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McKinney v. Progressive Direct Insurance Co.

United States District Court, W.D. Oklahoma

May 13, 2019

TALLIE MCKINNEY, Plaintiff,
v.
PROGRESSIVE DIRECT INSURANCE COMPANY d/b/a PROGRESSIVE, and CSAA GENERAL INSURANCE COMPANY d/b/a AAA INSURANCE, Defendants.

          ORDER

          JOE HEATON CHIEF U.S. DISTRICT JUDGE.

         Linda McKinney (“McKinney”), as mother and next friend of Tallie McKinney, then a minor, filed this action against defendants Progressive Direct Insurance Company (“Progressive”) and CSAA General Insurance Company (“CSAA”), alleging breach of contract and bad faith. Tallie McKinney (“Tallie”) has since reached her majority and has been substituted as the plaintiff. CSAA has moved for summary judgment on plaintiff's bad faith claim.

         Summary judgment is warranted “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.” Fed.R.Civ.P. 56(a). Material facts are those which “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. To determine whether this standard is met, the court views the evidence in the light most favorable to the non-moving party. Estate of Booker v. Gomez, 745 F.3d 405, 411 (10th Cir. 2014). “[T]he plain language of Rule 56(c) mandates entry of summary judgment . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

         Background

         On June 26, 2017, Tallie was a passenger in a vehicle driven by her friend Sierra Shannon (“Shannon”). Shannon caused a single-car accident. As a result Tallie suffered injuries, including fractures of her right arm and pelvis, which required surgery.

         McKinney was the named insured on an insurance policy issued by CSAA. Tallie was identified as a driver on the CSAA policy. Both Shannon and the vehicle she was driving were insured under an insurance policy issued by Progressive. Progressive offered plaintiff the full $100, 000 limit of liability coverage, which plaintiff accepted in exchange for a release.[1]

         Plaintiff submitted a claim to CSAA seeking uninsured(“UM”)/underinsured (“UIM”) benefits. CSAA evaluated plaintiff's claim and determined the total evaluation range was $108, 482.88 - $118, 482.88. CSAA then extended an offer to plaintiff's counsel in the amount of $8, 482.88. Plaintiff rejected this offer without making a counter-offer or discussing CSAA's evaluation further. A few months later, plaintiff filed this case alleging breach of contract and bad faith claims against CSAA and Progressive.

         During the course of discovery in this lawsuit, additional documentation was provided to CSAA for its ongoing review in connection with plaintiff's UM/UIM claim, and CSAA re-evaluated the claim and determined a new range of $133, 888.04 to $158, 888.04. CSAA then extended a new offer to plaintiff in the amount of $33, 888.04.[2]CSAA never received a response from plaintiff or her counsel.

         Analysis

          Plaintiff asserts that CSAA's initial evaluation and offer were unreasonable and were made in bad faith. Specifically, plaintiff contends that CSAA failed to conduct a reasonable investigation into plaintiff's claim, failed to perform a reasonable evaluation, and failed to promptly pay plaintiff's claim. CSAA contends that its investigation and evaluation of plaintiff's UM/UIM claim was reasonable and the subject of a legitimate value dispute between the parties.

         “[A]n insurer has an implied duty to deal fairly and act in good faith with its insured and . . . the violation of this duty gives rise to an action in tort . . . .” Christian v. Am. Home Assurance Co., 577 P.2d 899, 904 (Okla. 1978). Further, the Oklahoma Supreme Court has recognized:

there can be disagreements between insurer and insured on a variety of matters such as insurable interest, extent of coverage, cause of loss, amount of loss, or breach of policy conditions. Resort to a judicial forum is not per se bad faith or unfair dealing on the part of the insurer regardless of the outcome of the suit. Rather, tort liability may be imposed only where there is a clear showing that the insurer unreasonably, and in bad faith, withholds payment of the claim of its insured.

Id. at 905.

         In order to establish a bad faith claim, an insured “must present evidence from which a reasonable jury could conclude that the insurer did not have a reasonable good faith belief for withholding payment of the insured's claim.” Oulds v. Principal Mut. Life Ins. Co., 6 F.3d 1431, 1436 (10th Cir. 1993). In order to determine whether the insurer acted in good faith, the insurer's actions must be evaluated in light of the facts the insurer knew or should have known at ...


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