim at
the time the insured requested the insurer to perform its
contractual obligation. Id.
determining whether to pay a claim, the insurer must conduct
an investigation “reasonably appropriate under the
circumstances.” Willis v. Midland Risk Ins.
Co., 42 F.3d 607, 612 (10thCir.1994). To
succeed on a bad faith claim based on the theory of
inadequate investigation, “the insured must make a
showing that material facts were overlooked or that a more
thorough investigation would have produced relevant
information.” Sellman v. AMEX Assur. Co., 274
Fed.Appx. 655, 658 (10th Cir.2008). Nevertheless,
“nothing in the law requires an insurer to investigate
a claim exhaustively or to a faultless degree of accuracy.
Rather, the investigation only needs to be ‘reasonable
under the circumstances.'” Harris v.
Progressive Direct Ins. Co., 2016 WL 9022439, *3
court finds summary judgment is appropriate. Even viewing the
facts in a light most favorable to plaintiff, the
defendant's initial inspection indicated the leak was not
caused by wind damage. Upon receipt of the letter from
plaintiff's roofer, defendant reopened the claim and
hired an independent engineering firm to do another
inspection. The second inspection came to the same
conclusion as the first. Even if both inspections were
mistaken, this demonstrates at most negligence on
defendant's part, which will not suffice for a bad faith
claim. This matter is the quintessential case of
a simple dispute over whether a claim is covered under an
insurance policy. Northfield had the right to contest
liability based on the information it possessed.
availability of a punitive damage award in a bad faith case
is not automatic, but rather is governed by the standard
applicable in other tort cases. The plaintiff must show that
the defendant acted with oppression, malice, fraud or gross
negligence or wantonness. Cole v. Shelter Mut. Ins.
Co., 2014 WL 5018591, *4 (W.D.Okla.2014). Punitive
damages in bad faith cases require a finding that the conduct
of the insurance company was in reckless disregard for the
interests of the plaintiff, or was based on a dishonest
judgment, or was otherwise malicious, willful, or wanton.
Sloan v. State Farm Mut. Auto. Ins. Co., 360 F.3d
1220, 1224 (10th Cir.2004). As the plaintiff has
failed to raise a genuine issue of material fact as to a bad
faith claim, the court a fortiori finds that
plaintiff has not demonstrated his claim for punitive damages
survives the present motion.
the order of the court that the motion of the defendant for
summary judgment (#48) is hereby granted as to plaintiffs
claims for bad faith and punitive damages, and is hereby
denied as to plaintiffs claim for breach of contract.