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Steadfast Insurance Co. v. Eagle Road Oil LLC

United States District Court, N.D. Oklahoma

June 7, 2019

STEADFAST INSURANCE COMPANY, a subsidiary of ZURICH HOLDING COMPANY OF AMERICA, INC., Plaintiff,
v.
EAGLE ROAD OIL LLC; CUMMINGS OIL COMPANY; TERRITORY RESOURCES, LLC; ENERVEST OPERATING, LLC; PETRO WARRIOR, LLC; PETROQUEST ENERGY, LLC; and TRINITY OPERATING USG, LLC, Defendants.

          OPINION AND ORDER

          GREGORY K. FRIZZELL UNITED STATES DISTRICT JUDGE.

         Before the court are three motions: the Motion to Dismiss [Doc. 46] of defendant Trinity Operating (USG), LLC; the Motion to Dismiss [Doc. 49] of defendant Territory Resources, LLC; and the Motion to Dismiss [Doc. 55] of defendant Petro Warrior, LLC. The moving defendants seek dismissal of plaintiff's claims based on, among other grounds, the rule against claim splitting. For the reasons set forth below, the motions are granted. For the same reasons, the court also dismisses, sua sponte, plaintiff's claims against the non-moving defendants.

         I. Background

         A. Allegations in the Complaint

         According to the Complaint [Doc. 2], plaintiff Steadfast Insurance Company (“Steadfast”) had an insurance agreement with the Pawnee Nation of Oklahoma (the “Nation”). Steadfast alleges that defendants' disposal of fracking wastewater into Oklahoma's Arbuckle Limestone Formation caused earthquakes, which, in turn, “caused the Nation to suffer more than $400, 000.00 in physical and market value damages to its historical government buildings.” [Id. ¶ 40]. Steadfast asserts claims for absolute liability, negligence, trespass, and nuisance. It seeks “to enforce its rights of subrogation” and to recover $324, 269.98 that it paid the Nation pursuant to the terms of the insurance agreement. [Id. ¶ 5].

         B. Related Case

         About three months before Steadfast commenced this lawsuit, the Nation commenced, in this district, a related lawsuit captioned Pawnee Nation of Oklahoma v. Eagle Road Oil LLC, et al., No. 4:18-cv-263-JED-JFJ.[1] The attorneys representing the Nation in that lawsuit also represent Steadfast in this lawsuit, and the Nation's allegations in that lawsuit largely mirror Steadfast's allegations in this lawsuit. The Nation asserts the same causes of action against the same defendants and seeks to recover the same damages. Specifically, the Nation alleges that the same earthquakes “caused the Nation to suffer more than $400, 000.00 in physical and market value damages to its historical government buildings.” [SAC ¶ 40].

         II. Applicable Law

         A. Oklahoma Law

         1. Rule against Claim Splitting

         Under Oklahoma law, “a single tort or wrong to a single person gives rise to but a single action however numerous the items of damage resulting from the single wrong or tort may be.” Lowder v. Oklahoma Farm Bureau Mut. Ins. Co., 436 P.2d 654, 657 (Okla. 1967). Oklahoma courts recognize that a “defendant has a right to be proceeded against in a single action by any injured party for his single wrong or tort, ” as opposed to being “subjected to defense of multiple actions arising from his single wrong or tort upon separate or separable items of damage arising from that single wrong or tort for which he has but a single liability.” Id. at 658. “To avoid multiple and potentially vexatious lawsuits against the defendant liable for such a single wrong, the law proscribes ‘splitting' of such a single cause of action or claim.” Muskogee Title Co. v. First Nat. Bank & Tr. Co. of Muskogee, 894 P.2d 1148, 1150 (Okla.Civ.App. 1995) (citing Lowder, 436 P.2d at 658).

         2. Subrogated Insurers

         When an insurer establishes a claim as subrogee, Oklahoma courts say that the subrogated insurer “steps into the shoes of the plaintiff.” State Farm Mut. Auto. Ins. Co. v. Payne, 408 P.3d 204, 208 (Okla. 2017). The subrogated insurer brings the same cause of action as the insured, to recover damages arising from the same injuries as the insured; in short, the subrogated insurer maintains a suit in its own name to redress wrongs done to its insured. Id. The insurer takes the claim of the insured subject to all legal and equitable defenses that the tortfeasor may have against the insured and acquires no rights greater than those of the insured. Id. “The right of subrogation is not a matter of strict right, but is designed to promote and to accomplish justice.” Lowder, 436 P.2d at 657. Thus, “it will not be allowed where the legal and equitable rights of others are defeated.” Id.

         In Muskogee Title, the Oklahoma Court of Appeals summarized the law regarding the rule against claim splitting in ...


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