Government Employees Insurance Co. v. Quine
2011 OK 88
| Okla. | 2011Background
- GEICO insured Watkins under UM/UIM with $100k/$300k limits.
- Watkins, a minor, sustained injuries in a November 2005 auto accident; medical expenses were $9,904.05.
- tortfeasor’s liability insurer paid $13,890 and GEICO waived subrogation.
- GEICO evaluated Watkins’ UIM claim and offered several settlements conditioned on a full release; no unconditional partial payment was made.
- Watkins demanded unconditional tender of the undisputed amount; GEICO refused and sought declaratory relief; Watkins counterclaimed for bad faith and unfair dealing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is withholding an unconditional partial UIM payment a bad-faith breach? | Watkins: undisputed portion should be paid without release. | GEICO: no obligation to pay without release and full agreement. | No; Garnett controls; not a bad-faith breach where a legitimate noneconomic dispute exists and economic damages are satisfied. |
| Does resorting to litigation to resolve a legitimate dispute defeat bad-faith liability? | Watkins would argue ongoing dispute requires prompt payment. | GEICO may contest and resolve disputes in court without bad faith. | Garnett supports resorting to judicial forum is not per se bad faith. |
| Is Garnett controlling to answer the certified question? | Watkins relies on Garnett to require prompt payment of undisputed amounts. | GEICO aligns with Garnett’s framework that disputes negate automatic bad-faith liability. | Yes; Garnett governs and the question is answered negative. |
Key Cases Cited
- Garnett v. GEICO, 186 P.3d 935 (Okla. 2008) (insurer not liable for bad faith when there is a legitimate dispute over UIM value and economic damages already paid)
- Christian v. American Home Assurance Co., 577 P.2d 899 (Okla. 1977) (recognizes insurer may use judicial forum to resolve disputes without automatic bad faith liability)
- Weinstein v. Prudential Prop. & Cas. Ins. Co., 233 P.3d 1221 (Idaho 2010) (insurer delaying UM proceeds for unpaid medical bills can support bad-faith verdict)