Case Information
*1 Before KELLY , PHILLIPS , and MORITZ , Circuit Judges.
KELLY , Circuit Judge.
Plaintiff-Appellee Century Surety Company (“Century”) issued a commercial lines policy to Defendant-Appellant Shayona Investment, LLC (“Shayona”) covering commercial property and business income coverage. Shayona submitted claims, Century paid them, and then Century sought a *2 declaratory judgment in the district court as to whether the claims were fraudulent. At trial, the jury found in favor of Century, awarding it both the amount the company paid Shayona under the policy and the sum it spent investigating the claims. Shayona appeals from the district court’s entry of judgment on that verdict, arguing that the standard of proof the court instructed the jury to use was wrong. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we affirm.
Background
Century issued the policy to Shayona on October 19, 2011, for one year of coverage on the Cinderella Inn in Shawnee, Oklahoma. 2 Aplt. App. 201. The policy included a provision that expressly voided coverage “in any case of fraud” by the insured, including intentional concealment or misrepresentation of any material fact relating to the covered property or claim for coverage. 1 Aplee. Supp. App. 16. Such a provision is commonly referred to as a “fraud and false swearing” provision. The provision is consistent with the requirements of Oklahoma law. See Okla. Stat. tit. 36, § 4803(G).
Over the course of the next year, Shayona submitted multiple claims. First, it claimed property and business income loss from vandalism and theft to the Inn’s bar, which allegedly occurred in October 2011. Second, it claimed damages from a hail storm that occurred in May 2012. Century paid the claims in the *3 combined amount of $777,885.41. 2 Aplt. App. 202–06. After Shayona submitted additional related claims, Century became suspicious and conducted further investigation, eventually concluding that at least some of the submissions by Shayona were fraudulent. It then filed its complaint for declaratory judgment for a determination of rights and obligations under the contract, including whether Shayona had committed fraud such that the policy was void and Century was due back the money it had paid out. 1 Aplt. App. 11, 16–17.
The parties disagreed as to what evidentiary standard should govern. Shayona argued that a clear and convincing standard was appropriate because it viewed Century’s claim as a fraud action. 3 Aplt. App. 642. The district court disagreed; it accepted Century’s characterization of the action as one for declaratory judgment, and instructed the jury that Century need only prove breach of the contract by a preponderance of the evidence. 3 Aplt. App. 710–11. The jury found that Shayona had indeed submitted false or fraudulent information that voided the policy, and that judgment should be entered against Shayona for $855,057.91 [1] . Id. at 192, 741. The district court entered judgment on the verdict, 1 Aplt. App. 193, and this appeal followed.
Discussion
We review jury instructions de novo. Pratt v. Petelin,
We are not convinced, having previously held that, under Oklahoma law, an
insurer claiming that the insured violated a fraud and false swearing provision in
an insurance policy must prove it by “a fair preponderance of the evidence.”
Transp. Ins. Co. v. Hamilton,
Though Shayona blends its arguments to assert that the clear and *5 convincing standard should apply to the entirety of Century’s action, there are three possible reasons that might support such a conclusion. The first is that when an insurer seeks to deny payment on the contract for reason of fraud, preponderance is the right standard, but when it seeks restitution of money already paid, then clear and convincing is the standard. Second is that even though preponderance might be correct as to money paid out under the contract, the clear and convincing standard is required to recoup any additional costs not directly covered by the contract — here, Century’s investigative expenses. And third is that regardless of what would happen in the first two scenarios, the combination of (1) and (2) transforms the entire claim to one governed by the higher evidentiary standard. This is the argument most clearly presented by Shayona.
As to the first reason — setting aside for the moment the issue of extra-
contractual expenses — this is a distinction without a difference. In civil actions
involving private disputes, the general standard of proof is preponderance of the
evidence. Johnson v. Bd. of Governors of Registered Dentists of State of Okla.,
Nor has Shayona pointed to any cases that make a distinction as to the
burden of proof based upon whether a theory is asserted as a claim or defense.
Relying upon United Services Automobile Ass’n v. McCants,
In McCants, the insurer sought recovery of investigative expenses and of
money it paid out to the mortgagee on account of arson by the insured mortgagor.
See
We turn next to the second reason that might support Shayona’s position,
that extra-contractual expenses caused by the insured’s fraud can only be
recovered through a fraud action. The jury awarded Century $77,172.50 for its
investigative expenses. But Shayona forfeited challenging this award by not
objecting to the court’s jury instruction on damages. See 3 Aplt. App. 642, 718;
Oral Argument at 1:16–2:50; see also Fed. R. Civ. P. 51(c)(1), (d)(2); United
States ex rel. Bahrani v. ConAgra, Inc.,
AFFIRMED.
Notes
[1] This is the amount Century asked for in closing argument, which combines the $777,885.41 it paid out under the policy with the $77,172.50 it spent investigating the claims. 3 Aplt. App. 737, 540–48; Aplee. Br. at 9.