RAYMOND v. TAYLOR
2017 OK 80
| Okla. | 2017Background
- Passenger Mark Raymond was severely injured in a 2012 collision caused by BlueKnight employee Larry Bedell; the tortfeasor's insurer had $1,000,000 primary and $40,000,000 excess liability coverage.
- Raymond qualified for and received $500,000 underinsured/uninsured motorist (UM) benefits from American Mercury (Mercury), whose UM limit was $1,000,000 per accident.
- Mercury moved to intervene seeking subrogation of the $500,000 from the tortfeasors; Raymond settled with tortfeasors for a confidential amount that exceeded the primary limits but was less than the excess, with $500,000 withheld pending resolution of Mercury’s claim.
- The district court awarded Mercury full subrogation of the $500,000; the Court of Civil Appeals affirmed; the Oklahoma Supreme Court granted certiorari.
- Central legal question: whether a UM carrier may subrogate against an underinsured tortfeasor’s assets (including excess/umbrella policy proceeds) for amounts the UM carrier paid.
- Supreme Court majority held Mercury’s subrogation was limited to recovery from the tortfeasor’s primary insurer/assets and that Mercury could not reach the excess policy or other tortfeasor assets.
Issues
| Issue | Plaintiff's Argument (Raymond) | Defendant's Argument (Mercury) | Held |
|---|---|---|---|
| Whether a UM carrier may subrogate against an underinsured tortfeasor’s assets (including excess policy) for UM payments | Mercury should not be allowed to recover from tortfeasor assets beyond primary insurer because statute limits subrogation when UM applies to underinsured vehicles | Mercury argued §3636(F)’s general subrogation grant allows recovery from any tortfeasor assets, not limited to primary insurer; the insolvency-reference limits only insolvent-insurer scenarios | Held: UM carrier’s subrogation is limited as to payments under §3636(C) — cannot recover in excess of proceeds from the tortfeasor’s primary insurer/assets (no recovery from excess policy) |
| Proper construction of 36 O.S. §3636(F) — whether the “provided” clause applies to underinsured vehicles | Read §3636(F) as limiting subrogation once §3636(C) deems a vehicle uninsured for underinsured claims | Claimed the limiting clause only referenced insolvency and should not apply to underinsured-vehicle subsection | Held: the cross-reference to subsection (C) is meant to cover both insolvency and underinsured scenarios; the limiting clause applies and prevents recovery beyond primary insurer assets |
| Whether applying the limitation frustrates UM statute’s remedial purpose (insured protection) | Allowing Mercury to subrogate excess would effectively let UM carrier avoid its indemnity obligation and reduce insured protection | Mercury argued equitable subrogation and prior cases support recovery from tortfeasor assets beyond primary insurer | Held: statutory construction and legislative history favor protecting insureds; preventing UM carrier from stripping insured recovery promotes UM’s remedial purpose |
| Whether Mercury waived rights via settlement procedure (substitution/right-to-recover rule) | N/A to Raymond’s position here; district court need not address attorney-fee issue | Mercury did not exercise the statutory substitute-payment option to secure broader subrogation | Held: court did not reach attorney-fee question; Mercury’s failure to substitute payment under §3636(F) precluded broader subrogation under the settlement-substitution exception |
Key Cases Cited
- Moser v. Liberty Mut. Ins. Co., 731 P.2d 406 (Okla. 1986) (UM statute interpreted to protect insured as if tortfeasor had liability insurance; excludes excess/umbrella policies from UM limits analysis)
- GEICO Gen. Ins. Co. v. Northwestern Pac. Indem. Co., 115 P.3d 856 (Okla. 2005) (excess/umbrella policies not included when determining liability limits under §3636(C))
- Porter v. MFA Mut. Ins. Co., 643 P.2d 302 (Okla. 1982) (UM carrier has statutory right to recoupment from third-party tortfeasor; limitation for insolvent insurer scenario interpreted in context)
- 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)
- Barnes v. Okla. Farm Bureau Mut. Ins. Co., 11 P.3d 162 (Okla. 2000) (statutory provisions must be read together; subrogation and settlement-substitution exception discussed)