Anaya-Smith v. Federated Mut. Ins. Co.

549 P.3d 1213

2024 OK 34

Nancy ANAYA-SMITH, Next of kin of Michael Brian Smith, deceased, Plaintiff/Appellant,

v.FEDERATED MUTUAL INSURANCE COMPANY, Defendant/Appellee.

No. 120,403

Supreme Court of Oklahoma.

Filed May 14, 2024

As Corrected: May 17, 2024

CERTIFIED QUESTIONS FROM THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

¶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, 20 O.S.2011, §§ 1601-1611.

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 of 36 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 unin- sured motorist 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 85A O.S.Supp.2019, § 5 bars suit against the employer, the vehicle qualifies as an uninsured motor vehicle within the meaning of 36 O.S.Supp.2014, § 3636(C).

¶3 We answer the second question in the negative and conclude that the plain language of 36 O.S.Supp.2014, § 3636(G) requires a named insured to either elect or reject uninsured/underinsured (UM) coverage for all insureds under the policy, treating every insured in the same manner.

¶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

[1] ¶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 36 O.S.Supp.2014, § 3636(H). This form was identified as F80-104 PT.2 (OK-CA) (04-05) (Form 1). On Feb- ruary 28, 2018, a FADCO representative executed Form 1, rejecting UM coverage for all employees. Federated also provided FADCO with a separate document pertaining to the rejection/acceptance of UM benefits. This form deviated extensively from the format outlined in § 3636(H) and was identified as F80-104 PT.1 (OK-C.A.) (04-05) (Form 2). Form 2, which appears to be a substantially modified version of the statutorily required form, included two columns—one column representing UM coverage for directors, officer, partners or owners, and their family members, and a second column for any other person who qualified as an insured. FADCO elected to purchase UM coverage up to $1,000,000 for the directors, officers, partners, or owners of and their family members who qualify as insureds; however, FADCO rejected UM coverage for all other insureds:⁴

549 P.3d 1216.bmp

Based on the selections made in Form 2, an endorsement providing UM coverage for FADCO directors, officers, partners, or owners, 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 85A O.S.Supp.2019, § 5. Instead, Anaya-Smith sought recovery of UM benefits under FADCO’s commercial policy. Federated denied the UM claim because Smith was not a director, officer, partner, owner or qualifying member of FADCO at the time of the accident.

¶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 coverage scheme contravened Oklahoma law and public policy. Federated denied these claims and brought a counterclaim for declaratory judgment. Federated asked the federal district court to determine that FADCO’s insurance policy does not provide UM coverage to Smith because (1) the vehicle was not an uninsured vehicle at the time of the accident because the driver qualified as an insured for liability coverage and (2) FADCO’s rejection of UM coverage for some insureds and not for others was valid and did not violate 36 O.S.Supp.2014, § 3636. In the alternative, Federated claimed that if 36 O.S.Supp.2014, § 3636 requires a named insured to purchase/reject UM coverage uniformly for all insureds under a policy, UM coverage should be imputed at the minimum of $25,000 per person and $50,000 per occurrence in the statute, rather than the $1,000,000 amount under Federated Policy No. 9840992.

¶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 36 O.S.Supp.2014, § 3636. Anaya-Smith appealed from the summary judgment order.⁵ The Tenth Circuit certified the above-referenced questions to this Court.

II. REQUIREMENTS FOR ANSWERING CERTIFIED QUESTIONS

[2] ¶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, 20 O.S.2011, §§ 1601-1611. When assessing whether we should answer a federal certified question of law, we address both factors mentioned in § 1602: (1) would the answer be dispositive of an issue in pending litigation in the certifying court; and (2) is there established and controlling law on the subject matter? See Siloam Springs Hotel, LLC v. Century Sur. Co., 2017 OK 14, ¶ 14, 392 P.3d 262, 266. Answers to the first two certified questions would be determinative of issues in the underlying suit and present issues of first impression for which there is no controlling Oklahoma precedent. However, because the issue(s) relating to the amount which would be payable under...