ANAYA-SMITH v. FEDERATED MUTUAL INSURANCE CO.
Case Number: 120403
THE SUPREME COURT OF THE STATE OF OKLAHOMA
Decided: 05/14/2024
2024 OK 34
NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.
NANCY ANAYA-SMITH, Next of kin of Michael Brian Smith, deceased, Plaintiff/Appellant,
v.
FEDERATED MUTUAL INSURANCE COMPANY, Defendant/Appellee.
¶0 The United States Court of Appeals for the Tenth Circuit certified three questions of state law to this Court pursuant to the Revised Uniform Certification of Questions of Law Act,
CERTIFIED QUESTIONS ANSWERED IN PART.
Rex Travis, Oklahoma City, Oklahoma, for Plaintiff/Appellant.
Bart J. Robey, Chubbuck, Duncan & Robey, Oklahoma City, Oklahoma, and Thomas H. Crouch, Meagher & Greer, Scottsdale, Arizona, for Defendant/Appellee.
PER CURIAM:
¶1 The United States Court of Appeals for the Tenth Circuit certified to this Court three questions of law:
1. Where Mr. Smith was injured and killed as a passenger in an employer-owned vehicle that had $7,000,000 of liability insurance and has not shown the claim would exceed $7,000,000, but where Mr. Smith cannot recover under the policy because the worker‘s compensation exclusive remedy provision of
85A O.S. § 5 , bars suit against the employer, does that vehicle qualify as an uninsured motor vehicle within the meaning of36 O.S. § 3636 (C)?
2. Does
36 O.S. § 3636 permit FADCO, a corporate named insured, to purchase uninsured motorist coverage for its directors, officers, partners, owners, and their family members who qualify as insureds, but to reject uninsured motorist coverage for other persons who qualify as insureds?
3. If FADCO‘s insurance policy with Federated violates
36 O.S. § 3636 , does the legislative intent or purpose of § 3636 impute the $1,000,000 uninsured motorist coverage policy limit FADCO purchased for its directors, officers, partners, owners, and their family members who qualify as insureds or [does] the $25,000 per person/$50,000 per accident minimum uninsuredmotorist coverage policy limit in § 3636 [apply] to the other persons who qualify as insureds?
¶2 We answer the first question in the affirmative. Where Decedent was injured and killed as a passenger in an employer-owned vehicle with $7,000,000 of liability insurance and no proof was submitted to show the claim would exceed $7,000,000, but where Decedent cannot recover under the policy because the workers’ compensation exclusive remedy provision of
¶3 We answer the second question in the negative and conclude that the plain language of
¶4 Finally, because the record is undeveloped and the parties did not submit legal arguments pertaining to the third certified question, we decline to answer it for the first time.
I. CERTIFIED FACTS AND PROCEDURAL HISTORY
¶5 The federal court‘s certification order sets out the facts of this case. When answering a certified question, this Court will not presume facts outside those presented in the certification order. See Hamilton v. Northfield Ins. Co., 2020 OK 28, ¶ 4, 473 P.3d 22, 25. Our examination is confined to resolving legal issues. Id.
¶6 On March 24, 2020, Michael Brian Smith (“Smith“) was killed in a single-car accident that occurred while he was a passenger in a company vehicle owned by Fixtures & Drywall Company of Oklahoma (“FADCO“). At the time of the accident, the FADCO vehicle was being driven by Decedent‘s coworker, Duane Clark. Plaintiff/Appellant Nancy Anaya-Smith (“Anaya-Smith“), as next of kin of Smith (the “deceased“), contends the co-employee‘s negligence caused the fatal accident.
¶7 At the time of the accident, FADCO maintained an insurance policy with Federated Mutual Insurance Company (“Federated“). The insurance policy identified FADCO as the named insured and extended liability coverage to “all sums an ‘insured’ legally must pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies caused by an ‘accident’ and resulting from the ownership maintenance, or use of a covered auto.”1 The policy provided up to $1,000,000 of liability coverage per accident. FADCO also obtained an umbrella policy (Federated Policy No. 9840993), furnishing an additional $6,000,000 of liability coverage per accident — for a total of $7,000,000 in liability coverage. These liability limits covered an “insured,” which includes FADCO and “anyone else while using with [FADCO‘s] permission a covered ‘auto’ [FADCO] own[s], hire[s], or borrow[s].”2 The policies exclude “[a]ny obligation for which the ‘insured‘s’ insurer may be held liable under any workers’ compensation disability benefits.”3 Both parties agree that the vehicle involved in the fatal accident was a covered auto and the driver was an insured for liability purposes.
¶8 In addition to liability coverage, Federated offered FADCO the option of purchasing uninsured motorist (UM) insurance coverage by using an election form identical to the one required by
The Court now turns to the merits of the settlement agreement and the proposed class certification. As a continuation of the procedural history already established, the Court evaluates the fairness, reasonableness, and adequacy of the settlement under
I. Background
Following extensive discovery and mediation, the parties reached an agreement to resolve all claims related to the alleged consumer protection violations. This settlement was reached after nearly two years of litigation. The Court must determine whether the settlement is fair, reasonable, and adequate.
A. Merits of the Case vs. Settlement Terms
The most important factor is the strength of the case for the plaintiffs on the merits, balanced against the amount offered in settlement. In re Wireless, 396 F.3d at 933. Here, the plaintiffs faced significant hurdles in proving class-wide reliance and damages. The settlement provides substantial monetary relief to the class members, which outweighs the risks inherent in continued litigation.
The settlement agreement includes a total fund of $15 million. From this fund, class members who submit valid claims will receive a pro rata share after deduction of administrative costs and attorneys’ fees1. This recovery represents approximately 40% of the estimated maximum damages recoverable at trial.
While the plaintiffs believe their claims are strong, the defendant has raised several colorable defenses, including challenges to the standing of certain class members and the applicability of state consumer laws to the specific transactions at issue. As noted in Grunin v. Int‘l House of Pancakes, 513 F.2d 114, 124 (8th Cir. 1975), a court should not “turn the settlement hearing into a trial or a rehearsal of the trial.” Id. Instead, the court must balance the likelihood of success against the settlement‘s benefits. Id. at 125.
B. Complexity and Expense of Further Litigation
Class action litigation is notoriously complex and expensive. Continuing this case through trial and likely appeals would consume significant resources from both the parties and the judiciary. Settlement at this stage provides immediate and certain relief to the class, avoiding years of potential delay. DeBoer v. Mellon Mortg. Co., 64 F.3d 1171, 1178 (8th Cir. 1995).
II. Class Certification
For purposes of settlement, the Court finds that the proposed class meets the requirements of
The Court further finds that common questions of law and fact predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.
III. Attorneys’ Fees and Costs
Class counsel has requested an award of $5 million in attorneys’ fees, representing one-third of the settlement fund. In common fund cases, the district court has discretion to use either a “percentage-of-the-fund” method or a “lodestar” method to calculate fees. Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1157 (8th Cir. 1999). The Eighth Circuit frequently approves the percentage-of-the-fund method. Id.
The requested fee is within the range of reasonableness typically approved in this circuit. Huyer v. Buckley, 849 F.3d 395, 399 (8th Cir. 2017) (noting that fee awards between 25% and 36% are common). To ensure the reasonableness of the percentage award, the Court has performed a lodestar cross-check. Id. at 1157. Counsel has submitted detailed time records showing over 8,000 hours of legal work performed on a contingency basis. Using current market rates, the lodestar amount is approximately $4.2 million, resulting in a multiplier of 1.19. This multiplier is well within the acceptable range for complex class actions. Huyer, 849 F.3d at 399.
Consequently, the Court finds the requested fees to be reasonable given the results achieved, the risks undertaken by counsel, and the complexity of the issues. The requested reimbursement of $250,000 in litigation costs is also approved, as these expenses were necessary for the prosecution of the case and are of the type typically billed to clients.
JOHN A. ROSS
UNITED STATES DISTRICT JUDGE
Based on the selections made in Form 2, an endorsement providing UM coverage for FADCO directors, officers, partners, or owners of and their family members who qualify as insureds was added to Policy No. 9840992.
¶9 Because Smith was in the course and scope of his employment and traveling in an employer-owned vehicle at the time of the accident, the exclusive remedy provision of the Oklahoma Workers’ Compensation Act applied. Thus, Anaya-Smith was prohibited from suing FADCO or recovering damages under FADCO‘s commercial and umbrella policies. See
¶10 After her claim was disallowed, Anaya-Smith filed suit against Federated in the United States District Court for the Western District of Oklahoma. In her Complaint, Anaya-Smith alleged that Federated denied her UM claim in bad faith and that its UM
¶11 The parties each filed competing cross-motions for summary adjudication. Anaya-Smith sought partial summary judgment on the coverage issue. Federated also moved for summary judgment on the coverage issue, the bad faith claim, and its request for declaratory judgment. The district court granted summary judgment in favor of Federated and denied Anaya-Smith‘s motion. Specifically, the district court concluded: (1) the subject automobile was an uninsured vehicle at the time of the accident because Clark is immune from tort liability and (2) FADCO‘s policy providing UM coverage for some individuals who qualify as insureds but rejecting UM coverage for other insureds does not violate
II. REQUIREMENTS FOR ANSWERING CERTIFIED QUESTIONS
¶12 This Court has the discretionary power to answer certified questions of law if presented in accordance with the provisions of the Revised Uniform Certification of Questions of Law Act,
III. FIRST CERTIFIED QUESTION
Where Mr. Smith was injured and killed as a passenger in an employer-owned vehicle that had $7,000,000 of liability insurance and has not shown the claim would exceed $7,000,000, but where Mr. Smith cannot recover under the policy because the workers’ compensation exclusive remedy provision of
85A O.S. § 5 bars suit against the employer, does that vehicle qualify as an uninsured motor vehicle within the meaning of36 O.S. § 3636 (C)?
¶13 The federal court‘s first certified question asks us to decide whether the FADCO-owned vehicle involved in this accident was an “uninsured motor vehicle” within the meaning of
¶14 Federated maintains the automobile involved in the accident is not an uninsured/underinsured
¶15 Because uninsured motorist coverage is an important part of automobile insurance coverage, an entire section of the Oklahoma Insurance Code is dedicated to defining the coverage and providing protections for policyholders. For coverage purposes
[T]he term “uninsured motor vehicle” shall include an insured motor vehicle where the liability insurer thereof is unable to make payment with respect to the legal liability of its insured within the limits specified therein because of insolvency. For the purposes of this coverage the term “uninsured motor vehicle” shall also include an insured motor vehicle, the liability limits of which are less than the amount of the claim of the person or persons making such claim, regardless of the amount of coverage of either of the parties in relation to each other.
Because FADCO‘s liability policy is not accessible as a source for recovery, it logically follows that limits are less than the amount of Anaya-Smith‘s claim.
¶16 We have previously addressed the interplay between the exclusive remedy provision of OWCA and uninsured motorist (UM) coverage. First, in Barfield v. Barfield, 1987 OK 72, 742 P.2d 1107, we addressed a similar scenario to the case currently before us. Therein, two co-workers were involved in a fatal single motor-vehicle accident while in the course and scope of their employment. Id. ¶ 1, at 1109. The surviving spouses of both co-workers sought and received workers’ compensation benefits from their employer as provided by the Oklahoma Workers’ Compensation Act. Id. ¶ 3, at 1109. The widow of the passenger-employee in the accident filed a wrongful death action in the district court against the estate of the driver-employee and Kansas City Fire & Marine Insurance Company. Id. ¶ 4, at 1109. The passenger-employee was insured by a policy with Kansas City Fire & Marine which provided UM coverage. Id. The insurance company in Barfield argued the widow was not legally entitled to recover UM benefits because she had already recovered her exclusive remedy under the Workers’ Compensation Act. Id. ¶ 11, at 1110-11. Although, we affirmed dismissal of a direct cause of action against the driver-employee for negligence, we clearly acknowledged the right of the employee-passenger‘s surviving spouse to recover UM benefits under the subject policy:
[E]mployer-employee tort immunity under the Workers’ Compensation Act does not preclude recovery under one‘s own contract of insurance with an insurance carrier unrelated to the employer-employee relationship. The Oklahoma State Legislature has clearly manifested an intent that a worker who takes steps to assure his financial security shall not be penalized. . . .7 Protection under an uninsured motorist
policy is a contractual right resting in the insured and thus may be coexistent with the protection under the Workers’ Compensation Act.
Id. ¶¶ 12-13, at 1111-12. Thus, we held workers’ compensation benefits and UM benefits are not mutually exclusive and the recovery of UM does not require an insured to proceed in tort against the uninsured/underinsured as a condition to recovery under the policy. Id. ¶ 13, at 1113.
¶17 Subsequently, in Torres v. Kansas City Fire & Marine Insurance Co., 1993 OK 32, 849 P.2d 407, we considered another situation remarkably similar to the present case, and concluded that an employee was legally entitled to recover UM benefits under his employer‘s policy despite receiving workers’ compensation benefits.8 Id. ¶ 1, at 408. In Torres, two coworkers were involved in a single-car accident, resulting in the death of the employee-passenger. Id. ¶ 2, 849 P.2d at 409. The vehicle was owned by the employer and covered by a comprehensive business insurance policy which included a UM endorsement. Id. ¶¶ 2-3, 849 P.2d at 409. The insurer conceded that the deceased employee-passenger was an insured because he was an occupant of the employer‘s vehicle and met the definition of insured contained in the policy. Id. Additionally, both parties stipulated that the coworkers were in the course and scope of their employment and that each recovered workers’ compensation benefits.9 Id. The trial court determined, as a matter of law, that UM coverage was available. Id. ¶ 4, at 409. Thereafter, the parties proceeded to trial on the issue of employee-passenger‘s damages attributable to his coworker‘s negligence, and the jury returned a verdict in the amount of $350,000. Id.
¶18 On appeal, the insurance company argued the UM endorsement was inapplicable because the employee-passenger was not legally entitled to recover damages from the employee-driver because of statutory immunity under Oklahoma‘s workers’ compensation laws. Id. ¶ 5, at 409. We held that the UM endorsement provided coverage despite the exclusivity provision of the Oklahoma Workers’ Compensation Act, explaining: “the determining factor is . . . the intention of the parties to the contract . . . that UM coverage would be available once it was determined the party seeking coverage was an insured under the policy, that the uninsured tortfeasor causing damages was at fault and the extent of those damages was shown.” Id. ¶ 13, 849 P.2d at 412.
¶19 The federal district judge relied on both Barfield and Torres to conclude Oklahoma precedent allows pursuit of UM proceeds despite receiving workers’ compensation benefits. Federated, on the other hand, argues that the Barfield and Torres cases should not apply because they do not address the status of the vehicle. More specifically, it argues that Anaya-Smith has not established that the employer-owned vehicle was an “uninsured motor vehicle” as required for UM coverage to be applicable. To further support this contention, Federated alleges that the Barfield and Torres decisions should not apply because those cases likely involved standard automobile policies that typically include “fellow employee” exclusions which render a vehicle uninsured.
¶20 We are not persuaded by these arguments and will not read language into a policy of insurance that does not exist by mere suggestion or speculation of counsel. Further, we believe the federal district court correctly applied both the Barfield and Torres cases in its ruling on the status of the accident vehicle--it is an uninsured vehicle for purposes of determining UM benefits pursuant to
Barfield and Torres do not specifically discuss whether an immune tortfeasor is uninsured under § 3636, but in both cases the Oklahoma Supreme Court found that an insured could recover UIM benefits when the insured could not directly collect under an automobile liability insurance policy after receiving workers’ compensation benefits. Neither Torres nor Barfield makes any sense unless it is implied that an immune tortfeasor is treated as an uninsured motorist as a matter of Oklahoma law . . . . The Oklahoma Supreme Court has not expressly stated that a tortfeasor immune from suit due to the exclusive remedy of workers’ compensation is uninsured, but the Court would be ignoring the clear implication of Barfield and Torres if it were to find to the contrary.
¶21 We agree and now expressly hold that a tortfeasor, who is immune from suit due to the exclusive remedy of workers’ compensation, may be an uninsured motorist as a matter of Oklahoma law. The vehicle involved in the subject accident qualifies as an uninsured motor vehicle pursuant to
IV. SECOND CERTIFIED QUESTION
Does
36 O.S. § 3636 permit FADCO, a corporate named insured, to purchase uninsured motorist coverage for its directors, officers, partners, owners, and their family members who qualify as insureds, but to reject uninsured motorist coverage for other persons who qualify as insureds?
¶22 The second question requires us to determine whether Oklahoma‘s statutory UM scheme prohibits a corporate insured from electing, under a general automotive liability policy, to purchase UM coverage for certain executives and/or persons with an ownership interest in the company, while rejecting such coverage for the remaining company employees. We hold that once FADCO opted to purchase UM coverage under its Federated liability policy, all insureds must be treated in a uniform manner;
¶23 Anaya-Smith argues that a policy such as the one purchased by FADCO, which provides UM coverage for one class of insureds, but rejects it for others, is contrary to Oklahoma law and public policy. Title
A named insured or applicant shall have the right to reject uninsured motorist coverage in writing. The form signed by the insured or applicant which initially rejects coverage or selects lower limits shall remain valid for the life of the policy and the completion of a new selection form shall not be required when a renewal, reinstatement, substitute, replacement, or amended policy is issued to the same-named insured by the same insurer or any of its affiliates. Any changes to an existing policy, regardless of whether these changes create new coverage, do not create a new policy and do not require the completion of a new form.
After selection of limits, rejection, or exercise of the option not to purchase uninsured motorist coverage by a named insured or applicant for insurance, the insurer shall not be required to notify any insured in any renewal, reinstatement, substitute, amended or replacement policy as to the availability of such uninsured motorist coverage or such optional limits. Such selection, rejection, or exercise of the option not to purchase uninsured motorist coverage by a named insured or an applicant shall be valid for all insureds under the policy and shall continue until a named insured
requests in writing that the uninsured motorist coverage be added to an existing or future policy of insurance.
(emphasis added). Focusing in on the “shall be valid for all insureds” language in
¶24 Federated maintains that FADCO validly rejected UM coverage by completing the written form required by
¶25 When construing statutes, it is this Court‘s obligation to ascertain legislative intent. Russell v. Chase Inv. Servs. Corp., 2009 OK 22, ¶ 20, 212 P.3d 1178, 1185. Words in a statute are to be construed according to their plain and ordinary meaning unless it is clear the legislature intended a different meaning. Fanning v. Brown, 2004 OK 7, ¶ 10, 85 P.3d 841, 845-46. Rules of construction are not utilized if the language in a statute is unambiguous. Lang v. Erlanger Tublar Corp., 2009 OK 17, ¶ 8, 206 P.3d 589, 591.
¶26 We agree with Anaya-Smith‘s reading of
¶27 Whether an insured may limit UM coverage to certain classes of insureds under
¶28 Likewise, in Balagtas v. Bishop, 910 N.E.2d 789, 795 (Ind. Ct. App. 2009), an Indiana appellate court determined that its
¶29 Federated also relies on cases from outside jurisdictions in support of its argument that the policy exclusion in this case was enforceable. First, Federated points to a decision from the Delaware Supreme Court in Stoms v. Federated Servs. Ins. Co., 125 A.3d 1102 (Del. 2015). While driving a company car, employee David Stoms was killed by an uninsured motorist. Id. at 1104. Diamond Motor had previously opted to provide UM coverage for directors, officers, partners, and owners of the corporation, but rejected UM coverage for all other persons who would qualify as an insured. Id. at 1103-05. Federated denied coverage and Mr. Stoms’ wife initiated suit, claiming the exclusion in the insurance policy was invalid because it applied “different levels of uninsured motorists coverage to different drivers.” Id. at 1106. Rejecting this argument, the court concluded the coverage scheme did not violate statutory requirements. However, the Delaware UM statute did not contain any language similar to
¶30 Although parties to an insurance contract are free to negotiate terms as they see fit, an insurance contract must still comply with Oklahoma law. Ball v. Wilshire Ins. Co., 2009 OK 38, ¶ 27, 221 P.3d 717, 726. In Ball we explained:
When interpreting automobile insurance contracts, the court strives to strike a balance between freedom of contract principles and the state‘s interest in protecting the public. Statutorily mandated automobile insurance policies bear some characteristics of a public-law obligation under Oklahoma law and the full range of traditional freedom-of-contract principles do not
apply. Parties to an insurance contract are nevertheless free to agree upon such terms as they wish, including whether to limit or restrict the insurer‘s liability, as long as their agreement does not contravene public policy. A contract violates public policy only if it clearly tends to injure public health, morals or confidence in the administration of law, or if it undermines the security of individual rights with respect to either personal liability or private property. Courts exercise their power to nullify contracts made in contravention of public policy only rarely, with great caution and in cases that are free from doubt.
Id. (footnotes omitted).
¶31 Therefore, we answer the second certified question in the negative. Title
IV. THIRD CERTIFIED QUESTION
If FADCO‘s insurance policy with Federated violates
36 O.S. § 3636 , does the legislative intent or purpose of § 3636 impute the $1,000,000 uninsured motorist coverage policy limit FADCO purchased for its directors, officers, partners, owners, and their family members who qualify as insureds or [does] the $25,000 per person/$50,000 per accident minimum uninsured motorist coverage policy limit in § 3636 [apply] to the other persons who qualify as insureds?
¶32 Again, this Court‘s discretionary power to answer a federal certified question is set out in
V. CONCLUSION
¶33 We find that under Oklahoma law, a tortfeasor immune from suit due to the exclusive remedy provisions of
CERTIFIED QUESTIONS ANSWERED IN PART.
CONCUR: KAUGER, EDMONDSON, COMBS, GURICH, DARBY (by separate writing), JJ.
CONCUR IN PART, DISSENT IN PART: KANE, C.J. (by separate writing), ROWE, V.C.J, WINCHESTER, KUEHN, J.J.
DARBY, J., concurring specially:
¶1 I concur in the Court‘s judgment, but I write separately to further address two important
¶2 First, I would emphasize that the statute requires the offer of uninsured motorist coverage shall be made on a specific form which must be provided to the proposed insured in writing, separately from the application.
¶3 Federated offered FADCO the option of purchasing UM coverage using the statutory form, where FADCO rejected all UM coverage. (Defendant‘s Response to Plaintiff‘s Motion for Partial Summary Judgment and Cross Motion for Summary Judgment, Exhibit 1 - Declaration of Daniel Powers, Exhibit C; Record at A-0193). But on the same day, Federated apparently presented FADCO with an additional form titled “Oklahoma Commercial Auto Coverage Option” which deviated substantially from the election form specified by
¶4 Second, the language in the statute requires further discussion.
¶5 The second paragraph of (G) begins with the word “after” - referring to after the choices made by the insured or applicant pursuant to the prior paragraph. The first line reads: “After selection of limits, rejection, or exercise of the option not to purchase uninsured motorist coverage....” This third option appears to be another way to describe an insured‘s or applicant‘s decision to reject UM coverage.
¶6 The third sentence in the second paragraph of (G) begins with the words “Such selection” which is referring back to the “selection of limits” option. The sentence continues with the other two options named in the first sentence of the second paragraph. This line goes on to make clear that whichever option the insured or applicant chooses, it “shall be valid for all insureds under the policy...” The sentence does not end there, but reads further “and shall continue until a named insured requests in writing that the uninsured motorist coverage be added to an existing or future policy of insurance.” This creates an ambiguity.
¶7 One interpretation would allow an insured or applicant to first reject UM coverage or select lower limits for all named insureds, then add some amount of UM coverage to some but not all named insureds. But because the legislature used the word “the” to describe whatever UM coverage would be added, in my view the Legislature intended a subsequent choice which would also “be valid for all insureds under the policy.” The statute is not completely clear on this point. But reading the statute in context with all provisions therein,
KANE, C.J. CONCURRING IN PART AND DISSENTING IN PART:
¶1 I concur with the first proposition: Where Mr. Smith was injured and killed as a passenger in an employer-owned vehicle that had $7,000,000 of liability insurance and no proof was submitted to show the claim would exceed $7,000,000, but where Mr. Smith cannot recover under the policy because the workers’ compensation exclusive remedy provision of
¶2 However, I dissent to the majority‘s response to the second certified question: I believe that Oklahoma statutes and public policy allow a named insured, like FADCO, to choose to purchase optional UM coverage for some persons who qualify as an insured (here, its officers, directors, etc.) while rejecting such coverage for any other person who qualifies as an insured.
¶3 I do not agree with the majority‘s interpretation of
¶4 In reaching this conclusion, the Majority had to answer a question of first impression before this Court - whether limiting UM coverage to certain classes of insureds is against public policy. The Majority looked to other states that previously considered UM policies that provided different levels of coverage to different classes of insureds to determine if those policies violated public policies. Anaya-Smith relies on Varro v. Federated Mutual Ins. Co., 854 So.2d 726 (Fla. Dist. Ct. App. 2003) and Balagtas v. Bishop, 910 N.E.2d 789 (Ind. Ct. App. 2009) to support her position that UM statutes which limit UM coverage for certain classes of insureds are against public policy. In Varro, the court held there is “an express statutory policy prohibiting this type of discrimination between insureds” because the Florida UM statute only permits “a written rejection of the coverage on behalf of all insureds under the policy.” Varro, 854 So.2d at 729 (internal citations omitted). Similarly, in Balagtas, the Indiana court held that “the election or rejection of coverage must apply to all insureds.” Balagtas, 910 N.E.2d at 795.
¶5 However, these cases are distinguishable because the UM statutes in the Varro and Balagtas cases contain very different statutory language than the language used in Oklahoma‘s UM statute. For example, in Varro, Florida‘s UM statute requires UM coverage unless “an insured named in the policy makes a written rejection of the coverage on behalf of all insures under the policy.” See Varro, 854 So.2d at 728 (emphasis added)(internal citations omitted). Based on that language, the court in Varro ruled that a written rejection must be made for “all” insureds in order for it to be effective. Id.
¶7 For example, in Stoms v. Federated Servs. Ins. Co., 125 A.3d 1102 (Del. 2015), the Delaware Supreme Court addressed the validity of an insurance policy providing for different levels of UM coverage where the applicable statute permitted the insured to reject all UM coverage. In upholding the policy, the court explained:
[o]nce an insured has purchased the statutory minimum, the insured is free as a matter of contract to procure as much or little optional insurance as it wants, and to allocate it among drivers as it chooses . . . To hold that any coverage above the statutory minimum--such as uninsured motorist coverage, for which no level of coverage is statutorily mandated--has to be afforded to all who benefit from a policy would dissuade employers from buying anything above the statutory minimum.
Id. 1106-07. Like the facts in this case, in Stoms, the court upheld the policy which allowed policyholders to elect to obtain UM coverage for certain classes of insureds, specifically its directors, officers, partners, or owners of the employer and to reject it for all other insureds. Id. The Majority tries to distinguish this case from Stoms, despite the overwhelming similarity in the policy/levels of UM coverage for certain classes of insureds. The Majority argues the Delaware UM statute1 does not contain any language similar to
¶8 Additional courts have reached similar outcomes. See Jarrell v. Viking Ins. Co. of Wisconsin, No. 16-cv-01456, 2017 WL 1154025, at *3 (D. Colo. Mar. 28, 2017) (“Given a policyholder‘s right to decline coverage, Colorado law allows automobile liability policyholders to elect to obtain UM/UIM coverage for some ‘insureds’ but not others.“); Federated Mut. Ins. Co. v. Vaughn, 961 So.2d 816, 819 (Ala. 2007)(“. . . because the greater typically includes the lesser, the right to [totally] reject [sic] UM coverage implies the right to reject it partially.“); Hlasnick v. Federated Mut. Ins. Co., 539 S.E.2d 274, 277 (N.C. 2000) (rejecting public policy argument because statute did not mandate that UM coverage be equally applied to all insureds); Rarick v. Federated Service Ins. Co., 325 F.Supp.3d 590, 601-03 (E.D.Pa. 2018) (rejecting public policy challenge to providing different levels of UM coverage).
¶9 While the cases referenced above can provide guidance, it is Oklahoma law and public policy that determines the outcome of this case. In this regard, we have instructed that:
[T]he insurance coverage contract required by statute is to be liberally construed in favor of the object to be accomplished . . . . The primary purpose of including the uninsured motorist coverage in an insurance policy is to protect the insured from the effects of personal injury resulting from an accident with an uninsured/underinsured motorist.
State Farm Auto. Ins. Co. v. Greer, 1989 OK 110, ¶ 6, 777 P.2d 941, 942. “However, once it
¶10 The Oklahoma Legislature, not this Court or Congress, is primarily vested with the responsibility to declare public policy of this state. See Siloam Springs, 2017 OK 14, ¶ 21, 392 P.3d at 268. We have had occasion to find contracts to contravene public policy but only when said contract “clearly tends to injure public health.” Shepard v. Farmers Ins. Co., 1983 OK 103, ¶ 3, 678 P.2d 250, 251. We have previously instructed that the power to invalidate a contract should be exercised “rarely, with great caution and in cases that are free from doubt.” Id.
¶11 We have interpreted
¶12 Next, in Graham v. Travelers Insurance Co., 2002 OK 95, ¶ 1, 61 P.3d 225, 226-27, the issue before us was whether, in a commercial policy, UM/UIM coverage that provided for vehicles owned by the named insured must also be provided to employees using their own personal vehicles, which was limited by an endorsement to liability coverage. Id. Graham was driving his personal vehicle while in the course and scope of his employment when he was injured by an uninsured driver. Id. ¶ 3, at 227. The employer maintained an automobile policy that included UM/UIM coverage. Id. The policy provided liability insurance for employees using personal vehicles on company business, but limited UM coverage to only company owned vehicles. Id. ¶¶ 9-13, at 228-29. Because Graham was driving a personal vehicle at the time of the accident, the Court found that “Graham‘s vehicle clearly was insured for liability and was not insured, under the provisions of the policy, for UM/UIM.” Id. ¶ 13, at 229.
¶13 Graham argued, like Anaya-Smith does here, that those covered for liability must also be covered for UM/UIM under Oklahoma‘s UM statute. Id., ¶ 5, at 227. However, we rejected these arguments in Graham, pointing out that the employer and the insurer are the parties to the contract, the employer paid the premium, and the employer accepted UM/UIM coverage and limited it to company-owned vehicles. Id. ¶¶ 18-19, at 229-30. We concluded that an employer is “free to exclude employees operating their own vehicles from UM/UIM coverage through the method of limiting UM/UIM coverage to vehicles owned by the company.” Id. ¶ 21, at 230. However, we did emphasize an important part of our decision was that Graham owned the vehicle involved and thus, had “the opportunity to accept or reject UM/UIM coverage for his personal protection.” Id. ¶ 20, at 230.
¶14 In Ball v. Wilshire Insurance Co., 2009 OK 38, ¶¶ 25-26, 221 P.3d 717, 725-26, in a response to another certified question, we considered whether an insurer who denied UM benefits to a passenger based on an invalid exclusion in a liability policy acted in bad faith. In Ball, we re-examined our previous case law and emphasized the need to “protect the policyholder‘s choice of self and
¶15 More recently, in Lane v. Progressive Northern Insurance Co., 2021 OK 40, ¶ 1, 494 P.3d 345, 346, in a response to a certified question, we considered whether an exclusion which operates to deny UM coverage to an insured who recovers at least the mandated minimum in the form of liability coverage contravenes
. . . the exclusion does not merely modify the scope of available uninsured-motorist coverage--it outright negates that coverage. While the policyholder holds an option to accept uninsured-motorist coverage, the insurer carries an obligation to provide it.
Section 3636 requires uninsured-motorist coverage separate from liability coverage, whether it is provided within or supplemental to the basic liability policy. Progressive‘s blanket exclusion effectively ensures that only one form of coverage--for motor-vehicle liability--will ever be available, even though its policyholder has paid for both.
Id. ¶ 13, at 250. We emphasized in Lane that the purpose of
¶16 In short, based on the analysis above, I conclude that FADCO‘s choice to select UM coverage for some classes of insureds and reject UM coverage for others does not contravene the express language of the Oklahoma Uninsured Motorist Act nor its underlying policy of providing coverage for tortious conduct which would otherwise go uncompensated.
¶17 Had FADCO rejected all UM coverage outright, the policy would be in compliance with the statute although Anaya-Smith would have no claim to benefits. If an outright rejection for all persons is permissible, then providing additional coverage for at least some persons does not contravene the statute‘s text or purpose. As we explained in Ball, 2009 OK 39, ¶ 28, 221 P.3d at 727. Here, the limitation on UM coverage was an unambiguous contract term agreed to by the parties -- FADCO and Federated. Pursuant to these terms, the decedent “clearly was insured for liability and was not insured, under the provisions of the policy, for UM/UIM.” See Graham, 2002 OK 95, ¶ 13, 61 P.3d at 229. Allowing a policyholder to extend UM coverage to some classes of insureds, rather than limiting their choices to complete rejection or universal acceptance of UM coverage, only furthers the goals of
¶18 Therefore, I would answer the second certified question with a “yes.”
¶19 The third certified question does not require a response if the second question is answered correctly.
¶20 I respectfully dissent.
Notes
The liability policy also provided the following exclusions:
B. Exclusions
This insurance does not apply to any of the following:* * *
3. Workers’ Compensation
Any obligation for which the “insured” or the insured‘s’ insurer may be held liable under any workers’ compensation disability benefits or unemployment compensation law or any similar law.
The election form provides the insured may make one of four choices about UM coverage:
The following are effective on forms required on or after April 1, 2005. The offer of the coverage required by subsection B of this section shall be in the following form which shall be filed with and approved by the Insurance Commissioner. The form shall be provided to the proposed insured in writing separately from the application and shall read substantially as follows:
OKLAHOMA UNINSURED MOTORIST COVERAGE LAW
Oklahoma law gives you the right to buy Uninsured Motorist coverage in the same amount as your bodily injury liability coverage. THE LAW REQUIRES US TO ADVISE YOU OF THIS VALUABLE RIGHT FOR THE PROTECTION OF YOU, MEMBERS OF YOUR FAMILY, AND OTHER PEOPLE WHO MAY BE HURT WHILE RIDING IN YOUR INSURED VEHICLE. YOU SHOULD SERIOUSLY CONSIDER BUYING THIS COVERAGE IN THE SAME AMOUNT AS YOUR LIABILITY INSURANCE COVERAGE LIMIT.
Uninsured Motorist coverage, unless otherwise provided in your policy, pays for bodily injury damages to you, members of your family who live with you, and other people riding in your car who are injured by: (1) an uninsured motorist, (2) a hit-and-run motorist, or (3) an insured motorist who does not have enough liability insurance to pay for bodily injury damages to any insured person.
Uninsured Motorist coverage, unless otherwise provided in your policy, protects you and family members who live with you while riding in any vehicle or while a pedestrian. THE COST OF THIS COVERAGE IS SMALL COMPARED WITH THE BENEFITS!
You may make one of four choices about Uninsured Motorist Coverage by indicating below what Uninsured Motorist coverage you want:
____ I want the same amount of Uninsured Motorist coverage as my bodily injury liability coverage.
____ I want minimum Uninsured Motorist coverage $25,000.00 per person/$50,000.00 per occurrence.
____ I want Uninsured Motorist coverage in the following amount:
$____________ per person/$______________ per occurrence.
____ I want to reject Uninsured Motorist coverage.
_______________
Proposed Insured
THIS FORM IS NOT A PART OF YOUR POLICY AND DOES NOT PROVIDE COVERAGE.