RAYMOND v. TAYLOR
2017 OK 80
| Okla. | 2017Background
- Collision on July 6, 2012: Raymond (passenger) injured; driver Taylor died. Tortfeasor Bedell/BlueKnight had $1,000,000 primary and $40,000,000 excess liability policies. Raymond’s damages exceeded $2,000,000.
- Raymond was covered under Guy's Seed commercial UM policy issued by American Mercury (Mercury) with $1,000,000 UM limits; Mercury paid $500,000 to Raymond.
- Raymond sued Bedell/BlueKnight; Mercury intervened seeking subrogation for the $500,000 UM payment.
- Raymond settled with defendants for a confidential amount > primary limit but < excess limit; $500,000 claimed by Mercury was held pending resolution of subrogation rights.
- District Court ruled Mercury entitled to full $500,000 subrogation (including against tortfeasor assets/excess policy); Court of Civil Appeals affirmed. Oklahoma Supreme Court granted certiorari.
- Supreme Court majority held Mercury’s UM subrogation is limited to proceeds recoverable from the tortfeasor’s primary insurer/assets and may not reach the tortfeasor’s other assets (including excess policy); ordered release of $500,000 to Raymond.
Issues
| Issue | Plaintiff's Argument (Raymond) | Defendant's Argument (Mercury) | Held |
|---|---|---|---|
| Whether a UM carrier may subrogate UM payments against an underinsured tortfeasor’s assets (including excess/umbrella policy) | Statute limits UM subrogation to primary insurer proceeds only; UM carrier cannot reach tortfeasor’s excess assets | First sentence of §3636(F) grants broad subrogation to UM carrier against any recovery from tortfeasor; exception for insolvent insurer does not bar recovery from excess policy | Held for Raymond: UM carrier may not subrogate against the tortfeasor’s assets beyond recovery from the primary insurer/its assets (no recovery from excess policy) |
| Whether §3636(F)’s second-sentence limitation (referencing insolvent insurer) applies to underinsured-vehicle scenario | The cross-reference to §3636(C) should be read to limit subrogation in both insolvency and underinsured cases | The insolvent-insurer language shows the limitation applies only to insolvency, not underinsured situations | Held: cross-reference applies to entirety of §3636(C); limitation applies to underinsured scenario as well |
| Whether reading §3636(F) to permit recovery from tortfeasor assets would defeat UM coverage purpose | Allowing subrogation against excess policy would enable UM carrier to avoid its indemnity obligation, harming insured’s protection | Mercury contends equitable subrogation and precedent support recovery against tortfeasor assets | Held: statutory interpretation and policy favor protecting insured’s UM benefit; UM carrier cannot rely on tortfeasor’s excess to avoid its contractual duty |
| Whether attorney fees issue must be resolved | Not raised as necessary if subrogation fails | N/A | Held: Unnecessary to address attorney fees because Mercury’s subrogation right fails |
Key Cases Cited
- Moser v. Liberty Mut. Ins. Co., 731 P.2d 406 (Okla. 1986) (interpreting UM statute and excluding umbrella/excess policies from liability-limit calculations)
- GEICO Gen. Ins. Co. v. Nw. Pac. Indem. Co., 115 P.3d 856 (Okla. 2005) (excess policies not included when determining UM underinsured status)
- Porter v. MFA Mut. Ins. Co., 643 P.2d 302 (Okla. 1982) (recognizing UM carrier’s right to recoupment from third-party tortfeasor)
- Barnes v. Okla. Farm Bureau Mut. Ins. Co., 11 P.3d 162 (Okla. 2000) (subrogation principles and application when UM carrier substitutes payment for tentative settlement)
- Burch v. Allstate Ins. Co., 977 P.2d 1057 (Okla. 1998) (UM carrier is statutorily subrogated to insured’s rights against tortfeasor and tortfeasor’s liability carrier)
- Keel v. MFA Ins. Co., 553 P.2d 153 (Okla. 1976) (equitable considerations to prevent insurer from avoiding liability where insured paid premiums)